UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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Soliciting Material Pursuant to §240.14a-12

VITESSE SEMICONDUCTOR CORPORATION

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741 Calle Plano Drive

Camarillo, California 93012

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held Thursday, January 26, 2012

Wednesday, February 19, 2014

To Our Stockholders:

The 20122014 Annual Meeting of Stockholders of Vitesse Semiconductor Corporation will be held on January 26, 2012,February 19, 2014, at 9:00 a.m. local time, at the Hyatt Westlake Plaza in Thousand Oaks, 880 SouthS. Westlake Boulevard, Westlake Village, CACalifornia 91361, for the following purposes:

1.               To elect six directors to hold office for the ensuing year and until their successors are duly elected;

2.               To hold an advisory vote on executive compensation;

3.               To hold an advisory vote on the frequency of the advisory vote on executive compensation;

4.               To ratify the selection of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2012; and

5.               To transact such other business as may properly be brought before the meeting and any adjournment(s) thereof.

1.To elect seven directors to hold office for the ensuing year and until their successors are duly elected;
2.To approve an amendment to the 2011 Vitesse Employee Stock Purchase Plan;
3.To hold an advisory vote on executive compensation;
4.To ratify the selection of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2014; and
5.To transact such other business as may properly be brought before the meeting and any adjournment(s) thereof.
The foregoing items of business are more fully described in the proxy statement accompanying this Notice. Stockholders of record at the close of business on December 5, 201123, 2013 are entitled to notice of, and to vote at, the Annual Meeting.

All stockholders are cordially invited to attend the meeting. This year, we are using the Internet as our primary means of furnishing proxy materials to our stockholders. Accordingly, most stockholders will not receive paper copies of our proxy materials. We will instead send our stockholders a notice with instructions for accessing the proxy materials and voting electronically over the Internet or by telephone. The notice also provides information on how stockholders may request paper copies of our proxy materials. You may access the proxy statement and our annual report on the Internet, both of which are available at “www.edocumentview.com/VTSS.”

“www.envisionreports.com/VTSS"

Your vote is important. Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the meeting and we urge you to vote as soon as possible. As an alternative to voting in person at the Annual Meeting, you may vote electronically over the Internet or by telephone, or if you receive a proxy card or voting instruction form in the mail, by mailing the completed proxy card or voting instruction form. Timely voting by any of these methods will ensure your representation at the Annual Meeting.

By Order of the Board of Directors,

Camarillo, California

Christopher R. Gardner

December 6, 2011

23, 2013

President and Chief Executive Officer




VITESSE SEMICONDUCTOR CORPORATION

741 Calle Plano Drive
Camarillo, California 93012
(805) 388-3700

PROXY STATEMENT

INFORMATION CONCERNING SOLICITATION AND VOTING


General
General

The enclosed proxy is solicited on behalf of the Board of Directors (the “Board”) of Vitesse Semiconductor Corporation (“Vitesse” or the “Company”, “us”, “we”, or “our”) for use at the 20122014 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the Hyatt Westlake Plaza in Thousand Oaks, 880 SouthS. Westlake Boulevard, Westlake Village, CACalifornia 91361, on Thursday, January 26, 2012,Wednesday, February 19, 2014, at 9:00 a.m. local time and at any adjournment(s) thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement is first being made available to all stockholders entitled to vote at the Annual Meeting on or about December 16, 2011.

January 7, 2014.

Record Date and Shares Outstanding

Stockholders of record at the close of business on December 5, 201123, 2013 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting and at any adjournment(s) thereof. On the Record Date, 24,487,97857,829,283 shares of our common stock, $0.01 par value, were issued and outstanding.

Revocability of Proxies

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use (i) by delivering to us at our principal offices (Attention: Corporate Secretary) a written notice of revocation or a duly executed proxy bearing a later date, or (ii) by attending the Annual Meeting and voting in person. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote in person at the Annual Meeting, you must obtain a proxy issued in your name from that record holder, and you will need to provide a copy of such proxy at the Annual Meeting.


Attendance at the Annual Meeting

All stockholders of record as of the Record Date may attend the Annual Meeting. Please note that cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting. No items will be allowed into the Annual Meeting that might pose a concern for the safety of those attending. Additionally, to attend the meeting you will need to bring identification and proof sufficient to us that you were a stockholder of record as of the Record Date or that you are a representative of a stockholder of record as of the Record Date for a stockholder of record that is not a natural person.

For directions to attend the Annual Meeting, please visit the Hyatt Westlake Plaza in Thousand Oaks website at http://westlake.hyatt.com/hyatt/hotels/services/mapswww.westlake.hyatt.com/en/hotel/our-hotel/map-and-directions.html or contact the hotel via telephone at (805) 557-1234.


Voting and Costs of Solicitation

Shares Directly Held—StockholderHeld-Stockholder of RecordRecord. .  If you are a “registered holder,” that is your shares are registered in your name through our transfer agent, and you are viewing this proxy over the Internet you may vote electronically over the Internet. For those stockholders who receive a paper proxy in the mail, you may also vote electronically over the Internet or by telephone or by completing and mailing the proxy card provided. The website identified in our Notice of Internet Availability of Proxy Materials provides specific instructions on how to vote electronically over the Internet. Those stockholders who receive a paper proxy by mail, and who elect to vote by mail, should complete and return the mailed proxy card in the prepaid and addressed envelope that was enclosed with the proxy materials. You may request a ballot at the Annual Meeting and vote your shares in person.


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Shares Indirectly Held—Beneficial OwnerHeld-Beneficial Owner. .  If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by your broker or nominee who is considered the stockholder of record with respect to those shares. We urge you to direct your broker on how to vote your shares. Beneficial owners may attend the Annual Meeting, but may not vote in person unless you obtain a signed proxy from the stockholder of record giving you the right to vote the shares in person at the Annual Meeting. Your broker or nominee should provide you with a voting instruction card for you to use in directing the broker or nominee regarding how to vote your shares. If you did not receive a voting instruction card, please contact the institution holding your shares. We recommend that you vote your shares in advance as described above, so that your vote will be counted if you later decide not to attend the Annual Meeting.

Only proxy cards and voting instruction forms that have been signed, dated and timely returned, and only proxies that have been timely voted electronically or by telephone will be counted in the quorum and voted. The Internet and telephone voting facilities will close at 11:59 p.m. Eastern Time, Wednesday, January 25, 2012.  Tuesday, February 18, 2014. Stockholders who vote over the Internet or by telephone need not return a proxy card or voting instruction form by mail.

We will bear the entire cost of the solicitation of proxies for the Annual Meeting, including the preparation, assembly, printing and mailing of the Notice of Internet Availability of Proxy Materials, this proxy statement, the proxy card, and any additional solicitation materials furnished to stockholders. Solicitations also may be made by personal interview, telephone and electronic communications by directors, officers and other employees of Vitesse without additional compensation. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. No additional compensation will be paid to those individuals for any such services.

If your proxy is properly submitted, the shares represented thereby will be voted at the Annual Meeting in accordance with your instructions. If you are a registered holder and you do not specify how the shares represented thereby are to be voted, your shares will be voted as follows:

·

“For” election of all sixseven nominees for director as described in Proposal One;

·

“For” approval of the amendment to the 2011 Vitesse Employee Stock Purchase Plan as described in Proposal Two;
“For” approval of the advisory vote on executive compensation as described in Proposal Two;

·In favor of a say-on- pay vote occurring every “1 Year” as described in Proposal Three; and

·

“For” ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm as described in Proposal Four.

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If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the meeting to another time or place in order to solicit additional proxies in favor of the nominees of theour Board of Directors, the persons named as proxies and acting thereunder will have discretion to vote on these matters according to their best judgment to the same extent as the person delivering the proxy would be entitled to vote. At the date this proxy statement went to press, we did not know of any other matter to be raised at the Annual Meeting.

Some stockholders receive more than one Notice of Internet Availability of Proxy Materials, proxy card or voting instruction form because their shares are held in multiple accounts or registered in different names or addresses. Please vote your shares held in each account to ensure that all of your shares will be voted.

Quorum, Abstentions, Broker Non-Votes, Required Votes

Our bylaws provide that stockholders holding a majority of the shares of common stockCommon Stock issued and outstanding and entitled to vote on the Record Date constitute a quorum at meetings of stockholders. Therefore, at the Annual Meeting, the presence, in person or by proxy, of the holders of at least 12,243,99028,914,642 shares of Common Stock will be required to establish a quorum. Each outstanding share of our Common Stock is entitled to one vote on each proposal at the Annual Meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. Broker non-votes, however, are not counted as shares present and entitled to be voted with respect to the matter on which the broker has expressly not voted. Thus, broker non-votes will not affect the outcome of any of the matters being voted on at the Annual Meeting. Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (1) the broker has not received voting instructions from the beneficial owner and (2) the broker lacks discretionary voting power to vote such shares because the matter is not considered a routine matter. The only routine matter

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that is being submitted to stockholders at the Annual Meeting is Proposal Four, ratification of the appointment of our independent registered public accounting firm.

In the election of the sixseven directors (Proposal One), you may vote “For” all of the nominees or your vote may be “Withheld” with respect to one or more of the nominees. With respect to Proposal Three, the advisory vote on the frequency of the advisory vote on executive compensation, you may vote for “1 year,” “2 years,” or “3 years” or you may “Abstain.”  For all other proposals, you may vote “For,” “Against” or “Abstain.” If you “Abstain,” it has the same effect as a vote “Against.”

If a quorum is present at the Annual Meeting, a plurality of the shares voting will be sufficient to elect the director nominees (Proposal One). This means that the sixseven nominees for election as directors who receive the most votes “for” election will be elected. Approval of the amendment to the 2011 Vitesse Employee Stock Purchase Plan (Proposal Two), approval of the advisory vote on executive compensation (Proposal Two)Three) and ratification of the appointment of our independent registered public accounting firm (Proposal Four), each will require an affirmative vote of the majority of the shares of Common Stock present or represented at the Annual Meeting with respect to such proposal.  With respect to
If by the frequencydate of the advisory vote on executive compensation (Proposal Three), the Board will give careful consideration to the voting results on this proposal and expects to adopt the alternative that receives the greatest number of votes, even if that alternative doesAnnual Meeting we do not receive proxies representing sufficient shares to constitute a majorityquorum, the Chairman of the votes cast.

Meeting, or the stockholders entitled to vote thereat, shall have power to adjourn the meeting, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally noticed.


Effect of Not Casting Your Vote

If you hold your shares in street name it is critical that you cast your vote if you want it to count in the election of directors (Proposal One). In the past, if you held your shares in street name, and you did not indicate how you wanted your shares voted in the election of directors, your bank or broker was allowed to vote those shares on your behalf in the election of directors as it feltdeemed appropriate.

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Your bank or broker no longer has the discretion to vote your uninstructed shares in the election of directors. Similarly, your bank or broker does not have ability to vote your uninstructed shares on any other matters being submitted to the stockholders for a vote at the Annual Meeting other than ratification of the appointment of our independent registered public accounting firm (Proposal Four). Thus, if you hold your shares in street name and you do not instruct your bank or broker how to vote at the Annual Meeting, your shares will not be voted on Proposals One, Two or Three.

Deadline for Receipt of Stockholder Proposals

In order for a stockholder proposal to be considered for inclusion in our proxy statement for our 20132015 Annual Meeting of Stockholders, the written proposal must be received by us no later than August 18, 2012,September 9, 2014 and should contain the information required under our bylaws. If the date of next year’s annual meetingyear's Annual Meeting is moved more than 30 days before or after January 26, 2013,February 19, 2015, the first anniversary date of this year’syear's Annual Meeting, the deadline for inclusion of proposals in our proxy statement is instead a reasonable time before we begin to print and mail our proxy materials for next year’syear's meeting. Any proposals will also need to comply with Rule 14a-8 of the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding the inclusion of stockholder proposals in company sponsored proxy materials. Proposals should be addressed to our Corporate Secretary, at our principal executive offices.

If you intend to present a proposal at our 20132015 Annual Meeting of Stockholders and the proposal is not intended to be included in our proxy statement relating to that meeting, you must give us advance notice of the proposal in accordance with our bylaws. Pursuant to our bylaws, in order for a stockholder proposal to be deemed properly presented in these circumstances, a stockholder must deliver notice of the proposal to our Corporate Secretary, at our principal executive offices after the close of business on October 28, 2012November 21, 2014 and before the close of business on November 27, 2012.December 21, 2014. However, if the date of our 20132015 Annual Meeting of Stockholders is more than 30 days before or after January 26, 2013,February 19, 2015, the first anniversary of this year’syear's Annual Meeting, stockholders must give us notice of any stockholder proposals within a reasonable time before the mailing date of the proxy statement for next year’syear's Annual Meeting. If a stockholder does not provide us with notice of a stockholder proposal in accordance with the deadlines described above, the stockholder will not be permitted to present the proposal to the stockholders for a vote at the meeting.

The proxies to be solicited by us through our Board of Directors for our 20132015 Annual Meeting of Stockholders will confer discretionary authority on the proxy holders to vote on any stockholder proposal properly presented at the 20132015 Annual Meeting of Stockholders if we fail to receive notice of the stockholder’sstockholder's proposal for the meeting by August 18, 2012.

September 9, 2014.


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If a stockholder desires only to recommend a candidate for consideration by the Nominating and Corporate Governance Committee as a potential nominee for theour Board, see the procedures discussed in “Proposal One—ElectionOne-Election of Directors—ProcessDirectors-Process for Recommending Candidates for Election to theour Board of Directors.”

Further Information

We will provide without charge to each stockholder solicited by these proxy materials a copy of Vitesse’sVitesse's annual report on Form 10-K for the fiscal year ended September 30, 2011,2013, without exhibits, and any amendments, upon request of such stockholder made in writing to Vitesse Semiconductor Corporation, 741 Calle Plano Drive, Camarillo, California 93012, Attn: Investor Relations. We will also furnish any exhibit to the annual report on Form 10-K, if specifically requested in writing. You can also access our Securities and Exchange Commission (“SEC”) filings, including our annual reports on Form 10-K, on the SEC website at www.sec.gov.


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PROPOSAL ONE


ELECTION OF DIRECTORS


Our bylaws provide that the authorized number of directors is a minimum of five and a maximum of nine, with the exact number set by our Board. Currently, the authorized number of directors of the Company is six,seven, and sixseven members of our Board are to be elected at the Annual Meeting. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the nominees named below. Each nominee has consented to be named a nominee in this proxy statement and to continue to serve as a director if elected. If any nominee becomes unable or declines to serve as a director, if additional persons are nominated at the meeting, or if stockholders are entitled to cumulate votes, the proxy holders intend to vote all proxies received by them in such a manner (in accordance with cumulative voting) as will ensure the election of as many of the nominees listed below as possible, and the specific nominees to be voted for will be determined by the proxy holders. We are not aware of any reason that any nominee will be unable or will decline to serve as a director. The term of office of each person elected as a director will continue until the next Annual Meeting of Stockholders, or until a successor has been elected and qualified, or until his or her earlier resignation or removal. There are no family relationships among any of our directors or executive officers. There are no arrangements or understandings between any director or executive officer and any other person pursuant to which he or she is or was to be selected as a director or officer.

The names of the nominees all of whom are currently directors standing for re-election, and certain information about them as of December 5, 2011,23, 2013, are set forth below. All of the nominees have been nominated by theour Board acting on the recommendation of the Nominating and Corporate Governance Committee of theour Board, which consists solely of independent members of theour Board.

The Board recommends that stockholders vote “For” the election of each of the following nominees.

Nominee

 

Age

 

Director
Since

 

Principal Occupation

Christopher R. Gardner

 

51

 

2006

 

President and Chief Executive Officer of Vitesse

 

 

 

 

 

 

 

Steven P. Hanson(1)(2)

 

63

 

2007

 

Retired President and CEO of ON Semiconductor

 

 

 

 

 

 

 

James H. Hugar(1)(2)

 

65

 

2009

 

Retired Partner of Deloitte & Touche, LLP

 

 

 

 

 

 

 

G. William LaRosa(2)(3)

 

65

 

2010

 

Chief Executive Officer of G.W. LaRosa & Associates, LLC

 

 

 

 

 

 

 

G. Grant Lyon(3)

 

48

 

2009

 

President of Odyssey Capital Group, LLC

 

 

 

 

 

 

 

Edward Rogas, Jr.(1)(3)

 

71

 

2006

 

Chairman of the Board of Vitesse, Retired Senior Vice President of Teradyne, Inc.

Nominee Age Director
Since		 Principal Occupation
Matthew Frey (2)(4) 44 2013 Chief Executive Officer of Optimum Energy, LLC
Christopher R. Gardner 53 2006 President and Chief Executive Officer of Vitesse
Steven P. Hanson(2)(4) 65 2007 Retired President and CEO of ON Semiconductor
James H. Hugar (1)(3)(4) 67 2009 Retired Partner of Deloitte & Touche, LLP
Scot B. Jarvis (1)(3)(4) 53 2012 Co-founder of Cedar Grove Partners, LLC
Edward Rogas, Jr. (1)(2)(4) 73 2006 Chairman of the Board of Vitesse, Retired Senior Vice President of Teradyne, Inc.
Kenneth H. Traub(3)(4) 52 2013 President and CEO of Ethos Management, LLC

(1)     Member of the Audit Committee

(2)     Member of the Nominating and Corporate Governance Committee

(3)     Member of the Compensation Committee

(1)Member of the Audit Committee
(2)Member of the Nominating and Corporate Governance Committee
(3)Member of the Compensation Committee
(4)Member of the Strategic Advisory Committee

Vote Required

If a quorum is present, the sixseven nominees receiving the highest number of votes will be elected to theour Board. See “Information Concerning Solicitation and Voting—Quorum,Voting-Quorum, Abstentions, Broker Non-Votes, Required Votes.”

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Directors’Nominees' Principal Occupation, Business Experience and Qualifications

Matthew Frey

has served as a director since March 2013. He is the Chief Executive Officer of Optimum Energy, LLC, a cloud based SaaS provider of energy management applications for complex buildings, data centers, campuses, hospitals and manufacturing facilities, a position he has held since November 2010. For more than 16 years, Mr. Frey has served in senior executive and advisory roles at technology companies, including Data Base, Inc., Payroll Online, World Wide Packets and Optimum Energy. Prior to his current position at Optimum Energy, from January 2004 until its sale to Ciena Corporation in March of 2008, Mr. Frey served as President and Chief Operating Officer of World Wide Packets, a leading provider of Carrier Ethernet solutions. Subsequent to the sale, Mr. Frey served as Ciena's Sr. Vice President of Business Development until January 2009. Mr. Frey brings operational, strategic, industry, and software development expertise to the Board. Mr. Frey holds a BS


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degree in accounting from Santa Clara University and worked as an auditor at Price Waterhouse in Silicon Valley early in his career.
Christopher R. Gardner has served as a director and our Chief Executive Officer since 2006. From 2002 until he was appointed Chief Executive Officer in 2006, he served as our Vice President and General Manager of the Network Products Division, and from 2000 to 2002, he served as our Vice President and Chief Operating Officer. Prior to joining Vitesse in 1986, Mr. Gardner served as a member of the Technical Staff at Bell Laboratories. Mr. Gardner’sGardner's extensive career in the semiconductor industry, combined with his extensivebroad knowledge and understanding of our Company, the industry and the markets in which we operate, and the issues facing the Company, make Mr. Gardner a valuable member of our Board. Mr. Gardner received his BSEE degree from Cornell University and his MSEE degree from the University of California at Berkeley.

Steven P. Hansonhas served as a director since August 2007. For more than 32 years, Mr. Hanson has served in senior executive roles at technology companies, including 28 years at Motorola in various engineering management and leadership positions. Mr. Hanson served as the President and Chief Executive Officer of ON Semiconductor from 1999 to 2003. Mr. Hanson has been a senior partner at Southwest Value Acquisitions LLC, a private equity firm, since 2004. He served as the Chairman of InPlay Technologies, Inc., a high-technology firm delivering leadership human input device technologies and products from 2005 to 2007. Mr. Hanson has served Arizona State University as a member of the Dean’sDean's Advisory Council, W.P. Carey School of Business and the Dean’sDean's Advisory Council for the Ira A. Fulton School of Engineering. As a former senior executive at technology companies including ON Semiconductor and the General Manager of Europe, Middle East and Africa Semiconductor Group of Motorola, Mr. Hanson brings operational, strategic and industry expertise to our Board. Mr. Hanson holds a BSEE degree from the College of Engineering at Arizona State University.

James H. Hugar has served as a director since October 2009. Mr. Hugar retired from Deloitte & Touche, LLP, where he was an audit partner from 1982 to 2008, specializing in the financial services industry. Prior to his retirement, he served as the partner-in-charge of the Southern California Investment Companies Industry and Broker/Dealer Practice Unit. Mr. Hugar serves on the Board of Advisors of American Relocation & Logistics, Inc., a privately-held company. With over 35 years of experience in public accounting, including participation at hundreds of audit committee meetings and serving as a director/advisor for both privately and publicly held companies, Mr. Hugar brings public company financial expertise to theour Board. Mr. Hugar holds a BS degree in Accounting from Pennsylvania State University and an MSBA degree from the University of California, Los Angeles, and is a Certified Public Accountant.

G. William LaRosaScot B. Jarvis has served as a director since August 2010.May 2012. Mr. LaRosaJarvis co-founded Cedar Grove Partners, LLC, an investment and consulting/advisory partnership with a focus on wireless communication investments in 1997, and currently is currently the Chief Executive Officer of G.W. LaRosa & Associates, LLC, a global technology sales and business development firm, a positionits managing member. While at Cedar Grove, he has held since June 2009.invested in several successful early-stage companies in the telecommunications area and has served on a number of public and private boards. Prior to co-founding Cedar Grove, Mr. LaRosaJarvis served as a senior executive of Eagle River, Inc., a Craig McCaw investment firm. While at Eagle River, he founded Lead GroupNextlink Communications (now XO Communications) on behalf of McCaw and served on its board of directors. Mr. Jarvis has also served on the board of directors of Nextel Communications, Leap Wireless International, (LGI)NextG Networks, Inc., Wavelink Communications Inc., NextWeb, Inc., and helped lead smaller technology companies including Silicon Graphics and American Motion Systems.Cantata Technologies, Inc. From 1985 to 1994, Mr. LaRosaJarvis served in several executive capacities at McCaw Cellular Communications up until it was sold to AT&T. Mr. Jarvis currently serves on the board of advisors for Silvatron Partners in Los Gatos, California.Kratos Defense & Security Solutions (NASDAQ: KTOS) and Airspan Networks Inc. (OTCMKTS: AIRO), both publicly traded companies. In addition, Mr. La Rosa alsoJarvis currently serves as a group chairmanon the board of Visage International, a global CEO organization.directors of Good Technology, Inc., Root Wireless, Inc., MobiTV, Inc. and Slingshot Sports, LLC, all four of which are private companies. He is a past director forventure partner with Oak Investment Partners, a venture capital firm. Mr. Jarvis brings to our Board extensive experience in the advisory board for the Lubin School of Business at PACE University, and a CEO and former chairman of the board at LGI.  The experience he gained over the 30 years of holding various senior level, VP and senior executive positions attechnology industry leading companies including General Electric, IBM and Advanced Micro Devices allows Mr. LaRosa to provide the Board with industry experience and public company sales, marketing and operational expertise.board experience. Mr. LaRosa earned his MBAJarvis holds a BA degree in business administration from the Lubin SchoolUniversity of Business at PACE University and has a BS degree in electrical and electronic engineering from Manhattan College in New York City.Washington.

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G. Grant Lyon has served as a director since October 2009.  Mr. Lyon is currently the President of Odyssey Capital Group, LLC, a financial advisory and management consulting firm, where he has been employed since 1998.  In 2005, he served as interim Chief Financial Officer of Hypercom Corporation.  Prior to 2005, Mr. Lyon held positions as managing director at Ernst & Young Corporate Finance, LLC, and a managing member of Golf Equity, LLC and Vice President, Capital Markets at Evans Withycombe Residential, Inc.  Mr. Lyon began his career at Arthur Andersen, LLP, where he worked from 1987 to 1989.  Mr. Lyon served as Chairman of the Board of Three Five Systems.  He has also served as a director of Tickets.com, Inc.  Mr. Lyon’s breadth of experience in corporate finance and strategic initiatives, including capital raising, business and securities valuation, mergers and acquisitions and bankruptcy reorganizations allows Mr. Lyon to provide guidance to our Board and our Company regarding our operations, growth strategies and opportunities.  Mr. Lyon holds a BS degree and an MBA degree from Brigham Young University.  Mr. Lyon is a Certified Public Accountant and a published author and speaker.

Edward Rogas, Jr. has served as a director and Chairman of theour Board since 2006. Mr. Rogas is a director and consultant to companies in the technology industry. He served as a Senior Vice President at Teradyne, Inc., an automated test equipment manufacturer, from 2000 to 2005. From 1976 to 2000, he held various management positions in the semiconductor ATE portion of Teradyne, Inc., including Vice President from 1984 to 2000. From 1973 to 1976, he served as a Vice President at American Research and Development. Mr. Rogas serves on the Board of FormFactor, Inc., a manufacturing test-technology company, and Vignani Technologies, Pvt. Ltd. (a private Indian company). Mr. Rogas previously served on the board of directors of Photon Dynamics, Inc., a provider of digital imaging technology.LCD panel testers. Mr. Rogas brings to our Board extensive experience in engineering development and operations in the technology industry, financial sophistication and public company board experience. Mr. Rogas holds a BS degree from the United States Naval Academy and an MBA degree from Harvard Business School.

Kenneth H. Traub has served as a director since March 2013. Heis the President and Chief Executive Officer of Ethos Management LLC, which specializes in investing in and advising public companies to execute strategies to build and unlock stockholder value, a position he has held since January 2009. From 1999 until its acquisition by JDS Uniphase Corp. (“JDSU”)

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in February 2008, he served as President and Chief Executive Officer of American Bank Note Holographics, Inc. (“ABNH”), a leading global supplier of optical security devices. Mr. Traub managed the turnaround, growth and sale of ABNH, and under his leadership, ABNH's stockholders achieved a gain exceeding 1,000 percent. Following the sale of ABNH, he served as Vice President of JDSU, a global leader in optical technologies and telecommunications, through September 2008. In 1994, Mr. Traub co-founded Voxware, Inc., a pioneer in voice over Internet protocol communication technologies, and served as its Executive Vice President and Chief Financial Officer through 1998. From 1988 to 1994, he served as Vice President of Trans-Resources, Inc., a multinational holding company and investment manager. Mr. Traub currently serves on the boards of directors of the following SEC reporting companies: (i) MRV Communications, Inc. (OTCQB: MRVC), a leading provider of optical communications network equipment and integration (Mr. Traub is currently Chairman of the Board), (ii) DSP Group, Inc. (NASDAQ: DSPG), a leading global provider of wireless chipset solutions for converged communications, (iii) Athersys, Inc. (NASDAQ: ATHX), a biotechnology company engaged in the discovery and development of therapeutic product candidates designed to extend and enhance the quality of human life, and (iv) Xyratex Limited (NASDAQ: XRTX), a leading supplier of data storage technologies. He previously served on the Boards of Directors of (i) Phoenix Technologies, Inc. (NASDAQ: PTEC), a supplier of the basic input output system for the personal computer industry, from November 2009 until its sale in November 2010, (ii) iPass, Inc. (NASDAQ: IPAS), a leading global provider of mobility services for Enterprises and Carriers from June 2009 to June 2013, and (iii) MIPS Technologies, Inc. (NASDAQ: MIPS), a leading provider of industry standard processor architectures and cores from November 2011 until its sale in February 2013. He also served as the Chairman of the Board of the New Jersey chapter of the Young Presidents Organization in 2010 and 2011. He received a BA degree from Emory College, and an MBA from Harvard Business School. Mr. Traub has over 20 years of senior management, corporate governance, turnaround and transactional experience with various public and private companies. His wealth of executive management and board experience and corporate governance awareness from his experience as a senior executive of public companies and his current and past service as a director allows him to provide valuable advice and guidance to our Board.
Director Independence

The Board has determined that all of its current members and the nominees for election at the Annual Meeting, other than Mr. Gardner, meet the criteria for independence set forth in the NASDAQ Listing Rules and the Company’sCompany's Corporate Governance Guidelines. Mr. Gardner does not qualify as independent because hishe is a Vitesse employee. Our Corporate Governance Guidelines are posted on our website at www.vitesse.com under “Investors —- Corporate Governance.”

