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2023 PROXY STATEMENT SUMMARY
Executive Compensation Program Highlights
Our executive compensation program is designed to be heavily weighted towards compensating our executives based on company performance. To that end, we have implemented executive compensation policies and practices that reinforce our
pay-for-performance philosophy and align with commonly viewed best practices and sound governance principles.
The following chart summarizes these policies and practices: | Pay-for-performance, with significant portion of compensation at risk |
✓ | Caps on performance-based incentive compensation |
✓ | Multi-year performance periods |
✓ | Clawback policy on cash and equity incentive compensation |
✓ | Share ownership guidelines for executive officers and directors |
✓ | 100% independent directors on the Compensation Committee |
✓ | Independent compensation consultant engaged by the Compensation Committee |
✓ | Annual review and approval of our compensation strategy |
✓ | Engagement with shareholders |
✓ | Annual shareholder advisory vote on executive compensation |
| No targeting specific percentiles |
× | No changing of multi-year targets after they are set |
× | No repricing or buyouts of equity awards |
× | No short sales, hedging, or pledging of our ordinary shares |
× | No transactions involving derivatives of our ordinary shares |
× | No paying dividends or dividend equivalents on unvested equity awards (effective upon shareholder approval of our amended and restated 2010 Performance Incentive Plan) |
Fiscal 2017.Our fiscal 2017 executive compensation program used key performance measures (revenue
Shareholder Engagement andnon-GAAP gross margin) to link executive compensation Advisory Vote on Executive Compensation
We have conducted shareholder outreach annually since 2016 and have provided shareholders with
Fabrinet’s performance. Taking into account the results of previous stockholderan annual say-on-pay advisory
votesvote on
our executive compensation
and feedback received from shareholders during 2016, the Compensation Committee approved our fiscal 2017 executive compensation program with the following key components:A mix of long-term and short-term compensation components align executive interests with shareholders and serve to attract, retain and motivate executives.
More than half of the total compensation (63% for CEO, 53% for COO and 55% for CFO) was variable and performance-based, and a substantial portion (71% for CEO, 51% for COO and 57% for CFO) was equity-based.
Two-thirds of the equity awards granted to each of our named executive officers in fiscal 2017 consisted of performance-based restricted share units (PSUs) with challengingtwo-year cumulative performance targets.
Challenging performance goals established at the beginning of fiscal 2017 determined payouts under our cash-based incentive compensation plan following the completion of fiscal 2017.
since 2012. We increased the target, but decreased the maximum, amountare very pleased that could become payable to eachshareholders have expressed their continued support of our executive officers undercompensation practices since our fiscal 2017 cash-based incentive plan.
2016 annual meeting of shareholders. 4 | | | | | | 2023 PROXY STATEMENT |
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We increased the annual base salaries of our CEO (by 29%), COO (by 20%) and CFO (by 20%), following a fiscal year in which they had not received raises.
2023 PROXY STATEMENT SUMMARY
Employment arrangements with each of our named executive officers were amended to limit vesting acceleration provisions to equity-based awards granted prior to fiscal 2017 (except
Pay for restricted share units granted in fiscal 2017 that were earned based on fiscal 2016 performance).Performance
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We adopted a compensation clawback policy.
We adopted an executive perquisite policy that excludesnon-business, travel-related expenses and charitable contributions.
Fiscal 2018 Updates.In August 2017, the Compensation Committee approved our fiscal 2018 executive compensation program with the following key components:
We continue to use a mix of long-term and short-term compensation components to align executive interests with shareholders and attract, retain and motivate executives.
Two-thirds Our compensation program is strongly focused on delivering a substantial portion of compensation through performance-based compensation elements. This ensures proper alignment with our shareholders and ties the equity awards grantedultimate value delivered to each of our named executive officers into Fabrinet’s performance.
For fiscal 20182023, target total direct compensation for our named executive officers consisted of PSUs with challengingtwo-year cumulative performance targets.
Ourannual base salary, target bonus opportunity under our cash-based incentive plan, forand the aggregate grant date fair value of time-based and performance-based equity award grants in fiscal 2018 continues to use annual revenue andnon-GAAP gross margin as the sole2023 (assuming maximum achievement of performance measures that will determine payouts, if any, following the completion of fiscal 2018.
conditions).FY23 Target Direct Compensation Mix – CEO
FY23 Target Direct Compensation Mix – Other NEOs*
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We increased the target amount (13% for CEO, 14% for COO and 11% for CFO) that may become payable to each of our executive officers under our fiscal 2018 cash-based incentive plan.
We increased the annual base salaries of our CEO (by 6%), COO (by 6%) and CFO (by 8%).
The Compensation Committee also continued its dialogue with shareholders on our executive compensation practices by soliciting the views of institutional investors representing approximately 48% of our shares outstanding as of June 30, 2017 and having discussions in October 2017 with investors representing approximately 24% of our shares outstanding as of June 30, 2017, including four of our ten largest shareholders.
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![LOGO](https://files.docoh.com/DEF 14A/0001193125-17-314598/g475036g07w48.jpg)
c/o Intertrust Corporate Services (Cayman) Limited
190 Elgin Avenue
George Town
One Nexus Way, Camana Bay
FOR
20172023 ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is being provided to holders of ordinary shares of Fabrinet at the close of business on the record date (October 16, 2017)17, 2023) in connection with the solicitation of proxies by Fabrinet’s board of directors (the “Board”“Board”) for use at Fabrinet’s 20172023 Annual Meeting of Shareholders and any postponements, adjournmentspostponement, adjournment or continuationscontinuation thereof (the “Annual Meeting”“Annual Meeting”), for the purpose of considering and acting upon the matters set forth in this proxy statement and the accompanying notice. The Annual Meeting will be held on Thursday,Tuesday, December 14, 2017, at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304, commencing12, 2023, at 9:00 a.m., Pacific time.Standard Time via the Internet at www.virtualshareholdermeeting.com/FN2023.
We have adopted a virtual format for the Annual Meeting to provide a consistent experience to all our shareholders regardless of location.
On or about October 24, 2023, we began sending to all shareholders entitled to vote at the Annual Meeting a Notice of Internet Availability of Proxy Materials, which contains instructions on how to access this proxy statement, the accompanying notice of Annual Meeting and form of proxy card.
Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement, and references to our website address in this proxy statement are inactive textual references only.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND PROCEDURAL MATTERS
Q:
| CanHow can I attend the Annual Meeting?
|
A:
| You are invited to attend the Annual Meeting if you were a shareholder of record or a beneficial owner as of October 16, 201717, 2023 (the “Record Date”“Record Date”). You should bring photo identification for entranceShareholders may participate in the Annual Meeting at www.virtualshareholdermeeting.com/FN2023. Guests will not be able to vote shares or ask questions during the meeting. |
If you plan to attend the Annual Meeting online, please be aware of what you will need to gain admission to the meeting, as described below. If you do not comply with these procedures, you will not be able to participate in the Annual Meeting but may view the Annual Meeting webcast as a guest.
To attend online and participate in the Annual Meeting, shareholders of record will need to enter the 16-digit control number included on their Notice of Internet Availability of Proxy Materials or proxy card (if they requested printed materials) to log into www.virtualshareholdermeeting.com/FN2023. Beneficial owners who do not have a control number may gain access to the meeting by logging into their brokerage firm’s website and selecting the stockholder communications mailbox to link through to the Annual Meeting; instructions should also be provided on the voting instruction card provided by their broker, bank, or other nominee. The difference between holding shares as a shareholder of record and as a beneficial owner is described below under “Q. What is the difference between holding shares as a shareholder of record and as a beneficial owner?”
We encourage you to access the meeting prior to the start time. Please allow ample time for online check-in, which will begin at 8:45 a.m. Pacific Standard Time. If you have difficulties during the check-in time or during the meeting, we will have technicians ready to assist you with any difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting, please call the technical support number that will be posted on the virtual meeting platform’s log in page.
Q:
| Can shareholders ask questions during the Annual Meeting? |
A:
| Yes. Shareholders may submit questions online in advance of, or during, the Annual Meeting. The meeting will begin promptly at 9:00 a.m., Pacific time, and you should leave ample time for thecheck-in procedures. Shareholders may request directions to the offices of Wilson Sonsini Goodrich & Rosati by calling (650)493-9300. |
In advance of the meeting, shareholders may submit questions at www.proxyvote.com after logging in with the 16-digit control number included on their Notice of Internet Availability of Proxy Materials, voting instruction from or proxy card (if they requested printed materials).
During the meeting, shareholders may submit questions through the virtual meeting platform at www.virtualshareholdermeeting.com/FN2023.
We will endeavor to answer as many shareholder-submitted questions as time permits that comply with the meeting rules of conduct. We reserve the right to edit any inappropriate language and to exclude questions regarding topics that are not pertinent to meeting matters or Fabrinet’s business. If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition in the interest of time and fairness to all shareholders.
Q:
| Who is entitled to vote at the Annual Meeting? |
A:
| You may vote your Fabrinet ordinary shares if our records show that you owned your shares at the close of business on the Record Date. At the close of business on the Record Date, there were 36,330,858 ordinary shares outstanding and entitled to vote at the Annual Meeting, as well as 3,100,494 ordinary shares outstanding and held as treasury shares (which are not entitled to vote). You may cast one vote for each ordinary share held by you as of the Record Date on all matters presented. |
Q:
| Why did I receive aone-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials? |
A:
| In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”“SEC”), we have elected to provide access to our proxy materials over the Internet. Accordingly, we began sending a Notice of Internet Availability of Proxy Materials (the “Notice”“Notice”) to our shareholders of record and beneficial owners on or about October 20, 2017.24, 2023. |
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All shareholders will be able to access the proxy materials on the website referred to in the Notice, or to request a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy can be found in the Notice. In addition, shareholders may request the proxy materials be sent by mail or email on an ongoing basis. Choosing to receive future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment.
Q:
| What proposals will be voted on at the Annual Meeting? |
A:
| The proposals scheduled to be voted on atare: |
One:
| Election of two Class II directors listed in this proxy statement and recommended by the Annual Meeting are:Board to serve for a term of three years and until their respective successors have been duly elected and qualified or until their earlier death, resignation or removal. |
Election of three Class II directors listed in this proxy statement and recommended by the Board to serve for a term of three years, or until their respective successors have been duly elected and qualified;
Ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 29, 2018;
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Approval of our amended and restated 2010 Performance Incentive Plan, which increases the number of authorized shares issuable under the plan by 2,100,000 ordinary shares and provides for certain other amendments;
An advisory vote to approve the compensation paid to our named executive officers; and
An advisory vote to determine the frequency of holding future advisory votes to approve executive compensation.
Two:
| Ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 28, 2024. |
Three:
| A non-binding, advisory vote to approve the compensation of our named executive officers, as disclosed herein. |
Four:
| A non-binding, advisory vote to determine our shareholders’ preferred frequency of holding future advisory votes to approve the compensation of our named executive officers. |
Q:
| How does the Board of Directors recommend that I vote? |
A:
| The Board recommends that you vote your shares: |
• | “FOR” each of the nominees listed in this proxy statement and recommended by the Board for election as Class II directors (Proposal One). |
• | “FOR” the ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 28, 2024 (Proposal Two). |
• | “FOR” the approval of the compensation of our named executive officers (Proposal Three). |
• | “1 YEAR” as the frequency of holding future advisory votes to approve the compensation of our named executive officers (Proposal Four). |
Q:
| What is the voting requirement to approve each of the proposals and how are votes counted? |
A:
| Proposal One. A plurality of the votes cast is required for the election of directors (Proposal One).directors. You may vote “FOR” or “WITHHOLD” on each nominee for election as director. The nominees for director receiving the highest number of affirmative votes will be elected as directors. Abstentions and brokernon-votes “non-votes” will not affect the outcome of the election. However, as set forth below under “Corporatethe heading “Corporate Governance—Majority Voting Director Resignation Policy in Uncontested Elections,” we have a policy that if a director receives more “Withhold”“WITHHOLD” votes than “For”“FOR” votes in an uncontested election such as this one, the director shall offer his or her resignation for consideration by the Board. |
Proposals Two and Three. The affirmative vote of a majority of the votes cast by shareholders present in person (including virtually) or represented by proxy at the meeting and entitled to vote on the applicable proposal is required to (1) ratify the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 29, 2018 (Proposal Two),28, 2024, and (2) approve, our amended and restated 2010 Performance Incentive Plan, which increases the number of authorized shares issuable under the plan by 2,100,000 ordinary shares and provides for certain other amendments (Proposal Three), and (3) approve, on ana non-binding, advisory basis, the compensation paid toof our named executive officers (Proposal Four).officers. You may vote “FOR,” “AGAINST” or “ABSTAIN” on these proposals. Abstentions have the same effect as votes against these proposals. However,and brokernon-votes “non-votes” are not deemed to be votes cast and, therefore, are not included in the tabulation of voting results on these proposals. Proposal Four. A pluralitymajority of the votes cast by shareholders present in person (including virtually) or represented by proxy at the meeting and entitled to vote on the proposal is required to determine, on ana non-binding advisory basis, theour shareholders’ preference regarding the frequency of holding future advisory votes onto approve the compensation of our named executive compensation (Proposal Four).officers. However, in the event that no voting option receives a majority of the votes cast, the Board and the Compensation Committee will consider the voting option that receives the greatest number of votes to be the preference of our shareholders. You may indicate whether you would prefer an advisory vote on executive compensation every “1 YEAR,” “2 YEARS” or “3 YEARS”, or you may “ABSTAIN” from voting on the proposal. The frequency—one year, two years or three years—receiving the highest number of votes will be the frequency of holding future advisory votes on executive compensation recommended by the shareholders. Abstentions and brokernon-votes will “non-votes” are not affectdeemed to be votes cast and, therefore, are not included in the outcometabulation of voting results on this proposal. All shares entitled to vote and represented by properly submitted proxies received prior to the Annual Meeting (and not revoked) will be voted at the Annual Meeting in accordance with the instructions indicated by such
8 | | | | | | 2023 PROXY STATEMENT |
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proxy. If no instructions are indicated on such proxy, the shares represented by that proxy will be voted as recommended by the Board.
Q:
| How does the Board of Directors recommend that I vote?
|
A: | The Board recommends that you vote your shares:
|
“FOR” each of the nominees listed in this proxy statement and recommended by the Board for election as Class II directors (Proposal One);
“FOR” the ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 29, 2018 (Proposal Two);
“FOR” approval of our amended and restated 2010 Performance Incentive Plan, which increases the number of authorized shares issuable under the plan by 2,100,000 ordinary shares and provides for certain other amendments (Proposal Three);
“FOR” the approval, on an advisory basis, of the compensation paid to our named executive officers (Proposal Four); and
for “1 YEAR” as the frequency of holding future votes on executive compensation (Proposal Five).
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Q: | How many shares must be present or represented to conduct business at the Annual Meeting? |
A:
| The presence of the holders of at leastone-third of the total shares entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Such shareholders are counted as present at the meeting if (1) they are present in personvirtually at the Annual Meeting or (2) have properly submitted a proxy. |
Abstentions and broker“non-votes” Abstentions and broker “non-votes” are counted as present and entitled to vote and are, therefore, included for the purposes of determining whether a quorum is present at the Annual Meeting.
A broker“non-vote” occurs when a nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner, and the broker does not have, or declines to exercise, discretionary authority to vote those shares.
Q: | Who is entitled to vote at the Annual Meeting?
|
A: | You may vote your Fabrinet ordinary shares if our records show that you owned your shares at the close of business on the Record Date. At the close of business on the Record Date, there were 37,575,279 ordinary shares outstanding and entitled to vote and are, therefore, included for the purposes of determining whether a quorum is present at the Annual Meeting. You may cast oneA broker “non-vote” occurs when a nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner, and the broker does not have, or declines to exercise, discretionary authority to vote for each ordinary share held by you as of the Record Date on all matters presented. those shares. |
Q:
| How can I vote my shares in person atduring the Annual Meeting? |
A:
| Shares held in your name as the shareholder
Shareholders of record may be voted in person at the Annual Meeting. Shares held beneficially in street name may be voted in person atvote their shares electronically during the Annual Meeting only if you obtain a “legal proxy” from the broker, bank or nominee that holds your shares giving you the right to vote the shares.Even if you plan to attend the Annual Meeting, we recommend you also submit your vote as described in the Notice and as described below, so your vote will be counted even if you later decide not to attend the meetingby logging into www.virtualshareholdermeeting.com/FN2023. |
Beneficial owners may vote their shares electronically during the Annual Meeting only if they obtain a “legal proxy” from the broker, bank or nominee that holds the shares giving the beneficial owner the right to vote the shares. Voting online during the meeting will replace any previous votes. Even if you plan to attend the Annual Meeting, we recommend you also submit your vote as described in the Notice and as described below, so your vote will be counted even if you later decide not to attend the meeting.
