The Technology Committee is responsible to, among other things:
⯀ | | | Review the technology program scope, direction, quality, investment levels and execution of the technology strategies presented by the Company’s management. |
⯀ | Review significant emerging technology issues and trends that may affect the Company, its business and strategy. |
⯀ | Review the Company’s technology competitiveness, including the effectiveness of its technological efforts and investments in developing new products and business. |
The Board’s role in risk oversight includes receiving regular reports from members of management on areas of material risk to the Company, including operational, financial, legal, regulatory, compensation and strategic risks. These reports include communications from management when potentially significant new risks develop.
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TABLE OF CONTENTS Management prepares these reports based on an Enterprise Risk Management (ERM) process, which is in place| ⯀ | Assist the Company’s oversight of its ethics and compliance program, including the Company’s compliance with legal and regulatory requirements other than those related to identify, monitoraccounting or financial reporting and mitigate risks that could dramatically impactmonitoring whether the organization’s abilityCompany’s Code of Conduct has been communicated by the Company to meet strategicall directors, officers, and performance objectives. The full Board, orassociates. |
| ⯀ | Develop and annually assess the appropriate committee, receives these reports from management to enable it to understand our risk identification, risk managementadequacy of the Corporate Governance Guidelines for the Company. |
| ⯀ | Provide oversight and risk mitigation strategies. These reports include, for example, information providedguidance with regards to the Audit CommitteeCompany’s sustainability program and related environmental, social, and governance (“ESG”) matters, receive updates from management regarding the Company’s cybersecurity systems, policies,ESG activities, and procedures, results of penetration testing,review and amount of money spent to improve cybersecurity, to allowapprove the Audit Committee to fulfill its cybersecurity risk oversight role. All Board committees meet regularly and report to the full Board on risk management matters. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.Fundamentally, our business is positioned within the long-term sustainability megatrend, and our products help enable our customers’ applications that empower a more sustainable, safer, and connected world. Therefore, Littelfuse is committed to the long-term value of a robust sustainability strategy not only with respect to the markets we serve, but through a continuous improvement mindset around reducing our operational impact and doing the right thing to support our associates and the communities where we live and work.
The Nominating and Governance Committee of our Board of Directors provides oversight of our Sustainability Program and approves our annual sustainability report. Additional governance best practices are in place to support our sustainability program journey, including:
⯀ | Regular Nominating & Governance Committee and/or Board updates. |
⯀ | Quarterly senior leadership review of sustainability program progress and approval of overall strategy, including the CEO, CFO, CLO and CHRO. |
⯀ | Sustainability program oversight by our Chief Legal Officer. |
⯀ | Regular sustainability steering committee meetings to drive sustainability initiatives and progress. |
⯀ | Global ESG Policy that includes a commitment to publish annual ESG Reporting to stakeholders. |
⯀ | Robust environmental, social and governance policies that serve as a strong foundation to ensure the health and safety of associates, respect for the environment and adherence to the highest ethical standards. |
In 2022, the Company published our second annual Sustainability Report (the “2021 Sustainability Report”) to further enhance our transparency to communicate our progress towards our key internal sustainability initiatives. Notably,published by the 2021 Sustainability Report included expanding our reporting framework beyondCompany.
|
Technology Committee Meetings held in 2023: 3 The Technology Committee is responsible to, among other things: | ⯀ | Review the GRI Sustainability Reporting Standards to also includetechnology program scope, direction, quality, investment levels and execution of the Sustainability Accounting Standards Board (SASB) and align our material topics withtechnology strategies presented by the United Nations Sustainable Development Goals (SDGs).Based upon our materiality assessment, our strategic focus areas in our 2021 Sustainability Report continue to include:
• business ethics
• training, education, and career development
• health and safety in the workplace
• economic performance
| | | • innovation
• water and wastewater management
• diversity and equal opportunity
• energy management
| | | • climate change and greenhouse gas emissions
• sustainable supply chain
• community involvement
• waste and hazardous material management
Company’s management. |
The| ⯀ | Review significant emerging technology issues and trends that may affect the Company, has further communicated several key goals around these strategic focus areas,its business and strategy. |
| ⯀ | Review the Company’s technology competitiveness, including to:⯀ | reduce our greenhouse gas emissions 38% by 2035;the effectiveness of its technological efforts and investments in developing new products and business. |
⯀ | provide a zero-injury workplace;The Board’s role in risk oversight includes receiving regular reports from members of management on areas of material risk to the Company, including operational, financial, legal, regulatory, compensation and strategic risks. These reports include communications from management when potentially significant new risks develop. Management prepares these reports based on an Enterprise Risk Management (ERM) process, which is in place to identify, monitor and mitigate risks that could dramatically impact the organization’s ability to meet strategic and performance objectives. The full Board, or the appropriate committee, receives these reports from management to enable it to understand our risk identification, risk management and risk mitigation strategies. These reports include, for example, information provided to the Audit Committee regarding the Company’s cybersecurity systems, policies, and procedures and investments to improve cybersecurity, to allow the Audit Committee to fulfill its cybersecurity risk oversight role as described below. All Board committees meet regularly and report to the full Board on risk management matters. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships. The cybersecurity and data protection program at Littelfuse is based on foundational principles outlined in applicable industry and internationally accepted cybersecurity frameworks. Like all cybersecurity programs, there is no guarantee that every attack method and technique has been fully addressed, as these change constantly, but Littelfuse is diligent in its attempts to protect data of the Company and its stakeholders. Littelfuse strives to assess and update its cybersecurity program on a regular basis using an Information Security Management System (ISMS) comprised of three main elements – 1. independent internationally recognized vendors and technologies for assessments and monitoring, 2. strong internal controls based on industry standards, and 3. Board and Senior Leadership governance and support. Oversight from the Board, through the Audit Committee, is a key component of the Company’s cybersecurity strategy. The Audit Committee is tasked with reviewing the Company’s policies and procedures related to cybersecurity risks and incidents. The Company’s Chief Information Officer oversees its cybersecurity program, and regularly provides updates to Littelfuse senior leadership and the Audit Committee, as well as the full Board, which include information regarding the Company’s cybersecurity program initiatives, insurance coverage, acquisition integration processes, program performance as well as the maturity of the Littelfuse cybersecurity program. | | | 2024 Proxy Statement | | | 17 |
⯀ | increase female leader representation to 25% by 2026;TABLE OF CONTENTS These cybersecurity maturity updates are based on cybersecurity maturity reporting and analysis by the Littelfuse internal IT team, as well as reporting provided by independent third parties. The updates help senior leadership, the Audit Committee, and the Board to understand the risks the organization faces based on changing cybersecurity threats and on changes to the Littelfuse environment due to factors such as acquisitions and new technology upgrades and improvements. Representatives from Littelfuse’s technology team and other business functions receive regular cybersecurity risk reports and use this information for its decision making in operational improvements as well as budget and resource allocations. The Company is committed to empowering change on its sustainability journey. Every Littelfuse employee, customer, and partner has the potential to drive positive change – environmentally, socially, and ethically. Together, we’re shaping a future defined by sustainable choices and conscientious actions. Sustainability is more than just a concept; it’s integrated into the Company’s business strategy, processes, and daily actions. Innovation and collaboration are at the heart of its sustainability journey. Accordingly, the Company is positioned within the global sustainability megatrend to enhance our product offering to help empower a sustainable, connected, and safer world. Many of the Company’s key end markets are linked to sustainable applications such as electric vehicles and charging infrastructure, renewable energy, and power management. The Nominating and Governance Committee of our Board of Directors provides oversight of our Sustainability Program and approves our annual sustainability report. Additional governance best practices are in place to support our sustainability program journey, including: | ⯀ | Regular Nominating & Governance Committee and/or Board updates. |
| ⯀ | Sustainability program oversight by our Chief Legal Officer includes quarterly review of sustainability program progress and approval of overall strategy. |
| ⯀ | Regular sustainability steering committee meetings to drive sustainability initiatives and progress. |
| ⯀ | Global ESG Policy that includes a commitment to publish annual ESG Reporting to stakeholders. |
| ⯀ | Robust environmental, social and governance policies that serve as a strong foundation to ensure the health and safety of associates, respect for the environment and adherence to the highest ethical standards. |
⯀ | increase the representation of Black or African American associatesThe Company publishes an annual Sustainability Report to communicate our commitment, approach, and impact on each of our focus areas. The 2022 Sustainability Report, published in July 2023, was prepared in alignment with the GRI Standards – 2021, the Sustainability Accounting Standards Board (“SASB”), and outlines our governance, strategy, risk management, and metrics identified in the Task Force on Climate-Related Financial Disclosures (“TCFD”) recommendations. The following goals have further been established, and progress is reported on an annual basis in the Sustainability Report: | ⯀ | Reduce Scope 1 and 2 Greenhouse Gas Emissions 38% by 2035, based on a 2019 baseline – in line with keeping global temperatures well below 2" above pre-industrial temperatures. |
| ⯀ | Achieve zero waste in operations. |
| ⯀ | Aspire to increase diversity to have at least 25% female leaders by 2026 and at least 5% Black and African American employees in the U.S. to at least 5% by 2026. |
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| ⯀ | Achieve zero accident workplace. |
TABLE OF CONTENTS
Information regarding our progress towards these initial goals, and on how we manage our material topics is available in our 2021 Sustainability Report, located on our website at https://www.littelfuse.com/about-us/sustainability.aspx. The contents| ⯀ | Achieve 100% Code of our 2021Conduct training. |
| ⯀ | Elevate product stewardship as a competitive advantage. |
Information regarding our progress towards these initial goals, and on how we manage our material topics is available in the latest Sustainability Report, located on our website at https://www.littelfuse.com/about-us/sustainability.aspx. The contents of the Company’s Sustainability Reports and website are not incorporated by reference in this Proxy Statement. | | | 2024 Proxy Statement | | | 18 |
TABLE OF CONTENTS The Board maintains a stock ownership policy that requires our executive officers and directors to hold and maintain a minimum number of shares of common stock of the Company. The policy provides for the following: | ⯀ | Each executive officer and non-employee director is required to reach specific stock ownership within five years of his or her election or appointment. The stock ownership requirements are established by the Compensation Committee on a periodic basis and are generally targeted at the following minimum amounts, calculated at the time the requirements are established: |
| ○ | Non-Employee Directors: 5 times annual retainer |
| ○ | Chief Executive Officer: 5 times base salary |
| ○ | Chief Financial Officer and Executive Vice Presidents: 3 times base salary |
| ○ | Senior Vice Presidents: 2 times base salary |
| ⯀ | Until such time as the director or executive officer achieves the required stock ownership level, the director or executive officer is required to retain 50% of the net after-tax shares of common stock acquired upon a stock option exercise or vesting of restricted stock units. |
| ⯀ | Failure of a director or executive officer to satisfy the applicable stock ownership level within the required compliance period may result in their removal of participation in the Company’s annual equity grants, and/or being subject to a 100% retention requirement. |
All of our directors are in compliance with the guidelines and requirements set forth in our stock ownership policy. The named executive officers’ compliance with the stock ownership policy is discussed further in the Compensation Discussion and Analysis Section starting on page 26. Anti-Pledging and Anti-Hedging Under our Insider Trading Policy, our directors, officers and employees are prohibited from holding our common stock in a margin account or otherwise pledging our common stock as collateral for a loan. Our Insider Trading Policy also prohibits directors, officers and employees from entering into hedging transactions, such as swaps, collars, forward sale contracts, exchange funds, and similar arrangements or instruments designed to hedge or offset decreases in the market value of Littelfuse securities, except in the case of exceptional circumstances approved in advance by the Board of Directors. Corporate Governance Guidelines; Code of Conduct The Board has adopted Corporate Governance Guidelines. These guidelines address items such as the qualifications and responsibilities of our directors and director candidates and the corporate governance policies and standards applicable to the Board. In addition, the Board has adopted a Code of Conduct that applies to all our directors, principal executive officer, principal financial officer, principal accounting officer and controller, and all employees. The full text of our Corporate Governance Guidelines and our Code of Conduct is available on our website at: https://investor.littelfuse.com/corporate-governance/governance-overview. We will also disclose on this page of our website any amendments to, or waivers from, the Code of Conduct. | | | 2023 Proxy Statement
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TABLE OF CONTENTS
Related Person Transactions Policy The Board maintains a written Related Person Transactions Policy that governs the review, approval and ratification of transactions involving the Company and related persons where the amount involved exceeds $120,000. The Nominating and Governance Committee reviews and approves all proposed Related Person Transactions (as defined below). Related persons include: | ⯀ | any person who is, or at any time since the beginning of our last fiscal year was, a director, executive officer, or a nominee to become a director of Littelfuse; |
| ⯀ | any person who is known to be the beneficial owner of more than 5% of any class of our voting securities; |
⯀ | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee, or more than 5% beneficial owner; |
⯀ | any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee, or more than 5% beneficial owner; |
⯀ | any firm, corporation or other entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest; and |
⯀ | any charitable or non-profit organization in which any of the foregoing persons is actively involved in fundraising or otherwise serves as a director, trustee or in a similar capacity. |
The policy defines a Related Person Transaction as a transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships in which the Company (including any of our subsidiaries) was, is or will be a participant, the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest.
Our Executive Vice President, Mergers & Acquisitions, Chief Legal Officer and Corporate Secretary (“CLO”) determines for purposes of the policy whether a proposed transaction is a Related Person Transaction that must be approved by the Nominating and Governance Committee.The Nominating and Governance Committee will consider all of the relevant facts and circumstances available to the Nominating and Governance Committee, including (if applicable) but not limited to:
⯀ | | | the benefits of the Company; |
⯀ | the impact on a director’s independence in the event the Related Person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; |
⯀ | the availability of other sources for comparable products or services; |
⯀ | the terms of the transaction; and |
⯀ | the terms available to unrelated third parties or to employees generally. |
The Nominating and Governance Committee will approve only those Related Person Transactions that are in, or are not inconsistent with, our best interests and the best interests of our stockholders, as the Nominating and Governance Committee determines in good faith.
Related Party TransactionsDuring 2022 the Company entered into a related party transaction with Automated Technology (Phil.), Inc., as described below. This transaction was reviewed by our Nominating and Governance Committee, and it was determined that it is not inconsistent with the best interests of the Company and its stockholders.
Automated Technology (Phil.), Inc.
The Company owns approximately 24% of the outstanding common shares of Automated Technology (Phil.), Inc. (“ATEC”), a supplier located in the Philippines that provides assembly and test services. For the year ended
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TABLE OF CONTENTS December 31, 2022, ATEC rendered assembly| ⯀ | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee, or more than 5% beneficial owner; |
| ⯀ | any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee, or more than 5% beneficial owner; |
| ⯀ | any firm, corporation or other entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest; and test services to |
| ⯀ | any charitable or non-profit organization in which any of the Company totaling approximately $11.5 million. As of December 31, 2022, the Company’s accounts payable balance to ATEC was $1.8 million. In addition, our director Dr. Zommer currentlyforegoing persons is actively involved in fundraising or otherwise serves as a director, of ATEC.trustee or in a similar capacity. |
The policy defines a Related Person Transaction as a transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships in which the Company (including any of our subsidiaries) was, is or will be a participant, the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest. Our Executive Vice President, Mergers & Acquisitions, Chief Legal Officer and Corporate Secretary (“CLO”) determines for purposes of the policy whether a proposed transaction is a Related Person Transaction that must be approved by the Nominating and Governance Committee. The Nominating and Governance Committee will consider all of the relevant facts and circumstances available to the Nominating and Governance Committee, including (if applicable) but not limited to: Compensation Committee Interlocks and Insider ParticipationTzau-Jin Chung, Cary T. Fu, William P. Noglows, and Kristina A. Cerniglia served on | ⯀ | the Compensation Committee during the 2022 fiscal year, and none of them is now or ever was an employeebenefits of the Company. None of our executive officers served asCompany; |
| ⯀ | the impact on a director’s independence in the event the Related Person is a director, an immediate family member of the compensation committee, or on a board of directors performing equivalent functions, of any entity that had one or more of its executive officers serving as a director or memberan entity in which a director is a partner, stockholder or executive officer; |
| ⯀ | the availability of our Compensation Committee.Stockholders wishing to communicate directly with other sources for comparable products or services;
|
| ⯀ | the Board or individual directors should communicate in writing at the following address:Littelfuse, Inc.
8755 West Higgins Road, Suite 500
Chicago, Illinois 60631
Attention: Corporate Secretary
All written communications are received and processed by the Corporate Secretary prior to being forwarded to the Chairmanterms of the Boardtransaction; and
|
| ⯀ | the terms available to unrelated third parties or other appropriate members of the Board. Directors generally will not be forwarded communications that are primarily commercial in nature, relate to improper or irrelevant topics, or request general information aboutemployees generally. |
The Nominating and Governance Committee will approve only those Related Person Transactions that are in, or are not inconsistent with, our best interests and the best interests of our stockholders, as the Nominating and Governance Committee determines in good faith. Related Party Transactions As in past years, during 2023 the Company entered into related party transactions with Automated Technology (Phil.), Inc., as described below. This transaction was reviewed by our Nominating and Governance Committee, and it was determined that it is not inconsistent with the best interests of the Company and its stockholders. Automated Technology (Phil.), Inc. The Company owns approximately 24% of the outstanding common shares of Automated Technology (Phil.), Inc. (“ATEC”), a supplier located in the Philippines that provides assembly and test services. For the year ended December 30, 2023, ATEC rendered assembly and test services to the Company totaling approximately $11.5 million. As of December 30, 2023, the Company’s accounts payable balance to ATEC was $1.8 million. In addition, our former director Dr. Nathan Zommer served as a director of ATEC until April 2023. Compensation Committee Interlocks and Insider Participation Tzau-Jin Chung, Cary T. Fu, Kristina A. Cerniglia and William P. Noglows served on the Compensation Committee during the 2023 fiscal year, and none of them is now or ever was an employee of the Company. None of our executive officers served as a member of the compensation committee, or on a board of directors performing equivalent functions, of any entity that had one or more of its executive officers serving as a director or member of our Compensation Committee. In addition to internal reporting procedures, the Audit Committee has established communication procedures through an independent Ethics Helpline that can be accessed globally. The Ethics Helpline provides for communication, either anonymously or identified, from employees, vendors, and other interested parties to communicate concerns, including concerns with respect to our accounting, internal controls or financial reporting, to the Audit Committee and CLO. Concerns may be reported via telephone in the U.S. at 1-800-803-4135 or online at littelfuse.ethicspoint.com. | | | We believe that effective corporate governance should include regular engagement with our stockholders. Regular engagement forums include investor conferences, non-deal roadshows, meetings, and phone calls. During 2022, we conducted our stockholder engagement efforts through a combination of in-person and virtual forums, and effectively executed our planned outreach events. We believe this hybrid of outreach will continue for the foreseeable future given favorable benefits of both forums. We request feedback during these engagements and share the responses with our Executive Leadership Team and Board, which also helps to better inform our stakeholder messaging.
We believe that regular engagement with our stockholders helps to strengthen our relationships with stockholders and helps us to better understand stockholder views on our business strategy and performance, and corporate environmental, social, and governance practices.
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TABLE OF CONTENTS
OWNERSHIP OF LITTELFUSE, INC. COMMON STOCKThe following table sets forth certain information with respect to the beneficial ownership of our common stock as of February 28, 2023, by (1) each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, (2) each director, (3) each NEO, and (4) all of our directors and executive officers as a group. Information concerning persons known to us to be beneficial owners of more than 5% of our common stock is based upon our review of Schedules 13D, 13F and 13G, and amendments thereto, as filed with the SEC. Of the shares reported, none are subject to pledge or lien in a margin account or pursuant to a loan agreement.
Beneficial Ownership Table| | 5% Principal Stockholders
| | | | | | | | | | The Vanguard Group (3)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
| | | 2,546,324 | | | 10.3% | | | | BlackRock, Inc. (4)
55 East 52nd Street
New York, New York 10055
| | | 2,146,824 | | | 8.7% | | | | T. Rowe Price Investment Management, Inc. (5)
101 E. Pratt Street
Baltimore, Maryland 21201
| | | 1,494,101 | | | 6.0% | | | | Directors
| | | | | | | | | | Kristina A. Cerniglia (6) | | | 4,771 | | | * | | | | Tzau-Jin Chung (7) | | | 13,486 | | | * | | | | Cary T. Fu (8) | | | 7,563 | | | * | | | | Maria C. Green (9) | | | 2,654 | | | * | | | | Anthony Grillo (10) | | | 54,866 | | | * | | | | David W. Heinzmann (11) | | | 152,165 | | | * | | | | Gordon Hunter (12) | | | 27,480 | | | * | | | | William P. Noglows (13) | | | 23,053 | | | * | | | | Nathan Zommer (14) | | | 190,005 | | | * | | | | Named Executive Officers
| | | | | | | | | | Meenal A. Sethna (15) | | | 59,085 | | | * | | | | Ryan K. Stafford (16) | | | 58,337 | | | * | | | | Maggie Chu (17) | | | 3,058 | | | * | | | | Deepak Nayar (18) | | | 14,994 | | | * | | | | All current directors and executive officers as a group
(15 persons) (19) | | | 642,589 | | | 2.7% | |
*
| Indicates ownership of less than 1% of common stock. |
(1)
| Shares beneficially owned includes all outstanding stock options, restricted stock units, and deferred restricted stock units exercisable for or convertible into our common stock either currently or within 60 days after February 28, 2023. Except as otherwise noted, the beneficial owners have sole voting and sole dispositive power with respect to such shares. |
(2)
| Applicable ownership percentage is based upon 24,797,973 shares of common stock outstanding as of February 28, 2023. |
(3)
| The information is based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 9, 2023 reporting beneficial ownership as of December 30, 2022. The Vanguard Group reported that they have sole voting power with respect to no shares, shared voting power with respect to 8,326 shares, shared dispositive power with respect to 33,052 shares, and sole dispositive power with respect to 2,513,272 shares. |
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|
TABLE OF CONTENTS (4)
| The information is based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 25, 2023 reporting beneficial ownership as of December 31, 2022. BlackRock, Inc. reported that they have sole voting power with respect to 2,070,292 shares, and sole dispositive power with respect to all of the shares reported. |
(5)
| The information is based on a Schedule 13G filed by T. Rowe Price Investment Management, Inc. with the SEC on February 14, 2022 reporting beneficial ownership as of December 31, 2022. T. Rowe Price Investment Management, Inc. reported that they have sole voting power with respect to 529,091 shares, sole dispositive power with respect to 1,494,101 shares and no shared voting or shared dispositive power. |
(6)
| Includes (i) 2,998 stock options currently exercisable or that become exercisable within 60 days, and (ii) 567 restricted stock units that vest within 60 days. |
(7)
| Includes (i) 2,998 stock options currently exercisable or that become exercisable within 60 days, (ii) 567 restricted stock units that vest within 60 days, and (iii) 7,308 deferred restricted stock units granted pursuant to the directors deferred compensation plan that are deferred until 10 days after termination of service from the Board, including by resignation or retirement. |
(8)
| Includes (i) 3,798 stock options currently exercisable or that become exercisable within 60 days, and (ii) 567 restricted stock units that vest within 60 days. |
(9)
| Includes (i) 2,087 stock options currently exercisable or that become exercisable within 60 days, and (ii) 1,701 deferred restricted stock units granted pursuant to the directors deferred compensation plan that are deferred until 10 days after termination of service from the Board, including by resignation or retirement. |
(10)
| Includes (i) 4,743 stock options currently exercisable or that become exercisable within 60 days, (ii) 567 restricted stock units that vest within 60 days, and (iii) 774 deferred restricted stock units granted pursuant to the directors deferred compensation plan that are deferred until 10 days after termination of service from the Board, including by resignation or retirement. |
(11)
| Includes (i) 113,620 stock options currently exercisable or that become exercisable within 60 days, and (ii) 9,048 restricted stock units that vest within 60 days. |
(12)
| Includes (i) 3,798 stock options currently exercisable or that become exercisable within 60 days, and (ii) 567 restricted stock units that vest within 60 days. |
(13)
| Includes (i) 4,743 stock options currently exercisable or that become exercisable within 60 days, (ii) 567 restricted stock units that vest within 60 days, (iii) 5,000 shares held indirectly by trust, and (iv) 1,784 deferred restricted stock units granted pursuant to the directors deferred compensation plan that are deferred until 10 days after termination of service from the Board, including by resignation or retirement. |
(14)
| Includes (i) 2,998 stock options currently exercisable or that become exercisable within 60 days, and (ii) 567 restricted stock units that vest within 60 days. Excludes 16,727 shares held in a trust account pursuant to which he has no voting or dispositive power. |
(15)
| Includes (i) 44,148 stock options currently exercisable or that become exercisable within 60 days, and (ii) 3,371 restricted stock units that vest within 60 days. |
(16)
| Includes (i) 36,896 stock options currently exercisable or that become exercisable within 60 days, and (ii) 3,702 restricted stock units that vest within 60 days. |
(17)
| Includes (i) 2,031 stock options currently exercisable or that become exercisable within 60 days, and (ii) 411 restricted stock units that vest within 60 days. |
(18)
| Includes (i) 8,937 stock options currently exercisable or that become exercisable within 60 days, and (ii) 6,049 restricted stock units that vest within 60 days. |
(19)
| Our executive officers as of February 28, 2023 consisted of our named executive officers, Mr. Alexander Conrad, and Mr. Matthew J. Cole. The number of shares of common stock beneficially owned by our current directors and executive officers as a group includes (i) 24,436 stock options currently exercisable or that become exercisable within 60 days, and (ii) 2,326 restricted stock units that vest within 60 days, held by Messrs. Conrad and Cole.Stockholders wishing to communicate directly with the Board or individual directors should communicate in writing at the following address: Littelfuse, Inc.
