Preliminary Proxy Statement Definitive Proxy Statement Definitive Additional Materials Soliciting Material Pursuant to☐ ☐ ☒ ☐ ☐ §240.14a-12☒ No fee required. ☐ Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: ☐ Fee paid previously with preliminary materials. ☐ Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: 
Date: (3)Filing Party:Monday, March 30, 2020(4)Date Filed:
NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
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Time: | 11:00 a.m. Pacific Time | ||
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Record date: | February | ||
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18, 2020
The notice of meeting, Proxy Statement and annual report to stockholders are available at
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| How to Vote | ||||
| 2020 Director Nominees | ||||
| Executive Compensation | ||||
| Corporate Governance | ||||
| Stockholder Engagement | ||||
| Director Nominees | ||||
| CORPORATE GOVERNANCE | ||||
| Director Independence | ||||
| Board Committees | ||||
| Director Nominations | ||||
| Succession Planning | ||||
| Forward-Looking Statements | ||||
| DIRECTOR COMPENSATION | ||||
| 2019 | ||||
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||
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PROPOSAL 3: | ||||
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| EXECUTIVE OFFICERS | ||||
Executive Summary: Fiscal Year | ||||
| Compensation Philosophy and Objectives | ||||
| Compensation Determination Process | ||||
| Compensation Competitive Analysis | ||||
| Elements of Executive Compensation | ||||
| Additional Compensation Practices and Policies | ||||
| COMPENSATION COMMITTEE REPORT | ||||
| EXECUTIVE COMPENSATION | ||||
| Page | ||||
| Fiscal Year 2019 Supplemental Summary Compensation Data | ||||
Fiscal Year | ||||
Fiscal Year | ||||
| Policies | ||||
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| Potential Payments and Benefits upon Certain Terminations of Employment | ||||
| Permanent Disabilities Policies | ||||
| STOCKHOLDER INFORMATION | ||||
Security Ownership of Certain Beneficial Owners, Directors and Executive Officers | ||||
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| Other Relationships | ||||
| Quorum | ||||
| Voting Rights | ||||
| Voting Procedures | ||||
| Revocation | ||||
Board Recommendations, Required Vote and Effects of Abstentions and BrokerNon-Votes | ||||
| Uninstructed Votes | ||||
| OTHER INFORMATION | ||||
Stockholder Proposals and Director Nominations for the | ||||
| Other Matters | ||||
| APPENDIX A – Reconciliation of Non-GAAP Financial Measures | A-1 | |||
| APPENDIX B – Directions to the Annual Meeting | B-1 | |||
APPENDIX A – Financial Reconciliation: GAAP toNon-GAAP—Unaudited
APPENDIX B – Second Amendment to the Second Amended and Restated Employee Share Purchase Plan
APPENDIXB-1 – Broadcom Inc. Employee Stock Purchase Plan
APPENDIX C – Directions to the Annual Meeting
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Broadcom Inc. is the successor to Broadcom Limited (“Broadcom-Singapore”). After the close of market trading on April 4, 2018, Broadcom Inc. and Broadcom-Singapore completed a statutory scheme of arrangement under Singapore law pursuant to which Broadcom-Singapore became an indirect wholly-owned subsidiary of Broadcom Inc. and Broadcom Inc. became the ultimate parent holding company of the Broadcom corporate group. Information reported in this Proxy Statement for the period prior to this transaction relates to our predecessor, Broadcom-Singapore.
Date | Monday, | |
Time | 11:00 a.m., Pacific Time | |
Place | Broadcom Inc., | |
Record Date | February | |
| 6, 2020 | ||
| Telephone | ||||||||
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| Vote your shares online at www.proxyvote.com | Vote by calling (800) 690-6903 | Complete, sign and date your proxy card and return it in the postage-paid envelope | ||||||
Proposal | Board Recommendation | Page | |||||
| = | To elect each of the | For each director nominee | |||||
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To ratify the appointment of our independent registered public accounting firm for our fiscal year ending November | For | ||||||
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To hold an advisory vote to approve the compensation of our named executive officers | For | ||||||
| Name | Independent | Committees | # of Other Public Company Boards | ||||||
| Audit | Compensation | Nominating / Governance | Executive | ||||||
| Hock E. Tan (CEO) | u | — | |||||||
| Henry Samueli, Ph.D. (Chairman of the Board) | v | — | |||||||
| Eddy W. Hartenstein (Lead Independent Director) | ü | v | v | u | 3 | ||||
| Diane M. Bryant | ü | u | 1 | ||||||
| Gayla J. Delly | ü | u | u | 1 | |||||
| Raul J. Fernandez | ü | u | u | 1 | |||||
| Check Kian Low | ü | u | u | 1 | |||||
| Justine F. Page | ü | v | u | — | |||||
| Harry L. You | ü | u | u | 1 | |||||
| Name | Independent | Director since |
Committees* | # of Other | ||||||||||
| AC(1) | CC | N&GC | EC | |||||||||||
Hock E. Tan (CEO) |
| 2006 |
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| ◆ | — | |||||||
Henry Samueli, Ph.D. (Chairman of the Board) |
| 2016 |
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| — | |||||||
Eddy W. Hartenstein (Lead Independent Director) | ✓ | 2016 | ◆ |
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| ◆ | 3 | |||||||
Diane M. Bryant | ✓ | 2019 |
| ◆ |
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| 1 | |||||||
Gayla J. Delly | ✓ | 2017 | ◆ |
| ◆ |
| 1 | |||||||
Check Kian Low | ✓ | 2016 |
| ◆ | ◆ |
| 1 | |||||||
Peter J. Marks | ✓ | 2013 | ◆ |
| ◆ |
| — | |||||||
Harry L. You | ✓ | 2019 | ◆ |
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| 1 | |||||||
*AC = Audit Committee; CC = Compensation Committee; N&GC = Nominating & Corporate Governance Committee;
MemberEC = Executive Committee;◆; = Member;v= Chairperson.
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Record highContinued increase in year-over-year revenue of $20,848to $22,597 million, an 18%8% increase over our fiscal year ended October 29, 2017November 4, 2018 (“Fiscal Year 2017”2018”).
Although GAAP operating income increased $2,752decreased $1,691 million to $5,135$3,444 million, a 115%33% decrease over Fiscal Year 2018, our non-GAAP operating income increased $1,505 million to $11,929 million, a 14% increase over Fiscal Year 2017, andnon-GAAP operating income increased $2,413 million to $10,424 million, a 30% increase over Fiscal Year 2017.2018.*
Net cash provided by operating activities of $8,880$9,697 million, a 36%9% increase over Fiscal Year 2017,2018, and free cash flow of $8,245$9,265 million, a 50%12% increase over Fiscal Year 2017.2018.*
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Our capital allocation policy targets the return of 50% of our prior fiscal year free cash flow to stockholders in the form of dividends, and use of the balance of our free cash flow to buy back stock and support additional acquisitions, while remaining focused on maintaining our investment grade credit rating.
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* Please see Appendix A for a reconciliation ofnon-GAAP financial measures to the most directly comparable GAAP measures.
Our five-year cumulativeone-year TSR increased to 39.6% for Fiscal Year 2019.
Cumulative TSR
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Our executive compensation program incorporates many governance best practices, including:
Best Practices We Employ | Practices We Do Not Employ | ||||||||||
| ü | Majority of CEO and other NEO compensation tied to long-term performance | X | No excessive risk taking in our incentive plan design | |||||||
| ü | Performance metrics are directly tied to value creation for stockholders | X | Nore-pricing of underwater stock options | |||||||
| ü | Caps on cash and equity incentive plan payouts | X | No excise taxgross-ups | |||||||
| ü | “Double trigger” change in control payments and benefits | X | No supplemental retirement and pension benefits | |||||||
| ü | Engagement of an independent compensation consultant | X | No guaranteed bonuses | |||||||
| ü | Annual risk assessment of all of our compensation programs | X | No perquisites, other than in modest amounts | |||||||
| ü | CEO compensation is reviewed and approved by the independent directors | |||||||||
| ü | Proactive adoption of market standard proxy access provisions | ü | Annual election of directors | |||||||
| ü | Two or more stockholders holding at least 10% of outstanding shares may call special meetings | ü | Majority voting for directors in uncontested election | |||||||
| ü | |||||||||||
| Annual say-on-pay vote | ü | Separate Chairman and CEO roles, with a Lead Independent Director | ||||||||
| ü | No supermajority voting requirements for bylaw amendments | ü | Strong independent Board, | |||||||
| ü | No “poison pill” anti-takeover provisions | ü | Annual Board and committee evaluations | |||||||
| ü | Anti-hedging and anti-pledging policy for employees and directors | ü | Mandatory offer of board resignation at age 75 | |||||||
| ü | Stock ownership guidelines for all executive officers and directors (increased in December 2019) | ü | Active board refreshment process, resulting in the addition of | |||||||
| since 2018 | |||||||||||
Over
Consistent with those discussions, we have confirmed that our CEO will not receive anothercompensation and our equity award until at least 2021. We have also clarifiedcompensation strategy, including our disclosure regarding the PSUs awarded to our NEOs (other than our CEO) on page 39 and added disclosure on page 13 regarding our Board’s oversight of, and involvement with, our executive succession plans.
ELECTION OF DIRECTORS1110 members, and with effect from the start of the Annual Meeting will consist of eightnine members, with no vacancies. Upon the recommendation of the Nominating and Corporate Governance Committee, our Board has decided to nominatenominated the eightnine individuals below for election as directors, all of whom are currently directors. As previously announced, consistent with our Corporate Governance Guidelines, director Lewis C. Eggebrecht, offered his resignation from our Board upon turning 75 yearsDirector Peter J. Marks' term of age, to be effective as of the date of the Annual Meeting, which our Board accepted. In addition, directors James V. Dilleroffice will end, and Donald Macleod will not be standing forre-election at the Annual Meeting and theyhe will cease to be directorsa director, immediately prior to the Annual Meeting. Our Board expects that each of the director nominees will be available to serve as a director. Stockholders may not vote their proxies for a greater number of persons than the number of nominees named below. that a director nominee resigns or otherwise becomes unwilling or unable to serve after the mailing of the Internet Notice but before the Annual Meeting, our intention would be to make a public announcement of such resignation and either reduce the size of our Board or appoint a substitute nominee, in accordance with our Amended and Restated Bylaws (the “Bylaws”). If we reduce the size of our Board, this would reduce the number of nominees to be elected at the Annual Meeting. Votes received in respect of such director would not be counted in such circumstances. In the event that we instead propose to elect a substitute nominee at the Annual Meeting to fill any such vacancy, it is intended that the shares represented by the proxy will be voted for such substitute nominee. provided as of February 11, 2019, the record date for the Annual Meeting.6, 2020.Hock E. Tan 67,68, has served as our President and Chief Executive Officer since March 2006. From September 2005 to January 2008, he served as Chairman of the board of directors of Integrated Device Technology, Inc. (“IDT”). Prior to becoming chairman of IDT, Mr. Tan was the President and Chief Executive Officer of Integrated Circuit Systems, Inc. (“ICS”), from June 1999 to September 2005. Prior to ICS, Mr. Tan was Vice President of Finance with Commodore International, Ltd. from 1992 to 1994, and previously held senior management positions with PepsiCo, Inc. and General Motors Corporation. Mr. Tan served as managing director of Pacven Investment, Ltd., a venture capital fund in Singapore from 1988 to 1992, and served as managing director for Hume Industries Ltd. in Malaysia from 1983 to 1988.
| Henry Samueli, Ph.D. | |||
Chairman of the Board since December 2018 Director since 2016 Board Committees: Executive (Chair) |
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| Eddy W. Hartenstein | |||
Lead Independent Director since December 2018 Director since 2016 Board Committees:
Compensation (Chair) Nominating and Corporate Governance (Chair) Executive |
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| Diane M. Bryant | |||
Independent Director Director since 2019 Board Committees: Compensation | Ms. Bryant, Qualifications: Ms. Bryant’s qualifications to serve on our board include her more than three decades of experience and executive leadership in the semiconductor industry, in enterprise information technology solution development and deployment, and in advancing cloud computing services worldwide, cybersecurity experience, as well as her public company board and committee experience. | ||
| Gayla J. Delly | |||
Independent Director Director since 2017 Board Committees: Audit Nominating and Corporate Governance | Ms. Delly, Ms. Delly also served as chair of Flowserve’s audit committee from 2015 to 2019. Qualifications: Ms. Delly’s qualifications to serve on our Board include her leadership experience in senior executive and financial management positions, her international manufacturing experience, her education and experience as an accounting professional, as well as her public company board and committee experience. | ||
| Raul J. Fernandez | |||
Independent Director Director since 2020 Board Committees: Audit Nominating and Corporate Governance | Mr. Fernandez, 53, has served as Vice Chairman and owner of Monumental Sports & Entertainment (“Monumental”), a private partnership that co-owns the NBA’s Washington Wizards, the NHL’s Washington Capitals, the WNBA’s Washington Mystics and Wizards District Gaming NBA 2K team, and which co-owns and operates the Capital One Arena in Washington, DC, since 2010. He also serves as Special Advisor to, and is a Limited Partner of, each of General Atlantic Partners, a growth equity firm, and Carrick Capital Partners, a private equity firm. Mr. Fernandez previously served in several leadership roles at various technology companies, including, from 2004 to 2017, as Chairman and Chief Executive Officer for ObjectVideo, Inc., a developer of intelligent video surveillance software. Mr. Fernandez also founded Proxicom, Inc., a global provider of e-commerce solutions for Fortune 500 companies, and served as its Chief Executive Officer and Chairman of its board of directors since its inception in 1991 until its acquisition in 2001. He is currently on the board of directors of GameStop Corp., a public company listed on the New York Stock Exchange, where he also serves on the Audit Committee. Mr. Fernandez also served as a director of Kate Spade & Co. from 2001 through 2017, and previously served as a member of President George W. Bush’s Council of Advisors on Science and Technology. Qualifications: Mr. Fernandez’s qualifications to serve on the Board include his more than two decades of extensive operating experience and executive leadership, as a founder and chief executive officer of technology and software companies, his familiarity with government affairs, as well as his public company board and committee experience. | ||
| Check Kian Low | ||
Independent Director Director since 2016 Board Committees: Compensation Nominating and Corporate Governance |
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| Justine F. Page | |||
Independent Director Director since 2019 Board Committees: Audit (Chair) Executive | Ms. Page, 57, served as the Chief Financial Officer, Vice President of Finance, Treasurer, and Secretary of ICS, from May 1999 to September 2005 when ICS merged with IDT, following which Ms. Page retired. She joined ICS in 1993, holding titles including Director of Finance and Administration and Assistant Treasurer. From June 2008 until April 2017, Ms. Page served on the board of our predecessors, including Avago Technologies and Broadcom Limited, and served as chairperson of its Audit Committee and a member of its Nominating and Corporate Governance |
a Master of Taxation degree from Villanova University. Qualifications: committee experience. | |
| Harry L. You | |||
Independent Director Director since 2019 Board Committees: Audit Compensation | Mr. You, Qualifications: Mr. You’s qualifications to serve on our Board include his extensive and varied mergers and acquisitions experience, financial and strategic planning expertise, public company financial management experience, cybersecurity experience, and executive leadership roles at various technology-driven | ||
2019.14nine meetings during Fiscal Year 2018.2019. During Fiscal Year 2018,2019, each director attended at least 75% of the aggregate number of meetings of our Board and all committees of our Board on which he or she served. Our independent directors met at regularly scheduled executive sessions without management present. Our Corporate Governance Guidelines provide that each director is expected to attend the annual meetings of our stockholders. All of our directors then serving on our Board attended the annual meeting in April 2018.and, until December 5, 2018, Mr. Diller, an independent director, served as Chairman of the Board. Following Mr. Diller’s resignation as Chairman of the Board, Dr. Samueli was appointedserves as our Chairman of the Board and Mr. Hartenstein was appointed to serveserves as our Lead Independent Director. Upon his election as Chairman of the Board in 2018, Dr. Samueli resigned from his position as our Chief Technical Officer. Marks, and You and Mses. Bryant, Delly and Delly,Page, representing sixseven of our eightnine director nominees, are currently “independent directors”, and that Messrs. Diller, Eggebrecht and Macleod areMr. Marks is also an “independent directors”director”, as defined under the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and the Nasdaq Stock Market (“Nasdaq”).