Q:
| How can I vote my shares without attending the Annual Meeting? |
A:
| Whether you hold shares directly as the shareholder of record or beneficially in street name, you may direct how your shares are voted without attending the Annual Meeting. If you are a shareholder of record, you may vote by submitting a proxy; please refer to the voting instructions in the Notice or below. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker, bank or nominee; please refer to the voting instructions provided to you by your broker, bank or nominee. |
If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker, bank or nominee; please refer to the voting instructions provided to you by your broker, bank or nominee.
By Internet
— – Shareholders of record with Internet access may submit proxies until 11:59 p.m., Eastern time,Standard Time, on December 13, 2017,11, 2023, by following the “Vote by Internet” instructions described in the Notice, or by following the instructions at www.proxyvote.com. Most Fabrinet shareholders who hold shares beneficially in street name may vote by accessing the website specified in the voting instructions provided by their brokers, trustees or nominees. If you are a beneficial owner, please check the voting instructions provided by your broker, trustee or nominee for information regarding Internet voting availability.
By telephone
— – Depending on how your shares are held, you may be able to vote by telephone. If this option is available to you, you will have received information with the Notice or the voting instructions provided by your broker, bank or nominee explaining this procedure.
By mail
— – Shareholders of record may request a paper proxy card from Fabrinet and indicate their vote by completing, signing and dating the card where indicated and by returning it in the prepaid envelope that will be included with the proxy card. Please follow the procedures outlined in the Notice to request a paper proxy card.We may use the Broadridge QuickVote™ service to assist beneficial shareholders with voting their shares over the telephone. Alternatively, Kingsdale Advisors may contact beneficial shareholders to assist them with conveniently voting their shares directly over the phone. If you have any questions about the Annual Meeting, please contact Kingsdale by telephone at (866) 228-3049 (toll-free in North America) or (416) 867-2272 (call collect outside North America), or by email at contactus@kingsdaleadvisors.com.
Q:
| What is the difference between holding shares as a shareholder of record and as a beneficial owner? |
A:
|
Shareholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, you are considered the “shareholder of record” with respect to those shares, and we have sent the Notice directly to you. As a shareholder of record, you have the right to grant your voting proxy directly to us or to a third party, or to vote in person atvirtually during the Annual Meeting. |
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Beneficial Owner. If your shares are held in a brokerage account or by a bank or nominee, you are considered the “beneficial owner” of shares held in “street name,” and the Notice is being forwarded to you by your broker, bank or nominee (who is
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND PROCEDURAL MATTERS
considered the shareholder of record with respect to those shares). As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote your shares. Your broker, bank or nominee has enclosed or provided voting instructions for you to use in directing the broker, bank or nominee how to vote your shares. You are also invited to attend the Annual Meeting. However, because you are not the shareholder of record, you may not vote your shares
in person atvirtually during the Annual Meeting unless you obtain a “legal proxy” from your broker, bank or nominee giving you the right to vote the shares at the Annual Meeting.
If you hold your shares through a broker and do not provide your broker with specific voting instructions, your broker will have the discretion to vote your shares only on routine matters. As a result:
• | Your broker will have the authority to exercise discretion to vote your shares with respect to the ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 28, 2024, because the rules of The New York Stock Exchange (“NYSE”) treat that matter as routine. |
Your broker will not have the authority to exercise discretion to vote your shares with respect to the election of directors, approval of our amended and restated 2010 Performance Incentive Plan, the advisory vote to approve the compensation paid toof our named executive officers, and the advisory vote regardingto determine the shareholders’ preferred frequency with which shareholders will participate inof holding future advisory votes onto approve the compensation of our named executive compensationofficers because the NYSE rules of The New York Stock Exchange (“NYSE”) treat those matters asnon-routine; but
non-routine.Your broker will have the authority to exercise discretion to vote your shares with respect to the ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 29, 2018, because NYSE rules treat that matter as routine.
Q:
| What happens if additional matters are presented at the Annual Meeting? |
A:
| If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named as proxy holders will have discretion to vote on those matters in accordance with their best judgment. We do not currently anticipate that any other matters will be raised at the Annual Meeting. |
A:
| Subject to any rules your broker, bank or nominee may have, you may change your vote at any time before your proxy is votedthe electronic polls close at the Annual Meeting. |
If you are the shareholder of record, you may change your vote by (1) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the voting methods described above (and until the applicable deadline for each method), (2) providing a written notice of revocation to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054 prior to your shares being voted, or (3)
virtually attending the Annual Meeting and voting
in person.online during the meeting. Attending the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically request this.
If you are the beneficial owner of shares held in street name, you may change your vote by (1) submitting new voting instructions to your broker, bank or nominee, or (2) attending the Annual Meeting and voting
in persononline during the meeting if you first have obtained a legal proxy from your broker, bank or nominee giving you the right to vote your shares at the Annual Meeting.
Q:
| What happens if I decide to attend the Annual Meeting but I have already voted or submitted a proxy card covering my shares? |
A:
| Subject to any rules your broker, bank or nominee may have, you may attend the Annual Meeting and vote in personduring the meeting even if you have already voted or submitted a proxy card. Any previous votes that were submitted by you will be superseded by the vote you cast at the Annual Meeting. Please be aware that attendance at the Annual Meeting will not, by itself, revoke a proxy. |
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If a broker, bank or nominee beneficially holds your shares in street name and you wish to attend the Annual Meeting and vote
in person,during the meeting, you must obtain a legal proxy from the broker, bank or nominee holding your shares that gives you the right to vote the shares.
Q:
| What should I do if I receive more than one set of voting materials? |
A:
| If you received more than one Notice, voting instruction card or set of proxy materials, your shares are registered in more than one name or brokerage account. Please follow the instructions on each Notice or voting instruction card that you receive, to ensure that all of your shares are voted. |
Q:
| Is my vote confidential? |
A:
| Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Fabrinet or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote, and (3) to facilitate a successful proxy solicitation. Occasionally, shareholders provide written comments on their proxy cards, which may be forwarded to Fabrinet’s management. |
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will not be disclosed either within Fabrinet or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote, and (3) to facilitate a successful proxy solicitation. Occasionally, shareholders provide written comments on their proxy cards, which may be forwarded to Fabrinet’s management.
Q:
|
Where can I find the voting results of the Annual Meeting? |
A:
| We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Form8-K filed with the SEC within four business days after the Annual Meeting, which will also be available in the “Investors—Financials—Financials & Filings—SEC Filings” section of our website at www.fabrinet.com. |
Q:
| Who will bear the cost of soliciting votes for the Annual Meeting? |
A:
| We will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. We may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners for their reasonable expenses in forwarding solicitation material to such beneficial owners. We have engaged Kingsdale Advisors as our shareholder advisor and proxy solicitation agent and will pay fees of approximately $20,500, plus certain out-of-pocket expenses, to Kingsdale to assist us with the solicitation of proxies. Our directors, officers and employees also may solicit proxies in person or by other means of communication. Such directors, officers and employees will not be additionally compensated, but may be reimbursed for reasonableout-of-pocket expenses in connection with such solicitation. |
If you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur.
Q:
| What is the deadline to propose actions for consideration at next year’s annual meeting of shareholders or to nominate individuals to serve as directors? |
A:
| YouShareholders may submit proposals, including recommendations of director candidates, for consideration at future shareholder meetings.
|
For inclusion in Fabrinet’s proxy materials
— – Shareholders may present proper proposals for inclusion in our proxy statement and for consideration at our next annual meeting of shareholders by submitting their proposals in writing to our Corporate Secretary in a timely manner. In order to be included in the proxy statement for our 20182024 annual meeting of shareholders, shareholder proposals must be received by our Corporate Secretary no later than June 22, 2018,26, 2024 and must otherwise comply with the requirements of Rule14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”“Exchange Act”).
To be brought before an annual meeting
— – In addition, our memorandum and articles of association establish an advance notice procedure for shareholders who wish to present certain matters before an annual meeting of shareholders.Nominations for the election of directors only can be made (1) by or at the direction of the Board, or (2) by a shareholder who has delivered written notice to our Corporate Secretary within the Notice Period (as
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defined below) and who was a shareholder at the time of such notice and as of the record date for such meeting. The notice must contain specified information about the nominees and about the shareholder proposing such nominations.
Our memorandum and articles of association also provide that the only business that may be conducted at an annual meeting is business that is (1) properly brought before the meeting in accordance with our proxy materials with respect to such meeting, (2) properly brought before the meeting by or at the direction of the Board, or (3) properly brought before the meeting by a shareholder who has delivered written notice to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054 within the Notice Period (as defined below) and who is a shareholder at the time of such notice and as of the record date for such meeting. The notice must contain specified information about the matters to be brought before such meeting and about the shareholder proposing such matters.
The “Notice Period” is defined as that period not less than 45 days nor more than 75 days prior to the one yearone-year anniversary of the date on which we first mailed our proxy materials or a notice of availability of proxy materials (whichever is earlier) to shareholders in connection with the preceding year’s annual meeting of shareholders. As a result, the Notice Period for the 20182024 annual meeting of shareholders will start on August 6, 201810, 2024 and end on September 5, 2018.9, 2024.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND PROCEDURAL MATTERS
In addition, to comply with Rule 14a-19 of the Exchange Act, shareholders who intend to solicit proxies in support of director nominees (other than our nominees) at our 2024 annual meeting of shareholders must provide notice to our Corporate Secretary that sets forth the information required by Rule 14a-19 under the Exchange Act no later than October 13, 2024. Please note that the notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under the advance notice provisions of our memorandum and articles of association as described above.
If a shareholder who has notified us of his or her intention to present a proposal at an annual meeting does not appear to present his or her proposal at such meeting, we
needare not
required to present the proposal for vote at such meeting.
A copy of the full text of the provisions of our memorandum and articles of association discussed above may be obtained by writing to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, or by accessing Fabrinet’s filings on the SEC’s website at www.sec.gov.
All notices of proposals by shareholders, whether or not included in our proxy materials, should be sent to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054.
Q:
| How may I obtain a separate set of proxy materials or the 2017Fiscal 2023 Annual Report? |
A:
| If you share an address with another shareholder, each shareholder may not receive a separate copy of our proxy materials and 2017Fiscal 2023 Annual Report. Upon written request we will promptly send a separate copy of our proxy materials and 2017Fiscal 2023 Annual Report, without charge, to any shareholder at a shared address where a single copy of the documents was delivered. Shareholders may request additional copies of our proxy materials and 2017Fiscal 2023 Annual Report by contacting our investor relations at IR@fabrinet.com, or writing to Fabrinet, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, Attention: Investor Relations. Shareholders who share an address and receivereceived multiple copies of our proxy materials and 2017Fiscal 2023 Annual Report can also request to receive a single copy by following the instructions above. |
Q:
| Whom do I contact if I have questions? |
A:
| If you have any questions or need assistance completing your proxy or voting instruction form, please contact Kingsdale Advisors by telephone at (866) 228-3049 (toll-free within North America) or (416) 867-2272 (call collect outside of North America), or by email at contactus@kingsdaleadvisors.com. |
12 | | | | | | 2023 PROXY STATEMENT |
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This proxy statement provides information about the matters to be voted on at the 2017 Annual Meeting and additional information about Fabrinet and its executive officers and directors. Some of the information is provided as of the end of our 2015, 20162021, 2022 or 20172023 fiscal years, and some information is more recent. Our fiscal years end on the last Friday of June of each calendar year. Our 2015, 20162021, 2022 and 20172023 fiscal years ended on June 26, 2015,25, 2021, June 24, 2016,2022 and June 30, 2017,2023, respectively. Our 20182024 fiscal year will end on June 29, 2018.28, 2024.
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PROPOSAL
ONEONE: ELECTION OF DIRECTORS
Our amended and restated memorandum and articles of association provide that the number of our directors will be fixed from time to time by the Board, but may not consist of more than 15 directors. The Board presently consists of sixseven directors who are divided into three
classes with overlapping three-year terms as
follows: | | | | |
Class II Directors
(Term Expires in 2017)
| | Class III Directors
(Term Expires in 2018)
| | Class I Directors
(Term Expires in 2019)
|
Seamus Grady* | | David T. Mitchell | | Dr. Homa Bahrami |
Thomas F. Kelly | | | | Rollance E. Olson |
Dr. Frank H. Levinson* | | | | |
* | Under our Amended and Restated Articles of Association, Mr. Grady is required to stand for election this year. In order to make the classes of directors as even as possible, the Board intends to move Dr. Levinson from Class II to Class III next year before our 2018 annual meeting of shareholders.
|
set forth below. Upon expiration of the term of a class of directors, directors for that class will be elected for three-year terms at the annual meeting of shareholders in the year in which that term expires.
| Dr. Homa Bahrami | | | Seamus Grady | | | Dr. Frank H. Levinson | |
| Darlene S. Knight | | | Thomas F. Kelly | | | David T. Mitchell | |
| Rollance E. Olson | | | | | | | |
Nominees for Director
Three
Two candidates have been nominated for election at the Annual Meeting as Class II directors for a three-year term expiring in
2020.2026. Upon the recommendation of the Nominating & Corporate Governance Committee, the Board nominated
Seamus Grady and Thomas F. Kelly and Dr. Frank H. Levinson for election as Class II directors. Biographical information for each of the nominees is set forth below.
Each nominee has consented to being named in this proxy statement and to serving as a director if elected, and we have no reason to believe any nominee will be unavailable to serve. In the event Mr. Grady or Mr. Kelly or Dr. Levinson is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any
nominee who may be proposed by the Nominating & Corporate Governance Committee and designated by the Board to fill the vacancy.
If you sign your proxy or voting instruction card or vote by telephone or over the Internet, but do not give instructions with respect to the election of directors, your shares will be voted for the
threetwo persons recommended by the Board. If you wish to give specific instructions with respect to the election of directors, you may do so by indicating your instructions on your proxy or voting instruction card, or when you vote by telephone or over the Internet. If you do not give voting instructions to your broker, your broker will not vote your shares on this matter.
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the election of Seamus Grady, Thomas F. Kelly and Dr. Frank H. Levinson toeach of the Board.nominees listed above.
14 | | | | | | 2023 PROXY STATEMENT |
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PROPOSAL ONE: ELECTION OF DIRECTORS
The names of the members of the Board, their ages, their positions with Fabrinet and other biographical information as of October
16, 2017,17, 2023, are set forth below. A discussion of the qualifications, attributes and skills of each of the directors and the director nominee that led the Board and the Nominating & Corporate Governance
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Committee to conclude that he or she should serve as a director follows each of the biographies below.