8755 West Higgins Road, Suite 500
Chicago, Illinois 60631
Attention: Corporate Secretary All written communications are received and processed by the Corporate Secretary prior to being forwarded to the Chairman of the Board or other appropriate members of the Board. Directors generally will not be forwarded communications that are primarily commercial in nature, relate to improper or irrelevant topics, or request general information about the Company. In addition to internal reporting procedures, the Audit Committee has established communication procedures through an independent Ethics Helpline that can be accessed globally. The Ethics Helpline provides for communication, either anonymously or identified, from employees, vendors, and other interested parties to communicate concerns, including concerns with respect to our accounting, internal controls or financial reporting, to the Audit Committee and CLO. Concerns may be reported via telephone in the U.S. at 1-800-803-4135 or online at littelfuse.ethicspoint.com. We believe that effective corporate governance should include regular engagement with our stockholders. Regular engagement forums include investor conferences, non-deal roadshows, meetings, and phone calls. During 2023, we conducted our stockholder engagement efforts through a combination of in-person and virtual forums, and effectively executed our planned outreach events. We expect to continue to derive numerous benefits from this comprehensive approach to outreach. We request feedback during these engagements and share the responses with our Executive Leadership Team and Board, which also helps to better inform our stakeholder messaging. We believe that regular engagement with our stockholders helps to strengthen our relationships with stockholders and helps us to better understand stockholder views on our business strategy and performance, and corporate environmental, social, and governance practices. | | | 2024 Proxy Statement | | | 21 |
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TABLE OF CONTENTS OWNERSHIP OF LITTELFUSE, INC. COMMON STOCK The following table sets forth certain information with respect to the beneficial ownership of our common stock as of February 29, 2024, by (1) each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, (2) each director, (3) each NEO, and (4) all of our directors and executive officers as a group. Information concerning persons known to us to be beneficial owners of more than 5% of our common stock is based upon our review of Schedules 13D, 13F and 13G, and amendments thereto, as filed with the SEC. Of the shares reported, none are subject to pledge or lien in a margin account or pursuant to a loan agreement. Beneficial Ownership Table | | 5% Principal Stockholders
| | | | | | | | | | The Vanguard Group (3)
100 Vanguard Boulevard Malvern,
Pennsylvania 19355
| | | 2,662,648 | | | 10.7% | | | | BlackRock, Inc. (4)
50 Hudson Yards
New York, New York 10001
| | | 2,155,515 | | | 8.6% | | | | T. Rowe Price Investment Management, Inc. (5)
101 E. Pratt Street
Baltimore, Maryland 21201
| | | 1,415,163 | | | 5.7% | | | | Directors | | | | | | | | | | Kristina A. Cerniglia (6) | | | 5,927 | | | * | | | | Tzau-Jin Chung (7) | | | 12,968 | | | * | | | | Gayla J. Delly (8) | | | 0 | | | * | | | | Cary T. Fu (9) | | | 8,719 | | | * | | | | Maria C. Green (10) | | | 3,243 | | | * | | | | Anthony Grillo (11) | | | 57,226 | | | * | | | | David W. Heinzmann (12) | | | 182,042 | | | * | | | | Gregory N. Henderson (13) | | | 0 | | | * | | | | Gordon Hunter (14) | | | 28,385 | | | * | | | | William P. Noglows (15) | | | 24,919 | | | * | | | | Named Executive Officers
| | | | | | | | | | Meenal A. Sethna (16) | | | 81,460 | | | * | | | | Ryan K. Stafford (17) | | | 67,675 | | | * | | | | Maggie Chu (18) | | | 7,886 | | | * | | | | Deepak Nayar (19) | | | 13,592 | | | * | | | | All current directors and executive officers as a group
(18 persons) (20) | | | 568,815 | | | 2.3% | |
*
| Indicates ownership of less than 1% of common stock. |
(1)
| Shares beneficially owned includes all outstanding stock options, restricted stock units, and deferred restricted stock units exercisable for or convertible into our common stock either currently or within 60 days after February 29, 2024. Except as otherwise noted, the beneficial owners have sole voting and sole dispositive power with respect to such shares. |
(2)
| Applicable ownership percentage is based upon 24,922,944 shares of common stock outstanding as of February 27, 2024. |
(3)
| The information is based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 13, 2024 |
| | | 2024 Proxy Statement | | | Delinquent Section 16(a) Reports22Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers, directors and holders of more than 10% of our common stock to file
|
TABLE OF CONTENTS reporting beneficial ownership as of December 29, 2023. The Vanguard Group reported that they have sole voting power with respect to no shares, shared voting power with respect to 8,771 shares, shared dispositive power with respect to 35,248 shares, and sole dispositive power with respect to 2,627,400 shares. (4)
| The information is based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC initial reportson January 25, 2024 reporting beneficial ownership as of ownership and reports of changes in ownership of our common stock and other equity securities. Based solely on our review of the copies of these reports and on information provided by our executive officers and directors, we believe that during the fiscal year ended December 31, 2022 our directors2023. BlackRock, Inc. reported that they have sole voting power with respect to 2,087,520 shares, and executive officers compliedsole dispositive power with all Section 16(a) filing requirements. | | | 2023 Proxy Statement
| | | 23
|
TABLE OF CONTENTS
PROPOSAL NO. 2 - ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERSUnder the Dodd-Frank Act and the related rules promulgated by the SEC, we are requesting your advisory, non-binding approval of the compensation of our NEOs as disclosed in the following Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative as presented in this Proxy Statement. This proposal, commonly known as a “Say-on-Pay” proposal, gives stockholders the opportunityrespect to provide their input on our executive pay program and policies. We currently elect to provide our stockholders the opportunity to provide an advisory, non-binding vote on the compensation of our NEOs on an annual basis. Accordingly, it is expected that the next say-on-pay vote will occur at the 2024 annual meeting of stockholders.
As an advisory vote, this proposal is not binding on Littelfuse, the Board, or the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by stockholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding named executive officers.
Executive Compensation VoteWe believe that our executive compensation program effectively aligns the interests of stockholders and executives, incentivizes the accomplishment of company goals, and attracts and retains talented executives. The key components of our compensation program are as follows:
⯀ | Alignment of executive and stockholder interests through short and long-term incentives linked to operating performance; |
⯀ | Short-term cash compensation based upon individual contribution and performance; |
⯀ | Compensation structured to attract and retain the most talented industry leaders; and |
⯀ | Compensation program based, in part, on the practices of peers in our industry and other comparable companies. |
At our 2022 annual meeting of stockholders, approximately 93%all of the shares voted were cast in support of our executive compensation program. The Board and Compensation Committee value the opinions of our stockholders and took this high level of approval into account when developing the compensation for our NEOs. There were no significant changes to our executive compensation program for 2022 in light of the results of the say-on-pay votes at the 2022 annual meeting of stockholders.
This vote is not intended to address any specific item of compensation; rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Our Board urges you to approve the compensation of our NEOs by voting in favor of the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of our NEOs, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative as presented in this Proxy Statement.”
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE APPROVAL OF THE COMPENSATION OF OUR NEOS
| | | 2023 Proxy Statement
| | | 24
reported. |
TABLE OF CONTENTS
PROPOSAL NO. 3 - ADVISORY VOTE ON THE FREQUENCY OF ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERSIn connection(5)
| The information is based on a Schedule 13G filed by T. Rowe Price Investment Management, Inc. with the requirementsSEC on February 14, 2024 reporting beneficial ownership as of December 31, 2023. T. Rowe Price Investment Management, Inc. reported that they have sole voting power with respect to 522,650 shares, sole dispositive power with respect to 1,415,163 shares and no shared voting or shared dispositive power. |
(6)
| Includes (i) 3,700 stock options currently exercisable or that become exercisable within 60 days, and (ii) 454 restricted stock units that vest within 60 days. |
(7)
| Includes (i) 3,700 stock options currently exercisable or that become exercisable within 60 days, and (ii) 454 restricted stock units that vest within 60 days. Mr. Chung also holds 7,308 deferred restricted stock units granted pursuant to the Dodd-Frank Actdirectors deferred compensation plan that are deferred until 10 days after termination of service from the Board, including by resignation or retirement. |
(8)
| Ms. Delly joined the Board in September 2023. |
(9)
| Includes (i) 4,500 stock options currently exercisable or that become exercisable within 60 days, and (ii) 454 restricted stock units that vest within 60 days. |
(10)
| Includes (i) 2,789 stock options currently exercisable or that become exercisable within 60 days, and (ii) 454 restricted stock units that vest within 60 days. Ms. Green also holds 2,169 deferred restricted stock units granted pursuant to the related rules promulgateddirectors deferred compensation plan that are deferred until 10 days after termination of service from the Board, including by resignation or retirement. |
(11)
| Includes (i) 5,445 stock options currently exercisable or that become exercisable within 60 days, and (ii) 454 restricted stock units that vest within 60 days. Mr. Grillo also holds 774 deferred restricted stock units granted pursuant to the SEC, wedirectors deferred compensation plan that are asking youdeferred until 10 days after termination of service from the Board, including by resignation or retirement. |
(12)
| Includes (i) 139,231 stock options currently exercisable or that become exercisable within 60 days, and (ii) 8,275 restricted stock units that vest within 60 days. |
(13)
| Dr. Henderson joined the Board in May 2023. |
(14)
| Includes (i) 4,500 stock options currently exercisable or that become exercisable within 60 days, and (ii) 454 restricted stock units that vest within 60 days. |
(15)
| Includes (i) 4,500 stock options currently exercisable or that become exercisable within 60 days, (ii) 454 restricted stock units that vest within 60 days, and (iii) 5,000 shares held indirectly by trust. Mr. Noglows also holds 1,784 deferred restricted stock units granted pursuant to provide an advisory, non-binding vote on how frequently you wish to cast an advisory vote on the directors deferred compensation plan that are deferred until 10 days after termination of service from the Board, including by resignation or retirement. |
(16)
| Includes (i) 65,056 stock options currently exercisable or that become exercisable within 60 days, and (ii) 2,895 restricted stock units that vest within 60 days. |
(17)
| Includes (i) 46,515 stock options currently exercisable or that become exercisable within 60 days, and (ii) 3,134 restricted stock units that vest within 60 days. |
(18)
| Includes (i) 5,489 stock options currently exercisable or that become exercisable within 60 days, and (ii) 875 restricted stock units that vest within 60 days. |
(19)
| Includes (i) 11,581 stock options currently exercisable or that become exercisable within 60 days, and (ii) 2,003 restricted stock units that vest within 60 days. |
(20)
| Our executive officers as of February 29, 2024 consisted of our named executive officers: once every year, once every two years, or once every three years. This proposal, often called a “Say-When-on-Pay” proposal, allows stockholders to provide advisory input on the frequency with which they would prefer an advisory vote on executive compensation be included as a proposal in our Proxy Statement.Frequencyofficers, Mr. Alexander Conrad, Mr. Matthew J. Cole, Mr. Chad Marak, and Mr. Peter Kim. The number of Advisory Vote on Executive CompensationAfter careful consideration, the Board has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for the Company at this time, and therefore the Board recommends that you vote for a one-year interval for the advisory vote. In formulating its recommendation, the Board considered that an annual advisory vote on executive compensation will allow our stockholders to provide us with current direct input on our compensation philosophy, policies and practices as disclosed in the Proxy Statement, consistent with our policyshares of seeking input from and engaging in discussions with our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices. The Board also considered the stockholders’ advisory vote on the Say-When-on-Pay proposal presented at the Company’s annual meeting in 2017, when a plurality of votes cast were cast in favor of one-year intervals.
Although the Board of Directors recommends that stockholders vote for a Say-on-Pay proposal every year, you may cast your vote on your preferred voting frequency by choosing the option of one year, two years or three years, or abstain from voting, when you indicate your preference in response to the following resolution:
“RESOLVED, that the stockholders determine on an advisory basis that the frequency with which the stockholders shall have an advisory vote on the compensation of the named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative as presented in the Proxy Statement, shall be (A) every year, (B) every two years or (C) every three years.”
While we believe that a vote once every year is the best choice for us, you are not voting to approve or disapprove our recommendation, but rather to make your own choice among a vote once every year, every two years or every three years. You may also abstain from voting on this item. The option of one year, two years or three years that receives a plurality of votes cast by our stockholders will be the frequency for the advisory vote on executive compensation that has been selected by our stockholders. However, because this vote is advisory and will not be binding on the Board of Directors, the Board of Directors may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option selected by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR A FREQUENCY OF EVERY YEAR FOR FUTURE STOCKHOLDER ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
| | | 2023 Proxy Statement
| | | 25
common stock |
| | | 2024 Proxy Statement | | | 23 |
TABLE OF CONTENTS beneficially owned by our current directors and executive officers as a group includes (i) 62,383 stock options currently exercisable or that become exercisable within 60 days, and (ii) 3,941 restricted stock units that vest within 60 days, held by Messrs. Conrad, Cole, Marak, and Kim. Delinquent Section 16(a) Reports Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers, directors and holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Based solely on our review of the copies of these reports and on information provided by our executive officers and directors, we believe that during the fiscal year ended December 30, 2023 our directors and executive officers complied with all Section 16(a) filing requirements. TABLE OF CONTENTS PROPOSAL NO. 2 – ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS Under the Dodd-Frank Act and the related rules promulgated by the SEC, we are requesting your advisory, non-binding approval of the compensation of our NEOs as disclosed in the following Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative as presented in this Proxy Statement. This proposal, commonly known as a “Say-on-Pay” proposal, gives stockholders the opportunity to provide their input on our executive pay program and policies. We currently elect to provide our stockholders the opportunity to provide an advisory, non-binding vote on the compensation of our NEOs on an annual basis. Accordingly, it is expected that the next say-on-pay vote will occur at the 2025 annual meeting of stockholders. As an advisory vote, this proposal is not binding on Littelfuse, the Board, or the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by stockholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding named executive officers. Executive Compensation Vote We believe that our executive compensation program effectively aligns the interests of stockholders and executives, incentivizes the accomplishment of company goals, and attracts and retains talented executives. The key components of our compensation program are as follows: | ⯀ | Alignment of executive and stockholder interests through short and long-term incentives linked to operating performance; |
| ⯀ | Short-term cash compensation based upon Company performance and individual contribution; |
| ⯀ | Compensation structured to attract and retain the most talented industry leaders; and |
| ⯀ | Compensation program based, in part, on the practices of peers in our industry and other comparable companies. |
At our 2023 annual meeting of stockholders, approximately 94% of the shares voted were cast in support of our executive compensation program. The Board and Compensation Committee value the opinions of our stockholders and took this high level of approval into account when developing the compensation for our NEOs. There were no significant changes to our executive compensation program for 2023 in light of the results of the say-on-pay votes at the 2023 annual meeting of stockholders. This vote is not intended to address any specific item of compensation; rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Our Board urges you to approve the compensation of our NEOs by voting in favor of the following resolution: “RESOLVED, that the stockholders approve, on an advisory basis, the compensation of our NEOs, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative as presented in this Proxy Statement.” THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS The following Compensation Discussion and Analysis, or CD&A, describes our 2022 | | | 2024 Proxy Statement | | | 25 |
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS The following Compensation Discussion and Analysis, or CD&A, describes our 2023 executive compensation programs. This CD&A is intended to be read in conjunction with the tables beginning on page 38, which provide detailed historical compensation information for our following NEOs. | | David W. Heinzmann | | | President and Chief Executive Officer | | | Appointed to current role in January 2017. | | | | Meenal A. Sethna | | | Executive Vice President and Chief Financial Officer | | | Appointed to current role in March 2016. | | | | Ryan K. Stafford | | | Executive Vice President, Mergers & Acquisitions, Chief Legal Officer and Corporate Secretary | | | Appointed to current role in June 2021. Previously also served as CHRO. | | | | Maggie Chu | | | Senior Vice President and Chief Human Resources Officer | | | Joined the Company in June 2021, and was appointed an Executive Officer in July 2021. | | | | Deepak Nayar | | | Senior Vice President and General Manager, Electronics Business | | | Appointed to current role in May 2020. | | | David W. Heinzmann
| | | President and Chief Executive Officer
| | | Appointed to current role in January 2017.
| | | Meenal A. Sethna
| | | Executive Vice President, Chief Financial Officer
| | | Appointed to current role in March 2016.
| | | Ryan K. Stafford
| | | Executive Vice President, Mergers & Acquisitions, Chief Legal Officer and Corporate Secretary
| | | Appointed to current role in June 2021. Previously also served as CHRO.
| | | Maggie Chu
| | | Senior Vice President and Chief Human Resources Officer
| | | Joined the Company in June 2021, and was appointed an Executive Officer in July 2021.
| | | Deepak Nayar
| | | Senior Vice President and General Manager, Electronics Business
| | | Appointed to current role in May 2020.
| |
As described below, our executive compensation programs are designed to pay for performance and align the interests of our executives with those of our stockholders. In fiscal year 2022, our annual incentive awards for our NEOs were based on the Company’s achievement of financial objectives related to its base business operations including sales growth, earnings per share growth and cash generation, and the NEOs’ individual performances. In addition, a significant portion of our executive compensation program consists of long-term compensation subject to long-term vesting requirements.
The Compensation Committee continually reviews the compensation programs for our NEOs to ensure they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices. We believe that our compensation programs align the compensation of our executives with the interests of our stockholders while managing compensation risk, including through stock ownership guidelines, an independent Compensation Committee and the use of an independent compensation consultant.
The compensation of our NEOs during fiscal year 2022 directly ties to the Company’s overall business performance. During 2022, we achieved record level sales, earnings and cash generation. We grew sales by 21%, diluted earnings per share by 31%, and cash flow from operations by 12%. We achieved these record results while advancing our strategic initiatives and continuing to execute our capital deployment strategy. We expanded our product portfolios by acquiring both C&K Switches and Embed Ltd. We also increased our quarterly cash dividend by 13% to $0.60 per share in 2022.
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As described below, our executive compensation programs are designed to pay for performance and align the interests of our executives with those of our stockholders. In fiscal year 2023, our annual incentive awards for our NEOs were based on the Company’s achievement of financial objectives related to its base business operations including sales growth, earnings per share growth and cash generation, and the NEOs’ individual performances. In addition, a significant portion of our executive compensation program consists of long-term compensation subject to long-term vesting requirements. The Compensation Committee continually reviews the compensation programs for our NEOs to ensure they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices. We believe that our compensation programs align the compensation of our executives with the interests of our stockholders while managing compensation risk, including through stock ownership guidelines, an independent Compensation Committee and the use of an independent compensation consultant. The compensation of our NEOs during fiscal year 2023 directly ties to the Company’s overall business performance. Our 2023 results reflected improvements in our portfolio diversification and ability to execute through weaker end markets and inventory destocking cycles. While our sales declined 6% and our diluted earnings per share was down 31%, we delivered more resilient operating profit margins versus prior macroeconomic downturns. We also generated $457 million in cash flow from operations, a record for the Company, and growth of 9% versus the prior year. We continued to advance our long-term strategic initiatives and execute on our capital deployment strategy. We expanded our product portfolio by acquiring Western Automation Research and Development Limited, based in Galway, Ireland, and entered into an agreement to acquire a 200mm wafer fab located in Dortmund, Germany in early 2025. We also increased our quarterly cash dividend by over 8% to $0.65 per share in 2023. The Compensation Committee is responsible for overseeing the formulation and application of the Company’s Total Rewards Philosophy relating to the compensation and benefit programs for executive officers. Pay for performance is an essential element of our Total Rewards Philosophy, which is designed to drive performance in the form of global business growth by financially incentivizing our executive officers to create stockholder value. The Compensation Committee has worked with our management and the independent compensation consultant to design compensation programs with the following primary objectives: | ⯀ | Attract, retain and motivate highly qualified executives; |
⯀ | Reward executives based upon our financial performance at levels competitive with peer companies; and |
⯀ | Align a significant portion of the executive compensation with driving our performance and stockholder value in the form of performance-based executive incentive awards and long-term awards. | | | 2024 Proxy Statement | | | 26 |
| | | 2023 Proxy Statement
| | | 26
|
TABLE OF CONTENTS The guiding principles of| ⯀ | Reward executives based upon our Total Rewards Philosophy are as follows:Performance. We believe that the best way to accomplish alignment of compensationfinancial performance at levels competitive with the interests of our stockholders is to linkpeer companies; and
|
| ⯀ | Align a significant portion of totalthe executive compensation directly to meeting or exceeding Company, business unitwith driving our performance and individual performance goals. When performance exceeds expectations, total pay levels are expected to be higher. When performance falls below expectations, total pay levels are expected to be lower.Competitiveness. Our compensation and benefit programs are designed to be competitive with the compensation provided by companies with whom we compete for talent. While we generally target the 50th percentile of the total compensation of competitor companies, in some instances, we provide compensation above or below the 50th percentile to account for other factors such as an executive’s operating responsibilities, management level, tenure and performancestockholder value in the position. To help us analyze the competitivenessform of our compensation programs, we developed, with guidance from our independent compensation consultant, a compensation peer group that was used to set compensation for the 2022 fiscal year, as discussed below.
Cost. Our compensation and benefit programs are designed to be cost effective, which we believe to be in the best interests of our stakeholders.