Audit Committee
| Members | Primary Responsibilities | Meetings in Fiscal Year 2019 | ||||
Justine F. Page (Chair) Gayla J. Delly
Raul J. Fernandez Harry L. You
| •Oversee the quality and integrity of our financial statements and internal controls •Determine the appointment, compensation, retention, qualifications and independence of our independent registered public accounting firm •Conduct an annual performance evaluation of our internal audit function and independent registered public accounting firm •Oversee our financial and operational risk exposures, including any exposures related to data privacy and information technology systems controls and security, and the steps management takes to monitor, control and report such exposure •Oversee our compliance with legal and regulatory requirements •Review related party transactions | |||||
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| Members | Primary Responsibilities | Meetings in Fiscal Year 2019 | ||||||
Eddy W. Hartenstein (Chair) Diane M. Bryant
Check Kian Low
Peter J. Marks Harry L. You | •Determine our executives’ base and incentive compensation (other than that of our CEO) •Provide input and recommendations to the independent directors of our Board regarding our CEO’s compensation •Design (in consultation with management or our Board) and evaluate our compensation plans, policies and programs •Administer our equity-based plans and approve the terms of equity-based grants pursuant to those plans •Confirm that our compensation programs do not encourage unnecessary risk taking •Review and discuss, at least annually, the relationship between risk management policies and practices, business strategy and officers’ compensation •Establish and periodically review policies concerning perquisite benefits •Review and approve all employment agreements, severance andchange-in-control arrangements and perquisites for officers and other executives, other than the CEO, and make recommendations to our Board regarding such agreements and perquisites with our CEO •Review and make recommendations to our Board compensation for non-employee directors
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equity components. Based upon this review, the Compensation Committee believes the elements of our compensation programs do not encourage unnecessary or excessive risk-taking, and are not reasonably likely to have a material adverse effect on our Company in the future.
| Members | Primary Responsibilities | Meetings in Fiscal Year 2019 | ||||||
Eddy W. Hartenstein (Chair) Gayla J. Delly
Raul J. Fernandez Check Kian Low Peter J. Marks
| •Take a leadership role in shaping our corporate governance policies and procedures and develop recommendations for our Board •Identify, evaluate and recommend to our Board qualified candidates to become directors and to fill vacancies on the Board •Assess director independence •Oversee the annual evaluation of our Board and its committees •Consider stockholder proposals submitted for consideration at our annual meeting of stockholders •Periodically assess director continuing education with respect to our business, financial statements, corporate governance and other appropriate subjects •Periodically review and assess our Corporate Governance Guidelines and recommend changes to our Board | •Review, and periodically report to the Board, on matters of corporate responsibility and sustainability, and our public reporting on these topics. | 4 | |||||
| Members | Primary Responsibilities | Meetings in Fiscal Year 2019 | ||||||
Henry Samueli, Ph.D. (Chair) Eddy W. Hartenstein Justine F. Page Hock E. Tan
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Review and approve, subject to specified limitations: •investments, acquisitions, dispositions and capital expenditures; •new or incremental debt financings or borrowings, or amendments thereto, or refinancings thereof, including convertible debt, bond financing and commercial paper; and •treasury, cash management and other banking matters. | — | ||||||
| Review and provide recommendations to our Board on matters requiring full Board approval, including: •business opportunities, strategies and proposals, and other strategic matters; •business plans, annual budgets, targets, operational plans, capital structure and dividend policy; •proposed transactions that exceed its approval thresholds; and •efficient organization and management structure of our Company. | |||||
independence from management;
personal and professional integrity, ethics and values;
experience as an officer in corporate management;
experience and expertise in our industry and international business and familiarity with Broadcom;
experience as a board member of another public company;
practical and mature business judgment;
diversity of background and perspective (inclusive of age, ethnicity, experience, gender and race);
current Board size and composition and the extent to which a candidate would fill a present need on our Board; and
the other ongoing commitments and obligations of the candidate.
The Nominating/Governance Committee has from time to time also engaged third-party search firms to assist in identifying and evaluating possible candidates. Ms. Page, who joined our Board in June 2019, was first suggested as a prospective Board candidate by members of our Board, and Mr. Fernandez, who joined our Board in January 2020, was first suggested as a prospective candidate by members of our executive team. Both Ms. Page and Mr. Fernandez were then evaluated by the Nominating/Governance Committee according to its practice described above.
Resignation Offered at Age 75
also currently focused on the development of identified internal candidates, as well as on maintaining business and operational continuity.
| Aggregate Value* | ||
| Position | Prior to December 2019 | |
Non-employee Director | 3x annual cash retainer | |
| 5x annual cash retainer | ||
| CEO | 3x base salary | 6x base salary |
| 1x base salary | 3x base salary |
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ownership set forth under the guidelines effective December 2019.
upon appointment to our Board, an initial RSU award using a target value of an annual RSU award using a target value of On December 5, 2018, was elected as Chairman of the Board and immediately resigned as our Chief Technical Officer. During his service as our Chief Technical Officer, Dr. Samueli did not receive any additional compensation for his service on our Board or any committee of our Board. Upon his election as Chairman of the Board, Dr. Samuelihas declined all compensation for his service on our Board and as its Chairman. However, we provide Dr. Samueli with access to office space and administrative support in connection with the discharge of his duties as Chairman. The unvested equity awards that we previously granted to Dr. Samueli during his tenure as an employee of Broadcom will continue to vest, subject to the terms and conditions of the awards. We also do not compensate Mr. Tan for his service on our Board or any committee of our Board.2018 2020.During Fiscal Year 2018, ourreceivedare entitled to receive the following annual cash compensation, payable quarterly:Annual Fees Board membership (including the Chairperson of the Board)$ 80,000 Additional amounts, as applicable, payable to:Chairperson of the Board$ 150,000 Chairperson of the Audit Committee$ 35,000 Chairperson of the Compensation Committee$ 22,500 Chairperson of the Nominating/Governance Committee$ 18,000 Member of the Audit Committee (other than chairperson)$ 12,500 Member of the Compensation Committee (other than chairperson)$ 10,000 Member of the Nominating/Governance Committee (other than chairperson)$ 6,000 Annual Fees Board membership (payable to all non-employee directors) $ 90,000 Additional amounts, as applicable, payable to: Independent Chairperson of the Board $ 150,000 Lead Independent Director $ 100,000 Chairperson of the Audit Committee $ 40,000 Chairperson of the Compensation Committee $ 22,500 Chairperson of the Nominating/Governance Committee $ 20,000 Member of the Audit Committee (other than chairperson) $ 15,000 Member of the Compensation Committee (other than chairperson) $ 10,000 Member of the Nominating/Governance Committee (other than chairperson) $ 10,000 meetingsmeeting of stockholders and other travel undertaken at our request.receivedreceive the following equity compensation awards:$200,000,$220,000, prorated based on the expected portion of a year to be served between the time of such director’s appointment and the anticipated date of our annual meeting of stockholders immediately following the director’s appointment; and, thereafter,$200,000,$220,000, to be granted on the date of each annual meeting of stockholders, subject to the director’sre-election at such meeting.wasis divided by the average of our per share closing market prices, as quoted on the Nasdaq Global Select Market, over the 30 calendar days immediately preceding the grant date. These RSU awards vest in full on the earlier of (i) the first
Fiscal Year 2019 Director Compensation Program
In connection with its annual review of ournon-employee director compensation program, in December 2018, the Compensation Committee determined that the program delivered average total direct compensation at approximately the 35th percentile of our compensation peer group included on page 35, no changes having been made to the program since April 2016. With advice from Compensia, the Compensation Committee recommended, and upon review our Board approved, increases to various components of ournon-employee director compensation program.
Effective December 5, 2018, ournon-employee directors are entitled to receive the compensation set forth below. Dr. Samueli has declined all such compensation. However, we provide Dr. Samueli with access to office space and administrative support in connection with the discharge of his duties as Chairman.
Cash Compensation
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Equity Compensation
Our Board also increased the target value ofnon-employee directors’ equity awards to $220,000, calculated in the same manner and subject to the same vesting schedule and other terms as described above under “Fiscal Year 2018 Director Compensation Program - Equity Compensation”.
2019
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | Total | ||||||||||||
Gayla J. Delly | $ 98,500 | $ | 249,136 | $ | 347,636 | ||||||||||
James V. Diller | $258,000 | $ | 185,666 | $ | 443,666 | (2) | |||||||||
Lewis C. Eggebrecht | $ 90,000 | $ | 185,666 | $ | 275,666 | ||||||||||
Kenneth Y. Hao(3) | $ 60,000 | $ | 185,666 | $ | 245,666 | (4) | |||||||||
Eddy W. Hartenstein | $115,000 | $ | 185,666 | $ | 300,666 | ||||||||||
Check Kian Low | $ 86,000 | $ | 185,666 | $ | 271,666 | ||||||||||
Donald Macleod | $125,000 | $ | 185,666 | $ | 310,666 | ||||||||||
Peter J. Marks | $ 98,500 | $ | 185,666 | $ | 284,166 | ||||||||||
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | Total | |||||
| Diane M. Bryant | $ | 75,000 | $ | 282,890 | $ 357,890 | |||
| Gayla J. Delly | $ | 110,875 | $ | 227,602 | $ 338,477 | |||
James C. Diller(2) | $ | 92,000 | — | $ 92,000 | (3) | |||
Lewis C. Eggebrecht(2) | $ | 47,500 | — | $ 47,500 | ||||
| Eddy W. Hartenstein | $ | 214,375 | $ | 227,602 | $ 441,977 | |||
| Check Kian Low | $ | 104,000 | $ | 227,602 | $ 331,602 | |||
Donald Macleod(2) | $ | 66,250 | — | $ 66,250 | ||||
| Peter J. Marks | $ | 108,375 | $ | 227,602 | $ 335,977 | |||
| Justine F. Page | $ | 65,000 | $ | 182,915 | $ 247,915 | |||
| Harry L. You | $ | 78,750 | $ | 279,657 | $ 358,407 | |||
| (1) | Represents the grant date fair value of RSU awards granted in Fiscal Year |
| 1, 2019 following his or her election to our Board. With respect to Ms. |
| Name | Number of Shares Underlying RSUs (#) | Number of Shares Underlying Outstanding Stock Options (#) | ||||||||
Gayla J. Delly | 807 | — | ||||||||
James V. Diller | 807 | — | ||||||||
Lewis C. Eggebrecht | 807 | 5,121 | ||||||||
Kenneth Y. Hao | — | — | ||||||||
Eddy W. Hartenstein | 807 | — | ||||||||
Check Kian Low | 807 | — | ||||||||
Donald Macleod | 807 | 5,223 | ||||||||
Peter J. Marks | 807 | — | ||||||||
| Name | Number of Shares Underlying RSUs (#) |
| Diane M. Bryant | 775 |
| Gayla J. Delly | 775 |
| James V. Diller | — |
| Lewis C. Eggebrecht | — |
| Eddy W. Hartenstein | 775 |
| Check Kian Low | 775 |
| Donald Macleod | — |
| Peter J. Marks | 775 |
| Justine F. Page | 673 |
| Harry L. You | 775 |
| (2) | Messrs. Diller, Eggebrecht and Macleod did not stand for re-election and cased to be directors effective April 1, 2019. |
| (3) | At the time Mr. Diller |
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Audit Fees Audit-Related Fees Tax Fees All Other Fees Total
RATIFICATION OF APPOINTMENT OF OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM2019.2020. Our Board and the Audit Committee believe that the continued retention of PwC is in the best interests of Broadcom and our stockholders. We expect a representative from PwC to be present at the Annual Meeting. This representative will have the opportunity to make a statement if he or she so desires and is expected to be available to respond to appropriate questions.Broadcom-Singapore,us for Fiscal Year 2019. Also set forth below are the fees for all services rendered by PwC to Broadcom Limited, our predecessor, from October 30, 2017 to April 4, 2018 and to us from April 4, 2018 to November 4, 2018. Also set forth below are the fees for all services rendered by PwC to Broadcom-Singapore during Fiscal Year 2017. Fiscal Year 2018
Services to Broadcom and
Broadcom-Singapore
Fiscal Year 2017
Services to
Broadcom-Singapore
($ in thousands) $ 12,933 $ 9,736 994 941 1,310 1,694 10 3 $ 15,247 $ 12,374
Services to Fiscal Year 2018
Services to
Broadcom Limited ($ in thousands) Audit Fees $ 16,420 $ 12,933 Audit-Related Fees 592 994 Tax Fees 2,984 1,310 All Other Fees 229 10 Total $ 20,225 $ 15,247 or Broadcom-Singapore’s annual consolidated financial statements, audit of internal controls over financial reporting, the review of our or Broadcom-Singapore’sBroadcom Limited’s 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 those fiscal years, such as statutory audits. The fees include audit fees related to business combination accounting for our recently closed acquisitions, inclusive of the acquisition of Brocade Communications Systems,CA, Inc. (“Brocade”("CA") in Fiscal Year 2018.2019.Broadcom-Singapore’sBroadcom Limited’s consolidated financial statements and not included in Audit Fees. In fiscal year 2019, these fees included services related to acquisition due diligence. In Fiscal Year 2018, these fees included services related to the impact assessment of certain financial accounting standards and, in Fiscal Year 2017, these fees also included fees related to merger and acquisition due diligence.standards. 20182019 and Fiscal Year 2017,2018, these fees consisted ofincluded a license for specialized accounting research software.