There are no family relationships among any of our directors or executive officers.
| | | | | | | | | | | | | | | | |
| | | | | | | | | | Committee Memberships | | Other Public Co. Boards |
Name | | Age | | Director Since | | Position with Fabrinet | | Independent | | AC | | CC | | NCGC | |
David T. (Tom) Mitchell | | 75 | | 2000 | | Founder and Executive Chairman of the Board | | | | | | | | | | 0 |
Seamus Grady | | 50 | | 2017 | | Chief Executive Officer (Director Nominee) | | | | | | | | | | 0 |
Dr. Homa Bahrami | | 62 | | 2012 | | Director | | ✓ | | ✓ | | | | Chair | | 0 |
Thomas F. Kelly | | 64 | | 2010 | | Director (Director Nominee) | | ✓ | | Chair | | ✓ | | | | 0 |
Dr. Frank H. Levinson | | 64 | | 2001 | | Director (Director Nominee) | | ✓ | | ✓ | | Chair | | | | 1 |
Rollance E. Olson | | 74 | | 2004 | | Lead Independent Director | | ✓ | | | | | | ✓ | | 0 |
See “Corporate Governance Matters” below for additional information regarding the Board.
| Nominees for Director | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Seamus Grady | | | 56 | | | 2017 | | | 6 | | | Chief Executive Officer and Director | | | | | | | | | | | | | | | None | |
| Thomas F. Kelly | | | 70 | | | 2010 | | | 13 | | | Director | | | ✔ | | | Chair | | | ✔ | | | | | | 1 | |
| Continuing Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dr. Homa Bahrami | | | 68 | | | 2012 | | | 11 | | | Director | | | ✔ | | | | | | ✔ | | | Chair | | | None | |
| Darlene S. Knight | | | 57 | | | 2022 | | | 1 | | | Director | | | ✔ | | | ✔ | | | | | | | | | 1 | |
| Dr. Frank H. Levinson | | | 70 | | | 2001 | | | 22 | | | Director | | | ✔ | | | ✔ | | | Chair | | | | | | None | |
| David T. (Tom) Mitchell | | | 81 | | | 2000 | | | 23 | | | Founder and Chairman of the Board | | | | | | | | | | | | | | | None | |
| Rollance E. Olson | | | 80 | | | 2004 | | | 19 | | | Lead Independent Director | | | ✔ | | | | | | | | | ✔ | | | None | |
| | | | | | | | | | | | | | | | |
AC – Audit Committee | | | CC – Compensation Committee | | | NCGC – Nominating & Corporate Governance Committee | |
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PROPOSAL ONE: ELECTION OF DIRECTORS
Seamus Grady
| | | Mr. Grady has served as our chief executive officer and on the Board since September 2017. Prior to joining us, Mr. Grady served as executive vice president and chief operating officer, mechanical systems division, at Sanmina Corporation, an electronics manufacturing services company, from October 2012 to May 2017. Prior to that, Mr. Grady held various operations roles at Sanmina beginning in 2000, including as senior vice president medical division, from June 2011 to October 2012, and senior vice president global medical operations from March 2009 to June 2011. From 1999 to 2000, Mr. Grady served as director of materials and supply chain management at Lucent Technologies Inc. (formerly Ascend Communications). From 1989 to 1999, Mr. Grady served in a variety of operations roles at Manufacturers Services Limited (now Celestica), an electronic manufacturing and supply chain services company. Mr. Grady holds a B. Tech in Manufacturing Technology from the National University of Ireland, Galway (NUIG). |
| | | |
| | | Among other skills and qualifications, Mr. Grady brings to the Board broad and deep experience in the electronics manufacturing services industry, including overseeing operations at multiple international facilities. |
Thomas F. Kelly
| | | Mr. Kelly has served on the Board since 2010. Mr. Kelly has served as a Venture Consultant for Forgepoint Capital, a venture capital firm, since November 2022. Mr. Kelly served as chief executive officer and president of IDX, a provider of software and services for cyber breach and identity fraud protection, from August 2017 to August 2022. From 2016 to 2017, Mr. Kelly served as a cybersecurity industry consultant. In the prior twenty years, Mr. Kelly was Chief Executive Officer of several software and security companies including AccelOps between 2015 and 2016 (acquired by Fortinet, 2016), Moxie Software, MontaVista Software (acquired by Cavium, 2009), BlueStar Solutions (acquired by Affiliated Computer Services, 2004) and Blaze Software (acquired by Brokat Infosystems AG, 2000). Mr. Kelly has also held executive leadership operating roles at several companies including Epicor Software, Cirrus Logic, Cadence Design Systems, and Frame Technology (acquired by Adobe, 1995). Mr. Kelly has been a member of the board of directors of ZeroFox Holdings, Inc. since August 2022 and was previously a member of the boards of directors of FEI and Epicor Software. He is also on the Board of Regents of Santa Clara University. Mr. Kelly earned a bachelor of science degree in economics from Santa Clara University. |
| | | |
| | | Among other skills and qualifications, Mr. Kelly brings to the Board audit and financial reporting expertise, as well as extensive managerial and operational experience. |
16 | | | | | | 2023 PROXY STATEMENT |
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PROPOSAL ONE: ELECTION OF DIRECTORS
Dr. Frank H. Levinson
| | | Dr. Levinson has served on the Board since 2001. Dr. Levinson has served as the managing director of Small World Group, a group primarily involved in investing in and growing small companies, since 2006. Dr. Levinson served as the chairman of the board of directors and chief technical officer of Finisar Corporation, a provider of fiber optic components and network performance test and monitoring systems, from August 1999 to January 2006, and remained as a director of Finisar until August 2008. From 1988 to 1999, Dr. Levinson served as the chief executive officer of Finisar. From January 1986 to February 1988, Dr. Levinson served as the optical department manager at Raynet, Inc., a fiber optic systems company and, from April 1985 to December 1985, as the chief optical scientist at Raychem Corporation. From January 1984 to July 1984, Dr. Levinson was a member of the technical staff at Bellcore, a provider of services and products to the communications industry. From 1980 to 1983, Dr. Levinson was as a member of the technical staff at AT&T Bell Laboratories. Dr. Levinson was a member of the boards of directors of TKB Critical Technologies 1, a special purpose acquisition company, from October 2021 to August 2023, and of Interlink Electronics, Inc. from July 2014 to June 2020. Dr. Levinson earned a bachelor of science degree in mathematics and physics from Butler University, and a master’s degree in astronomy and a doctor of philosophy degree in astronomy from the University of Virginia. |
| | | |
| | | Among other skills and qualifications, Dr. Levinson brings to the Board executive leadership and management experience in a global organization and semiconductor industry experience, having served as chairman of the board of directors, chief technical officer and chief executive officer of Finisar Corporation. |
David T. (Tom) Mitchellis our founder and has served as our executive chairman of the Board since September 2017.
| | | Mr. Mitchell is our founder and has served as our non-employee chairman of the Board since June 2018. Mr. Mitchell previously served as our executive chairman of the Board from September 2017 until June 2018, as our chief executive officer and chairman of the Board from our inception in 2000 until September 2017, and as our president from 2000 to January 2011. In 1979, Mr. Mitchell previously served as our chief executive officer and chairman of the Board from our inception in 2000 until September 2017, and as our president from 2000 to January 2011. In 1979, Mr. Mitchellco-founded Seagate Technology, a disk drive manufacturing company. Mr. Mitchell served as the president of Seagate Technology from 1983 to 1991. From 1992 to 1995, Mr. Mitchell served as the chief operating officer of Conner Peripherals, a disk drive manufacturing company. From 1995 to 1998, Mr. Mitchell served as the chief executive officer of JTS Corp., a mobile disk drive manufacturing company. During his tenure in the data storage industry, Mr. Mitchell established manufacturing operations in Singapore, Thailand, Malaysia, the PRC and India. Mr. Mitchell was a member of the board of directors of GigOptix, Inc. from June 2012 through July 2013. Mr. Mitchell earned a bachelor of science degree in economics from Montana State University. |
| | | |
| | | Among other skills and qualifications, Mr. Mitchell brings to the Board extensive knowledge and understanding of Fabrinet’s business, operations and employees, having founded Fabrinet and served on the Board since our inception, as well as more than 30 years of experience in an array of executive management roles within the disk drive and optoelectronics manufacturing industries. |
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Among other skills and qualifications, Mr. Mitchell brings to the Board extensive knowledge and understanding of Fabrinet’s business, operations and employees, having founded Fabrinet and served on the Board since our inception, as well as more than 30 years of experience in an array of executive management roles within the disk drive and optoelectronics manufacturing industries.
Seamus Grady has served as our chief executive officer and on the Board since September 2017. Prior to joining us, Mr. Grady most recently served as executive vice president and chief operating officer, mechanical systems division, at Sanmina Corporation, an electronics manufacturing services company, from October 2012 to May 2017. Prior to that, Mr. Grady held various operations roles at Sanmina beginning in 2000, including as senior vice president medical division, from June 2011 to October 2012, and senior vice president global medical operations from March 2009 to June 2011. From 1999 to 2000, Mr. Grady served as director of materials and supply chain management at Lucent Technologies Inc. (formerly Ascend Communications). From 1989 to 1999, Mr. Grady served in a variety of operations roles at Manufacturers Services Limited, an electronic manufacturing and supply chain services company (now Celestica). Mr. Grady holds a B. Tech in Manufacturing Technology from the National University of Ireland, Galway (NUIG).
Among other skills and qualifications, Mr. Grady brings to the Board broad and deep experience in the electronics manufacturing services industry, including overseeing operations at multiple international facilities.
PROPOSAL ONE: ELECTION OF DIRECTORS
Dr.
Homa Bahrami has served on the Board since August 2012. Dr. Bahrami has been a Senior Lecturer at the Haas School of Business, University of California, Berkeley. She is also a Faculty Director of the Center for Executive Education and a Board member of the Center for Teaching Excellence at the Haas School of Business,-12-
where she has served on the faculty since 1986. Dr. Bahrami was a member of the board of directors of FEI Company (acquired by Thermo Fisher Scientific Inc. in 2016) from February 2012 through September 2016, where she served on the audit and compensation committees, and a member of the board of directors of FormFactor, Inc. from 2004 through 2010. Dr. Bahrami earned a bachelor of arts degree with honors in sociology and social administration from Hull University and a master of science degree in industrial administration and a doctor of philosophy degree in organizational behavior from Aston University in the United Kingdom.
Among other skills and qualifications, Dr. Bahrami brings to the Board experience in organizational design and executive development for global enterprises.
Thomas F. Kelly has served on the Board since 2010. Since August 2017, Mr. Kelly has served as chief executive officer of ID Experts, a provider of software and services for cyber breach and identity fraud protection. From March 2015 until its acquisition by Fortinet in June 2016, Mr. Kelly served as chief executive officer of AccelOps, a provider of network security monitoring and analytics solutions. From June 2010 to January 2014, Mr. Kelly served as chief executive officer and president of Moxie Software, a provider of enterprise social software. From June 2006 to June 2009, Mr. Kelly was chairman of the board of MontaVista Software (acquired by Cavium Networks, Inc. in 2009), a provider of Linux-based development software, where he was also chairman, president and chief executive officer from June 2006 to June 2008. From February 2008 to January 2009, Mr. Kelly was president and chief executive officer of Epicor Software, an enterprise resource planning software company, where he also served on the board of directors from 2000 to 2009. In 2004 and 2005, Mr. Kelly was with Trident Capital, a venture capital company. From 2001 to 2004, he was chairman, president and chief executive officer of BlueStar Solutions (acquired by Affiliated Computer Services, Inc. in 2004), an enterprise resource planning software hosting company. From 1998 to 2001, Mr. Kelly was chairman and chief executive officer of Blaze Software, Inc. (acquired by Brokat Infosystems AG in 2001). Prior to that, he served as chief financial officer or chief operating officer at several software and semiconductor companies, including Cirrus Logic, Inc., Frame Technology, Cadence Design Systems, Valid Logic Corporation and Analog Design Tools. Earlier in his career he was with Arthur Anderson & Company. Mr. Kelly was a member of the board of directors of FEI Company (acquired by Thermo Fisher Scientific Inc. in 2016) from September 2003 through September 2016, where he served as chairman of the board and chairman of the audit committee. He is also on the Board of Regents of Santa Clara University. Mr. Kelly earned a bachelor of science degree in economics from Santa Clara University.
Among other skills and qualifications, Mr. Kelly brings to the Board audit and financial reporting expertise as well as managerial and operational experience gained from his service on the audit committees of multiple public companies and his roles at Cadence Design Systems, Cirrus Logic, Frame Technology, Epicor Software, Trident Capital and various emerging growth technology companies.
Dr. Frank H. Levinson has served on the Board since 2001. Since 2006, Dr. Levinson has served as the managing director of Small World Group, a group primarily involved in investing in and growing small companies. Dr. Levinson served as the chairman of the board of directors and chief technical officer of Finisar Corporation, a provider of fiber optic components and network performance test and monitoring systems, from August 1999 to January 2006, and remained as a director of Finisar until August 2008. From 1988 to 1999, Dr. Levinson served as the chief executive officer of Finisar. From January 1986 to February 1988, Dr. Levinson served as the optical department manager at Raynet, Inc., a fiber optic systems company and, from April 1985 to December 1985, as the chief optical scientist at Raychem Corporation. From January 1984 to July 1984, Dr. Levinson was a member of the technical staff at Bellcore, a provider of services and products to the communications industry. From 1980 to 1983, Dr. Levinson was as a member of the technical staff at AT&T Bell Laboratories. Since July 2014, Mr. Levinson has been a member of the board of directors of Interlink Electronics, Inc., where he currently serves as chairman of the compensation committee and a member of the audit and nominating and governance committees. Dr. Levinson earned a bachelor of science degree in mathematics and physics from Butler University, and a master’s degree in astronomy and a doctor of philosophy degree in astronomy from the University of Virginia.
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Among other skills and qualifications, Dr. Levinson brings to the Board executive leadership and management experience in a global organization and semiconductor industry experience, having served as chairman of the board of directors, chief technical officer and chief executive officer of Finisar Corporation.
| | | Dr. Bahrami has served on the Board since 2012. Dr. Bahrami is a Senior Lecturer at the Haas School of Business, University of California, Berkeley. She is also a Faculty Director of the Center for Executive Education and a board member of the Center for Teaching Excellence at the Haas School of Business, where she has served on the faculty since 1986. Dr. Bahrami was a member of the board of directors of FEI Company (acquired by Thermo Fisher Scientific Inc. in 2016) from February 2012 through September 2016, where she served on the audit and compensation committees. Dr. Bahrami earned a bachelor of arts degree with honors in sociology and social administration from Hull University and a master of science degree in industrial administration and a doctor of philosophy degree in organizational behavior from Aston University in the United Kingdom. |
| |
| | | Among other skills and qualifications, Dr. Bahrami brings to the Board experience in organizational design and executive development for global enterprises. |
Darlene S. Knight
| | | Ms. Knight has served on the Board since January 2022. Ms. Knight has significant operational and P&L experience with multi-national manufacturing businesses, primarily in the automotive sector, where she has held strategic and operations roles. Ms. Knight most recently served as Vice President, Americas of Adient plc, a global leader in the automotive seating supply industry, from May 2018 to January 2019, and as Vice President, China of Adient from March 2016 to April 2018. Prior to her roles at Adient, Ms. Knight served as Group Vice President and General Manager, Complete Seat Americas of Johnson Controls, Inc., a global diversified technology and industrial company, from October 2013 until February 2016. Ms. Knight also previously served in senior leadership roles at Tecumseh Products Corporation, a manufacturer of commercial refrigeration compressors and condensing unit systems, from 2012 to 2013, and at Edscha GmbH, a Tier 1 automotive supplier, from 2006 to 2012. Ms. Knight served in roles of increasing responsibility at General Motors Corporation from 1984 until 2006. Ms. Knight is a member of the boards of directors of eLeapPower, a privately held corporation, and Reliance Worldwide Corporation Limited, a publicly traded company listed on the Australian Securities Exchange, where she also serves on the ESG and the health & safety committees of the board. Ms. Knight earned a bachelor of science degree in industrial administration from GMI Engineering & Management Institute and a master of science degree in engineering science from Rensselaer Polytechnic Institute. |
| | | |
| | | Among other skills and qualifications, Ms. Knight brings to the Board significant operational and leadership experience with global manufacturing businesses. |
Rollance E. Olson
| | | Mr. Olson has served on the Board since 2004, including as lead independent director since 2011. From 1986 to 2011, Mr. Olson served as chief executive officer of Parts Depot Inc., a wholesale automotive replacement parts and supplies business in Virginia. From 1980 to 1985, Mr. Olson served as the president of Brake Systems, Inc., and from 1973 to 1980, Mr. Olson served in various positions at Bendix Corporation, an automotive safety brake and control systems company, including as general manager of the Fram/Autolite division, general manager of the Bendix automotive aftermarket division and corporate staff consultant. From 1968 to 1973, Mr. Olson served as a management consultant and project leader with Booz, Allen & Hamilton, a management and technology consultant firm. Mr. Olson’s business career started with Honeywell, Inc. in Minneapolis, Minnesota. Mr. Olson also served on the board of directors for several privately owned retail and technology companies. He served as a board member (9 years) and chairman of the board of the largest automotive aftermarket trade association, and was a guest lecturer at the Darden School of Business (University of Virginia). Mr. Olson earned a bachelor of arts degree from the University of Minnesota. |
| | | |
| | | Among other skills and qualifications, Mr. Olson brings to the Board executive leadership and management experience gained from his service as chief executive officer of Parts Depot Inc. for more than 25 years. |
18 | | | | | | 2023 PROXY STATEMENT |
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Annual Non-Employee Director Compensation Elements
The Compensation Committee annually reviews director compensation with the
Boardassistance of its independent compensation consultant to ensure that it is appropriate and competitive in light of market circumstances and prevailing “best practices” for corporate governance. The compensation elements reflect the Board’s view that compensation to non-employee directors should consist of an appropriate mix of cash and equity awards. The annual non-employee director compensation arrangements described below have been effective since
2004, including as lead independent director since January 2011. From 1986 to 2011, Mr. Olson served as chief executive officerJune 25, 2022 (the beginning of
Parts Depot Inc., a wholesale automotive replacement parts and supplies business in Virginia. From 1980 to 1985, Mr. Olson served as the president of Brake Systems, Inc., and from 1973 to 1980, Mr. Olson served in various positions at Bendix Corporation, an automotive safety brake and control systems company, including as general manager of the Fram/Autolite division, general manager of the Bendix automotive aftermarket division and corporate staff consultant. From 1968 to 1973, Mr. Olson served as a management consultant and project leader with Booz, Allen & Hamilton, a management and technology consultant firm. Mr. Olson’s business career started with Honeywell, Inc. in Minneapolis, Minnesota. Mr. Olson also served on the board of directors for several privately owned retail and technology companies. He served as a board member (9 years) and chairman of the board of the largest automotive aftermarket trade association, and was a guest lecturer at the Darden School of Business (University of Virginia)fiscal 2023).