Best Practices in Compensation GovernanceHighlighted below are the key features of ourperformance-based executive compensation program, including the pay practices that we have implemented to drive sustainable results, encourage executive retention and align executive and stockholder interests. We also identify certain pay practices that we have not implemented because we believe they do not serve our risk management goals or stockholders’ long-term interests.
| ✔
What
We
Do
| | | ⯀ Pay for performance and allocate individual awards based on actual results
⯀ Provide an appropriate mix of short-term and long-term compensation
⯀ Require stock ownership and retention of a significant portion of equity-based awards
⯀ Prohibit pledging and speculative trading of company securities
⯀ Engage independent compensation consultant
⯀ Annually assess and mitigate compensation risk
⯀ Limit the annual incentive cash payout amounts and annual equity grants to any individual executive officer in a given year
| | | ✘
What
We
Don’t
Do
| | | ⯀ No multi-year guaranteed incentive awards for executive officers
⯀ No excise tax gross ups upon change in control payments and benefits
⯀ No discounts, reloading or re-pricing stock options
⯀ No incentives that encourage excessively risky behavior
⯀ No dividend equivalents are paid on unearned restricted stock units
⯀ No excessive perquisites
| |
Allocation between Short-Term and Long-Term CompensationThe allocation between short-term and long-term compensation is based primarily on competitive market practices relative to base salaries, annual incentive awards and long-term incentive values, as opposed to a targeted allocation betweenawards.
|
The guiding principles of our Total Rewards Philosophy are as follows: Performance. We believe that the best way to accomplish alignment of compensation with the interests of our stockholders is to link a significant portion of total compensation directly to meeting or exceeding Company, business unit and individual performance goals. When performance exceeds expectations, total pay levels are expected to be higher. When performance falls below expectations, total pay levels are expected to be lower. Competitiveness. Our compensation and benefit programs are designed to be competitive with the compensation provided by companies with whom we compete for talent. While we generally target the 50th percentile of the total compensation of competitor companies, in some instances, we provide compensation above or below the 50th percentile to account for other factors such as an executive’s operating responsibilities, management level, tenure and performance in the position. To help us analyze the competitiveness of our compensation programs, we developed, with guidance from our independent compensation consultant, a compensation peer group that was used to set compensation for the 2023 fiscal year, as discussed below. Cost. Our compensation and benefit programs are designed to be cost effective, which we believe to be in the best interests of our stakeholders. Best Practices in Compensation Governance Highlighted below are the key features of our executive compensation program, including the pay practices that we have implemented to drive sustainable results, encourage executive retention and align executive and stockholder interests. We also identify certain pay practices that we have not implemented because we believe they do not serve our risk management goals or stockholders’ long-term interests. | | ✔
What
We
Do | | | ⯀ Pay for performance and allocate individual awards based on actual results
⯀ Provide an appropriate mix of short-term and long-term pay. We also consider certain internal factors that may cause us to target a particular elementcompensation
⯀ Require stock ownership and retention of a NEO’s compensation differently. These internal factors may include the NEO’s operating responsibilities, management levelsignificant portion of equity-based awards
⯀ Prohibit pledging and tenure and performance in the position. We consider the total compensation to be delivered to individual NEOs, and as such, exercise discretion in determining the portion allocated to annual and long-term incentive opportunity. We believe that this “total compensation” approach provides the ability to align pay decisions with the short-term and long-term needsspeculative trading of the business and the interests of our stockholders. It also allows for the flexibility needed to recognize differences in performance of each NEO by providing differentiated pay.company securities
Competitive compensation levels for our executive officers are in part established through the review of competitive market compensation data provided by the Compensation Committee’s⯀ Engage independent compensation consultant. This review includes base salary,consultant
⯀ Annually assess and mitigate compensation risk
⯀ Limit the annual incentive opportunitiescash payout amounts and long-termannual equity grants to any individual executive officer in a given year | | | | ✘
What
We
Don’t
Do | | | ⯀ No multi-year guaranteed incentive opportunitiesawards for executive officers
⯀ No excise tax gross ups upon change in control payments and benefits
⯀ No discounts, reloading or re-pricing stock options
⯀ No incentives that encourage excessively risky behavior
⯀ No dividend equivalents are paid on unearned restricted stock units
⯀ No excessive perquisites | |
Allocation between Short-Term and Long-Term Compensation The allocation between short-term and long-term compensation is based primarily on competitive market practices relative to base salaries, annual incentive awards and long-term incentive values, as opposed to a targeted allocation between short-term and long-term pay. We also consider certain internal factors that may cause us to target a particular element of a NEO’s compensation differently. These internal factors may include the NEO’s operating responsibilities, management level and tenure and performance in the position. We consider the total compensation to be delivered to individual NEOs, and as such, exercise discretion in determining the portion allocated to annual and long-term incentive opportunity. We believe that this “total compensation” approach provides the ability to align pay decisions with the short-term and long-term needs of the business and the interests of our stockholders. It also allows for the flexibility needed to recognize differences in performance of each NEO by providing differentiated pay. | | | 2024 Proxy Statement | | | 27 |
TABLE OF CONTENTS Competitive compensation levels for our executive officers are in part established through the review of competitive market compensation data provided by the Compensation Committee’s independent compensation consultant. This review includes base salary, annual incentive opportunities and long-term incentive opportunities for comparable companies. In 2021, we selected an industry compensation peer group as a source to evaluate compensation levels for the 2022 and 2023 fiscal years. The compensation peer group consisted of 19 publicly traded companies of reasonably similar size to us in the electronic equipment, the electronic components and equipment industry and the semiconductor/semiconductor equipment and manufacturing industry, representing different segments of our business. In 2022, CMC Materials Inc was removed from the peer group, as it was acquired. The current compensation peer group is set forth below: | | | 2023 Proxy Statement
| | | 27Ametek, Inc. (AME) | | | Methode Electronics, Inc. (MEI) |
Belden, Inc. (BDC) | | | ON Semiconductor Corporation (ON) | Cirrus Logic, Inc. (CRUS) | | |
| TABLE OF CONTENTS
comparable companies. In 2021, we selected an industry compensation peer group as Coherent Corp (f/k/a source to evaluate compensation levels for the 2022 fiscal year. The compensation peer group originally consisted of 19 publicly traded companies of reasonably similar size to us in the electronic equipment, the electronic components and equipment industry and the semiconductor/semiconductor equipment and manufacturing industry, representing different segments of our business. The compensation peer group now consists of 18 companies as CMC Materials Inc was removed from the peer group, as it was acquired. The current compensation peer group is set forth below:
Ametek, Inc. (AME)
| | | Methode Electronics, Inc. (MEI)
| Belden, Inc. (BDC)
| | | ON Semiconductor Corporation (ON)
| Cirrus Logic, Inc. (CRUS)
| | | OSI Systems, Inc. (OSIS)
| Coherent Corp (f/k/a II-VI, Inc.) (IIVI)II-VI, Inc.) (COHR)
| | | Qorvo, Inc. (QRVO) | Diodes Incorporated (DIOD) | | | Rogers Corp (ROG) | Gentex Corporation (GNTX) | | | Sensata Technologies Holding PLC (ST) | Gentherm, Incorporated (THRM) | | | Synaptics Inc (SYNA) | Hubbell Incorporated (HUBA, HUBB) | | | TTM Technologies, Inc. (TTMI) | Knowles Corp (KN) | | | Visteon (VC) |
As part of its ongoing review of the compensation peer group, in July 2023 the Compensation Committee approved updates to the compensation peer group for the 2024 fiscal year. This new peer group positions Littelfuse around the median of the peer group based on revenue. The following group will be used to evaluate 2024 compensation decisions for our NEOs: Advanced Energy Industries, Inc. (AEIS) * | | | Methode Electronics, Inc. (MEI) | Ametek, Inc. (AME) | | | ON Semiconductor Corporation (ON) | Belden, Inc. (BDC) | | | OSI Systems, Inc. (OSIS) | Cirrus Logic, Inc. (CRUS) | | | Qorvo, Inc. (QRVO) | Coherent Corp (f/k/a II-VI, Inc.) (COHR) | | | Rogers Corp (ROG) | Diodes Incorporated (DIOD) | | | Sensata Technologies Holding PLC (ST) | Gentex Corporation (GNTX) | | | Synaptics Inc (SYNA) | Gentherm, Incorporated (THRM) | | | TTM Technologies, Inc. (TTMI) | Hubbell Incorporated (HUBA, HUBB) | | | Visteon (VC) | Knowles Corp (KN) | | | |
The raw data derived from each company in the compensation*
| Indicates a new peer group was size-adjusted to approximate our revenuescompany for the corresponding fiscal year. The total2024 compensation for our NEOs is generally targeted at the 50th percentile of the competitive market data. In 2022, the Compensation Committee awarded total target compensation to Messrs. Heinzmann, Stafford, and Nayar and Mses. Sethna and Chu that was +6%, +10%, +10%, +8%, and -3%, respectively, in relation to the median of our peer group. In setting the compensation of our NEOs in 2022,decisions |
The raw data derived from each company in the compensation peer group was size-adjusted to approximate our revenues for the corresponding fiscal year. The total compensation for our NEOs is generally targeted at the 50th percentile of the competitive market data. In 2023, the Compensation Committee awarded total target compensation to Messrs. Heinzmann, Stafford, and Nayar and Mses. Sethna and Chu that was +9%, +5%, +11%, +7%, and 0%, respectively, in relation to the median of our peer group. In setting the compensation of our NEOs in 2023, the Compensation Committee considered the individual scope of responsibility of each NEO, each NEO’s historical compensation levels, the NEO’s years of experience, the NEO’s past, and expected future contributions to our success, market practice, internal equity considerations and individual performance. Additional information regarding the components of total compensation for our NEOs is discussed below under “Components of Total Compensation.” Annual Compensation Process The Compensation Committee reviews industry data and performance results presented by its independent compensation consultant in determining the appropriate aggregate and individual compensation levels for the year. In conducting its review, the Compensation Committee considers quantitative performance results, the overall need of the organization to attract, retain and motivate the executive team, and the total cost of compensation programs. Annual Compensation ProcessThe Compensation Committee reviews industry data and performance results presented by its independent compensation consultant in determining the appropriate aggregate and individual compensation levels for the year. In conducting its review, the Compensation Committee considers quantitative performance results, the overall need of the organization to attract, retain and motivate the executive team, and the total cost of compensation programs.
| | | The Compensation Committee reviews base salaries annually and changes them when it determines appropriate. The approval of incentive awards for NEOs under the Littelfuse, Inc. Annual Incentive Plan (the “Annual Incentive Plan”) for the preceding year and the terms of the incentive awards for NEOs for the current year are approved by the Compensation Committee at its January or February meeting. Long-term equity compensation is granted by the Compensation Committee and the full Board at the April meeting, held in connection with the annual meeting of stockholders. The Compensation Committee oversees the administration of the Company’s equity-based programs and makes recommendations to the Board for its consideration and approval of equity awards to be made to the CEO and other executive officers. The Compensation Committee has delegated authority to the CEO to grant equity awards to other non-executive officer employees. Ratification of grants for any non-executive officers who are newly-hired or promoted during the course of the year generally occurs at the Compensation Committee meeting immediately following the hiring or promotion, as applicable.
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TABLE OF CONTENTS The Compensation Committee reviews base salaries annually and changes them when it determines appropriate. The approval of incentive awards for NEOs under the Littelfuse, Inc. Annual Incentive Plan (the “Annual Incentive Plan”) for the preceding year and the terms of the incentive awards for NEOs for the current year are approved by the Compensation Committee at its January or February meeting. Long-term equity compensation is granted by the Compensation Committee and the full Board at the April meeting, held in connection with the annual meeting of stockholders. The Compensation Committee oversees the administration of the Company’s equity-based programs and makes recommendations to the Board for its consideration and approval of equity awards to be made to the CEO and other executive officers. The Compensation Committee has delegated authority to the CEO to grant equity awards to other non-executive officer employees. Ratification of grants for any non-executive officers who are newly-hired or promoted during the course of the year generally occurs at the Compensation Committee meeting immediately following the hiring or promotion, as applicable. Role of the Board, Compensation Committee, Management and Consultants The Compensation Committee establishes, reviews and recommends all elements of the executive compensation program to the members of the Board for approval. The Compensation Committee works with an independent compensation consultant, Compensation Strategies, Inc., for advice and perspective regarding market trends that may affect decisions about our executive compensation program and practices. Our independent compensation consultant also advises the Compensation Committee on non-employee director compensation matters. Additional responsibilities of the Board, the Compensation Committee, management and the independent compensation consultant include: Board of Directors and Compensation Committee | ⯀ | The Compensation Committee reviews and recommends the CEO’s business goals and objectives relevant to executive compensation to the members of the Board, other than the CEO, for approval, evaluates the performance of the CEO in light of those goals and objectives and recommends the CEO’s compensation level to such members of the Board based on this evaluation. The Compensation Committee reviews and recommends the CEO’s annual and long-term incentive target opportunities and payouts for approval by the members of the Board, other than the CEO. |
| ⯀ | For NEOs other than the CEO, the Compensation Committee reviews and makes recommendations based on a review of compensation survey data and publicly-disclosed compensation information for our peer group, individual performance, internal pay equity and other relevant factors for approval by the full Board for all NEO compensation arrangements including base salary determination and annual and long-term incentive target opportunities and payouts. |
Management and Consultants | ⯀ | Compensation program design: Management makes recommendations in consultation with the independent compensation consultant on compensation program design and pay levels and implements the compensation programs approved by the Board. |
| ⯀ | Develop performance measures: Management identifies appropriate performance measures, recommends performance targets that are used to determine annual awards, and develops individual performance objectives for each NEO. |
| ⯀ | Compile competitive market data: Management works with the independent compensation consultant in compiling compensation information and preparing the data for presentation to the Compensation Committee. |
| ⯀ | Develop compensation recommendations: Based on the compensation survey data and publicly-disclosed compensation information, our CEO and our Chief Human Resources Officer (“CHRO”) prepare recommendations for the NEOs (other than for the CEO) and present these recommendations to the Compensation Committee. The Compensation Committee reviews these recommendations along with the competitive market data and other information and advice of the independent compensation consultant, and makes a recommendation to the full Board for approval. Our CEO also assists the Compensation Committee by providing input with regards to the fulfillment of the individual performance objectives of the other NEOs. Compensation recommendations for the CEO are made by the Compensation Committee based on the compensation survey data and are presented for approval to the directors other than the CEO. Our Executive Vice President and Chief Financial Officer also assists in the preparation of performance targets and objectives based on our short-term and long-term growth plans and provides financial information used by the Compensation Committee to make decisions with respect to incentive goals based on achievement of financial targets and related payouts. |
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TABLE OF CONTENTS based on the compensation survey data and are presented for approval to the directors other than the CEO. Our Executive Vice President and Chief Financial Officer also assists in the preparation of performance targets and objectives based on our short-term and long-term growth plans and provides financial information used by the Compensation Committee to make decisions with respect to incentive goals based on achievement of financial targets and related payouts. Compensation Risk At the direction of the Compensation Committee, management conducts a comprehensive risk assessment of our compensation policies and practices and presents its findings to the Compensation Committee. The assessment includes a review of the risk areas within the Company’s compensation programs to ensure that there are no design flaws which motivate inappropriate or excessive risk taking. Management conducted this assessment of all compensation policies and practices for all employees, including the NEOs, and determined that the compensation programs are not reasonably likely to have a material adverse effect on the Company. | | | 2023 Proxy Statement
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During the review, several risk mitigating factors in our programs were noted, including: | ⯀ | Our annual incentive program awards are capped to limit compensation in any given year; |
| ⯀ | Our equity incentive awards vest over several years, so while the potential compensation payable for equity incentive awards is tied directly to appreciation of our stock price, taking excessive risk for a short-term gain is discouraged because it would not maximize the value of equity incentive awards over the long-term; and |
| ⯀ | Our executive officers and directors are subject to a stock ownership policy with minimum stock holding requirements that aligns their interests with the interests of our stockholders. |
Impact of Accounting and Tax Issues on Executive Compensation In general, Section 162(m) of the Internal Revenue Code (“162(m)”) limits to $1 million the amount of annual compensation that we can deduct for federal income tax purposes with respect to each of our covered executive officers, as defined (including but not limited to our CEO, our CFO and our three other most highly compensated officers). While the Committee considers the tax consequences of compensation programs, including the 162(m) limitations, it will weigh those considerations against others in order to structure compensation in a manner that is in the best interest of the Company and its stockholders and to attract and retain senior talent. The Committee also considers the accounting implications of significant compensation decisions, including decisions that relate to our equity incentive plans. If accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives. Components of Total Compensation Our executive compensation program combines both fixed and variable elements of compensation focusing on both annual and long-term incentives. The following charts show target total compensation for fiscal year 2022.2023.
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TABLE OF CONTENTS The compensation of our NEOs consists of five components, each designed to help achieve our compensation objectives and to contribute to a total compensation arrangement that is competitive, appropriately performance-based and valued by our NEOs. The purpose of each component of our NEOs’ compensation, along with the pay mix methodology used to determine target total compensation illustrated in the above charts, are described in the following table. | | Base Salary | | | Designed to attract, retain and motivate highly-qualified executives by paying a competitive salary. | | | Annualized base salary as of 12/31/2022.30/2023. | | | | Short-Term Incentive – Annual Incentive Plan (cash awards) | | | Designed to provide a performance-based cash reward to executives and key employees of the Company for contributing to the achievement of our short-term company goals. | | | Based on an annualized target amount as a percentage of base pay.
• Incentives, if earned, are typically paid in Q1 following the performance year. | | | | Long-Term Incentive Plan (stock option and RSU awards) | | | Designed to emphasize the goals of our equity compensation: (1) align each NEO’s financial interests with driving stockholder value; (2) focus the NEOs’ efforts on long-term financial performance of the Company; and (3) assist in the retention of our NEOs.
• Stock option awards - Generate value only when Company’s stock price appreciates above the stock price on the date of grant and aligns to interests of shareholders.
• RSU awards - Value of these awards increases if the Company’s stock price increases from stock price on the date of grant, and the value of these awards decreases if the stock price declines from stock price on the date of grant and aligns to interests of shareholders. | | | Based on 20222023 annual grant value of long-term incentives.
• Grants awarded are comprised of 50% stock options and 50% RSUs. | | | | Health and Welfare Programs and Perquisites | | | Designed to provide competitive levels of health and welfare protection and retirement and savings programs. | | | | | | | Retirement and Post-Employment Arrangements | |
Information regarding the administration and the determination of amounts of each component is below. Administration: Our CEO and our CHRO recommend NEO salary levels (other than for the CEO) to the Compensation Committee for approval. The Compensation Committee reviews the NEO salary recommendations and makes its recommendations to the full Board for approval. The Compensation Committee determines and makes CEO salary recommendations to the Board, other than the CEO, for approval. Determination of amounts: Base salary is generally targeted at the 50th percentile of the compensation peer group, although we also take into account factors such as individual scope of responsibility, years of experience, past | | | 20232024 Proxy Statement
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TABLE OF CONTENTS and future contributions to our success and possible differences in compensation standards in our industry. We strive to be market competitive in an effort to attract, retain and motivate highly-talented executive officers. Each year the Compensation Committee may recommend to the Board and the Board may approve increases in base salary for NEOs. Annual salary increases are generally effective as of April 1 each year. The base salary amounts for the NEOs, effective as of April 1, 2022,2023, and approved to become effective on April 1, 2023,2024, are as follows: | | Name | | | 2022
Annualized Base Salary | | | 2023
Annualized Base Salary | | Name | | | 2023
Annualized Base Salary | | | 2024
Annualized Base Salary | | | | David W. Heinzmann | | $961,151 | | $1,009,869 | | David W. Heinzmann | | $1,009,869 | | $1,045,214 | | | | Meenal A. Sethna | | $529,632 | | $582,595 | | Meenal A. Sethna | | $582,595 | | $623,377 | | | | Ryan K. Stafford | | $549,850 | | $571,844 | | Ryan K. Stafford | | $571,844 | | $591,859 | | | | Maggie Chu | | $351,000 | | $386,100 | | Maggie Chu | | $386,100 | | $413,127 | | | | Deepak Nayar | | $481,525 | | $500,786 | | Deepak Nayar | | $500,786 | | $520,817 | |
In January 2014, our Compensation Committee and our Board approved the Annual Incentive Plan and on April 25, 2014, our stockholders approved the Annual Incentive Plan (“AIP”). Administration: The Compensation Committee establishes, after (1) consulting with our CEO and CHRO, (2) reviewing the compensation peer group information and other information and advice of the independent compensation consultant and (3) discussing the financial goals and targets of the Company for the next fiscal year with our CEO and our CFO, the threshold, target and maximum amounts that may be awarded under the AIP to each NEO for the fiscal year. The annual target amounts are set as percentages of each NEO’s base salary and the maximum amounts for 20222023 were set at the percentages set forth below. Determination of eligible AIP amounts: Our AIP is intended to compensate NEOs for their short-term contributions to the Company’s performance. Annual incentive awards to NEOs are granted based on the NEOs’ and the Company’s performances and are approved by the Compensation Committee and recommended to the full Board for approval. While one factor the Compensation Committee considers regarding the compensation of our NEOs is where that compensation falls in relation to the 50th percentile of the total compensation of our compensation peer group, it does not necessarily match our annual incentive awards against a certain percentile of the compensation peer group and it considers other factors, such as internal equity considerations, executive experience and the years of service of the NEO, in setting the targets as a percent of base salary. It sets the threshold, target and maximum amounts for the AIP so that, if earned, we pay sufficient total annual compensation to remain competitive. The maximum incentive amount that may be paid to an employee for a performance period is subject to a cap under the AIP, which was $2,500,000. Effective January 1, 2024, the AIP was amended and restated to (i) increase to $5,000,000 the maximum incentive amount that may be paid to an employee for a performance period, (ii) remove references to Section 162(m) given the elimination of the performance-based compensation exception as a result of the enactment of the Tax Cuts and Jobs Act of 2017 for tax years beginning on or after January 1, 2018, and make related adjustments to affected provisions, (iii) allow the Compensation Committee the discretion to adjust any awards upward, as well as downward, for any plan participant, including NEOs, and (iv) clarify that payments received under the AIP are subject to certain “clawback” rights in favor of the Company, including pursuant to the Company’s clawback policy, which is currently $2,500,000.described on page 36. The following table summarizes the AIP opportunity percentages for the NEOs for 2022:2023: | | | | | 2022 AIP Target Opportunity
(as a % of 2022 Base Salary) | | | | | 2023 AIP Target Opportunity
(as a % of 2023 Base Salary) | | | | Name | | | Threshold | | | Target | | | Maximum (1) | | Name | | | Threshold | | | Target | | | Maximum | | | | David W. Heinzmann | | 57.5% | | 115% | | 253% | | David W. Heinzmann | | 60.0% | | 120.0% | | 264.0% | | | | Meenal A. Sethna | | 40% | | 80% | | 176% | | Meenal A. Sethna | | 40.0% | | 80.0% | | 176.0% | | | | Ryan K. Stafford | | 40% | | 80% | | 176% | | Ryan K. Stafford | | 40.0% | | 80.0% | | 176.0% | | | | Maggie Chu | | 30% | | 60% | | 132% | | Maggie Chu | | 30.0% | | 60.0% | | 132.0% | | | | Deepak Nayar | | 40% | | 80% | | 176% | | Deepak Nayar | | 40.0% | | 80.0% | | 176.0% | |
(1) | The performance goals related to business operations have a payout range from 0% - 200% of target. The payout range for the individual performance goal, weighted at 20% for each NEO, was 0% - 300%, subject in each case to the then-applicable cap under the AIP. | | 2024 Proxy Statement | | | 32 |
TABLE OF CONTENTS Under the 20222023 AIP, the Compensation Committee established performance goals each with a maximum annual award percentage that could be paid to each NEO. For 2022,2023, the NEOs were eligible to receive up to a maximum of 200% of their target annual incentive opportunities for each of the performance goals other thanrelated to business operations (payout range of 0% – 200%). The NEOs were eligible to receive up to a maximum of 300% for thetheir individual performance goal, which was increased to ais weighted at 20% for each NEO (payout range of 0% – 300% maximum payout.). | | | 2023 Proxy Statement
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The Compensation Committee considered the performance of the Company’s base business operations when selecting the below financial performance metrics and relevant weighting. The Compensation Committee believes that these metrics reflect the performance of the Company’s ongoing operations with respect to its existing business. | | David W. Heinzmann | | | 30% | | | 25% | | | 25% | | | 0% | | | 20% | | | | Meenal A. Sethna | | | 10% | | | 40% | | | 30% | | | 0% | | | 20% | | | | Ryan K. Stafford | | | 10% | | | 40% | | | 30% | | | 0% | | | 20% | | | | Maggie Chu | | | 10% | | | 40% | | | 30% | | | 0% | | | 20% | | | | Deepak Nayar | | | 0% | | | 10% | | | 10% | | | 60% | | | 20% | |
In January 2023,2024, the Compensation Committee evaluated the Company’s performance against the AIP performance metrics and determined the following achievement results: | | Base Business Operations
Performance Metric (1) | | | Threshold
Performance
(50%) | | | Target
Performance
(100%) | | | Maximum
Performance
(200%) | | | Actual
Performance | | | Percentage
Achievement | | Base Business Operations
Performance Metric (1) | | | Threshold
Performance
(50%) | | | Target
Performance
(100%) | | | Maximum
Performance
(200%) | | | Actual
Performance | | | Percentage
Achievement | | | | AIP Corporate Sales ($M) | | $2,208 | | $2,324 | | $2,556 | | $2,428 | | 145% | | AIP Corporate Sales ($M) | | $2,387 | | $2,513 | | $2,764 | | $2,350 | | 0% | | | | AIP Earnings per Share (“AIP EPS”) | | $12.88 | | $13.56 | | $14.91 | | $17.26 | | 200% | | AIP Earnings per Share (“AIP EPS”) | | $13.49 | | $14.20 | | $16.90 | | $11.75 | | 0% | | | | AIP Cash flow from Operations ($M) | | $371 | | $390 | | $429 | | $420 | | 176% | | AIP Cash flow from Operations ($M) | | $382 | | $402 | | $442 | | $457 | | 200% | | | | Applicable Business Unit Metrics | | (2) | | (2) | | (2) | | (2) | | (3) | | Applicable Business Unit Metrics | | (2) | | (2) | | (2) | | (2) | | (3) | |
(1)
| The performance metrics were determined as follows: |
• | | | AIP Corporate Sales – represents our 20222023 net sales as reported in our audited financial statements adjusted to exclude the C&K Switches and Embed acquisitions.Western Automation acquisition. | • | | | AIP EPS – represents our 20222023 AIP net income, as described below, divided by our diluted weighted-average shares and equivalent shares outstanding. “AIP net income” is calculated as our GAAP net income, as reported in our audited financial statements, excluding the after-tax impact of the following items: acquisition and integration costs; restructuring, impairment and other charges; non-operating foreign exchange gains and losses; the C&K Switches and Embed acquisitions;Western Automation acquisition; and certain other significant and unusual items. | • | | | AIP Cash flow from Operations – represents our 20222023 cash flow from operations, as reported in our audited financial statements. |
(2)
| The business unit target goals for Mr. Nayar were set to be attainable with good performance. |
(3)
| Based on the actual performance of his business unit, Mr. Nayar’s percentage achievement for the electronics net sales metric was 140%0% and the electronics operating income metric was 200%0%. |
The Compensation Committee also reviews the individual performance of each NEO. These reviews are qualitative in nature and require subjective determinations by the Compensation Committee. The Compensation Committee receives input from the CEO and CHRO with respect to each NEO’s performance and considers factors generally related to (i) overall Company business performance, (ii) Organizationorganization strength and build talent pipeline development within the Company, (iii) strengthenimproved results and maturity of our ESG program, (iv) strategic long-term growth including the integration of newly acquired companies, and (v) other matters specific to each NEO’s scope of responsibility. Our 20222023 NEO evaluation result reflects recognition of current year actions taken to align the | | | 2024 Proxy Statement | | | 33 |
TABLE OF CONTENTS Company’s operations with the macroeconomic environment and the advancement of several long-term strategic initiatives. The Compensation Committee determined the achievement of the individual performance goals for each of the NEOs as follows: Mr. Heinzmann - 160%,– 121 %, Ms. Sethna - 160%120%, Mr. Stafford - 160%120%, Ms. Chu - 160%120%, and Mr. Nayar - 240%125%. The Compensation Committee also received recommendations from Mr. Heinzmann related to the 20222023 AIP award amounts for the other NEOs. It received input from its independent compensation consultant with respect to | | | 2023 Proxy Statement
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the appropriate 20222023 AIP award amount for Mr. Heinzmann. After consideration of the performance metrics described above and the recommendations from Mr. Heinzmann and input from the independent compensation consultant, the Compensation Committee approved and recommended to the Board, and the Board approved, the following 20222023 AIP awards to the NEOs: | | | | | AIP Target | | | AIP Maximum | | | 2022 AIP Payout
(Paid in March 2023) | | | | | AIP Target
| | | AIP Maximum | | | 2023 AIP Payout
(Paid in March 2024) | | | | Name | | | % of Base
Salary (1) | | | Amount
($) | | | Amount
($) | | | % of AIP
Target | | | Amount of AIP Payout
($) | | Name | | | % of Base
Salary (1) | | | Amount
($) | | | Amount
($) | | | % of AIP
Target | | | Amount of AIP Payout
($) | | | | David W. Heinzmann | | 115% | | $1,105,323 | | $2,431,711 | | 169.5% | | $1,873,523 | | David W. Heinzmann | | 120% | | $1,211,843 | | $2,666,054 | | 74.3% | | $900,000 | | | | Meenal A. Sethna | | 80% | | $423,706 | | $932,153 | | 179.3% | | $759,704 | | Meenal A. Sethna | | 80% | | $466,076 | | $1,025,367 | | 84.0% | | $391,504 | | | | Ryan K. Stafford | | 80% | | $439,880 | | $967,736 | | 179.3% | | $788,705 | | Ryan K. Stafford | | 80% | | $457,475 | | $1,006,445 | | 84.0% | | $384,279 | | | | Maggie Chu | | 60% | | $210,600 | | $463,320 | | 179.3% | | $377,606 | | Maggie Chu | | 60% | | $231,660 | | $509,652 | | 84.0% | | $194,594 | | | | Deepak Nayar | | 80% | | $385,220 | | $847,484 | | 187.6% | | $722,673 | | Deepak Nayar | | 80% | | $400,629 | | $881,383 | | 45.0% | | $180,283 | |
(1)
| For AIP purposes, incentive opportunities are based on our NEO’s 20222023 annualized base salary. |
20232024 Annual Incentive Plan: At itsthe January 20232024 Compensation Committee meeting, the Compensation Committee approved the annual incentive plan structure along withand performance goal weights and established the NEOs’ target annual incentive plan opportunity percentages for the 20232024 AIP. At that time itSubsequently, in February 2024, the Committee also established 20232024 financial performance goals under the 20232024 AIP for Messrs. Heinzmann, Stafford, and Nayar and Mses. Sethna and Chu. ThoseThe goals were set in excesscommensurate with budget considering a challenging yet attainable growth year and the dynamic performance of budget but attainable with good performance,our end markets, and they are based on the same performance metrics and weighting as in 2022.2023. The following table summarizes each NEO’s AIP target opportunity, as a percentage of base salary for the NEOs:| | | | | 2023 AIP Opportunity
(as a % of 2023 Base Salary) | | | | | 2024 AIP Opportunity
(as a % of 2024 Base Salary) | | | | Name | | | Threshold | | | Target | | | Maximum | | Name | | | Threshold | | | Target | | | Maximum | | | | David W. Heinzmann | | 60% | | 120% | | 264% | | David W. Heinzmann | | 62.5% | | 125% | | 275% | | | | Meenal A. Sethna | | 40% | | 80% | | 176% | | Meenal A. Sethna | | 42.5% | | 85% | | 187% | | | | Ryan K. Stafford | | 40% | | 80% | | 176% | | Ryan K. Stafford | | 42.5% | | 85% | | 187% | | | | Maggie Chu | | 30% | | 60% | | 132% | | Maggie Chu | | 30.0% | | 60% | | 132% | | | | Deepak Nayar | | 40% | | 80% | | 176% | | Deepak Nayar | | 40.0% | | 80% | | 176% | |
C.