2018.
firm
for Fiscal Year 2019.
the quality and integrity of the Company’s financial statements and internal controls; the appointment, compensation, retention, qualifications and independence of the Company’s independent registered public accounting firm; the performance of the Company’s internal audit function and independent registered public accounting firm; the Company’s compliance with legal and regulatory requirements; and related party transactions. Higher quality audit work and accounting advice due to PwC’s institutional knowledge of and familiarity with the Company’s business and operations, accounting policies and financial systems, and internal control framework Operational efficiencies and a resulting lower fee structure because of PwC’s history and familiarity with the Company’s business 1, 2020.20182019 Financial Statements4, 20183, 2019 (“Fiscal Year 2018”2019”) with the Company’s management and PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm (“PwC”). In addition, the Audit Committee has discussed with PwC, with and without management present, the Company’s internal controls over financial reporting and overall quality of the Company’s financial reporting. The Audit Committee also discussed with PwC the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board (“PCAOB”).20182019 be included in the Company’s Annual Report on Form10-K for Fiscal Year 20182019 for filing with the Securities and Exchange Commission.20182019 in accordance with established procedures.3, 2019.Directors:Donald Macleod,Directors on December 10, 2019:Eddy W. HartensteinPeter J. MarksYou** Mr. You joined the Audit Committee on January 8, 2019.
APPROVAL OF AN AMENDMENT TO THE SECOND AMENDED AND RESTATED EMPLOYEE SHARE PURCHASE PLAN
We are asking our stockholders to approve an amendment (the “ESPP Amendment”) to the Broadcom Limited Second Amended and Restated Employee Share Purchase Plan, originally adopted on July 27, 2009 and most recently amended on April 4, 2018 (the “Current ESPP”). The Current ESPP, as amended by the proposed ESPP Amendment is referred to in this proposal as the “ESPP”. On February 6, 2019, based on the recommendation of the Compensation Committee, our Board approved and adopted the ESPP Amendment subject to approval by our stockholders. The ESPP Amendment attached as Appendix B to this Proxy Statement will, among other administrative changes, make the following changes to the Current ESPP:
remove the July 27, 2019 expiration date so that the ESPP will remain in effect until terminated by our Board;
remove the evergreen provision. As of February 3, 2019, 7,549,088 shares of our common stock remained available for issuance under the Current ESPP, which will be the only shares available for issuance under the ESPP following the ESPP Amendment; and
rename the Current ESPP the “Broadcom Inc. Employee Stock Purchase Plan.”
We are not increasing the shares available for issuance under the ESPP.
If our stockholders approve the ESPP Amendment, we will incorporate the ESPP Amendment and restate the Current ESPP in full, in the form attached as AppendixB-1 to this Proxy Statement.
The ESPP is designed to provide employees with the opportunity to purchase our common stock at a discount through accumulated payroll deductions during successive offering periods. We believe that the ESPP enhances such employees’ sense of participation in our performance, aligning their interests with those of our stockholders, and is a necessary and powerful employee incentive and retention tool that benefits our stockholders.
Summary of the Material Features of the ESPP
The principal features of the ESPP are summarized below, but the summary is qualified in its entirety by (1) the ESPP Amendment, which is included as Appendix B to this Proxy Statement; and (2) the ESPP, as amended and restated to incorporate amendments through February 6, 2019, including the ESPP Amendment, which is included as AppendixB-1 to this Proxy Statement. We encourage you to read the ESPP Amendment and the ESPP carefully.
The ESPP has two components: the Section 423 Component and theNon-Section 423 Component (each defined below). The ESPP authorizes the grant of options that are intended to qualify for favorable US federal tax treatment under Section 423 of the US Internal Revenue Code (the “Code”) (the “Section 423 Component”), as well as options that are not intended to betax-qualified under Section 423 of the Code (the“Non-Section 423 Component”), which will generally be granted tonon-US employees.
Plan administration
The ESPP is currently administered by the Compensation Committee. Subject to the provisions of the ESPP, the plan administrator determines the terms and conditions of the offerings under the ESPP; provided, however, that all participants granted purchase rights in an offering that are intended to comply with Section 423 of the Code will have the same rights and privileges within the meaning of Section 423 of the Code.
Shares available under the ESPP
As of February 3, 2019, the maximum number of shares of our common stock that remain available for sale under the Current ESPP, which will continue under the ESPP, is 7,549,088 shares. A total of 2,450,912 shares have been issued and sold under the Current ESPP since September 15, 2010 (the start of the first offering period under the Current ESPP).
Eligible employees
Eligible participants in the ESPP generally include employees of our subsidiaries that are designated by the Compensation Committee as eligible subsidiaries in the ESPP, (1) who do not own 5% or more of the total combined voting power or value of our stock, (2) whose customary employment is for more than 20 hours per week, and (3) whose customary employment is for more than five months in any calendar year. The Compensation Committee may also exclude from participating in the Section 423 Component any employee who is a citizen or resident ofa non-US jurisdiction, if their participation would be prohibited under the laws of that jurisdiction or cause the ESPP to violate the requirements of Section 423 of the Code. Any such exclusion ofnon-US employees is applied in an identical
manner to all similar situated employees. In addition, with respect to theNon-Section 423 Component, eligibility may be further limited by applicable local law and the Compensation Committee may only designate some employees of a designated subsidiary as eligible employees. As of February 3, 2019, we had approximately 12,893 employees who were eligible to participate in the ESPP, of which 8,418 were participating.
Non-employee directors are not eligible to, and do not, participate in the Current ESPP or the ESPP.
Offering Periods
Shares are currently offered during two successivesix-month offering periods, generally beginning on September 15 and March 15 of each year, unless otherwise determined by the plan administrator.
Purchase Price
At the end of each offering period, each participant purchases the number of shares of common stock that the participant’s accumulated payroll deductions during that offering period will buy at a purchase price equal to the lesser of 85% of the fair market value of our common stock on the first day of the offering period or the purchase date. The fair market value of our common stock on the first day of the current offering period (September 17, 2018) was $234.83 and on February 1, 2019 (the last trading day in our first quarter of Fiscal Year 2019) was $266.81.
Employees may not purchase more than $25,000 in fair market value of shares of our common stock in any calendar year, in accordance with Section 423 of the Code. In addition, the maximum number of shares any participant can acquire in a single offering period is currently 2,500 shares.
Participation
Participants must authorize a payroll deduction of at least 1%, but not more than 10%, of their ESPP-eligible compensation, which will be deducted on each payday during an offering period.
Except as otherwise provided by the Compensation Committee, a participant may cancel his or her payroll deduction authorization at any time before the end of the offering period, subject to the ESPP’s notice requirements. However, a participant cannot make any changes to the rate of his or her payroll deductions during an offering period.
Transferability
Other than upon a participant’s death, options granted under the ESPP are not transferable by a participant and are exercisable only by the participant.
Effect of Changes in Capitalization
In the event of any dividend or other distribution, reorganization, merger, consolidation, combination, repurchase, or exchange of shares of our common stock, or other change in our corporate structure affecting our shares, the Compensation Committee may adjust the number of shares with respect to which options may be granted or are subject to outstanding options, as well as the option price.
In the event ofnon-reciprocal transaction between us and our stockholders (such as a share split,spin-off, rights offering, or nonrecurring share dividend that affects our shares and causes a change in the per share value of our shares underlying outstanding options), the Compensation Committee will equitably adjust the number of shares subject to outstanding options, as well as the option prices.
Effect of Corporate Transactions on Offering Periods
In the event of a dissolution or liquidation, the offering period then in progress will be shortened by setting a new exercise date, and will terminate immediately before the proposed dissolution or liquidation, unless the Compensation Committee determines otherwise.
In the event of a sale of all or substantially all of our assets, or our merger with or into another corporation, each outstanding option will be assumed, or an equivalent option substituted by the successor corporation or its affiliate. If the successor corporation does not assume or substitute the option, any offering period then in progress will be shortened by setting a new exercise date to occur prior to the effective date of such transaction.
Amendment and termination
The Compensation Committee may at any time terminate the ESPP without obtaining stockholder approval, unless required by applicable law or regulation. Without stockholder consent, the Compensation Committee may, in its sole
discretion, change the offering periods, limit the frequency and number of changes in the amount withheld during an offering period, establish the exchange ratio applicable to amounts withheld in a currency other than US dollars, permit payroll withholding in excess of the amount designated by a participant to adjust for delays or mistakes in our processing of properly completed withholding elections, and establish other limitations or procedures it deems advisable that are consistent with the ESPP. The ESPP will be in effect indefinitely, unless terminated by our Board in accordance with the ESPP.
Certain U.S. Federal Income Tax Consequences of the ESPP
The following is a general summary under current law of the material U.S. federal income tax consequences to an employee who participates in the ESPP. This summary deals with the general U.S. federal income tax principles that apply and is provided only for general information. Some kinds of taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. Tax laws are complex and subject to change and may vary depending on individual circumstances and from locality to locality. This summary also assumes that the Section 423 Component complies with Section 423 of the Code and is based on the tax laws in effect as of the date of this proxy statement. Changes to these laws could alter the tax consequences described below. The summary does not discuss all aspects of federal income taxation that may be relevant in light of a participant’s personal circumstances. This summarized tax information is not tax advice and a recipient of an award should rely on the advice of his or her legal and tax advisors.
As described above, the ESPP has a Section 423 Component and aNon-Section 423 Component. The tax consequences for a U.S. taxpayer will depend on whether he or she participates in the Section 423 Component or theNon-Section 423 Component.
Tax Consequences to U.S. Participants in the Section 423 Component.
The right of participants to make purchases under the Section 423 Component are intended to qualify under the provisions of Section 423 of the Code. Under the applicable Code provisions, no income will be taxable to a participant until the sale or other disposition of the shares purchased under the ESPP. Upon such sale or disposition, the participant will generally be subject to tax in an amount that depends upon the length of time such shares are held by the participant prior to disposing of them. If the shares are sold or disposed of more than two years from the first day of the offering period during which the shares were purchased and one year from the date of purchase, or if the participant dies while holding the shares, the participant (or his or her estate) will recognize ordinary income measured as the lesser of (1) the excess of the fair market value of the shares at the time of such sale or disposition over the purchase price or (2) an amount equal to 15% of the fair market value of the shares as of the first day of the offering period. Any additional gain will be treated as long-term capital gain. If the shares are held for the holding periods described above but are sold for a price that is less than the purchase price, there is no ordinary income and the participating employee has a long-term capital loss for the difference between the sale price and the purchase price
If the shares are sold or otherwise disposed of before the expiration of the holding periods described above, the participant will recognize ordinary income generally measured as the excess of the fair market value of the shares on the date the shares are purchased over the purchase price. Any additional gain or loss on such sale or disposition will be long-term or short-term capital gain or loss, depending on how long the shares were held following the date they were purchased by the participant prior to disposing of them
We are not entitled to a deduction for amounts taxed as ordinary income or capital gain to a participant except to the extent of ordinary income recognized upon a sale or disposition of shares prior to the expiration of the holding periods described above.
Tax Consequences to U.S. Participants in theNon-Section 423 Component.
A U.S. participant in theNon-Section 423 Component will have compensation income equal to the value of the Common Stock on the day he or she purchased the common stock less the purchase price.
When a participant sells the common stock he or she purchased under theNon-Section 423 Component of the ESPP, he or she also will have a capital gain or loss equal to the difference between the sales proceeds and the value of the common stock on the day he or she purchased it. This capital gain or loss will be long-term if the participant held the common stock for more than one year and otherwise will be short-term.
Any compensation income that a participant receives upon the purchase of shares of common stock under theNon-Section 423 Component of the ESPP is subject to withholding for income, Medicare and social security taxes, as applicable. In addition, the compensation income is required to be reported as ordinary income to the participant on his or her annual FormW-2, and the participant is responsible for ensuring that this income is reported on his or her individual income tax return.
We are entitled to a deduction for amounts taxed as ordinary income to a participant to the extent of ordinary income recognized upon a purchase made under theNon-Section 423 Component.
Shares Purchased Under the ESPP
The actual number of shares that may be purchased by any individual on an ESPP purchase date cannot be determined in advance because the number of shares purchased depends on each employee’s voluntary election to participate and on the fair market value of our common stock at various future dates. The following table shows the number of shares of our common stock that have been purchased by employees, including our NEOs, from September 15, 2010 (the start of the first offering period under the Current ESPP) through September 14, 2018, the most recent ESPP purchase date to have occurred.
| Name | Shares Purchased | Weighted average exercise price | ||||||||
Named executive officers |
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Hock E. Tan | 0 | — | ||||||||
Thomas H. Krause | 0 | — | ||||||||
Charlie B. Kawwas | 417 | $150.96 | ||||||||
Mark D. Brazeal | 0 | — | ||||||||
Bryan T. Ingram | 0 | — | ||||||||
All current executive officers as a group | 657 | $157.79 | ||||||||
All current directors or nominees, who are not executive officers, as a group | 0 | — | ||||||||
Associate of any directors, executive officers or nominees | 0 | — | ||||||||
Other persons who received or are to receive 5% of such options or rights | 0 | — | ||||||||
Allnon-executive officer employees as a group | 2,450,255 | $105.68 | ||||||||
Our Board recommends that stockholders vote, FOR the resolution to approve
the amendment to the Second Amended and Restated Employee Share Purchase Plan.
advisory basis, FOR the resolution to approve compensation of our named executive officers.
Name President, Chief Executive Officer and Director Mr. Tan Thomas H. Krause Jr. Charlie B. Kawwas, Ph.D. Mark D. Brazeal11, 2019:6, 2020:NameAgePositionBiographyAge Position Biography Hock E. Tan 68 67 67, has served as our President and Chief Executive Officer since March 2006. From September 2005 to January 2008, he served as Chairman of the board of directors of IDT. Prior to becoming chairman of IDT, Mr. Tan was the President and Chief Executive Officer of ICS, from June 1999 to September 2005. Prior to ICS, Mr. Tan was Vice President of Finance with Commodore International, Ltd. from 1992 to 1994, and previously held senior management positions with PepsiCo, Inc. and General Motors Corporation. Mr. Tan served as managing director of Pacven Investment, Ltd., a venture capital fund in Singapore from 1988 to 1992, and served as managing director for Hume Industries Ltd. in Malaysia from 1983 to 1988.4142 Chief Financial Officer Mr. Krause has served as our Chief Financial Officer since October 2016, and served as our Vice President and acting Chief Financial Officer and principal financial officer from March 2016 to October 2016. Mr. Krause also served as our Vice President, Corporate Development from January 2012 to October 2016. Prior to joining us, he was an independent management consultant representing several public and private technology companies. Mr. Krause previously served as Vice President of Business Development at Techwell, Inc., a mixed-signal fabless semiconductor company, and held various roles with Technology Crossover Ventures and Robertson Stephens. 4849 Senior Vice President and Chief Sales Officer Dr. Kawwas has served as our Senior Vice President and Chief Sales Officer since June 2015 and served as our Senior Vice President, Worldwide Sales from May 2014 to June 2015. Dr. Kawwas served as Senior Vice President of Sales for LSI Corporation (“LSI”) from 2010 to May 2014, when we acquired LSI, having joined LSI in 2007 as Vice President of Marketing through its acquisition of Agere Systems. Prior to joining Agere Systems in 2005, he served as the leader of product line management for optical Ethernet and multiservice edge portfolio at Nortel Networks. 5152 Chief Legal Officer compliancepublic affairs functions across the company. Prior to his current role, he served as the Chief Legal Officer and Senior Vice President, IP Licensing for SanDisk Corporation, from December 2014 until it was acquired by Western Digital Corporation in 2016. Before joining SanDisk, Mr. Brazeal spent 15 years at BRCMBroadcom Corporation in various positions of increasing responsibility, most recently as the Senior Vice President and Senior Deputy General Counsel in charge of all commercial, operational, IP licensing and litigation matters for BRCM.Broadcom Corporation. Prior to that, Mr. Brazeal was an attorney in the transactional and IP groups at the law firms of Wilson Sonsini Goodrich & Rosati in Palo Alto, CA, Yuasa & Hara in Tokyo, Japan and Howrey & Simon in Washington, D.C. He earned a J.D. and a B.A. in American Government from the University of Virginia.