Mr. Olson earned a bachelor of arts degree from the University of Minnesota.Among other skills and qualifications, Mr. Olson brings to the Board executive leadership and management experience gained from his service as chief executive officer of Parts Depot Inc. for more than 25 years.
| Annual Retainer (Cash) | | | All Board Members: | | | $75,000 | |
| Board Chair*: | | | $200,000 | |
| Lead Independent Director**: | | | $45,000 | |
| *Applicable only if the Board Chair is a non-employee director. This retainer was approved by the Board in connection with Mr. Mitchell’s transition in June 2018 from executive chairman of the Board to non-employee Chairman of the Board in light of Mr. Mitchell’s ongoing significant involvement with Fabrinet and the valuable leadership and guidance he provides to Fabrinet. | |
| **Applicable only if the Board Chair is not an independent director. | |
| Committee Member Retainer (Cash) | | | Audit Committee: | | | $12,500 (or $33,000 if member is the chair) | |
| Compensation Committee: | | | $10,000 (or $21,000 if member is the chair) | |
| Nominating & Corporate
Governance Committee: | | | $6,000 (or $15,000 if member is the chair) | |
| Restricted Share Units (Equity) | | | Initial Grant*: Upon joining the Board, and effective as of the date an individual becomes a non-employee member of the Board, an award of RSUs, on a prorated basis, to cover a number of Fabrinet’s ordinary shares equal to: $220,000, divided by the closing price of the ordinary shares on the NYSE on the date of grant, and multiplied by the ratio of (i) the number of days beginning with the date the director joins the Board and ending on the day immediately preceding the one year anniversary of the prior year’s annual shareholder meeting, divided by (ii) 365 days, with the resulting number rounded down to the nearest whole share. For the avoidance of doubt, an individual who becomes a non-employee director as a result of ceasing to be an employee will be eligible to receive an Initial Grant. | |
| Annual Grant*: On the date of each annual shareholder meeting and provided that the non-employee director will continue as a Board member following such meeting, an award of RSUs covering a number of Fabrinet’s ordinary shares equal to: $220,000, divided by the closing price of the ordinary shares on the NYSE on the date of grant, with the resulting number rounded down to the nearest whole share. | |
| Vesting: RSUs will be scheduled to vest in full on January 1 following the next annual meeting of shareholders after the applicable date of grant, provided the director continues to remain a service provider to Fabrinet through such date. | |
| *Grants are automatic and nondiscretionary and subject to the terms and conditions of Fabrinet’s 2020 Equity Incentive Plan and form of Restricted Share Unit Agreement previously approved for use under such plan. Any RSUs that vest will be settled in ordinary shares of Fabrinet, and the par value of ordinary shares of Fabrinet issued upon such settlement will be considered to have been paid with past services rendered. | |
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Fiscal 2023 Director Compensation
of DirectorsCompensation for Fiscal 2017
Table
The following table presents information regarding the compensation earned or paid in fiscal
20172023 to individuals who were members of the Board at any time during fiscal
2017,2023, and who also were not our employees. We refer to those directors as
non-employee directors.
During fiscal 2023, Mr. Grady,
and Mr. Mitchell doour chief executive officer, did not receive additional compensation for
theirhis service as a director.
| | | | | | | | | | | | |
Name | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1)(2) | | | Total ($) | |
Homa Bahrami | | | 69,900 | | | | 119,973 | | | | 189,873 | |
Thomas Kelly | | | 80,500 | | | | 119,973 | | | | 200,473 | |
Frank Levinson | | | 73,000 | | | | 119,973 | | | | 192,973 | |
Rollance Olson | | | 121,500 | | | | 119,973 | | | | 241,473 | |
| Dr. Homa Bahrami | | | 100,000 | | | 219,899 | | | — | | | 319,899 | |
| Thomas F. Kelly | | | 118,000 | | | 219,899 | | | — | | | 337,899 | |
| Darlene S. Knight | | | 87,500 | | | 219,899 | | | — | | | 307,399 | |
| Dr. Frank H. Levinson | | | 108,500 | | | 219,899 | | | — | | | 328,399 | |
| David T. Mitchell | | | 275,000 | | | 219,899 | | | — | | | 494,899 | |
| Rollance E. Olson | | | 126,000 | | | 219,899 | | | — | | | 345,899 | |
(1)
| (1) | Reflects the aggregate grant date fair value of the shares in accordance with FASB Accounting Standards Codification Topic 718 (“ASC 718”).718. The assumptions used in the valuation of these awards are set forth in the notes to our consolidated financial statements, which are included in our Annual Report on Form10-K for the year ended June 30, 2017,fiscal 2023, filed with the SEC on August 23, 2017.22, 2023. These amounts do not correspond to the actual value that willmay be realized by the directors. |
(2)
| (2)On December 8, 2022, each of Dr. Bahrami, Mr. Kelly, Ms. Knight, Dr. Levinson, Mr. Mitchell and Mr. Olson was granted 1,679 restricted share units, all of which are scheduled to vest on January 1, 2024 subject to continued service with us. |
(3)
| The following table presents the aggregate number of shares underlying unvested stock awards and outstanding options held by each of ournon-employee directors as of the endlast day of fiscal 2017. 2023. |
| | | | | | | | |
Name | | Aggregate Number of Shares Underlying Unvested Stock Awards | | | Aggregate Number of Shares Underlying Outstanding Options | |
Dr. Bahrami | | | 2,893 | | | | — | |
Mr. Kelly | | | 2,893 | | | | 30,000 | |
Dr. Levinson | | | 2,893 | | | | — | |
Mr. Olson | | | 2,893 | | | | — | |
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Standard Director Compensation Arrangements for Fiscal 2017
During fiscal 2017,non-employee directors received the following cash compensation for their service on the Board:
an annual retainer of $49,000;
$45,000 per year for serving as Chairman of the Board (applicable only if the chairman is anon-employee director);
For the first half of fiscal 2017, $15,000 per year for serving as lead independent director of the Board (applicable only if the chairman is an employee director);
For the second half of fiscal 2017, $120,000 per year for serving as lead independent director of the Board (applicable only if the chairman is an employee director);
$10,500 per year for each member of the Audit Committee (or $25,500 if such member is the chairperson);
$6,000 per year for each member of the Compensation Committee (or $13,500 if such member is the chairperson); and
$5,000 per year for each member of the Nominating & Corporate Governance Committee (or $10,400 if such member is the chairperson).
During fiscal 2017, the Board reinstated an increase in the annual retainer for the lead independent director from $15,000 per year to $120,000 per year, effective January 1, 2017, in light of his increased Board responsibilities, including overseeing strategic initiatives.
Non-employee directors also receive the following equity compensation for their service on the Board:
upon joining the Board, an award of restricted share unitspro-rated to reflect a value equal to: $120,000, divided by the closing price of Fabrinet’s ordinary shares on the NYSE on the date of grant and multiplied by the number of days beginning with the date the director joins the Board and ending on the day immediately preceding the one year anniversary of the prior year’s annual shareholder meeting, divided by 365 days; and
on the date of each annual shareholder meeting, an award of restricted share units valued at $120,000 based on the closing price of Fabrinet’s ordinary shares on the NYSE on the date of each such annual shareholder meeting.
Restricted share units granted to directors generally will vest in full on January 1 following the next annual meeting of shareholders after the date of grant, provided the director continues to serve through such date.
Standard Director Compensation Arrangements for Fiscal 2018
Following the end of fiscal 2017, the Board approved the following cash and equity compensation for service bynon-employee directors on the Board, effective July 1, 2017 (the beginning of fiscal 2018).
an annual retainer of $63,000;
$45,000 per year for serving as Chairman of the Board (applicable only if the chairman is anon-employee director);
$120,000 per year for serving as lead independent director of the Board (applicable only if the chairman is an employee director);
$12,500 per year for each member of the Audit Committee (or $30,000 if such member is the chairperson);
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$9,500 per year for each member of the Compensation Committee (or $20,000 if such member is the chairperson);
$6,000 per year for each member of the Nominating & Corporate Governance Committee (or $14,000 if such member is the chairperson);
upon joining the Board, an award of restricted share unitspro-rated to reflect a value equal to: $165,000, divided by the closing price of Fabrinet’s ordinary shares on the NYSE on the date of grant and multiplied by the number of days beginning with the date the director joins the Board and ending on the day immediately preceding the one year anniversary of the prior year’s annual shareholder meeting, divided by 365 days; and
on the date of each annual shareholder meeting, an award of restricted share units valued at $165,000 based on the closing price of Fabrinet’s ordinary shares on the NYSE on the date of each such annual shareholder meeting.
Restricted share units granted to directors generally will vest in full on January 1 following the next annual meeting of shareholders after the date of grant, provided the director continues to serve through such date.
See “Corporate Governance Matters” below for additional information regarding the Board.
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PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General
The Audit Committee has appointed PricewaterhouseCoopers ABAS Ltd. (“PwC”) as our independent registered public accounting firm for our fiscal year ending June 29, 2018. Although ratification by shareholders is not required by any applicable legal requirements, the Board has determined it is desirable to request ratification of this selection by our shareholders. Notwithstanding its selection, the Audit Committee, in its discretion, may appoint a new independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of Fabrinet and its shareholders. If our shareholders do not ratify the appointment of PwC, the Audit Committee may reconsider its selection.
A representative of PwC is expected to be present at the meeting, will have the opportunity to make a statement if he or she desires to do so, and is expected to be available to respond to appropriate questions.
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as Fabrinet’s independent registered public accounting firm for Fabrinet’s fiscal year ending June 29, 2018.
Accounting Fees
The following table presents fees paid or accrued by Fabrinet for audit and other services rendered by PwC for fiscal 2017 and fiscal 2016.
| | | | | | | | |
| | Fiscal 2017 | | | Fiscal 2016 | |
Audit Fees(1) | | $ | 1,058,551 | | | $ | 817,209 | |
Audit-Related Fees | | | — | | | | — | |
Tax Fees(2) | | | 20,814 | | | | — | |
All Other Fees(3) | | | 67,500 | | | | — | |
| | | | | | | | |
Total | | $ | 1,146,865 | | | $ | 817,209 | |
| | | | | | | | |
| Dr. Homa Bahrami | | | 1,679 | | | — | |
| Thomas F. Kelly | | | 1,679 | | | — | |
| Darlene Knight | | | 1,679 | | | — | |
| Dr. Frank H. Levinson | | | 1,679 | | | — | |
| David T. Mitchell | | | 1,679 | | | — | |
| Rollance E. Olson | | | 1,679 | | | — | |
| (2) | Tax fees consist of fees for international tax consulting services.
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| (3) | All other fees consist of fees for providing comfort letters and consent letters during the fiscal year.
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Pre-Approval of Audit andNon-Audit ServicesPursuant to its charter, the Audit Committee is required to (1) review and approve, in advance, the scope and plans for all audits and audit fees and (2) approve, in advance, allnon-audit services to be performed by our independent auditors.
All services and fees of PwC werepre-approved by the Audit Committee.
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PROPOSAL THREE
APPROVAL OF FABRINET’S AMENDED AND RESTATED 2010 PERFORMANCE
INCENTIVE PLAN
General
WeDirector Share Ownership Guidelines
Our directors are
asking our shareholders to approve our amended and restated 2010 Performance Incentive Plan (the “2010 Plan”), which amends our 2010 Plan to:add 2,100,000 ordinary shares to the total number of shares reserved for issuance under the 2010 Plan;
prohibit the payment of dividends or similar rights with respect to any unvested awards granted under the 2010 Plan on or after the date our amended and restated 2010 Plan is approved by shareholders;
clarify that only events in which Fabrinet does not survive (or does not survive as a public company in respect of its ordinary shares) will trigger the 2010 Plan’s provisions relating to assumption and termination of awards with respect to awards granted under the 2010 Plan on or after the date our amended and restated 2010 Plan is approved by shareholders;
impose aone-year minimum vesting period with respect to awards granted under the 2010 Plan on and after the date our amended and restated 2010 Plan is approved by shareholders, except that share-based awards that do not satisfy thisone-year minimum vesting period may be granted in an aggregate amount that does not exceed 5% of the total shares reserved and available for grant and issuance under the 2010 Plan;
limit the authority of the Plan Administrator (as defined below) to accelerate the vesting of an award granted under the 2010 Plan on or after the date our amended and restated 2010 Plan is approved by shareholders in violation of the minimum vesting provisions, except in connection with a participant’s death, disability, termination of employment or reaching retirement age or an event that triggers the 2010 Plan’s provisions relating to assumption and termination of awards; and
limit the aggregate grant date fair market value of awards thatnon-employee directors may receive in any one of our fiscal years.
In October 2017, the Compensation Committee and the Board approved our amended and restated 2010 Plan, subject to approval from our shareholders at the Annual Meeting.
We believe that approval of our amended and restated 2010 Plan is essential to our continued success as our employees are our most valuable assets, and the awards permitted to be granted under the 2010 Plan are vital to our ability to attract and retain outstanding individuals in the competitive labor markets in which we compete. The Board and management believe that grants of equity awards to employees motivate high levels of performance to achieve Fabrinet’s goals, provide an effective means for recognizing employee contributions that promote our success, and promote closer alignment of the interests of employees with those of our shareholders by giving employees a perspective of an owner with an equity stake in Fabrinet. The Board believes that approval of our amended and restated 2010 Plan is in the best interests of Fabrinet and our shareholders.
The 2010 Plan was last amended in December 2014, pursuant to which the 2010 Plan was modified to eliminate the return to the 2010 Plan of any ordinary shares that are or become subject to awards granted under the 2010 Plan, and to require a four (4) year vesting schedule for awards granted under the 2010 Plan (that is, the vesting occurs in four, equal installments on each annual anniversary of the award’s grant date), subject to continued service by the award recipient, except to the extent a different vesting schedule may be specified in the applicable award agreement. Other than the requested increase in the number of ordinary shares reserved under the 2010 Plan and the other amendments described above and the December 2014 amendments to the 2010 Plan, no material amendments have been made to the 2010 Plan since our shareholders last approved the 2010 Plan at our 2012 annual meeting of shareholders.
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Background for Current Request to Increase the Share Reserve
In determining the increase to the share reserve under the 2010 Plan, the Compensation Committee considered a number of factors, including the following:
| • | | Shares Available for Grant.Currently, the maximum number of ordinary shares that may be delivered pursuant to awards under the 2010 Plan is 5,700,000 ordinary shares, plus any shares subject to share options under our predecessor Amended and Restated 1999 Share Option Plan (the “1999 Plan”) outstanding as of June 24, 2010, that expire, are canceled or terminate after June 24, 2010, without being exercised.As of September 29, 2107, 508,850 ordinary shares remained available for grant under the 2010 Plan.The proposed amendment and restatement of the 2010 Plan would increase the number of shares available for grant under the 2010 Plan by 2,100,000 ordinary shares, bringing the total that may be granted under the 2010 Plan to 7,800,000 ordinary shares, plus any shares subject to share options under the 1999 Plan outstanding as of June 24, 2010, that expire, are canceled or terminate after June 24, 2010, without being exercised. As of September 29, 2017, no benefits or amounts relating to the additional 2,100,000 ordinary shares have been received by, or allocated to, any individuals.
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| • | | Shares Outstanding.As of September 29, 2017, under the 2010 Plan there were: (i) 38,157 shares subject to outstanding options, with a weighted average exercise price of $15.38 and a weighted average remaining term of 1.1 years (ii) 1,108,010 ordinary shares subject to outstanding restricted share units, and (iii) 508,586 ordinary shares subject to outstandingperformance-based restricted share units. The 1999 Plan was terminated in June 2010. No equity awards have been granted under the 1999 Plan since its termination or will be granted under the 1999 Plan in the future. As of September 29, 2017, there were no awards outstanding under the 1999 Plan.
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| • | | Overhang.As of September 29, 2017, our overhang is 4.2%. For this purpose we calculated overhang as (a) the sum of (i) 38,157 ordinary shares subject to outstanding options under the 2010 Plan, (ii) 1,108,010 ordinary shares subject to outstanding restricted share units under the 2010 Plan, and (iii) 508,586 ordinary shares subject toperformance-based restricted share units under the 2010 Plan, divided by (b) the sum of (i) 37,572,302 ordinary shares, which is the total number of our ordinary shares outstanding as of September 29, 2017, (ii) 1,654,753 ordinary shares underlying outstanding awards under the 2010 Plan, and (iii) 508,850 ordinary shares available for grant under the 2010 Plan.