In making its determination, our Board considered the objective tests and the subjective tests for determining who is an “independent director” under the NASDAQ Listing Rules. The subjective test states that an independent director must be a person who lacks a relationship that, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In assessing independence under the subjective test, our Board took into account the standards in the objective tests, and reviewed and discussed additional information provided by the directors and the Company with regard to each director’sdirector's business and personal activities as they may relate to us and our management for the three year period preceding the date of determination.determination, including the circumstances leading to Messrs. Frey and Traub's nominations for election to the Board at the 2013 Annual Meeting which occurred at the request of Raging Capital Fund, LP ("the Fund"), as well as the Fund's compensation of Mr. Traub for his service on the Board as disclosed in the Fund's filings with the SEC. Based on all of the foregoing, as required by NASDAQ rules, our Board made a subjective determination as to each independent director that no relationships existsexist which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

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The Board and Board Committees

Board of Directors

The Board held a total of nine13 meetings during fiscal year 2011.2013. Each of our incumbent directors attended at least 75 percent of the aggregate of all meetings of theour Board and the committees of theour Board upon which such director served in fiscal year 2011.2013. Under our Corporate Governance Guidelines, theour Board is required to hold an executive session at each meeting of theour Board at which employee directors are not present.

The

Our Board has been chaired by Mr. Rogas since December 2006. As chairman of theour Board, Mr. Rogas also serves as our Lead Director. The Board has elected to maintain a leadership structure with an independent director chairman, elected by vote of the independent directors, because we believe that, at this time, our Company and its stockholders are best served by having an independent chairman convene, establish, after consultation with management, set agenda items for and preside over meetings of theour Board and executive sessions of the independent directors. We further believe that our corporate governance principles and policies ensure that strong and independent directors will continue to effectively oversee our management and key issues related to long-range business plans, strategic issues, risks and integrity.


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During fiscal year 2011, the2013, our Board had three standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee.

Our Board also maintained a Strategic Advisory Committee as an ad hoc committee of our Board with an indefinite term.

Audit Committee

The Audit Committee, which consists of Messrs. Hugar, HansonJarvis and Rogas, has been chaired by Mr. Hugar since December 9, 2009. All of the members of the Audit Committee are “independent” as defined under rules promulgated by the SEC and meet the NASDAQ Listing Rules criteria for independence. TheOur Board has determined that Mr. Hugar is an “audit committee financial expert” as that term is defined in Item 407(d)(5) of Regulation S-K. Among other things, the Audit Committee assists our Board of Directors in its oversight of the integrity of our financial statements, the qualifications and independence of our independent auditors, the performance of our internal audit function, compliance with legal and regulatory requirements, our disclosure controls, and our systems of internal controls. The Audit Committee held ninesix meetings during fiscal year 2011.2013. A copy of the Audit Committee charter is available on our website at www.vitesse.com under “Investors —- Corporate Governance.”

Compensation Committee

The Compensation Committee, which consists of Messrs. Lyon, LaRosaHugar, Jarvis and Rogas,Traub, has been chaired by Mr. LyonJarvis since December 9, 2009.  Mr. Lyon and Mr. Rogas have served on this committee since December 9, 2009, and Mr. LaRosa has served on this committee since August 11, 2010.March 2013. The Compensation Committee, among other things, reviews and approves our executive compensation policies and programs, and grants stock options and other equity awards to our employees, including officers, pursuant to our stock incentive plans. See “Executive Officers and Executive Compensation—Compensation“Compensation Discussion and Analysis” and “Director“Proposal One - Election of Directors -Director Compensation” below for a description of our processes and procedures for the consideration and determination of executive and director compensation. The Compensation Committee held eight meetings during fiscal year 2011.2013. A copy of the Compensation Committee charter is available on our website at www.vitesse.com under “Investors —- Corporate Governance.”

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Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee, which consists of Messrs. Frey, Hanson Hugar and LaRosa,Rogas, has been chaired by Mr. Hanson since June 29, 2009.  Mr. Hugar has served on this committee since December 9, 2009 and Mr. LaRosa has served on this committee since August 11, 2010. The Nominating and Corporate Governance Committee, among other things, assists theour Board by making recommendations to theour Board on matters concerning director nominations and elections, board committees and corporate governance. The Nominating and Corporate Governance Committee held foureight meetings during fiscal year 2011.2013. A copy of the Nominating and Corporate Governance Committee charter is available on our website at www.vitesse.com under “Investors —- Corporate Governance.”

Strategic Advisory Committee
The Board forms ad hoc committees from time to time to assist our Board in fulfilling its responsibilities with respect to matters that are the subject of the ad hoc committee's mandate. During fiscal year 2013, the Board maintained a Strategic Advisory Committee to assist our Board by making recommendations on transactions and initiatives that the committee believes are reasonably likely to maximize stockholder value. The Strategic Advisory Committee has been chaired by Mr. Rogas since its formation in fiscal year 2012, and currently consists of Messrs. Frey, Hanson, Hugar, Jarvis, Rogas and Traub.
Corporate Governance Guidelines

The Company maintains a set of Corporate Governance Guidelines, which can be found on our website at www.vitesse.com under “Investors —- Corporate Governance.” The Corporate Governance Guidelines cover a range of governance related matters, including requirements that theour Board maintain an independent Chairman of the Board, and that at least three fourths of theour Board andas well as the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee consist of independent members.

The Corporate Governance Guidelines also provide that no director may serve on the board of more than three other public companies while serving on Vitesse's Board. Our Board waived this guideline with respect to Mr. Traub, who presently serves on the board of four other public companies. Additionally, the Corporate Governance Guidelines provide that the Board should not nominate any incumbent director or candidate who has already attained the age of 72, unless the age limitation is waived by a unanimous vote of independent directors. Our Board waived this guideline with respect to Mr. Rogas’ nomination for election at the Annual Meeting.


8


Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics for members of theour Board, our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Controller and persons performing similar functions, and all other officers and employees of the Company and its consolidated subsidiaries. A copy of this Code is posted on our website at www.vitesse.com under “Investors —- Corporate Governance.” We intend to disclose any amendment to, or waiver from, the provisions of this Code on our website at www.vitesse.com under “Investors —- Corporate Governance.”

Board’s

Board's Role in Risk Oversight

Our management team is responsible for identifying, assessing and managing the material risks facing our Company. The Board’sOur Board's role in risk oversight includes receiving regular updates from management on areas of material risks and key strategies and initiatives. TheOur Board also participates in a review of the Company’sCompany's annual operating plan, which includes the identification of the most significant risks facing our business and evaluation of how the Company’sCompany's corporate strategies align to manage those risks. While theour Board is ultimately responsible for risk oversight, each committee assists theour Board in fulfilling its oversight responsibilities. The Audit Committee oversees management of financial risks. The Compensation Committee provides oversight of the Company’sCompany's compensation policies and practices including risks associated with executive compensation. The Nominating and Corporate Governance Committee manages risks associated with corporate governance, including the independence of Board members, Board composition, and policies and procedures such as our Code of Business Conduct and Ethics and Corporate Governance Guidelines, used to promote ethical conduct and compliance with law.

The full Board has evaluated Vitesse’sVitesse's overall compensation policies and practices for its employees to determine whether such policies and practices create incentives that can affect Vitesse’sVitesse's risk and management of that risk, and has further assessed whether any risks arising from these policies and practices are reasonably likely to have a material adverse effect on us. TheOur Board has concluded that the risks arising from our policies and practices are not reasonably likely to have a material adverse effect on us.

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The Compensation Committee and theour Board, in connection with their assessment of performance criteria for fiscal year 2011,2013, concluded that while the criteria or targets reward prudent risk-taking in support of our objectives, they do not encourage or promote inappropriate risk-taking by the participants.

Attendance at Annual Meeting of Stockholders by Directors

It is the policy of the Company that, absent extraordinary circumstances, each member of theour Board shall attend our Annual Meeting of Stockholders. All of our Board members attended the last year’syear's Annual Meeting.

Meeting of Stockholders.

Compensation Committee Interlocks and Insider Participation

During

Messrs. Hugar, Jarvis, LaRosa, Lyon, Rogas and Traub were members of the Compensation Committee during fiscal year 2011, G. Grant2013 (Messrs. LaRosa, Lyon G. William LaRosa and Edward Rogas Jr. served onleft the Compensation Committee.committee and Messrs. Hugar, Jarvis and Traub joined the committee in March 2013). None of the committee members has ever served as an officer of Vitesse. None of the committee members served as an employee of Vitesse during fiscal year 20112013 or had any relationship requiring disclosure by us under Item 404 of Regulation S-K. During fiscal year 2011,2013, none of our executive officers served on the compensation committee (or equivalent), or the board of directors, of another entity whose executive officer(s) served on our Compensation Committee or Board of Directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers, directors, and persons who own beneficially more than 10 percent of a registered class of our equity securities to file reports of ownership and changes in ownership within specified periods with the SEC. To our knowledge, based solely on our review of the copies of Section 16(a) forms required to be furnished to us with respect to fiscal year 20112013 and written representations that no other reports were required, we believe that our executive officers, directors, and greater than 10 percent stockholders complied with the Section 16(a) reporting requirements during fiscal year 2011, except as follows: Columbia Pacific Opportunity Fund, L.P., Columbia Pacific Advisors, LLC, Alexander B. Washburn, Daniel R. Baty, Stanley L. Baty and Brandon D. Baty jointly filed a Schedule 13G/A with the SEC on June 10, 2011, in which they reported beneficial ownership of 11.2 percent of our Common Stock.  None of these beneficial owners of greater than 10% of our common stock has filed a Form 3 with the SEC.

2013.

Process for Recommending Candidates for Election to theour Board of Directors

The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders. A stockholder that desires to recommend a candidate for election to theour Board must direct the recommendation in writing to us at our principal offices (Attention: Corporate Secretary) and must include the candidate’scandidate's name, age, home and business contact

9


information, principal occupation or employment, the number of shares beneficially owned by the nominee, whether any hedging transactions have been entered into by the nominee or on his or her behalf, information regarding any arrangements or understandings between the nominee and the stockholder nominating the nominee or any other persons relating to the nomination, a written statement by the nominee acknowledging that the nominee will owe a fiduciary duty to the Company, if elected, and any other information required to be disclosed about the nominee if proxies were to be solicited to elect the nominee as a director. For a stockholder recommendation to be considered by the Nominating and Corporate Governance Committee as a potential candidate at an Annual Meeting, nominations must be received on or before the deadline for receipt of stockholder proposals for such meeting. In the event a stockholder decides to nominate a candidate for director and solicits proxies for such candidate, the stockholder will need to follow the rules set forth by the SEC and in our bylaws. See “Information Concerning Solicitation and Voting -− Deadline for Receipt of Stockholder Proposals.”

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The Nominating and Corporate Governance Committee’sCommittee's criteria and process for evaluating and identifying the candidates that it approves as director nominees are as follows:

·

The committee regularly reviews the current composition and size of theour Board.

·

The committee reviews the qualifications of any candidates who have been properly recommended by a stockholder, as well as those candidates who have been identified by management, individual members of theour Board or, if the committee determines, a search firm. Such review may, in the committee’scommittee's discretion, include a review solely of information provided to the committee or may also include discussions with persons familiar with the candidate, an interview with the candidate or other actions that the committee deems proper.

·

The committee evaluates the performance of theour Board as a whole and evaluates the performance and qualifications of individual members of theour Board eligible for re-election at an Annual Meeting of Stockholders.

·

The committee considers the suitability of each candidate, including the current members of theour Board, in light of the current size and composition of theour Board. Except as may be required by rules promulgated by the NASDAQ Stock Market or the SEC, it is the committee’s belief that there are no specific minimum qualifications that must be met by any candidate for theour Board, nor are there specific qualities or skills that are necessary for one or more of the members of theour Board to possess. In selecting new directors of the Company, consideration will be given to each individual director’s (i) personal qualities, experiences, and abilities; (ii) the collective skills of all of the directors, taking into account the responsibilities of theour Board; and (iii) qualifications imposed by law and regulation. As stated in the Company’s Corporate Governance Guidelines, the Company has the following expectations of its directors and director candidates:

·

Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the stockholders;

·

Directors must have an inquisitive and objective perspective, practical wisdom and mature judgment;

·

Directors should represent diverse experiences at a strategy/policy setting level, and should be people who have high-level managerial experience, and who are accustomed to dealing with complex problems;

·

Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on theour Board for an extended period of time;

·

Directors should possess a willingness to challenge and stimulate management and demonstrate the ability to work as part of a team in an environment of trust; and

·

Directors should offer their resignation in the event of any significant change in their personal circumstances, including a change in their principal job responsibilities.

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·The committee may, from time-to-time, establish additional qualifications for directors as it deems appropriate.

·

In evaluating the qualifications of the candidates, the committee considers many factors, including, issues of character, judgment, independence, age, expertise, diversity of experience, length of service, other commitments and the like. However, theour Board has not adopted a formal diversity policy. The committee evaluates such factors, among others, and does not assign any particular weighting or priority to any of these factors. The committee considers each individual candidate in the context of the current perceived needs of theour Board as a whole.

·


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After such review and consideration, the committee recommends the slate of Directordirector nominees to the full Board for its approval.

The Nominating and Corporate Governance Committee will endeavor to notify, or cause to be notified, all Directordirector candidates, including those recommended by a stockholder, of its decision as to whether to nominate such individual for election to theour Board.

Stockholder Communication with theour Board of Directors

Any stockholder may contact any of our Directorsdirectors by writing to them by mail, c/o our Corporate Secretary, at our principal executive offices, the address of which appears on the cover of this proxy statement.

Any stockholder may report to us any complaints regarding accounting, internal accounting controls or auditing matters. Any stockholder who wishes to so contact us should send such comments to the Audit Committee, c/o James H. Hugar, at our principal executive offices, the address of which appears on the cover of this proxy statement.

Any stockholder communications sent to theour Board will first go to our Corporate Secretary, who will log the date of receipt of the communication as well as the identity and contact information of the correspondent in our stockholder communications log. After logging the communication, our Corporate Secretary will forward the communication to the Chairman of theour Board (in the case of communications directed to the whole Board) or to the applicable individual Director(s)director(s) addressed in the correspondence.

In the case of any complaints, the appropriate committee of theour Board will review and, if appropriate, investigate the complaint in a timely manner. In the case of accounting or auditing related matters, a member of the Audit Committee, or the Audit Committee as a whole, will review the summary of the communication, the results of the investigation, if any, and, if appropriate, the draft response. The summary and response will be in the form of a memo, which will become part of the stockholder communications log that the Corporate Secretary maintains with respect to all stockholder communications.

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Director Compensation

The general policy of theour Board is that compensation for non-employee directors should be a mix of cash and equity-based compensation. We do not pay management Directorsdirectors for Board service in addition to their regular employee compensation. The Compensation Committee, which consists solely of independent directors, has the primary responsibility for reviewing and considering any revisions to director compensation. Our Board reviews the Compensation Committee’sCommittee's recommendations and determines the amount and type of director compensation.

The Compensation Committee can engage the services of outside advisers, experts and others to assist the committee. During fiscal year 2011,2012, the Compensation Committee did not use an outside adviser to assist in setting director compensation.  The fiscal year 2011 compensation package for Directors is the same as the fiscal year 2010 compensation package for Directors, which was adopted on April 1, 2010, after consultation withengaged independent compensation consultant, Connell & Partners,Radford, an Aon Hewitt Company, to review director compensation and make recommendations to the Compensation Committee for changes in director compensation for fiscal year 2013.
Effective October 1, 2012, on the recommendation of the Compensation Committee, our Board of Directors modified non-employee director compensation to provide for a divisionfixed amount of Gallagher Benefit Services (formerly DolmatConnell & Partners).

cash compensation for service on our Board and on each of our Board's standing committees, and to provide for grants of initial and annual RSU awards to be for a fixed number of shares. Prior to these changes, non-employee director compensation included a mix of fixed annual cash retainers and variable per meeting cash fees, and initial and annual equity awards determined based on a fixed dollar amount that resulted in the issuance of restricted stock units (RSUs) for a number of shares determined based on Vitesse's stock price at the time of the award.

Our Board may continue to provide for payment of per meeting cash fees for service on ad hoc committees of our Board established from time-to-time, and determined to pay such fees for service on the Strategic Advisory Committee. Our Board also authorized an additional grant of RSUs for service on the Strategic Advisory Committee.
Non-employee director compensation consists of the following elements:

·

Annual retainer of $30,000;

·$40,000;

Chairperson of the Board —− additional retainer fee of $20,000;

·$25,000;

Committee chairpersons —− additional retainer fees of $20,000 for the Audit Committee, $12,000$15,000 for the Compensation Committee, and $8,000$10,000 for the Nominating and Corporate Governance Committee;

·


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Committee membership (excluding chairpersons) —− additional retainer fees of $8,000$10,000 for the Audit Committee, $6,000$8,000 for the Compensation Committee, and $4,000$5,000 for the Nominating and Corporate Governance Committee;

·Board meeting fees — $1,500 for attendance at each in-person Board meeting and $750 for attendance at each scheduled conference call Board meeting;

·Committee meeting fees —$1,000 for attendance at each in-person committee meeting and $500 for attendance at each scheduled conference call committee meeting; and

·

Annual equity compensation $55,000 in the form of restricted stock units (RSUs),9,500 RSUs, which RSUs are automatically granted on the second Monday in January of the applicable year and vest fully on the first anniversary of the grant date; and
Strategic Advisory Committee membership fees − $1,000 for attendance at each in-person meeting and $500 for attendance at each scheduled conference call meeting, and 4,000 RSUs to be automatically granted on the second Monday in January of the applicable year and vest fully on the first anniversary of the grant date.


A non-employee director also is entitled to receive, upon initial election or appointment to our Board, a one-time award of equity compensation of 14,000 RSUs to be granted on the date of the director's appointment or election to our Board and to vest in three annual installments of 33% on the first three anniversaries of the grant date.
If a non-employee Directordirector is appointed to theour Board in between Annual Meetings of Stockholders, the annual cash compensation payable to that Directordirector is pro-rated for the remaining portion of the term in which the director is appointed to theour Board, and the first award of $55,000 in annual equity compensation to be automatically granted to the director on the second Monday in January of the year following the Director’sdirector's appointment is pro-rated based on the length of the Director’sdirector's service on theour Board since the date of the previous year’syear's annual award of equity compensation.

Upon a non-employee Director’s initial election or appointment to the Board, the director also receives a one-time award of equity compensation of $100,000 in the form of RSUs, which RSUs are granted on the date of the Director’s appointment or election to the Board and vest in three annual installments of 33% on the first three anniversaries of the grant date.

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The following table details the total compensation earned by our non-employee Directorsdirectors in fiscal year 2011.

2013. 

Director Summary Compensation

Director

 

Fees Earned
or Paid in
Cash

 

Stock
Awards(1)(2)

 

Total

 

 

 

 

 

 

 

 

 

Steven P. Hanson (3)(8)

 

$

67,746

 

$

55,000

 

$

122,746

 

James H. Hugar (4)(8)

 

$

75,750

 

$

55,000

 

$

130,750

 

G. William LaRosa (5)(8)

 

$

58,246

 

$

22,916

 

$

81,162

 

G. Grant Lyon (6)(8)

 

$

53,750

 

$

55,000

 

$

108,750

 

Edward Rogas, Jr. (7)(8)

 

$

86,746

 

$

55,000

 

$

141,746

 

(1)

Director 
Fees Earned
or Paid in
Cash
 
Stock
Awards(1)(2)
 Total
Matthew B. Frey (3)(11) $32,250
 $29,400
 $61,650
Steven P. Hanson (4)(11) 62,500
 30,105
 92,605
James H. Hugar (5)(11) 74,000
 30,105
 104,105
Scot B. Jarvis (6)(11) 65,750
 22,579
 88,329
G. William LaRosa (7)(11) 27,000
 —
 27,000
G. Grant Lyon (8)(11) 28,000
 —
 28,000
Edward Rogas, Jr. (9)(11) 88,000
 30,105
 118,105
Kenneth H. Traub (10)(11) 35,000
 29,400
 64,400
  $412,500
 $171,694
 $584,194

(1)Represents awards of restricted stock units, each of which entitles the director to receive one share of our Common Stock at the time of vesting, without the payment of an exercise price or other cash consideration.
(2)
These amounts represent the grant date fair value of the stock awards granted in fiscal year 2013 determined in accordance with ASC Topic 718. These amounts may not correspond to the actual value eventually realized by the director, which depends in part on the market value of our Common Stock in future periods. Assumptions used in calculating these amounts are set forth in the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended September 30, 2013.
(3)Mr. Frey’s compensation was prorated for a partial year of service; he joined the Board as of the 2013 Annual Meeting of stockholders on March 7, 2013. Mr. Frey served as a member of the Nominating and Corporate Governance Committee and Strategic Advisory Committee during fiscal year 2013.
(4)
Mr. Hanson served as Chairman of the Nominating and Corporate Governance Committee and a member of the Audit Committee and Strategic Advisory Committee during fiscal year 2013.
(5)
Mr. Hugar served as Chairman of the Audit Committee and a member of the Compensation Committee, Nominating and Corporate Governance Committee and Strategic Advisory Committee during fiscal year 2013.
(6)
Mr. Jarvis served as Chairman of the Compensation Committee and a member of the Audit Committee and Strategic Advisory Committee during fiscal year 2013.

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(7)
Mr. LaRosa’s compensation was prorated for a partial year of service; he left the Board as of the 2013 Annual Meeting of stockholders on March 7, 2013. Mr. LaRosa served as a member of the Compensation Committee, Nominating and Corporate Governance Committee and Strategic Advisory Committee during fiscal year 2013.
(8)
Mr. Lyon’s compensation was prorated for a partial year of service; he left the Board as of the 2013 Annual Meeting of stockholders on March 7, 2013. Mr. Lyon served as Chairman of the Compensation Committee and a member of the Strategic Advisory Committee during fiscal year 2013.
(9)
Mr. Rogas served as Chairman of our Board and Chairman of the Strategic Advisory Committee and as a member of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee during fiscal year 2013.
(10)Mr. Traub’s compensation was prorated for a partial year of service; he joined the Board as of the 2013 Annual Meeting of stockholders on March 7, 2013. Mr. Traub served as a member of the Compensation Committee and Strategic Advisory Committee during fiscal year 2013.
(11)On January 14, 2013, each of Messrs. Hanson, Hugar, LaRosa, Lyon, and Rogas received an RSU award for 13,500 shares of Common Stock and Mr. Jarvis received an RSU award for 10,125 shares of Common Stock, which RSU awards vest in full on the first anniversary of the date of grant. On March 7, 2013, Messrs. Frey and Traub received initial RSU awards for 14,000 shares of Common Stock, which vests in three equal installments on the first, second and third anniversaries of the date of grant.
Stock Ownership Guidelines for Non-Employee Directors
The Board of Directors has established stock ownership guidelines for non-employee directors. Each non-employee director is expected to own Vitesse Common Stock-based holdings equal in value to at least three times such director's annual cash retainer for service on our Board, excluding retainers and other amounts paid for service as Chairperson, Lead Director or on committees of our Board. Non-employee directors may count toward these guidelines the value of (i) shares they or their immediate family members own directly or in trust, including the vested portion of shares issued as restricted stock awards, and (ii) the vested portion of restricted stock units eachheld by them and for which shares of whichCommon Stock have not been issued, including shares that have not been issued due to a recipient's election to defer the settlement date for such vested restricted stock units. Each non-employee director is expected to achieve this level of ownership by the later of August 9, 2015 or the third anniversary of his or her election to our Board of Directors.
The share ownership of the non-employee directors serving at September 30, 2013 is reported below, and is based on the closing market price of our common stock (which was $3.04 on September 30, 2013):
DirectorCurrent Ownership Guideline as a Multiple of Annual Cash Retainer Fee Ownership as a Multiple of Annual Cash Retainer Fee as of September 30, 2013
Matthew B. Frey3 —
Steven P. Hanson3 5
James H. Hugar3 6
Scot B. Jarvis3 5
Edward Rogas, Jr.3 6
Kenneth H. Traub3 5

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PROPOSAL TWO

APPROVAL OF
AMENDMENT TO 2011 EMPLOYEE STOCK PURCHASE PLAN

The Board of Directors has approved an amendment to the Company’s 2011 Employee Stock Purchase Plan (the “ESPP”) to increase the number of shares of common stock available for purchase under the plan from 2.5 million shares to 5.5 million shares. We are asking stockholders to approve the amendment to the ESPP. The ESPP allows employees to purchase shares of our common stock at a discount using payroll deductions. The ESPP entitles employees in the DirectorUnited States to receive special tax treatment provided by the Internal Revenue Code (the “Code”). A copy of the ESPP, as amended, is attached to this proxy statement as Appendix A. The description below is a summary and not intended to be a complete description of the ESPP. Please read the ESPP for more detailed information.
Description of the Employee Stock Purchase Plan
The purpose of the ESPP is to provide employees of the Company and those subsidiaries designated to participate in the ESPP with an opportunity to purchase shares of common stock. The ESPP has two portions-one portion for employees in the United States and one portion for international employees.
The portion of the ESPP for employees in the United States is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of such portion of the ESPP, accordingly, will be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.
A total of 2.5 million shares of common stock originally were available for issuance and purchase under the ESPP when it was approved by stockholders in 2011. At December 23, 2013, 726,014 shares remained available for issuance and purchase under the ESPP, and we anticipate issuing approximately 368,000 additional shares on the next purchase date scheduled to occur on January 31, 2014. Accordingly, following the next purchase date, there will only be approximately 358,014 shares of common stock available for issuance under the ESPP.
If the amendment to the ESPP is approved, an additional 3.0 million shares of common stock will be available for issuance and purchase under the ESPP. Of these additional shares, the number of shares of common stock available for issuance and purchase under the portion of the ESPP for United States employees will be 3.0 million shares of common stock less the number of shares of common stock used for the employee stock purchase programs for employees outside the United States. If any purchase right terminates for any reason without having been exercised, the shares of common stock not purchased under such purchase right shall again become available for the ESPP.
The ESPP is administered by the Compensation Committee of our Board. The Compensation Committee has the full and exclusive discretionary authority to construe and interpret the ESPP and the rights granted under it, to designate from time-to-time which subsidiaries of the Company will participate in the ESPP, to establish rules and regulations for the administration of the ESPP, and to amend the ESPP to satisfy applicable laws, to obtain any exemption under such laws or to reduce or eliminate any unfavorable legal, accounting or other consequences. The Compensation Committee also may adopt special rules for employees of the Company’s international subsidiaries to conform to the particular laws and practices of the countries in which such employees reside.
Eligibility
Generally, all employees of the Company and its designated subsidiaries whose customary employment is for more than 20 hours per week and who have completed at least six months of service with the Company or any subsidiary are eligible to participate in the ESPP. Employees of designated subsidiaries outside the United States may have different eligibility requirements as determined appropriate by the Compensation Committee, for example, to accommodate local requirements and practices. However, any employee who would own or have options to acquire five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any subsidiary is excluded from participating in the ESPP. As of November 29, 2013, there were approximately 230 employees eligible to participate in the ESPP.
Purchase of Shares of Common Stock
Pursuant to procedures established by the Compensation Committee, eligible employees may elect to have a portion of their compensation used to purchase shares of common stock. Purchase periods are established and purchases of shares of common stock are made on the last trading day of the purchase period with compensation amounts withheld from employees during the