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Kirsten M. Spears | 56 | Chief Accounting Officer, Vice President and Corporate Controller | Ms. Spears has served as our Chief Accounting Officer since March 2016 and as our Vice President and Corporate Controller since May 2014. Prior to our acquisition of LSI, Ms. Spears served as Vice President and Corporate Controller of LSI. She joined LSI in September of 1997 and held a number of management positions in accounting and reporting before becoming the Corporate Controller in 2007. Before joining LSI, Ms. Spears worked for Price Waterhouse LLP in audit; for Raychem Corporation, managing a variety of accounting functions; and for Bank of America, managing branch operations. | |||
2019. Hock E. Tan, President and CEO; Thomas H. Krause, Jr., CFO; Charlie B. Kawwas, Ph.D., Senior Vice President and Chief Sales Officer; Mark D. Brazeal, Chief Legal Officer; and Bryan T. Ingram, Senior Vice President and General Manager, Wireless Semiconductor Division. Although GAAP operating income Net cash provided by operating activities of 20182019 executive compensation program. This CD&A is intended to be read in conjunction with the tables and other information beginning on page 45,42, which provide further historical compensation information for our NEOs, who are our CEO, CFO and each of our three other most highly compensated executive officers serving at the end of our Fiscal Year 2018.20182019 were:
Fiscal Year 20182019 Company Performance and Key Pay Decisions20182019 performance continued to be strong on many measures, with robustboth revenue and non-GAAP operating margin growth,growth*, the successful integration of the acquired BrocadeCA business and the successful execution and completion of our acquisition of CA,the enterprise security business (“Symantec Business”) of Symantec Corporation (now known as NortonLifeLock Inc. (“CA”), which closed on the first day of our Fiscal Year 2019.2020. Our executive compensation program is structured around the achievement of near-term financial and operational targets and longer-term business objectives and strategies. We believe in rewarding excellent performance; likewise, we believe pay should reflect underperformance, if that occurs. This is reflected in the Fiscal Year 2019 APB Plan bonus payouts, which are significantly lower than those for Fiscal Year 2018 because we did not achieve the revenue performance goal for Fiscal Year 2019. We seek to closely align our executives’executive officers’ interests with those of our stockholders and, accordingly, allocate a significant portion of our executives’ compensation opportunity to equity-based compensation, the value of which depends on our performance relative to that of our peers.20182019 Financial Results Highlights20182019 include:Record highContinued increase in year-over-year revenue of $20,848to $22,597 million, an 18%8% increase over Fiscal Year 2017.increased $2,752decreased $1,691 million to $5,135$3,444 million, or 115%a 33% decrease over Fiscal Year 2018, our non-GAAP operating income increased $1,505 million to $11,929 million, a 14% increase over Fiscal Year 2017 andnon-GAAP operating income increased $2,413 million to $10,424 million or 30% increase over Fiscal Year 2017.2018.*$8,880$9,697 million, a 36%9% increase over Fiscal Year 20172018, and free cash flow of $8,245$9,265 million, a 50%12% increase over Fiscal Year 2017.2018.*Revenue(in billions)Operating Income(in billions)Free Cash Flow(in billions)* Please see Appendix A for a reconciliation ofnon-GAAP financial measures to the most directly comparable GAAP measures.
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Our We have significantly increased our absolute TSR since our initial public offering in 2009 by longer-termfive-year TSR performance, based on an investment of $100 in our common stock on the first day of our fiscal year 2014, has been very strong on both an absolute and relative basis. Although our one-year TSR increased significantly, we believe long-term TSR is a more relevant measure, as our stock price over short-term periods is frequently impacted by short-term market volatility, share price movements and macroeconomic pressures unrelated to our underlying performance.three-year cumulativeone-year TSR increased to 39.6% for Fiscal Year 2019.23.9%24.0% annually on average over the past three years, and hasby 30.9% annually on average over the past five years.Similarly, our five-year cumulative TSR has increased by 40.0% annually on average, and has also significantly outperformed our peer group median and the S&P 500 Index.While ourone-year TSR decreased 10.2% for Fiscal Year 2018, we believe longer-term TSR is a more relevant measure, as theone-year period is frequently impacted by short-term market volatility, geopolitical factors, share price movements and macroeconomic pressures unrelated to our underlying performance.1,465.0%over 2,085%, with a cumulative TSR increase of 34.6%35.1% annually on average.Cumulative TSR
Our Strategic Performance
Significant transactions occurring during Fiscal Year 20182019 included:
| ◦ | The completion of our acquisition of |
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We continued to focus the scope of our acquired businesses, concentrating on core, mission critical technologies, and successfully divested substantially all of thevarious non-core Brocade CA businesses held for sale during Fiscal Year 2018.
During Fiscal Year The targetThe Compensation Committee and members of management have conducted substantial stockholder outreach in Fiscal Year 2018 and over the last several years, as discussed in more detail on page 33, because weWe believe listening toactively engaging with, and understanding the concerns and views of, our stockholders is an important factor in developing corporate practices that support our business, including in designing an effective executive compensation program.2018, we reached out to2019, Mr. Hartenstein and members of management and the IR team continued their substantial stockholder engagement, contacting stockholders beneficially owning over 50%60% of our then outstanding shares of common stock, to discuss our compensation philosophy, structure and then recent Compensation Committee actions and decisions. The chairperson of the Compensation Committee, Mr. Hartenstein, participatedas discussed in thosemore detail on page 29. This resulted in discussions with our largest stockholders on matters relating to our executive compensation program. Topics that were discussedprogram, our compensation philosophy and structure, and various executive compensation actions and decisions. Discussion topics also included the long-term, multi-year PSU award grantedour senior management succession plan, in particular with respect to Mr. Tan, in Fiscal Year 2017 and the timing of Mr. Tan’s next equity grant, the structure of our CEO compensation and our equity compensation strategy, including our Multi-Year Equity Awards (as described below).PSU awards grantedmeeting and entitled to vote on the matter, voted in favor of the say-on-pay proposal. Following the 2019 annual meeting, the Compensation Committee reviewed the results of the say-on-pay proposal. In light of this approval, the Compensation Committee did not make any significant changes to our other NEOs and succession planning. Consistent with those discussions, we have confirmed that Mr. Tan will not receive another equity award until at least 2021. We have also clarified our disclosure regarding the PSUs awarded to our NEOs (other than our CEO) on page 39 and added disclosure on page 13 regarding our Board’s oversight of, and involvement with, our executive succession plans. The majority of the stockholders we spoke with indicated that they were generally supportive of our compensation actions and decisions and program design.program.20182019 Compensation Highlights and Key DecisionsPositive 2018Fiscal Year 2019 Company Performance.Payouts under the APB Plan, our annual cash incentive bonus plan, were tied to challengingpre-established annual corporate and divisional or functional performance goals, as well as the individual contributions and performance of each executive. and maximum attainment levels for adjustednon-GAAPthe two corporate performance goals - revenue and adjustednon-GAAP operating margin (defined(as defined in “Elements of Executive Compensation – Annual Cash Incentive Bonus Plan” below) - for Fiscal Year 20182019 were set by the Compensation Committee at levels significantly above our Fiscal Year 20172018 actual performance levels and were designed to significantly enhance stockholder value, be difficult to attain and to require substantial effort to achieve. The divisional or functional performance goals were also set by the Compensation Committee at levels difficult to attain and to require substantial effort on behalf of the division or function, and the NEO in charge of the division or function, to achieve.
Corporate performance attainmentAlthough revenue increased 8% over Fiscal Year 2018, our semiconductor solutions segment was negatively impacted by a broad-based slowdown in demand for semiconductor products worldwide, resulting in our revenue falling significantly below the year exceeded the maximum plantarget performance level resultingand, as a result, in 150%62% attainment of the corporate performance goals under the APB Plan.
Additionally, nearlyDespite adverse macro-economic and other conditions outside of our control during the year, the Compensation Committee elected not to adjust the challenging performance goals set for our Fiscal Year 2019 APB Plan, which significantly reduced our annual cash incentive bonus payouts for the year.
The Compensation Committee, following consideration of our CEO’s recommendations (other than with respect to himself) may, under the terms of the plan, apply an, judiciously applies individual performance multiplier, and has judiciously applied such multipliers to recognize the extraordinary efforts of our executives in light ofdespite negative market conditions or when we exceed the maximumexceptional performance levels forwith respect to our corporate performance goals or where an executive’s division or function results exceedresults. Economic factors outside of our control, including increased tensions between the maximum specifiedU.S. and its trading partners and the slowdown in the semiconductor industry negatively impacted our ability to achieve our corporate performance levels.goals during Fiscal Year 2019. The Compensation Committee carefully assessed individual executives’ performance, including increased revenue year-over-year, despite these macro-economic factors, and the successful integration of CA. As overall performance exceeded the maximum plan performance levels,such, our NEOs, other than our CEO, each received an individual performance multipliermultipliers of 130%100-130%, and ourwith those exceeding division or function targets receiving higher multipliers. Our CEO (upon approval of the Independent Directors)independent directors), received an individual performance multiplier of 150%117%, resulting in APB Plan payouts ranging between 174% and 225%a payout of target.
“Elements of Executive Compensation – Long-Term Incentive Compensation” for a detailed discussion of the Multi-Year Equity Awards).
stockholders and to attract and retain top talent.
| Base Salary | Individual salaries are based on an executive’s responsibilities. Salaries are set to be competitive with market and industry norms, and to reflect individual performance. | ||
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| Equity awards, in the form of service-based RSU awards and PSU awards, are granted to incentivize our executives to grow sustainable, long-term stockholder value. Further, they serve as retention tools for our key executives, and are intended to reflect the value we place on their contribution to our Company. | ||
* Please see Appendix A for a reconciliation ofnon-GAAP financial measures to the most directly comparable GAAP measures.
Target Total Direct Compensation
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Executive Compensation Program Governance
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| Performance metrics are directly tied to value creation for stockholders | X |
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| Caps on cash and equity incentive plan payouts | X |
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| “Double trigger” change in control payments and benefits | X |
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| Engagement of an independent compensation consultant | X |
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| Annual risk assessment of all of our compensation programs | X |
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| CEO compensation is reviewed and approved by the independent directors | ||
attract qualified, experienced and talented executives in a highly competitive market;
retain, motivate and reward these executives whose skills, knowledge and performance are critical to ouron-going success;
encourage our executives to focus on the achievement of our corporate financial and operational performance goals by aligning their APB Plan payout to the achievement ofpre-established annual corporate and divisional or functional goals, as well as the individual contributions and performance of each executive; and
align our executives’ interests with those of our stockholders by linking a significant portion of each executive’s target total direct compensation opportunity to returns realizable by our stockholders in the form of PSU awards that are subject to the attainment ofpre-established performance-based objectives, and the rest in the form of which vest based on service over four years.
equity award to the Independent Directorsindependent directors for approval, the Compensation Committee considers each executive’s level of experience and expertise and overall value to us, as well as how much vested and unvested equity he or she then holds.
Over the last several years
Consistent with our emphasis on delivering sustainable long-term value creation for our stockholders, beginning in Fiscal Year 2017, the Compensation Committee also designed the PSU awards granted to our other executives to be subject solely to relative and absolute TSR performance metrics.
In Fiscal Year 2018,2019, we contacted stockholders beneficially owning over 50%60% of our then outstanding shares of common stock to discuss our compensation philosophy and structure, as well as Compensation Committee actions and decisions. The ChairmanOur Lead Independent Director and chairperson of the Compensation Committee, Mr. Hartenstein, participated in these discussions with our largest stockholders related to our executive compensation programs.stockholders. Topics that were discussed included:
the expected timing ofsenior management succession planning in particular with respect to Mr. Tan’s next equity grant, in light of his Fiscal Year 2017 long-term, multi-year PSU award, which we have confirmed will not occur until 2021 at the earliest;
the structure of Mr. Tan’s Fiscal Year 2017 long-term, multi-year PSU award and our independent directors’ approach to setting Mr. Tan’s LTI compensation in Fiscal Year 2017;
succession planning;
the structure of our other NEOs’ LTICEO compensation; and
a detailed discussion of the Multi-Year Equity Awards. These stockholders indicated that they were,continue to be, generally, supportive of our compensation actions and decisions and program design, with a number of holders indicating that they appreciated the long-term nature of the Fiscal Year 2017 equity award granteddesign. In response to Mr. Tan.these discussions, we have also provided additional information regarding our senior management succession plan under “Corporate Governance — Succession Planning” on page 15. The inputfeedback received from our stockholders was reported to both the Compensation Committee and to our Board.
Say-on-Pay
At our 2018 annual meeting, we submitted our executive compensation program to anon-binding, advisory vote of our stockholders (the“say-on-pay proposal”). Stockholders representing approximately 62% of our outstanding shares present in person or by proxy at the meeting and voting on the matter voted in favor of thesay-on-pay proposal. Following the 2018 annual meeting, the Compensation Committee reviewed the results of thesay-on-pay proposal. Our engagement with stockholders discussed above, indicated that the lower support for thesay-on-pay proposal was primarily due to concerns regarding the timing of Mr. Tan’s next equity award, with some investors expressing concern about the size of the award. Consequently, subsequent to the 2018 annual meeting, we have confirmed that Mr. Tan will not receive another equity award until at least 2021. The input received from our stockholders was reported to the Compensation Committee and to our Board. Given this feedback, and the fact that no equity award will be granted to Mr. Tan until at least 2021, the Compensation Committee determined to retain the existing structure of our compensation program design for our other executives for Fiscal Year 2018.
current base salary, target APB Plan opportunities (and prior fiscal year payouts), the accumulated value of outstanding and unvested equity awards and other benefits; and
our CEO’s recommendation on compensation and individual performance (other than for himself), the executive’s performance and his or her importance to our Company, among other things.