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| • | | Burn Rate.Burn rate measures our usage of our ordinary shares for the 2010 Plan as a percentage of our total outstanding ordinary shares. For our fiscal years 2017, 2016 and 2015, our burn rates were 3.0%, 1.8% and 1.9%, respectively. The rates were calculated by dividing the number of our ordinary shares subject to equity awards granted during the year by the weighted average number of our ordinary shares outstanding during the year.
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| • | | Forecasted Grants.The Compensation Committee anticipates that the proposed share increase to the 2010 Plan, based on currently projected share use, will be sufficient for the granting of equity awards under the 2010 Plan through approximately June 2020. Since we determine the size of equity awards to be granted based on the competitive dollar value to be delivered to participants, our actual share usage could be substantially different from our forecasted share usage if our share price on the date the award is granted is significantly different from the share price assumed in the forecast (which was $39.35). For example, if our share price on the date the award is granted is lower than the share price assumed in the forecast, we would need a larger number of shares than the number projected by the forecast in order to deliver the same value to participants.
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| • | | Proxy Advisory Firm Guidelines.In light of our significant institutional shareholder base, the Compensation Committee considered proxy advisory firm guidelines.
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| • | | Share Repurchase Program.In August 2017, the Board approved a share repurchase program to permit Fabrinet to repurchase up to $30.0 million worth of its issued and outstanding ordinary shares in the open market in accordance with applicable rules and regulations, at such time and such prices as
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| management may decide. The repurchase program is intended to partially offset dilution from equity award grants.
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If our shareholders do not approve our amended and restated 2010 Plan, no shares will be added to the total number of shares reserved for issuance under the 2010 Plan, and the 2010 Plan will continue under its existing terms without the increase in the share reserve or the other amendments summarized in this proposal. This would mean that Fabrinet may soon be unable to continue making grants under the 2010 Plan, jeopardizing our ability to attract and retain the talent necessary for us to continue and succeed in our business.
Summary of the 2010 Performance Incentive Plan
The following is a summary of the principal features of the 2010 Plan and its operation, as amended and restated, to reflect the changes proposed in this proxy statement. The 2010 Plan, as amended and restated, is attached as Appendix B to this proxy statement. The summary does not contain all of the terms and conditions of the 2010 Plan and is qualified in its entirety by reference to the 2010 Plan as set forth in Appendix B.
General
The purpose of the 2010 Plan is to promote our success and to increase shareholder value by providing an additional means of compensation through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. Awards under the 2010 Plan may be in the form of share options, share appreciation rights (“SARs”), restricted shares, share bonuses, performance shares, share units, phantom shares, dividend equivalents, other similar rights to purchase or acquire our ordinary shares, and any similar securities with a value derived from the value of or related to our ordinary shares or returns on our ordinary shares. Employees, officers, directors and consultants that provide services to us or one of our subsidiaries are eligible to receive awards under the 2010 Plan. As of September 29, 2017, we had approximately 10,475 employees (including five (5) executive officers), four(4) non-employee directors and no consultants who would be eligible to receive awards under the 2010 Plan.
Administration of the 2010 Plan
The Board, or a committee of directors appointed by the Board, has the authority to administer the 2010 Plan (the “Plan Administrator”). The Plan Administrator has broad authority and power to do all things necessary or desirable in connection with the administration of the 2010 Plan and authorization of awards, including without limitation, to:
select eligible participants and determine the types of awards that they are to receive;
grant awards and determine the grant date, the number of shares that are to be subject to awards and the terms and conditions of awards, including the price (if any) to be paid for the shares or the award and any or no vesting requirements;
approve the forms of award agreements;
cancel, modify or waive Fabrinet’s rights with respect to, or modify, discontinue, suspend or terminate any or all outstanding awards, subject to any required consents;
construe and interpret the terms of the 2010 Plan and any agreements under the 2010 Plan;
| • | | accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards under the 2010 Plan;provided,however, that, if shareholders approve our amended and restated 2010 Plan, the vesting of awards granted on or after the date that our amended and restated 2010 Plan is approved by shareholders cannot be accelerated such that any portion of such award becomes vested
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| prior to theone-year anniversary of such award’s grant date, except in the event of a participant’s death, disability, termination of employment or reaching retirement age or an event that triggers the 2010 Plan’s provisions relating to assumption and termination of awards;
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subject to the other provisions of the 2010 Plan, make certain adjustments to an outstanding award (provided that no such adjustment may constitute a reduction by amendment, cancellation and regrant, exchange or other means including an exchange for cash or another award, of the per share exercise or base price of any option or SAR, unless approved by our shareholders) and authorize the termination, conversion, substitution or succession of an award upon the occurrence of certain corporate transactions;
acquire or settle rights under awards in cash, shares of equivalent value, or other consideration (provided that unless approved by our shareholders, we cannot effect a repricing of an option or SAR granted under the 2010 Plan by purchasing the option or SAR at a time when the per share exercise or base price of the award is greater than the fair market value of our ordinary share); and
determine the fair market value of an ordinary share or awards under the 2010 Plan.
The Plan Administrator may delegate certain authority to officers or employees of Fabrinet or its subsidiaries, including delegating to our officers the authority to determine the employees (including officers) of Fabrinet or its subsidiaries as participants, the number of shares to be granted under an award, and other terms and conditions of awards. The Plan Administrator also may establish rules and regulations under the 2010 Plan (includingsub-plans under the 2010 Plan to specify the terms and conditions of awards granted to service providers outside of the United States). Actions taken by us or the Plan Administrator with respect to the 2010 Plan will be conclusive and binding upon all persons.
Number of Ordinary Shares Available Under the 2010 Plan
Subject to the adjustment provisions contained in the 2010 Plan, the maximum number of ordinary shares that may be delivered pursuant to awards under the 2010 Plan is 5,700,000 ordinary shares, plus any shares subject to share options under our 1999 Plan outstanding as of June 24, 2010, that expire, are canceled or terminate after June 24, 2010, without being exercised. The maximum number of our ordinary shares that may be delivered pursuant to options that qualify as incentive stock options for U.S. tax purposes under the 2010 Plan is 5,700,000 ordinary shares.
We are asking shareholders to approve an increase of 2,100,000 shares in the number of ordinary shares that may be issued under the 2010 Plan. If shareholders approve our amendedownership guidelines and restated 2010 Plan, an aggregate of 7,800,000 ordinary shares, plus any shares subject to share options under the 1999 Plan outstanding as of June 24, 2010, that expire, are canceled or terminate after June 24, 2010, without being exercised, would be available for issuance under the 2010 Plan; and the maximum number of ordinary shares that may be delivered pursuant to incentive stock options granted under the 2010 Plan would be 7,800,000 ordinary shares (as increased pursuant to our amended and restated 2010 Plan described in this proposal).
The number of shares subject to an award granted under the 2010 Plan will reduce the number of shares available for issuance under the 2010 Plan, regardless of whether the award is settled in cash or a form other than ordinary shares, expires or for any reason is cancelled or terminated, is forfeited, fails to vest, or for any other reason is not paid or delivered under the 2010 Plan, is exchanged by a participant or withheld by us as full or partial payment in connection with an award, or is exchanged by a participant or withheld by us or our subsidiaries to satisfy the tax withholding obligations related to an award. Shares deliverable under the 2010 Plan will be our authorized but unissued ordinary shares.
The number and type of shares available under the 2010 Plan, including any share limits under the 2010 Plan, the number, amount and type of shares subject to, and the grant, purchase, exercise or base prices of,
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outstanding awards, and the securities, cash or other property deliverable upon exercise or payment of any outstanding awards, will be subject to equitable and proportionate adjustment, in order to preserve the level of incentives intended by the 2010 Plan and any outstanding awards granted under the 2010 Plan, in the event of any reclassification, recapitalization, stock split (including stock splits in the form of stock dividends), reverse stock split, merger, combination, consolidation, reorganization,spin-off,split-up, or similar extraordinary dividend distribution in respect of our ordinary shares, exchange of our ordinary shares or other securities, or any similar, unusual or extraordinary corporate transaction in respect of our ordinary shares.
Awards
Each award under the 2010 Plan will be evidenced by a written or electronic award agreement between us and the participant that specifies the terms and conditions of the award. Awards generally may be paid by any lawful consideration as the Plan Administrator permits, including, for example, services rendered to us, cash, reduction in the number of shares otherwise deliverable under an award, cashless exercise, and delivery of previously owned ordinary shares of Fabrinet. Unless otherwise set forth in an award agreement, an award granted under the 2010 Plan will be scheduled to vest as to 25% of the shares subject to the awardcertain prohibitions on each annual anniversary of the award’s grant date over a period of four years, subject to the participant’s continued employment or other service with us or our subsidiaries through the applicable vesting date.
If shareholders approve our amended and restated 2010 Plan, no awards granted on or after December 14, 2017 may vest or become exercisable earlier than one (1) year after such award is granted, except that awards up to a maximum of five percent (5%) of the total shares reserved and available for grant and issuance under the 2010 Plan may be granted without regard to such minimum one (1) year vesting requirements.
Share Options and SARs
The per share exercise prices of share options and the per share base prices of SARs granted under the 2010 Plan will not be less than the fair market value of one of our ordinary shares on the date of grant. Incentive stock options may be granted only to employees of Fabrinet or its subsidiaries. Incentive stock options granted to any owner of our ordinary shares representing more than 10% of the total combined voting power of all classes of our shares on the date of grant (which we refer to as a “10% owner”), must have a per share exercise price that is at least 110% of the fair market value of one of our ordinary shares. The maximum term of share options and SARs is 10 years, except that the maximum term of any incentive stock options granted to a 10% owner must not exceed five (5) years.
Generally, the fair market value of one of our ordinary shares is the last price in regular trading for our ordinary shares as provided by the Financial Industry Regulatory Authority (“FINRA”) through the NYSE for the date in question, or if no sales of our ordinary shares were reported on the NYSE on such date in question, such last price in regular trading with respect to the next preceding day on which sales were reported for our ordinary shares by FINRA. However, the Plan Administrator may provide that the fair market value is equal to the last price for an ordinary share provided by FINRA on the last trading day preceding the date in question or the average of the high and low trading prices per share of our ordinary shares provided by FINRA for the date in question or the most recent trading day. On October 16, 2017, the closing price of our ordinary shares on the NYSE was $36.74 per share.
Other Awards
Restricted shares, share bonuses, performance shares, share units, phantom shares, dividend equivalents, or similar rights to purchase or acquire shares may be issued under the 2010 Plan. The Plan Administrator will determine the terms and conditions of such awards, including whether such awards may be purchased at a fixed or variable price or ratio related to our ordinary shares, or upon the passage of time, the occurrence of one or more events or the achievement of performance criteria or other conditions, or a combination of any of these
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requirements. In addition, any similar securities with a value derived from the value of or related to our ordinary shares or returns on our ordinary shares may be issued under the 2010 Plan.
Deferrals and Settlements
The Plan Administrator may provide for the deferred payment of awards and may determine the terms applicable to deferrals (including, for example, whether to provide for the payment or crediting of interest or other earnings on the deferred amounts or of dividend equivalents where the deferred amounts are denominated in shares). Payment of awards may be in the form of cash, our ordinary shares, other awards, or a combination of any of these forms, with any restrictions that the Plan Administrator may impose.
Non-Employee Director Award Limitations
If shareholders approve our amended and restated 2010 Plan, nonon-employee director may be granted, in any fiscal year of the Company, share-settled awards under the 2010 Plan with an aggregate grant date fair value (determined in accordance with U.S. generally accepted accounting principles) of more than $250,000. Any awards granted to an individual while he or she was an employee will not count for purposes of the limitations.
Dividends and Other Equivalent Rights
If shareholders approve our amended and restated 2010 Plan, other than with respect to the adjustments referenced under “Number of Ordinary Shares Available Under the 2010 Plan” above, no dividends or dividend equivalents may be paid with respect to an award granted on or after the date our amended and restated 2010 Plan is approved by shareholders.
Transferability of Awards
Awards under the 2010 Plan generally will not be transferable other than by will or the laws of descent and distribution, certain transfers to family members, and to validly designated beneficiaries upon death, and generally may be exercised only by the participant during his or her lifetime. The Plan Administrator may permit certain other transfers of awards pursuant to conditions and procedures that it determines, and subject to compliance with applicable federal and state securities laws.
Merger or Other Corporation Transaction
Upon the occurrence of any event in which Fabrinet does not survive (or does not survive as a public company in respect of its ordinary shares), including a merger, combination, consolidation, or other reorganization, any exchange of our ordinary shares or other securities, sale of all or substantially all of our business, ordinary shares or assets, our dissolution, or any other event in which we do not survive (or do not survive as a public company in respect of our ordinary shares), the Plan Administrator may allow for a cash payment in settlement of, or for the assumption, substitution or exchange of share-based awards or the cash, securities or property deliverable to a share-based award holder based on the consideration payable to shareholders upon such transaction. If the Plan Administrator has not made such provision, then each award granted under our 2010 Plan generally will become fully vested and will terminate at the time of such transaction, provided that holders of share options and SARs are given reasonable advance notice and reasonable opportunity to exercise their awards. However, a transaction will not be deemed to occur with respect to participants who are subject to U.S. income taxation unless the transaction qualifies as a “change in control” within the meaning of Internal Revenue Code Section 409A.
Unless expressly set forth otherwise in the award agreement or other agreement entered into between the award holder and us or any of our subsidiaries, or a severance program sponsored by us or any of our subsidiaries, awards will not accelerate vesting if doing so will result in thenon-deductibility of the awards for Fabrinet under Internal Revenue Code Section 280G (i.e., golden parachute payments).
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Amendment and Termination of the 2010 Plan
The Board may amend, modify, terminate or suspend the 2010 Plan at any time in whole or in part. However, no amendment, modification, suspension or termination of the 2010 Plan or amendment of an award agreement will affect any outstanding award in any manner materially adverse to a participant without his or her consent. Plan amendments will be submitted to shareholders for their approval to the extent required by or advisable under applicable law or any applicable listing agency. The 2010 Plan is not exclusive—the Board and Compensation Committee may grant equity and performance incentives or other compensation, in shares, cash or otherwise, under other plans or authority.
The 2010 Plan will terminate in June 2020, unless earlier terminated by the Board. However, the Plan Administrator will retain its authority until all outstanding awards are exercised or terminated.
Number of Awards Granted to Employees and Directors
The number of awards that an employee, director or consultant may receive under the 2010 Plan is at the discretion of the Plan Administrator, except pursuant to the maximum limits referenced fornon-employee directors under“Non-Employee Director Award Limitations” above, and, therefore, cannot be determined in advance. Our executive officers andnon-employee directors have an interest in this proposal because they are eligible to receive awards under the 2010 Plan. The following table sets forth information with respect to the grant of restricted share units and performance-based restricted share units (PSUs) under the 2010 Plan during fiscal 2017 (no other type of award was granted during this time):
| | | | | | | | | | | | | | | | |
| | RSUs Granted (#) | | | Weighted Average Dollar Value of RSUs Granted ($) | | | PSUs Granted (#) | | | Weighted Average Dollar Value of PSUs Granted ($) | |
David T. Mitchell | | | 189,969 | | | | 40.48 | | | | 123,516 | | | | 40.48 | |
Executive Chairman of the Board; FormerChief Executive Officer | | | | | | | | | | | | | | | | |
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Seamus Grady(1) | | | — | | | | — | | | | — | | | | — | |
Chief Executive Officer | | | | | | | | | | | | | | | | |
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Dr. Harpal S. Gill | | | 67,316 | | | | 40.48 | | | | 49,406 | | | | 40.48 | |
President and Chief Operating Officer | | | | | | | | | | | | | | | | |
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Toh-Seng Ng | | | 61,758 | | | | 40.48 | | | | 41,996 | | | | 40.48 | |
Executive Vice President, Chief Financial Officer | | | | | | | | | | | | | | | | |
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Dr. Hong Hou | | | 15,438 | | | | 40.48 | | | | 12,350 | | | | 40.48 | |
Executive Vice President, Chief Technical Officer | | | | | | | | | | | | | | | | |
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All current executive officers as a group (5 people) | | | 334,481 | | | | 40.48 | | | | 227,268 | | | | 40.48 | |
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All currentnon-employee directors as a group (4 people) | | | 11,572 | | | | 41.47 | | | | — | | | | — | |
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All employees who are not executive officers as a group | | | 515,303 | | | | 37.86 | | | | 7,410 | | | | 40.48 | |
(1) | Mr. Grady did not receive any equity awards during fiscal 2017 because he joined us in September 2017.