14


purchase period. Pursuant to procedures established by the Compensation Committee, employees may withdraw with respect to a future purchase period. If an employee withdraws from a future purchase period, such employee may not recommence withholding of compensation for the purchase of shares of common stock until the following purchase period. The Compensation Committee has established a purchase period under the ESPP of six months, ending on January 31 and July 31.
On each purchase date (the last trading day of each purchase period), any amounts withheld from an employee’s compensation during the applicable purchase period for purposes of the ESPP will be used to purchase the greatest number of whole shares of common stock that can be purchased with such amounts. The purchase price for a share of our Common Stockcommon stock will be set, unless the Compensation Committee determines higher percentages, at the lesser of (i) eighty-five percent (85%) of the fair market value of a share of common stock on the first trading day of the purchase period or (ii) eighty-five percent (85%) of the fair market value of a share of common stock on the purchase date. For purposes of the ESPP, “fair market value” generally means the closing sales price of a share of common stock for the day. As of December 18, 2013 the closing sales price of a share of common stock as reported on the NASDAQ Global Market was $2.72 per share.
The Code limits the aggregate fair market value of the shares of common stock (determined as of the beginning of the purchase period) that any employee in the United States may purchase under the ESPP during any calendar year to $25,000. In addition, an employee may purchase a maximum number of shares determined by dividing $25,000 by the fair market value of the shares on the first day of the applicable offering period and the Compensation Committee may further limit the number of shares that an employee may purchase in any purchase period. Employees in the United States must notify the Company if shares of common stock are disposed of in a disposition that does not satisfy the holding period requirements of Section 423 of the Code (generally, as discussed below, two years from the beginning of the applicable purchase period).
The Company pays the administrative costs associated with the operation of the ESPP. The employees pay any brokerage commissions that result from their sales of shares of common stock.
The Company may deduct or withhold or require employees to pay to the Company any federal, state, local and other taxes the Company is required to withhold with respect to any event arising as a result of the ESPP. The Company may also deduct those amounts from the employees’ wages or compensation.
Effect of Certain Corporate Events
The ESPP provides for adjustment of the number of shares of common stock which may be granted under the ESPP as well as the purchase price per share of common stock and the number of shares of common stock covered by each purchase right for any increase or decrease in the number of shares of common stock resulting from a stock split, reverse stock split, stock dividend, extraordinary cash dividend, combination or reclassification of the common stock or recapitalization, reorganization, consolidation, split-up, spin-off or any other increase or decrease in the number of shares of common stock effected without receipt of consideration by the Company.
In the event of any corporate transaction, the Compensation Committee may make such adjustment it deems appropriate to prevent dilution or enlargement of rights in the ESPP, in the number, class of or price of shares of common stock available for purchase under the ESPP and in the number of shares of common stock which an employee is entitled to purchase and any other adjustments it deems appropriate. In the event of any such transaction, the Compensation Committee may elect to have the purchase rights under the ESPP assumed or such purchase rights substituted by a successor entity, to set an earlier purchase date, prior to the consummation of such corporate transaction, to terminate all outstanding purchase rights either prior to their expiration or upon completion of the purchase of shares of common stock on the next purchase date, or to take such other action deemed appropriate by the Compensation Committee.
Amendment and Termination
The Board may amend the ESPP at any time, provided such amendment does not cause rights issued under the portion of the ESPP for United States employees to fail to meet the requirements of Section 423 of the Code. Moreover, any amendment for which stockholder approval is required under Section 423 of the Code or any securities exchange on which the shares are traded must be submitted to the stockholders for approval. The Board may suspend or terminate the ESPP any time.
U.S. Federal Income Tax Consequences
The following discussion is only a brief summary of the United States federal income tax consequences to the Company and employees under the portion of the ESPP applicable to employees in the United States. It is based on the Code as in effect as of the date of this proxy statement. The discussion relates only to United States federal income tax treatment; state, local, foreign,

15


estate, gift and other tax consequences are not discussed. The summary is not intended to be a complete analysis or discussion of all potential tax consequences.
The amounts deducted from an employee’s pay pursuant to the ESPP will be included in the employee’s compensation and be subject to federal income and employment tax. Generally, no additional income will be recognized by the employee either at the beginning of the purchase period when purchase rights are granted pursuant to the ESPP or at the time the employee purchases shares of common stock pursuant to the ESPP.
If the shares of common stock are disposed of at least two years after the first day of the purchase period to which the shares of common stock relate and at least one year after the shares of common stock were acquired under the ESPP (the “Holding Period”), or if the employee dies while holding the shares of common stock, the employee (or in the case of the employee’s death, the employee’s estate) will recognize ordinary income in the year of disposition or death in an amount equal to the lesser of (a) the excess of the fair market value of the shares of common stock on the first trading day of the purchase period over the purchase price of the share of common stock, or (b) the excess of fair market value of the shares of common stock at the time of vesting, withoutsuch disposition over the payment of an exercisepurchase price or other cash consideration.

(2)These amounts represent the grant date fair value of the shares of common stock.

If the shares of common stock awards grantedare sold or disposed of (including by way of most gifts) before the expiration of the Holding Period, the employee will recognize ordinary income in fiscalthe year 2011 determinedof sale or disposition in accordance with ASC Topic 718.  These amounts may not correspondan amount equal to the actualexcess of the sales price over the purchase price. Even if the shares of common stock are sold for less than their fair market value eventually realized by the Director, which depends in part on the market valuepurchase date, the same amount of our Common Stock in future periods.  Assumptions used in calculating these amounts are set forth in the Notes to Consolidated Financial Statementsordinary income is included in our annual report on Form 10-K forincome.
In addition, the year ended September 30, 2011.

(3)Mr. Hanson served as Chairmanemployee generally will recognize capital gain or loss in an amount equal to the difference between the amount realized upon the sale of the Nominating and Corporate Governance Committee and a member of the Audit Committee during fiscal year 2011.

(4)Mr. Hugar served as Chairman of the Audit Committee and a member of the Nominating and Corporate Governance Committee during fiscal year 2011.

(5)Mr. LaRosa served as a member of the Compensation Committee and the Nominating and Governance Committee during fiscal year 2011.

(6)Mr. Lyon served as Chairman of the Compensation Committee during fiscal year 2011.

(7)Mr. Rogas served as Chairman of the Board and as a member of the Audit Committee and the Compensation Committee during fiscal year 2011.

(8)On January 10, 2011, each of Messrs. Hanson, Hugar, Lyon and Rogas received an RSU award for 13,253 shares of common stock and Mr. LaRosa received a pro-rated RSU award for 5,522the employee’s tax basis in the shares of common stock.  Each RSUstock (generally, the amount the employee paid for the shares of common stock plus the amount, if any, taxed as ordinary income). Capital gain or loss recognized on a disposition of shares of common stock will vestbe long-term capital gain or loss if the employee’s holding period for the shares of common stock exceeds one year. The purchase date begins the holding period for determining whether the gain or loss realized is short or long term.

If the employee disposes of shares of common stock purchased pursuant to the ESPP after the Holding Period, the Company will not be entitled to any federal income tax deduction with respect to the shares of common stock issued under the ESPP. If the employee disposes of such shares of common stock prior to the expiration of the Holding Period, the Company generally, will be entitled to a federal income tax deduction in fullan amount equal to the amount of ordinary income recognized by the employee as a result of such disposition.
New Plan Benefits
Participation in the ESPP is entirely within the discretion of the eligible employees. Because the Company cannot presently determine the participation levels by employees, the rate of contributions by employees and the eventual purchase price under the ESPP, it is not possible to determine the value of benefits which may be obtained by executive officers and other employees under the ESPP. Non-employee directors are not eligible to participate in the ESPP.
The affirmative vote of the holders of a majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on January 10, 2012.

14the resolution is required for approval of the amendment to the ESPP. The Board has unanimously approved the amendment to the ESPP and believes it to be in the best interests of the Company and the stockholders.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT TO THE 2011 EMPLOYEE STOCK PURCHASE PLAN.


16



PROPOSAL TWO
THREE

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), we are required to include in this proxy statement and present at the Annual Meeting a non-binding stockholder vote to approve the compensation of our executives, as described in this proxy statement, pursuant to the compensation disclosure rules of the SEC. This proposal, commonly known as a “say on pay” vote, gives stockholders the opportunity to endorse or not endorse the compensation of our executives as disclosed in this proxy statement. This proposal will be presented at the Annual Meeting as a resolution in substantially the following form:

RESOLVED, that the stockholders approve the compensation of the Company’sCompany's executives, as disclosed in the Compensation Discussion and Analysis, the compensation tables and related narrative disclosure in the Company’sCompany's proxy statement for the Annual Meeting.

This vote will not be binding on our Board of Directors and may not be construed as overruling a decision by theour Board or creating or implying any change to the fiduciary duties of theour Board. The vote will not affect any compensation previously paid or awarded to any executive. The Compensation Committee and the Board may, however, take into account the outcome of the vote when considering future executive compensation arrangements.

The purpose of our compensation programs is to attract and retain experienced, highly qualifiedhighly-qualified executives critical to our long-term success and enhancement of stockholder value.

Required Vote

Endorsement of the compensation of our executive officers will require the affirmative vote of a majority of the shares of Common Stockcommon stock present or represented and entitled to vote at the Annual Meeting with respect to such proposal. See “Information Concerning Solicitation and Voting—Quorum,Voting-Quorum, Abstentions, Broker Non-Votes, Required Votes.”

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” ENDORSEMENT OF THE COMPENSATION OF OUR EXECUTIVE OFFICERS.

15



17



PROPOSAL THREE
ADVISORY VOTE ON THE FREQUENCY OF
AN ADVISORY VOTE ON EXECUTIVE COMPENSATION

Under the Dodd-Frank Act, in addition to providing stockholders with the opportunity to cast an advisory vote on executive compensation, we are required this year to include in this proxy statement and present at the Annual Meeting a non-binding stockholder vote on whether an advisory vote on executive compensation should be held every year, every two years or every three years.

The Board believes that holding an advisory vote on executive compensation every year is the optimal interval for conducting and responding to a “say on pay” vote, so that, stockholders may annually express their views on Vitesse’s executive compensation program.

Stockholders have the opportunity to choose among four options (holding the advisory vote on executive compensation every year, every two years, every three years, or abstaining) and, therefore, stockholders will not be voting to approve or disapprove the Board’s recommendation.

Although this advisory vote on the frequency of the “say on pay” vote is nonbinding, the Board and the Compensation Committee may take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR A “SAY ON PAY” FREQUENCY OF “EVERY YEAR”.

16


PROPOSAL FOUR

RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Audit Committee of the Board has selected BDO USA, LLP, an independent registered public accounting firm, to audit our financial statements for the fiscal year ending September 30, 2012,2014, and recommends that stockholders vote for ratification of such appointment. BDO USA, LLP has audited our financial statements since the fiscal year ended September 30, 2008. Although ratification by stockholders is not required by law, the Audit Committee has determined that it is desirable to request ratification of this selection by the stockholders as a matter of good corporate practice. Notwithstanding its selection, the Audit Committee, in its discretion, may appoint a new independent registered public accounting firm at any time during the fiscal year if the Audit Committee believes that such a change would be in the best interest of Vitesse and its stockholders. If the stockholders do not ratify the appointment of BDO USA, LLP, the Audit Committee may reconsider its selection.

Representatives of BDO USA, LLP are expected to be present at the meetingAnnual Meeting and will be afforded the opportunity to make a statement if they desire to do so. The representatives of BDO USA, LLP are also expected to be available to respond to appropriate questions.


Fees Paid to BDO USA, LLP

The following table sets forth fees for services paid to BDO USA, LLP, our independent registered public accounting firm, for the fiscal years ended September 30, 20112013 and 2010:

 

 

2011

 

2010

 

Audit Fees (1)

 

$

529,069

 

$

899,937

 

Audit-Related Fees (2)

 

13,288

 

—

 

Tax Fees (3)

 

273,090

 

207,175

 

All Other Fees

 

—

 

—

 

Total

 

$

815,447

 

$

1,107,112

 

2012:

(1)Audit fees include the audit of our annual financial statements, the audit of management’s assessment of our internal control over financial reporting and BDO USA, LLP’s audit of our internal control over financial reporting, review of financial statements included in our Form 10-Q quarterly reports, and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years.  This category also includes advice on accounting matters that arose during, or as a result of, the audit or the review of interim financial statements, statutory audits required by non-U.S. jurisdictions and the preparation of an annual “management letter” on internal control matters.

(2)Audit related fees relate to the 401k plan audit for calendar year ended December 31, 2010.

(3)Tax fees consist of tax services for tax compliance and tax preparation plus tax services relating to our global restructuring project which was completed in May 2011.

17

  2013 2012
Audit Fees (1) $683,456
 $589,270
Tax Fees (2) —
 9,744
Total $683,456
 $599,014
(1)Audit fees relate to professional services rendered in connection with the audit of our annual financial statements and the audit of internal controls and the related management assessment of internal controls, quarterly review of financial statements included in our Quarterly Report on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings. For the fiscal years ended September 30, 2013 and 2012, audit fees included $119,767 and $23,438, respectively, of accounting advisory services related to the issuance of a comfort letter in connection with our Company's issuance of common stock and preparation of response to a SEC comment letter.
(2)
Tax fees consist of fees paid in fiscal year 2012 to a BDO USA LLP international firm for tax compliance services in Japan.


Approval Procedures

The Audit Committee, at its sole discretion, pre-approved and reviewed audit and non-audit services performed by our independent registered public accounting firm, as well as the fees charged for such services. Requests for approval are considered at each regularly scheduled Audit Committee meeting or, if necessary, are approved by the unanimous consent of all members of the Audit Committee. In its pre-approval and review of non-audit service fees, the Audit Committee considers, among other factors, the possible effect of the performance of such services on the auditors’auditors' independence. The Audit Committee considered and pre-approved all services rendered during fiscal years 20112013 and 2010.

2012.

Vote Required

The approval of the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2012,2014, will require the affirmative vote of a majority of the shares of Common Stockcommon stock present or represented and entitled to vote at the Annual Meeting with respect to such proposal. See “Information Concerning Solicitation and Voting—Voting - Quorum, Abstentions, Broker Non-Votes, Required Votes.”

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF BDO USA, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

18


18


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table presents information regarding the beneficial ownership of our common stock with respect to:

·

Each person who is known to us to be the beneficial owner of more than 5five percent (5%) of our outstanding Common Stock;

·common stock;

Each of our Directorsdirectors and nominees;

·

Each of our named executive officers; and

·

All of our Directorsdirectors and executive officers as a group.

This information is as of December 5, 2011,23, 2013, except for information on greater than 5five percent (5%) stockholders. Amounts reported under “Number of Shares of Common Stock Beneficially Owned” include the number of shares subject to stock options and RSUs that become exercisable or vest and the number of shares that can be acquired upon conversion of Series B convertible preferred stock and debentures, within 60 days of December 5, 201123, 2013 (which shares are shown in the columns to the right). Unless otherwise indicated, the persons named in this table have sole voting and sole investment power with respect to all shares shown as beneficially owned, subject to community property laws where applicable. Unless otherwise indicated, the address of each person listed is c/o Vitesse Semiconductor Corporation, 741 Calle Plano, Camarillo, California 93012.

 

 

Number of Shares
of Common Stock
Beneficially
Owned (1)

 

Percent
of Class

 

Number of
Shares Subject
to Options
Exercisable
Within 60 Days

 

Number of
Shares Subject
to RSUs That
Vest Within
60 Days

 

Number of Shares
Subject to Series B
Preferred Stock and
Debentures Convertible
Within 60 Days (2)

 

Directors, Nominees and Named Executive Officers:

 

 

 

 

 

 

 

 

 

 

 

Christopher R. Gardner

 

198,165

 

*

 

117,400

 

36,850

 

—

 

Steven P. Hanson

 

28,410

 

*

 

7,750

 

13,253

 

—

 

James H. Hugar

 

42,310

 

*

 

5,750

 

13,253

 

—

 

G. William LaRosa

 

17,253

 

*

 

—

 

5,522

 

—

 

G. Grant Lyon

 

38,310

 

*

 

5,750

 

13,253

 

—

 

Martin S. McDermut

 

22,039

 

*

 

10,416

 

10,416

 

—

 

Martin C. Nuss.

 

40,644

 

*

 

24,950

 

10,050

 

—

 

Steve Perna

 

19,168

 

*

 

7,900

 

3,350

 

—

 

Edward Rogas, Jr.

 

26,560

 

*

 

6,000

 

13,253

 

—

 

Richard C. Yonker

 

—

 

*

 

—

 

—

 

—

 

Directors and officers as a Group (9 persons)

 

432,859

 

1.8

%

185,916

 

119,200

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Than 5% Stockholders:

 

 

 

 

 

 

 

 

 

 

 

Linden Capital, L.P (3).

 

1,425,918

 

5.7

%

—

 

—

 

588,888

 

CNH CA Master Account, L.P.(4) 

 

2,476,333

 

9.2

%

—

 

—

 

2,476,333

 

Whitebox Advisors, LLC (5) 

 

2,535,078

 

9.6

%

—

 

—

 

1,887,234

 

Kopp Investment Advisors, LLC (6) 

 

2,326,759

 

9.5

%

—

 

—

 

—

 

AQR Capital Management, LLC (7)

 

1,429,000

 

5.7

%

—

 

—

 

382,333

 

Aristeia Capital L.L.C. (8) 

 

2,211,111

 

9.0

%

—

 

—

 

—

 

Columbia Pacific Opportunity Fund, L.P. (9)

 

2,744,128

 

11.2

%

—

 

—

 

—

 

ABN AMRO Bank N.V., London Branch (10) 

 

1,187,778

 

4.6

%

—

 

—

 

1,187,778

 

Raging Capital, LP (11)

 

2,006,927

 

8.2

%

—

 

—

 

—

 

New Vernon Investment Management LLC (12)

 

1,282,900

 

5.2

%

—

 

—

 

—

 

  Number of Shares
of Common Stock
Beneficially
Owned (1)(2)		 Percent
of Class (3)		 
Number of
Shares Subject
to Options
Exercisable
Within 60 Days
 Number of
Shares Subject
to RSUs That
Vest Within
60 Days
Directors, Nominees and Named Executive Officers:  
  
  
  
Matthew Frey —
 *
 —
 —
Christopher R. Gardner 609,093
 1% 300,700
 37,500
Steven P. Hanson 80,670
 *
 7,750
 13,500
James H. Hugar 94,206
 *
 5,750
 13,500
Scot B. Jarvis 72,892
 *
 —
 10,125
Martin S. McDermut 269,236
 *
 92,750
 16,250
Dr. Martin C. Nuss 150,795
 *
 69,975
 9,375
Edward Rogas, Jr. 94,856
 *
 6,000
 13,500
Kenneth H. Traub 90,200
 *
 —
 —
Directors and officers as a Group (9 persons) 1,461,948
 2.5% 482,925
 113,750
Greater Than 5% Stockholders:  
  
  
  
Raging Capital Master Fund, Ltd. (4) 10,391,127
 18.0% —
 —
Rima Senvest Management, LLC (5) 5,094,055
 8.8% —
 —
Kopp Investment Advisors, LLC (6) 3,770,319
 6.5% —
 —
Columbia Pacific Opportunity Fund, L.P. (7) 2,945,414
 5.1% —
 —
* Less than 1%.

(1)Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission that deem shares to be beneficially owned by any person who has or shares voting or investment power with respect to such shares.  Shares of Common Stock that presently, or within 60 days of the date of this information, may be acquired by a holder upon exercise of warrants or options or conversion of preferred stock or convertible debt, or that vest under restricted stock units, are deemed outstanding for purposes of computing the percentage ownership of the person holding such securities, but are not deemed outstanding for computing the percentage ownership of any other person.  As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding at December 5, 2011.

(1)Beneficial ownership is determined in accordance with the rules of the SEC that deem shares to be beneficially owned by any person who has or shares voting or investment power with respect to such shares. Shares of common stock that presently, or within 60 days of the date of this information, may be acquired by a holder upon exercise of warrants or options or conversion of preferred stock or convertible debt, or that vest under restricted stock units, are deemed outstanding for purposes of computing the percentage ownership of the person holding such securities, but are not deemed outstanding for computing the percentage ownership of any other person. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding at December 23, 2013.
(2)Pursuant to the terms of convertible debentures held by certain of our stockholders, the maximum number of shares that may be acquired by any such stockholder upon conversion of the convertible debentures is limited to the extent necessary to ensure that, following such exercise, the total number of shares of common stock then beneficially owned by such stockholder and its affiliates and any other persons whose beneficial ownership of common stock would be aggregated with the stockholder for purposes of Section 13(d) of the Exchange Act, does not exceed 9.99% of the total number of issued and outstanding shares of common stock then outstanding. The shares of common stock and percentage ownership listed in this table reflect these contractual limitations on a stockholder's ability to acquire shares of common stock upon conversion of its convertible debentures.

19



(3)Based on 57,829,283 shares of stock outstanding as of December 23, 2013.
(4)
As of December 23, 2013, based on information set forth in a Schedule 13D/A filed with the SEC on June 24, 2013, Raging Capital Master Fund, Ltd., Raging Capital Management, LLC, and William C. Martin, collectively, beneficially own and report shared voting and dispositive power over 10,391,127 shares of our common stock. The mailing address for Raging Capital Fund is Ten Princeton Avenue, Rocky Hill, NJ 08553.
(5)
As of December 23, 2013, based on information set forth in a Schedule 13G filed with the SEC on August 9, 2013 by Rima Senvest Management, LLC, Richard Mashaal and Senvest Master Fund, L.P. The mailing address for Rima Senvest Management, LLC is 110 East 55th Street, Suite 1600, New York, New York 10022.
(6)As of December 23, 2013, based on information set forth in a Schedule 13D/A filed with the SEC on June 28, 2013 by Kopp Investment Advisors, LLC (“KIA”), Kopp Holding Company, LLC (“KHCLLC”), and LeRoy C. Kopp. KIA is an investment advisor managing discretionary accounts owned by numerous third-party clients, KHCLLC is a holding company, and the parent company of KIA, engaged in the investment industry, and Mr. Kopp is serving as the sole governor, chairman and chief investment officer of KIA and KHCLLC. The mailing address for Kopp Investment Advisors, LLC is 8400 Normandale Lake Blvd., Suite 1450, Bloomington, MN 55437.
(7)As of December 23, 2013, based on information set forth in a Schedule 13G/A filed with the SEC on July 2, 2013 by Columbia Pacific Opportunity Fund, L.P., Columbia Pacific Advisors, LLC, Alexander B. Washburn, Daniel R. Baty, Stanley L. Baty, and Brandon D. Baty. The mailing address for Columbia Pacific Opportunity Fund, L.P. is 1910 Fairview Avenue East, Suite 500, Seattle, WA 98102.


20


(2)Pursuant to the terms of Series B convertible preferred stock and convertible debentures held by certain of our stockholders, the maximum number of shares that may be acquired by any such stockholder upon conversion of the Series B convertible preferred stock or convertible debentures is limited to the extent necessary to ensure that, following such exercise, the total number of shares of common stock then beneficially owned by such stockholder and its affiliates and any other persons whose beneficial ownership of common stock would be aggregated with the stockholder for purposes of Section 13(d) of the Exchange Act, does not exceed 9.99% of the total number of issued and outstanding shares of common stock then outstanding.  The shares of common stock and percentage ownership listed in this table reflect these contractual limitations on a stockholder’s ability to acquire shares of common stock upon conversion of its Series B convertible preferred stock or convertible debentures.

(3)As of December 5, 2011, based on information set forth in a Schedule 13G/A filed with the SEC on January 26, 2011, Linden Capital, L.P., Linden Capital, L.P., Linden GP LLC and Siu Min Wong, collectively, beneficially own: (i) 837,030 shares of Common Stock, and (ii)$2,650,000 principal amount of the Company’s 8.00% Convertible Second Lien Debentures due 2014 which are convertible into 588,888 shares of Common Stock, and report shared voting and dispositive power over 1,425,918 shares of our common stock.  The mailing address for Linden Capital, L.P. is c/o Wakefield Quin, Victoria Place, 31 Victoria Street, Hamilton HM10, Bermuda.

(4)As of December 5, 2011, CNH CA Master Account, L.P. and its affiliates beneficially own an aggregate of 20,200 shares of Series B Preferred Stock that are convertible into an aggregate of 101,000 shares of common stock and $10,689,000 aggregate principal amount of debt securities that are convertible into an aggregate of 2,375,333 shares of common stock. The mailing address for CNH CA Master Account, L.P. is Two Greenwich Plaza, 3rd Floor, Greenwich, CT 06830.

(5)As of December 5, 2011, based on information set forth in a Schedule 13G/A filed with the SEC on February 11, 2011, Whitebox Advisors, LLC beneficially owns 647,844 shares of common stock and $9,341,807 aggregate principal amount of debt securities that are convertible into an aggregate of 1,887,234 shares of common stock.  The mailing address for Whitebox Advisors, LLC is 3033 Excelsior Boulevard, Suite 300, Minneapolis, MN 55416.

(6)As of December 5, 2011, based on information set forth in a Schedule 13D/A filed with the SEC on November 5, 2010 and a Schedule 13F filed with the SEC on October 28, 2011 by Kopp Investment Advisors, LLC (“KIA”), Kopp Holding Company, LLC (“KHCLLC”), and LeRoy C. Kopp. KIA is an investment advisor managing discretionary accounts owned by numerous third-party clients, KHCLLC is a holding company, and the parent company of KIA, engaged in the investment industry, and Mr. Kopp is serving as the sole governor, chairman and chief investment officer of KIA and KHCLLC. As reported in the Schedule 13F, KIA has sole dispositive power with respect to 981,550 shares, shared dispositive power with respect to 1,345,209 shares, and beneficially owns 2,326,759 shares. The mailing address for Kopp Investment Advisors, LLC is 7701 France Avenue South, Suite 500, Edina, MN 55435.

(7)As of December 5, 2011, based on information set forth in a Schedule 13G/A filed with the SEC on February 10, 2011, AQR Capital Management, LLC, AQR Capital Management, LLC and AQR Absolute Return Master Account LP, collectively, beneficially own and report shared voting and dispositive power over 1,046,667 shares of our common stock, and own debt securities that are convertible into an aggregate of 382,333. The mailing address for AQR Capital Management, LLC and AQR Absolute Return Master Account L.P. is Two Greenwich Plaza, 3rd Floor Greenwich, CT 06830.