| Long-Term Incentive Compensation |
Consistent with prior years’ practice, in 20222023 the Compensation Committee awarded a combination of two types of equity awards under the Long-Term Incentive Plan to our NEOs: stock option awards and RSUs. The stock options vest one-third annually over a three-year vesting period and have an exercise price equal to the fair market value of our common stock on the date of grant. The RSUs also vest one-third annually over a three-year vesting period. Administration: The Compensation Committee reviews the compensation peer group information, the advice of the independent compensation consultant and, for NEOs other than the CEO, the recommendation of our CEO and our CHRO with respect to the NEOs’ long-term incentive grants of stock options and RSUs. The Compensation Committee makes recommendations to the Board, other than the CEO, for the grant of stock options and RSUs to the NEOs. Determination of amounts: We target total equity compensation awards at the 50th percentile of our compensation peer group, although we also take into account other factors, such as years of experience and internal pay equity considerations, when determining total equity compensation. In 2022,2023, based on a valuation performed by the independent compensation consultant, the Compensation Committee determined that 50% of the value of the equity awards would be made in stock options and 50% would be made in RSUs. | | | 20232024 Proxy Statement
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TABLE OF CONTENTS As part of the annual grant of long-term compensation in April, the restricted stock unit awards and stock options granted in 20222023 to each NEO are set forth below. | | David W. Heinzmann | | | 8,619 | | | 3-year vest | | | 28,190 | | | 3-year vest | | | $231.64 | | | | Meenal A. Sethna | | | 2,999 | | | 3-year vest | | | 9,808 | | | 3-year vest | | | $231.64 | | | | Ryan K. Stafford | | | 2,907 | | | 3-year vest | | | 9,506 | | | 3-year vest | | | $231.64 | | | | Maggie Chu | | | 1,232 | | | 3-year vest | | | 4,030 | | | 3-year vest | | | $231.64 | | | | Deepak Nayar | | | 2,290 | | | 3-year vest | | | 7,490 | | | 3-year vest | | | $231.64 | |
| | David W. Heinzmann | | | 9,708 | | | 3-year vest | | | 29,800 | | | 3-year vest | | | $240.76 | | | | Meenal A. Sethna | | | 3,344 | | | 3-year vest | | | 10,265 | | | 3-year vest | | | $240.76 | | | | Ryan K. Stafford | | | 3,039 | | | 3-year vest | | | 9,329 | | | 3-year vest | | | $240.76 | | | | Maggie Chu | | | 1,395 | | | 3-year vest | | | 4,283 | | | 3-year vest | | | $240.76 | | | | Deepak Nayar | | | 2,236 | | | 3-year vest | | | 6,862 | | | 3-year vest | | | $240.76 | |
(1)
| 20222023 grant of RSUs and Options vest in annual installments of 33% on each of the first three anniversaries of the grant date. |
Stock Ownership Policy As discussed on page 1819, the Company maintains a stock ownership policy applicable to all executive officers and directors that is reviewed annually by the Compensation Committee. The table below describes the ownership requirements for each NEO, and their progress towards the ownership requirements, as of February 28, 2023.27, 2024.| | David W. Heinzmann | | | 15,900 | | | 46,457 | | | | Meenal A. Sethna | | | 5,300 | | | 17,717 | | | | Ryan K. Stafford | | | 5,500 | | | 24,531 | | | | Maggie Chu | | | 2,300 | | | 3,588 | | | | Deepak Nayar | | | 3,200 | | | 8,077 | |
| | David W. Heinzmann | | | 15,900 | | | 52,156 | | | | Meenal A. Sethna | | | 5,300 | | | 19,633 | | | | Ryan K. Stafford | | | 5,500 | | | 24,155 | | | | Maggie Chu | | | 2,300 | | | 4,608 | | | | Deepak Nayar | | | 3,200 | | | 4,264 | |
(1)
| Pursuant to the stock ownership policy, the Compensation Committee may adjust the share ownership requirements in the event of a significant increase in the price of the Company’s common stock. The current share ownership requirements are based on the 30-business-day average stock price for the period of December 13, 2021, through January 25, 2022, of $301.35 per share and the NEO’s annualized base salaries for 2022. At the time the share ownership requirements are established, the Compensation Committee uses a multiple of the NEO’s base salary to calculate the minimum share requirement, as described on page 1819. |
(2)
| Includes direct and indirect ownership of beneficially owned shares and unvested restricted stock/units. |
D.
| Health and Welfare Programs and Perquisites |
Health and Welfare Programs Our NEOs participate in the same health and welfare programs designed for all of our full-time U.S. employees. The program includes partial reimbursement of gym membership dues, wellness bonus, group health, dental, disability, business travel accident, life and accidental death and dismemberment (AD&D) coverage. Our NEOs are also provided with an increased amount of life and AD&D insurance in order to provide a targeted level of coverage equal to the lesser of three times annual base salary or $1,000,000. These programs are important components of our total compensation program, and we provide them to remain competitive. Perquisites Our NEOs are provided with the opportunity to receive executive physicals and financial planning services on an annual basis. The executive physical program provides approximately $6,000 in services per NEO annually. The financial planning program provides up to $12,000 per year of financial planning services per NEO annually. The Company also pays for limited expenses related to spouse travel on certain business trips. We provide these benefits to help our NEOs efficiently manage their time and financial affairs and to allow them to stay focused on business issues. Amounts and types of perquisites are included in the 20222023 All Other Compensation Table on page 39. | | | 20232024 Proxy Statement
| | | 35 |
TABLE OF CONTENTS E.
| Retirement and Post-Employment Arrangements |
Retirement Plans We provide retirement benefits to our U.S. employees and NEOs through the following plans that are intended to be a component of a competitive compensation package. Littelfuse, Inc. 401(k) Retirement and Savings Plan NEOs may elect to participate in the Littelfuse, Inc. 401(k) Retirement and Savings Plan (“401(k) Plan”) on the same basis as all other U.S. employees. The 401(k) Plan provides employees the opportunity to save for retirement on a tax-favored basis. The Company amended and restated the 401(k) Plan, effective as of January 1, 2022. The Company provides discretionary Company contributions equal to 2% of a participant’s annual eligible pay. This is in addition to the existing Company matching contributions, which provide a dollar-for-dollar match on participant salary deferrals up to 4% of a participant’s annual eligible pay (subject to IRS compensation limits). Littelfuse, Inc. Supplemental Retirement and Savings Plan The Littelfuse, Inc. Supplemental Retirement and Savings Plan (the “Supplemental Plan”) is a non-qualified retirement plan that is intended to provide supplemental retirement income benefits to employees whose benefits under our tax-qualified 401(k) plan are limited by the application of Internal Revenue Code Section 415, which includes our NEOs. Participants can defer a portion of their annual compensation to the Supplemental Plan. The Company provides a matching contribution designed to ensure that participants receive a combined match under the Supplemental Plan and the Company’s 401(k) Plan on the first 4% of their annual compensation.compensation and on the 2% discretionary contribution, if applicable. Post-Employment Arrangements Change in Control Agreements Each of the NEOs has entered into a change of control agreement with the Company that provides certain payments and benefits on termination of employment in connection with a change of control of the Company. Additional information including the terms of our NEO’s change of control agreements is included on page 45. We have not entered into an employment agreement with any NEO, other than (i) a Letter Agreement with Mr. Heinzmann, effective January 1, 2017 in connection with his assumption of the President and Chief Executive Officer role, and (ii) an Employment Offer Letter to Ms. Chu, dated April 27, 2021, as accepted by Ms. Chu on April 28, 2021, in connection with the Company’s employment of Ms. Chu as Senior Vice President and Chief Human Resources Officer. Pursuant to Mr. Heinzmann’s Letter Agreement, Mr. Heinzmann’s base salary was $700,000 for 2017 and his target bonus was set at 90% of base salary. In addition, the Letter Agreement provided for the grant of restricted stock units having a grant date value of $1,050,000, that vestvested entirely on the third anniversary of the grant. The Company also entered into a new change of control agreement with Mr. Heinzmann, consistent with the terms described on page 45.Pursuant to the Employment Offer Letter with Ms. Chu, her annualized base salary was set at $325,000 for 2021 and her target bonus was set at 60% of base salary. In addition, the Employment Offer Letter provided for (i) the grant of restricted stock units having an approximate equivalent value of $662,500 based on the closing price of Littelfuse common stock on the date of Ms. Chu’s hire, and (ii) the grant of options having an approximate equivalent value of $162,500, each of which vest in three annual installments beginning one year from the grant date. The Company also entered into a change of control agreement with Ms. Chu, consistent with the terms described on page 45. In compliance with NASDAQ listing requirements, the Board adopted a Clawback Policy in October 2023 to allow the Company to recover incentive-based compensation paid to executive officers in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws. | | | 20232024 Proxy Statement
| | | 36 |
TABLE OF CONTENTS COMPENSATION COMMITTEE REPORT To the Board of Directors of Littelfuse, Inc.: We have reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on the review and discussion referred to above, we recommend to the Board of Directors that the Compensation Discussion and Analysis referred to above be included in this Proxy Statement and in our Annual Report on Form 10-K for the year ended December 31, 2022.30, 2023. | | | Compensation Committee: | | | | | | | | Tzau-Jin Chung (Chairman) | | | | Kristina A. Cerniglia | | | | Cary T. Fu | | | | William P. Noglows |
The foregoing report is not deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to the Securities and Exchange Commission’s proxy rules or the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. | | | 20232024 Proxy Statement
| | | 37 |
TABLE OF CONTENTS The following table sets forth compensation information for our NEOs in fiscal years 2023, 2022, 2021, and 2020.2021. 20222023 Summary Compensation Table | | David W. Heinzmann
President and Chief
Executive Officer | | | 2022 | | | $953,025 | | | $0 | | | $1,960,305 | | | $1,984,294 | | | $1,873,523 | | | $79,124 | | | $6,850,271 | | | | 2021 | | | $921,885 | | | $0 | | | $1,715,931 | | | $1,396,152 | | | $2,056,862 | | | $79,301 | | | $6,170,131 | | | | 2020 | | | $845,250 | | | $259,210 | | | $1,543,674 | | | $1,340,271 | | | $0 | | | $76,656 | | | $4,065,061 | | | | Meenal A. Sethna
Executive Vice
President and Chief
Financial Officer | | | 2022 | | | $517,595 | | | $625 | | | $682,093 | | | $690,385 | | | $759,704 | | | $50,527 | | | $2,700,929 | | | | 2021 | | | $477,978 | | | $200 | | | $618,622 | | | $503,293 | | | $751,115 | | | $51,783 | | | $2,402,991 | | | | 2020 | | | $444,087 | | | $93,892 | | | $612,182 | | | $1,075,256 | | | $0 | | | $48,585 | | | $2,274,002 | | | | Ryan K. Stafford
Executive Vice
President, Mergers &
Acquisitions, Chief
Legal Officer and
Corporate Secretary (7) | | | 2022 | | | $545,202 | | | $0 | | | $661,168 | | | $669,127 | | | $788,705 | | | $51,241 | | | $2,715,443 | | | | 2021 | | | $527,388 | | | $0 | | | $912,752 | | | $742,604 | | | $816,010 | | | $55,629 | | | $3,054,383 | | | | 2020 | | | $489,994 | | | $103,357 | | | $608,588 | | | $528,408 | | | $0 | | | $51,062 | | | $1,781,409 | | | | Maggie Chu
Senior Vice President
and Chief Human
Resources Officer (8) | | | 2022 | | | $344,500 | | | $0 | | | $280,206 | | | $283,672 | | | $377,606 | | | $38,415 | | | $1,324,399 | | | | 2021 | | | $189,583 | | | $110,000 | | | $676,145 | | | $149,649 | | | $219,511 | | | $27,144 | | | $1,372,032 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deepak Nayar
Senior Vice President
and General Manager,
Electronics Business (9) | | | 2022 | | | $470,582 | | | $366 | | | $520,838 | | | $527,221 | | | $722,673 | | | $30,279 | | | $2,271,959 | | | | 2021 | | | $434,562 | | | $1,575 | | | $391,556 | | | $318,587 | | | $612,850 | | | $32,126 | | | $1,791,256 | | | | 2020 | | | $402,926 | | | $75,951 | | | $866,261 | | | $452,083 | | | $0 | | | $29,526 | | | $1,826,747 | |
| | David W. Heinzmann
President and Chief
Executive Officer | | | 2023 | | | $997,691 | | | $0 | | | $2,291,379 | | | $2,304,434 | | | $900,000 | | | $148,002 | | | $6,641,506 | | | | 2022 | | | $953,025 | | | $0 | | | $1,960,305 | | | $1,984,294 | | | $1,873,523 | | | $161,399 | | | $6,932,546 | | | | 2021 | | | $921,885 | | | $0 | | | $1,715,931 | | | $1,396,152 | | | $2,056,862 | | | $79,301 | | | $6,170,131 | | | | Meenal A. Sethna
Executive Vice
President and Chief
Financial Officer | | | 2023 | | | $569,355 | | | $641 | | | $789,284 | | | $793,792 | | | $391,504 | | | $83,949 | | | $2,628,525 | | | | 2022 | | | $517,595 | | | $625 | | | $682,093 | | | $690,385 | | | $759,704 | | | $80,572 | | | $2,730,974 | | | | 2021 | | | $477,978 | | | $200 | | | $618,622 | | | $503,293 | | | $751,115 | | | $51,783 | | | $2,402,991 | | | | Ryan K. Stafford
Executive Vice
President, Mergers &
Acquisitions, Chief
Legal Officer and
Corporate Secretary (7) | | | 2023 | | | $566,346 | | | $0 | | | $717,295 | | | $721,412 | | | $384,279 | | | $82,479 | | | $2,471,811 | | | | 2022 | | | $545,202 | | | $0 | | | $661,168 | | | $669,127 | | | $788,705 | | | $67,275 | | | $2,731,477 | | | | 2021 | | | $527,388 | | | $0 | | | $912,752 | | | $742,604 | | | $816,010 | | | $55,629 | | | $3,054,383 | | | | Maggie Chu
Senior Vice President
and Chief Human
Resources Officer (8) | | | 2023 | | | $377,324 | | | $665 | | | $329,262 | | | $331,204 | | | $194,594 | | | $51,059 | | | $1,284,108 | | | | 2022 | | | $344,500 | | | $0 | | | $280,206 | | | $283,672 | | | $377,606 | | | $47,195 | | | $1,333,179 | | | | 2021 | | | $189,583 | | | $110,000 | | | $676,145 | | | $149,649 | | | $219,511 | | | $27,144 | | | $1,372,032 | | | | Deepak Nayar
Senior Vice President
and General Manager,
Electronics Business | | | 2023 | | | $495,971 | | | $0 | | | $527,763 | | | $530,638 | | | $180,283 | | | $59,865 | | | $1,794,520 | | | | 2022 | | | $470,582 | | | $366 | | | $520,838 | | | $527,221 | | | $722,673 | | | $38,425 | | | $2,280,105 | | | | 2021 | | | $434,562 | | | $1,575 | | | $391,556 | | | $318,587 | | | $612,850 | | | $32,126 | | | $1,791,256 | |
(1)
| Base salary includes compensation deferred under the 401(k) Plan and the Supplemental Plan. For fiscal year 2020, the amounts also include a 10% - 25% reduction in base salary from April 1, 2020, through June 30, 2020, in connection with the Company’s cost-cutting measures related to the COVID-19 pandemic. |
(2)
| For fiscal year 2022,2023, represents discretionary payments made to NEOs. For Ms.Mses. Sethna and Chu, amounts include discretionary bonuses earned in connection with the Company’s wellness initiatives, in the amounts of $641 and $665, respectively. For fiscal year 2022, represents discretionary bonus earned in connection with ourthe Company’s wellness initiatives in the amount of $625.$625 for Ms. Sethna. For Mr. Nayar, amount includes discretionary bonus earned in connection with our patent program in the amount of $366. For fiscal year 2021, represents discretionary bonus earned in connection with the Company’s wellness initiatives in the amount of $200 for Ms. Sethna. For Ms. Chu, bonus amount earned represents a cash sign-on payment included as part of her employment offer letter. For Mr. Nayar, amount includes discretionary bonus earned in connection with our patent program in the amount of $1,575. For fiscal year 2020, represents discretionary bonus payments made to NEOs. For Mr. Stafford and Ms. Sethna, amounts also include discretionary bonuses earned in connection with the Company’s wellness initiatives, in the amounts of $200 and $400, respectively. For Mr. Nayar, amount includes discretionary bonus earned in connection with our patent program in the amount of $1,575. |
(3)
| Represents the full grant date fair value of RSUs for fiscal years 2023, 2022, 2021, and 2020,2021, in accordance with FASB ASC Topic 718, based on assumptions described in Note 12 to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.30, 2023. |
(4)
| Represents the full grant date fair value of stock option awards for fiscal years 2023, 2022, 2021, and 2020,2021, in accordance with FASB ASC Topic 718, based on assumptions described in Note 12 to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.30, 2023. |
| | | 2023 Proxy Statement
| | | 38
|
TABLE OF CONTENTS
(5)
| Represents payouts for performance under the Annual Incentive Plan. See pages 32–-34 for information on how amounts were determined. |
(6)
| The amounts shown are detailed in the supplemental “All Other Compensation” table below. The amount of each NEO’s supplemental plan company matching contribution has been updated to reflect a correction that was made for the fiscal year ended December 31, 2022. Each NEO received the following corrected company |
| | | 2024 Proxy Statement | | | 38 |
TABLE OF CONTENTS matching contribution attributable to the 2022 fiscal year: Mr. Heinzmann, $121,157 (previously reported as $38,882); Ms. Sethna, $42,801 (previously reported as $12,756); Mr. Stafford, $30,446 (previously reported as $14,412); Ms. Chu, $11,150 (previously reported as $2,370); and Mr. Nayar, $18,103 (previously reported as $9,957). (7)
| Mr. Stafford was appointed as Executive Vice President, Mergers & Acquisitions, Chief Legal Officer and Corporate Secretary in June 2021 and previously served as Executive Vice President, Chief Legal and Human Resources Officer and Corporate Secretary. |
(8)
| Ms. Chu was hired as Senior Vice President and Chief Human Resources Officer in June 2021. |
(9)
| Mr. Nayar was appointed as Senior Vice President and General Manager Electronics Business in May 2020 and previously served as Senior Vice President and General Manager, Electronics and Industrial Business Unit. |
20222023 All Other Compensation Table The table below provides additional information about the amounts that appear in the “All Other Compensation” column in the Summary Compensation Table above. For additional information regarding perquisites and health and welfare programs, refer to page 35. | | David W. Heinzmann | | | $18,300 | | | $38,882 | | | $21,943 (1) | | | $79,124 | | | | Meenal A. Sethna | | | $18,300 | | | $12,756 | | | $19,471 (2) | | | $50,527 | | | | Ryan K. Stafford | | | $18,300 | | | $14,412 | | | $18,529 (3) | | | $51,241 | | | | Maggie Chu | | | $18,300 | | | $2,370 | | | $17,745 (4) | | | $38,415 | | | | Deepak Nayar | | | $18,300 | | | $9,957 | | | $2,022 (5) | | | $30,279 | |
| | David W. Heinzmann | | | $19,800 | | | $115,002 | | | $13,200 (1) | | | $148,002 | | | | Meenal A. Sethna | | | $19,800 | | | $44,749 | | | $19,400 (2) | | | $83,949 | | | | Ryan K. Stafford | | | $19,800 | | | $45,729 | | | $16,950 (3) | | | $82,479 | | | | Maggie Chu | | | $19,800 | | | $17,944 | | | $13,315 (4) | | | $51,059 | | | | Deepak Nayar | | | $19,800 | | | $38,865 | | | $1,200 (5) | | | $59,865 | |
(1)
| The amount reported for Mr. Heinzmann includes the cost of: an executive physical ($8,743); tax and financial planning ($12,000); and life and AD&D insurance ($1,200). |
(2)
| The amount reported for Ms. Sethna includes the cost of: partial reimbursement of health club membership dues generally available to U.S. employees ($374)400); an executive physical ($5,897)5,800); life and AD&D insurance ($1,200); and tax and financial planning ($12,000). |
(3)
| The amount reported for Mr. Stafford includes the cost of: an executive physical ($5,329)3,750); life and AD&D insurance ($1,200); and tax and financial planning ($12,000). |
(4)
| The amount reported for Ms. Chu includes the cost of: an executive physicalpartial reimbursement of health club membership dues generally available to U.S. employees ($4,857)400); life and AD&D insurance ($1,200); and tax and financial planning ($11,688)11,715). |
(5)
| The amount reported for Mr. Nayar includes the cost of: life and AD&D insurance ($1,200); tax and financial planning ($625); and a tax gross-up in connection with the discretionary bonus earned from our patent program ($197). |
| | | 20232024 Proxy Statement
| | | 39 |