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Summary of U.S. Federal Income Tax Consequences
The following paragraphs are a summary of the general federal income tax consequences to U.S. taxpayers and Fabrinet of equity awards granted under the 2010 Plan. Tax consequences for any particular individual may be different.
Nonqualified Stock Options
No taxable income is reportable when a nonqualified stock option with a per share exercise price equal to the fair market value of an underlying share on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the exercised shares subject to the option. Any taxable income recognized in connection with an option exercise by an employee of Fabrinet is subject to tax withholding by Fabrinet. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss to the participant.
Incentive Stock Options
No taxable income is reportable when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax, in which case the exercise of the award may subject the participant to, or affect the determination of, the alternative minimum tax). If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of thetwo- orone-year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option. Any additional gain would be taxable as capital gain.
Share Appreciation Rights
No taxable income is reportable when a share appreciation right with a base price per share equal to the fair market value of an underlying share on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.
Other Awards
A participant generally will not have taxable income at the time an award of restricted shares, share units, performance shares, phantom shares, dividend equivalents, or share bonuses are granted. Instead, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the award becomes either (i) freely transferable, or (ii) no longer subject to substantial risk of forfeiture. However, the recipient of a restricted share award may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date the award is granted.
Medicare Surtax
Beginning in 2013, a participant’s annual “net investment income,” as defined in Section 1411 of the Code may be subject to a 3.8% federal surtax (generally referred to as the “Medicare Surtax”). Net investment income may include capital gain and/or loss arising from the disposition of shares subject to a participant’s awards under the 2010 Plan. Whether a participant’s net investment income will be subject to the Medicare Surtax will depend on the participant’s level of annual income and other factors.
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Tax Effect for Fabrinet
Fabrinet may be entitled to a tax deduction in connection with an award under the 2010 Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonqualified stock option). Special rules limit the deductibility of compensation paid to our chief executive officer and other “covered employees” as determined under Section 162(m) of the Internal Revenue Code and applicable guidance.
Section 409A
Section 409A of the Internal Revenue Code contains requirements applicable to nonqualified deferred compensation arrangements. These include requirements with respect to an individual’s election to defer compensation and the individual’s selection of the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual’s separation from service, a predetermined date or the individual’s death). Section 409A imposes restrictions on an individual’s ability to change his or her distribution timing or form after the compensation has been deferred. For certain individuals who are officers, Section 409A requires that such individual’s distribution commence no earlier than six months after such officer’s separation from service.
Awards granted under the 2010 Plan with a deferral feature will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. Certain states, including California, have similar laws that impose additional taxes, interest and penalties on nonqualified deferred compensation arrangements. Fabrinet or its subsidiaries, as applicable, also will have withholding and reporting requirements with respect to such amounts.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON THE PARTICIPANT AND FABRINET WITH RESPECT TO AWARDS UNDER THE 2010 PLAN AND DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE ORNON-U.S. JURISDICTION IN WHICH THE EMPLOYEE OR CONSULTANT MAY RESIDE.
Recommendation of the Board of Directors
The Board recommends a vote “FOR” approval of our amended and restated 2010 Performance Incentive Plan, which increases the number of authorized shares issuable under the plan by 2,100,000 ordinary shares and provides for certain other amendments.
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PROPOSAL FOUR
ADVISORY VOTE TO APPROVE COMPENSATION PAID TO NAMED EXECUTIVE OFFICERS
General
In accordance with SEC rules, we are providing our shareholders with the opportunity to vote to approve, on an advisory ornon-binding basis, the compensation of our named executive officers (or “Named Officers”) as disclosed in this proxy statement in accordance with rules of the SEC. This proposal, commonly known as a“say-on-pay” proposal, gives our shareholders the opportunity to express their views on our Named Officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific Named Officer, but rather the overall compensation of all of our Named Officers and the compensation philosophy, policies and practices described in this proxy statement. We currently hold oursay-on pay vote every year.
While this advisory vote to approve executive compensation isnon-binding, it will provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when making future executive compensation decisions. The Board and the Compensation Committee value the opinions of shareholders and, to the extent there is any significant vote against the Named Officer compensation as disclosed in this proxy statement, will endeavor to communicate with shareholders to better understand the concerns that influenced the vote, consider those shareholders’ concerns and evaluate whether any actions are necessary to address those concerns.
We urge shareholders to read the “Executive Compensation” section of this proxy statement, and in particular the information discussed under the heading “Executive Compensation—Compensation Discussion and Analysis”, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives. We believe that our executive compensation program is working to ensure management’s interests are aligned with our shareholders’ interests to support long-term value creation. Accordingly, pursuant to Section 14A of the Exchange Act, you are being asked to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that Fabrinet’s shareholders approve, on an advisory basis, the compensation of Fabrinet’s named executive officers, as disclosed in Fabrinet’s Proxy Statement for the 2017 Annual Meeting of Shareholders pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and related narrative disclosures.”
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the approval, on an advisory basis, of the compensation paid to our Named Officers.
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PROPOSAL FIVE
ADVISORY VOTE REGARDING THE FREQUENCY OF HOLDING
FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
General
The Dodd-Frank Act also enables shareholders to vote, on an advisory ornon-binding basis, on how frequently they would like to cast an advisory vote on the compensation of our Named Officers. By voting on this proposal, you may indicate whether you would prefer an advisory vote on Named Officer compensation once every year, every two years or every three years, or you may abstain from voting.
After careful consideration of the frequency alternatives, the Board believes that conducting an advisory vote on executive compensation every year is appropriate for Fabrinet and its shareholders at this time. The Board has determined that an annual advisory vote on executive compensation will allow shareholders to provide timely input on Fabrinet’s executive compensation philosophy, policies and practices as disclosed in the proxy statement each year. We recognize that our shareholders may have different views as to what is the best approach for Fabrinet, and we look forward to hearing from our shareholders on this proposal.
Recommendation of the Board of Directors
The Board recommends that shareholders vote to hold future advisory votes on executive compensation every “1 YEAR.”
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AUDIT COMMITTEE REPORT
The Audit Committee assists the Board in fulfilling its responsibilities for oversight of the integrity of our financial statements, our internal accounting and financial controls, our compliance with legal and regulatory requirements, the organization and performance of our internal audit function and the qualifications, independence and performance of our independent registered public accounting firm.
Our management is responsible for establishing and maintaining internal controls and preparing our consolidated financial statements. The independent registered public accounting firm is responsible for auditing the financial statements. It is the responsibility of the Audit Committee to oversee these activities.
The Audit Committee has:
Reviewed and discussed the audited financial statements with management and with PricewaterhouseCoopers ABAS Ltd., our independent registered public accounting firm;
Discussed with PricewaterhouseCoopers ABAS Ltd. the matters required to be discussed under the rules adopted by the Public Company Accounting Oversight Board (the “PCAOB”); and
Received the written disclosures and the letter from PricewaterhouseCoopers ABAS Ltd. required by applicable requirements of the PCAOB regarding PricewaterhouseCoopers ABAS Ltd.’s communications with the Audit Committee concerning independence and has discussed with PricewaterhouseCoopers ABAS Ltd. its independence.
Based upon these discussions and review, the Audit Committee recommended to the Board that the audited financial statements be includedtransactions in our Annual Report on Form10-K for the fiscal year ended June 30, 2017, for filing with the United States Securitiessecurities. For more information, see “Corporate Governance Matters—Share Ownership Guidelines” and Exchange Commission.“Corporate Governance Matters—Prohibited Transactions in Our Securities.”
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Respectfully submitted by the members of the Audit Committee of the Board of Directors.
Thomas F. Kelly (Chairman)
Dr. Homa Bahrami
Dr. Frank H. Levinson
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CORPORATE GOVERNANCE MATTERS
Corporate Governance Guidelines
We have adopted Corporate Governance Guidelines that establish the corporate governance policies the Board intends to follow in overseeing our business in accordance with its fiduciary duties.
The Corporate Governance Guidelines are available in the “Investors—Governance” section of our website at www.fabrinet.com.
We are committed to maintaining the highest standards of ethical conduct, with business practices and principles of behavior that support this commitment. Accordingly, the Board has adopted a Code of Business Conduct, which is applicable to all of our directors, officers (including our principal executive officer and senior financial and accounting officers) and employees.
The Code of Business Conduct is available in the “Investors—Governance” section of our website at www.fabrinet.com. We will disclose on our website any amendments to the Code of Business Conduct, as well as any waivers, required to be disclosed by SEC or NYSE rules.
Majority Voting
Director Resignation Policy in Uncontested Elections
The Board endorses the principle of using a majority voting standard for uncontested elections of directors. Accordingly, in an election of directors such as this one, a nominee who receives more “Withhold” votes than “For” votes is expected to promptly tender his or her resignation as a director to the Board for consideration.
After considering any information the Board deems appropriate, the Board will act to accept or reject each tendered director resignation. Any director who tenders a resignation under the majority voting policy may not participate in the action of the Board regarding whether to accept or reject his or her tender of resignation.
Board Leadership Structure
Our Corporate Governance Guidelines provide that the Board will fill the chairman and chief executive officer positions based upon what it believes is in our best interests at any point in time. Mr. Mitchell served in both positions until his retirement as chief executive officer in September 2017. We separated the two roles effective upon this transition, with Mr. Mitchell
an employee director, continuing as executive chairman of the
Board.Board from September 2017 until June 2018, and as a non-employee chairman of the Board beginning in June 2018. The Board believes that as our founder and having served as our chief executive officer from our inception until September 2017, Mr. Mitchell is in the best position to direct the focus and attention of the Board on the areas most relevant for us and our shareholders, as Mr. Mitchell is the most familiar with our business, industry and strategic priorities. In the role of
executive chairman, Mr. Mitchell also is able to provide strong and valuable leadership for us both internally and externally.
In addition, our Corporate Governance Guidelines provide that if the chairman is not independent, the Board shall appoint a lead independent director.
RollanceMr. Olson has served as our lead independent director since January 2011. The lead independent director’s duties include coordinating the activities of the independent and other
non-employee directors, coordinating the agenda for and moderating sessions of the independent and other
non-employee directors, and facilitating communications among the entire Board.
Our independent directors meet in executive session at each regularly scheduled meeting of the Board, and at such other times as necessary or appropriate as determined by the independent directors. Our lead independent director presides at such executive sessions of the Board.
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As a part of its oversight function, the Board monitors management’s processes for operating our business, including risk management. The
Board is responsible for theBoard’s oversight of
ourrisk includes monitoring management’s work to identify risks and manage risk parameters, including those relating to enterprise,
risk management.financial, operational, information security, business and reputation risks. Together with its committees, the Board ensures that any material risks relevant to us or our business are
identified, appropriately considered and
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addressed.
Our management team is responsible for
day-to-day risk management. Management’s responsibilities include identifying, evaluating and addressing potential risks that may exist at the enterprise, strategic, financial and operating levels and the development of processes for mitigating these risks, and the Board, together with its committees, oversees management in its execution of these responsibilities. At periodic meetings of the Board and its committees, and in other meetings and discussions, our management reports to and seeks guidance from the Board and its committees, as applicable, with respect to
risks and other matters that could affect our business. In addition, our legal counsel provides reports of legal risks to the Board and its committees. Similarly, our chief financial officer provides reports to the Audit Committee concerning financial, tax and audit related risks. In addition, the Audit Committee receives periodic reports from management on our compliance programs and efforts, investment policy and practices.
The Board reviews the strategic, financial, operational and operationalinformation security risks inherent in our business
through its consideration of the various matters presented to the Board or its committees by management for review or approval. Furthermore, each board committee regularly reviews and evaluates various aspects of enterprise risk as part of its specific functions and responsibilities delegated by the Board.
The Audit Committee considers risk in connection with its oversight of our financial review and reporting processes and regulatory and corporate compliance matters. In addition, the Audit Committee is responsible for the oversight and review of certain risk management policies, including our insurance, investment and business continuity
policies.policies, and cybersecurity and data security risks. The Compensation Committee considers risk in connection with its oversight of the design and administration of our compensation policies, plans and
programs.programs and assesses and monitors whether such policies, plans and programs have the potential to encourage excessive risk-taking. The Nominating & Corporate Governance Committee considers risk in connection with its oversight of our governance structure, policies and processes, including conflicts of interest (other than related party transactions reviewed by the Audit Committee)
., and oversight of our environmental, social and governance programs.
We believe that the Board’s role is consistent with our leadership structure, with our chief executive officer and management primarily responsible for enterprise risk management, and with the Board and its committees providing oversight of these efforts.
ContactingInformation Security Risk Oversight and Management
The Board has delegated to the
BoardAudit Committee primary responsibility for the oversight of
DirectorsShareholderscybersecurity and other interested parties may communicate directly with our leaddata security risks and mitigation strategies. Mr. Kelly, an independent director by sending an email to leadindependentdirector@fabrinet.com. Communications received at this email address are automatically routed directly to our lead independent director. Shareholders and other interested parties who wish to communicate with the Board may do so by sending an email to board@fabrinet.com or a written communication addressed to Fabrinet, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, Attention: Board of Directors. Our legal counsel reviews all incoming communications from shareholders and other interested parties (except for communications sent directly to the lead independent director, mass mailings, product complaints or inquiries, job inquiries, business solicitations and patently offensive or otherwise inappropriate material) and, as appropriate, routes such communications to the appropriate member(s)Chair of the Board, or if none is specified,Audit Committee, has significant information security risk oversight and management expertise, most recently as chief executive officer and president of IDX, a provider of software and services for cyber breach and identity fraud protection, from August 2017 to the executive chairmanAugust 2022.
The Audit Committee provides oversight of
the Board.Attendance at Annual Meetings of Shareholders by the Board of Directors
Although we do not have a formal policy regarding attendance by members of the Board at our annual meeting of shareholders, we encourage, but do not require, directors to attend. Allmanagement’s review of our directors attendedinformation security program and risk mitigation actions, which include information security
policies, procedures, training initiatives, and both internal and external audits. The Audit Committee receives quarterly briefings on these matters by our 2016 annual meetingVice President, Information Technology & Security, who has oversight responsibility for our information security team.
As part of shareholders.our thorough approach to information security management, and to continue to avoid being subject to information security breach penalties or settlements, we engage external experts to regularly test and audit our information security program in addition to conducting our own internal testing and audits.
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CORPORATE GOVERNANCE MATTERS
Our ordinary shares are listed on the NYSE. Pursuant to the NYSE listing standards, independent directors must comprise a majority of the Board, and each member of our Audit, Compensation and Nominating & Corporate Governance Committees must be independent. A director will only qualify as an “independent director” if inhe or she meets certain requirements and the opinionBoard determines that the director has no material relationship with Fabrinet (either directly or as a partner, shareholder or officer of an organization that has a relationship with Fabrinet).
The Board has reviewed the independence of each director and determined that each of Dr. Bahrami, Mr. Kelly, Ms. Knight, Dr. Levinson and Mr. Olson, representing five of our seven directors, is “independent” as that term is defined under the applicable rules and regulations of the SEC and the NYSE listing standards. In making these determinations, the Board considered the current and prior relationships that each non-employee director does not have a relationship that would interferehas with us and all other facts and circumstances the exercise of independent judgment in carrying out the responsibilities of a director.-31-
Board deemed relevant.
Audit Committee members also must satisfy theadditional independence criteria set forth inRule 10A-3 under the
Exchange Act. In order to be considered independent for purposes of
Rule 10A-3, a member of the Audit Committee may not, other than in his or her capacity as a member of the Audit Committee, the Board, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from us or any of our subsidiaries; or (2) be an affiliated person of us or any of our subsidiaries.
Compensation Committee members must satisfy additional independence criteria set forth under the NYSE listing standards. In order for a member of the Compensation Committee to be considered independent, the Board must consider all factors specifically relevant to determining whether a director has a relationship to us that is material to that director’s ability to be independent from management in connection with the duties of a Compensation Committee member, including, but not limited to: (1) the source of compensation of such director, including any consulting, advisory, or other compensatory fee paid by us to such director; and (2) whether such director is affiliated with us, any of or subsidiaries, or an affiliate of any of our subsidiaries.
The Board has reviewed the independence of each director and determined that Dr. Bahrami, Mr. Kelly, Dr. Levinson and Mr. Olson, representing four of our six directors, do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC and the NYSE listing standards. In making these determinations, the Board considered the current and prior relationships that eachnon-employee director has with us and all other facts and circumstances the Board deemed relevant.
Board Meetings and Committees
During fiscal 2017, the
We expect directors to attend and actively participate in Board held twelve meetings and also took certain actions by written consent.committee meetings. Each of our incumbent directors attended at least 75% of the total number of meetings of the Board and the committees on which he or she served during fiscal 2017. 2023.
| Full Board | | | 6 | |
| Audit | | | 4 | |
| Compensation | | | 4 | |
| Nominating & Corporate Governance | | | 5 | |
| Total Meetings (average director attendance of 99%) | | | 19 | |
| Executive Sessions (independent directors meet without management present) | | | 6 | |
The Board has established an Audit Committee, a Compensation Committee, and a Nominating & Corporate Governance Committee, each of which has the composition and responsibilities described below.