(8)As of December 5, 2011, based on information set forth in a Schedule 13G/A filed with the SEC on February 14, 2011, Aristeia Capital L.L.C. (“ACLLC”), as the investment manager for Aristeia Master L.P., Aristeia International Limited and Aristeia Partners, L.P. (the “Funds”), collectively, report shared voting and dispositive power over 2,211,111 shares of our common stock.  Based on the information reported in the Schedule 13G/A, ACLLC shares voting and investment control over shares held by the Funds, and ACLLC and its affiliates disclaim beneficial ownership of the shares held by the Funds except to the extent of their respective economic interests in each Fund.  The mailing address for Aristeia Capital L.L.C. is 136 Madison Avenue, 3rd Floor, New York, NY 10016.

(9)As of December 5, 2011, based on information set forth in a Schedule 13G/A filed with the SEC on June 10, 2011, Columbia Pacific Opportunity Fund, L.P., Columbia Pacific Advisors, LLC (“CPA”), Alexander B. Washburn, Daniel R. Baty, Stanley L. Baty, and Brandon D. Baty, collectively, beneficially own and report sole voting and dispositive power over 2,744,128 shares of our common stock.  The mailing address for Columbia Pacific Opportunity Fund, L.P. is 1910 Fairview Avenue East, Suite 500, Seattle, WA 98102.

(10)As of December 5, 2011, ABN AMRO Bank N.V., London Branch beneficially owns $5,345,000 aggregate principal amount of debt securities that are convertible into an aggregate of 1,187,777 shares of common stock.  The mailing address for ABN AMRO Bank N.V., London Branch is c/o RBS Global Banking & Markets 600 Washington Boulevard Stamford, CT 06901.

(11)As of December 5, 2011, based on information set forth in a Schedule 13G filed with the SEC on October 17, 2011, Raging Capital Fund, LP, Raging Capital Fund (QP), LP, Raging Capital Management, LLC, and William C. Martin, collectively, beneficially own and report shared voting and dispositive power over 2,006,927 shares of our common stock. The mailing address for Raging Capital Fund is 254 Witherspoon Street, Princeton, NJ 08542.

(12)As of December 5, 2011, based on information set forth in a Schedule 13G filed with the SEC on February 11, 2011, New Vernon Investment Management LLC, New Vernon Aegir Master Fund Ltd., New Vernon Partners LLC, and Trent Stedman, collectively, beneficially own and report sole voting and dispositive power over 1,282,900 shares of our common stock. The mailing address for New Vernon Investment Management LLC is 799 Central Ave. Suite 350. Highland Park, Illinois 60035.

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EXECUTIVE OFFICERS

Set forth below is information regarding our executive officers, other than Christopher R. Gardner, our President and Chief Executive Officer, for whom information is set forth above in Proposal One under “Directors’“Nominees' Principal Occupation, Business Experience and Qualifications.”

Martin S. McDermut, age 60,62, was appointed our Chief Financial Officer on July 27, 2011. Prior to joining Vitesse, Mr. McDermut provided chief financial officer and interim management advisory services since 2007. From January 2009 to July 2011, Mr. McDermut served as Managing Director of Avant Advisory Group, a financial advisory and management consulting firm to entrepreneurial and middle market companies. From May to November 2010, Mr. McDermut was the Interim Chief Financial Officer of IRIS International, Inc., a publicly traded diagnostic medical equipment manufacturer. Prior to joining Avant Advisory Group, from October 2007 to December 2008, Mr. McDermut provided financial and management consulting services to various clients as principal of his own financial consulting firm. Prior to this role, his career included chief financial officer positions at publicly traded, entrepreneurial and early-stage companies. Mr. McDermut also worked for the certified public accounting and consulting firm Coopers & Lybrand L.L.P. (now known as PricewaterhouseCoopers LLP) where he was a partner and the practice leader of the firm’sfirm's Los Angeles Entrepreneurial Advisory Services Group. Mr. McDermut is a Certified Public Accountant, Certified Merger & Acquisitions Advisor, Certified Insolvency and Restructuring Advisor, and Certified Fraud Specialist. He holds an MBA degree in Finance and Accounting from the University of Chicago and a BA degree in Economicseconomics from the University of Southern California.California and an MBA degree in finance and accounting from the University of Chicago.

Dr. Martin C. Nuss, age 54,56, was appointed our Vice President of Technology and Strategy in November 2007. Prior to joining Vitesse, Dr. Nuss served as Vice President and Chief Technology Officer of the Optical Ethernet groupGroup of Ciena Corporation, a network infrastructure solutions and intelligent software provider. Dr. Nuss founded Internet Photonics in 2000, and served as its Chief Technology Officer until the company was acquired by Ciena in 2004. Dr. Nuss also served 15 years at Bell Labs in various technical and management roles including Director of the Optical Data Networks Research Department. He is a Fellow of the Optical Society of America and a member of IEEE. Dr. Nuss holds a doctorate in applied physics from the Technical University in Munich, Germany.

Steve Perna, age 53, was appointed our Vice President of Product Marketing in August 2010.  Prior to joining Vitesse, Mr. Perna held the position of President and Chief Executive Officer at Wiquest Communications, a wireless networking start-up, from 2007 to 2009.  From 1995 to 2007, Mr. Perna held various vice president and executive-level roles at PMC-Sierra.  Prior to PMC-Sierra, he spent 15 years as the Director of Marketing and Management at Texas Instruments in Dallas.  Mr. Perna earned a BS degree in chemical engineering from the University of Notre Dame in 1980.  He also earned an MBA degree in marketing management and an MS degree in corporate finance from the University of Dallas, as well as an MS degree in biomedical/electrical engineering from the University of Texas.



21



COMPENSATION DISCUSSION AND ANALYSIS


Compensation Philosophy and Objectives

Vitesse’s

Vitesse's compensation philosophy is to pay our executive officers a reasonable and competitive base salary, to reward their achievements during the previous fiscal year, and to incentivize their performance in future years. Our overall compensation goal is to establish and administer an executive compensation program that effectively attracts and retains highly skilledhighly-skilled executive officers, enhances stockholder value, motivates technological innovation, and rewards executive officers who contribute to the Company’sCompany's long-term success.

We attempt to achieve these objectives by offering a compensation program comprised of base salary, annual cash incentive awards and equity-based compensation. We use all three components of compensation in an effort to create a balanced compensation package that provides adequate incentives for outstanding performance without creating undue incentives for excessive risk taking by our executives.

Our executive compensation strategy is to provide compensation opportunities at the 4050th to 75thpercentiles of market, depending on the compensation component and assuming acceptable levels of performance achievement. Specifically, we:

·Target base salary levels between the market 40th and 60th percentiles in aggregate;

·Provide target bonus opportunities to earn between the market 50th and 75th percentiles of total cash compensation (base salary plus annual cash bonus) for achieving key business objectives and results; and

·Grant long-term incentives annually such that total direct compensation (total cash plus long-term incentive) is positioned between the market 50th and 75th percentiles if performance objectives are achieved.

•
Target base salary levels at the market 50th percentile in aggregate;
•
Provide target bonus opportunities to earn between the market 50th and 60th percentiles of total cash compensation (base salary plus annual cash bonus) for achieving key business objectives and results; and
•
Grant long-term incentives annually such that total direct compensation (total cash plus long-term incentive) is positioned at the market 50th percentile if performance objectives are achieved.
As part of our compensation strategy, we monitor our compensation mix relative to market. We generally design our compensation program with the intent of providing a compensation mix (i.e., distribution between elements) similar to the market.

Over the past several years, the compensation for our executive officers has been between the 25th and 50th percentiles of market, well below our objective of providing opportunities at the 50th to 75th percentiles of market. To align with our initiatives to decrease expenses to improve profitability, we have held base salaries constant at levels that now are generally near the 25th percentile of market, and have targeted bonus opportunities for many executive officers to more closely approximate between the 25th and 50th percentiles of market with the exception of the CEO whose target bonus opportunity is at the 75th percentile. While our overall compensation philosophy has not changed, the actual compensation opportunities for our executive officers have not kept pace with our compensation objectives. For fiscal year 2014, we expect this trend will continue with respect to target base salaries, which for the majority of our executive officers will remain around the 25th percentile of market, until we achieve a company-defined measure of operating income. When our financial performance improves and we achieve a measure of operating income, we will seek to realign actual base salaries with our philosophy of paying base salaries at the market 50th percentile.
2013 “Say on Pay” Proposal Voting Results
We are required to hold an advisory vote on compensation practices for executive officers (commonly referred to as a “say on pay” proposal). Our stockholders voted on a “say on pay” proposal at our 2013 Annual Meeting of Stockholders, and we have included a “say on pay” proposal in this proxy statement (Proposal Three) for action at this year's Annual Meeting. Our Compensation Committee will consider the results of voting on our “say on pay” proposal as part of its evaluation of whether to make changes to our compensation programs to the extent necessary to align the programs with our compensation objectives and to address market-wide or company-specific concerns about our executive compensation program. Our stockholders overwhelmingly supported our executive compensation practices at the 2013 Annual Meeting of Stockholders, with 88.1% of the shares voting on the proposal voting in favor of the compensation of our executive officers.
Determining Executive Compensation

The Compensation Committee of our Board of Directors is primarily responsible for determining the annual salaries and other compensation of executive officers. The Compensation Committee has adopted a general approach of compensating executives with cash salaries commensurate with the experience and expertise of the executive and competitive with median salaries paid to executives at comparable companies. To reward executives for their contributions to the achievement of Company-wide performance goals, incentive target bonus awards are established at a level designed to ensure that when such payouts are added to the executive’sexecutive's base salary, the target total compensation for meeting performance expectations will be near the median at comparable companies (with above-median compensation opportunities for exceeding performance goals). In

22


addition, to align our executives’executives' compensation with our business strategies, values and management initiatives, both short- and long-term, executive officers are provided with long-term performance incentives.

We also consider the compensation levels of executive officers at other publicly traded companies. We have collected information regarding compensation levels at other companies over the last several years from a variety of sources, including proxy statements, compensation reports and surveys published or prepared by compensation consulting firms. Using this information, we generally establish compensation levels (including salary, cash bonus and equity-based compensation) comparable to the median compensation levels of our counterparts at comparable companies.

22


The Chief Executive Officer makes compensation recommendations for named executive officers (other than the Chief Executive Officer) and other senior executives. He actively participates in the annual executive compensation assessment (other than for the Chief Executive Officer position). In developing his recommendations, the Chief Executive Officer takes into account a number of factors, including individual performance and contribution level, current compensation relative to market, past awards, compensation level relative to internal peer positions, and internal compensation expense budgets. The Chief Executive Officer does not attend executive sessions of theour Board or meetings where his own compensation is being determined.

The independent directors of theour Board conduct a formal performance review of the named executive officers, including the Chief Executive Officer, which includes an assessment of financial and non-financial accomplishments. At the beginning of each fiscal year, the Chief Executive Officer develops management performance objectives for the named executive officers (other than the Chief Executive Officer) and assigns weights to each objective which vary differently from year-to-year depending on our priorities. These objectives are then submitted to the independent Directorsdirectors of theour Board for review. At the conclusion of each fiscal year, the Chief Executive Office and the independent Directorsdirectors then evaluate the named executive officers’officers' (other than the Chief Executive Officer) actual performance against the pre-established objectives to determine compensation awards for the named executive officers.

Should a restatement of earnings occur upon which incentive compensation awards were based, the Compensation Committee has the discretion to take necessary actions to protect the interests of stockholders, including actions to recover such awards. Additionally, each of Messrs. Gardner’s, McDermut’sGardner's and Perna’sMcDermut's employment agreement requires such executive to return to us any bonus payments if we are required to prepare an accounting restatement to correct an accounting error on an interim or annual financial statement due to material noncompliance with any financial reporting requirement under the federal securities laws, if theour Board determines that misconduct by the executive occurred and caused such restatement. The executive would be required to disgorge any bonus or other incentive-based or equity-based compensation he received from us during the 12-month period following the first public issuance or filing with the SEC (whichever first occurs) of the financial document embodying such error, and any net profits realized by the executive from the sale of our stock during that 12-month period.

The Compensation Committee has the authority to engage the services of one or more independent compensation consultants to provide advice on executive compensation matters. The Compensation Committee has the discretion to hire and fire the compensation consultant, as described in the Compensation Committee’sCommittee's charter. The Compensation Committee determines the scope of the consultant’sconsultant's engagement and compensation for the consultant’sconsultant's services. The compensation consultant may not provide any services to Vitesse other than advice on compensation matters, and works with management only at the request and subject to the oversight of the Compensation Committee. Management reviews consultant invoices, and approves and remits payment in accordance with the terms of the engagement.

In 2010,

During fiscal year 2012, the Compensation Committee engaged the services of Connell & Partners, independent compensation consultants,consultant Radford to conduct a peer groupdetailed assessment of our compensation surveyprograms for senior executive officers, including chief executive officers.  Connell & Partnersour Chief Executive Officer. Radford is directly accountable to the Compensation Committee. Neither Radford nor any other affiliate of Aon, Radford’s parent company, provides pay dataany services for semiconductor companies, includingVitesse other than compensation consulting services. The Compensation Committee conducted a conflict of interest assessment by using the majorityfactors applicable to compensation consultants under applicable SEC rules and NASDAQ Listing Rules, and no conflict of our competitors, consisting of executive compensation levels for base salary, annual cash bonus and equity awards.

23

interest was identified. The Compensation Committee has concluded that Radford is independent.

In October 2010, Connell & PartnersRadford compared the compensation of our senior executive officers to a peer group of publicly traded companies. The peer group selection criteria used by Connell & PartnersRadford consisted of firms that have similar products and/or services to ours and that havewith revenues and market capitalizations that arebetween approximately one-half to two times thoseVitesse's revenues at the time they were selected and market capitalizations of Vitesse.  Due toless than $300 million. Of the relative lack19 peer group companies ultimately selected, all of the companies within these desired ranges, we chose to expand our scope to includemet at least one of the revenue and market capitalization selection criteria, and 14 companies met both criteria. For those companies that fall within one-third to three timesdid not meet both criteria, we nevertheless concluded that each company was a reasonable comparable in terms of business model and because we compete with it for talent in some of our metrics.  We employed a revenue range of $50M to $500M, reflecting the expanded range around our most recent four quarters’ revenue.  Consistent with our previous methodology, the following factors were used to redefine our peer group:

·Status as a public, US-based and non-subsidiary firm;

·Revenue between $50 million and $500 million;

·Market capitalization between $30 million and $300 million; and

·Product and industry similarity, which included the following industries: communication integrated circuits; networking integrated circuits; and design, foundry and packaging services industries.

Connell & Partners reviewed the potential peer landscape by assessing direct product competitors listed in Hoover’s database, companies that listed Vitesse in their peer groups, local labor market companies, and firms in Vitesse’s related industries as referenced in Hoover’s database.  Compensation benchmarking for our executive officers included information published in the peer group’s most recent proxy statements and Radford’s Executive Compensation survey data.

business markets.


23


Based on these objective criteria and other subjective considerations, which were intended to recognize pay practices related to both Vitesse’sVitesse's industry and size, in fiscal year 2012, the Compensation Committee selected the following sixteen19 peer group companies taking into account input from management and the recommendation from Connell & Partners:

Radford:

Anadigics, Inc.

Magma Design Automation, Inc.

Applied Micro Circuits Corporation

Mindspeed Technologies, Inc.

Conexant Systems,Cascade Microtech, Inc.

Nanometrics,MIPS Technologies, Inc.

DSP Group, Inc.

EMCORE Corporation

Oplink Communications, Inc.

EMCOREExar Corporation

Pericom Semiconductor Corporation

Exar Corporation

FormFactor, Inc.

PLX Technology, Inc.

GSI Technology, Inc.Sigma Designs, Inc.

Ikanos Communications, Inc.

Silicon Image,Supertex, Inc.

IXYSIntegrated Silicon Solution, Inc.

Symmetricom, Inc.
LTX-Credence Corporation

Supertex, Inc

TranSwitch Corporation
Mattson Technology, Inc.


While the firms included in our peer group may not be in direct competition with Vitesse, we believeconcluded in fiscal year 2012 that our peer group iswas representative of our market for executive talent.

24 Compensation benchmarking for our executive officers included information in the peer group's most recent proxy statements published before completion of the Radford report and the 2012 Radford Global Technology Survey data.

Our Compensation Committee has determined to reassess our peer group and compensation programs every other year, and consequently during fiscal year 2013 we did not reevaluate our peer group or the compensation of our executive officers relative to the executive officers of our peer group companies.


Compensation Elements

Our compensation package for executive officers consists of base salary, annual cash incentive (bonus) awards and long-term equity-based compensation. The executive officers are also eligible to participate in all of our employee benefit plans.

Base SalariesSalaries. .  We provide competitive base salaries to pay for day-to-day service in position that reflect an individual’sindividual's duties and responsibilities, experience, expertise, and individual performance. The salaries are generally set to approximate the 50th percentile market levels for the positions at each level, although there may be variations by individual to recognize the importance of the position or the experience of the individual.

Individual salary levels are determined based on assessments of:

·

Internal job responsibilities;

·

Experience in role; and

·

Market levels for comparable positions.

Salary increases are determined based on an assessment of individual performance in the role and relative to individual objectives established for the year.

The base salaries for our named executive officers were last increased in February and May, 2010.  The Compensation Committee awarded merit increases in base salary for our Chief Executive Officer in February 2010 and for Messrs. Nuss and Yonker in May 2010. 

We did not increase base salaries for our named executive officers during fiscal year 2011.years 2011 or 2012. In November 2011,2012, the Compensation Committee considered increases inevaluated the base salaries forof our named executive officers and compared them against our targeted philosophy of base salaries at the market 50th percentile. The Compensation Committee determined that Mr. Gardner's base salary was below the market 25th percentile, Mr. McDermut's base salary was at the market 50th percentile, and Dr. Nuss's base salary was near the market 25th percentile. With respect to Mr. McDermut and Dr. Nuss, the Compensation Committee decided

24


not to increase base salaries in favor of providing these officers with a greater cash bonus opportunity for fiscal year 2012, and resolved2013. With respect to maintainMr. Gardner, the Compensation Committee decided to consider any increase in base salariessalary as part of the negotiation of a new employment agreement with Mr. Gardner, whose existing employment agreement was set to expire in February 2013. Mr. Gardner’s base salary was increased to $394,000 upon execution of his new employment agreement in January 2013, which is at current levels.the 25th percentile. Annual base salaries for fiscal years 2010, 2011, 2012 and 20122013 for the named executive officers are as follows:

 

 

Fiscal Year 2010

 

Fiscal Year 2011

 

Fiscal Year 2012

 

Executive

 

Annual Base Salary(1)

 

Annual Base Salary

 

Annual Base Salary

 

Christopher R. Gardner

 

$

366,667

 

$

375,000

 

$

375,000

 

Martin S. McDermut (2) 

 

—

 

285,000

 

285,000

 

Richard C. Yonker (3) 

 

279,167

 

285,000

 

—

 

Martin C. Nuss

 

226,250

 

235,000

 

235,000

 

Steve Perna

 

235,000

 

235,000

 

235,000

 

  Fiscal Year 2011 Fiscal Year 2012 Fiscal Year 2013
Executive Annual Base Salary Annual Base Salary Annual Base Salary
Christopher R. Gardner $375,000
 $375,000
 $394,000
Martin S. McDermut 285,000
 285,000
 285,000
Dr. Martin C. Nuss 235,000
 235,000
 235,000

(1)Pro-rated to reflect merit increases in base salaries for Mr. Gardner and Mr. Yonker and Dr. Nuss in February 2010 and May 2010, respectively.

(2)Mr. McDermut’s employment with Vitesse commenced in July 2011.

(3)Mr. Yonker’s employment with Vitesse terminated in July 2011.

25



Annual Cash BonusBonus. .  We provide eligible employees, including the Chief Executive Officer and other named executive officers, the opportunity to earn annual cash awards upon achieving predeterminedpre-determined performance goals and objectives and, for our named executive officers other than the Chief Executive Officer, Vitesse achieving a minimum level of financial performance for the fiscal year, typically determined by reference to the Company’sCompany's Adjusted EBITDA for the year. The purpose is to reward attainment of Company financial goals and individual performance objectives, with threshold, target and maximum award opportunities expressed as a percentage of base salary. Target bonuses generally vary by executive level and are set at levels that, when combined with base salaries, will deliver market 50th50th percentile levels of total cash compensation if financial and performance objectives are met and above the 50th50th percentile levels if targets are exceeded.

The following are our fiscal year 20112013 threshold, target and maximum annual cash bonus opportunities as a percentage of base salary for our named executive officers assuming 100% of their individual performance objectives are achieved:

Executive

 

Threshold

 

Target

 

Maximum

 

Christopher R. Gardner

 

50

%

100

%

150

%

Martin S. McDermut (1)

 

4.2

%

6.7

%

10

%

Richard C. Yonker

 

25

%

40

%

60

%

Martin C. Nuss

 

15

%

30

%

50

%

Steve Perna

 

15

%

30

%

50

%

(1)Mr. McDermut joined Vitesse in July 2011, and was eligible for the same annual cash bonus opportunity as his predecessor, Mr. Yonker, pro-rated for the portion of fiscal year 2011 during which Mr. McDermut was employed by Vitesse.

Executive Threshold Target Maximum
Christopher R. Gardner 50% 100% 150%
Martin S. McDermut 25% 50% 60%
Dr. Martin C. Nuss 15% 40% 50%

We select different financial performance metrics and individual performance objectives to reward performance and to motivate desired behaviors. Performance weightings vary by executive. For fiscal year 2013, weightings for the Chief Executive Officer weightings are generally 40% towere 50% on achieving specific Company-wide financial metrics and 50% to 60% on execution of our annual operating plan and improvements to Vitesse’s market position vis-à-vis its competitors.strategic goals for Vitesse including future revenue production. For the Chief Financial Officer, the fiscal year 2013 performance objectives are generally 50%were 60% on achieving company-wide financial metrics and 50%40% on goals specific to the finance department and Vitesse’s financial liquidity, capital resources and capital resources.future revenue production. For the other named executive officers, the performance objectives are generally weighted 50%60% to 80% on goals related to new products and revenue growth and 50%20% to 40% on goals specific to the executive’s department.

executive's department or principal responsibilities.

The rationale for the mix of financial and strategic objectives is to recognize that Vitesse must improve its short-term financial performance while at the same time invest in new products and organizational improvements that will lead to long-term revenue growth and financial stability. Vitesse considers both revenue and gross margins in the portion of the bonus plan that is focused on financial performance because Vitesse believes top line growth and profitable operations are both equally necessary to support and increase the stock price for investors. Additionally, Vitesse includesincluded cash in the fiscal year 2013 bonus plan for our Chief Executive Officer and Chief Financial Officer in recognition of the need to build cash balances to pay down our substantial indebtedness that matures in 2014. At the conclusion of each fiscal year, the Compensation Committee evaluates the named executive officers’officers' actual performance against the pre-established objectives to determine compensation awards for the named executive officers. If minimum thresholds are not achieved, no cash incentive is paid.

paid under the plan.

The bonus payments, if any, for a fiscal year are paid by the end of the first quarter of the following fiscal year, or as soon as practicable after determination and certification of the actual financial performance levels for the year and grant of approval by the Compensation Committee in a duly held meeting, but, in no event, later than March 15 of the following fiscal year.

26


Chief Executive OfficerOfficer. .  The bonus payment to our Chief Executive Officer is determined at the discretion of the Compensation Committee after assessing Vitesse’sVitesse's financial performance and reviewing Mr. Gardner’sGardner's achievement of individual performance


25


objectives. Mr. Gardner’sGardner's fiscal year 20112013 financial goals and individual performance objectives, as well as the portion of Mr. Gardner’sGardner's potential bonus payment related to each performance metric, were determined in December 20102012 and are summarized in the following table. Mr. Gardner is able to achieve between zero percent and 150% of each financial goal and individual performance metric, with achievement below a minimum threshold of 50% assigned a zero percent. Based on the Compensation Committee’sCommittee's evaluation of Mr. Gardner’sGardner's performance relative to his financial and individual performance metrics, the Compensation Committee determined that Mr. Gardner achieved an overall bonus payment percentage of 50%20% of his potential bonus payment for fiscal year 2011,2013, as follows:

Performance Metric

 

Weighting of Each
Metric as a
Percentage of
Total Potential
Bonus Payment

 

Percentage
Achievement of
Performance
Metric (Between
0% and 150%)

 

Bonus Payment
as a Percentage
of Potential
Bonus Payment

 

Financial Performance Metrics:

 

 

 

 

 

 

 

Revenue from Operations

 

10

%

0

%

0

%

Gross Margin

 

10

%

150

%

15

%

Cash

 

10

%

0

%

0

%

EBITDA

 

20

%

0

%

0

%

Execution of Annual Operating Plan

 

15

%

0

%

0

%

Execution of Senior Debt Refinancing

 

5

%

100

%

5

%

Execution of Carrier Ethernet Strategy

 

20

%

100

%

20

%

Strengthening the Organization

 

10

%

100

%

10

%

 

 

 

 

 

 

 

 

Total:

 

100

%

 

 

50

%

Performance Metric 
Weighting of Each
Metric as a
Percentage of
Total Potential
Bonus Payment
 
Percentage
Achievement of
Performance
Metric (Between
0% and 150%)
 
Bonus Payment
as a Percentage
of Potential
Bonus Payment
Financial Performance Metrics:  
  
  
Revenue from Operations 20% 0% 0%
Gross Margin 10% 0% 0%
Cash 20% 0% 0%
Strategic Goals:      
  Debt Refinancing 20% 100% 20%
  New Product Revenue 30% 0% 0%
Total 100%  
 20%
The substantial majority of Mr. Gardner’sGardner's individual performance objectives were defined in advance by reference to quantified goals and specific achievement dates, and thus, the Compensation Committee was able to evaluate Mr. Gardner’sGardner's actual performance against objectives without substantial subjective analysis. With the exception of gross margin, Mr. Gardner did not achieve any of his financial performance objectives asfor revenue from operations, gross margin and cash, and EBITDAor his strategic goal for new product revenue, as these metrics were below minimum thresholds. Mr. Gardner did exceed the maximum achievement criteriaachieve his target for gross margin,debt refinancing, earning him 150%100% of this objective’sobjective's bonus weighting.  With respect to refinancing our senior debt and strengthening the organization,
While Mr. Gardner met the target dates for achieving these goals by refinancing the debt in February 2011, improving financial reporting and hiring a successor chief financial officer in July 2011.  Mr. Gardner’s execution of all of the Company’s annual operating plan elements fell below the minimum  of 80% achievement threshold for this objective, as determined by the Compensation Committee and measured by periodic reporting that occurred throughout fiscal year 2011.  Mr. Gardner was successful in executing on elements of our Carrier Ethernet strategy, which was measured by projected revenues derived from eligible design wins achieved during fiscal year 2011.

Based on Mr. Gardner’s achievement of an overall bonus goals percentage of 50%20%, he was entitled to a cash bonus of $187,500 for fiscal year 2011.  However, Vitesse did not achieve the minimum level of Adjusted EBITDA for fiscal year 20112013 that was a condition to the payout of any bonus to our other executive officers.  Although achieving a minimum Adjusted EBITDA was not a factor in determiningChief Executive Officer. Accordingly, Mr. Gardner’s bonus, he nevertheless recommended to the Compensation Committee, and the Compensation Committee agreed, that Mr. Gardner did not receive a cash bonus for fiscal year 2011.