TABLE OF CONTENTS Grants of Plan-Based Awards in 20222023The following table sets forth plan-based awards granted to our NEOs in 2022.2023. | | David W. Heinzmann | | | RSUs | | | 4/28/22 | | | – | | | – | | | – | | | 8,619(4) | | | – | | | – | | | $1,960,305 | | | | Options | | | 4/28/22 | | | – | | | – | | | – | | | – | | | 28,190(5) | | | $231.64 | | | $1,984,294 | | | | Annual Cash (3) | | | – | | | $552,662 | | | $1,105,323 | | | $2,431,711 | | | – | | | – | | | – | | | – | | | | Meenal A. Sethna | | | RSUs | | | 4/28/22 | | | – | | | – | | | – | | | 2,999(4) | | | – | | | – | | | $682,093 | | | | Options | | | 4/28/22 | | | – | | | – | | | – | | | – | | | 9,808(5) | | | $231.64 | | | $690,385 | | | | Annual Cash (3) | | | – | | | $211,853 | | | $423,706 | | | $932,153 | | | – | | | – | | | – | | | – | | | | Ryan K. Stafford | | | RSUs | | | 4/28/22 | | | – | | | – | | | – | | | 2,907(4) | | | – | | | – | | | $661,168 | | | | Options | | | 4/28/22 | | | – | | | – | | | – | | | – | | | 9,506(5) | | | $231.64 | | | $669,127 | | | | Annual Cash (3) | | | – | | | $219,940 | | | $439,880 | | | $967,736 | | | – | | | – | | | – | | | – | | | | Maggie Chu | | | RSUs | | | 4/28/22 | | | – | | | – | | | – | | | 1,232(4) | | | – | | | – | | | $280,206 | | | | Options | | | 4/28/22 | | | – | | | – | | | – | | | – | | | 4,030(5) | | | $231.64 | | | $283,672 | | | | Annual Cash (3) | | | – | | | $105,300 | | | $210,600 | | | $463,320 | | | – | | | – | | | – | | | – | | | | Deepak Nayar | | | RSUs | | | 4/28/22 | | | – | | | – | | | – | | | 2,290(4) | | | – | | | – | | | $520,838 | | | | Options | | | 4/28/22 | | | – | | | – | | | – | | | – | | | 7,490(5) | | | $231.64 | | | $527,221 | | | | Annual Cash (3) | | | – | | | $192,610 | | | $385,220 | | | $847,484 | | | – | | | – | | | – | | | – | |
| | David W. Heinzmann | | | RSUs | | | 4/27/23 | | | – | | | – | | | – | | | 9,708(4) | | | – | | | – | | | $2,291,379 | | | | Options | | | 4/27/23 | | | – | | | – | | | – | | | – | | | 29,800(5) | | | $240.76 | | | $2,304,434 | | | | Annual Cash (3) | | | – | | | $605,921 | | | $1,211,843 | | | $2,666,054 | | | – | | | – | | | – | | | – | | | | Meenal A. Sethna | | | RSUs | | | 4/27/23 | | | – | | | – | | | – | | | 3,344(4) | | | – | | | – | | | $789,284 | | | | Options | | | 4/27/23 | | | – | | | – | | | – | | | – | | | 10,265(5) | | | $240.76 | | | $793,792 | | | | Annual Cash (3) | | | – | | | $233,038 | | | $466,076 | | | $1,025,367 | | | – | | | – | | | – | | | – | | | | Ryan K. Stafford | | | RSUs | | | 4/27/23 | | | – | | | – | | | – | | | 3,039(4) | | | – | | | – | | | $717,295 | | | | Options | | | 4/27/23 | | | – | | | – | | | – | | | – | | | 9,329(5) | | | $240.76 | | | $721,412 | | | | Annual Cash (3) | | | – | | | $228,738 | | | $457,475 | | | $1,006,445 | | | – | | | – | | | – | | | – | | | | Maggie Chu | | | RSUs | | | 4/27/23 | | | – | | | – | | | – | | | 1,395(4) | | | – | | | – | | | $329,262 | | | | Options | | | 4/27/23 | | | – | | | – | | | – | | | – | | | 4,283(5) | | | $240.76 | | | $331,204 | | | | Annual Cash (3) | | | – | | | $115,830 | | | $231,660 | | | $509,652 | | | – | | | – | | | – | | | – | | | | Deepak Nayar | | | RSUs | | | 4/27/23 | | | – | | | – | | | – | | | 2,236(4) | | | – | | | – | | | $527,763 | | | | Options | | | 4/27/23 | | | – | | | – | | | – | | | – | | | 6,862(5) | | | $240.76 | | | $530,638 | | | | Annual Cash (3) | | | – | | | $200,314 | | | $400,629 | | | $881,383 | | | – | | | – | | | – | | | – | |
(1)
| The exercise price shown for individual options is the fair market value of the Company’s common stock on the date of grant (determined based on the closing stock price on that date reported by NASDAQ). |
(2)
| Represents the full grant date fair value of 20222023 awards calculated in accordance with FASB ASC Topic 718, based on assumptions described in Note 12 to our audited financial statements included in our 20222023 Annual Report on Form 10-K. There can be no assurance that amounts shown under the Grant Date Fair Value of Stock and Option Awards column will ever be realized by the NEOs. |
(3)
| These amounts represent 20222023 annual incentive cash awards granted under the Annual Incentive Plan. The actual 20222023 annual incentive cash award achievements were determined by the Compensation Committee and approved by the full Board in January 20222024 and are reflected in the Summary Compensation Table under the Non-Equity Incentive Plan Compensation column. Refer to pages 32– 34 for additional information concerning these awards. |
(4)
| Represents the 20222023 annual grant of RSUs awarded under the Long-Term Plan that typically vest annually in installments of 33% on each anniversary of the grant date such that the RSUs are fully vested on or after three years from the date of grant. Refer to page 34-35 for additional information concerning these awards. |
(5)
| Reflects the 20222023 award of stock options under the Long-Term Incentive Plan. The underlying option awards typically vest in installments of 33% on each anniversary of the date of grant, such that options are fully exercisable on or after three years from the date of grant. Refer to page 34-35 for additional information concerning these awards. |
| | | 20232024 Proxy Statement
| | | 40 |
TABLE OF CONTENTS Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table See discussion of information presented in the Summary Compensation Table and Grants of Plan-Based Awards Table in the Compensation Discussion and Analysis starting on page 26.Outstanding Equity Awards at 20222023 Fiscal Year-End The following table provides information regarding the outstanding equity awards held by each of the NEOs as of December 31, 2022.30, 2023. | | David
W. Heinzmann | | | 4/28/17 | | | 24,066 | | | 0 | | | $154.15 | | | 4/28/24 | | | – | | | – | | | | 4/27/18 | | | 23,061 | | | 0 | | | $192.59 | | | 4/27/25 | | | – | | | – | | | | | | | 4/26/19 | | | 25,888 | | | 0 | | | $199.24 | | | 4/26/26 | | | – | | | – | | | | | | | 4/23/20 | | | 28,474 | | | 14,237(3) | | | $132.08 | | | 4/23/27 | | | 4,009 | | | $882,782 | | | | | | | 4/22/21 | | | 6,282 | | | 12,562(5) | | | $267.84 | | | 4/22/28 | | | 4,332 | | | $953,906 | | | | | | | 4/28/22 | | | 0 | | | 28,190(7) | | | $231.64 | | | 4/28/29 | | | 8,619 | | | $1,897,904 | | | | Meenal A. Sethna | | | 4/28/17 | | | 3,478 | | | 0 | | | $154.15 | | | 4/28/24 | | | – | | | – | | | | | | | 4/27/18 | | | 9,145 | | | 0 | | | $192.59 | | | 4/27/25 | | | – | | | – | | | | | | | 4/26/19 | | | 10,266 | | | 0 | | | $199.24 | | | 4/26/26 | | | – | | | – | | | | | | | 4/23/20 | | | 11,292 | | | 5,646(3) | | | $132.08 | | | 4/23/27 | | | 1,590 | | | $350,118 | | | | | | | 7/31/20 | | | 0 | | | 11,953(4) | | | $177.65 | | | 7/31/27 | | | – | | | – | | | | | | | 4/22/21 | | | 2,265 | | | 4,528(5) | | | $267.84 | | | 4/22/28 | | | 1,562 | | | $343,952 | | | | | | | 4/28/22 | | | 0 | | | 9,808(7) | | | $231.64 | | | 4/28/29 | | | 2,999 | | | $660,380 | | | | Ryan K. Stafford | | | 4/26/19 | | | 10,206 | | | 0 | | | $199.24 | | | 4/26/26 | | | – | | | – | | | | | | | 4/23/20 | | | 11,226 | | | 5,613(3) | | | $132.08 | | | 4/23/27 | | | 1,581 | | | $348,136 | | | | | | | 4/22/21 | | | 3,341 | | | 6,682(5) | | | $267.84 | | | 4/22/28 | | | 2,304 | | | $507,341 | | | | | | | 4/28/22 | | | 0 | | | 9,506(7) | | | $231.64 | | | 4/28/29 | | | 2,907 | | | $640,121 | | | | Maggie Chu | | | 6/1/21 | | | 687 | | | 1,374(6) | | | $262.75 | | | 6/1/28 | | | 1,740 | | | $383,148 | | | | | | | 4/28/22 | | | 0 | | | 4,030(7) | | | $231.64 | | | 4/28/29 | | | 1,232 | | | $271,286 | | | | Deepak Nayar | | | 4/23/20 | | | 0 | | | 3,573(3) | | | $132.08 | | | 4/23/27 | | | 4,791 | | | $1,054,978 | | | | | | | 7/10/20 | | | 0 | | | 2,717(4) | | | $166.63 | | | 7/10/27 | | | – | | | – | | | | | | | 4/22/21 | | | 1,434 | | | 2,866(5) | | | $267.84 | | | 4/22/28 | | | 988 | | | $217,558 | | | | | | | 4/28/22 | | | 0 | | | 7,490(7) | | | $231.64 | | | 4/28/29 | | | 2,290 | | | $504,258 | |
| | David
W. Heinzmann | | | 4/27/2018 | | | 23,061 | | | 0 | | | $192.59 | | | 4/27/2025 | | | 0 | | | $0 | | | | 4/26/2019 | | | 25,888 | | | 0 | | | $199.24 | | | 4/26/2026 | | | 0 | | | $0 | | | | | | | 4/23/2020 | | | 42,711 | | | 0 | | | $132.08 | | | 4/23/2027 | | | 0 | | | $0 | | | | | | | 4/22/2021 | | | 12,563 | | | 6,281(3) | | | $267.84 | | | 4/22/2028 | | | 2,166 | | | $579,535 | | | | | | | 4/28/2022 | | | 9,397 | | | 18,793 (5) | | | $231.64 | | | 4/28/2029 | | | 5,746 | | | $1,537,400 | | | | | | | 4/27/2023 | | | 0 | | | 29,800 (6) | | | $240.76 | | | 4/27/2030 | | | 9,708 | | | $2,597,472 | | | | Meenal A. Sethna | | | 4/27/2018 | | | 9,145 | | | 0 | | | $192.59 | | | 4/27/2025 | | | 0 | | | $0 | | | | | | | 4/26/2019 | | | 10,266 | | | 0 | | | $199.24 | | | 4/26/2026 | | | 0 | | | $0 | | | | | | | 4/23/2020 | | | 16,938 | | | 0 | | | $132.08 | | | 4/23/2027 | | | 0 | | | $0 | | | | | | | 7/31/2020 | | | 11,953 | | | 0 | | | $177.65 | | | 7/31/2027 | | | 0 | | | $0 | | | | | | | 4/22/2021 | | | 4,529 | | | 2,264 (3) | | | $267.84 | | | 4/22/2028 | | | 781 | | | $208,964 | | | | | | | 4/28/2022 | | | 3,270 | | | 6,538 (5) | | | $231.64 | | | 4/28/2029 | | | 1,999 | | | $534,852 | | | | | | | 4/27/2023 | | | 0 | | | 10,265 (6) | | | $240.76 | | | 4/27/2030 | | | 3,344 | | | $894,721 | | | | Ryan K. Stafford | | | 4/26/2019 | | | 10,206 | | | 0 | | | $199.24 | | | 4/26/2026 | | | 0 | | | $0 | | | | | | | 4/23/2020 | | | 16,839 | | | 0 | | | $132.08 | | | 4/23/2027 | | | 0 | | | $0 | | | | | | | 4/22/2021 | | | 6,682 | | | 3,341 (3) | | | $267.84 | | | 4/22/2028 | | | 1,152 | | | $308,229 | | | | | | | 4/28/2022 | | | 3,169 | | | 6,337 (5) | | | $231.64 | | | 4/28/2029 | | | 1,938 | | | $518,531 | | | | | | | 4/27/2023 | | | 0 | | | 9,329 (6) | | | $240.76 | | | 4/27/2030 | | | 3,039 | | | $813,115 | | | | Maggie Chu | | | 6/1/2021 | | | 1,374 | | | 687 (4) | | | $262.75 | | | 6/1/2028 | | | 870 | | | $232,777 | | | | | | | 4/28/2022 | | | 1,344 | | | 2,686 (5) | | | $231.64 | | | 4/28/2029 | | | 821 | | | $219,667 | | | | | | | 4/27/2023 | | | 0 | | | 4,283 (6) | | | $240.76 | | | 4/27/2030 | | | 1,395 | | | $373,246 | | | | Deepak Nayar | | | 4/22/2021 | | | 2,867 | | | 1,433 (3) | | | $267.84 | | | 4/22/2028 | | | 494 | | | $132,175 | | | | | | | 4/28/2022 | | | 2,497 | | | 4,993 (5) | | | $231.64 | | | 4/28/2029 | | | 1,526 | | | $408,297 | | | | | | | 4/27/2023 | | | 0 | | | 6,862 (6) | | | $240.76 | | | 4/27/2030 | | | 2,236 | | | $598,264 | |
(1)
| The exercise price shown for individual optionees is the fair market value of the Company’s common stock on the date of grant (determined based on the closing stock price on that date reported by NASDAQ). |
(2)
| Values are based on the closing stock price of $220.20$267.56 per share of our common stock on the NASDAQ on December 30, 2022,29, 2023, the last trading day of the 20222023 fiscal year. There is no assurance that if or when the RSUs vest they will have this value. |
(3)
| Options vest annually in installments of 33% beginning April 23, 2021, such that the options are fully exercisable on or after three years from the date of grant. |
(4)
| Options 100% cliff vest such that the options are fully exercisable on or after three years from the date of grant. |
(5)
| Options vest annually in installments of 33% beginning April 22, 2022, such that the options are fully exercisable on or after three years from the date of grant. |
(6)(4)
| Options vest annually in installments of 33% beginning June 1, 2022, such that the options are fully exercisable on or after three years from the date of grant. |
(7)(5)
| Options vest annually in installments of 33% beginning April 28, 2023, such that the options are fully exercisable on or after three years from the date of grant. |
(6)
| Options vest annually in installments of 33% beginning April 27, 2024, such that the options are fully exercisable on or after three years from the date of grant. |
Narrative disclosures of the compensation awarded to our NEOs as reported in the Summary Compensation Table and Grants of Plan-Based Awards Table are included in the Compensation Discussion and Analysis, starting on page 26. | | | 20232024 Proxy Statement
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TABLE OF CONTENTS Option Exercises and Stock Vested in 20222023The following table provides the amounts received upon exercise of options or similar instruments or the vesting of stock or similar instruments during 20222023 fiscal year. | | David W. Heinzmann | | | – | | | – | | | 8,712(3) | | | $1,998,833 | | | | Meenal A. Sethna | | | 3,400 | | | $318,337 | | | 3,377(4) | | | $774,636 | | | | Ryan K. Stafford | | | – | | | – | | | 3,733(5) | | | $857,097 | | | | Maggie Chu | | | – | | | – | | | 871(6) | | | $234,804 | | | | Deepak Nayar | | | 5,551 | | | $549,564 | | | 2,082(7) | | | $477,861 | |
| | David W. Heinzmann | | | 24,066 | | | $2,728,798 | | | 9,048(3) | | | $2,213,153 | | | | Meenal A. Sethna | | | 3,478 | | | $338,242 | | | 3,371(4) | | | $824,795 | | | | Ryan K. Stafford | | | 0 | | | $0 | | | 3,702(5) | | | $906,229 | | | | Maggie Chu | | | 0 | | | $0 | | | 1,281(6) | | | $322,890 | | | | Deepak Nayar | | | 6,290 | | | $711,198 | | | 6,049(7) | | | $1,483,596 | |
(1)
| Value Realized on Exercise represents the difference between exercise price and market price at the time of exercise, excluding any tax obligation in connection with such exercises. |
(2)
| Determined based on the closing stock price of the Company common stock on the vesting dates, excluding tax obligations incurred in connection with such vesting. |
(3)
| Represents 33% installment vesting of RSU award granted on April 26, 2019, April 23, 2020, April 22, 2021, and April 22, 2021.28, 2022. Number of shares includes 3,8594,009 shares withheld by the Company to pay for minimum withholding tax due upon the vesting of the RSU awards on April 26, 2022,23, 2023, April 23, 2022,22, 2023, and April 22, 2022.28, 2023. |
(4)
| Represents 33% installment vesting of RSU award granted on April 26, 2019, April 23, 2020, April 22, 2021, and April 22, 2021.28, 2022. Number of shares includes 1,2051,428 shares withheld by the Company to pay for minimum withholding tax due upon the vesting of the RSU awards on April 26, 2022,23, 2023, April 23, 2022,22, 2023, and April 22, 2022.28, 2023. |
(5)
| Represents 33% installment vesting of RSU award granted on April 26, 2019, April 23, 2020, April 22, 2021, and April 22, 2021.28, 2022. Number of shares includes 1,5231,483 shares withheld by the Company to pay for minimum withholding tax due upon the vesting of the RSU awards on April 26, 2022,23, 2023, April 23, 2022,22, 2023, and April 22, 2022.28, 2023. |
(6)
| Represents 33% installment vesting of RSU award granted on June 1, 2021.2021 and April 28, 2022. Number of shares includes 255375 shares withheld by the Company to pay for minimum withholding tax due upon the vesting of the RSU awards on June 1, 2022.2023 and April 28, 2023. |
(7)
| Represents 33% installment vesting of RSU award granted on April 26, 2019,23, 2020, April 22, 2021, and April 28, 2022 and 100% cliff vesting of an award granted on April 23, 2020, and April 22, 2021.2020. Number of shares includes 7762,830 shares withheld by the Company to pay for minimum withholding tax due upon the vesting of the RSU awards on April 26, 2022,23, 2023, April 23, 2022,22, 2023, and April 22, 2022.28, 2023. |
| | | 20232024 Proxy Statement
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TABLE OF CONTENTS Nonqualified Deferred Compensation The following table discloses contributions, earnings and balances under the Supplemental Plan for each NEO for 2022.2023. | | David W. Heinzmann | | | $902,966 | | | $38,882 | | | ($564,511) | | | $0 | | | $3,126,097 | | | | Meenal A. Sethna | | | $239,538 | | | $12,756 | | | ($207,764) | | | $0 | | | $1,272,734 | | | | Ryan K. Stafford | | | $10,904 | | | $14,412 | | | ($123,437) | | | $0 | | | $554,429 | | | | Maggie Chu | | | $78,352 | | | $2,370 | | | ($9,031) | | | $0 | | | $83,765 | | | | Deepak Nayar | | | $0 | | | $9,957 | | | ($30,923) | | | $0 | | | $162,010 | |
| | David W. Heinzmann | | | $911,249 | | | $115,002 | | | $591,920 | | | ($539,421) | | | $4,287,695 | | | | Meenal A. Sethna | | | $246,862 | | | $44,749 | | | $222,755 | | | $0 | | | $1,817,430 | | | | Ryan K. Stafford | | | $34,988 | | | $45,729 | | | $108,981 | | | $0 | | | $759,924 | | | | Maggie Chu | | | $226,479 | | | $17,944 | | | $56,740 | | | $0 | | | $393,322 | | | | Deepak Nayar | | | $0 | | | $38,865 | | | $32,800 | | | $0 | | | $241,843 | |
(1)
| Reflects amounts that have been reported in the Salary column of the Summary Compensation Table. |
(2)
| These amounts reflect Company and matching contributions made under the Supplemental Plan. These amounts were reported in the All Other Compensation column of the Summary Compensation Table for 2022.2023. These amounts include contributions that are attributable to the 20222023 fiscal year but that were made in 20232024 after the end of the 20222023 fiscal year. |
(3)
| These amounts represent interest earnings/losses credited to each NEO’s account in the Supplemental Plan. Interest earnings/losses credited to these accounts are derived from the actual returns on the same investment options that are available under the 401(k) Plan, and the allocation the executives make amongst those qualified plan investment options. Given that these investment options are available to all employees participating in the non-discriminatory, tax-qualified 401(k) Plan, the interest earnings credited to the Supplemental Plan are not considered to be above market and, thus, do not need to be reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column of the Summary Compensation Table, which column is not included in our Summary Compensation Table. |
See discussion of the Supplemental Plan in the section titled “Retirement and Post-Employment Arrangements” starting on page 36. | | | 20232024 Proxy Statement
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TABLE OF CONTENTS POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL Termination of Employment Generally We have not entered into any employment agreements with our NEOs, other than a Letter Agreement with Mr. Heinzmann and an Employment Offer Letter with Ms. Chu. We have entered into a change in control agreement with each NEO and each NEO is entitled to receive certain payments and benefits upon termination of employment pursuant to (i) the Long-Term Incentive Plan, (ii) Individual Award Agreements, (iii) the Executive Severance Policy, and (iv) Supplemental Plan provisions. Long-Term Incentive Plan Termination Provisions The Long-Term Plan governs equity grants made in years 2010 and later, and under the provisions of the Long-Term Plan, all outstanding (unvested) equity grants shall be cancelled and no longer exercisable on the date of employment termination, unless otherwise provided in an individual award agreement or by approval of the Compensation Committee. Key definitions in our Long-Term Plan and the individual award agreements are described below. Disability For purposes of the Long-Term Plan, “disability” has the same meaning as in the Award Agreements and the change in control agreements in effect. Disability is defined as the inability to engage in substantial gainful activity or receipt of income replacement benefits under our (or our subsidiary’s) accident and health plan for at least three months, in either case, because of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of at least 12 months. Change in Control “Change in control” under the Long-Term Plan generally means the first to occur of (1) certain acquisitions by any person becoming the owner of more than 50% of the Company, by vote or by value, (2) certain acquisitions (other than as described in (1)) by any person becoming the owner of 30% or more of the total voting power of Company stock within a 12 month period, (3) replacement of a majority of the Board within a 12 month period by directors whose appointment or election is not previously endorsed by the then majority of the Board, or (4) certain acquisitions of 40% or more of the Company’s assets. Award Agreement Termination Provisions In April 2020, the Compensation Committee and the full Board approved new form award agreements for restricted stock units and stock options granted to executive-level employees, including all NEOs, and non-employee directors (the “2020 Form Award Agreements”). The 2020 Form Award Agreements were substantially similar to the form of award agreements previously disclosed by the Company with terms as described below. In April and July 2020, the Compensation Committee and the full Board approved retention restricted stock unit and stock option award grants to executive-level employees, including certain NEOs, and form restricted stock unit and stock option award agreements in connection with such grants (the “2020 Form Retention Award Agreements”). The 2020 Form Retention Award Agreements provide that upon eligible retirement both unvested outstanding stock options and restricted stock units are immediately forfeited. All other provisions remain the same as the 2020 Form Award Agreements, with terms as described below.