Each committee acts in accordance with a written charter adopted by the Board. The committee charters are available in the “Investors—Governance” section of our website at www.fabrinet.com.
The Audit Committee currently consists of Mr. Kelly
(chairman)(chair),
Dr. BahramiMs. Knight and Dr. Levinson, each of whom is independent under the NYSE listing standards and the rules and regulations of the SEC. The Board has determined that Mr. Kelly qualifies as an “audit committee financial expert” under the rules and regulations of the SEC and that each member of the Audit Committee meets the financial literacy requirements of the NYSE listing standards.
The Audit Committee held four meetings during fiscal 2017.Among other responsibilities, the Audit Committee
assists the Board in its oversight of (1)
oversees our accounting and financial reporting processes and
internal controls, (2) the audit
of our financial statements, (2) assists the Board in overseeing theand integrity of our financial statements,
(including, without limitation, internal control over financial reporting), (3)
oversees our compliance with
ethics policies and legal and regulatory requirements, (4)
oversees the
qualifications, independence and performance of our independent auditors,
and (5)
prepares the
disclosure required by applicable law and SEC rules, and (6) provides to the Board such information and materials as it may deem necessary to make the Board awareperformance of
significant financial matters that require the attention of the Board.our internal audit function. The Audit Committee
acts in accordance with a written charter adopted by the Board, which is
available in the “Investors—Governance” section of our website at www.fabrinet.com.also responsible for reviewing, approving and monitoring related party transactions, and reviewing cybersecurity and data security risks and mitigation strategies.
The Audit Committee report is included in this proxy statement on page
29.33.
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The Compensation Committee currently consists of Dr.
Bahrami, Dr. Levinson
(chairman)(chair) and Mr. Kelly, each of whom is independent under the NYSE listing standards and the rules and regulations of the SEC. In addition, the Board
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has determined that Dr. Bahrami, Dr. Levinson and Mr. Kelly meet the requirements of thenon-employee director definition of Rule16b-3 promulgated under the Exchange Act and the outside director definition of Section 162(m) of the Internal Revenue Code, as amended. The Compensation Committee held six meetings during fiscal 2017 and also took certain actions by written consent.
Code.
Among other responsibilities, the Compensation Committee (1)
develops, reviewsoversees our compensation policies, plans, benefits programs, and
approves our overall compensation
policiesphilosophy, (2) assists the Board in its oversight of executive compensation, (3) administers our incentive compensation and
goals, including policies and forms of compensation provided to our directors and executive officers, (2) oversees the administration of our equity compensation
and employee benefit plans,
and programs, and (3) produces(4) prepares an annual report on executive officer compensation for inclusion in our annual proxy
statement. The Compensation Committee acts in accordance with a written charter adopted bystatement, (5) assists the Board
which is available in
the “Investors—Governance” sectionits oversight of our
website at www.fabrinet.com.policies and strategies related to people management, and (6) reviews and evaluates our compensation policies and practices as they relate to risk management and risk-taking incentives.
The Compensation Committee report is included in this proxy statement on page
48.46.
Nominating & Corporate Governance Committee
The Nominating & Corporate Governance Committee currently consists of Dr. Bahrami
(chairwoman)(chair) and Mr. Olson, each of whom is independent under the NYSE listing standards and the rules and regulations of the SEC.
The Nominating & Corporate Governance Committee held five meetings during fiscal 2017 and also took certain actions by written consent.Among other responsibilities, the Nominating & Corporate Governance Committee (1) assists the Board in identifying prospective director nominees, (2) recommends candidates for election to the Board at each annual meeting of shareholders, (3) reviews and recommends updates to our corporate governance
principles,guidelines, as appropriate, (4) reviews and recommends directors to serve on each board committee, (5) oversees the annual evaluation of the Board and its committees,
and (6) monitors and reviews matters related to succession planning for our
executives officers. The Nominating & Corporate Governance Committee acts in accordance with a written charter adopted by the Board, which is available in the “Investors—Governance” section ofexecutive officers, and (7) oversees our
website at www.fabrinet.com.environmental, social and governance programs (including reviewing risks relating to corporate social responsibility and environmental sustainability).
The Nominating & Corporate Governance Committee will consider recommendations of candidates for election to the Board submitted by shareholders of Fabrinet. For more information, see “Process“Process for Recommending Candidates for Election to the Board of Directors”Directors” below.
Attendance at Annual Meetings of Shareholders by the Board of Directors
Although we do not have a formal policy regarding attendance by members of the Board at our annual meeting of shareholders, we encourage, but do not require, directors to attend.
All of our directors attended our 2022 annual meeting of shareholders.
Contacting the Board of Directors
Shareholders and other interested parties who wish to communicate directly with our lead independent director may do so by sending an email to leadindependentdirector@fabrinet.com. Communications received at this email address are automatically routed directly to our lead independent director.
Shareholders and other interested parties who wish to communicate with the Board may do so by sending an email to board@fabrinet.com or a written communication addressed to Fabrinet, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, Attention: Board of Directors.
Our legal counsel reviews all incoming communications from shareholders and other interested parties (except for communications sent directly to the lead independent director, mass mailings, product complaints or inquiries, job inquiries, business solicitations and patently offensive or otherwise inappropriate material) and, as appropriate, routes such communications to the appropriate member(s) of the Board, or if none is specified, to the chairman of the Board.
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CORPORATE GOVERNANCE MATTERS
Share Ownership Guidelines
We have
To further align the interests of our executive officers and members of the Board with those of our shareholders, we first adopted share ownership guidelines for our
executive officers and non-employee directors
and executive officers. For information regarding such guidelines, seein August 2012. In 2023, the
sectionCompensation Committee retained Compensia, Inc., a national compensation consulting firm, to provide independent services to assist the Compensation Committee in evaluating the competitiveness of our share ownership guidelines. As a result of this
proxy statement entitled “Executive Compensation—review and upon the recommendation of the Compensation
DiscussionCommittee, the Board amended our share ownership guidelines in August 2023. Under these guidelines, our executive officers are required, and
Analysis—Share Ownership Guidelines.”our non-employee directors are expected, to own a number of shares with a minimum value equivalent to the following:
| Chief Executive Officer | | | 5x annual base salary | |
| Other Executive Officers | | | 2x annual base salary | |
| Non-employee directors | | | 4x annual Board retainer | |
Our executive officers are required, and non-employee directors are expected, to have achieved the applicable amount of share ownership by the later of August 2023 or five years after becoming an executive officer or being appointed to the Board, as applicable, and to maintain such amount of share ownership thereafter throughout their tenure as an executive officer or non-employee director of Fabrinet.
Shares counted towards the minimum ownership levels include all shares directly or beneficially owned by the executive officer or non-employee director and any unvested, non-performance-based restricted share units held by the executive officer or non-employee director.
To satisfy these guidelines, any executive officer or non-employee director who has not reached or who fails to maintain their minimum ownership level must retain at least fifty percent (50%) of any net shares derived from the vesting or exercise of equity awards until their applicable guideline is met. “Net shares” are those shares that remain after shares are sold or netted to pay the exercise price (if any) of equity awards and applicable taxes.
At its discretion, the Compensation Committee may waive these guidelines for non-employee directors joining the Board from government, academia, or similar professions. The Compensation Committee may also temporarily suspend these guidelines if compliance would create severe hardship or prevent an executive officer or non-employee director from complying with a court order.
As of September 30, 2023, all of our executive officers and non-employee directors either met the applicable ownership threshold or were within the permitted time period to attain the required ownership.
Prohibited Transactions in Our Securities
Our officers, directors, employees and consultants are prohibited from trading in derivative securities with respect to our securities, including put and call options and other
financial instruments whose value varies with the value of our ordinary shares. This prohibition also extends to short sales.
Compensation Committee Interlocks and Insider Participation
During fiscal 2017,2023, Dr. Bahrami, Mr. Kelly and Dr. Levinson served as members of the Compensation Committee. None of the members of the Compensation Committee is or has in the past served as an officer or employee of
Fabrinet. None of our executive officers serves as a
member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Board or Compensation Committee.
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Process for Recommending Candidates for Election to the Board of Directors
The Nominating & Corporate Governance Committee is responsible for, among other things, determining the criteria for membership to the Board, and recommending candidates for election to the Board. The
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Nominating & Corporate Governance Committee will consider recommendations from shareholders for candidates to serve on the Board. There are no differences in the manner by which the Nominating & Corporate Governance Committee evaluates nominees for director based on whether the nominee is recommended by a shareholder or a member of the Board.
Shareholder Recommendations
andfor Board Nominees
Shareholder recommendations for candidates to the Board must be directed in writing to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, and must include (1) the candidate’s name, age, business address and residence address, (2) the candidate’s principal occupation or employment, (3) the class and number of shares that are held of record or beneficially owned by the candidate and any derivative positions held or beneficially held by the candidate, (4) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of the candidate with respect to any of our securities, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of our shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit of share price changes for, or to increase or decrease the voting power of the candidate, (5) a description of all arrangements or understandings between the nominating shareholder and each candidate and any other person or persons pursuant to which the nominations are to be made by the nominating shareholder, (6) a written statement executed by the candidate acknowledging that as a director, the candidate will owe a fiduciary duty under Cayman Islands law with respect to Fabrinet and its shareholders, and (7) any other information relating to the candidate that would be required to be disclosed about such candidate if proxies were being solicited for the election of the candidate as a director, or that is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including, without limitation, the candidate’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected).
Shareholder recommendations for candidates to the Board must also contain specified information about the shareholder proposing such nomination. For more information, please refer to our memorandum and articles of association, which may be obtained by writing to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, or by accessing Fabrinet’s filings on the SEC’s website at www.sec.gov.
The Nominating & Corporate Governance Committee will evaluate and recommend candidates for membership on the Board consistent with any criteria established by the committee. The consideration of any candidate for director will be based on the committee’s assessment of the individual’s background, experience, skills and abilities, and if such characteristics qualify the individual to fulfill the needs of the Board at that time. While the Nominating & Corporate Governance Committee has not established specific minimum qualifications or a formal diversity policy for director candidates, the committee believes that candidates and nominees should reflect a board of directors that is predominately independent and that is comprised of directors who (1) are of high integrity, (2) have broad, business-related knowledge and experience, (3) have qualifications that will increase overall board effectiveness, (4) have diverse backgrounds and perspectives, and (5) meet other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to Audit Committee members.
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Identification and Evaluation of Director Nominees
The Nominating & Corporate Governance Committee uses a variety of methods for identifying and evaluating director nominees. The committee assesses the appropriate size and composition of the Board, the needs of the Board and its committees and the qualifications of candidates in light of these needs.
Candidates may come to the attention of the Nominating & Corporate Governance Committee through shareholders, management, current members of the Board or search firms. The evaluation of these candidates may be based solely upon information provided to the committee or may also include discussions with persons familiar with the candidate, an interview of the candidate or other actions the committee deems appropriate, including the use of third parties to review candidates.
26 | | | | | | 2023 PROXY STATEMENT |
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) PRACTICES AND POLICIES
Fabrinet is committed to being a good corporate citizen in the communities in which we work and live. We maintain the highest ethical, safety, and environmental standards, and encourage our employees to assist us in meeting these standards. Because good corporate citizenship is essential to our success, we are committed to operating with integrity, contributing to the local communities surrounding our facilities, promoting diversity and inclusion in the workplace, developing our employees, and protecting the environment.
The Board, including through its committees, oversees our environmental, social and governance (“ESG”) efforts
and believes an integrated approach to our business strategy, corporate governance, and corporate citizenship creates long-term value for our stakeholders.
In 2022, we published our inaugural ESG Report, detailing our ESG practices and policies described below. The contents of our ESG Report are referenced for general information only and are not incorporated by reference in this proxy statement. We anticipate filing an update of our ESG Report in 2023.
We are committed to the deployment of sustainable manufacturing and continuous improvement throughout our operations. We conduct our business and manage our operations globally in a manner that protects the environment and meets or exceeds all applicable environmental laws, legislation and regulations. In particular:
we maintain an Environment, Occupational Health and Safety (EHS) management system that is certified to both ISO 14001 for environmental management and ISO 45001 for occupational health and safety management;
our operations and products are compliant with European Union regulations, such as RoHS and REACH, prohibiting the use of certain chemicals unless authorized by the government or relevant agency;
we embed sustainability into our culture and reinforce a sustainability mindset among employees through trainings, workshops, competitions, and events throughout the year; and
we have the following environmental protection programs:
° | water conservation & recycling; |
° | hazardous waste reduction & safety; |
° | paper use reduction & recycling; and |
° | carbon emission reduction. |
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) PRACTICES AND POLICIES
We are a global company with strong ties to the local communities in which we operate. We value the overall well-being of our employees and promote the vitality of community and culture by working to build an inclusive and welcoming workplace.
COVID-19 Initiatives and Practices
During the COVID-19 pandemic, we instituted broad ranging measures to protect the health and welfare of our employees, including a policy of encouraging all employees worldwide to become vaccinated. Due in particular to the relatively low vaccination rate among the
Thai population early in the pandemic, these measures included providing vaccine – free of charge – to all of our employees based in Thailand. Thanks in large part to our vaccination program, we are proud to have a worldwide employee vaccination rate of over 99%. We also provided resources and assistance to the community adjacent to our facilities in the Pathum Thani province of Thailand, including antigen testing, vaccinations, gloves, hand sanitizer, personal protective equipment and, in some cases, financial support.
In addition, we undertook many COVID-19 prevention and containment related initiatives at our facilities, including:
a requirement that face masks be worn at all times, except while eating in socially distanced cafeterias;
automation of doors and restroom faucets to decrease touchpoints;
emergency vehicle transport for employees who tested positive for the virus; and
other employee support, emotional and otherwise, where necessary.
Although we lifted our face mask mandate and relaxed some of our social distancing requirements, we are prepared to reinstitute these measures, as well as any other precautions that may be warranted, in the event of future outbreaks of COVID-19.
Other Employee Welfare Initiatives
We also have the following practices and policies:
company culture that promotes the highest standards of ethics and compliance for our business, including a Code of Business Conduct with principles to guide our employee, officer, and director conduct;
employee career guidance and counseling (with established employee development and training opportunities);
equal employment opportunity hiring practices and policies;
anti-harassment policy that prohibits sexual harassment in any form, details how to report and respond to harassment issues, and strictly prohibits retaliation against any employee for reporting harassment;
a diversity, equity and inclusion policy expressing our commitment to promoting an inclusive and diverse work environment, and the need to treat others at all times with dignity and respect;
whistleblower hotline operated by an independent third party for confidential reporting;
market competitive compensation and benefits;
prohibition of child labor;
Fabrinet Academy (our in-house education and training program for managerial, professional, and technical skills development);
employee tuition reimbursement plan;
discretionary and profit-sharing bonus plans;
employee fitness center;
“Happy Workplace” program, modeled after the World Health Organization’s Healthy Workplaces framework and the International Labor Organization’s Decent Work Agenda; and
employee motherhood and parenting training.
28 | | | | | | 2023 PROXY STATEMENT |
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) PRACTICES AND POLICIES
Local Community Initiatives
In addition to providing COVID-19 related support to the community adjacent to our facilities in the Pathum Thani province of Thailand, we support our local communities in the following ways:
“Maharaj” Orphanage benefactor (annual financial and administrative support, and employee volunteers); and
free elderly health checks for local community residents (Thailand).
Workplace Safety
We demonstrate our commitment to workplace safety with the following policies and practices:
compliance with the local labor laws and standards in all countries in which we operate; and
compliance with the local workplace safety laws and regulations in all countries in which we operate.
We are committed to good corporate governance, including the following:
Shareholder Engagement Initiatives
we consult with experts on the best compensation and governance practices;
we regularly attend and participate in investor roadshows and conferences; and
we reach out annually to our 25 largest shareholders, in advance of our annual shareholders’ meeting, and invite them to provide feedback on our executive compensation and corporate governance practices by participating in conference calls with Chairs of the Compensation, Audit, and Nominating & Corporate Governance Committees.
Business Practices
we have and enforce our Code of Business Conduct;
we require our suppliers to agree to conduct their business practices in accordance with our Supplier Code of Conduct;
we are a member of the Responsible Business Alliance and adhere to its code of conduct; and
we have a conflict minerals sourcing policy that supports our efforts to enable a socially and environmentally responsible global supply chain.