27

2013.

Other Named Executive OfficersOfficers. .  Named executive officers other than Mr. Gardner participate in our Executive Bonus Plan, under which their bonus payments are based partially on Vitesse’sVitesse's Adjusted EBITDA and partially on achievement of personal goals, according to the following formula:

Total
Bonus

=

Base
Salary

X

Total
Bonus
=
Base
Salary
X% of Total Bonus with 100% of Goals Achieved
for the respective Adjusted EBITDA

x

X

% of Personal
Goals Achieved

Adjusted EBITDA is calculated as net income before interest, expenses for taxes, depreciation, amortization, deferred stock compensation, gain or loss on the embedded derivative , and non-recurring professional fees, with the possibility of adjustment for certain unusual or non-recurring events. The table below shows the fiscal year 20112013 Adjusted EBITDA goals (expressed as a percentage of our target Adjusted EBITDA for the fiscal year) and minimum, target and maximum bonus payments for each level of Adjusted EBITDA assuming achievement of all personal performance goals (expressed as a percentage of annual base salary).

 

 

Adjusted EBITDA

 

Total Bonus with
100% of Goals
Achieved for
CFO

 

Total Bonus with
100% of Goals
Achieved for Other
Named Executive
Officers (other than
the CEO and CFO)

 

Below Minimum

 

Less than 67.6% of Target

 

0

%

0

%

 

 

 

 

 

 

 

 

Minimum

 

67.6% of Target

 

25

%

15.0

%

 

 

 

 

 

 

 

 

Target

 

100% of Target

 

40

%

30.0

%

 

 

More than 118.2% of Target

 

50

%

40.0

%

 

 

 

 

 

 

 

 

Maximum

 

More than 141.9% of Target

 

60

%

50.0

%


26


 Adjusted EBITDA 
Total Bonus with
100% of Goals
Achieved for
CFO
 
Total Bonus with
100% of Goals
Achieved for Other
Named Executive
Officers (other than
the CEO and CFO)
Below MinimumLess than 37.5% of Target 0% 0%
Minimum37.5% to less than 62.5% of Target 25% 15%
Target62.5% to less than 100% of Target 40% 20%
 100% to less than 125% of Target 50% 40%
Maximum125% or more of Target 60% 50%
For fiscal year 2011,2013, Vitesse achieved an Adjusted EBITDA that was below the minimum level of Adjusted EBITDA for the payment of bonuses under the plan. As a result, none of the named executive officers participating in the Executive Bonus Plan received a cash bonus for fiscal year 2011,2013 under the Executive Bonus Plan, irrespective of the percentage of personal goals achieved by the named executive officer.  Mr. Yonker was not employed by us at fiscal year-end, and thus not eligible for an annual bonus for 2011.  Mr. McDermut joined us in July 2011, and was eligible for a pro-rated 2011 bonus.

The individual performance goals for each of the named executive officers other than our Chief Executive Officer for the fiscal year 20112013 Executive Bonus Plan were initially established by Mr. Gardner at the beginning of fiscal year 2011.2013. Following fiscal year-end 2011,2013, Mr. Gardner made aboth qualitative and subjective determination regarding the extent to which Messrs.Mr. McDermut and Dr. Nuss and Perna met their individual performance goals. Mr. Gardner did not evaluate Mr. Yonker’s performance, as he was not employed at fiscal year-end, or Mr. McDermut’s performance, as he was employed with Vitesse for only two months during fiscal year 2011 and a performance evaluation was not necessary to determine any bonus due to Vitesse’s failure to achieve minimum Adjusted EBITDA for the year.

The financial goals and individual performance objectives for each of Messrs. Yonker,Mr. McDermut and Dr. Nuss, and Perna, as well as the portion of each named executive officer’sofficer's potential bonus payment related to each performance metric are summarized inand the following tables. Additionally, for Messrs. Nuss and Perna, the CEO’sCEO's determination as to what extent each metric was achieved is also presented.are summarized in the following table. Each named executive officer is able to achieve between zero percent and 100% of each individual performance metric, with achievement below a minimum threshold of 50% assigned a zero percent.

28Martin S. McDermut


Richard C. Yonker

Performance Metric

Weighting
Performance MetricWeighting of Each Metric as a Percentage of Total Potential Bonus Payment Percentage Achievement of Performance Metric (Between 0% and 100%) Bonus Payment as a Percentage of Potential Bonus Payment
Financial Performance Metrics:     
Cash30% 0% 0%
Gross Margin10% 0% 0%
Operating Expenses20% 100% 20%
Strategic Goals

 

 

Debt Refinancing30% 100% 30%
New Product Revenue10% 0% 0%
Total100%   50%

The majority of Each Metric
as a Percentage of Total
Potential Bonus Payment

Financial Performance Metrics:

Cash

20

%

Gross Margin

10

%

EBITDA

20

%

Execution of Senior Debt Refinancing

20

%

Strengthening the Organization

30

%

Total:

100

%

Mr. Yonker’s employment with Vitesse terminated in July 2011, and consequently he was not eligible for a fiscal year 2011 annual bonus.  Upon joining Vitesse in July 2011, Mr. McDermut succeeded to theMcDermut's individual performance objectives established for(70%) were defined in advance by reference to quantified goals and specific achievement dates, and thus, Mr. Yonker.  It was not necessaryGardner and the Compensation Committee were able to conduct aevaluate Mr. McDermut's actual performance evaluation ofagainst objectives without substantial subjective analysis. Mr. McDermut who replacedachieved his maximum achievement percentage for operating expenses and debt refinancing, earning him 100% of these objectives' bonus weightings. Mr. Yonker,McDermut did not achieve his financial performance objectives for revenue from operations, gross margin and cash, or his strategic goal for new product revenue, as he was employed with Vitesse for only two months duringthese metrics were below minimum thresholds. For fiscal year 2011 and due to Vitesse’s failure to achieve2013, Vitesse achieved an Adjusted EBITDA that was below the minimum level of Adjusted EBITDA for the payment of bonuses under the plan. As a result, Mr. McDermut did not receive a cash bonus for fiscal year no bonus would be awarded.

2013 under the Executive Bonus Plan.


27


Dr. Martin C. Nuss

Performance Metric

 

Weighting of Each
Metric as a
Percentage of
Total Potential
Bonus Payment

 

Percentage
Achievement of
Performance
Metric (Between
0% and 100%)

 

Bonus Payment
as a Percentage
of Potential
Bonus Payment

 

Creation of Long Range Plan

 

10

%

50

%

5

%

Execution of Carrier Ethernet Strategy

 

20

%

100

%

20

%

Defining Next Generation Products

 

20

%

75

%

15

%

Improving Industry Perception

 

20

%

100

%

20

%

Understanding the End Customer

 

10

%

100

%

10

%

Strengthening the Organization

 

10

%

0

%

0

%

IP Portfolio Management

 

10

%

75

%

7.5

%

 

 

 

 

 

 

 

 

Total:

 

100

%

 

 

77.5

%

Performance MetricWeighting of Each Metric as a Percentage of Total Potential Bonus Payment Percentage Achievement of Performance Metric (Between 0% and 100%) Bonus Payment as a Percentage of Potential Bonus Payment
Customer Penetration20% 100% 20%
Strengthening the Organization20% 75% 15%
Expand Leadership in Network Timing20% 100% 20%
Anticipate Network Disruptions20% 75% 15%
New Innovation20% 50% 10%
Total100%   80%

The substantial majority of Dr. Nuss’Nuss' individual performance objectives were defined in advance by reference to quantified goals and specific achievement dates, and thus, Mr. Gardner and the Compensation Committee were able to evaluate Dr. Nuss’Nuss' actual performance against objectives without substantialusing both qualitative and subjective analysis. Dr. Nuss achieved his target completionachievement for customer penetration, where his efforts were focused on increasing relationships with executives at our top customers and prospects. He also realized his target achievement for expanding Vitesse's leadership in network timing, with the Long Range Plan, which consistedsuccess of identifying target markets, business planVeriTime™, and technical analysis.realized success in strengthening the organization by scaling the marketing and sales process and anticipating market disruptions to identify new product opportunities. Dr. Nuss achieved the maximum achievementminimum criteria for executing our Carrier Ethernet strategy, which was measured by projected revenues derived from eligible design wins achieved duringnew product innovation. For fiscal year 2011.  Dr. Nuss2013, Vitesse achieved slightly above target criteriaan Adjusted EBITDA that was below the minimum level of Adjusted EBITDA for defining next-generation products.  He achieved the maximum criteria for improving industry perception and understandingpayment of bonuses under the end-customer by advancing Vitesse asplan. As a thought leader in Carrier Ethernet and packet synchronization and timing technologies at the majority of industry-leading OEMs.result, Dr. Nuss did not achieve the target criteriareceive a cash bonus for strengthening and growing his organization.  Dr. Nuss achieved slightly above target criteria for managing our IP patent portfolio by maximizing the value of our critical IP via management of our patent and IP process.

29


Steve Perna

Performance Metric

 

Weighting of Each
Metric as a
Percentage of
Total Potential
Bonus Payment

 

Percentage
Achievement of
Performance
 Metric (Between
0% and 100%)

 

Bonus Payment
as a Percentage
of Potential
Bonus Payment

 

Revenue from Operations

 

10

%

0

%

0

%

Execution of Carrier Ethernet Strategy

 

20

%

100

%

20

%

Improving Industry Perception

 

40

%

75

%

30

%

Strengthening the Organization

 

20

%

50

%

10

%

Personal Goal

 

10

%

0

%

0

%

 

 

 

 

 

 

 

 

Total:

 

100

%

 

 

60

%

The majority of Mr. Perna’s individual performance objectives were defined in advance by reference to quantified goals and specific achievement dates, and thus, Mr. Gardner and the Compensation Committee were able to evaluate Mr. Perna’s actual performance against objectives without substantial subjective analysis.  Mr. Perna did not achieve his minimum objective for revenue from operations as the Company’s revenue declined in fiscal year 2011.  Mr. Perna achieved2013 under the maximum achievement criteria for executing our Carrier Ethernet strategy, which was measured by projected revenues derived from eligible design wins achieved during fiscal year 2011 as well as go-to-market plans for new products.  Mr. Perna exceeded target criteria for improving industry perception by successfully advancing Vitesse’s new Carrier Ethernet and packet synchronization and timing products at our Tier 1 and Tier 2 customer base, creating design opportunities and design wins.  Mr. Perna achieved his target criteria for strengthening his organization to improve focus on major product lines and the ability of the organization to develop and growth our business.  Mr. Perna did not achieve the target level for his personal goal.

Executive Bonus Plan.

Long-term (Equity) IncentivesIncentives. . Annual awards of equity compensation vary by executive level and are generally set to approximate the market 50th to 75th percentile levels, with a desire of achieving target total direct compensation between the median and 75th percentile. Officer awards are granted based on their performance in the previous year, the importance of their role in the current year, and a subjective assessment of the difficulty in achieving Vitesse’sVitesse's corporate goals.

We deliver the long-term incentive value through a mix of stock options and restricted stock units to our employees. The percentage mix and number of stock options and restricted stock units varies by levelyear and by year.level. For the named executive officers, the long-term incentive compensation awards in fiscal year 20112013 were paid 33%approximately 27% in stock options and 67% in RSUs.

From 2006 until March 2011, we were limited in our ability to grant equity compensation awards to our named executive officers.  With respect to equity awards granted after fiscal year 2007, such awards could not vest until Vitesse’s common stock was once again listed on the NASDAQ Global Market, which occurred on March 2, 2011.  As a consequence of the limitations on our ability to effectively use long-term equity incentives as a component of executive compensation, we believe that our Chief Executive Officer and certain of our other named executive officers hold fewer long-term equity awards than similarly situated executives within our peer group creating a potential disadvantage in terms of employee retention.

Commencing in fiscal year 2010, the Compensation Committee resolved to grant larger equity awards to our named executive officers over a three year period that approximate the market 75th percentile level in an effort to close the gap in equity ownership by our named executive officers relative to their peers.  The final awards under this three year plan will occur in fiscal year 2012, after which the Compensation Committee expects that future long-term equity incentives will more closely approximate the market 50th percentile level.

30


In December 2010, the Compensation Committee determined that it was appropriate to grant equity awards to our named executive officers in a manner consistent with its three year plan to raise levels of equity ownership by executive officers.  The grants were weighted in such a way to achieve short-term retention by granting RSUs and with a focus towards long-term incentive and retention by granting stock options.  The number of grants of each type of award made to executive officers was determined at the discretion of the Compensation Committee after taking into consideration market data provided by Connell and Partners and each officer’s total percent of stock ownership.  The equity awards were paid 33% in stock options and 67%approximately 73% in RSUs, calculated as a percentage of shares underlying such awards. The Compensation Committee determined that the RSUs would have a three year vesting while the stock options would have a four year vesting schedule to promote retention.  As part of the terms of the awards, the Compensation Committee determined that regardless of the vesting schedule no options would be exercisable, nor would any RSUs be converted to shares of common stock until Vitesse’s shares were listed on a national securities exchange, which occurred on March 2, 2011.

Mr. McDermut received an equity award of RSUs and stock options in August 2011 shortly following the commencement of his employment with Vitesse. Mr. McDermut received RSUs for 50,000 shares and stock options for 50,000 shares, which equity awards vest in 24 consecutive equal monthly installments.  Mr. McDermut’s equity award was for the same number of total shares that were issued to Mr. Yonker during fiscal year 2011, which award we determined to be within our peer group range and in the lower end of the range for a newly hired chief financial officer.  We did provide Mr. McDermut with a more favorable vesting of his equity awards than we provided to Mr. Yonker.  The rationale was to make the initial hiring package sufficiently attractive for Mr. McDermut to join the Company, and to recognize that Mr. McDermut’s equity awards were weighted more heavily in stock options than RSUs and in amounts that were in the lower end of the range for a newly hired chief financial officer.

The named executive officers’ long-term incentive awards for fiscal year 20112013 are reported below.

 

 

2011 Awards

 

Officer

 

RSUs
(#)

 

Options
(#)

 

 

 

 

 

 

 

Christopher R. Gardner

 

147,400

 

72,600

 

Richard C. Yonker

 

67,000

 

33,000

 

Martin S. McDermut

 

50,000

 

50,000

 

Martin C. Nuss

 

40,200

 

19,800

 

Steve Perna

 

13,400

 

6,600

 

 2013 Awards
OfficerRSUs
(#)		 Options
(#)
Christopher R. Gardner182,000
 68,000
Martin S. McDermut82,500
 31,000
Dr. Martin C. Nuss48,000
 18,000
Other CompensationCompensation. . The named executive officers enjoy the same benefits as all other employees of Vitesse, including medical, dental, vision, accidental death and dismemberment, group term life insurance in the amount of two times annual compensation (up to $280,000), business travel insurance, a 401(k) plan, and long-term disability pay of up to 60% of salary (with a salary cap of $10,000 per month) with an option to buy up to 67% of salary (with a salary cap of $15,000 per month). Paid leave benefits include vacation, sick leave, holidays and a sabbatical after 10 years of employment. Vitesse offers education assistance and a health/fitness benefit of $100 per year for health club membership or health/fitness classes.  Vitesse also offers monetary rewards for patents.

31


Chief Executive Officer Compensation

The total compensation paid to Mr. Gardner was 9.8%10.5% lower in fiscal year 20112013 compared to fiscal year 2010,2012, as shown in the table below.

 

 

CEO Compensation

 

 

 

2010

 

2011

 

 

 

 

 

 

 

Base Salary (1)

 

$

367,404

 

$

377,644

 

Annual Bonus

 

206,250

 

—

 

Long-term Incentives (2)

 

815,760

 

875,688

 

All Other Compensation

 

—

 

—

 

Total

 

$

1,389,414

 

$

1,253,332

 

 

 

 

 

 

 

Percent Change

 

 

 

-9.8

%


28

(1)Salary amounts for 2010 include four (4) months of salary at an annual rate of $350,000 and eight (8) months of salary at an annual rate of $375,000.

(2)Long-term incentives include value of stock and option awards.

Mr. Gardner’s base salary was last increased in February 2010, when the Compensation Committee awarded him an increase in annual base salary from $350,000 to $375,000.  Mr. Gardner did not receive an increase in base salary for fiscal year 2011, and in November 2011, after considering an increase in base salaries for executive officers for fiscal year 2012, the Compensation Committee resolved to maintain base salaries for named executive officers, including Mr. Gardner, at current levels.

For fiscal year 2011, Mr. Gardner was entitled to a cash bonus of $187,500 based on his achievement of individual performance objectives under his executive bonus plan.  Mr. Gardner, however, recommended to the Compensation Committee that he not receive a cash bonus for fiscal year 2011 because of Vitesse’s failure to achieve the minimum level of Adjusted EBITDA for fiscal year 2011 that was a condition to the payout of any bonus to executive officers other than Mr. Gardner.  The Compensation Committee accepted Mr. Gardner’s recommendation, and he was not awarded a cash bonus for fiscal year 2011.

Chief Financial Officer Compensation

Mr. McDermut joined Vitesse as our Chief Financial Officer in July 2011. Mr. McDermut’s base salary, cash bonus opportunity and long-term equity incentive compensation was negotiated with Mr. McDermut prior to him joining the Company.  His compensation package was based in part on benchmark data provided by Connell & Partners in November 2010 and consisted of the same base salary and cash bonus compensation of Mr. Yonker, who Mr. McDermut replaced as Chief Financial Officer.  Mr. McDermut did receive a different long-term equity compensation package than Mr. Yonker received in December 2011.  Mr. McDermut’s equity compensation of 100,000 shares of common stock was awarded 50% in RSUs and 50% in stock options, vesting in equal monthly installments over a two year period.  Mr. Yonker’s equity compensation of 100,000 shares of common stock was awarded 67% in RSUs and 33% in stock options, vesting in equal annual installments over a four year period.  We provided Mr. McDermut with a more favorable vesting of his equity awards to make the initial hiring package sufficiently attractive for Mr. McDermut to join the Company, and to recognize that Mr. McDermut’s equity awards were weighted more heavily in stock options than RSUs and in amounts that were in the lower end of the range for a newly hired chief financial officer.

32



  CEO Compensation
  2012 2013
Base Salary $375,000
 $387,021
Annual Bonus 75,000
 —
Long-term Incentives (1) 517,952
 479,229
Total $967,952
 $866,250
Percent Change  
 (10.5)%

(1)Long-term incentives include value of stock and option awards.

Report of Compensation Committee

The Compensation Committee of our Board of Directors is primarily responsible for determining the annual salaries and other compensation of executive officers and administering our stock incentive and stock purchase plans. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section of this proxy statement with management and based on such review and discussion has recommended to our Board of Directors that the Compensation Discussion and Analysis section be included in Vitesse’s 2011 Annual ReportVitesse's 2013 annual report on Form 10-K and in this proxy statement.

Compensation Committee

G. Grant Lyon

Edward Rogas, Jr.

Respectfully submitted by

G. William LaRosa

THE COMPENSATION COMMITTEE
Scot B. Jarvis, Chairman
James H. Hugar
Kenneth H. Traub

33


29



EXECUTIVE COMPENSATION

Summary Compensation Table


The following table sets forth as to each person (referred to as our named executive officers) serving as Chief Executive Officer and Chief Financial Officer during fiscal year 2011, and the most highly compensated executive officers other than the Chief Executive Officer and Chief Financial Officer who were serving as executive officers at the end of fiscal year 2011 whose compensation exceeded $100,000 (of which we only had two), information concerning all compensation paid to our named executive officers for services to us in all capacities during the fiscal years ended September 30, 2011, 20102013, 2012 and 2009.

Name and
Principal Position

 

Year

 

Salary (1)

 

Stock
Awards (2)

 

Option
Awards (2)

 

Non-Equity
Incentive Plan
Compensation

 

All Other
Compensation

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christopher R. Gardner

 

2011

 

$

377,644

 

$

642,664

 

$

233,024

 

$

—

 

$

—

 

$

1,253,332

 

Chief Executive Officer

 

2010

 

367,404

 

468,000

 

347,760

 

206,250

 

—

 

1,389,414

 

 

 

2009

 

303,333

 

74,000

 

90,160

 

262,500

 

—

 

729,993

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Martin S. McDermut (3)

 

2011

 

53,529

 

166,500

 

117,815

 

—

 

—

 

337,844

 

Chief Financial Officer

 

2010

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

2009

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richard C. Yonker (4)

 

2011

 

254,856

 

292,120

 

105,920

 

—

 

285,000

(6)

937,896

 

Chief Financial Officer

 

2010

 

278,846

 

234,000

 

173,790

 

33,915

 

—

 

720,551

 

 

 

2009

 

256,667

 

37,000

 

45,080

 

116,875

 

—

 

455,622

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Martin C. Nuss

 

2011

 

249,311

 

175,272

 

63,552

 

—

 

—

 

488,135

 

Vice President,

 

2010

 

225,769

 

104,000

 

77,240

 

24,675

 

—

 

431,684

 

Technology and Strategy

 

2009

 

205,333

 

18,500

 

22,540

 

38,133

 

—

 

284,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steve Perna (5)

 

2011

 

240,273

 

58,424

 

21,184

 

—

 

75,000

(7)

394,881

 

Vice President, Product

 

2010

 

36,154

 

95,750

 

70,203

 

—

 

75,000

(7)

277,107

 

Marketing

 

2009

 

—

 

—

 

—

 

—

 

—

 

—

 

(1)Salary amounts reflect the actual base salary payments, as of the end of the respective2011. For fiscal year to the2013, our named executive officers.

(2)These amount represent the grant date fair value of the stockofficers were: Christopher R. Gardner, Chief Executive Officer; Martin S. McDermut, Chief Financial Officer; and stock option awards determined in accordance with ASC Topic 718.  These amounts may not correspond to the actual value eventually realized by the officer, which depends in part on the market value of our Common Stock in future periods.  Assumptions used in calculating these amounts are set forth in the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended September 30, 2011.

(3)Mr. McDermut’s employment with Vitesse commenced on July 27, 2011.

(4)Mr. Yonker’s employment with Vitesse terminated on July 29, 2011.

(5)Mr. Perna’s employment with Vitesse commenced on August 2, 2010.

(6)Consists of severance pay.

(7)Consists of a relocation allowance of $150,000, paid out in two installments in fiscal year 2011Dr. Martin C. Nuss, Vice President, Technology and 2010.

34Strategy.

Name and
Principal Position		Year Salary (1) Bonus (2) Stock
Awards (3)		 Option
Awards (3)		  Total
Christopher R. Gardner2013 $387,021
 $—
 $382,200
 $97,029
  $866,250
Chief Executive Officer2012 375,000
 75,000
 419,100
 98,852
  967,952
 2011 377,644
 —
 642,664
 233,024
  1,253,332
Martin S. McDermut (4)2013 285,000
 

 173,250
 44,234
  502,484
Chief Financial Officer2012 285,000
 28,500
 190,500
 44,933
  548,933
 2011 53,529
 —
 166,500
 117,815
  337,844
Dr. Martin C. Nuss2013 235,000
 —
 100,800
 25,684
  361,484
Vice President, Technology and Strategy2012 235,000
 26,438
 114,300
 26,960
  402,698
2011 249,311
 —
 175,272
 63,552
  488,135

(1)Salary amounts reflect the actual base salary payments, as of the end of the respective fiscal year, to the named executive officers.
(2)These amounts reflect discretionary cash bonuses awarded to the named executive officers.
(3)These amounts represent the grant date fair value of the stock and stock option awards determined in accordance with ASC Topic 718. These amounts may not correspond to the actual value eventually realized by the officer, which depends in part on the market value of our common stock in future periods. Assumptions used in calculating these amounts are set forth in the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended September 30, 2013.
(4)Mr. McDermut's employment with Vitesse commenced on July 27, 2011.


Grants of Plan-Based Awards in Fiscal Year 20112013

The following table sets forth information relating to plan-based awards granted to our named executive officers in fiscal year 2011:

 

 

Estimate Future Payouts Under Non-Equity Incentive Plan Awards (1)

 

Grant

 

All Other
Stock Awards:
Number of

 

All Other
Option
Awards:
Number of
Securities
Underlying

 

Exercise Price
of Options

 

Grant Date
Fair Value of
Stock and
Option

 

Name

 

Threshold

 

Target

 

Maximum

 

Date

 

Stock Units

 

Options

 

(Per Share) (2)

 

Awards (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christopher R. Gardner

 

$

—

 

$

375,000

 

$

562,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/9/2010

 

147,400

 

 

 

 

 

642,664

 

 

 

 

 

 

 

 

 

12/9/2010

 

 

 

72,600

 

$

4.36

 

233,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Martin S. McDermut

 

$

—

 

$

19,000

 

$

28,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/10/2011

 

50,000

 

 

 

 

 

166,500

 

 

 

 

 

 

 

 

 

8/10/2011

 

 

 

50,000

 

3.33

 

117,815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richard C. Yonker

 

$

—

 

$

114,000

 

$

171,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/9/2010

 

67,000

 

 

 

 

 

292,120

 

 

 

 

 

 

 

 

 

12/9/2010

 

 

 

33,000

 

4.36

 

105,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Martin C. Nuss

 

$

—

 

$

70,500

 

$

117,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/9/2010

 

40,200

 

 

 

 

 

175,272

 

 

 

 

 

 

 

 

 

12/9/2010

 

 

 

19,800

 

4.36

 

63,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steve Perna

 

$

—

 

$

70,500

 

$

117,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/9/2010

 

13,400

 

 

 

 

 

58,424

 

 

 

 

 

 

 

 

 

12/9/2010

 

 

 

6,600

 

4.36

 

21,184

 

2013: 
Name Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) Grant Date All Other
Stock Awards:
Number of Stock Units		 All Other
Option
Awards:
Number of
Securities
Underlying Options		 Exercise Price
of Options (Per Share) (2)		 Grant Date
Fair Value of
Stock and Option Awards (3)
  Threshold Target Maximum          
Christopher R. Gardner $197,000
 $394,000
 $591,000
    
  
  
  
   
  
  
 3/7/2013 182,000
  
  
 $382,200
   
  
  
 3/7/2013  
 68,000
 $2.10
 97,029
Martin S. McDermut 71,250
 142,500
 171,000
    
  
  
  
   
  
  
 3/7/2013 82,500
  
  
 173,250
   
  
  
 3/7/2013  
 31,000
 2.10
 44,234
Dr. Martin C. Nuss 35,250
 94,000
 117,500
    
  
  
  
   
  
  
 3/7/2013 48,000
  
  
 100,800
   
  
  
 3/7/2013  
 18,000
 2.10
 25,684

 

 

 

          
        
 

     

        
   

 

 


30

(1)Represents possible payouts for fiscal year 2011 for the named executive officers under their respective bonus plans.  Amounts actually earned are displayed in the Summary Compensation Table.

(2)The exercise price of all stock options is equal to the closing price of our Common Stock on the grant date.

(3)The grant date fair value of the stock and stock option awards is determined in accordance with ASC Topic 718, but disregarding the estimate of forfeitures related to service-based vesting conditions.  Assumptions used in calculating these amounts are set forth in the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended September 30, 2011.