In August 2017,October 2018, the Compensation Committee approved the compensation peer group for Fiscal Year 2018,2019, which appears below. The following selection criteria were considered when developing ourthe compensation peer group:
| |||||||||
| Applied Materials, Inc. | |||||||||
| Booking Holdings | Intel Corporation | Oracle Corporation | Thermo Fisher Scientific, Inc. | |||||
| International Business Machines Corporation | PayPal Holdings, Inc. | Visa, Inc. | |||||||
| Cognizant Technology Solutions Corporation | Mastercard, Inc. | Qualcomm Inc. | Western Digital Corporation | ||||||
| DXC Technology Company | Micron Technology, Inc. | ||||||||
Percentile
|
Revenue
($mm)(1)
|
Market Capitalization
($mm)(2)
| ||||||||
Fiscal Year 2018 Peer Group | 25th | $ | 11,169 | $ | 38,105 | |||||
| Median | $ | 13,831 | $ | 68,789 | ||||||
| 75th | $ | 18,245 | $ | 112,287 | ||||||
Broadcom | $ | 16,257 | $ | 98,330 | ||||||
| Rank | 60% | 73% | ||||||||
| Percentile | Revenue ($mm)(1) | Market Capitalization ($mm)(2) | |
| Fiscal Year 2019 Peer Group | 25th Median 75th | $ 14,999 $ 20,647 $ 29,328 | $ 51,822 $103,553 $176,222 |
| Broadcom | $ 20,248 | $ 93,713 | |
| Rank | 46% | 37% | |
2018.
Radford Global Technology Survey;
Radford Global Sales Survey; and
Mercer High Tech Salary Survey (Asia).
base salary; an annual cash incentive bonus plan; LTI compensation in the form of equity awards, including a substantial weighting toward PSU awards; severance and change in control payments and benefits; and modest perquisites and other personal benefits.componentselements of our executive compensation program are:componentelement of our executive compensation program designed to attract, engage and retain key executives.our executive officers. Base salaries provide fixed, baseline compensation and are set at levels intended to reflect an executive’s individual performance throughout the prior fiscal year and level and scope of responsibility, to be within a competitive range for similar positions at the companies in our compensation peer group and/or in the market salary survey data, and to take into account internal pay parity among our executives.executive officers. The Compensation Committee also receivedreviews our economic and business conditions and outlook. The base salaries of our key executives are reviewed annually by the Compensation Committee.key executivesexecutive officers (other than himself).
The Compensation Committee also reviews and considers many factors in determining individual performance for the purposes of adjusting base salaries.Thesesalaries.These factors include such measures as division or function performance against budget, achievement of divisional or functional goals, new product introductions and corporate strategy implementation.
Given
| NEO | Title | Base Salary (USD) Effective July 1, 2017 | Base Salary (USD) Effective July 1, 2018 | % Change | ||||||||
Hock E. Tan
|
President and Chief Executive Officer
|
|
$1,100,000
|
|
|
$1,100,000
|
|
0%
| ||||
Thomas H. Krause Jr.
|
Chief Financial Officer
|
|
$ 400,000
|
|
|
$ 400,000
|
|
0%
| ||||
Charlie B. Kawwas, Ph.D.
|
Senior Vice President and Chief Sales Officer
|
|
$ 488,529
|
|
|
$ 488,529
|
|
0%
| ||||
Mark D. Brazeal
|
Chief Legal Officer
|
|
$ 450,000
|
|
|
$ 450,000
|
|
0%
| ||||
Bryan T. Ingram
|
Senior Vice President and General Manager, Wireless Semiconductor Division
|
|
$ 592,250
|
|
|
$ 592,250
|
|
0%
| ||||
the same levels as the prior fiscal year.
| NEO | Title | Base Salary (USD) Effective July 1, 2018 | Base Salary (USD) Effective July 1, 2019 | % Change |
| Hock E. Tan | President and Chief Executive Officer | $ 1,100,000 | $ 1,100,000 | 0% |
| Thomas H. Krause Jr. | Chief Financial Officer | $ 400,000 | $ 400,000 | 0% |
| Charlie B. Kawwas, Ph.D. | Senior Vice President and Chief Sales Officer | $ 488,529 | $ 488,529 | 0% |
| Mark D. Brazeal | Chief Legal Officer | $ 450,000 | $ 450,000 | 0% |
| Bryan T. Ingram | Senior Vice President and General Manager, Wireless Semiconductor Division | $ 592,250 | $ 592,250 | 0% |
| NEO | APB Plan Target Bonus
| ||
Hock E. Tan | 150% | ||
Thomas H. Krause Jr. | 75% | ||
Charlie B. Kawwas, Ph.D. | 75% | ||
Mark D. Brazeal | 60% | ||
Bryan T. Ingram | 100% | ||
closely align our CEO’s interests with those of our stockholders generally, and to provide additional retention incentive to our CEO.
adjustednon-GAAPrevenue threshold attainment level set at $23,171 million, target set at $19,876$24,390 million and maximum set at $20,870$25,610 million; and
adjustednon-GAAP operating income as a percentage ofnon-GAAP revenue, referred to as “adjustednon-GAAP operating margin”margin,” threshold attainment level set at 52.5%, target set at 49.5%53.5% and maximum set at 51.5%55.5%.
Corporate Performance Components
Non-GAAP Revenue Performance Goal Attainment
Fiscal Year 2017 APB Plan Adjusted Achieved (in millions) | Fiscal Year 2018 Adjusted Non-GAAP Revenue Target Attainment Level (in millions) | Fiscal Year 2018 Attainment Level (in millions) | Fiscal Year 2018 Non-GAAP (in millions) | Fiscal Year 2018 Revenue from Acquired (in millions) | Fiscal Year 2018 APB Plan (in millions) | |||||
$17,658 | $19,876 | $20,870 | $20,862 | $81(1) | $20,943 | |||||
|
Non-GAAP Operating Margin Performance Goal Attainment
Fiscal Year 2017 APB Plan Adjusted Non-GAAP Operating Margin Achieved | Fiscal Year 2018 Adjusted Non-GAAP | Fiscal Year 2018 Non-GAAP | Fiscal Year (in millions) | Provisions (in millions) | Other Accruals, (in millions) | Fiscal Year 2018 APB Plan Non-GAAP (in millions) | Fiscal Year 2018 APB Plan Adjusted Non- GAAP Operating Margin Achieved | |||||||
48.1% | 49.5% | 51.5% | $10,424 | $542 | $53(1) | $11,019 | 52.6% | |||||||
|
Corporate Performance Attainment Level
| Corporate Performance Goals | Actual Fiscal Year 2018 Performance (in millions) | As a % of Target Attainment | Weight | Weighted Attainment | ||||
Adjustednon-GAAP Revenue | $20,943 | 150% | 50% | 75% | ||||
Adjustednon-GAAP Operating Margin | 52.6% | 150% | 50% | 75% | ||||
Total Attainment | 150% | |||||||
| Revenue Performance Goal Attainment | ||||
Fiscal Year 2018 APB Plan Adjusted Non-GAAP Revenue Achieved (in millions) | Fiscal Year 2019 Revenue Threshold Attainment Level (in millions) | Fiscal Year 2019 Revenue Target Attainment Level (in millions) | Fiscal Year 2019 Revenue Maximum Attainment Level (in millions) | Fiscal Year 2019 Revenue Achieved (in millions) |
| $20,943 | $23,171 | $24,390 | $25,610 | $22,597 |
| Non-GAAP Operating Margin Performance Goal Attainment | |||||||
Fiscal Year 2018 APB Plan Adjusted Non-GAAP Operating Margin Achieved | Fiscal Year 2019 Adjusted Non-GAAP Operating Margin Threshold Attainment Level | Fiscal Year 2019 Adjusted Non-GAAP Operating Margin Target Attainment Level | Fiscal Year 2019 Adjusted Non-GAAP Operating Margin Maximum Attainment Level | Fiscal Year 2019 Non-GAAP Operating Income Achieved (in millions) | Provisions or Accruals for Anticipated Payouts Under APB Plan (in millions) | Fiscal Year 2019 Adjusted Non- GAAP Operating Income Achieved (in millions) | Fiscal Year 2019 Adjusted Non-GAAP Operating Margin Achieved |
| 52.6% | 52.5% | 53.5% | 55.5% | $11,929 | $373 | $12,302 | 54.4% |
| Corporate Performance Attainment Level | ||||
| Corporate Performance Goals | Actual Fiscal Year 2019 Performance (in millions) | As a % of Target Attainment | Weight | Weighted Attainment |
| Revenue | $22,597 | 0% | 50% | 0% |
| Adjusted non-GAAP Operating Margin | 54.4% | 125% | 50% | 62% |
| Total Attainment | 62% | |||
100-130% for those exceeding division or function targets receiving higher multipliers.
macro-economic factors outside our Company’s control, including the increase tension between the U.S. and its trading partners and the broad-based slowdown in the semiconductor industry, resulting in a payout of 73% of his target bonus.
| Name | Bonus Target Percent | Fiscal Year 2018 Bonus Goals | Fiscal Year 2018 Bonus Achievement |
Fiscal Year 2018 Payout Amount in Dollars (USD) and as a | ||||||||||||||||||
Hock E. Tan President and Chief Executive Officer | 150% | Adjustednon-GAAP Revenue (50%) | 150% | |||||||||||||||||||
| Adjusted non-GAAP Operating Margin (50%) | 150% | |||||||||||||||||||||
| Fiscal Year 2018 Attainment | 150% | $ | 3,855,288 | 337.5% | ||||||||||||||||||
Thomas H. Krause Jr. Chief Financial Officer | 75% | Adjusted non-GAAP Revenue (25%) | 150% | |||||||||||||||||||
| Adjusted non-GAAP Operating Margin (25%) | 150% | |||||||||||||||||||||
| Direct Expenses (50%)(2) | 117% | |||||||||||||||||||||
| Fiscal Year 2018 Attainment | 134% | $ | 541,042 | 130.3% | ||||||||||||||||||
Charlie B. Kawwas, Ph.D. Senior Vice President and Chief Sales Officer | 75% | Adjusted non-GAAP Revenue (25%) | 150% | |||||||||||||||||||
| Adjusted non-GAAP Operating Margin (25%) | 150% | |||||||||||||||||||||
| Design Wins (15%) | 106% | |||||||||||||||||||||
| Direct Expenses (15%)(2) | 120% | |||||||||||||||||||||
| Product Revenue (20%) | 150% | |||||||||||||||||||||
| Fiscal Year 2018 Attainment | 139% | $ | 686,715 | 135.4% | ||||||||||||||||||
Mark D. Brazeal Chief Legal Officer | 60% | Adjusted non-GAAP Revenue (25%) | 150% | |||||||||||||||||||
| Adjusted non-GAAP Operating Margin (25%) | 150% | |||||||||||||||||||||
| Direct Expenses (50%)(2) | 120% | |||||||||||||||||||||
| Fiscal Year 2018 Attainment | 135% | $ | 492,075 | 105.3% | ||||||||||||||||||
| Name | Bonus Target Percent | Fiscal Year 2018 Bonus Goals | Fiscal Year 2018 Bonus Achievement |
Fiscal Year 2018 Payout Amount in Dollars (USD) and as a | ||||||||||||||||||
Bryan T. Ingram Senior Vice President and General Manager, Wireless Semiconductor Division | 100% | Adjusted non-GAAP Revenue (25%) | 150% | |||||||||||||||||||
| Adjusted non-GAAP Operating Margin (25%) | 150% | |||||||||||||||||||||
| WSD Revenue (25%) | 98% | |||||||||||||||||||||
| WSD Operating Margin (25%) | 143% | |||||||||||||||||||||
| Fiscal Year 2018 Attainment | 135% | $ | 1,080,171 | 175.6% | ||||||||||||||||||
|
|
| Name | Bonus Target Percent | Fiscal Year 2019 Bonus Goals | Fiscal Year 2019 Bonus Achievement | Fiscal Year 2019 Payout Amount in Dollars (USD) and as a Percentage of Base Salary Paid(1) | ||
| Hock E. Tan | 150% | Revenue (50%) | 0% | |||
| President and Chief Executive Officer | Adjusted non-GAAP Operating Margin (50%) | 125% | ||||
| Fiscal Year 2019 Attainment | 62% | $ 1,202,281 | 109.3 | % | ||
| Thomas H. Krause Jr. | 75% | Revenue (25%) | 0% | |||
| Chief Financial Officer | Adjusted non-GAAP Operating Margin (25%) | 125% | ||||
Direct Expenses (50%)(2) | 120% | |||||
| Fiscal Year 2019 Attainment | 91% | $ 355,443 | 88.9 | % | ||
| Charlie B. Kawwas, Ph.D. | 75% | Revenue (25%) | 0% | |||
| Senior Vice President and Chief Sales Officer | Adjusted non-GAAP Operating Margin (25%) | 125% | ||||
| Product Revenue (15%) | 0% | |||||
| Bookings (12.5%) | 111% | |||||
| Design Wins (12.5%) | 134% | |||||
Direct Expenses (10%)(2) | 120% | |||||
| Fiscal Year 2019 Attainment | 74% | $ 351,418 | 71.9 | % | ||
| Mark D. Brazeal | 60% | Revenue (25%) | 0% | |||
| Chief Legal Officer | Adjusted non-GAAP Operating Margin (25%) | 125% | ||||
Direct Expenses (50%)(2) | 100% | |||||
| Fiscal Year 2019 Attainment | 81% | $ 285.436 | 63.4 | % | ||
| Bryan T. Ingram | 100% | Revenue (25%) | 0% | |||
Senior Vice President and General Manager, Wireless Semiconductor Division (WSD) | Adjusted non-GAAP Operating Margin (25%) | 125% | ||||
| WSD Revenue (25%) | 0% | |||||
| WSD Operating Margin (25%) | 59% | |||||
| Fiscal Year 2019 Attainment | 46% | $ 271,299 | 45.8 | % | ||
our NEOs for Fiscal Year 2019.
Relative TSRgranted in the form of PSU awards.
2023. Our CEO did not receive a Multi-Year Equity Award and will not receive another equity award until at least 2021.
Relative TSR less than the 25th percentile, no shares will be earned for that performance period.
Relative TSR at the 25th percentile, 50% of the target number of shares subject to that performance period will be earned.
Relative TSR at the 50th percentile, 100% of the target number of shares subject to that performance period will be earned.
For the fourth performance period:
| ◦ | Relative TSR greater than 50th but less than 75th percentile, between 100% and 200% of the total number of the target shares subject to the award will be earned. |
| ◦ | Relative TSR at or greater than |
| ◦ | In the aggregate, the maximum payout over four years is 200% of the total target number of shares. |
If the Relative TSR is between two of the percentile levels, the number of shares earned will be determined using linear interpolation.