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PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed PricewaterhouseCoopers ABAS Ltd. and its network firm (“PwC”) as our independent registered public accounting firm for our fiscal year ending June 28, 2024. Although ratification by shareholders is not required by any applicable legal requirements, the Board has determined it is desirable to request ratification of this appointment by our shareholders. Notwithstanding its selection, the Audit Committee, in its discretion, may appoint a new independent registered public accounting firm at any time during the fiscal year if the Audit Committee believes that such a change would be in the best interests of Fabrinet and its shareholders. If our shareholders do not ratify the appointment of PwC, the Audit Committee may reconsider the appointment.
A representative of PwC is expected to be present at the meeting, will have the opportunity to make a statement if he or she desires to do so, and is expected to be available to respond to appropriate questions.
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the ratification of the appointment of PwC as Fabrinet’s independent registered public accounting firm for Fabrinet’s fiscal year ending June 28, 2024.
The following table presents fees paid or accrued by Fabrinet for audit and other services rendered by PwC for fiscal 2023 and fiscal 2022.
| Audit Fees(1) | | | $1,745,149 | | | $1,671,166 | |
| Audit-Related Fees | | | — | | | — | |
| Tax Fees(2) | | | 60,723 | | | 24,814 | |
| All Other Fees(3) | | | 7,280 | | | 9,914 | |
| Total | | | $1,813,152 | | | $1,705,894 | |
(1)
| Audit Fees consist of fees for professional services provided in connection with the audit of our annual consolidated financial statements, the review of our quarterly consolidated financial statements, and audit services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for the applicable fiscal year, such as statutory audits, as well as out of pocket expenses. |
(2)
| Tax fees consist of fees for tax compliance services. |
(3)
| All other fees consist of fees for accounting research software and accounting advisory services during the applicable fiscal year. |
In fiscal 2023, there were no other professional services provided by PwC, other than those listed above, that would have required the Audit Committee to consider their compatibility with maintaining the independence of PwC.
Pre-Approval of Audit and Non-Audit Services
Pursuant to its charter, the Audit Committee is required to (1) review and approve, in advance, the scope and plans for all audits and audit fees and (2) approve, in advance, all non-audit services to be performed by our independent auditors. All services and fees of PwC for the periods set forth in the table above were pre-approved by the Audit Committee.
30 | | | | | | 2023 PROXY STATEMENT |
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PROPOSAL THREE: ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS
In accordance with SEC rules, we are providing our shareholders with the opportunity to vote to approve, on an advisory or non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with rules of the SEC. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on the compensation of our named executive officers as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the compensation philosophy, policies and practices described in this proxy statement. We currently hold our say-on-pay vote every year.
While this advisory vote to approve executive compensation is non-binding, it will provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when making future executive compensation decisions. The Board and the Compensation Committee value the opinions of shareholders and, to the extent there is any significant vote against the compensation of our named executive officers as disclosed in this proxy statement, will endeavor to communicate with shareholders to better
understand the concerns that influenced the vote, consider those shareholders’ concerns and evaluate whether any actions are necessary to address those concerns.
We urge shareholders to read the “Executive Compensation” section of this proxy statement, and in particular the information discussed under the heading “Executive Compensation—Compensation Discussion and Analysis,” which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives. We believe that our executive compensation program is working to ensure management’s interests are aligned with our shareholders’ interests to support long-term value creation. Accordingly, pursuant to Section 14A of the Exchange Act, you are being asked to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that Fabrinet’s shareholders approve, on an advisory basis, the compensation of Fabrinet’s named executive officers as disclosed in Fabrinet’s Proxy Statement for the 2023 Annual Meeting of Shareholders, pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and related narrative disclosures.”
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this proxy statement.
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PROPOSAL FOUR: ADVISORY VOTE TO DETERMINE PREFERRED FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS
The Dodd-Frank Act and Section 14A of the Exchange Act enable our shareholders to indicate their preference at least once every six years regarding how frequently we should solicit a non-binding advisory vote on the compensation of our named executive officers. Accordingly, we are asking our shareholders to indicate whether they would prefer an advisory say-on-pay vote every one year, two years, or three years. Alternatively, shareholders may abstain from casting a vote. We currently hold our say-on pay vote every year.
The Board believes that conducting an annual say-on-pay vote is appropriate for Fabrinet and its shareholders at this time because compensation decisions are made annually and an annual advisory vote will allow shareholders to provide more frequent and direct input on our compensation philosophy, policies, and practices. We recognize that our shareholders may have different views as to what is the best approach for Fabrinet, and we look forward to hearing from our shareholders on this proposal.
Recommendation of the Board of Directors
The Board recommends that shareholders vote to hold future advisory votes to approve the compensation of our named executive officers every “1 YEAR.”
32 | | | | | | 2023 PROXY STATEMENT |
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The Audit Committee assists the Board in fulfilling its responsibilities for oversight of the integrity of our financial statements, our internal accounting and financial controls, our compliance with legal and regulatory requirements, the organization and performance of our internal audit function and the qualifications, independence and performance of our independent registered public accounting firm.
Our management is responsible for establishing and maintaining internal controls and preparing our consolidated financial statements. The independent registered public accounting firm is responsible for auditing the financial statements. It is the responsibility of the Audit Committee to oversee these activities.
The Audit Committee has:
Reviewed and discussed the audited financial statements with management and with PricewaterhouseCoopers ABAS Ltd., our independent registered public accounting firm;
• | Discussed with PricewaterhouseCoopers ABAS Ltd. the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC; and |
Received the written disclosures and the letter from PricewaterhouseCoopers ABAS Ltd. required by applicable requirements of the PCAOB regarding PricewaterhouseCoopers ABAS Ltd.’s communications with the Audit Committee concerning independence, and has discussed with PricewaterhouseCoopers ABAS Ltd. its independence.
Based upon these discussions and review, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, for filing with the SEC.
Respectfully submitted by the members of the Audit Committee of the Board of Directors.
Thomas F. Kelly (Chair)
Darlene S. Knight
Dr. Frank H. Levinson
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The names of our executive officers, their ages, their positions with us and other biographical information as of October
16, 2017,17, 2023, are set forth below. There are no family relationships among any of our directors or executive officers.
Name | | Age | | | Position
|
David T. (Tom) Mitchell
| | | 75 | | | Executive Chairman of the Board of Directors |
Seamus Grady | | | 5056 | | | Chief Executive Officer and Director | |
| Dr. Harpal Gill | | | 6470 | | | President and Chief Operating Officer | |
Toh-Seng Ng | Csaba Sverha | | 63 | 44 | | | Executive Vice President, Chief Financial Officer | |
Dr. Hong Q. Hou | Edward T. Archer | | 53 | 60 | | | Executive Vice President, Chief Technical OfficerSales & Marketing | |
David T. (Tom) Mitchell.For Mr. Mitchell’s biography, please see “Proposal One—Election of Directors—Biographical Information” above.
Seamus
Grady.Grady.For Mr. Grady’s biography, please see “Proposal“Proposal One—Election of Directors—Biographical Information”Information” above.
Dr.
Harpal Gill has served as our president since January 2011, and as our chief operating officer since March 2009. Previously, Dr. Gill was our senior vice president, operations from May 2005 to March 2009. He also has served as executive vice president, operations of Fabrinet Co., Ltd., our subsidiary in Thailand, since July 2007. From July 2003 to January 2005, Dr. Gill served as vice president of engineering and then senior vice president of engineering for Maxtor Corporation, a disk drive manufacturer. From January 1999 to July 2003, Dr. Gill served as the vice president of engineering for Read Rite Corporation, a supplier of magnetic recording heads for data storage devices. From June 1996 to October 1998, Dr. Gill served as the managing director of JTS Corp., a disk drive manufacturer. Dr. Gill also has held senior management positions with Seagate Technology and Stanton Automation. Dr. Gill earned a bachelor of science degree in mechanical engineering from Brunel University and a doctor of philosophy degree in engineering from the University of Bradford.Toh-Seng Ng
Csaba Sverha has served as our executive vice president, and chief financial officer since March 2012.February 2020. Previously, he was our vice president of operations finance from March 2018 to February 2020. From 2005 to March 2018, Mr. Sverha held various finance roles of increasing responsibility at Sanmina Corporation, an electronics manufacturing services company. During his
thirteen-year tenure at Sanmina, he assumed site level as well as regional and global finance roles, most recently serving as vice president finance & controller, Mechanical Systems Division, from December 2017 to March 2018. Prior to that, Mr. Sverha served as controller with Benetton Hungary (United Colors of Benetton). Prior to joining Benetton, Mr. Sverha held junior finance analyst and controller positions with Flex in Hungary. Mr. Sverha holds a Master’s Degree in Agricultural Economics and Management from the Szent Istvan University, Godollo Hungary (SZIU).
Edward T. Archer has served as our executive vice president, sales & marketing since January 2019. Prior to joining Fabrinet, Mr. Archer was the senior vice president of financesales for the Integrated Manufacturing Services Division of Sanmina Corporation from October 2014 to December 2018. He is a thirty-year veteran of the electronics industry, with broad sales and managing director of Casix, Inc., our subsidiary in the People’s Republic of China, from March 2010 to March 2012, and senior vice president and operations controller of Fabrinet from January 2007 to March 2010. Mr. Ng joined us with nearly 28 years of international financial managementmarketing experience in the semiconductortechnical services, products and data storage industries. Prior to joining us,electronic manufacturing services. He began his career in sales leadership roles at Future Electronics, Wyle Electronics and Arrow Electronics, followed by nine years at Altera Corporation (now Intel) as its regional sales director for both FPGA and ASIC products. Mr. Ng managed financial operations at Magnecomp Precision Plc. in Thailand, Hitachi Global Storage Technologies in San Jose, and Read-Rite Corporation in a series of positions, culminating in his role as corporate controller and vice president of finance. Mr. NgArcher earned a bachelor of science degree in accountancyindustrial technology (technical marketing) from the University of Singapore, and a master of business administration degree in international management from Golden GateCalifornia Polytechnic State University.
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Dr. Hong Q. Hou has served as our executive vice president and chief technical officer since January 2016. Prior to joining us, Dr. Hou served as the chief operating officer of AXT, Inc., a manufacturer of semiconductor substrates, from June 2015 to January 2016, and as a venture partner at ARCH Venture Partners from January 2015 to June 2015. Prior to that, Dr. Hou served as president, chief executive officer and a member of the board of directors of EMCORE Corporation, a provider of compound semiconductor-based components and subsystems, from 2008 to January 2015. Dr. Hou holds eight U.S. patents and has published more than 200 technical articles. Dr. Hou holds a doctor of philosophy degree in electrical engineering from the University of California at San Diego, and he has completed executive management courses at the Stanford Graduate School of Business.
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Compensation Discussion and Analysis
This section contains a discussion of the material elements of compensation awarded to, earned by or paid to our principal executive officer, principal financial officer, and the other individuals included in the
“Summary“Summary Compensation Table”Table” beginning on page
48.47. We refer to these individuals as our
“Named Officers”“NEOs” or “Named Officers” in this proxy statement.
For fiscal
2017,2023, our Named Officers were:
David T. Mitchell, Executive Chairman
| Seamus Grady | | | Chief Executive Officer (“CEO”) | |
| Dr. Harpal Gill | | | President and Chief Operating Officer (“COO”) | |
| Csaba Sverha | | | Executive Vice President, Chief Financial Officer (“CFO”) | |
| Edward T. Archer | | | Executive Vice President, Sales & Marketing | |
Shareholder Engagement Following Recent Say-on-Pay Votes
We are committed to maintaining an active dialogue with our shareholders to understand their priorities and concerns, as we believe that ongoing engagement builds mutual trust and understanding. We have conducted shareholder outreach annually since 2016 and have provided shareholders with an annual say-on-pay advisory vote on the compensation of our Named Officers since 2012. Most recently, in November 2022, we invited our then 25 largest shareholders, representing approximately 75% of our shares outstanding as of October 31, 2022, to provide feedback on our executive compensation and corporate governance practices by participating in conference calls with the Chairs of our Compensation, Audit, and Nominating & Corporate Governance Committees. However, due to scheduling conflicts during the holiday season, we were unable to hold calls in 2022 with the shareholders that responded to our outreach.
We will continue our practice of shareholder outreach on our executive compensation and governance practices by again soliciting the views of institutional shareholders representing in the aggregate more than 75% of our shares outstanding as of October 31, 2023, including our 25 largest shareholders on that date. We will contact these shareholders after the filing of this proxy statement to invite them to a call before the date of the BoardAnnual Meeting.
We are very pleased that our shareholders have expressed their continued support of our compensation practices every year since 2016, with approximately 83%, 99%, 82% and Former Chief Executive Officer (“CEO”);
Dr. Harpal S. Gill, President and Chief Operating Officer (“COO”);
Toh-Seng Ng, Executive Vice President, Chief Financial Officer (“CFO”); and
Dr. Hong Hou, Executive Vice President, Chief Technical Officer (“CTO”).
Seamus Grady, our current chief executive officer, is not a Named Officer because he joined us in September 2017. Accordingly, any references in this “Executive Compensation” section to our chief executive officer refer to Mr. Mitchell, who served as our chief executive officer for all of fiscal 2017.
Shareholder Engagement and Executive Compensation Program Updates Following 2015 and 2016Say-on-Pay Votes
While approximately 78%96% of the votes cast in the sayon-pay advisory vote at our 20162022, 2021, 2020 and 2019 annual meetingmeetings of shareholders, wererespectively, being voted in favor of our executive compensation as disclosed in our 2016 proxy statement, at our 2015 annual meeting of shareholders only 28% of the votes cast in thesay-on-pay advisory vote were voted in favor of our executive compensation as disclosed in our 2015 proxy statement. The 2015 vote represented a significant decline compared to the results of our 2014say-on-pay advisory vote, when approximately 74% of the votes cast were voted in favor of our executive compensation as disclosed in our 2014 proxy statement. In response to the results of our 2015say-on-pay vote, the Compensation Committee contacted shareholders to understand better their priorities and concerns with respect to our executive pay practices, examined the reports and analyses issued by the principal proxy advisory services, and engaged a proxy advisory firm to advise the Compensation Committee. The Compensation Committee has continued its dialogue with shareholders on our executive compensation practices by soliciting the views of institutional investors representing approximately 48% of our shares outstanding as of June 30, 2017, and having discussions in October 2017 with investors representing approximately 24% of our shares outstanding as of June 30, 2017, including four of our ten largest shareholders.
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Following the 2015say-on-pay advisory vote, the Compensation Committee solicited the views of institutional investors representing approximately 49% of our shares outstanding as of June 30, 2016, and had discussions with and received feedback on our executive compensation practices from investors representing approximately 20% of our shares outstanding as of June 30, 2016, including four of our ten (and nine of our 20) largest shareholders during the Summer of 2016. Dr. Levinson, the Chairman of the Compensation Committee, attended all of these discussions. He was joined by Mr. Kelly, the other member of the Compensation Committee, and Mr. Olson, our lead independent director,statements for many of the discussions. The feedback received was presented to the Compensation Committee and the Board. In addition, we conferred with representatives of Institutional Shareholder Services in the Spring of 2016 to discuss our compensation practices. The principal feedback we received from shareholders and the response of the Compensation Committee is noted in the chart below.
those years.![graphic](/files/DEF 14A/0001140361-23-049314/ny20010304x1_barcharts.jpg)
| 2023 PROXY STATEMENT | |
Shareholder Concern or Request | | Compensation Committee Response
|
Fiscal 2015 executive compensation appeared excessive and should be based upon and evaluated against an appropriate peer group.
| | We believe our executive management team is the very best in the electronics manufacturing space, as evidenced by our consistent growth and profitability over the last four years, and we compensate the team accordingly.
|
| |
| | We believe the compensation paid to our entire executive management team (four persons), when viewed in total, is less than the total compensation paid to the executive management teams of comparable companies.
|
| |
| | We believe it would be very difficult to replace our executives, especially since our headquarters and manufacturing facilities are located in Thailand. Because of this, we have designed executive compensation packages that we believe are necessary and in the best interest of Fabrinet to retain our executive management team.
|
| |
Equity awards should include performance-based metrics that span multiple years.
| | While we granted equity awards following fiscal 2015 and fiscal 2016 that were based, in part, on fiscal 2015 and fiscal 2016 performance, respectively, we introduced performance-based restricted share units, or PSUs, in fiscal 2017. The PSUs will be earned, if at all, over a2-year cumulative performance period based on company achievement of challenging revenue andnon-GAAP gross margin targets. See “Fiscal 2017 Compensation Decisions” below for more information.
|
| |
Incentive compensation should be subject to a clawback.
| | In October 2016, we adopted a clawback policy applicable to our executive officers. See “Compensation Recovery Policy” below for more information.
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