(1)
Represents possible payouts for fiscal year 2013 for the named executive officers under their respective bonus plans. Amounts actually earned are displayed in the Summary Compensation Table.
(2)The exercise price of all stock options is equal to the closing price of our common stock on the grant date.
(3)
The grant date fair value of the stock and stock option awards is determined in accordance with ASC Topic 718, but disregarding the estimate of forfeitures related to service-based vesting conditions. Assumptions used in calculating these amounts are set forth in the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended September 30, 2013.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Salary amounts reported in the Summary Compensation Table reflect the actual base salary payments made to the named executive officer in the respective fiscal year. Non equity incentive plan compensation amounts reported in the summary compensation tablereflect non-incentive plan based cash payments.  Non-equity incentive plan compensation represents incentive cash bonuses earned for services rendered during the respective fiscal year. The non-equityNon-equity incentive plan compensation payments for fiscal year 2011 are paid in a lump sum by the end of the first quarter of the fiscal year following the year in which the bonus is earned, or as soon as practicable after determination and certification of the actual financial performance levels for the year and approval by the Compensation Committee but, in no event later than March 15 2012.

Vested options were exercisableof the following fiscal year. For fiscal years 2013, 2012, and the shares underlying RSU awards were deliverable starting March 2, 2011, the dayCompany achieved an Adjusted EBITDA that was below the Company’s Common Stock commenced listing on NASDAQ Global Market.

35minimum level of Adjusted EBITDA for the payment of non-equity incentive plan compensation, and thus no named executive officer received payment of non-equity incentive plan compensation for those fiscal years.


Outstanding Equity Awards at Fiscal Year-End 2011

2013

The following table provides information regarding the holdings of equity awards by our named executive officers at September 30, 2011:

 

 

 

 

Option Awards

 

Stock Awards

 

Name

 

Grant Date

 

Number of
Securities
Underlying
Unexercised
Options
Exercisable

 

Number of
Securities
Underlying
Unexercised
Options
Unexercisable

 

Option
Exercise
Price per
Share

 

Option
Expiration
Date

 

Number of
Shares or
Units of
Stock That
Have Not
Vested

 

Market Value
of Shares or
Units of
Stock That
Have Not
Vested (a)

 

Christopher R. Gardner

 

 

 

 

 

 

 

 

 

 

 

209,900

(21)

$

619,205

 

 

 

10/2/2001

 

6,000

(1)

 

 

$

145.40

 

10/2/2011

 

 

 

 

 

 

 

10/2/2001

 

1,000

(2)

 

 

145.40

 

10/2/2011

 

 

 

 

 

 

 

10/2/2001

 

144

(3)

 

 

145.40

 

10/2/2011

 

 

 

 

 

 

 

10/2/2001

 

13,530

(4)

 

 

145.40

 

10/2/2011

 

 

 

 

 

 

 

10/2/2001

 

1,470

(5)

 

 

145.40

 

10/2/2011

 

 

 

 

 

 

 

10/17/2002

 

11,250

(6)

 

 

16.52

 

10/17/2012

 

 

 

 

 

 

 

10/27/2004

 

5,000

(7)

 

 

139.40

 

10/20/2013

 

 

 

 

 

 

 

10/27/2004

 

3,750

(8)

 

 

51.60

 

10/27/2014

 

 

 

 

 

 

 

10/27/2004

 

3,750

(9)

 

 

51.60

 

10/27/2014

 

 

 

 

 

 

 

10/27/2004

 

5,625

(10)

 

 

51.60

 

10/27/2014

 

 

 

 

 

 

 

10/27/2004

 

1,875

(11)

 

 

51.60

 

10/27/2014

 

 

 

 

 

 

 

12/2/2005

 

5,500

(12)

 

 

48.00

 

12/2/2015

 

 

 

 

 

 

 

6/21/2006

 

20,000

(13)

 

 

30.60

 

6/21/2016

 

 

 

 

 

 

 

10/13/2008

 

15,000

(14)

5,000

(14)

7.40

 

10/13/2018

 

 

 

 

 

 

 

2/12/2010

 

22,500

(15)

67,500

(15)

5.20

 

2/12/2020

 

 

 

 

 

 

 

12/9/2010

 

 

 

72,600

(16)

4.36

 

12/9/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Martin McDermut

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/10/2011

 

2,083

(17)

47,917

(17)

3.33

 

8/10/2021

 

47,917

(22)

141,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Martin C. Nuss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11/16/2007

 

7,500

(18)

2,500

(18)

19.80

 

11/16/2017

 

54,158

(23)

159,766

 

 

 

10/13/2008

 

3,750

(14)

1,250

(14)

7.40

 

10/13/2018

 

 

 

 

 

 

 

2/25/2010

 

5,000

 

15,000

(19)

5.20

 

2/25/2020

 

 

 

 

 

 

 

12/9/2010

 

 

 

19,800

(16)

4.36

 

12/9/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mr. Steve Perna

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/11/2010

 

6,250

 

18,750

(20)

3.83

 

8/11/2020

 

25,900

(24)

76,405

 

 

 

12/9/2010

 

—

 

6,600

(16)

4.36

 

12/9/2020

 

 

 

 

 

36

2013: 

    Option Awards Stock Awards
Name Grant Date Number of
Securities
Underlying
Unexercised
Options
Exercisable		   Number of
Securities
Underlying
Unexercised
Options
Unexercisable		   Option
Exercise
Price per
Share		 Option
Expiration
Date		 Number of
Shares or
Units of
Stock That
Have Not
Vested		   Market Value
of Shares or
Units of
Stock That
Have Not
Vested (A)
Christopher R. Gardner    
    
    
   292,700
 
(16) 
 $889,808
  10/20/2003 5,000
 
(1) 
  
   139.40
 10/20/2013  
    
  10/27/2004 3,750
 
(2) 
  
   51.60
 10/27/2014  
    
  10/27/2004 3,750
 
(3) 
  
   51.60
 10/27/2014  
    
  10/27/2004 5,625
 
(4) 
  
   51.60
 10/27/2014  
    
  10/27/2004 1,875
 
(5) 
  
   51.60
 10/27/2014  
    
  12/2/2005 5,500
 
(6) 
  
   48.00
 12/2/2015  
    
  6/21/2006 20,000
 
(7) 
  
   30.60
 6/21/2016  
    
  10/13/2008 20,000
 
(8) 
  
   7.40
 10/13/2018  
    
  2/12/2010 67,500
 
(9) 
 22,500
 
(9) 
 5.20
 2/12/2020  
    
  12/9/2010 36,300
 
(10) 
 36,300
 
(10) 
 4.36
 12/9/2020  
    
  12/9/2011 27,500
 
(11) 
 27,500
 
(11) 
 2.54
 12/9/2021      
  3/7/2013 17,000
 
(12) 
 51,000
 
(12) 
 2.10
 3/7/2023  
    
Martin S. McDermut    
 
  
  
 
  
  
   99,375
 
(17) 
 302,100
  8/10/2011 50,000
 
(13) 
 

 
 3.33
 8/10/2021      
  12/9/2011 12,500
 
(11) 
 12,500
 
(11) 
 2.54
 12/9/2021      
  3/7/2013 7,750
 
(12) 
 23,250
 
(12) 
 2.10
 3/7/2023      
Dr. Martin C. Nuss    
 
  
  
 
  
  
   78,600
 
(18) 
 238,944
  11/16/2007 10,000
 
(14) 
     19.80
 11/16/2017      
  10/13/2008 5,000
 
(8) 
     7.40
 10/13/2018  
 
  
  
  2/25/2010 15,000
 
(15) 
 5,000
 
(15) 
 5.20
 2/25/2020  
 
  
  
  12/9/2010 9,900
 
(10) 
 9,900
 
(10) 
 4.36
 12/9/2020  
 
  
  
  12/9/2011 7,500
 
(11) 
 7,500
 
(11) 
 2.54
 12/9/2021      
  3/7/2013 4,500
 
(12) 
 13,500
 
(12) 
 2.10
 3/7/2023      
(A)
The market value of the stock awards is based on the closing price per share of Vitesse’s stock on September 30, 2013, which was $3.04 per share.

31


(1)Annual Grant: Vested 25% on 10/20/04, 25% on 10/20/05, 25% on 10/20/06, and 25% on 10/20/07
(2)Annual Grant: Vested 50% on 10/27/07 and 50% on 10/27/08
(3)Annual Grant: Vested 50% on 10/27/05 and 50% on 10/27/06
(4) Annual Grant: Vested 33% on 10/27/06, 33% on 10/27/07, and 33% on 10/27/08
(5)Annual Grant: Vested 100% on 10/27/09
(6)Annual Grant: Vested 25% on 12/2/06, 25% on 12/2/07, 25% on 12/2/08, and 25% on 12/2/09
(7)Retention Grant: Vested 25% on 6/21/07, 25% on 6/21/08, 25% on 6/21/09 and 25% on 6/21/10
(8) Annual Grant: Vested 50% on 10/14/09, 25% on 10/13/10, and 25% on 10/13/2011
(9)Employment Agreement Grant: Vested 25% on 2/12/11, 25% on 2/12/12, and 25% on 2/12/13 and vests 25% on 2/12/14
(10) Annual Grant: Vested 25% on 12/10/11 and 25% on 12/10/12, and vests 25% on 12/10/13 and 25% on 12/10/14
(11)Annual Grant: Vested 25% on 2/1/12 and 25% on 12/9/12, and vests 25% on 12/9/13 and 25% on 12/9/14
(12)Annual Grant: Vested 25% on 5/1/13 and vests 25% on 3/7/14, 25% on 3/7/15 and 25% on 3/7/16
(13)Employment Agreement Grant: Vested monthly for 24 months  
(14)Employment Agreement Grant: Vested 25% on 11/16/08, 25% on 11/16/09, 25% on 11/16/10 and 25% on 11/16/11
(15)Employment Agreement Grant: Vested 25% on 2/25/11, 25% on 2/25/12 and 25% on 2/25/13 and vest 25% on 2/25/14
(16)Annual Grant - 147,400: Vested 25% on 12/9/11 and 25% on 12/9/12 and vests 25% on 12/9/13 and 25% on 12/9/14; Annual Grant - 165,000: Vested 25% on 2/1/12, 25% on 12/9/12, and vests 25% on 12/9/13 and 25% on 12/9/14; and Annual Grant-182,000: Vested 25% on 5/1/13, and vests 25% on 3/7/14, 25% on 3/7/15, and 25% on 3/7/16               
(17)Annual Grant-75,000: Vested 25% on 2/1/12, 25% on 12/9/12, and vests 25% on 12/9/13 and 25% on 12/9/14; and Annual Grant-82,500: Vested 25% on 5/1/13, and vests 25% on 3/7/14, 25% on 3/7/15, and 25% on 3/7/16   
(18)Annual Grant-40,200: Vested 25% on 12/9/11 and 25% on 12/9/12, and vests 25% on 12/9/13 and 25% on 12/9/14; Annual Grant-45,000: Vested 25% on 2/1/12 and 25% on 12/9/12, vests 25% on 12/9/13 and 25% on 12/9/14; and Annual Grant-48,000: Vested 25% on 5/1/13, and vests 25% on 3/7/14, 25% on 3/7/15, and 25% on 3/7/16.

(A)The market value of the stock awards is based on the closing price per share of Vitesse’s stock on September 30, 2011, which was $2.95 per share.

(1) Special Grant: Vested 25% on 10/1/01, 25% on 10/1/02, 25% on 10/1/03, and 25% on 10/1/04

(2)Special Grant: Vested 20% on 1/1/02, 20% on 1/1/03, 20% on 1/1/04, 20% on 1/1/05, and 20% on 1/1/06

(3) Special Grant: Vested 100% on 12/31/02

(4)Annual Grant: Vested 22% on 10/1/02, 22% on 10/1/03, 22% on 10/1/04, 17% on 10/1/05, and 17% on 10/1/06

(5)Annual Grant: Vested 1% on 10/1/02, 1% on 10/1/03, 4% on 10/1/04, 47% on 10/1/05, and 47% on 10/1/06

(6)Annual Grant: Vested 20% on 10/17/02, 20% on 4/17/03, 20% on 10/17/03, 20% on 4/17/04, and 20% on 10/17/04

(7)Annual Grant: Vested 25% on 10/20/04, 25% on 10/20/05, 25% on 10/20/06, and 25% on 10/20/07

(8)Annual Grant: Vested 50% on 10/27/07 and 50% on 10/27/08

(9)Annual Grant: Vested 50% on 10/27/05 and 50% on 10/27/06

(10)Annual Grant: Vested 33% on 10/27/06, 33% on 10/27/07, and 33% on 10/27/08

(11)Annual Grant: Vested 100% on 10/27/09

(12)Annual Grant: Vested 25% on 12/2/06, 25% on 12/2/07, 25% on 12/2/08, and 25% on 12/2/09

(13)Retention Grant: Vested 25% on 6/21/07, 25% on 6/21/08, and 25% on 6/21/09 and vests 25% on 6/21/10

(14)Annual Grant: Vested 50% on 10/14/09 and vests 25% on 10/13/10 and 25% on 10/13/11

(15)Employment Agreement Grant: Vested 25% on 2/12/11, 25% on 2/12/12, and 25% on 2/12/13 and vests 25% on 2/12/14

(16)Annual Grant: Vested 25% on 12/10/11, 25% on 12/10/12, 25% on 12/10/13, and 25% on 12/10/14

(17)Employment Agreement Grant: Vests monthly for 24 months.

(18)Employment Agreement Grant: Vested 25% on 11/16/08, 25% on 11/16/09, and 25% on11/16/10 and vests 25% on 11/16/11

(19)Employment Agreement Grant-20,000:  Vested 33% on 2/25/11 and 33% on 2/25/12 and vests 33% on 2/25/13

(20)Employment Agreement Grant: Vested 25% on 8/11/11 and 25% on 8/11/12 and vests 25% on 8/11/13 and 25% on 8/11/14

(21)Annual Grant-10,000: Vested 50% on 10/14/09 and vests 25% on 10/13/10 and 25% on 10/13/11; Employment Agreement Grant-90,000: Vested 33% on 2/12/11 and 33% on 2/12/12 and vests 33% on 2/12/13; and Annual grant - 147,400: Vested 25% on 12/9/11, 25% on 12/9/12, 25% on 12/9/13 and 25% on 12/9/14.

(22)Employment Agreement Grant - 50,000: Vests monthly for 24 months.

(23)Annual Grant-2500: Vested 50% on 10/14/09 and vests 25% on 10/13/10 and 25% on 10/13/11; Employment Agreement Grant-20,000: Vested 33% on 2/25/11 and 33% on 2/25/12 and vests 33% on 2/25/13; and Annual grant - 40,200: Vested 25% on 12/9/11, 25% on 12/9/12, 25% on 12/9/13 and 25% on 12/9/14.

(24)Employment Agreement Grant-25,000: Vested 50% on 8/11/11 and 50% on 8/11/12; and Annual grant - 13,400: Vested 25% on 12/9/11, 25% on 12/9/12, 25% on 12/9/13 and 25% on 12/9/14.

Option Exercises and Stock Vested in Fiscal Year 2011

2013

The following table provides information on RSU vesting for each of the named executive officers during fiscal year 2011.2013. No options were exercised by named executive officer exercised stock optionsofficers during the year.

 

 

Stock Awards

 

Name

 

Number of Shares
Acquired on Vesting

 

Value Realized on Vesting

 

 

 

 

 

 

 

Christopher R. Gardner

 

37,500

 

$

205,875

 

Martin S. McDermut

 

2,083

 

6,770

 

Martin C. Nuss

 

8,542

 

46,896

 

Steve Perna

 

12,500

 

44,250

 

Richard C. Yonker

 

18,750

 

102,938

 

37fiscal year 2013.

  Stock Awards
Name Number of Shares
Acquired on Vesting		 Value Realized on Vesting
Christopher R. Gardner 153,600
 $298,997
Martin S. McDermut 62,292
 126,540
Dr. Martin C. Nuss 39,966
 76,951


Employment Agreements

Christopher R. Gardner

On February 12, 2010,January 30, 2013, we entered into a new two year employment agreement with Christopher Gardner, our President and Chief Executive Officer.  Officer, which supersedes and replaces our employment agreement with Mr. Gardner dated as of February 12, 2010, as amended to date, which agreement was scheduled to expire by its terms on February 13, 2013.
Pursuant to his employment agreement, Mr. Gardner receives an annual base salary of $375,000$394,000 and is eligible to participate in a cash incentive plan for which provides him with the opportunity to earn a target bonus of 100% of his base salary and a maximum bonus of 150% of his base salary, with the amount of his bonus determined at the discretion of the Compensation Committee. Mr. Gardner is eligible to receive equity awards under the Company’sCompany's stock incentive plans and, in connection with entering into his employment agreement, Mr. Gardner received stock options to purchase 90,000 shares of our common stock and RSUs for 90,000 shares of our common stock.  The stock options have an exercise price of $5.20 per share and vest 25% per year over four years.  The RSUs vest over three years, with one-third of the RSUs vesting on each one-year anniversary of the date of grant.plans. Mr. Gardner is entitled to five weeks of vacation per year, and is entitled to all other employee benefits provided to other senior executives.

If Mr. Gardner’sGardner's employment is terminated by him for good reason or by Vitesse other than for cause, Mr. Gardner is entitled to a lump sum payment equal to (a) two years of his base salary, plus (b) two times his maximum bonus, plus (c) a pro-rata portion (based upon the portion of the fiscal year prior to his termination date) of his target bonus. In the case of a termination for such reasons within 24 months following a change of control of Vitesse, Mr. Gardner receives the compensation noted above for items (a) and (b), plus the greater of his target bonus in the fiscal year in which termination occurs or the amount of his bonus in the prior fiscal year.

If Mr. Gardner’sGardner's employment is terminated by Vitesse other than for cause during the one-year period prior to a change of control of Vitesse and Mr. Gardner can demonstrate that his termination arose in connection with or in anticipation of such change of control, then all RSUs which are subject solely to time-based vesting and were outstanding immediately prior to Mr. Gardner’sGardner's final day of employment will become fully vested and, to the extent such change of control occurs during the six-month period following the termination date of Mr. Gardner’sGardner's employment, all of his outstanding options which are subject solely to time-based vesting shall become fully vested at the time of the change of control.

32


If Mr. Gardner’sGardner's employment is terminated for good reason or other than for cause during the 24-month period following a change of control, then all outstanding options and RSUs which are subject solely to time-based vesting shall become fully vested and his stock options shall remain exercisable for an additional 90 days following the date of his termination of employment.

Mr. Gardner’sGardner's employment agreement contains a provision that would require him to return to Vitesse any bonus payments he received if the Company were required to prepare an accounting restatement to correct an accounting error on an interim or annual financial statement included in a report on Form 10-Q or Form 10-K, due to material noncompliance with any financial reporting requirement under the federal securities laws, and theour Board determines that misconduct by Mr. Gardner occurred and caused such restatement.

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Martin S. McDermut

Effective July 27, 2011, we entered into a two yearan employment agreement with Martin McDermut, our Chief Financial Officer.Officer, for a term that now expires on July 27, 2015. Pursuant to his employment agreement, Mr. McDermut receives an annual base salary of $285,000 and is eligible to participate in the Company’sCompany's cash incentive plan for senior executives which provides him with the opportunity to earn a target bonus of 40%50% of his base salary and a maximum bonus of 60% of his base salary, with the amount of his bonus determined at the discretion of the Compensation Committee. Any bonus amount earned for fiscal year 2011 will be prorated based on the portion of the year Mr. McDermut was employed with us.  Mr. McDermut is eligible to receive equity awards under the Company’sCompany's stock incentive plans and, in connection with entering into his employment agreement, Mr. McDermut received stock options to purchase 50,000 shares of our common stock and RSUs for 50,000 shares of our Common Stock.  The stock options have an exercise price of $3.33 per share and the stock options and RSUs vest in equal monthly installments over two years.plans. Mr. McDermut is entitled to three weeks of vacation per year, and is entitled to all other employee benefits provided to other senior executives.

If Mr. McDermut’sMcDermut's employment is terminated by him for good reason or by Vitesse other than for cause, Mr. McDermut is entitled to a lump sum payment equal to 12 months of his then base salary and remains eligible for his earned bonus, prorated using the maximum potential annual bonus amount through his date of termination. In addition, if such termination of employment occurs within the 12 months following a change in control, Mr. McDermut would be entitled to (a) an additional payment equal to the amount of his maximum potential annual bonus for the fiscal year in which his termination occurred, (b) immediate vesting of his equity compensation awards with respect to the number of shares that would have vested if Mr. McDermut had completed an additional two years of continuous service and his stock options shall remain exercisable for an additional 90 days following the date of his termination of employment, and (c) payment of the cost of continuation of group medical and dental benefits for a period of 24 months.

Mr. McDermut’sMcDermut's employment agreement contains a provision that would require him to return to Vitesse any bonus payments he received if the Company were required to prepare an accounting restatement to correct an accounting error on an interim or annual financial statement included in a report on Form 10-Q or Form 10-K, due to material noncompliance with any financial reporting requirement under the federal securities laws, and theour Board determines that misconduct by Mr. McDermut occurred and caused such restatement. Mr. McDermut would be required to disgorge (i) any bonus or other incentive-based or equity-based compensation he received from the Company during the 12-month period following the first public issuance or filing with the SEC (whichever first occurs) of the financial document embodying such error, and (ii) any net profits realized by Mr. McDermut from the sale of the Company’sCompany's stock during that 12-month period.

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Dr. Martin C. Nuss

Dr. Martin Nuss serves as our Vice President Technology and Strategy pursuant to an employment letter agreement with us, dated October 26, 2007, as amended in Decemberand restated effective November 30, 2011. The term of the agreement will continue until terminated by either party. Pursuant to his employment letter agreement, Dr. Nuss receives an annual base salary, which presently is $235,000, and is eligible to participate in the Company’sCompany's cash incentive plan for senior executives which presently provides him with the opportunity to earn a target bonus of 30%40% of his base salary and a maximum bonus of 50% of his base salary, with the amount of his bonus determined at the discretion of the Compensation Committee. Dr. Nuss is entitled to all other employee benefits provided to other senior executives.

If Dr. Nuss’Nuss' employment is terminated by him for good reason or by Vitesse other than for cause, Dr. Nuss is entitled to a lump sum payment equal to 12 months of his then base salary, unless termination occurs within 12 months following a change in control. If such termination of employment occurs within the 12 months following a change in control, Dr. Nuss would be entitled to (a) 9 months of his then base salary, (b) an additional payment equal to one week of base salary for every 12 months Dr. Nuss has been employed by Vitesse, (c) his earned bonus for the fiscal year in which the termination occurred pro-rated based on termination date and subject to other terms and conditions of the bonus plan then in effect, (d) an additional payment equal to 50% of the amount of his maximum potential annual bonus for the fiscal year in which his termination occurred, (e) immediate vesting of his equity compensation awards with respect to the number of shares that would have vested if Dr. Nuss had completed an additional two years of continuous service and his stock options shall remain exercisable for an additional 90

33


days following the date of his termination of employment, and (f) payment of the cost of COBRA medical and dental benefits for a period of 12 months.

Steve Perna

On August 2, 2010, we entered into an employment agreement with Steve Perna, our Vice President, Product Marketing.  The term of the agreement will continue until terminated by either party.  Pursuant to his employment agreement, Mr. Perna receives an annual base salary, which presently is $235,000, and is eligible to participate in the Company’s cash incentive plan for senior executives which presently provides him with the opportunity to earn a target bonus of 30% of his base salary and a maximum bonus of 50% of his base salary, with the amount of his bonus determined at the discretion of the Compensation Committee.  Mr. Perna is eligible to receive equity awards under the Company’s stock incentive plans and, in connection with entering into his employment agreement, Mr. Perna received stock options to purchase 25,000 shares of our common stock and RSUs for 25,000 shares of our common stock.  The stock options have an exercise price of $3.83 per share and vest 25% per year over four years.  The RSUs vest 50% per year over two years.  Mr. Perna is entitled to three weeks of vacation per year, and is entitled to all other employee benefits provided to other senior executives.

Mr. Perna also received relocation allowance of $150,000, which required the relocation of Mr. Perna to within 45 miles of the Company’s Camarillo, California office.  If Mr. Perna voluntarily terminates employment with Vitesse or is terminated by Vitesse for cause before completing four full years of service, Mr. Perna has agreed to repay the relocation allowance.

If Mr. Perna’s employment is terminated by him for good reason or by Vitesse other than for cause, Mr. Perna is entitled to (i) a lump sum payment equal to six months of his then base salary; (ii) his earned bonus, calculated at the maximum target and prorated through his date of termination; plus (iii) an additional bonus equal to his actual earned, pro-rated bonus.  If such termination of employment occurs within the 12 months following a change in control, Mr. Perna would be entitled to (a) a lump sum payment equal to six months of his then base salary, plus an additional payment equal to one week of base salary for every 12 months Mr. Perna has been employed by Vitesse; (b) his earned bonus for the fiscal

40


year in which termination occurred; (c) a payment equal to the amount of his maximum potential annual bonus for the fiscal year in which his termination occurred; (d) immediate vesting of his equity compensation awards with respect to the number of shares that would have vested if Mr. Perna had completed an additional two years of continuous service as though all options and other equity arrangements were vesting over four years in 48 equal monthly amounts, and his stock options shall remain exercisable for an additional 90 days following the date of his termination of employment; and (e) payment of the cost of COBRA medical and dental benefits for a period of 12 months.

Mr. Perna’s employment agreement contains a provision that would require him to return to Vitesse certain bonus payments and profits he received if the Company were required to prepare an accounting restatement to correct an accounting error on an interim or annual financial statement included in a report on Form 10-Q or Form 10-K, due to material noncompliance with any financial reporting requirement under the federal securities laws, and the Board determines that misconduct by Mr. Perna occurred and caused such restatement.  Mr. Perna would be required to disgorge (i) any bonus or other incentive-based or equity-based compensation he received from the Company during the 12-month period following the first public issuance or filing with the SEC (whichever first occurs) of the financial document embodying such error, and (ii) any net profits realized by Mr. Perna from the sale of the Company’s stock during that 12-month period.

41


Richard Yonker

On July 29, 2011, we entered into a resignation and separation agreement and general release of claims with Richard Yonker in connection with his resignation as our Chief Financial Officer.  Pursuant to the agreement, we paid Mr. Yonker severance in the amount of $285,000, representing 12 months of his annual base salary, and Mr. Yonker provided us with a general release of claims and agreed to cooperate with and assist the Company with respect to any pending or future litigation, disputed claims or other matters.

Potential Payments upon Termination or Change-in-Control

As described above, our employment agreements with each of our named executive officers who were employed by Vitesse at September 30, 20112013 provide for severance benefits in the event that the executive’sexecutive's employment is terminated without cause or for good reason. These severance benefits generally increase if any such termination occurs in connection with a change in control of Vitesse. We do not have any agreements or other arrangements that provide for payments solely upon a change in control of Vitesse without the termination of employment.

Without Change in Control

The following table sets forth severance payments and benefits that we would have been obligated to pay to the named executive officers who were employed by us at September 30, 2011,2013, assuming a triggering event had occurred under each of their respective agreements as of September 30, 20112013 that did not also involve a change in control of Vitesse:

 

 

Termination Without Change in Control

 

 

 

Base Salary
Payment

 

Bonus
Payment

 

Total
Payout

 

 

 

 

 

 

 

 

 

Christopher R. Gardner (1)

 

$

750,000

 

$

1,500,000

 

$

2,250,000

 

Martin S. McDermut (2)

 

285,000

 

30,780

 

315,780

 

Martin C. Nuss (3)

 

235,000

 

—

 

235,000

 

Steve Perna (4)

 

117,500

 

235,000

 

352,500

 

  Termination Without Change in Control
  Base Salary
Payment		 Bonus
Payment		 Continuation
of Benefits(4)		 Total
Payout
Christopher R. Gardner (1) $788,000
 $1,576,000
 $15,224
 $2,379,224
Martin S. McDermut (2) 285,000
 171,000
 —
 456,000
Dr. Martin C. Nuss (3) 235,000
 —
 —
 235,000
(1)  Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2011,2013, in an amount equal to two years of his base salary. Bonus payment represents the sum of (i) two times his maximum bonus opportunity for fiscal year 20112013 and (ii) one times his target bonus opportunity for fiscal year 2011.