Relative TSR | TSR Achievement Factor | ||
Performance Periods 1, 2 and 3 | |||
At the 50th Percentile of the S&P 500 | 1 | ||
At the 25th Percentile of the S&P 500 | 0.5 | ||
Below the 25th Percentile of the S&P 500 | 0 | ||
Performance Period 4 | |||
At the 75th Percentile of the S&P 500 | Absolute TSR Negative = 4 less the Prior Achievement Sum Absolute TSR Neutral or Positive = 8 less the Prior Achievement | ||
At the 50th Percentile of the S&P 500 | 4 less the Prior Achievement Sum | ||
At the 25th Percentile of the S&P 500 | Prior Achievement Sum greater than or equal to 1.5 = 0.5 Prior Achievement Sum less than 1.5 = 2 less the Prior Achievement Sum | ||
Below the 25th Percentile of the S&P 500 | 0 | ||
Fiscal Year 2018 Mix of
Consistent with our compensation philosophy, the Compensation Committee granted equity awards to our NEOs in Fiscal Year 2018 as set forth in the table below. The awards vest over four years, with 25% of the shares of common stock subject to the awards vesting annually, subject to the NEO’s continued employment with us on the relevant vesting dates. The PSU awards however are also subject to the satisfaction of the applicable performance criteria, discussed in more detail above under “Relative TSR PSU Awards”. As intended, Mr. Tan did not receive an equity award in Fiscal Year 2018 and Mr. Tan will not receive another equity award until at least 2021.
| December 2017(1) | March 2018 | ||||||||||||||
| NEO | Service-Based RSUs (Number of Shares) | PSUs (Maximum Number of Shares)(2) | Service-Based RSUs (Number of Shares) | ||||||||||||
Thomas H. Krause Jr. | 5,000 | 16,000 | 8,000 | ||||||||||||
Charlie B. Kawwas, Ph.D. | 5,000 | 15,000 | 7,500 | ||||||||||||
Mark D. Brazeal | 3,000 | 13,000 | 6,500 | ||||||||||||
Bryan T. Ingram | 5,000 | 15,000 | 7,500 | ||||||||||||
| January 2019 | |||||||||
PSUs (Maximum Number of Shares)(1)(2) | Service-Based RSUs (Number of Shares)(2) | ||||||||
| NEO | Award 1 | Award 2 | Award 3 | Award 4 | Award 1 | Award 2 | Award 3 | Award 4 | |
| Thomas H. Krause Jr. | 20,000 | 20,000 | 20,000 | 20,000 | 10,000 | 10,000 | 10,000 | 10,000 | |
| Charlie B. Kawwas, Ph.D. | 20,000 | 20,000 | 20,000 | 20,000 | 10,000 | 10,000 | 10,000 | 10,000 | |
| Mark D. Brazeal | 15,000 | 15,000 | 15,000 | 15,000 | 7,500 | 7,500 | 7,500 | 7,500 | |
| Bryan T. Ingram | 15,000 | 15,000 | 15,000 | 15,000 | 7,500 | 7,500 | 7,500 | 7,500 | |
| (1) |
|
Represents the maximum number of shares of common stock that may be earned. The target number of shares that may be earned is 50% of this |
| (2) | The vesting start date for |
Relative TSR PSU Awards Earned for the 2017-20182017-2019 and 2018-2019 Performance Period
Periods
| Performance Period | 2017-2018 | 2017-2019 |  |
| Relative TSR Attainment | 57th Percentile | 67th Percentile | |
| Percentage of Target Shares Earned | 100% | 100% | |
| Thomas H. Krause, Jr. | 3,125 shares | 3,125 shares | |
| Charlie B. Kawwas, Ph.D. | 3,125 shares | 3,125 shares | |
| Mark D. Brazeal | 3,125 shares | 3,125 shares | |
| Bryan T. Ingram | 3,125 shares | 3,125 shares | |
 |  |
Fiscal Year 2019 Multi-Year Equity Incentive Awards
In December 2018, the Compensation Committee, with advice from Compensia, approved a broad-based programMarch 1st of multi-year equity grants (the “Multi-Year Equity Awards”) of RSUs and PSUs to eligible individuals, including employees who recently joined Broadcom in connection with our acquisition of CA, and our NEOs, other than our CEO.
Each Multi-Year Equity Award vests on the same basis as four annual equity grants made on March 15 of each year, beginning in 2019. The value of each grant was intended to approximate the value of an annual grant, consistent with the Company’s historical practices, with successive four-year vesting periods. The grant date for each Multi-Year Equity Award granted to our NEOs was January 15, 2019. The vesting start dates are March 15, 2019, 2020, 2021 and 2022. As withThe table below sets forth the awards granted to our NEOs under the annual equity program, 50% of each grant are service-based RSUs and 50% are PSUs. Each grant will vest as to 25% of the shares underlying such grant on each annual anniversary of the vesting start date applicable to that grant, subject to the NEO’s continued employment with us on the relevant vesting date. The PSU awards are based on our Relative TSR attainment and absolute TSR over four overlapping one, two, three and four-year performance periods. Thethe number of shares earned are determined in the same manner asunder the PSU awards discussed above under “Relative TSR PSU Awards”. No further annual equity grants will be made to our NEOs (or other employees receiving such Multi-Year Equity Awards) until at least 2023.
The Multi-Year Equity Awards were all granted ataward for each complete performance period, as determined by the same time, instead of annually over the next four years. However, they have annual staggered vesting start dates (starting March 15, 2019) and pursuant to their terms, in the event of a change of control (such as a qualifying termination) or other event, holders are not entitled to any accelerated vesting provided by any other agreement or arrangement with us except with respect to those grants for which a vesting start date has already occurred as at the effective time of the event giving rise to the acceleration.
An example of a Multi-Year Equity Award of RSUs, vesting over seven years, is set forth below:
| For Illustrative Purposes Only | # of RSUs Vesting On | |||||||||||||||||||||||||||||||
| Multi-Year Equity Award | 3/15/19 | 3/15/20 | 3/15/21 | 3/15/22 | 3/15/23 | 3/15/24 | 3/15/25 | 3/15/26 | ||||||||||||||||||||||||
Grant 1: 400 RSUs | — * | 100 | 100 | 100 | 100 | — | — | — | ||||||||||||||||||||||||
Grant 2: 400 RSUs | — | — | * | 100 | 100 | 100 | 100 | — | — | |||||||||||||||||||||||
Grant 3: 400 RSUs | — | — | — | * | 100 | 100 | 100 | 100 | — | |||||||||||||||||||||||
Grant 4: 400 RSUs | — | — | — | — | * | 100 | 100 | 100 | 100 | |||||||||||||||||||||||
Total: 1,600 RSUs | 0 | 100 | 200 | 300 | 400 | 300 | 200 | 100 | ||||||||||||||||||||||||
* Denotes grant vesting start date
We have historically granted annual equity awards to the vast majority of our employee base to align their interests with those of our stockholders, encourage retention, and drive performance. The acquisition of CA marks an important milestone for us and the Multi-Year Equity Awards are intended to provide our employees with clarity regarding future compensation in order to create a powerful long-term retention incentive, as well as sharpened focus on long-term stockholder value creation.
We also believe it is in the best interests of our stockholders to maximize the use of the remaining shares available under the Avago Technologies Limited 2009 Equity Incentive Plan (“2009 Plan”), which expires in 2019. The Multi-Year Equity Awards were issued out of the 2009 Plan, as well as out of the BRCM 2012 Stock Incentive Plan (the “2012 Plan”).
Performance Period 2018-2019 
Relative TSR Attainment Percentage of Target Shares Earned 100% Thomas H. Krause, Jr. 2,000 shares Charlie B. Kawwas, Ph.D. 1,875 shares Mark D. Brazeal 1,675 shares Bryan T. Ingram 1,875 shares
Hedging and Pledging Prohibitions
A core element of our compensation philosophy is to align the interests of our executives with those of our stockholders by providing appropriate long-term incentives. In furtherance of this philosophy, our insider trading policy prohibits our directors and employees, including our executives, from hedging or pledging our securities, from making short sales, or trading in derivative securities related to our securities.
Each
Transition and Separation Agreement – Mr. Ingram
3, 2019. Directors on January 28, 2020: Bryant20192020 Annual Meeting of Stockholders and the Company’s Annual Report on Form10-K for the fiscal year ended November 4, 2018.Directors:Bryant*James V. DillerLewis C. EggebrechtLow*Donald Macleod* Ms. Bryant and Mr. Low joined the Compensation Committee on January 11, 2019
Peter Marks
Name and Principal Positions | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) |
Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Hock E. Tan |
| 2018 |
|
| 1,121,154 |
|
| 0 |
|
| 0 |
|
| 3,855,288 |
| 66,495 | (3) |
| 5,042,937 |
| ||||||||
President and Chief Executive Officer | 2017 | 1,100,000 | 0 | 98,322,843 | 3,712,500 | 75,820 | 103,211,163 | |||||||||||||||||||||
| 2016 | 1,011,662 | 0 | 21,656,268 | (4) | 1,980,516 | (5) | 43,601 | 24,692,047 | ||||||||||||||||||||
Thomas H. Krause Jr. | 2018 | 407,692 | 200,000 | (6) | 6,168,190 | 541,042 | 16,500 | (7) | 7,333,425 | |||||||||||||||||||
Chief Financial Officer | 2017 | 400,000 | 100,000 | 10,101,125 | 520,888 | 16,200 | 11,138,213 | |||||||||||||||||||||
| 2016 | 349,687 | 200,000 | 2,574,300 | 312,924 | 15,900 | 3,452,811 | ||||||||||||||||||||||
Charlie B. Kawwas, Ph.D. | 2018 | 497,924 | 200,000 | (6) | 5,860,388 | 686,715 | 16,500 | (7) | 7,261,527 | |||||||||||||||||||
Senior Vice President and Chief Sales Officer | 2017 | 488,529 | 0 | 7,322,750 | 672,688 | 16,200 | 8,500,167 | |||||||||||||||||||||
| 2016 | 479,007 | 0 | 4,273,410 | 549,885 | 20,278 | 5,322,580 | ||||||||||||||||||||||
Mark D. Brazeal | 2018 | 458,654 | 100,000 | (6) | 4,747,443 | 492,075 | 19,200 | (7) | 5,817,372 | |||||||||||||||||||
Chief Legal Officer | 2017 | 268,269 | 0 | 5,906,188 | 243,935 | 12,462 | 6,430,854 | |||||||||||||||||||||
Bryan T. Ingram | 2018 | 603,640 | 0 | 5,860,388 | 1,080,171 | 16,500 | (7) | 7,560,699 | ||||||||||||||||||||
Senior Vice President and General Manager, Wireless Semiconductor Division | 2017 | 592,250 | 0 | 7,322,750 | 1,145,780 | 16,200 | 9,076,980 | |||||||||||||||||||||
| 2016 | 580,706 | 0 | 3,123,580 | 380,423 | 15,900 | 4,100,609 | ||||||||||||||||||||||
Name and Principal Positions | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($) | Total ($) |
Hock E. Tan | 2019 | 1,100,000 | 0 | 0 | 1,202,281 | 64,607(3) | 2,366,888 |
President and Chief Executive Officer | 2018 | 1,121,154 | 0 | 0 | 3,855,288 | 66,495 | 5,042,937 |
| 2017 | 1,100,000 | 0 | 98,322,843 | 3,712,500 | 75,820 | 103,211,163 | |
| Thomas H. Krause Jr. | 2019 | 400,000 | 0 | 17,073,150 | 355,443 | 16,800(4) | 17,845,393 |
| Chief Financial Officer | 2018 | 407,692 | 200,000 | 6,168,190 | 541,042 | 16,500 | 7,333,425 |
| 2017 | 400,000 | 100,000 | 10,101,125 | 520,888 | 16,200 | 11,138,213 | |
| Charlie B. Kawwas, Ph.D. | 2019 | 488,529 | 0 | 17,073,150 | 351,418 | 16,800(4) | 17,929,897 |
Senior Vice President and Chief Sales Officer | 2018 | 497,924 | 200,000 | 5,860,388 | 686,715 | 16,500 | 7,261,527 |
| 2017 | 488,529 | 0 | 7,322,750 | 672,688 | 16,200 | 8,500,167 | |
| Mark D. Brazeal | 2019 | 450,000 | 0 | 12,804,863 | 285,436 | 16,800(4) | 13,557,099 |
| Chief Legal Officer | 2018 | 458,654 | 100,000 | 4,747,443 | 492,075 | 19,200 | 5,817,372 |
| 2017 | 268,269 | 0 | 5,906,188 | 243,935 | 12,462 | 6,430,854 | |
| Bryan T. Ingram | 2019 | 592,250 | 0 | 12,804,863 | 271,299 | 16,800(4) | 13,685,212 |
Senior Vice President and General Manager, Wireless Semiconductor Division | 2018 | 603,640 | 0 | 5,860,388 | 1,080,171 | 16,500 | 7,560,699 |
| 2017 | 592,250 | 0 | 7,322,750 | 1,145,780 | 16,200 | 9,076,980 | |
| (1) | Represents the grant date fair value of service-based RSU awards and PSU awards, determined in accordance with ASC 718. Although the Multi-Year Equity Awards have four staggered vesting start dates of March 15, 2019, 2020, 2021 and 2022, under ASC 718 we are required to include the grant date fair value of all the Multi-Year Equity Awards in Fiscal Year 2019. As the PSU awards are not subject to performance conditions as defined under ASC 718, the maximum grant date fair values for such awards do not differ from the fair values presented in this table. The amounts in this column do not reflect compensation actually received by the NEOs or the actual value that may be recognized by the NEO. For a discussion of the valuation assumptions used in the calculations, see Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of our |
| (2) | Represents amounts paid under the APB Plan for each fiscal year. Please see the plan description in “Compensation Discussion and Analysis—Elements of Executive Compensation—Annual Cash Incentive Bonus Plan” above. |
| (3) | Represents |
| (4) |
|
|
|
Represents Section 401(k) employer matching contributions. |
Name Approval Date(1) Grant Date(1) Estimated Future Payouts Under Non-Equity Incentive Estimated Future Payouts Under Equity Incentive Plan All Other Stock Awards: Number of Shares of Stock or Units (#)(3) Grant Date Fair Value of Stock and Option Awards ($)(4) Threshold ($) Target ($) Maximum ($) Threshold (#) Target(5) (#) Maximum (#) Hock E. Tan Thomas H. Krause Jr. Charlie B. Kawwas, Ph.D. Mark D. Brazeal Bryan T. Ingram The approval date represents the date on which the award was approved by the Compensation Committee or the Represents potential payouts under the APB Plan for Fiscal Year Represents the four service-based RSU Represents the grant date fair value of the equity awards, as determined in accordance with ASC 718. For a discussion of the valuation assumptions used in the calculations, see Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of our Represents 20182019 Supplemental Summary Compensation DataFiscal
YearSalary
($)Stock
Awards
($)Non-Equity
Incentive Plan
Compensation
($)All Other
Compensation
($)Total
($)2019 1,100,000 0 0 1,202,281 64,607 2,366,888 2018 1,121,154 0 0 3,855,288 66,495 5,042,937 2017 1,100,000 0 98,322,843 3,712,500 75,820 103,211,163 Thomas H. Krause Jr. 2019 400,000 0 4,713,700 355,443 16,800 5,485,943 Chief Financial Officer 2018 407,692 200,000 6,168,190 541,042 16,500 7,333,425 2017 400,000 100,000 10,101,125 520,888 16,200 11,138,213 Charlie B. Kawwas, Ph.D. 2019 488,529 0 4,713,700 351,418 16,800 5,570,447 2018 497,924 200,000 5,860,388 686,715 16,500 7,261,527 2017 488,529 0 7,322,750 672,688 16,200 8,500,167 Mark D. Brazeal 2019 450,000 0 3,535,275 285,436 16,800 4,287,511 Chief Legal Officer 2018 458,654 100,000 4,747,443 492,075 19,200 5,817,372 2017 268,269 0 5,906,188 243,935 12,462 6,430,854 Bryan T. Ingram 2019 592,250 0 3,535,275 271,299 16,800 4,415,624 2018 603,640 0 5,860,388 1,080,171 16,500 7,560,699 2017 592,250 0 7,322,750 1,145,780 16,200 9,076,980 20182019 to each of our NEOs. All equity awards were granted under the 2009 Plan, unless otherwise noted.