Eligible Retirement Eligible retirement under the individual award agreements entered into prior to 2017 means the date upon which an employee, having attained an age of not less than 62 and completing five years of employment with us, terminates employment with the Company. Eligible retirement under the individual award agreements entered into in 2017 and later provides that the definition of eligible retirement is 55 plus 10 years of service with the Company. | | | 2023 Proxy Statement
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Stock Options Stock options granted to the NEOs in or after 2017 under the Long-Term Plan automatically become fully vested upon the recipient’s termination of employment due to death or “disability,” termination without cause within two years following a “change in control,” or termination without cause on or after “eligible retirement.” Upon any such termination of employment, recipient may exercise his or her vested stock options until the earlier of (1) the date on which the stock options would otherwise terminate in accordance with the terms of their grants or (2) the expiration of three months (or 90 days in some cases) after the date of termination or 12 months in the case of death or the | | | 2024 Proxy Statement | | | 44 |
TABLE OF CONTENTS 7th anniversary of the grant date in the case of eligible retirement. Under all other termination of employment events, all unvested stock options are forfeited upon termination and the recipient has three months after termination to exercise his or her stock options which were vested immediately prior to termination (unless the recipient is terminated for cause, in which case the options will no longer be exercisable effective immediately upon the recipient’s termination date). Restricted Stock Units RSUs granted to the NEOs inon or after 2017 under the Long-Term Plan that have not vested are generally forfeited upon the recipient’s termination of employment. However, if a recipient terminates employment due to death or “disability,” then a pro rata portion of his or her unvested RSUs may become vested based on the recipient’s prior service with the Company. Any unvested RSUs will automatically fully vest if an event occurs that constitutes a “change in control” or upon “eligible retirement.” For awards granted prior to 2017, if a recipient terminates employment due to “eligible retirement,” then a pro-rata portion of his or her unvested RSUs will vest. Change of Control Agreements Termination Provisions We entered into new Tier I change of control agreements with each of our executive officers, including our NEOs, effective January 1, 2021.2024. These agreements replaced the previous change of control agreements that had expired on December 31, 2020.2023 and contain substantially identical terms. If a change of control occurs at any time on or before December 31, 2023,2026, the Company has agreed to continue to retain the services of such NEOs and each of them has agreed to remain in our service, for two years after the occurrence of the change of control (the “Service Period”). During the Service Period, the Company will provide them with (i) monthly base salary that is no less than the highest monthly base salary provided to them during the twelve months prior to the change of control, (ii) fringe benefits, reimbursement of business expenses, paid vacation time and office support at levels no less than provided to them during the 120 days prior to the change of control, (iii) annual bonuses that shall be the greater of (a) the average of the NEO’s annual bonus for the three years prior to the change of control and (b) the target bonus amount applicable to the NEO for the fiscal year in which the change of control occurs, and (iv) health and welfare benefits and incentive, paid vacation, savings and retirement opportunities generally no less favorable, in the aggregate, than the plans in effect during the 120 days prior to the change of control or those provided after the change of control to other peer executives of the Company if more favorable. In the event that the Company terminates the service of the NEOs during the Service Period other than for cause, death or disability, or if any of them terminate their service for good reason, they will be entitled to the following payments and benefits in addition to certain accrued amounts: (1)
| a lump sum payment equal to two times (three times in the case of Mr. Heinzmann) his or her annual base salary and the greater of: (i) the average of the NEO’s annual bonus for the three years prior to termination from service and (ii) the target bonus amount applicable to the NEO for the fiscal year in which the termination occurs; |
(2)
| a pro-rata amount equal to the greatest of such NEO’s (i) target annual bonus for the fiscal year in which the termination occurs, (ii) annual bonus for the year in which the termination occurs based on performance through the termination date, and (iii) average annual bonus for the last three fiscal years for the three years prior to the termination date; |
(3)
| during the two years (three years in the case of Mr. Heinzmann) following termination, reimbursement of the premium cost in excess of the normal active employee rate for his or her peer group to continue group medical benefits under COBRA (or reimbursements of excess individual insurance policy costs, if COBRA is not available) plus reimbursement of any post-tax difference; |
(4)
| for a period of up to two years (three years in the case of Mr. Heinzmann) after termination, or until the NEO accepts employment with any third party if earlier, reasonable outplacement services to the NEO; |
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(5)
| any option or right granted to the NEO under any of our equity-based plans will be exercisable by the NEO until the earlier of the date on which the option or right terminates in accordance with the terms of its grant or the expiration of 12 months after the date of termination, or the expiration of such longer period, if any, in accordance with the terms of the individual award agreement; and |
(6)
| the payment or provision of other amounts or benefits required to be paid under any of our plans, programs, policies, practices, contracts or agreements. |
| | | 2024 Proxy Statement | | | 45 |
TABLE OF CONTENTS In addition to the above additional benefits and payments, the NEO will no longer be bound by any non-compete agreements. For purposes of the change in control agreements, “cause” means (i) the willful and continued failure by the NEO to substantially perform his duties (other than due to physical or mental illness), after a written demand for substantial performance is delivered by the Board specifically identifying the manner in which the Board believes that the NEO has not substantially performed his duties and such failure is not cured within 60 calendar days after receipt of such written demand or (ii) the willful engagement by the NEO in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. “Good reason” means (i) the NEO is not elected to, or is removed from, any elected office that the NEO held immediately prior to a change of control, (ii) the assignment to the NEO of any duties materially inconsistent in any respect with the NEO’s position, authority, duties or responsibilities, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, other than isolated, insubstantial and inadvertent actions not occurring in bad faith which are remedied, (iii) any failure by the Company to comply with any of the provisions of the change of control agreement other than certain isolated, insubstantial and inadvertent failures not occurring in bad faith which are remedied, (iv) requiring the NEO to travel on business to a substantially greater extent than required immediately prior to the change of control, or (v) any purported termination of the NEO’s service other than as expressly permitted under the agreements, in all cases provided the NEO provides at least 90 days’ notice and allows the Company at least 30 days to cure. If the NEO’s service is terminated by reason of his death or disability during the Service Period, in addition to any accrued amounts due to the NEO for services prior to separation, the Company will pay to the NEO or his or her legal representative (i) a pro-rata amount equal to the greatest of such NEO’s (a) target annual bonus for the fiscal year in which the termination occurs, (b) annual bonus for the year in which the termination occurs based on performance through the termination date or (c) average annual bonus for the last three fiscal years prior to the termination date, plus (ii) any other amounts or benefits required to be paid or provided or which the NEO is eligible to receive under any of our plans, programs, policies, practices, contracts or agreements. These other benefits include, in the case of death, benefits at least equal to the most favorable benefits provided by the Company to the estates and beneficiaries of peer executives and, in the case of disability, disability and other benefits at least equal to the most favorable of those generally provided by the Company to disabled NEOs and/or their families. If the NEO is terminated voluntarily without good reason during the Service Period, the Company will pay to the NEO any accrued amounts due to the NEO for services prior to termination, plus (i) a pro-rata amount equal to the greatest of such NEO’s (a) target annual bonus for the fiscal year in which the termination occurs, (b) annual bonus for the year in which the termination occurs based on performance through the termination date or (c) average annual bonus for the last three fiscal years for the three years prior to the termination date, and (ii) any other amounts or benefits required to be paid or provided or which the NEO is eligible to receive under any of our plans, programs, policies, practices, contracts or agreements. If the NEO is terminated for cause during the Service Period, the Company will pay to the NEO any accrued but unpaid base salary due to the NEO for services prior to termination, plus any other amounts or benefits required to be paid or provided or which the NEO is eligible to receive under any of our plans, programs, policies, practices, contracts or agreements. Consistent with the Tier I change of control agreements entered into previously, the NEOs agree to confidentiality provisions, provisions for non-disparagement, compensation clawback, return of documents and cooperation in defense of claims made by or against Littelfuse. Executive Severance Policy The Company adopted an Executive Severance Policy (the “Severance Policy”) on January 15, 2018. | | | 2023 Proxy Statement
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The Severance Policy provides severance protections to the senior leadership team holding titles of Senior Vice President or higher and any other key employee specifically designated as a participant by the Board. The severance protections provided by the Severance Policy apply to terminations occurring on or after January 15, 2018, and consist of the following: | ⯀ | Severance benefits equal to a specified multiple of base salary and target annual bonus (2x for CEO, 1.5x for Executive Vice Presidents, and 1x for Senior Vice Presidents); |
| ⯀ | Pro-rated actual annual bonus for the year of termination; |
| | | 2024 Proxy Statement | | | 46 |
TABLE OF CONTENTS | ⯀ | Payment of premiums for continued group health coverage for a specified period (18 months for CEO and Executive Vice Presidents, and 12 months for Senior Vice Presidents), or, if shorter, the maximum period provided by law; and |
| ⯀ | Continuation of perquisites through the end of the year of termination, and outplacement services for up to one year after the date of termination. |
Provision of these severance benefits under the Severance Policy is conditioned upon the executive entering into a separation and release agreement with Littelfuse, which will include certain protections for Littelfuse such as a general release of claims, agreements not to disclose confidential information, and, for a specified period after the date of termination, (1) solicit employees or interfere with customer, vendor, and other relationships or (2) engage in competitive activities. No severance is payable under the Severance Policy if termination of employment is for “cause” (as defined below), due to the executive’s death or disability, or if the executive voluntarily terminates employment for any reason. “Cause” is defined as set forth in the executive’s change of control agreement with Littelfuse as in effect at the time of termination or, in the absence of such an agreement, as determined by the Board, in its sole discretion. Supplemental Plan Termination Provisions Supplemental Plan account balances are at all times 100% vested, and each U.S. NEO is entitled to receive his or her Supplemental Plan account balance upon termination of employment, or if elected either (i) age 59½ or (ii) age 65 or the later of five years of service. The benefit is paid in a lump sum or installments over five years, as elected by the NEO. For purposes of the Potential Payments Upon Termination or Change in Control table below we have assumed that the account balances of the NEOs will be paid on termination of employment in a lump sum, although the NEO could have elected a different distribution date and form of payment in accordance with the Supplemental Plan. Potential Payments upon Termination or Change in Control Upon the termination of employment of a NEO, they may be entitled to additional benefits or payments beyond those provided under our benefit plans, depending on the event triggering the termination. The events that would trigger a NEO’s entitlement to additional benefits or payments, and the estimated value of these additional benefits or payments, and the timing of such payments are described in the following table. As each NEO is considered a “specified employee” under Section 409A of the Internal Revenue Code of 1986, as amended, upon separation of service the payments described below for the NEO’s Supplemental Plan balance would be subject to a six-month delay. | | | 2023 Proxy Statement
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The table below has been prepared assuming a termination date and, where applicable, a change of control date, of December 30, 2022,29, 2023, the last business day of our 20222023 fiscal year, and a stock price of $220.20$267.56 per share, which was the closing price of our common stock on such date. | | Name | | | Voluntary
Resignation
or
Retirement (1) | | | Resignation
for Good
Reason or
Involuntary
Termination
other than
for
Cause within
2 years of a
Change of
Control (2) | | | Death (3) | | | Disability (4) | | | Termination
for Cause (5) | | | Involuntary
Termination
other than
for Cause,
Death,
Disability or
Change of
Control (6) | | Name | | | Voluntary
Resignation
or
Retirement (1) | | | Resignation
for Good
Reason or
Involuntary
Termination
other than
for
Cause within
2 years of a
Change of
Control (2) | | | Death (3) | | | Disability (4) | | | Termination
for Cause (5) | | | Involuntary
Termination
other than
for Cause,
Death,
Disability or
Change of
Control (6) | | | | David W. Heinzmann | | $8,115,254 | | $14,356,036 | | $6,708,468 | | $5,708,468 | | $3,126,097 | | $14,220,610 | | David W. Heinzmann | | $10,475,787 | | $15,470,858 | | $8,236,973 | | $7,236,973 | | $4,287,695 | | $15,914,367 | | | | Meenal A. Sethna | | $1,272,734 | | $4,996,387 | | $3,773,429 | | $2,773,429 | | $1,272,734 | | $3,510,906 | | Meenal A. Sethna | | $1,817,430 | | $5,679,768 | | $3,843,500 | | $2,843,500 | | $1,817,430 | | $3,835,386 | | | | Ryan K. Stafford | | $2,544,645 | | $5,452,232 | | $2,592,280 | | $1,592,280 | | $554,429 | | $4,883,826 | | Ryan K. Stafford | | $2,877,441 | | $5,779,539 | | $2,796,231 | | $1,796,231 | | $759,924 | | $4,877,980 | | | | Maggie Chu | | $83,765 | | $2,348,599 | | $1,255,301 | | $255,301 | | $83,765 | | $1,065,724 | | Maggie Chu | | $393,322 | | $3,026,596 | | $1,899,265 | | $899,265 | | $393,322 | | $1,254,228 | | | | Deepak Nayar | | $2,181,649 | | $4,436,391 | | $2,694,787 | | $1,694,787 | | $162,010 | | $3,813,006 | | Deepak Nayar | | $1,565,864 | | $4,022,944 | | $1,783,786 | | $783,786 | | $241,843 | | $2,698,065 | |
(1)
| This amount represents for Messrs. Heinzmann, Stafford, and StaffordNayar (i) the value of all unvested stock options (actual value to be determined upon exercise), (ii) the value of all unvested RSUs, and (iii) his Supplemental Plan account balance. For Mr. Nayar, the amount represents (i) the value of all unvested stock options excluding the special retention award (actual value to be determined upon exercise), (ii) the value of unvested RSUs (excluding the April 23, 2020 cliff vested RSU award), and (iii) his Supplemental Plan account balance. For Mses. Sethna and Chu, this amount represents the value of each NEO’s Supplemental Plan account balance. |
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TABLE OF CONTENTS (2)
| This amount represents (i) two years of annual base salary (three years for Mr. Heinzmann) payable in a lump sum on the 30th day following separation of service, (ii) two times (three times for Mr. Heinzmann) the greater of the average AIP bonuses for the previous three years and the AIP target bonus for 20222023 payable in a lump sum on the 30th day following separation of service, (iii) an amount equal to the greatest of the average AIP bonuses for three years, the AIP target bonus for 2022,2023, and the AIP bonus for 20222023 based on performance through separation of service payable in a lump sum on the 30th day following separation of service, (iv) the cost of two years of continued coverage under our group health and dental plans (three years for Mr. Heinzmann), and (v) the cost of outplacement services for two years, assuming the value of this benefit is 15% of the NEO’s annual base salary. In addition, this amount includes the value of all unvested stock options (actual value to be determined upon exercise) and all unvested RSUs which vest upon termination, and the value of the NEO’s Supplemental Plan account balance. If the change of control and severance payments and benefits are above the threshold which triggers an excise tax under Section 280G of the Code, either the severance is reduced to the amount such that the excise tax is avoided or the full severance is paid with the excise tax imposed, whichever is more favorable to the executive on an after-tax basis. |
(3)
| This amount represents (i) life insurance coverage equal to the lesser of three times the executive’s annual base salary and $1,000,000, (ii) the value of all unvested stock options which vest upon termination (actual value to be determined upon exercise), (iii) the value of a pro-rata portion of all unvested RSUs which vest upon termination, and (iv) the NEO’s Supplemental Plan account balance. |
(4)
| This amount represents (i) the value of all unvested stock options (actual value to be determined upon exercise), (ii) the value of a pro-rata portion of all unvested RSUs, and (iii) the NEO’s Supplemental Plan account balance. |
(5)
| This amount represents the value of each NEO’s Supplemental Plan account balance. |
(6)
| This amount represents (i) severance benefits equal to a multiple of base and target annual bonus (2 times for Mr. Heinzmann, one and a half times for Ms. Sethna and Mr. Stafford, and one time for Ms. Chu and Mr. Nayar), (ii) AIP target bonus for 2022,2023, (iii) the cost of continued coverage under our group health and dental plans (eighteen months for Messrs. Heinzmann and Stafford and Ms. Sethna and twelve months for Ms. Chu and Mr. Nayar), and (iv) the cost of outplacement services for one year, assuming the value of this benefit is 7.5% of the NEO’s annual base salary. In addition, this amount includes for Messrs. Heinzmann, Stafford, and StaffordNayar the value of all unvested stock options (actual value to be determined upon exercise) and all unvested RSUs which vest upon termination, and the value of his Supplemental Plan account balance. For Mr. Nayar,Mses. Sethna and Chu, this amount also includes the value of each NEO’s Supplemental Plan account balance. |
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the value of all unvested stock options, excluding the special retention award (actual value to be determined upon exercise) and all unvested RSUs, excluding the cliff vested award, which vest upon termination, and the value of his Supplemental Plan account balance. For Mses. Sethna and Chu, this amount also includes the value of each NEO’s Supplemental Plan account balance.
COMPENSATION PLAN INFORMATIONWe have two equity compensation plans that have been approved by our stockholders: the Littelfuse, Inc. Long-Term Incentive Plan that was approved by our stockholders at the April 2017 annual stockholder meeting and the Deferred Compensation Plan for Non-Employee Directors that was approved by our stockholders at the May 2005 annual stockholder meeting.
Pursuant to our acquisition of IXYS on January 17, 2018, we assumed four equity compensation plans that have not been approved by our stockholders and pursuant to which we may continue to grant equity awards: IXYS Corporation 2009 Equity Incentive Plan, IXYS Corporation 2011 Equity Incentive Plan, IXYS Corporation 2013 Equity Incentive Plan, IXYS Corporation 2016 Equity Incentive Plan (together, the “IXYS Plans”). We also assumed two expired equity compensation plans that have not been approved by our stockholders and pursuant to which we have outstanding equity awards: the Zilog, Inc. 2002 Omnibus Stock Incentive Plan and Zilog, Inc. 2004 Omnibus Stock Incentive Plan (together, the “Zilog Plans”). The IXYS Corporation 2009 Equity Incentive Plan expired in June 2019 and equity awards remain outstanding under it.
Information about our equity compensation plans that were either approved or not approved by our stockholders as of December 31, 2022, is as follows:
| | Equity compensation plans approved by security holders | | | 698,848(2) | | | $145.33 | | | 462,409(4) | | | | Equity compensation plans not approved by security holders | | | 95,691(3) | | | $76.92 | | | 171,606(5) | | | | Total(6) | | | 794,539 | | | $137.09 | | | 634,015 | |
(1)
| The weighted average exercise price does not take into account the shares issuable upon the vesting of outstanding restricted stock units, which have no exercise price. |
(2)
| Includes 151,458 shares reserved for issuance upon vesting of outstanding restricted stock units and 547,390 outstanding stock options granted under the Littelfuse, Inc. Long-Term Incentive Plan. |
(3)
| Includes 27,066 shares reserved for issuance upon vesting of outstanding restricted stock units under the IXYS Plans and 68,625 outstanding stock options granted under the IXYS Plans and Zilog Plan. Below is a brief description of the material features of the compensation plans acquired pursuant to the acquisition of IXYS. |
(4)
| Includes 417,762 shares that remain available for future issuance under the Littelfuse, Inc. Long-Term Incentive Plan and 44,647 shares that remain available for future issuance under the Deferred Compensation Plan for Non-Employee Directors. |
(5)
| Includes 22,965 shares that remain available for future issuance under the IXYS Corporation 2013 Equity Incentive Plan, and 148,641 shares that remain available for future issuance under the IXYS Corporation 2016 Equity Incentive Plan. |
(6)
| As of February 28, 2023, approximately 633,889 shares remained available for future issuance under all equity plans including the Long-Term Plan, IXYS Plans and the Deferred Compensation Plan for Non-Employee Directors. 756,839 shares were subject to outstanding awards under the Long-Term Plan and IXYS Plans. The awards outstanding as of such date consisted of 579,774 shares subject to stock options, with a weighted average exercise price of $178.91 and a weighted average remaining term of 4.21 years, and 177,065 shares underlying
|
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restricted stock units. The estimated total potential dilution from all combined Plans is 8.55%, which is calculated by dividing (i) the sum of number of shares subject to outstanding awards (756,839 as of February 28, 2023), the number of shares remaining available for future awards (633,889 as of February 28, 2023), and the number of new shares being requested in Proposal 4 beginning on page 58, by (ii) the number of issued and outstanding shares of the Company as of the record date (February 28, 2023). Note, included in the 633,889 shares available for future issuance, in addition to shares under the Long-Term Plan, as of February 28, 2023, the Company has an additional 171,046 shares available for issuance under plans assumed as part of the IXYS acquisition in 2018.
IXYS Plans
In connection with the acquisition of IXYS, we assumed the IXYS Corporation 2009 Equity Incentive Plan, IXYS Corporation 2011 Equity Incentive Plan, IXYS Corporation 2013 Equity Incentive Plan, IXYS Corporation 2016 Equity Incentive Plan and outstanding unvested stock options originally granted by IXYS Corporation under the IXYS Plans that were held by continuing employees. At the time of the acquisition of IXYS Corporation, these awards were converted to Littelfuse stock options, with adjustments made to the exercise price of the stock options and the number of shares subject to stock options as agreed upon in the Acquisition Agreement. These unvested options vest in accordance with their original terms, generally vesting in equal annual installments over a four-year period from the original grant date. The options, once granted, generally expire ten years from the date of grant. Under the IXYS Plans, we may grant to former employees of IXYS Corporation or its subsidiaries restricted stock awards, RSUs, stock options and stock appreciation rights with an exercise price that is no less than the fair market value on the date of grant. Equity awards granted under the IXYS Plans following the acquisition have been on similar terms and consistent with grants made pursuant to the Littelfuse, Inc Long-Term Incentive Plan. The IXYS Corporation 2009 and 2011 Equity Incentive Plans expired in June 2019 and June 2021 respectively, with no additional grants made after the expiration date. As of December 31, 2022, 171,606 shares remained available for issuance under the IXYS Plans.
Zilog Plans
In connection with the acquisition of IXYS Corporation, we assumed the Zilog, Inc. 2004 Omnibus Stock Incentive Plan and outstanding stock options originally granted by IXYS Corporation under the Zilog Plan that were held by continuing employees of Zilog. At the time of the acquisition of IXYS Corporation, these awards were converted to Littelfuse stock options, with adjustments made to the exercise price of the stock options and the number of shares subject to stock options as agreed upon in the Acquisition Agreement. These options vested in accordance with their original terms, generally in equal annual installments over a four-year period from the original grant date. The options generally expire ten years from the date of grant. The Zilog 2004 Omnibus Stock Incentive Plan expired in February 2014 and no additional grants have been made thereunder. Therefore, as of December 31, 2022, no shares remain available for issuance of new awards under the Zilog Plan and 12,086 stock options remain outstanding.
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information for the fiscal year 2022:2023: | ⯀ | the median of the annual total compensation of all employees of our company (other than Mr. Heinzmann, our Chief Executive Officer), was $16,604;$10,343; |
| ⯀ | the annual total compensation of Mr. Heinzmann, our Chief Executive Officer, was $6,850,271;$6,641,506; and |
| ⯀ | the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees, which represents a reasonable estimate calculated in accordance with SEC regulations and guidance, is 413642 to 1. |
Our median employee for the fiscal year 20222023 is not the same employee that was used in the 20212022 CEO Pay Ratio calculation. As a result of the additional employees acquired in connection with the Company’s acquisitionsacquisition activity and footprint optimization during 2022,2023, there were significant changes to our employee population. | | | 2023 Proxy Statement
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Methodology | ⯀ | As of December 31, 2022,30, 2023, we had 18,30916,658 employees of Littelfuse, Inc. and its consolidated subsidiaries, with 49% of these employees located in the Americas (including U.S., Canada, Mexico and Brazil), 12%13% located in Europe (primarily in Lithuania, Italy, United Kingdom and Germany), and 39%38% located in various countries in Asia-Pacific (primarily in China and the Philippines). |
| ⯀ | After taking into consideration the adjustments permitted by SEC rules, we have excluded 1,64542 employees of C&K Switches,Western Automation Research and Development Limited, which we acquired during fiscal 2022.2023. As a result, our employee population for purposes of identifying our median employee consisted of 16,664 individuals. The majority of these employees are full-time (or full-time equivalent) employees, with less than 1% who are employed on a part-time basis. |
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TABLE OF CONTENTS result, our employee population for purposes of identifying our median employee consisted of 16,616 individuals. The majority of these employees are full-time (or full-time equivalent) employees, with less than 1% who are employed on a part-time basis. | ⯀ | To find the median of the annual total compensation of all our employees (other than our Chief Executive Officer) as of December 31, 2022,30, 2023, we used the annual base pay, including salary or hourly wages, from our global payroll records. We annualized the compensation of all permanent employees who were hired in fiscal 20222023 and remained employed at the end of fiscal 2022,2023, although they did not work for the Company or its consolidated subsidiaries for the entire fiscal year. We did not make any cost-of-living adjustments in identifying the median employee. |
| ⯀ | Our median employee is a full-time, salariedhourly employee located in Asia-Pacific,the Americas, with a base salary of $5,652.$7,811. Once the median employee was identified, we collected, from local HR, all other compensation elements, including overtime pay, positionproductivity awards, and shift allowances, productivity and spot bonus awards, life insurance premiumsmeal, transportation and housing benefits to calculate the median employee’s total annual compensation in the amount of $16,604.$10,343. |
| ⯀ | All compensation components for non-U.S. employees were converted into U.S. dollars using fiscal year 20222023 annually set internal exchange rates. |
| ⯀ | With respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column of our 20222023 Summary Compensation Table included in this Proxy Statement on page 38 and incorporated by reference under Item 11 of Part III of our Annual Report. |
The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to use estimates, assumptions, adjustments and statistical sampling. Accordingly, our pay ratio is an estimate calculated in accordance with Item 402(u) and may not be comparable to the pay ratios reported by other companies. | | | 20232024 Proxy Statement
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The following table presents specified executive compensation and financial performance measures for the Company’s threefour most recently completed fiscal years.