2013.

(2)  Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2011,2013, in an amount equal to one year of his base salary. Bonus payment represents the prorated sum of (i) one times his maximum bonus opportunity for fiscal year 2011 and (ii) one times his target bonus opportunity for fiscal year 2011.

2013.

(3)  Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2011,2013, in an amount equal to one year of this base salary.

(4)   Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2011, in an amount equal to six months of his base salary.  Bonus payment represents the sum of (i) one times his maximum bonus opportunity for fiscal year 2011 and (ii) one times his prorated target bonus opportunity for fiscal year 2011.

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With Change in Control

The following table sets forth severance payments and benefits that we would have been obligated to pay to the named executive officers who were employed by us at September 30, 2011, assuming a triggering event had occurred under each of their respective agreements as of September 30, 2011 in connection with a change in control of Vitesse:

 

 

Termination With Change in Control

 

 

 

Base Salary
Payment

 

Bonus
Payment

 

Continuation
of Benefits(5)

 

Acceleration of
Vesting of Equity
Awards(6)

 

Total
Payout

 

 

 

 

 

 

 

 

 

 

 

 

 

Christopher R. Gardner (1)

 

$

750,000

 

$

1,500,000

 

$

—

 

$

619,205

 

$

2,869,205

 

Martin S. McDermut (2)

 

285,000

 

30,780

 

36,158

 

141,355

 

493,293

 

Martin C. Nuss (3)

 

235,000

 

—

 

—

 

—

 

235,000

 

Steve Perna (4)

 

122,019

 

235,000

 

19,314

 

76,405

 

452,738

 

(1)   Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2011, in an amount equal to two years of his base salary.  Bonus payment represents the sum of (i) two times his maximum bonus opportunity for fiscal year 2011 and (ii) one times his target bonus opportunity for fiscal year 2011.

(2)   Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2011, in an amount equal to one year of his base salary.  Bonus payment represents the prorated sum of (i) one times his maximum bonus opportunity for fiscal year 2011 and (ii) one times his target bonus opportunity for fiscal year 2011.

(3)   Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2011, in an amount equal to one year of this base salary.

(4)   Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2011, in an amount equal to 27 weeks of his base salary.  Bonus payment represents the sum of (i) one times his maximum earned bonus opportunity for fiscal year 2011 and (ii) one times his target bonus opportunity for fiscal year 2011.

(5)  Represents the aggregate amount of all premiums payable for the continuing of the executive’s health benefits for the applicable severance period, based on the amounts of such premiums at September 30, 2011.

(6)2013.

With Change in Control
The following table sets forth severance payments and benefits that we would have been obligated to pay to the named executive officers who were employed by us at September 30, 2013, assuming a triggering event had occurred under each of their respective agreements as of September 30, 2013 in connection with a change in control of Vitesse:
  Termination With Change in Control
  Base Salary
Payment		 Bonus
Payment		 Continuation
of Benefits(4)		 Acceleration of
Vesting of Equity
Awards(5)		 Total
Payout
Christopher R. Gardner (1) $788,000
 $1,576,000
 $15,224
 $951,498
 $3,330,722
Martin S. McDermut (2) 285,000
 342,000
 39,594
 260,220
 926,814
Dr. Martin C. Nuss (3) 207,885
 176,250
 20,277
 214,674
 619,086
(1)  Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2013, in an amount equal to two years of his base salary. Bonus payment represents the sum of (i) two times his maximum bonus opportunity for fiscal year 2013 and (ii) one times his target bonus opportunity for fiscal year 2013.
(2)  Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2013, in an amount equal to one year of his base salary. Bonus payment represents two times his maximum bonus opportunity for fiscal year 2013.

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(3)  Base salary payment represents cash severance payments based on the executive’s salary at September 30, 2013, in an amount equal to the sum of 9 months of his base salary plus one week of base salary for every 12 months of his employment with us. Bonus payment represents 150% of his maximum bonus opportunity for fiscal year 2013.
(4)  Represents the aggregate amount of all premiums payable for the continuing of the executive’s health benefits for the applicable severance period, based on the amounts of such premiums at September 30, 2013.
(5)  Represents the value of accelerated “in the money” stock options and restricted stock awards using the closing price of our Common Stockcommon stock on September 30, 20112013 of $2.95$3.04 per share.

43


Equity Compensation Plan Information

The following table provides information as of September 30, 2011 concerning securities authorized for issuance under our equity compensation plans:

 

 

A

 

B

 

C

 

Plan Category 

 

Number of Securities
to be Issued upon
Exercise of
Outstanding Options,
Warrants or Rights

 

Weighted Average
Exercise Price of
Outstanding
Options (3)

 

Number of Shares
Remaining
Available for Future
Issuance Under
Equity
Compensation Plans
(Excluding Shares
Reflected in
Column A)

 

Equity compensation plans approved by security holders (1)

 

2,889,160

(2)

$

16.28

 

1,656,084

(4)

Equity compensation plans not approved by security holders (5)

 

106,002

 

$

81.76

 

—

 

Total

 

2,995,162

 

$

18.60

 

1,656,084

 

(1)   Consists of the 2010 Incentive Plan and the 2001 Stock Incentive No additional awards are being made under the 2001 Stock Incentive Plan.

(2)   Includes 1,295,979 RSUs, which do not have an exercise price.

(3)   Consists of the weighted average exercise price for stock options only

(4)   Consists of shares of our common stock reserved for issuance under the 2010 Incentive Plan.  Shares available for issuance under the 2010 Incentive Plan can be granted pursuant to stock options, stock appreciation rights, restricted stock or units, performance units, performance shares and any other stock based award selected by the compensation committee.

(5)   Consists of the Vitesse International Inc. 1999 International Stock Option Plan, which was adopted in 1999 to provide for the grant to international employees of incentive stock options and the assumption of options under plans of foreign subsidiaries. The Vitesse International Inc. 1999 International Stock Option Plan expired on October 31, 2009.  No additional options may be granted under the 1999 International Stock Option Plan.

Risk Assessment Regarding Compensation Policies and Practices

Our compensation program for employees does not create incentives for excessive risk taking by our employees or involve risks that are reasonably likely to have a material adverse effect on Vitesse. Our base salary component of compensation does not encourage risk-taking because it is a fixed amount. Our executive bonus plan for senior executives and our equity compensation awards have the following risk-limiting characteristics:

·

Cash awards to each executive officer are set in a market range and are limited by the terms of the executive bonus plan for senior executives to a fixed maximum specified in the plan;

·


Cash awards are made based on a review of a variety of indicators of performance, thus diversifying the risk associated with any single indicator of performance;

·


Neither cash nor equity awards are not tied to formulas that could focus executives on specific short-term outcomes;

·


Members of the Compensation Committee approve the final cash incentive awards made under the executive bonus plan for senior executives in their discretion, after the review of executive and corporate performance;

·


Members of the Compensation Committee approve all equity awards for senior executives in their discretion;

·


An equity award’saward's value is delivered in the form of stock and options that vest over multiple years, which aligns the interests of executive officers to long-term shareholder interests; and

44



·Equity and cash awards, as well as profits realized upon the sale of our securities, may be recovered by us should a restatement of earnings occur upon which incentive compensation awards were based, or in the event of certain other wrong-doing by the recipient.

Certain Relationships and Related Person Transactions

Review and Approval of Related Person Transactions

Transaction

In accordance with the charter for the Audit Committee of theour Board, the members of the Audit Committee, all of whom are independent directors, review and approve in advance any proposed related person transactions. Additionally, from time-to-time theour Board may directly consider these transactions. We will report all such material related person transactions under applicable accounting rules and SEC rules and regulations. For purposes of these procedures, the individuals and entities that are considered “related persons” include:

·

Any of our Directors,directors, nominees for Directordirector and executive officers;

·

Any person known to be the beneficial owner of five percent or more of our Common Stockcommon stock (a “5% Stockholder”); and

·

Any immediate family member, as defined in Item 404(a) of Regulation S-K, of a director, nominee for Director,director, executive officer and 5% Stockholder.

The Audit Committee is responsible for reviewing, in consultation with counsel, reports and disclosures of insider and affiliated party transactions and compliance with our policy and procedures with respect to related party transactions. Our policies and procedures regarding related party transactions are evidenced in writing by our Code of Business Conduct and Ethics. The Code requires all Directors,directors, officers and employees to discharge their responsibilities solely on the basis of the Company’sCompany's best interests, independent of personal interests, considerations or relationships. The Code also requires anyone who personally becomes involved in a situation that gives rise to an actual or potential conflict of interest to immediately notify our Human Resources department. The Code requires members of our Board to take all reasonable steps to avoid conflicts of interest with

35


the Company. Additionally, the Code requires members of our Board to promptly disclose to the Chairperson of our Nominating and Corporate Governance Committee any situation that involves, or may reasonably be expected to involve, a conflict of interest with the Company. The charter of our Board’sBoard's Nominating and Corporate Governance Committee provides that this committee will review potential conflicts of interest involving members of our Board and will determine whether such Directordirector or Directorsdirectors may vote on any issue as to which there may be a conflict.

Reportable Related Person Transactions

Since October 1, 2010,2012, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or will be a party, in which the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest.

45



36



REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The Audit Committee Report does not constitute soliciting materials and shall not be deemed filed or incorporated by reference into any other filings by us under the Securities Act of 1933 or the Exchange Act, except to the extent we specifically incorporate this Audit Committee Report by reference therein.

The Audit Committee hereby reports as follows:

1.Management has primary responsibility for the accuracy and fairness of the Company’s consolidated financial statements as well as the processes employed to prepare the financial statements, and the system of internal control over financial reporting.

2.The Audit Committee represents the Board of Directors in discharging its responsibilities relating to the Company’s accounting, financial reporting, financial practices, and system of internal controls. As part of its oversight role, the Audit Committee has reviewed and discussed with Company’s management the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

3.The Audit Committee has discussed with the Company’s independent registered public accounting firm, BDO USA, LLP, the overall scope of and plans for their audit. The Audit Committee has met with and without management present, to discuss the Company’s financial reporting processes and system of internal control over financial reporting in addition to those matters required to be discussed by Statement on Auditing Standards No. 61 as amended (AICPA, Professional Standards, Vol. I AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T.

4.The Audit Committee has received the written disclosures and the letter from BDO USA, LLP required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with BDO USA, LLP their independence.

5.Based on the review and discussions referred to in paragraphs (1) through (4) above, the Audit Committee recommended to the Board of Directors and the Board of Directors has approved the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011, for filing with SEC.

1.Management has primary responsibility for the accuracy and fairness of the Company's consolidated financial statements as well as the processes employed to prepare the financial statements, and the system of internal control over financial reporting.

2.The Audit Committee represents the Board of Directors in discharging its responsibilities relating to the Company's accounting, financial reporting, financial practices, and system of internal controls. As part of its oversight role, the Audit Committee has reviewed and discussed with Company's management the Company's audited consolidated financial statements included in its annual report on Form 10-K for the fiscal year ended September 30, 2013.

3.
The Audit Committee has discussed with the Company's independent registered public accounting firm, BDO USA, LLP, the overall scope of and plans for their audit. The Audit Committee has met with and without management present, to discuss the Company's financial reporting processes and system of internal control over financial reporting in addition to those matters required to be discussed by Statement on Auditing Standards No. 61 as amended (AICPA, Professional Standards, Vol. I AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T.

4.The Audit Committee has received the written disclosures and the letter from BDO USA, LLP required by applicable requirements of the PCAOB regarding the independent accountant's communications with the Audit Committee concerning independence, and has discussed with BDO USA, LLP their independence.

5.Based on the review and discussions referred to in paragraphs (1) through (4) above, the Audit Committee recommended to the Board of Directors and the Board of Directors has approved the inclusion of the audited financial statements in the Company's annual report on Form 10-K for the fiscal year ended September 30, 2013, for filing with SEC.

Respectfully submitted by

THE AUDIT COMMITTEE

James H. Hugar, Chairman

Steven P. Hanson

Scot B. Jarvis

Edward Rogas, Jr.

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37

OTHER MATTERS

We know of no other matters to be submitted to the meeting. If any other matters properly come before the meeting, it is the intention of the persons named in the form proxy to vote the shares they represent as theour Board may recommend.

By Order of the Board of Directors,

Camarillo, California

Christopher R. Gardner

December 6, 2011

23, 2013

President and Chief Executive Officer

47


Notice of 2012 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — January 26, 2012 The undersigned, stockholder of Vitesse Semiconductor Corporation, a Delaware corporation, hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated December 8, 2011, and hereby appoints Christopher R. Gardner and Martin S. McDermut, and each of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the Annual Meeting of Stockholders of Vitesse Semiconductor Corporation to be held on January 26, 2012 at 9:00 a.m., local time, at the Hyatt Westlake Plaza in Thousand Oaks, 880 South Westlake Boulevard, Westlake Village, California 91361, and at any adjournment(s) thereof and to vote all shares of common stock which the undersigned would be entitled to vote if then and there personally present, on all the matters set forth on the reverse side. THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED (1) TO ENSURE AS MANY OF THE NOMINEES FOR THE ELECTION OF DIRECTORS SET FORTH IN PROPOSAL ONE ARE ELECTED AS DIRECTORS, (2) FOR AN ADVISORY VOTE ON EXECUTIVE COMPENSATION, (3) FOR EVERY ONE YEAR ON THE FREQUENCY OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION, (4) FOR THE RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AS SET FORTH IN PROPOSAL FOUR, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING AND ANY ADJOURNMENT(S) THEREOF. Proxy — VITESSE SEMICONDUCTOR CORPORATION 2012 Annual Meeting Admission Ticket 2012 Annual Meeting of VITESSE SEMICONDUCTOR CORPORATION January 26, 2012 at 9:00 a.m. Local Time Hyatt Westlake Plaza in Thousand Oaks 880 South Westlake Boulevard Westlake Village, California 91361 Upon arrival, please present this admission ticket and photo identification at the registration desk. Directions From Los Angeles Int'l Airport: Take Century Blvd. to 405 San Diego Freeway North to 101 West/Ventura Fwy.-North. Exit at Westlake Blvd., turn left. Pass over freeway to first signal and turn left. Hotel is on right. From Burbank Airport: Exit to Hollywood Way South. Turn left onto Alameda Ave. Follow signs to 134 Ventura Fwy.-West. Hwy 134 converts to 101 Ventura Fwy.-North. Exit at Westlake Blvd., turn left. Pass over freeway to first signal and turn left. Hotel is on right. IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.





Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X 01DYWC 1 U P X + Annual Meeting Proxy Card . Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below C Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. Date (mm/dd/yyyy) — Please print date below. + A Proposals — The Board of Directors recommends a vote FOR all nominees listed, FOR Proposals 2 and 4 and every 1 YEAR on Proposal 3. For Against Abstain 4. To ratify the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2012. 1. Election of Directors. For Withhold For Withhold For Withhold IMPORTANT ANNUAL MEETING INFORMATION 2. To approve by advisory vote the compensation of the Company’s executives. 1 Year 2 Years 3 Years Abstain 3. To hold an advisory vote on the frequency of the advisory vote on executive compensation. 01 - Christopher R. Gardner 04 - G. Grant Lyon 02 - Steven P. Hanson 05 - Edward Rogas, Jr. 03 - James H. Hugar 06 - G. William LaRosa For Against Abstain Change of Address — Please print your new address below. Comments — Please print your comments below. B Non-Voting Items Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE______________ SACKPACK_____________ 1234 5678 9012 345 1 2 4 3 9 2 1 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND C 1234567890 J N T C123456789 Admission Ticket IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Electronic Voting Instructions You can vote by Internet or telephone! Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on January 25, 2012. Vote by Internet • Log on to the Internet and go to www.envisionreports.com/VTSS • Follow the steps outlined on the secured website. Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call. • Follow the instructions provided by the recorded message.

APPENDIX A

VITESSE SEMICONDUCTOR CORPORATION
AMENDED AND RESTATED
2011 EMPLOYEE STOCK PURCHASE PLAN
        The Vitesse Semiconductor Corporation 2011 Employee Stock Purchase Plan is comprised of two sub-plans as set forth below, each of which is intended to constitute a separate offering: The Vitesse Semiconductor Corporation U.S. Employee Stock Purchase Plan and the Vitesse Semiconductor Corporation International Employee Stock Purchase Plan.
        The number of shares of the Common Stock of Vitesse Semiconductor Corporation reserved for sale and authorized for issuance pursuant to the Vitesse Semiconductor Corporation 2011 Employee Stock Purchase Plan, comprised of the Vitesse Semiconductor Corporation U.S. Employee Stock Purchase Plan and the Vitesse Semiconductor Corporation International Employee Stock Purchase Plan, is 5,500,000 shares, subject to adjustment as set forth in Section 9 of each sub-plan. Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares.
VITESSE SEMICONDUCTOR CORPORATION
U.S. EMPLOYEE STOCK PURCHASE PLAN
SECTION 1.    PURPOSE
        The purpose of this Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company. It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of this Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that Section of the Code.

SECTION 2.    DEFINITIONS
        Certain terms used in this Plan have the meanings set forth in Appendix A.

SECTION 3.    ELIGIBILITY REQUIREMENTS
3.1   Initial Eligibility
        Except as provided in Section 3.2, each Employee shall become eligible to participate in the Plan in accordance with Section 4 on the first Enrollment Date on or following the later of (a) the date on which such Employee completes six (6) months of employment; and (b) the Effective Date. Participation in the Plan is entirely voluntary.
3.2   Limitations on Eligibility
        The following Employees are not eligible to participate in the Plan:
        (a)   Employees who have been employed less than six (6) months;
        (b)   Employees whose customary employment is twenty (20) hours or less per week; and
        (c)   Employees who, immediately upon purchasing Shares under the Plan, would own directly or indirectly, an aggregate of five percent (5%) or more of the total combined voting power or value of all outstanding shares of all classes of stock of the Company or any Subsidiary (and for purposes of this paragraph, the rules of Section 424(d) of the Code shall apply, and stock which the Employee may purchase under outstanding options shall be treated as stock owned by the Employee).

SECTION 4.    ENROLLMENT


        Any Eligible Employee may enroll in the Plan for any Offering Period by completing and signing an enrollment election form or by such other means as the Committee shall prescribe and submitting such enrollment election to the Company in accordance with procedures established by the Committee on or before the Cut-Off Date with respect to such Offering Period. Unless otherwise determined by the Committee, the enrollment election and the designated rate of payroll deduction shall continue for future Offering Periods unless the Participant changes or cancels the enrollment election or designated rate of payroll deduction prior to the Cut-Off Date.

SECTION 5.    GRANT OF OPTIONS ON ENROLLMENT
5.1   Option Grant
        Enrollment by an Eligible Employee in the Plan as of an Enrollment Date will constitute the grant by the Company to such Participant of an option on such Enrollment Date to purchase Shares from the Company pursuant to the Plan.
5.2   Option Expiration
        An option granted to a Participant pursuant to this Plan shall expire, if not terminated for any reason first, on the earliest to occur of: (a) the end of the Offering Period in which such option was granted; (b) the completion of the purchase of Shares under the option under Section 7; or (c) the date on which participation of such Participant in the Plan terminates for any reason.
5.3   Purchase of Shares
        An option granted to a Participant under the Plan shall give the Participant a right to purchase on a Purchase Date the largest number of whole Shares, as determined by the Committee, which the funds accumulated in the Participant’s Account as of such Purchase Date will purchase at the applicable Purchase Price; provided, however, that such option shall be for a maximum number of shares determined by dividing $25,000 by the Fair Market Value of the Shares on the first day of the applicable Offering Period; provided, further, that the Committee may, in its discretion, limit the number of Shares purchased by each Participant in any Purchase Period.
        Notwithstanding anything to the contrary herein, to the extent required by Section 423 of the Code, no Employee shall be granted an option under the Plan (or any other plan of the Company or a Subsidiary intended to qualify under Section 423 of the Code) which would permit the Employee to purchase Shares under the Plan (and such other plan) in any calendar year with a Fair Market Value (determined at the time such option is granted) in excess of $25,000 and any payments made by a Participant in excess of this limitation shall be returned to the Participant in accordance with procedures established by the Committee.

SECTION 6.    PAYMENT
        The Committee may designate the time and manner for payment of Shares to be purchased during the Purchase Period, including, but not limited to, through payroll deductions from Eligible Compensation, the terms and conditions of which are designated by the Committee. Payment amounts shall be credited on a bookkeeping basis to a Participant’s Account under this Plan. All payment amounts may be used by the Company for any purpose and the Company shall have no obligation to segregate such funds. No interest accrues on payments by Participants.

SECTION 7.    PURCHASE OF SHARES
7.1   Option Exercise
        Any option held by the Participant that was granted under this Plan and that remains outstanding as of a Purchase Date shall be deemed to have been exercised on such Purchase Date for the number of whole Shares, as determined by the Committee, which the funds accumulated in the Participant’s Account as of the Purchase Date will purchase at the applicable Purchase Price (but not in excess of the number of Shares for which options have been granted to the Participant pursuant to Section 5.3). Options for other Shares for which options have been granted that are not purchased on the last Purchase Date during the Offering Period shall terminate. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such Shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of


1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed. As a condition to the exercise of an option, the Committee may require the person exercising such option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares.
7.2   Refund of Excess Amount
        If, after a Participant’s exercise of an option under Section 7.1, an amount remains credited to the Participant’s Account as of a Purchase Date, then the remaining amount shall be (a) if no further Purchase Periods are immediately contemplated by the Committee, distributed to the Participant as soon as administratively feasible, or (b) if another Purchase Period is contemplated by the Committee, carried forward in the Account for application to the purchase of Shares on the next following Purchase Date.
7.3   Employees of Subsidiary
        In the case of Participants employed by a Designated Subsidiary, the Committee may provide for Shares to be sold through the Subsidiary to such Participants, to the extent consistent with Section 423 of the Code.
7.4   Pro Rata Allocation
        If the total number of Shares for which options are or could be exercised on any Purchase Date in accordance with this Section 7, when aggregated with all Shares for which options have been previously exercised under this Plan, exceeds the maximum number of Shares reserved in Section 12, the Company may, in accordance with Section 12, allocate the Shares available for delivery and distribution in the ratio that the balance in each Participant’s Account bears to the aggregate balances of all Participants’ Accounts, and the remaining balance of the amount credited to the Account of each Participant under the Plan shall be returned to him or her as promptly as possible.
7.5   Notice of Disposition
        If a Participant or former Participant sells, transfers or otherwise makes a disposition of Shares purchased pursuant to an option granted under the Plan if such Participant or former Participant is subject to United States federal income tax, then such Participant or former Participant shall notify the Company or the Employer in writing of such sale, transfer or other disposition within ten (10) days of the consummation of such sale, transfer or other disposition. Without limitation on the Participant or former Participant’s ability to sell, transfer or otherwise make a disposition of Shares and without limitation on Section 11.2, Participants and former Participants must maintain any Shares purchased pursuant to an option granted under the Plan within two (2) years after the date such option is granted or within one (1) year after the date such Shares were transferred to the Participant at the broker designated by the Committee, unless the Committee determines otherwise.

SECTION 8.    WITHDRAWAL FROM THE PLAN, TERMINATION
OF EMPLOYMENT, AND LEAVE OF ABSENCE
8.1   Withdrawal From the Plan
        A Participant may withdraw all funds accumulated in the Participant’s Account from the Plan with respect to a future Purchase Period by delivering a notice of withdrawal to the Company or the Employer (in a manner prescribed by the Committee) at any time up to but not including the thirty (30) days prior to the Enrollment Date next following the date such notice of withdrawal is delivered, or at such shorter time in advance of such Enrollment Date as the Committee may permit. If a notice of complete withdrawal as described in the preceding sentence is timely received, the Company or the Employer will cease the Participant’s payroll withholding for the Plan in accordance with timing and other procedures established by the Committee. An Employee who has withdrawn with respect to a future Purchase Period may not return funds to the Company or the Employer during that Purchase Period and require the Company or the Employer to apply those funds to the purchase of Shares. Any Eligible Employee who has withdrawn from the Plan may, however, re-enroll in the Plan on the next subsequent Enrollment Date, if any.
8.2   Termination of Participation
        Participation in the Plan terminates immediately on the date on which a Participant ceases to be employed by the Company or the Employer for any reason whatsoever or otherwise ceases to be an Eligible Employee, and all funds then


accumulated in the Participant’s Account shall not be used to purchase Shares, but shall instead be distributed to the Participant as soon as administratively feasible.
8.3   Leaves of Absence
        If a Participant takes a leave of absence, such Participant shall have the right, in accordance with procedures prescribed by the Committee, to elect to withdraw from the Plan in accordance with Section 8.1. To the extent determined by the Committee or required by Section 423 of the Code, certain leaves of absence may be treated as cessations of employment for purposes of the Plan.

SECTION 9.    ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,
DISSOLUTION, LIQUIDATION, MERGER OR ASSET SALE
9.1   Adjustments Upon Changes in Capitalization
        Subject to any required action by the stockholders of the Company, the right to purchase Shares of Common Stock covered by a current Offering Period and the number of Shares which have been authorized for issuance under the Plan for any future Offering Period, the maximum number of Shares each Participant may purchase each Offering Period (pursuant to Section 5.3 hereof), as well as the price per Share and the number of Shares covered by each right under the Plan which have not yet been purchased shall be proportionately adjusted in the sole discretion of the Committee for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, extraordinary cash dividend, combination or reclassification of the Common Stock, or recapitalization, reorganization, consolidation, split-up, spin-off, or any other increase or decrease in the number of Shares effected without receipt of consideration by the Company. Except as expressly provided otherwise by the Committee, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares.
9.2   Adjustment Upon Dissolution, Liquidation, Merger or Asset Sale
        Without limitation on the preceding provisions, in the event of any dissolution, liquidation, merger, consolidation, sale of all or substantially all of the Company’s outstanding voting securities, sales, lease, exchange or other transfer of all or substantially all of the Company’s assets, or any similar transaction as determined by the Committee in its sole discretion, the Committee may make such adjustment it deems appropriate to prevent dilution or enlargement of rights in the number and class of Shares which may be delivered under Section 12, in the number, class of or price of Shares available for purchase under the Plan and in the number of Shares which a Participant is entitled to purchase and any other adjustments it deems appropriate. Without limiting the Committee’s authority under this Plan, in the event of any such transaction, the Committee may elect to have the options hereunder assumed or such options substituted by a successor entity, to terminate all outstanding options either prior to their expiration or upon completion of the purchase of Shares on the next Purchase Date, to shorten the Offering Period by setting a new Purchase Date, or to take such other action deemed appropriate by the Committee.
SECTION 10.    DESIGNATION OF BENEFICIARY
        Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom the amount in his or her Account is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during the Participant’s lifetime. In the absence of any such designation, any Account balance remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

SECTION 11.    ADMINISTRATION
11.1 Administration by Committee
        The Plan shall be administered by the Committee. The Committee shall have the authority to delegate duties to officers, directors or employees of the Company.
11.2 Authority of Committee


        The Committee shall have the full and exclusive discretionary authority to construe and interpret the Plan and options granted under it; to establish, amend, and revoke rules and regulations for administration of the Plan (including, without limitation, the determination and change of Offering Periods, Purchase Periods and payment procedures, the requirement that Shares be held by a specified broker, and the establishment of the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars); to determine all questions of eligibility, disputed claims and policy that may arise in the administration of the Plan; to make any changes to the Plan or its operations to reduce or eliminate any unfavorable legal, accounting or other consequences to the extent deemed appropriate by the Committee; and, generally, to exercise such powers and perform such acts as the Committee deems necessary or expedient to promote the best interests of the Company, including, but not limited to, designating from time to time which Subsidiaries of the Company shall be part of the Employer. The Committee’s determinations as to the interpretation and operation of this Plan shall be final and conclusive and each action of the Committee shall be binding on all persons.
        In exercising the powers described in the foregoing paragraph, the Committee may adopt special or different rules for the operation of the Plan including, but not limited to, rules which allow employees of any foreign Subsidiary to participate in, and enjoy the tax benefits offered by, the Plan; provided that such rules shall not result in any grantees of options having different rights and/or privileges under the Plan in violation of Section 423 of the Code nor otherwise cause the Plan to fail to satisfy the requirements of Section 423 of the Code and the regulations thereunder.
11.3 Administrative Modifications
        The Plan provisions relating to the administration of the Plan may be modified by the Committee from time to time as may be desirable to satisfy any requirements of or under the federal securities and/or other applicable laws of the United States, to obtain any exemption under such laws, or to reduce or eliminate any unfavorable legal, accounting or other consequences or for any other purpose deemed appropriate by the Committee.