Plan Awards(2)
Awards 214,183 1,713,461 3,855,288 19,471 311,539 700,962 12/4/2017 12/15/2017 5,000 1,243,350 3/13/2018 3/15/2018 1,000 8,000 16,000 2,918,360 3/13/2018 3/15/2018 8,000 2,006,480 14,268 380,489 856,100 12/4/2017 12/15/2017 5,000 1,243,350 3/13/2018 3/15/2018 937 7,500 15,000 2,735,963 3/13/2018 3/15/2018 7,500 1,881,075 17,524 280,385 630,865 12/4/2017 12/15/2017 3,000 746,010 3/13/2018 3/15/2018 812 6,500 13,000 2,371,168 3/13/2018 3/15/2018 6,500 1,630,265 38,439 615,029 1,383,815 12/4/2017 12/15/2017 5,000 1,243,350 3/13/2018 3/15/2018 937 7,500 15,000 2,735,963 3/13/2018 3/15/2018 7,500 1,881,075
Under Non-Equity Incentive
Plan Awards(2)
Under Equity Incentive Plan
Awards
Stock
Awards:
Number of
Shares of
Stock or
Units
Date Fair
Value of
Stock
and
Option
Awards
($)(4)Name
Date(1)
Date(1)Vesting Start Date Threshold
($)Target
($)Maximum
($) Threshold
(#)
(#)Maximum
(#) 206,250 1,650,000 3,712,500 18,750 300,000 675,000 12/4/2018 1/15/2019 3/15/2019 1,250 10,000 20,000 2,757,600 12/4/2018 1/15/2019 3/15/2020 1,250 10,000 20,000 2,631,600 12/4/2018 1/15/2019 3/15/2021 1,250 10,000 20,000 2,511,400 12/4/2018 1/15/2019 3/15/2022 1,250 10,000 20,000 2,396,750 12/4/2018 1/15/2019 3/15/2019 10,000 1,956,100 12/4/2018 1/15/2019 3/15/2020 10,000 1,791,500 12/4/2018 1/15/2019 3/15/2021 10,000 1,611,200 12/4/2018 1/15/2019 3/15/2022 10,000 1,417,000 Charlie B. Kawwas, Ph.D. 9,160 366,397 824,393 12/4/2018 1/15/2019 3/15/2019 1,250 10,000 20,000 2,757,600 12/4/2018 1/15/2019 3/15/2020 1,250 10,000 20,000 2,631,600 12/4/2018 1/15/2019 3/15/2021 1,250 10,000 20,000 2,511,400 12/4/2018 1/15/2019 3/15/2022 1,250 10,000 20,000 2,396,750 12/4/2018 1/15/2019 3/15/2019 10,000 1,956,100 12/4/2018 1/15/2019 3/15/2020 10,000 1,791,500 12/4/2018 1/15/2019 3/15/2021 10,000 1,611,200 12/4/2018 1/15/2019 3/15/2022 10,000 1,417,000 16,875 270,000 607,500 12/4/2018 1/15/2019 3/15/2019 937 7,500 15,000 2,068,200 12/4/2018 1/15/2019 3/15/2020 937 7,500 15,000 1,973,700 12/4/2018 1/15/2019 3/15/2021 937 7,500 15,000 1,883,550 12/4/2018 1/15/2019 3/15/2022 937 7,500 15,000 1,797,563 12/4/2018 1/15/2019 3/15/2019 7,500 1,467,075 12/4/2018 1/15/2019 3/15/2020 7,500 1,343,625 12/4/2018 1/15/2019 3/15/2021 7,500 1,208,400 12/4/2018 1/15/2019 3/15/2022 7,500 1,062,750 37,016 592,250 1,332,563 12/4/2018 1/15/2019 3/15/2019 937 7,500 15,000 2,068,200 12/4/2018 1/15/2019 3/15/2020 937 7,500 15,000 1,973,700 12/4/2018 1/15/2019 3/15/2021 937 7,500 15,000 1,883,550 12/4/2018 1/15/2019 3/15/2022 937 7,500 15,000 1,797,563 12/4/2018 1/15/2019 3/15/2019 7,500 1,467,075 12/4/2018 1/15/2019 3/15/2020 7,500 1,343,625 12/4/2018 1/15/2019 3/15/2021 7,500 1,208,400 12/4/2018 1/15/2019 3/15/2022 7,500 1,062,750 (1) Independent Directors,independent directors, as applicable. The grant date is the date on which the award became effective.(2) 2018.2019. Target bonus amount for Fiscal Year 20182019 were as follows: Mr. Tan 150%, Mr. Krause 75%, Dr. Kawwas 75%, Mr. Brazeal 60% and Mr. Ingram 100%, as a percentage of base salary. The threshold amount for Mr. Tan was 12.5% of his target bonus amount, calculated based on the achievement of a single corporate goal at 50% of the target for such goal and with the individual performance multiplier set at target 50%. The threshold amount for each of Messrs. Krause, Brazeal and Ingram was 6.25% of his target bonus amount, calculated based on the achievement of a single corporate or divisional goal at 25% of the target for such goal and with the individual performance multiplier set at target 50%. The threshold amount for Dr. Kawwas was 3.75%2.5% of his target bonus amount, calculated based on the achievement of a single corporate or divisional goal at 15%10% of the target for such goal and with the individual performance multiplier set at target 50%. The maximum bonus payable was 225% of the target bonus amount for Mr. Tan, which assumes maximum (150%) performance for each corporate goal and with the individual performance multiplier set at 150%. The maximum bonus payable was 225% of the target bonus amount for Messrs. Krause, Brazeal and Ingram, and Dr. Kawwas, which assumes maximum (150%) performance for (i) each corporate goal and (ii) each divisional or functional goal and with the maximum individual performance multiplier set at 150%.(3) awards,Multi-Year Equity Awards granted in January 2019, which vest at a rate of 25% per year on each anniversary of the grantapplicable vesting start date, subject to the NEO’s continued employment with us through the relevant vesting date.(4) 2018 Form10-K2019 Annual Report filed with the SEC on December 21, 2018.(5) athe four PSU award thatMulti-Year Equity Awards granted in January 2019, which will vest at a rate of 25% per year on each anniversary of the grantapplicable vesting start date, subject to the NEO’s continued employment with us through the relevant vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The Multi-Year Equity Awards have staggered vesting start dates of March 15, 2019, 2020, 2021 and 2022. The performance criteria is based on our Relative TSR over four performance periods beginning on the March 2, 20182nd immediately prior to the applicable vesting start date and ending on each ofthe immediately following March 1 of 2019, 2020, 2021, and 2022.1st. The number of shares of common stock that may be earned is capped atone-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock subject to thefor each PSU award, if at the end ofduring the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled.
Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock that Have Not Vested (#) Market Value of Shares Units of Stock that Have Not Vested ($)(2) Equity Incentive Plan Awards: Number of Securities Underlying Unearned Units of Stock (#) Market Value of Shares or Units of Stock that Have Not Vested($)(2) Hock E. Tan Thomas H. Krause Jr. Charlie B. Kawwas, Ph.D. Mark D. Brazeal Bryan T. Ingram The awards shown in these columns are awards granted under our 2009 Plan unless otherwise noted. The amounts shown in this column represent the number of shares of common stock that have not vested multiplied by Represents 20182019 Outstanding Equity Awards at FiscalYear-End Table4, 2018,3, 2019, the last day of Fiscal Year 2018,2019, held by each of our NEOs. Option Awards(1) Restricted Share Unit Awards(1) Name Grant Date
or 3/12/2013 131,250 — 35.45 3/11/2020 — — — — 9/13/2013 1,337,916 — 38.99 9/12/2020 — — — — 1/2/2014 750,000 — 52.65 1/1/2021 — — — — 6/15/2016 — — — — 240,000(3) 52,984,800 12/15/2016 — — 4,507(4) 995,010 — — 6/15/2017 — — — — 168,000(5) 37,089,360 3/11/2014 22,500 — 62.02 3/10/2021 — — — — 3/15/2015 — — 2,500(4) 551,925 — — 3/15/2015 — — 2,500(6) 551,925 — — 3/15/2016 — — 5,000(4) 1,103,850 — — 3/15/2016 — — 5,000(6) 1,103,850 — — 11/15/2016 — — 7,500(4) 1,655,775 — — 11/15/2016 — — 7,500(6) 1,655,775 — — 12/15/2016 — — 3,750(4) 827,888 — — 3/15/2017 — — 9,375(4) 2,069,719 9,375(7) 2,069,719 12/15/2017 — — 5,000(4) 1,103,850 — — 3/15/2018 — — 8,000(4) 1,766,160 8,000(8) 1,766,160 3/1/2013 3,668 — 38.92 3/1/2020 — — — — 3/1/2014 5,662 — 62.63 3/1/2021 — — — — 6/10/2014 50,000 — 71.86 6/9/2021 — — — — 3/15/2015 — — 3,750(4) 827,888 — — 3/15/2015 — — 3,750(6) 827,888 — — 12/15/2015 — — 1,500(4) 331,155 — — 3/15/2016 — — 7,500(4) 1,655,775 — — 3/15/2016 — — 7,500(6) 1,655,775 — — 12/15/2016 — — 3,750(4) 827,888 — — 3/15/2017 — — 9,375(4) 2,069,719 9,375(7) 2,069,719 12/15/2017 — — 5,000(4) 1,103,850 — — 3/15/2018 — — 7,500(4) 1,655,775 7,500(8) 1,655,775 4/15/2017 — — 9,375(4) 2,069,719 9,375(9) 2,069,719 12/15/2017 — — 3,000(4) 662,310 — — 3/15/2018 — — 6,500(4) 1,435,005 6,500(8) 1,435,005 12/9/2014 — — 1,500(4) 331,155 — — 3/15/2015 — — 6,250(4) 1,379,813 — — 3/15/2015 — — 6,250(6) 1,379,813 — — 12/15/2015 — — 2,000(4) 441,540 — — 3/15/2016 — — 5,000(4) 1,103,850 — — 3/15/2016 — — 5,000(6) 1,103,850 — — 12/15/2016 — — 3,750(4) 827,888 — — 3/15/2017 — — 9,375(4) 2,069,719 9,375(7) 2,069,719 12/15/2017 — — 5,000(4) 1,103,850 — — 3/15/2018 — — 7,500(4) 1,655,775 7,500(8) 1,655,775 Name Grant Date Number of
Securities
Underlying
Unexercised
Options (#)
ExercisableNumber of
Securities
Underlying
Unexercised
Options (#)
UnexercisableOption
Exercise
Price
($)Option
Expiration
Date Number of
Shares or
Units of
Stock that
Have Not
Vested
(#)
Value of
Shares or
Units of
Stock
that
Have Not
Vested
($)(2)Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unearned
Units of
Stock
(#)
Value of
Shares or
Units of
Have Not
Vested
($)(2)Hock E. Tan 9/13/2013 1,229,166 — 38.99 9/12/2020 — — — — 1/2/2014 750,000 — 52.65 1/1/2021 — — — — 12/15/2016 — — 890,956 — — 6/15/2017 — — — — 224,222,040 Thomas H. Krause Jr. 3/15/2016 — — 741,475 — — 3/15/2016 — — 741,475 — — 11/15/2016 — — 1,482,950 — — 11/15/2016 — — 1,482,950 — — 12/15/2016 — — 741,475 — — 3/15/2017 — — 1,853,688 5,561,063 12/15/2017 — — 1,112,213 — — 3/15/2018 — — 1,779,540 4,152,260 1/15/2019 — — 2,965,900 2,965,900 3/15/2019 1/15/2019 — — 2,965,900 2,965,900 3/15/2020 1/15/2019 — — 2,965,900 2,965,900 3/15/2021 1/15/2019 — — 2,965,900 2,965,900 3/15/2022 Charlie B. Kawwas, Ph.D. 6/10/2014 20,000 — 71.86 6/9/2021 — — — — 12/15/2015 — — 222,443 — — 3/15/2016 — — 1,112,213 — — 3/15/2016 — — 1,112,213 — — 12/15/2016 — — 741,475 — — 3/15/2017 — — 1,853,688 5,561,063 12/15/2017 — — 1,112,213 — — 3/15/2018 — — 1,668,319 3,892,744 1/15/2019 — — 2,965,900 2,965,900 3/15/2019 1/15/2019 — — 2,965,900 2,965,900 3/15/2020 1/15/2019 — — 2,965,900 2,965,900 3/15/2021 1/15/2019 — — 2,965,900 2,965,900 3/15/2022 Mark D. Brazeal 4/15/2017 — — 1,853,688 5,561,063 12/15/2017 — — 667,328 — — 3/15/2018 — — 1,445,876 3,373,711 1/15/2019 — — 2,224,425 2,224,425 3/15/2019 1/15/2019 — — 2,224,425 2,224,425 3/15/2020 1/15/2019 — — 2,224,425 2,224,425 3/15/2021 1/15/2019 — — 2,224,425 2,224,425 3/15/2022 Name Grant Date Number of
Securities
Underlying
Unexercised
Options (#)
ExercisableNumber of
Securities
Underlying
Unexercised
Options (#)
UnexercisableOption
Exercise
Price
($)Option
Expiration
Date Number of
Shares or
Units of
Stock that
Have Not
Vested
(#)
Value of
Shares or
Units of
Stock
that
Have Not
Vested
($)(2)Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unearned
Units of
Stock
(#)
Value of
Shares or
Units of
Have Not
Vested
($)(2)Bryan T. Ingram 12/15/2015 — — 296,590 — — 3/15/2016 — — 741,475 — — 3/15/2016 — — 741,475 — — 12/15/2016 — — 741,475 — — 3/15/2017 — — 1,853,688 5,561,063 12/15/2017 — — 1,112,213 — — 3/15/2018 — — 1,668,319 3,892,744 1/15/2019 — — 2,224,425 2,224,425 3/15/2019 1/15/2019 — — 2,224,425 2,224,425 3/15/2020 1/15/2019 — — 2,224,425 2,224,425 3/15/2021 1/15/2019 — — 2,224,425 2,224,425 3/15/2022 (1) (2) $220.77,$296.59, the closing price per share of common stock on November 2, 2018,1, 2019, the last trading day of Fiscal Year 2018.(3) the PSU award granted in Fiscal Year 2016 based on attainment of the maximum performance level, which vests in full upon completion of the performance period, subject to continued employment with us and achievement of thepre-established performance goals over the performance period of three years from the grant date, as determined by the Independent Directors within 60 days following the end of the performance period. The Independent Directors will determine the achievement of two performance measures (i) Relative TSR over the performance period and (ii) share price growth over the performance period, based on90-day trailing average prices at the start and end of the performance period. Based upon the level of performance achieved, a maximum of 240,000 shares of common stock may be earned under the PSU award. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled.