| | Year | | | Summary
Compensation
Table Total for
PEO | | | Compensation
Actually Paid
to PEO (1) | | | Average
Summary
Compensation
Table Total for
Non-PEO NEOs | | | Average
Compensation
Actually Paid to Non-
PEO Named
Executive
Officers (2) | | | Value of Initial Fixed td00
Investment Based On: | | | Net
Income (4) | | |
Adjusted Earnings Per Share
(5) | | Year | | | Summary
Compensation
Table Total for
PEO (1) | | | Compensation
Actually Paid
to PEO (2) | | | Average
Summary
Compensation
Table Total for
Non-PEO NEOs (1) | | | Average
Compensation
Actually Paid to
Non-
PEO Named
Executive
Officers (3) | | | Value of Initial Fixed td00
Investment Based On: | | | Net
Income (5) | | | Adjusted
Earnings
Per Share
(6) | | | | Total
Shareholder
Return | | | Peer Group
Total
Shareholder
Return (3) | | | Total
Shareholder
Return | | | Peer Group
Total
Shareholder
Return (4) | | | | 2022 | | $6,850,271 | | $1,148,117 | | $2,253,183 | | $311,368 | | $118.21 | | $124.87 | | $373.3 | | $17.26 | | 2023 | | $6,641,506 | | $8,714,124 | | $2,044,741 | | $2,860,318 | | $145.06 | | $159.56 | | $259.5 | | $11.75 | | | | 2021 | | $6,170,131 | | $10,569,353 | | $2,155,166 | | $3,602,524 | | $167.40 | | $151.36 | | $283.8 | | $12.88 | | 2022 | | $6,932,546 | | $1,230,392 | | $2,268,933 | | $327,118 | | $118.21 | | $124.87 | | $373.3 | | $17.26 | | | | 2020 | | $4,065,061 | | $9,624,985 | | $1,722,056 | | $3,711,472 | | $134.50 | | $120.75 | | $130.0 | | $6.23 | | 2021 | | $6,170,131 | | $10,569,353 | | $2,155,166 | | $3,602,524 | | $167.40 | | $151.36 | | $283.8 | | $12.88 | | | | | 2020 | | $4,065,061 | | $9,624,985 | | $1,722,056 | | $3,711,472 | | $134.50 | | $120.75 | | $130.0 | | $6.23 | |
(1)
| The amount of the PEO and each Non-PEO NEO’s Summary Compensation Table total has been updated to reflect a correction that was made to the supplemental plan company matching contribution for the fiscal year ended December 31, 2022. Each PEO and Non-PEO NEO received the following corrected company matching contribution attributable to the 2022 fiscal year: Mr. Heinzmann, $121,157 (previously reported as $38,882); Ms. Sethna, $42,801 (previously reported as $12,756); Mr. Stafford, $30,446 (previously reported as $14,412); Ms. Chu, $11,150 (previously reported as $2,370); and Mr. Nayar, $18,103 (previously reported as $9,957). These updates have been reflected in the graphs on pages 53-54. |
(2)
| The table below outlines the amounts included as additions and deductions in the calculation of Compensation Actually Paid (CAP) for our Principal Executive Officer (PEO), David W. Heinzmann. |
| | 2022 | | | $6,850,271 | | | $1,960,305 | | | $1,984,294 | | | $361,791 | | | ($2,119,346) | | | $1,148,117 | | | | 2021 | | | $6,170,131 | | | $1,715,931 | | | $1,396,152 | | | $2,936,037 | | | $4,575,268 | | | $10,569,353 | | | | 2020 | | | $4,065,061 | | | $1,543,674 | | | $1,340,271 | | | $3,083,060 | | | $5,360,809 | | | $9,624,985 | |
| | 2023 | | | $6,641,506 | | | $2,291,379 | | | $2,304,434 | | | $3,184,473 | | | $3,483,958 | | | $8,714,124 | | | | 2022 | | | $6,932,546 | | | $1,960,305 | | | $1,984,294 | | | $361,791 | | | ($2,119,346) | | | $1,230,392 | | | | 2021 | | | $6,170,131 | | | $1,715,931 | | | $1,396,152 | | | $2,936,037 | | | $4,575,268 | | | $10,569,353 | | | | 2020 | | | $4,065,061 | | | $1,543,674 | | | $1,340,271 | | | $3,083,060 | | | $5,360,809 | | | $9,624,985 | |
(a)
| The methodology for estimating the fair value of restricted stock unit awards is consistent with the methodology as described in Note 12 “Stock-Based Compensation” of the Notes to Consolidated Financial Statements included in our 2020-20222021-2023 Annual Reports on Form 10-K. The methodology for estimating the fair value of stock option awards at each applicable measurement date is consistent with the Black Scholes methodology as described in Note 12 “Stock-Based Compensation” of the Notes to Consolidated Financial Statements included in our 2020-20222021-2023 Annual Reports on Form 10-K, with the exception of the expected life assumption. The expected life assumption used in estimating the stock option valuations noted above ranges from 0.850.50 to 4.02 years. |
(b)
| The reported value of equity awards represents the grant date fair value of restricted stock unit awards as reported in the “Stock Awards” column of the Summary Compensation Table for each applicable year. |
(c)
| The reported value of option awards represents the grant date fair value of stock option awards as reported in the “Option Awards” column of the Summary Compensation Table for each applicable year. |
(d)
| The equity award adjustments incorporate the following additions (or subtractions, as applicable): |
(i)
| the respective year-end estimated fair value of any equity awards granted in the applicable year that are both outstanding and unvested as of each year; 2023: $2,564,562; 2022: $1,870,840; 2021: $2,027,364; 2020: $2,996,776 |
(ii)
| the amount of change in estimated fair value as of the end of each applicable year as compared to the prior fiscal year for all awards granted in prior years that remain outstanding and unvested as of each year; 2023: $382,942; 2022: ($780,780); 2021: $673,996; 2020: $443,446 |
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TABLE OF CONTENTS (iii)
| for all awards granted in prior years that vest in the applicable year, the amount equal to the change in fair value as of the vesting date compared to the estimated fair value from the prior fiscal year;2023: $236,969; 2022: ($728,269); 2021: $234,677; 2020: ($357,162) |
(e)
| The option award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: |
(i)
| the respective year-end estimated fair value of any equity awards granted in the applicable year that are both outstanding and unvested as of each year; 2023: $2,656,968; 2022: $1,816,846; 2021: $1,856,699; 2020: $5,129,591 $5,129,591 |
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(ii)
| the amount of change in estimated fair value as of the end of each applicable year as compared to the prior fiscal year for all awards granted in prior years that remain outstanding and unvested as of each year;2023: $396,935; 2022: ($1,904,221); 2021: $2,124,028; 2020: $847,250 |
(iii)
| for all awards granted in prior years that vest in the applicable year, the amount equal to the change in fair value as of the vesting date compared to the estimated fair value from the prior fiscal year; 2023: $430,055; 2022: ($2,031,971); 2021: $594,541; $594,541; 2020: ($616,032) |
(2)(3)
| The table below outlines the amounts included as additions and deductions in the calculation of compensation actually paid (CAP) for Non-PEO NEOs. |
| | 2022 (f) | | | $2,253,183 | | | $536,076 | | | $542,601 | | | ($29,073) | | | ($834,065) | | | $311,368 | | | | 2021 (g) | | | $2,155,166 | | | $649,769 | | | $428,533 | | | $1,067,878 | | | $1,457,782 | | | $3,602,524 | | | | 2020 (h) | | | $1,722,056 | | | $564,463 | | | $620,423 | | | $1,119,992 | | | $2,054,310 | | | $3,711,472 | |
| | 2023 (f) | | | $2,044,741 | | | $590,901 | | | $594,262 | | | $874,386 | | | $1,126,354 | | | $2,860,318 | | | | 2022 (g) | | | $2,268,933 | | | $536,076 | | | $542,601 | | | ($29,073) | | | ($834,065) | | | $327,118 | | | | 2021 (h) | | | $2,155,166 | | | $649,769 | | | $428,533 | | | $1,067,878 | | | $1,457,782 | | | $3,602,524 | | | | 2020 (i) | | | $1,722,056 | | | $564,463 | | | $620,423 | | | $1,119,992 | | | $2,054,310 | | | $3,711,472 | |
(a)
| The methodology for estimating the fair value of restricted stock unit awards is consistent with the methodology as described in Note 12 “Stock-Based Compensation” of the Notes to Consolidated Financial Statements included in our 2020-20222021-2023 Annual Reports on Form 10-K. The methodology for estimating the fair value of stock option awards at each applicable measurement date is consistent with the Black Scholes methodology as described in Note 12 “Stock-Based Compensation” of the Notes to Consolidated Financial Statements included in our 2020-20222021-2023 Annual Reports on Form 10-K, with the exception of the expected life assumption. The expected life assumption used in estimating the stock option valuations noted above ranges from 0.850.50 to 4.02 years. |
(b)
| The reported value of equity awards represents the grant date fair value of restricted stock unit awards as reported in the “Stock Awards” column of the Summary Compensation Table for each applicable year. |
(c)
| The reported value of option awards represents the grant date fair value of stock option awards as reported in the “Option Awards” column of the Summary Compensation Table for each applicable year. |
(d)
| The equity award adjustments for stock in each applicable year include the addition (or subtraction, as applicable) of the following: |
(i)
| the respective year-end estimated fair value of any equity awards granted in the applicable year that are both outstanding and unvested as of each year; 2023: $661,349; 2022: $511,609; 2021: $771,458; 2020: $863,429 |
(ii)
| the amount of change in estimated fair value as of the end of each applicable year as compared to the prior fiscal year for all awards granted in prior years that remain outstanding and unvested as of each year; 2023: $115,945; 2022: ($339,626); 2021: $235,855; 2020: $360,228$360,228 |
(iii)
| for all awards granted in prior years that vest in the applicable year, the amount equal to the change in fair value as of the vesting date compared to the estimated fair value from the prior fiscal year; 2023: $97,092; 2022: ($201,056); 2021: $60,565; $60,565; 2020:($103,665) |
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| The option award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: |
(i)
| the respective year-end estimated fair value of any equity awards granted in the applicable year that are outstanding and unvested as of each year; 2023: $685,173; 2022: $496,813; 2021: $572,479; 2020: $1,477,981$1,477,981 |
(ii)
| the amount of change in estimated fair value as of the end of each applicable year as compared to the prior fiscal year for all awards granted in prior years that remain outstanding and unvested as of each year; 2023: $110,705; 2022: ($795,064); 2021: $731,620; 2020: $760,646$760,646 |
(iii)
| for all awards granted in prior years that vest in the applicable year, the amount equal to the change in fair value as of the vesting date compared to the estimated fair value from the prior fiscal year; 2023: $330,476; 2022: ($535,814); 2021: $153,683; 2020:($184,317) |
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(f)
| For fiscal year 2023, the following NEOs are included in the calculation: Meenal A. Sethna, Ryan K. Stafford, Maggie Chu, and Deepak Nayar |
(g)
| For fiscal year 2022, the following NEOs are included in the calculation: Meenal A. Sethna, Ryan K. Stafford, Maggie Chu, and Deepak Nayar |
(g)(h)
| For fiscal year 2021, the following NEOs are included in the calculation: Meenal A. Sethna, Ryan K. Stafford, Maggie Chu, and Deepak Nayar |
(h)(i)
| For fiscal year 2020, the following NEOs are included in the calculation: Meenal A. Sethna, Ryan K. Stafford, Matthew J. Cole, and Deepak Nayar |
(3)(4)
| For years 2020 – 2023, the Peer Group used for Total Shareholder Return (TSR) is the samegroup of companies consisting of the Dow Jones Electrical Components and Equipment Industry Group Index consistent with the peer group as disclosed in Item 5 in our 20222023 Annual Report on Form 10-K. |
(4)(5)
| Net Income is shown in millions, as reported in our 20222023 Annual Report on Form 10-K. |
(5)(6)
| Company Selected Measure used is Adjusted Earnings Per Share. Adjusted Earnings Per Share (AIP EPS) is calculated as described for “AIP EPS” in footnote 1 on page 33. |
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The following graphs illustratesillustrate the relationship of Compensation Actually Paid (CAP) for our PEO and the average CAP for our Non-PEO NEOs in relationship to our Total Shareholder Return, Net Income and Adjusted EPS (the Company Selected Measure (CSM)). Additionally, the graphs also describe the relationship between our own TSR versus our peer group TSR. Compensation actually paid is influenced by numerous factors, including, but not limited to, share price volatility, new grant issuance and timing of vesting, as well as other factors.
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The most important Financial Performance measures used by the Company to link Compensation Actually Paid to Company Performance for the most recently completed fiscal year for PEO and Non-PEO NEOs are as follows: (i)
| Adjusted Earnings Per Share
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(iii)
| Cash from Operations
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PROPOSAL NO. 4 – FIRST AMENDMENT TO THE AMENDED AND RESTATED
LITTELFUSE, INC. LONG TERM INCENTIVE PLAN
Our Long-Term Plan was originally adopted by the Board of Directors on February 4, 2010 and approved by the Company’s stockholders on April 30, 2010; it was subsequently amended and restated on April 28, 2017 to, among other changes, increase the number of shares authorized for issuance under the plan. On March 3, 2023, the Board approved the First Amendment to the Amended and Restated Littelfuse, Inc. Long-Term Incentive Plan described in this proposal (the “Plan Amendment”), subject to stockholder approval, to be effective as of April 27, 2023. The Plan Amendment will be effective on the date of stockholder approval and after that date will apply to all awards made under the Long-Term Plan, as amended by the Plan Amendment (the “Amended Plan”) before, on or after that date. If approved, the additional shares being requested under the Amended Plan will be registered under the Securities Act of 1933. If our stockholders do not approve the Amended Plan, the present version of the Long-Term Plan will continue as currently in effect.
A copy of the Plan Amendment is attached as Appendix A to this Proxy Statement. The proposed changes included in the Plan Amendment are summarized below under the heading “Summary of Changes to the Long-Term Plan.” The material terms of the Amended Plan, assuming the approval of this proposal by our stockholders, are summarized below under the heading “Description of the Amended Plan.”
The Board believes the approval of the Plan Amendment is advisable and in the best interests of the Company and its stockholders because it assists in attracting and retaining employees, directors and consultants of the Company and its affiliates, motivates such individuals by means of performance-related incentives to achieve long-range performance goals, and enables such individuals to participate in the long-term growth and financial success of the Company.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE
FIRST AMENDMENT TO THE AMENDED AND RESTATED LITTELFUSE, INC.
LONG-TERM INCENTIVE PLAN
Summary of Changes to the Long-Term PlanThe Amended Plan is substantially identical to the Long-Term Plan that was previously approved by stockholders on April 28, 2017, with the following exceptions:
⯀ | Increase in Authorized Shares. The number of shares authorized for issuance under the Long-Term Plan is being increased by 730,000 shares, from 2,250,000 to 2,980,000, which does not include 614,248 shares that had been reserved but unissued under prior plans that were superseded and replaced by the Long-Term Plan when it was originally adopted in 2010. As of February 28, 2023, approximately 418,196 shares remained available for future issuance under the Long-Term Plan and 666,587 shares were subject to outstanding awards under the Long-Term Plan. The awards outstanding as of such date consisted of 515,927 shares subject to stock options and 150,660 shares underlying restricted stock units. Because we only have approximately 418,196 shares available for future issuance under the Long-Term Plan, we believe that an increase in the number of shares of our common stock authorized for issuance under the Long-Term Plan is important to enable the Company to continue to grant equity-based awards. Further, we believe that the increase is consistent with market practices and is important to allow us to continue to attract, motivate, reward, and retain the talent critical to achieving our business goals. This is only the second time we have requested stockholder approval for additional share authorization under the Long-Term Plan. Based on the projected rate of share usage, we believe that the 730,000 additional shares being requested, together with the shares currently available for issuance, will be sufficient to fund future equity grants to employees and directors over the next five years. Note that in addition to shares under the Long-Term Plan, as of February 28, 2023, the Company has additional shares available for issuance under plans assumed as part of the IXYS acquisition in 2018. However, the shares under those assumed plans are not available for issuance to legacy Littelfuse employees. For further plan and share information, refer to footnote 6 beginning on page 49.
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⯀ | Other Changes. The Long-Term Plan is being amended to conform the performance-based compensation provisions of the Plan to the provisions of Section 162(m) of the Code, as amended by the Tax Cuts and Jobs Act in 2018.
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Description of the Amended PlanThe following description of the Amended Plan is a summary and is qualified in its entirety by reference to the provisions of the Plan Amendment, which is attached as Appendix A to this Proxy Statement, and the Long-Term Plan, which is included as an exhibit to our Current Report on Form 8-K, filed on May 1, 2017.
Administration. The Amended Plan requires that a committee of non-employee independent outside directors administer the Amended Plan. Currently, our Compensation Committee, which we refer to in this summary as the Committee, administers the Amended Plan. Among other powers and duties, the Committee determines the employees who will be eligible to receive awards and establishes the terms and conditions of all awards. Unless prohibited by applicable law or the applicable rules of a stock exchange, the Committee may delegate its authority and administrative duties under the Amended Plan and may delegate to an executive officer its authority to grant awards to non-officer employees, subject to certain rules in the Amended Plan.
Shares Subject to the Amended Plan. The shares issuable under the Amended Plan are shares of our common stock that are (i) authorized but unissued or (ii) held in or acquired for the Littelfuse treasury. The total aggregate shares of common stock authorized for issuance during the term of the Amended Plan is limited to 3.03 million shares, all of which may be issued pursuant to incentive stock options, plus the 614,248 shares that had been reserved but unissued under prior plans that were superseded and replaced by the Long-Term Plan when it was originally adopted in 2010. Approximately 462,409 shares remained available for issuance as of the 2022 fiscal year end. The Committee must equitably adjust awards and the number of shares available under the Amended Plan in the event of a stock split, stock dividend, extraordinary cash dividend, split-up, spin-off, reclassification or other recapitalization affecting the common stock. Subject to certain limitations, the shares of common stock allocable to the portion of awards granted under the Amended Plan that have been forfeited, canceled, expired without becoming exercised or terminated and which have not been applied to pay the exercise price or taxes, may again be issued pursuant to new awards under the Amended Plan.
Types of Awards. There are seven types of awards that may be made under the Amended Plan including incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”), stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance shares and performance units. Each award is subject to an award agreement approved by the Committee reflecting the terms and conditions of the award. For purposes of awards determined by reference to the fair market value of a share of our common stock, fair market value means the closing price of a share of our common stock on the relevant date, or if there are no sales on such date, on the next preceding day on which there were sales.
Eligibility. Current and future U.S. and non-U.S. employees (including officers) and prospective employees as designated by the Committee (or our CEO pursuant to a delegation) and members of our Board may receive awards under the Amended Plan. However, only U.S. employees may receive ISOs. As of February 28, 2023, approximately 336 individuals consisting of 7 executive officers, 8 directors who are not executive officers, and approximately 321 employees who are not executive officers are eligible to receive awards under the Amended Plan. The closing price of Littelfuse common stock on the NASDAQ Global Select Market was $258.73 per share as of February 28, 2023.
Stock Options. ISOs are options to purchase our common stock that receive tax benefits if they meet the requirements under Code Section 422, and NQSOs are options to purchase our common stock that do not meet those requirements.
Option Grant: Each option award must be evidenced by an award agreement specifying the option exercise price, the term of the option, the number of shares of our common stock subject to the option, and such other provisions as the Committee determines, and which are not inconsistent with the terms of the Amended Plan (which need not be the same for each award or for each recipient). The award agreement must also specify whether the option is to be treated as an ISO within the meaning of Code Section 422. Options not designated as ISOs are considered to be NQSOs.
Exercise of Options: Options granted under the Amended Plan are exercisable at such times as set forth in an award agreement. The exercise price of each option must be at least 100% of the fair market value of a share of our common stock on the date of grant. The exercise price of each ISO to any individual who owns more than
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10% of the voting power of our stock must be at least 110% of the fair market value of a share of our common stock on the date of grant. The fair market value of shares with respect to which ISOs are exercisable for the first time by any individual during any one calendar year is limited to $100,000, and any ISOs that become exercisable in excess of that amount are deemed NQSOs.
Payment of Exercise Price: The exercise price is payable in cash, by tendering shares of our common stock (which have been held for any minimum period needed to avoid adverse impacts for our financial reporting purposes), or, if permitted by the Committee or where it would not trigger a charge to our earnings for financial reporting purposes, by withholding shares that would be acquired on exercise, tendering other awards payable under the Amended Plan, or broker-assisted cashless exercise (if permitted by all applicable laws and regulations). Options are exercisable at such times and subject to the conditions, restrictions and contingencies specified by the Committee.
Option Term: The maximum term of any option is ten years from the date of grant. With respect to ISOs granted to an individual who owns more than 10% of the voting power of our stock, the maximum term is 5 years from the date of grant.
Stock Appreciation Rights. Each SAR represents the right to receive a payment in an amount equal to the increase in the fair market value of a share of our common stock on the date the recipient exercises the award over the fair market value of a share of our common stock at the date the award is granted (the “base price”). The Committee will determine, in its sole discretion, the number of SARs granted to any individual under the Amended Plan and any terms and conditions pertaining to the awards.
SARs Grant: Each award of SARs must be evidenced by an award agreement specifying the base price, the term of the SAR, and such other provisions as the Committee determines, and which are not inconsistent with the terms of the Amended Plan (which need not be the same for each award or for each recipient).
Base Price of SAR: The base price of each SAR granted under the Amended Plan must be at least equal to 100% of the fair market value of a share of our common stock on the date of grant.
Settlement of SARs: SARs granted under the Amended Plan are exercisable (“settled”) at such times as set forth in an award agreement. Following exercise of a SAR, a participant is entitled to receive payment in an amount determined by multiplying: (a) the excess of the fair market value of a share on the date of exercise over the base price per share; by (b) the number of shares with respect to which the SAR is exercised. Payment to settle SARs may be in cash, shares of common stock, or a combination of cash and shares, as determined by the Committee. The Committee may provide a maximum dollar limit on the total payment due under a SAR.
SAR Term: The maximum term of any SAR is ten years from the date of grant.
Restricted Stock and Restricted Stock Units. An award of restricted stock is a grant of shares of our common stock subject to restrictions specified by the Committee that generally lapse upon vesting. Each RSU awarded entitles the recipient to receive, upon vesting of the award, one share of our common stock or cash in an amount equal to the fair market value of one share of our common stock on the date of vesting (or a combination of cash and shares, in the Committee’s discretion). Each award of restricted stock or RSUs must be evidenced by an award agreement that specifies the period of restriction for restricted stock or the vesting period for RSUs, the number of shares of restricted stock or RSUs granted, and such other provisions as the Committee shall determine, and which are not inconsistent with the terms of the Amended Plan (which need not be the same for each award or for each recipient). Unless otherwise provided in the award agreement, a recipient of a restricted stock or RSU award has no stockholder rights, such as voting or cash dividend rights, until vesting of the RSU or restricted stock and the recipient has become the shareholder of record for the shares of our common stock, if any.
Performance Units and Performance Shares. Each performance share represents the recipient’s right to receive one share of our common stock, upon achievement of performance goals established by the Committee. Each performance unit entitles the recipient to receive a cash payment equal to the value of the performance unit, as determined by the Committee on the grant date, upon achievement of the performance goals established by the Committee. Recipients of performance shares or performance units earn the right to receive payment based on their achievement of the applicable performance goals during the performance period, as determined by the Committee.
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Grant of Performance Award: Each award of performance units or performance shares must be evidenced by an award agreement that specifies the initial value of the award, the performance goals and the performance period, and such other provisions as the Committee determines, and which are not inconsistent with the terms of the Amended Plan.
Stockholder/Dividend Rights: Unless otherwise provided in the award agreement, a recipient of performance shares or performance units has no stockholder rights, such as voting or cash dividend rights, until the award has vested and the recipient has become the stockholder of record for the shares of our common stock, if any.
Performance Goals. Performance goals under the Amended Plan are based on performance measures, which may include any of the following: revenue; primary or fully-diluted earnings per share; earnings before interest, taxes, depreciation, and/or amortization; pretax income; operating income; cash flow from operations; total cash flow; return on equity; return on capital; return on assets; net operating profits after taxes; economic value added; capital expenditures; expense levels; stock price; debt levels; market share; total stockholder return or return on sales; or any individual performance objective which is measured solely in terms of quantitative targets related to Littelfuse or its business; or any combination thereof. In addition, the performance goals may be based in whole or in part upon the performance of Littelfuse and/or one or more of its affiliates, one or more of its divisions or units or, in such a case, any combination of the foregoing, on a consolidated or nonconsolidated basis, under one or more of these performance measures. These performance measures may be changed only if the Committee proposes a change for stockholder vote and stockholders approve a change. The performance goals that apply to any performance unit or performance share award must be established in writing by the Committee in the applicable award agreement. The Committee must certify attainment of these goals before any payout or vesting may be determined, and has the ability to adjust its determinations to decrease (but not increase) the payment under the award. If applicable tax and/or securities laws change to permit Committee sole discretion to alter the performance goals without obtaining stockholder approval of such changes, the Committee will have sole discretion to make such changes without obtaining stockholder approval.
Limitations on Awards. The maximum number of shares that may be awarded pursuant to options, restricted stock, RSUs, and performance units and shares under the Amended Plan to any “covered employee,” as such term is defined in the regulations promulgated under Code Section 162(m), in any one calendar year is limited to 200,000 shares of our common stock unless, with respect to outstanding awards, if any, that remain subject, on a grand-fathered basis, to the exception for performance-based compensation from the tax deductibility limitations of Code Section 162(m) the Committee determines that the award of such shares will not be designed to comply with such exception. In addition, in any one calendar year, a “covered employee” may not receive a cash amount payable under the Amended Plan greater than $3,000,000, unless, with respect to outstanding awards, if any, that remain subject, on a grand-fathered basis, to the exception for performance-based compensation from the tax deductibility limitations of Code Section 162(m) the Committee determines that the award of such shares will not be designed to comply with such exception. The maximum number of shares that may be awarded pursuant to any award under the Amended Plan during any calendar year to any non-employee member of our Board is limited to 50,000.
Vesting and Forfeiture. The Committee determines the time and conditions under which the award will vest or the period of restriction will lapse as part of making an award; provided that any time-based vesting must be at least one (1) year, except in limited cases (not to exceed 5% of outstanding awards) approved by the Compensation Committee. Vesting or the lapse of the period of restriction may, in the Committee’s discretion, be based solely upon continued employment or service for a specified period of time, or may be based upon the achievement of specific performance goals (company-wide, subsidiary-wide, divisional, and/or individual), or both. Vesting means the time at which an option or SAR holder may exercise his or her award, the end of the period of restriction with respect to restricted stock or RSUs, or the time at which the recipient of performance units or performance shares has satisfied the requirements to receive payment of the award (which can be no less than one year). Vesting or lapse provisions need not be uniform among awards granted at the same time or to persons similarly situated. Vesting and lapse requirements will be set forth in the applicable award agreement. The Committee, in its discretion, may accelerate vesting of any award at any time. When a participant terminates employment or service with us, all unvested awards are forfeited unless otherwise provided by the Committee.