SECTION 12.    NUMBER OF SHARES
        Subject to adjustment as set forth in Section 9, the number of Shares reserved for sale and authorized for issuance pursuant to the Vitesse Semiconductor Corporation 2011 Employee Stock Purchase Plan is 5,500,000 shares and, therefore, the number of Shares authorized for issuance pursuant to the Plan is the number of Shares specified above less the number of Shares issued pursuant to the Vitesse Semiconductor Corporation International Employee Stock Purchase Plan. If any option granted under the Plan shall for any reason terminate without having been exercised, the Shares not purchased under such option shall again become available for the Vitesse Semiconductor Corporation 2011 Employee Stock Purchase Plan. If on a given Purchase Date, the number of Shares with respect to which options are to be exercised exceeds the number of Shares then available under the Plan, the Committee shall make a pro rata allocation of the Shares remaining available for purchase in as uniform a manner as shall be practical and as it shall determine to be equitable.

SECTION 13.    MISCELLANEOUS
13.1 Restrictions on Transfer
        Options granted under the Plan to a Participant may not be exercised during the Participant’s lifetime other than by the Participant. Neither amounts credited to a Participant’s Account nor any rights with respect to the exercise of an option or to receive stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw from the Plan in accordance with Section 8.1.
13.2 Administrative Assistance
        If the Committee in its discretion so elects, it may retain a brokerage firm, bank or other financial institution to assist in the purchase of Shares, delivery of reports or other administrative aspects of the Plan. If the Committee so elects, each Participant shall (unless prohibited by applicable law) be deemed upon enrollment in the Plan to have authorized the establishment of an account on his or her behalf at such institution. Shares purchased by a Participant under the Plan shall be held in the Account in the Participant’s name, or if the Participant so indicates in the enrollment form, in the Participant’s name together with the name of his or her spouse in joint tenancy with right of survivorship or spousal community property, or in certain forms of trust approved by the Committee.


13.3 Treatment of Non-U.S. Participants
        Participants who are employed by non-U.S. Designated Subsidiaries, who are paid in foreign currency, and who contribute foreign currency to the Plan through contributions or payroll deductions will have such contributions converted to U.S. dollars. The exchange rate and method for such conversion will be determined as prescribed by the Committee. In no event will any procedure implemented for dealing with exchange rate fluctuations that may occur during an Offering Period result in a purchase price below the Purchase Date Price permitted under the Plan. Each Participant shall bear the risk of any currency exchange fluctuations (if applicable) between the date on which any Participant contributions are converted to U.S. dollars and the following Purchase Date.
13.4 Withholding
        The Company or any Employer shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company or any member of the Employer, an amount sufficient to satisfy federal, state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.
13.5 Equal Rights and Privileges
        All Eligible Employees shall have equal rights and privileges with respect to the Plan so that the Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 or any successor provision of the Code and the related regulations. Notwithstanding the express terms of the Plan, any provision of the Plan which is inconsistent with Section 423 or any successor provision of the Code shall without further act or amendment by the Company or the Committee be reformed to comply with the requirements of Section 423 of the Code. This Section 13.5 shall take precedence over all other provisions in the Plan.
13.6 Applicable Law
        The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of Delaware.
13.7 Amendment and Termination
        The Board may amend, alter or terminate the Plan at any time; provided, however, that (1) the Plan may not be amended in a way which will cause rights issued under the Plan to fail to meet the requirements of Section 423 of the Code; and (2) no amendment that would amend or modify the Plan in a manner requiring stockholder approval under Section 423 of the Code or the requirements of any securities exchange on which the Shares are traded shall be effective unless such stockholder approval is obtained. In addition, the Committee may amend the Plan as provided in Section 11.3, subject to the conditions set forth in this Section 13.7.
        If the Plan is terminated, the Committee may elect to terminate all outstanding options either prior to their expiration or upon completion of the purchase of Shares on the next Purchase Date, or may elect to permit options to expire in accordance with their terms (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all funds accumulated in Participants’ Accounts as of the date the options are terminated shall be returned to the Participants as soon as administratively feasible.
13.8 No Right of Employment
        Neither the grant nor the exercise of any rights to purchase Shares under this Plan nor anything in this Plan shall impose upon the Company or a member of the Employer any obligation to employ or continue to employ any Employee. The right of the Company or a member of the Employer to terminate any Employee shall not be diminished or affected because any rights to purchase Shares have been granted to such Employee.
13.9 Rights as Shareholder
        No Participant shall have any rights as shareholder unless and until Shares have been issued to him or her.
13.10  Governmental Regulation
        The Company’s obligation to sell and deliver Shares under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such Shares.


13.11  Gender
        When used herein, masculine terms shall be deemed to include the feminine, except when the context indicates to the contrary.
13.12  Condition for Participation
        As a condition to participation in the Plan, Eligible Employees agree to be bound by the terms of the Plan (including, without limitation, the notification and holding requirements of Section 7.5) and the determinations of the Committee.
APPENDIX A-1
DEFINITIONS
        As used in the Plan,
”Account” means a recordkeeping account maintained for a Participant to which Participant contributions and payroll deductions, if applicable, shall be credited.
”Board” means the Board of Directors of the Company.
”Code” means the Internal Revenue Code of 1986, as amended.
”Committee” means the Compensation Committee or any other committee appointed by the Board to administer the Plan.
”Common Stock” means the Common Stock of the Company.
”Company” means Vitesse Semiconductor Corporation, a Delaware corporation.
”Cut-Off Date” means the date established by the Committee from time to time by which enrollment forms must be received prior to an Enrollment Date.
”Designated Subsidiary” means any Subsidiary which has been designated by the Committee from time to time in its sole discretion as eligible to participate in the Plan and which has adopted the Plan with the approval of the Committee in its sole and absolute discretion.
”Effective Date” means the first trading day for the Common Stock on the NASDAQ Stock Market, the New York Stock Exchange or other applicable trading market after the date on which the Plan is approved by the Company’s stockholders.
”Eligible Compensation” means all base gross earnings, including such amounts of gross earnings as are deferred by an Eligible Employee (a) under a qualified cash or deferred arrangement described in Section 401(k) of the Code or (b) to a plan qualified under Section 125 of the Code. Eligible Compensation does not include overtime, cash bonuses, commissions, severance pay, hiring and relocation bonuses, pay in lieu of vacations or sabbaticals, sick leave, gain from stock option exercises or any other special payments.
”Eligible Employee” means an Employee eligible to participate in the Plan in accordance with Section 3.
”Employee” means any individual who is an employee of the Employer for tax purposes.
”Employer” means the Company or any Designated Subsidiary of the Company by which an Employee is employed.
”Enrollment Date” means the first Trading Day of an Offering Period.
”Exchange Act” means the Securities Exchange Act of 1934, as amended.
”Fair Market Value” means, as of any date, the closing price for the Common Stock on any given date during regular trading, or if not trading on that date, such price on the last preceding date on which the Common Stock was traded, unless determined otherwise by the Committee using such methods or procedures as it may establish.
”Grant Date” means a date on which an Eligible Employee is granted an option under the Plan pursuant to Section 5.
”Grant Price” means the Fair Market Value of a Share on the Grant Date for such option.


”Offering Period” means the period beginning and ending on the dates designated by the Committee; provided, that each period shall in no event end later than twenty-seven (27) months from the Grant Date. The Offering Period may but need not be the same as the Purchase Period, as determined by the Committee.
”Participant” means an Eligible Employee who has enrolled in the Plan pursuant to Section 4.
”Plan” means this Vitesse Semiconductor Corporation U.S. Employee Stock Purchase Plan.
”Purchase Date” with respect to a Purchase Period means the last Trading Day in such Purchase Period.
”Purchase Date Price” means the Fair Market Value of a Share on the applicable Purchase Date.
”Purchase Period” means the period beginning and ending on the dates designated by the Committee; provided, that each period shall, in no event end later than twenty-seven (27) months from the Grant Date.
”Purchase Price” means the price designated by the Committee, at which each Share may be purchased under any option, but in no event less than eighty-five percent (85%) of the lesser of:
(1) The Grant Price and
(2) The Purchase Date Price.
”Shares” means shares of the Company’s Common Stock.
”Subsidiary” means a corporation, domestic or foreign, of which not less than 50% of the combined voting power is held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.
”Trading Day” means a day on which the New York Stock Exchange, the NASDAQ Stock Market or other alternative exchange or service on which the Common Stock is traded, listed or quoted is open for trading.



VITESSE SEMICONDUCTOR CORPORATION
AMENDED AND RESTATED
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
SECTION 1.    PURPOSE
        The purpose of this Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company.

SECTION 2.    DEFINITIONS
        Certain terms used in this Plan have the meanings set forth in Appendix A.

SECTION 3.    ELIGIBILITY REQUIREMENTS
3.1   Initial Eligibility
        Except as provided in Section 3.2, each Employee shall become eligible to participate in the Plan in accordance with Section 4 on the first Enrollment Date on or following the later of (a) the date on which such Employee completes six (6) months of employment or such shorter period determined appropriate by the Committee; and (b) the Effective Date. Participation in the Plan is entirely voluntary.
3.2   Limitations on Eligibility
        The following Employees are not eligible to participate in the Plan:
(a) Employees who have been employed less than six (6) months or such shorter period determined appropriate by the Committee; and

(b) Unless otherwise determined appropriate by the Committee, Employees whose customary employment is twenty (20) hours or less per week.

SECTION 4.    ENROLLMENT
        Any Eligible Employee may enroll in the Plan for any Offering Period by completing and signing an enrollment election form or by such other means as the Committee shall prescribe and submitting such enrollment election to the Company in accordance with procedures established by the Committee on or before the Cut-Off Date with respect to such Offering Period. Unless otherwise determined by the Committee, the enrollment election and the designated rate of payroll deduction shall continue for future Offering Periods unless the Participant changes or cancels the enrollment election or designated rate of payroll deduction prior to the Cut-Off Date.

SECTION 5.    GRANT OF OPTIONS ON ENROLLMENT
5.1   Option Grant
        Enrollment by an Eligible Employee in the Plan as of an Enrollment Date will constitute the grant by the Company to such Participant of an option on such Enrollment Date to purchase Shares from the Company pursuant to the Plan.
5.2   Option Expiration
        An option granted to a Participant pursuant to this Plan shall expire, if not terminated for any reason first, on the earliest to occur of: (a) the end of the Offering Period in which such option was granted; (b) the completion of the purchase of Shares under the option under Section 7; or (c) the date on which participation of such Participant in the Plan terminates for any reason.


5.3   Purchase of Shares
        An option granted to a Participant under the Plan shall give the Participant a right to purchase on a Purchase Date the largest number of whole Shares, as determined by the Committee, which the funds accumulated in the Participant’s Account as of such Purchase Date will purchase at the applicable Purchase Price; provided, however, that the Committee may, in its discretion, limit the number of Shares purchased by each Participant in any Purchase Period.

SECTION 6.    PAYMENT
        The Committee may designate the time and manner for payment of Shares to be purchased during the Purchase Period, including, but not limited to, through payroll deductions from Eligible Compensation, the terms and conditions of which are designated by the Committee. Payment amounts shall be credited on a bookkeeping basis to a Participant’s Account under this Plan. All payment amounts may be used by the Company for any purpose and the Company shall have no obligation to segregate such funds. No interest accrues on payments by Participants.

SECTION 7.    PURCHASE OF SHARES
7.1   Option Exercise
        Any option held by the Participant that was granted under this Plan and that remains outstanding as of a Purchase Date shall be deemed to have been exercised on such Purchase Date for the number of whole Shares, as determined by the Committee, that the funds accumulated in the Participant’s Account as of the Purchase Date will purchase at the applicable Purchase Price (but not in excess of the number of Shares for which options have been granted to the Participant pursuant to Section 5.3). Options for other Shares for which options have been granted that are not purchased on the last Purchase Date during the Offering Period shall terminate. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such Shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed. As a condition to the exercise of an option, the Committee may require the person exercising such option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares.
7.2   Refund of Excess Amount
        If, after a Participant’s exercise of an option under Section 7.1, an amount remains credited to the Participant’s Account as of a Purchase Date, then the remaining amount shall be: (a) if no further Purchase Periods are immediately contemplated by the Committee, distributed to the Participant as soon as administratively feasible or (b) if another Purchase Period is contemplated by the Committee, carried forward in the Account for application to the purchase of Shares on the next following Purchase Date.
7.3   Employees of Subsidiary
        In the case of Participants employed by a Designated Subsidiary, the Committee may provide for Shares to be sold through the Subsidiary to such Participants.
7.4   Pro Rata Allocation
        If the total number of Shares for which options are or could be exercised on any Purchase Date in accordance with this Section 7, when aggregated with all Shares for which options have been previously exercised under this Plan, exceeds the maximum number of Shares reserved in Section 12, the Company may, in accordance with Section 12, allocate the Shares available for delivery and distribution in the ratio that the balance in each Participant’s Account bears to the aggregate balances of all Participants’ Accounts, and the remaining balance of the amount credited to the Account of each Participant under the Plan shall be returned to him or her as promptly as possible.

SECTION 8.    WITHDRAWAL FROM THE PLAN, TERMINATION
OF EMPLOYMENT, AND LEAVE OF ABSENCE


8.1   Withdrawal From The Plan
        A Participant may withdraw all funds accumulated in the Participant’s Account from the Plan for the next future Purchase Period by delivering a notice of withdrawal to the Company or the Employer (in a manner prescribed by the Committee) at any time up to but not including the thirty (30) days prior to the Enrollment Date next following the date such notice of withdrawal is delivered, or at such shorter time in advance of such Enrollment Date as the Committee may permit. If a notice of complete withdrawal as described in the preceding sentence is timely received, the Company or the Employer will cease the Participant’s payroll withholding for the Plan in accordance with timing and other procedures established by the Committee. An Employee who has withdrawn from a future Purchase Period may not return funds to the Company or the Employer during that Purchase Period and require the Company or the Employer to apply those funds to the purchase of Shares. Any Eligible Employee who has withdrawn from the Plan may, however, re-enroll in the Plan on the next subsequent Enrollment Date, if any.
8.2   Termination of Participation
        Participation in the Plan terminates immediately on the date on which a Participant ceases to be employed by the Company or the Employer for any reason whatsoever or otherwise ceases to be an Eligible Employee, and all funds then accumulated in the Participant’s Account shall not be used to purchase Shares, but shall instead be distributed to the Participant as soon as administratively feasible.
8.3   Leaves of Absence
        If a Participant takes a leave of absence, such Participant shall have the right, in accordance with procedures prescribed by the Committee, to elect to withdraw from the Plan in accordance with Section 8.1. To the extent determined by the Committee, certain leaves of absence may be treated as cessations of employment for purposes of the Plan.

SECTION 9.    ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,
DISSOLUTION, LIQUIDATION, MERGER OR ASSET SALE
9.1   Adjustments Upon Changes in Capitalization
        Subject to any required action by the stockholders of the Company, the right to purchase Shares of Common Stock covered by a current Offering Period and the number of Shares which have been authorized for issuance under the Plan for any future Offering Period, the maximum number of Shares each Participant may purchase each Offering Period (pursuant to Section 5.3 hereof), as well as the price per Share and the number of Shares covered by each right under the Plan which have not yet been purchased shall be proportionately adjusted in the sole discretion of the Committee for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, extraordinary cash dividend, combination or reclassification of the Common Stock, or recapitalization, reorganization, consolidation, split-up, spin-off, or any other increase or decrease in the number of Shares effected without receipt of consideration by the Company. Except as expressly provided otherwise by the Committee, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares.
9.2   Adjustments Upon Dissolution, Liquidation, Merger or Sale of Assets
        Without limitation on the preceding provisions, in the event of any dissolution, liquidation, merger, consolidation, sale of all or substantially all of the Company’s outstanding voting securities, sales, lease, exchange or other transfer of all or substantially all of the Company’s assets, or any similar transaction as determined by the Committee in its sole discretion, the Committee may make such adjustment it deems appropriate to prevent dilution or enlargement of rights in the number and class of Shares which may be delivered under Section 12, in the number, class of or price of Shares available for purchase under the Plan and in the number of Shares which a Participant is entitled to purchase and any other adjustments it deems appropriate. Without limiting the Committee’s authority under this Plan, in the event of any such transaction, the Committee may elect to have the options hereunder assumed or such options substituted by a successor entity, to terminate all outstanding options either prior to their expiration or upon completion of the purchase of Shares on the next Purchase Date, to shorten the Offering Period by setting a new Purchase Date, or to take such other action deemed appropriate by the Committee.

SECTION 10.    DESIGNATION OF BENEFICIARY


        Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom the amount in his or her Account is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during the Participant’s lifetime. In the absence of any such designation, any Account balance remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

SECTION 11.    ADMINISTRATION
11.1 Administration by Committee
        The Plan shall be administered by the Committee. The Committee shall have the authority to delegate duties to officers, directors or employees of the Company.
11.2 Authority of Committee
        The Committee shall have the full and exclusive discretionary authority to construe and interpret the Plan and options granted under it; to establish, amend, and revoke rules and regulations for administration of the Plan (including, without limitation, the determination and change of Offering Periods, Purchase Periods and payment procedures, the requirement that Shares be held by a specified broker, and the establishment of the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars); to determine all questions of eligibility, disputed claims and policy that may arise in the administration of the Plan; to make any changes to the Plan or its operations to reduce or eliminate any unfavorable legal, accounting or other consequences to the extent deemed appropriate by the Committee; and, generally, to exercise such powers and perform such acts as the Committee deems necessary or expedient to promote the best interests of the Company, including, but not limited to, designating from time to time which Subsidiaries of the Company shall be part of the Employer. The Committee’s determinations as to the interpretation and operation of this Plan shall be final and conclusive and each action of the Committee shall be binding on all persons. The Committee may adopt special or different rules for the operation of the Plan for different Participants, including, but not limited to, rules designed to accommodate the practices of the applicable jurisdiction.
11.3 Administrative Modification
        The Plan provisions relating to the administration of the Plan may be modified by the Committee from time to time as may be desirable to satisfy any requirements of or under the securities or other applicable laws of the United States or other jurisdiction, to obtain any exemption under such laws, or to reduce or eliminate any unfavorable legal, accounting or other consequences or for any other purpose deemed appropriate by the Committee.

SECTION 12.    NUMBER OF SHARES
        Subject to adjustment as set forth in Section 9, the number of Shares reserved for sale and authorized for issuance pursuant to the Vitesse Semiconductor Corporation 2011 Employee Stock Purchase Plan is 5,500,000 shares and, therefore, the number of Shares authorized for issuance pursuant to the Plan is the number of Shares specified above less the number of Shares issued pursuant to the Vitesse Semiconductor Corporation U.S. Employee Stock Purchase Plan. If any option granted under the Plan shall for any reason terminate without having been exercised, the Shares not purchased under such option shall again become available for the Vitesse Semiconductor Corporation 2011 Employee Stock Purchase Plan. If on a given Purchase Date, the number of Shares with respect to which options are to be exercised exceeds the number of Shares then available under the Plan, the Committee shall make a pro rata allocation of the Shares remaining available for purchase in as uniform a manner as shall be practical and as it shall determine to be equitable.

SECTION 13.    MISCELLANEOUS
13.1 Restrictions on Transfer
        Options granted under the Plan to a Participant may not be exercised during the Participant’s lifetime other than by the Participant. Neither amounts credited to a Participant’s Account nor any rights with respect to the exercise of an option or to receive stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall


be without effect, except that the Company may treat such act as an election to withdraw from the Plan in accordance with Section 8.1.
13.2 Administrative Assistance
        If the Committee in its discretion so elects, it may retain a brokerage firm, bank or other financial institution to assist in the purchase of Shares, delivery of reports or other administrative aspects of the Plan. If the Committee so elects, each Participant shall (unless prohibited by applicable law) be deemed upon enrollment in the Plan to have authorized the establishment of an account on his or her behalf at such institution. Shares purchased by a Participant under the Plan shall be held in the Account in the Participant’s name, or if the Participant so indicates in the enrollment form, in the Participant’s name together with the name of his or her spouse in joint tenancy with right of survivorship or spousal community property, or in certain forms of trust approved by the Committee.
13.3 Treatment of Non-U.S. Participants
        Participants who are employed by non-U.S. Designated Subsidiaries, who are paid in foreign currency, and who contribute foreign currency to the Plan through contributions or payroll deductions will have such contributions converted to U.S. dollars. The exchange rate and method for such conversion will be determined as prescribed by the Committee. Each Participant shall bear the risk of any currency exchange fluctuations (if applicable) between the date on which any Participant contributions are converted to U.S. dollars and the following Purchase Date.
13.4 Withholding
        The Company or any Employer shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company or any member of the Employer, an amount sufficient to satisfy taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.
13.5 Applicable Law
        The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of Oregon.
13.6 Amendment and Termination
        The Board may amend, alter or terminate the Plan at any time; provided, however, that no amendment which would amend or modify the Plan in a manner requiring stockholder approval under the requirements of any securities exchange on which the Shares are traded shall be effective unless such stockholder approval is obtained. In addition, the Committee may amend the Plan as provided in Section 11.3, subject to the conditions set forth in this Section 13.6.
        If the Plan is terminated, the Committee may elect to terminate all outstanding options either prior to their expiration or upon completion of the purchase of Shares on the next Purchase Date, or may elect to permit options to expire in accordance with their terms (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all funds accumulated in Participants’ Accounts as of the date the options are terminated shall be returned to the Participants as soon as administratively feasible.
13.7 No Right of Employment
        Neither the grant nor the exercise of any rights to purchase Shares under this Plan nor anything in this Plan shall impose upon the Company or a member of the Employer any obligation to employ or continue to employ any Employee. The right of the Company or a member of the Employer to terminate any Employee shall not be diminished or affected because any rights to purchase Shares have been granted to such Employee.
13.8 Rights as Shareholder
        No Participant shall have any rights as shareholder unless and until Shares have been issued to him or her.
13.9 Governmental Regulation
        The Company’s obligation to sell and deliver Shares under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such Shares.
13.10  Gender


        When used herein, masculine terms shall be deemed to include the feminine, except when the context indicates to the contrary.
13.11  Condition for Participation
        As a condition to participation in the Plan, Eligible Employees agree to be bound by the terms of the Plan and the determinations of the Committee.
APPENDIX A

DEFINITIONS
        As used in the Plan,
”Account” means a recordkeeping account maintained for a Participant to which Participant contributions and payroll deductions, if applicable, shall be credited.
”Board” means the Board of Directors of the Company.
”Code” means the Internal Revenue Code of 1986, as amended.
”Committee” means the Compensation Committee or any other committee appointed by the Board to administer the Plan.
”Common Stock” means the Common Stock of the Company.
”Company” means Vitesse Semiconductor Corporation, a Delaware corporation.
”Cut-Off Date” means the date established by the Committee from time to time by which enrollment forms must be received prior to an Enrollment Date.
”Designated Subsidiary” means any Subsidiary which has been designated by the Committee from time to time in its sole discretion as eligible to participate in the Plan and which has adopted the Plan with the approval of the Committee in its sole and absolute discretion.
”Effective Date” means the first trading day for the Common Stock on the NASDAQ Stock Market, the New York Stock Exchange or other applicable trading market after the date on which the Plan is approved by the Company’s stockholders.
”Eligible Compensation” means all base gross earnings, including such amounts of gross earnings as are deferred by an Eligible Employee (a) under a qualified cash or deferred arrangement described in Section 401(k) of the Code or (b) to a plan qualified under Section 125 of the Code. Eligible Compensation does not include overtime, cash bonuses, commissions, severance pay, hiring and relocation bonuses, pay in lieu of vacations or sabbaticals, sick leave, gain from stock option exercises or any other special payments.
”Eligible Employee” means an Employee eligible to participate in the Plan in accordance with Section 3.
”Employee” means any individual who is an employee of the Employer for purposes of the Plan as determined by the Committee.
”Employer” means the Company or any Designated Subsidiary of the Company by which an Employee is employed.
”Enrollment Date” means the first Trading Day of an Offering Period.
”Exchange Act” means the Securities Exchange Act of 1934, as amended.
”Fair Market Value” means, as of any date, the closing price for the Common Stock on any given date during regular trading, or if not trading on that date, such price on the last preceding date on which the Common Stock was traded, unless determined otherwise by the Committee using such methods or procedures as it may establish.
”Grant Date” means a date on which an Eligible Employee is granted an option under the Plan pursuant to Section 5.
”Grant Price” means the Fair Market Value of a Share on the Grant Date for such option.


”Offering Period” means the period beginning and ending on the dates designated by the Committee; provided, that each period shall in no event end later than twenty-seven (27) months from the Grant Date. The Offering Period may but need not be the same as the Purchase Period, as determined by the Committee.
”Participant” means an Eligible Employee who has enrolled in the Plan pursuant to Section 4.
”Plan” means this Vitesse Semiconductor Corporation International Employee Stock Purchase Plan.
”Purchase Date” with respect to a Purchase Period means the last Trading Day in such Purchase Period.
”Purchase Date Price” means the Fair Market Value of a Share on the applicable Purchase Date.
”Purchase Period” means the period beginning and ending on the dates designated by the Committee; provided, that each period shall, in no event end later than twenty-seven (27) months from the Grant Date.
”Purchase Price” means the price designated by the Committee, at which each Share may be purchased under any option, but in no event less than eighty-five percent (85%) of the lesser of:
(1) The Grant Price and
(2) The Purchase Date Price.
”Shares” means shares of the Company’s Common Stock.
”Subsidiary” means a corporation, domestic or foreign, of which not less than 50% of the combined voting power is held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.
”Trading Day” means a day on which the New York Stock Exchange, the NASDAQ Stock Market or other alternative exchange or service on which the Common Stock is traded, listed or quoted is open for trading.