Extension Exercise Period. The Committee, in its discretion, may extend the period of time for which an option or SAR is to remain exercisable following a termination of service, but in no event beyond the expiration of the option or SAR.
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Prohibition on Repricing. Except as required or permitted pursuant to a recapitalization or reorganization, in no event will the Committee amend an option or SAR to reduce the exercise or base price below the fair market value of the award on the date of grant or grant an option or SAR in exchange for the cancellation or surrender of an option or SAR with a higher per share exercise or base price.
Limits on Transfers of Awards/Beneficiary Designation. All awards are exercisable only by the participant during the participant’s lifetime, and are transferable only by will or by the laws of descent and distribution; provided, however, that the Committee may permit a transfer of an award, other than an ISO, to a family member of an individual, subject to such restrictions as the Committee may provide. Participants may designate a beneficiary or beneficiaries to receive their benefits under the Amended Plan if they die before receiving any or all of such benefit.
Deferrals. At the Committee’s discretion, cash or shares payable upon the satisfaction of any requirements with respect to RSUs, performance units, or performance shares may be deferred. Shares or cash payable upon the exercise of stock options or SARs or the vesting of restricted stock may not be deferred. Any deferrals must be timely elected to comply with policies and procedures established by the Committee and the requirements of Code Section 409A.
Recapitalization. Upon a recapitalization, the Committee must adjust the number and kind of shares issuable and maximum limits for each type of award, adjust the number and kind of shares subject to outstanding awards, adjust the exercise or base price of outstanding options or SARs, and make any other equitable adjustments as needed to prevent dilution or enlargement of rights of awards.
Reorganization. Upon a reorganization, the Committee may decide that awards will apply to securities of the resulting corporation (with appropriate adjustment as determined by the Committee), that some or all options and/or SARs will be immediately exercisable (to the extent permitted under federal or state securities laws), that options and/or SARs will be immediately exercisable and terminate after at least 30 days’ notice to holders (to the extent permitted under federal or state securities laws), and/or that some or all awards of restricted stock or RSUs will become immediately fully vested.
Amendment and Termination. Our Board may amend, suspend or terminate the Amended Plan and any award agreement at any time, without the consent of stockholders or participants; provided, however, that any amendment to the Amended Plan must be submitted to the Corporation’s stockholders for approval if stockholder approval is required by applicable law. However, no amendment or termination may materially and adversely affect the rights of holders of outstanding awards without their consent unless necessary to comply with applicable law.
Federal Income Tax ConsequencesThe following summary of the federal income tax consequences relating to the Amended Plan is based on present U.S. federal tax laws and regulations. We cannot assure you that the laws and regulations will not change in the future and affect the tax consequences of the matters discussed in this section. This summary is not intended to be exhaustive and does not discuss the tax consequences of a participant’s death or the provisions of any income tax laws of any municipality, state or foreign country in which a participant may reside.
Incentive Stock Options. An employee participant will generally have no tax consequences when he or she receives the grant of an ISO. In most cases, an employee participant also will not have income tax consequences when he or she exercises an ISO. An employee participant may have income tax consequences when exercising an ISO if the aggregate fair market value of the shares of the common stock subject to the ISO that first become exercisable in any one calendar year exceeds $100,000. If this occurs, the excess shares (the number of shares the fair market value of which exceeds $100,000 in the year first exercisable) will be treated as though they are NQSOs instead of ISOs. Additionally, subject to certain exceptions for death or disability, if an employee participant exercises an ISO more than three months after termination of employment, the exercise of the option will be taxed as the exercise of a NQSO. Any shares recharacterized as NQSOs will have the tax consequences described below with respect to the exercise of NQSOs.
An employee participant recognizes income when selling or exchanging the shares acquired from the exercise of an ISO in the amount of the difference between the fair market value at the time of the sale or exchange and the exercise price the participant paid for those shares. This income will be taxed at the applicable capital gains rate if the sale or exchange occurs after the expiration of the requisite holding periods. Generally, the required holding periods expire two years after the date of grant of the ISO and one year after the date the common stock is acquired
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by the exercise of the ISO. Further, the amount by which the fair market value of a share of the common stock at the time of exercise of the ISO exceeds the exercise price will likely be included in determining a participant’s alternative minimum taxable income and may cause the participant to incur an alternative minimum tax liability in the year of exercise.
If an employee participant disposes of the common stock acquired by exercising an ISO before the holding periods expire, the participant will recognize compensation income. The amount of income will equal the difference between the option exercise price and the lesser of (i) the fair market value of the shares on the date of exercise and (ii) the price at which the shares are sold. This amount will be subject to income tax at ordinary income rates, but will not be subject to income or employment tax withholding. If the sale price of the shares is greater than the fair market value on the date of exercise, the participant will recognize the difference as gain and will be taxed at the applicable capital gains rate. If the sale price of the shares is less than the exercise price, the participant will recognize a capital loss equal to the excess of the exercise price over the sale price.
Using shares acquired by exercising an ISO to pay the exercise price of another option (whether or not it is an ISO) will be considered a disposition of the shares for federal tax purposes. If this disposition occurs before the expiration of the required holding periods, the employee optionholder will have the same tax consequences as are described in the preceding paragraph. If the option holder transfers any of these shares after holding them for the required holding periods or transfers shares acquired by exercising an NQSO or on the open market, he or she generally will not recognize any income upon exercise. Whether or not the transferred shares were acquired by exercising an ISO and regardless of how long the option holder has held those shares, the basis of the new shares received from the exercise will be calculated in two steps. In the first step, a number of new shares equal to the number of older shares tendered (in payment of the option’s exercise) is considered exchanged under Code Section 1036 and the related rulings; and these new shares receive the same holding period and the same basis the option holder had in the old tendered shares, if any, plus the amount included in income from the deemed sale of the old shares and the amount of cash or other nonstock consideration paid for the new shares, if any. In the second step, the number of new shares received by the option holder in excess of the old tendered shares receives a basis of zero, and the option holder’s holding period with respect to such shares commences upon exercise.
There will be no tax consequences to Littelfuse when it grants an ISO or, generally, when an employee participant exercises an ISO. However, to the extent that an option holder recognizes ordinary income when he or she exercises, as described above, Littelfuse generally will have a tax deduction in the same amount and at the same time.
Nonqualified Stock Options. A participant generally has no income tax consequences from the grant of NQSOs. In the tax year when the participant exercises the NQSO, he or she recognizes ordinary income in the amount by which the fair market value of the shares at the time of exercise exceeds the exercise price for the shares, and that amount will be subject to employment taxes.
If a participant exercises a NQSO by paying the exercise price with previously acquired common stock, he or she will have federal income tax consequences (relative to the new shares received) in two steps. In the first step, a number of new shares equivalent to the number of older shares tendered (in payment of the NQSO exercised) is considered to have been exchanged in accordance with Code Section 1036 and related rulings, and no gain or loss is recognized. In the second step, with respect to the number of new shares acquired in excess of the number of old shares tendered, the participant recognizes income on those new shares equal to their fair market value less any non-stock consideration tendered. The new shares equal to the number of the old shares tendered will have the same basis the participant had in the old shares and the holding period with respect to the tendered older shares will apply to the new shares. The excess new shares received will have a basis equal to the amount of income recognized on exercise, increased by any non-stock consideration tendered. The holding period begins on the exercise of the option.
The gain, if any, realized at the later disposition of the common stock will either be short- or long-term capital gain, depending on the holding period.
There will be no tax consequences to Littelfuse when granting a NQSO. Littelfuse generally will have a tax deduction in the same amount and at the same time as the ordinary income recognized by the participant.
Stock Appreciation Rights. Neither the participant nor Littelfuse has income tax consequences from the issuance of a SAR. The participant recognizes taxable income at the time the SAR is exercised in an amount equal to the amount by which the cash and/or the fair market value of the shares of the common stock received upon that exercise
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exceeds the base price. The income recognized on exercise of a SAR will be taxable at ordinary income tax rates and be subject to employment taxes. Littelfuse generally will be entitled to a tax deduction with respect to the exercise of a SAR in the same amount and at the same time as the ordinary income recognized by the participant.
Restricted Stock. A holder of restricted stock will not recognize income at the time of the award, unless he or she specifically makes an election to do so under Code Section 83(b) within thirty days of such award. Unless the holder has made such an election, he or she will realize ordinary income and be subject to employment taxes in an amount equal to the fair market value of the shares on the date the restrictions on the shares lapse, reduced by the amount, if any, he or she paid for such stock. Littelfuse will generally be entitled to a corresponding deduction in the same amount and at the same time as the holder recognizes ordinary income. Upon the otherwise taxable disposition of the shares awarded after ordinary income has been recognized, the holder will realize a capital gain or loss (which will be long-term or short-term depending upon how long the shares are held after the restrictions lapse).
If the holder made a timely election under Code Section 83(b), he or she will recognize ordinary income for the taxable year in which an award of restricted stock is received in an amount equal to the fair market value of all shares of restricted stock awarded (even if the shares are subject to forfeiture). That income will be taxable at ordinary income tax rates. At the time of disposition of the shares, if such an election was made, the holder will recognize gain in an amount equal to the difference between the sales price and the fair market value of the shares at the time of the award. Such gain will be taxable at the applicable capital gains rate. Littelfuse will generally be entitled to a tax deduction in the same amount and at the same time as the ordinary income recognized by the participant.
Restricted Stock Units. A holder of RSUs generally will not recognize income at the time of the award. Upon vesting and delivery of the cash or shares due upon settlement of an RSU, a holder will generally realize ordinary income and be subject to employment taxes in an amount equal to the fair market value of the shares distributed. Littelfuse will generally be entitled to a tax deduction in the same amount and at the same time as the holder recognizes income. When the holder later disposes of his or her shares, the difference between the amount realized on sale and the amount recognized by the holder upon settlement of the RSU will be a capital gain or loss (which will be long-term or short-term depending upon how long the shares are held).
Performance Shares. A holder of a performance share will generally recognize ordinary income and be subject to employment taxes in the year of vesting and payment of shares for performance under the Amended Plan. Similarly, Littelfuse will generally be entitled to a tax deduction in the same amount and at the same time as the holder recognizes income.
Performance Units. A holder of a performance unit will generally recognize ordinary income and be subject to employment taxes in the year of vesting and cash payment for performance under the Amended Plan. Similarly, Littelfuse will generally be entitled to a tax deduction in the same amount and at the same time as the holder recognizes income.
Limitation on Company Deductions. No federal income tax deduction is allowed for Littelfuse for any compensation paid to a “covered employee” in any taxable year of Littelfuse to the extent that his or her compensation exceeds $1,000,000. For this purpose, “covered employees” are generally our Chief Executive Officer and the three other most highly compensated officers other than, for years prior to 2018, our Chief Financial Officer for the taxable year, and the term “compensation” generally includes amounts includable in gross income as a result of the exercise of stock options or SARs, payments pursuant to RSUs, performance shares or units, or the receipt of restricted stock.
Prior to 2018 (and including tax years that began prior to January 1, 2018), this limitation did not apply to compensation qualifying as “performance based” under Code Section 162(m). While the Committee has generally attempted to maximize the amount of executive compensation that it would be permitted to deduct for tax purposes, the Committee believes that the primary purpose of our compensation program is to support Littelfuse’s business strategy and the long-term interests of our stockholders. Therefore, the Committee has maintained the flexibility to award compensation that may not be tax-deductible if doing so furthers the objectives of our executive compensation program.
Under recent U.S. tax reform, the exception to Code Section 162(m) for performance-based compensation has been repealed for tax years beginning after December 31, 2017, subject to certain transition and grandfathering rules. In addition, our Chief Financial Officer will be included as a covered employee. Despite these new limits on the
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deductibility of performance-based compensation, the Committee continues to believe that a significant portion of our named executive officers’ compensation should be tied to Littelfuse’s performance. Therefore, the changes to Code Section 162(m) have not significantly impacted the design of our compensation program going forward.
Code Section 409A. Code Section 409A applies to certain “nonqualified deferred compensation” and would impose adverse consequences if an award under the Amended Plan is neither exempt from, nor compliant with, the requirements of Code Section 409A. Such adverse consequences include, but are not limited to, immediate income inclusion of the ordinary income that would be recognized if the rights are exercised at the date of vesting, a 20% tax on the amount required to be included in income, and interest at a penalty rate. Littelfuse intends that any awards granted under the Amended Plan be exempt from or structured to comply with Code Section 409A. However, if an award is subject to Code Section 409A, absent the participant’s consent, the Committee may amend such award, or take any other actions necessary to comply with, or exempt, such award from Code Section 409A.
Plan Benefits Under the Amended PlanAs of the date of this Proxy Statement, no awards have been made under the Amended Plan that are contingent upon stockholder approval of this proposal. Awards to be received by officers and other employees following the date of this Proxy Statement are not determinable because future benefits or amounts to be received by or allocated to each person named will depend on a variety of factors, including fair market value of the Company’s stock and the achievement of performance goals set by the Compensation Committee.
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TABLE OF CONTENTS PROPOSAL NO. 53 - APPROVAL AND RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS Subject to approval of the stockholders, the Audit Committee of the Board has appointed Grant ThorntonDeloitte & Touche LLP (“Grant Thornton”Deloitte”), an independent registered public accounting firm, as independent auditors to examine the annual consolidated financial statements of the Company and its subsidiary companies for the fiscal year ending December 30, 2023.28, 2024. The stockholders are being asked to approve and ratify such appointment. A representative of Grant Thornton LLPDeloitte will be available during the meeting to make a statement, if such representative so desires, and to respond to stockholders’ questions. Although approval and ratification of the Audit Committee’s appointment of Grant ThorntonDeloitte is not required, we value the opinions of our stockholders and believe that stockholder approval and ratification of the appointment is a good corporate governance practice. In the event of a negative vote on this proposal, the Audit Committee will reconsider its appointment of Grant Thornton.Deloitte. Even if this appointment is approved and ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of Littelfuse and its stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL AND RATIFICATION OF GRANT THORNTONDELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITORS OF THE COMPANY’S CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDING DECEMBER 30, 202328, 2024 Audit and Non-Audit Fees The following table presents the approximate fees for professional audit services rendered by Grant Thornton LLP for the audit of our financial statements for professional services rendered for the fiscal years ended December 30, 2023 and December 31, 2022, and January 1, 2022: | | | | Fiscal Year 2022 | | Fiscal Year 2021 | | | | Fiscal Year 2023 | | Fiscal Year 2022 | | | | Audit Fees (1) | | $3,259,200 | | $2,841,500 | | Audit Fees (1) | | $3,357,450 | | $3,259,200 | | | | Audit-Related Fees (2) | | $29,500 | | $28,500 | | Audit-Related Fees (2) | | $30,000 | | $29,500 | | | | Tax Fees (3) | | $185,700 | | $0 | | Tax Fees (3) | | $99,000 | | $185,700 | | | | All Other Fees (4) | | $6,500 | | $6,500 | | All Other Fees (4) | | $6,500 | | $6,500 | | | | Total | | $3,480,900 | | $2,876,500 | | Total | | $3,492,950 | | $3,480,900 | |
(1)
| Includes fees related to U.S. GAAP audit and statutory audits of foreign subsidiaries in each year. |
(2)
| Includes fees related to audits of employee benefit plans in each year. |
(3)
| Includes fees related to tax, transfer pricing and expatriate tax advice and compliance in each year and other miscellaneous services. |
(4)
| Includes fees related to access to an on-line accounting research tool in each year. |
Audit Committee Pre-Approval Policies and Procedures All audit and non-audit services and the related fees are pre-approved by the Audit Committee, which considers, among other things, the possible effect of the performance of such services on the registered public accounting firm’s independence. The Audit Committee pre-approves the annual engagement of the principal independent registered public accounting firm, including the performance of the annual audit, statutory audits at foreign locations, quarterly reviews and tax services. The Chairperson of the Audit Committee has been delegated the authority to provide any necessary specific pre-approval for services that have not been previously pre-approved, but he must report the pre-approval at the next meeting of the Audit Committee. | | | 20232024 Proxy Statement
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TABLE OF CONTENTS REPORT OF THE AUDIT COMMITTEE Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate by reference filings, including this Proxy Statement, in whole or in part, the following Report of the Audit Committee shall not be incorporated by reference into any such filings. The Audit Committee oversees our financial reporting process and compliance with the Sarbanes-Oxley Act of 2002 on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in our Annual Report on Form 10-K for the 20222023 fiscal year with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee also reviewed and discussed the audited financial statements with the independent auditors and discussed the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Commission. In addition, the Audit Committee has discussed with the independent auditors their independence from management and the Company, including the matters in the written disclosures and letter received by the Audit Committee from the independent auditors as required by the applicable requirements of the PCAOB regarding the independent auditors’ communications with the Audit Committee regarding the independent auditors’ independence, and considered the compatibility of non-audit services with the auditors’ independence. The Audit Committee discussed with the independent auditors the overall scope and plans for their audits. The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of our internal control over financial reporting, and the overall quality of our financial reporting. The Audit Committee held six meetings during fiscal 2022.2023. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2022,30, 2023, for filing with the SEC. | | | Audit Committee: | | | | | | | | Cary T. Fu (Chairman) | | | | Kristina A. Cerniglia | | | | Gayla J. Delly | | | | Maria C. Green | | | | Anthony Grillo |
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TABLE OF CONTENTS Stockholder Proposals for Inclusion in the 20242025 Proxy Statement. If a stockholder wants to submit, in accordance with SEC Rule 14a-8, a proposal for inclusion in our proxy statement for the 20242025 annual meeting, the proposal must be received at our principal executive offices, in writing, by November 17, 2023.[November 14, 2024]. All proposals should be submitted, along with proof of ownership of our common stock in accordance with Rule 14a-8(b)(2), to our Corporate Secretary at 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631. Stockholder proposals must comply with SEC Rule 14a-8, Delaware law and our bylaws. Failure to deliver a proposal by these means may result in it not being deemed timely received. Our bylaws provide proxy access to eligible stockholders. The proxy access bylaw provision provides that a stockholder, or a group of up to twenty stockholders, that own three percent or more of the Company’s outstanding common stock continuously for at least three years may submit director nominees for up to the greater of (i) two directors or (ii) twenty percent of the Board. A stockholder’s notice of nomination of one or more director candidates to be included in the Company’s proxy statement and ballot pursuant to Article II, Section 8 of our bylaws must be received at our principal executive offices, in writing by November 17, 2023[November 14, 2024] (i.e., no later than 120 days prior to the anniversary of the mailing of the Company’s proxy statement for the immediately preceding year). Other Stockholder Proposals for Presentation at the 20242025 Annual Meeting. Stockholders of record who do not submit a proposal for inclusion in our proxy materials under SEC Rule 14a-8, but who instead intend to nominate a person for election as director or to introduce an item of business at the 20242025 annual meeting, must provide advance written notice to us in accordance with our bylaws. Our bylaws require that in order to nominate persons to our Board or to present a proposal for action by stockholders at an annual meeting of stockholders, a stockholder must provide advance written notice to our Corporate Secretary, which notice must be delivered to or mailed and received at our principal executive offices not later than the close of business on the 60th day (February 27, 202424, 2025 for the 20242025 annual meeting of stockholders) nor earlier than the close of business on the 90th day prior (January 28, 202425, 2025 for the 20242025 annual meeting of stockholders) to the first anniversary of the preceding year’s annual meeting of stockholders. In the event that the date of the annual meeting to which such stockholder’s notice relates is more than 30 days before or more than 60 days after such anniversary date, for notice by the stockholder to be timely it must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made by us. In the event that the number of directors to be elected to the Board is increased and there is no public announcement by us naming all of the nominees for director or specifying the size of the increased Board at least 70 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice will be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to or mailed and received at our principal executive offices not later than the close of business on the 10th day following the day on which such public announcement is first made by us. Additionally, stockholders of record who intend to solicit proxies in support of director nominees other than the Company’s nominees pursuant to SEC Rule 14a-19, must also provide the additional information required by SEC Rule 14a-19 no later than February 27, 2024,24, 2025, and must comply with certain other requirements set forth in our bylaws. The stockholder’s notice must contain detailed information specified in our bylaws and, if applicable, SEC Rule 14a-19, and should be addressed to our Corporate Secretary at 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631. You may obtain a copy of our bylaws upon request by writing to the Corporate Secretary at our principal executive offices. As to any proposal that a stockholder intends to present to stockholders without inclusion in our Proxy Statement for our 20242025 annual meeting of stockholders, the proxies named in management’s proxy for that meeting will be entitled to exercise their discretionary authority on that proposal by advising stockholders of such proposal and how they intend to exercise their discretion to vote on such matter, unless the stockholder making the proposal solicits proxies with respect to the proposal to the extent required by Rule 14a-4(c)(2) under the Exchange Act. In order for proposals of stockholders made outside of Rule 14a-8 under the Exchange Act to be considered timely within the meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be received by our Corporate Secretary at the address above by February 27, 2024.24, 2025. The chairman of the 20242025 annual meeting may refuse to allow the transaction of any business or acknowledge the nomination of any person not made in compliance with the procedures set forth for such matters in our bylaws. | | | 20232024 Proxy Statement
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TABLE OF CONTENTS We do not know of any matters to be acted upon at the Annual Meeting other than those discussed in this Proxy Statement. If any other items or matters are properly presented before the Annual Meeting, the proxy holders will vote on such matters in their discretion. A proxy granted by a stockholder will give discretionary authority to the proxy holders to vote on any matters introduced pursuant to these procedures, subject to applicable SEC rules. | | | 20232024 Proxy Statement
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TABLE OF CONTENTS LITTELFUSE, INC. LONG-TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF APRIL 28, 2017)
This First Amendment to the Littelfuse, Inc. Long-Term Incentive Plan, as previously amended and restated effective as of April 28, 2017 (the “Plan”), is made effective as of April 27, 2023, by Littelfuse, Inc. (the “Corporation”).
WITENSSETH
WHEREAS, the Corporation established the Plan, which was originally ratified by the Corporation’s stockholders on April 30, 2010, with an effective date of February 3, 2010;
WHEREAS, the Plan was further amended on July 27, 2012 and on April 28, 2017;
WHEREAS, the Board of Directors of the Corporation (the “Board”) has the power and authority under Section 15.1 of the Plan to amend the Plan, subject to stockholder approval as applicable;
WHEREAS, the Board desires to amend the Plan to (i) increase the number of shares of the Corporation’s common stock that are available for issuance as awards under the Plan; and (ii) conform the performance-based compensation provisions of the Plan to the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended by the Tax Cuts and Jobs Act; and
WHEREAS, the Plan remains otherwise without change;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 4.1(a) of the Plan is restated in its entirety to provide as follows:
(a)
| The Shares available for Awards may be either authorized and unissued Shares or Shares held in or acquired for the treasury of the Corporation. The aggregate number of Shares that may be issued or used for reference purposes under the Plan or with respect to which Awards may be granted shall not exceed 2,980,000 Shares, all of which may be issued pursuant to Incentive Stock Options and are subject to adjustment as provided in Section 4.3. The number of Shares reserved for issuance under this Plan, as set forth above, shall be increased by reserved but unissued shares under the Prior Plans, and no additional awards shall be granted under the Prior Plans. In no event shall fractional Shares be issued under the Plan. |
2. Section 18.2 of the Plan is restated in its entirety to provide as follows:
18.2
| COMPLIANCE WITH CODE SECTION 162(m). |
(a)
| Effective for taxable years of the Corporation beginning after December 31, 2017, the Performance-Based Exception is no longer applicable to Awards. Accordingly, although Awards of Performance Shares and Performance Units that are granted to Participants on and after the Performance-Based Exception is no longer applicable may still take into account the performance measures under Sections 9 and 10 of the Plan, such Awards need not comply with the requirements of Code Section 162(m). Accordingly, the terms of Sections 3, 4.2, 6, 7, 8.5, 8.6, 9 and 10, including the definitions of Named Executive Officer and other terms used therein, need not be interpreted in a manner consistent with Code Section 162(m) effective with respect to Awards to which the Performance-Based Exception no longer applies. |
(b)
| The Corporation intends that, to the extent an Award qualifies for grandfathering under Code Section 162(m), as amended, such Awards that are designated as Awards to Named Executive Officers shall continue to constitute qualified “performance-based compensation” within the meaning of Code Section 162(m), unless otherwise determined by the Committee at the time of allocation of an Award. |
(c)
| In the event that applicable tax and/or securities laws change to once again permit the application of the Performance-Based Exception, the Corporation intends that Awards designated as Awards to Named Executive Officers shall constitute qualified “performance-based compensation” within the meaning of |
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TABLE OF CONTENTS Code Section 162(m), unless otherwise determined by the Committee at the time of allocation of an Award. Accordingly, the terms of Sections 3, 4.2, 6, 7, 8.5, 8.6, 9 and 10, including the definitions of Named Executive Officer and other terms used therein, shall once again be interpreted in a manner consistent with Code Section 162(m).
(d)
| If any provision of the Plan or any Award Agreement relating to Performance Shares or Performance Units that is designated as intended to comply with Code Section 162(m) does not comply or is inconsistent with the requirements of Code Section 162(m), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Committee or any other person sole discretion to increase the amount of compensation otherwise payable in connection with any such Award upon attainment of the applicable performance objectives.
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