|
| (4) | Represents the PSU award granted in Fiscal Year 2017 based on attainment of the |
| (5) | Represents PSU awards that are scheduled to vest at the rate of 25% a year on each anniversary of the grant date, subject to the satisfaction of a share price contingency (set at the grant date) and the NEO’s continued employment with us through the applicable vesting date. No shares of common stock will vest until the average closing price per share of our common stock over a 20 consecutive trading day period is equal to or greater than 120% of the fair market value of a share of common stock on the grant date. The share price contingency for this PSU award was met prior to the fourth anniversary of the grant date and therefore all of the shares of common stock subject to the PSU have the potential to vest (assuming continued service). If the share price contingency was not met by the fourth anniversary of the grant date or the time the NEO ceases to provide services to us, the PSUs would not vest and the award would have expired or immediately terminated, as applicable. |
| (6) | Represents a PSU award based on attainment of the |
| (7) | Represents a PSU award based on attainment of the |
|
| (8) | Represents a PSU award based on attainment of the maximum performance level, given that the level of performance through November 3, 2019 is tracking at above target. The PSU award will vest at a rate of 25% per year on the later of (i) each anniversary of the grant date and (ii) the last day of the performance period, subject to the NEO’s continued employment with us through the applicable vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The performance criteria is based on our Relative TSR over four performance periods beginning on |
| (9) | Represents a service-based RSU Multi-Year Equity Award that will vest at a rate of 25% per year on each anniversary of the applicable vesting start date, subject to the NEO’s continued employment with us through the relevant vesting date. The Multi-Year Equity Awards have staggered vesting start dates of March 15, 2019, 2020, 2021 and 2022. |
| (10) | Represents a PSU Multi-Year Equity Award based on attainment of the target performance level, given that the level of performance through November 3, 2019 is tracking below target. The PSU award will vest at a rate of 25% per year on each anniversary of the applicable vesting start date, subject to the NEO’s continued employment with us through the applicable vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The Multi-Year Equity Awards have staggered vesting start dates of March 15, 2019, 2020, 2021 and 2022.The performance criteria is based on our Relative TSR over four performance periods beginning on the March 2nd immediately prior to the applicable vesting start date and ending on the immediately following March 1st. The number of shares of common stock that may be earned is capped at one-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock for each PSU award, if during the fourthperformance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled. |
| Option Awards | RSU Awards | |||||||||||||||
| Name |
Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Release (#) | Value Realized on Vesting/Release ($) | ||||||||||||
Hock E. Tan | 240,000 | (1) | 49,520,522 | 1,503 | 399,392 | |||||||||||
Thomas H. Krause Jr. | — | — | 30,000 | 7,970,413 | ||||||||||||
Charlie B. Kawwas, Ph.D. | 10,000 | 1,785,108 | 36,109 | 9,531,283 | ||||||||||||
Mark D. Brazeal | — | — | 6,250 | 1,543,375 | ||||||||||||
Bryan T. Ingram | 60,000 | 11,454,246 | 47,500 | 12,574,068 | ||||||||||||
Option Awards | RSU and PSU Awards | |||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Release (#)(1) | Value Realized on Vesting/Release ($) |
| Hock E. Tan | 240,000 | 57,835,743 | 235,071 | 62,495,748 |
| Thomas H. Krause Jr. | 22,500 | 4,388,868 | 27,750 | 7,697,148 |
| Charlie B. Kawwas, Ph.D. | 39,330 | 8,695,268 | 28,250 | 8,085,448 |
| Mark D. Brazeal | — | — | 10,250 | 3,112,065 |
| Bryan T. Ingram | — | — | 32,500 | 9,245,140 |
| (1) |
|
Policies Continued Base Salary Health Benefits Continuation Coverage Equity Award Vesting Acceleration(2) Hock E. Tan Thomas H. Krause, Jr. Charlie B. Kawwas, Ph.D. Mark D. Brazeal Bryan T. Ingram Bonus payments are calculated using the lesser of the NEO’s prior year’s actual bonus or prior year’s target bonus. Upon a qualifying termination of a NEO’s employment in connection with a change in control of our Company, the NEO will receive full acceleration of all outstanding service-based equity awards, and acceleration of outstanding performance-based equity awards to the extent (i) the effective price per share paid by the acquirer meets or exceeds any share price contingency applicable to any share-price performance-based awards or (ii) other performance goals have been deemed satisfied, in the discretion of our Board, based on our performance through the date of the change in control, for all other types of performance-based equity awards. Continued Base Health Benefits Bonus payments are calculated using the lesser of the NEO’s prior year’s actual bonus or prior year’s target bonus.Policy Name Bonus(1) 24 months 200 % — 100 % 12 months 100 % 12 months 100 % 12 months 100 % 12 months 100 % 12 months 100 % 12 months 100 % 12 months 100 % 12 months 100 % Name Hock E. Tan 24 months 200% — 100% Thomas H. Krause, Jr. 12 months 100% 12 months 100% Charlie B. Kawwas, Ph.D. 12 months 100% 12 months 100% Mark D. Brazeal 12 months 100% 12 months 100% (1) (2) Name
Salary
Continuation Coverage Hock E. Tan 12 months 100% — Thomas H. Krause, Jr. 9 months 50% 6 months Charlie B. Kawwas, Ph.D. 9 months 50% 6 months Mark D. Brazeal 9 months 50% 6 months Hock E. Tan12 months100% — Thomas H. Krause, Jr.9 months50% 6 months Charlie B. Kawwas, Ph.D.9 months50% 6 months Mark D. Brazeal9 months50% 6 months Bryan T. Ingram9 months50% 6 months(1) September 2015,March 2019, our Board approved the Death and Permanent Disability Policy. This policy wasPolicies. These policies were effective immediately upon adoption, and providesprovide for the full acceleration of vesting of equity awards that have started vesting upon an executive’s death or permanent disability of his or her outstanding and unvested equity awards that would otherwise vest solely based on the executive’s continued service, including
performance-based equity PSU awards for which the performance criteria have been met as of the date of such death or permanent disability. However, pursuant to the terms of the Multi-Year Equity Awards, holders are not entitled to full acceleration of vesting of these awards except with respect to those awards for which the vesting start date has already occurred at the time of an executive’s death or disability. The Death andPermanent Disability Policy applies in the event of the death or permanent disability of (i) any officer of our Company, as such term is defined in Exchange Act Rule16a-1, and (ii) any member of our CEO’s executive staff, including our NEOs.
NEOs, as determined by our CEO.
in Connection with a Change in Control
| Name | Cash Severance ($) | Cash Severance ($) | Health Benefits ($)(1) | Total ($) | ||||||||||||||||
Hock E. Tan | 1,100,000 | 1,650,000 | — | 2,750,000 | ||||||||||||||||
Thomas H. Krause Jr. | 300,000 | 150,000 | 10,998 | 460,998 | ||||||||||||||||
Charlie B. Kawwas, Ph.D. | 366,397 | 183,198 | 11,778 | 561,374 | ||||||||||||||||
Mark D. Brazeal | 337,500 | 75,289 | (2) | 10,839 | 423,628 | |||||||||||||||
Bryan T. Ingram | 444,188 | 296,125 | 10,778 | 751,091 | ||||||||||||||||
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Potential Payments and Benefits upon Certain Terminations of Employment in Connection with a Change in Control
The following table reflects the potential payments and benefits to which our NEOs would be entitled under their severance benefits agreements in effect as of the end of Fiscal Year 2018 in the event of a qualifying termination taking place within 12 months following a change in control of our Company (or in the case of Mr. Tan three months before or 12 months following a change in control of our Company). The amounts presented in the table assume an employment termination date of November 4, 20183, 2019 and that all eligibility requirements contemplated by the NEO’s respective agreements and our policies and practices, as applicable, were met.
| Name | Cash Severance ($) | Cash Severance ($) | Health Benefits ($)(1) | Value of RSU/ Acceleration ($)(2) | Total ($) | ||||||||||||||||||||
Hock E. Tan | 2,200,000 | 3,300,000 | — | 49,583,838 | (3) | 55,083,838 | |||||||||||||||||||
Thomas H. Krause Jr. | 400,000 | 300,000 | 21,996 | 15,169,548 | (4) | 15,891,545 | |||||||||||||||||||
Charlie B. Kawwas, Ph.D. | 488,529 | 366,397 | 23,557 | 13,650,651 | (4) | 14,529,133 | |||||||||||||||||||
Mark D. Brazeal | 450,000 | 150,577 | (5) | 21,678 | 6,694,188 | (4) | 7,316,443 | ||||||||||||||||||
Bryan T. Ingram | 592,250 | 592,250 | 21,557 | 14,092,191 | (4) | 15,298,247 | |||||||||||||||||||
| Name | Cash Severance Base Salary ($) | Cash Severance Bonus ($) | Health Benefits Continuation Coverage ($)(1) | Value of RSU/PSU Acceleration ($)(2) | Total ($) | |
| Hock E. Tan | 2,200,000 | 3,300,000 | — | 77,479,985(3) | 82,979,985 | |
| Thomas H. Krause Jr. | 400,000 | 300,000 | 21,996 | 22,075,787(4) | 22,797,783 | |
| Charlie B. Kawwas, Ph.D. | 488,529 | 366,397 | 23,557 | 19,772,469(4) | 20,650,952 | |
| Mark D. Brazeal | 450,000 | 270,000 | 21,678 | 14,152,682(4) | 14,894,360 | |
| (1) | Represents the cost of our subsidized continued healthcare benefits based on our current costs to provide such coverage. |
| (2) | The amounts in this column include, for each service-based RSU award and PSU award subject to a share price contingency that has been met, the number of shares of common stock that would have vested multiplied by $296.59, the closing price per share of common stock on November 1, 2019, the last trading day of Fiscal Year 2019. As of such date, all share price contingencies have been met and the vesting of all such awards would have accelerated in the event of a qualifying termination. |
| (3) | This amount includes, for each PSU award for which the applicable performance goals have been deemed satisfied based on our actual performance immediately prior to November 1, 2019, the last trading day of Fiscal Year 2019, that would have accelerated, the number of shares of common stock that would have vested multiplied by $296.59, the closing price per share of common stock on November 1, 2019. As of such date, 258,232 shares of common stock subject to the PSU awards granted in Fiscal Year 2017, would have vested in the event of a qualifying termination. |
| (4) | This amount includes, for each PSU award for which the applicable performance goals have been deemed satisfied based on our actual performance immediately prior to November 1, 2019, the last trading day of Fiscal Year 2019, that would have accelerated, the number of shares of common stock that would have vested multiplied by $296.59, the closing price per share of common stock on November 1, 2019. As of such date, the following shares would have vested in the event of a qualifying termination: 12,011 shares subject to the Fiscal Year 2017 PSU awards for each of Messrs. Krause and Brazeal, and Dr. Kawwas, 10,265 shares for Mr. Krause, 9,624 shares for Dr. Kawwas and 8,340 shares for Mr. Brazeal subject to the Fiscal Year 2018 PSU awards, and 8,656 shares for Mr. Krause, 8,656 shares for Dr. Kawwas and 6,492 shares for Mr. Brazeal subject to the Fiscal Year 2019 PSU awards with a vesting start date of March 15, 2019. |
| Name | Cash Severance Base Salary ($) | Cash Severance Bonus ($) | Health Benefits Continuation Coverage ($)(1) | Total ($) | |
| Hock E. Tan | 1,100,000 | 1,650,000 | — | 2,750,000 | |
| Thomas H. Krause Jr. | 300,000 | 150,000 | 10,998 | 460,998 | |
| Charlie B. Kawwas, Ph.D. | 366,397 | 183,198 | 11,778 | 561,374 | |
| Mark D. Brazeal | 337,500 | 135,000 | 10,839 | 483,339 | |
| (1) | Represents the cost of our subsidized continued healthcare benefits, based on our current costs to provide such coverage. |
| Name | Value of RSU/PSU Acceleration ($)(1)(2) | |
| Hock E. Tan | 113,001,976(3) | |
| Thomas H. Krause Jr. | 12,901,665 | |
| Charlie B. Kawwas, Ph.D. | 10,778,461 | |
| Mark D. Brazeal | 6,191,316 | |
| (1) | The amounts in this column include for each service-based RSU award and PSU award subject to a share price contingency that had been met, the number of shares of common stock that would have vested multiplied by |
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Potential Payments under our Death and Disability Policy
The following table reflects the potential payments and benefits to which our NEOs would be entitled under the Death and Disability Policy in effect as of November 4, 2018, in the event of death or permanent disability. The amounts presented in the table assume a termination of employment date of November 4, 2018 and that all eligibility requirements contemplated by the Death and Disability Policy were met.
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| (2) | The amounts in this column do not include accelerations of the PSU awards subject to performance goals based on criteria other than share price contingencies, except as noted below, as these awards are not eligible for acceleration upon death or permanent disability. |
| (3) | This amount includes the acceleration of the PSU award granted in Fiscal Year 2017 with respect to 50% of the target number of shares of common stock for each performance period multiplied by |
We collected compensation data from our human resources system of record for all employees globally, whether employed on a full-time, part-time, temporary or seasonal basis, as of November We annualized the compensation of all permanent full-time and part-time employees who we hired between We used target total annual compensation of our CEO to the annual total compensation of our median employee (the “Ratio”). For Fiscal Year 2018,2019, the annual total compensation of our CEO, as reported in the “Fiscal Year 20182019 Summary Compensation Table”, is $5,042,937$2,366,888 and the annual total compensation of our median compensated employee is $202,915.$354,119. The Ratio is 257 to 1.2018,2019, Mr. Tan did not receive an equity award, as his Fiscal Year 2017 PSU award was a long-term, multi-year award. Our median compensated employee was granted Multi-Year Equity Awards, which will vest on the same basis as four annual equity grants made on March 15 of each year, beginning in 2019. In order to better compare Mr. Tan’s annual total compensation to our median compensated employee, we are providing a supplemental pay ratio that includes (1) in the CEO’s 20182019 annual total compensation an annualized value of Mr. Tan’s Fiscal Year 2017 PSU award, taking the 2017 grant date fair value of the award and annualizing it over four years.years, and (2) in the median employee’s 2019 annual total compensation the grant date fair value of the Multi-Year Equity Award with a vesting start date of March 15, 2019 and excluding the grant date fair value of the Multi-Year Equity Awards with vesting start dates in 2020, 2021 and 2022. This results in an annualnotional, total compensation for Fiscal Year 2019 of $29,623,648$26,947,598 for our CEO.CEO and $168,268 for our median employee. The supplemental ratio calculated using this amount is 146160 to 1.20182019 Summary Compensation Table” with respect to each of our NEOs.4, 2018.October 30, 2017November 5, 2018 and November 4, 2018.3, 2019. We applied an exchange rate used in our human resources system of record as of November 4, 20183, 2019 to convert all international currencies into U.S. dollars. target direct compensation as of November 4, 2018,3, 2019, as our consistently applied compensation measure. In this context, target total target direct compensation means (1) the applicable annual base salary determinedlevel in effect as of November 4, 2018,3, 2019, (2) the annual incentive cash target amount or commission target amount payable for service in Fiscal Year 2018,2019, and (3) the approved value of the annual equity awards granted during Fiscal Year 2018.
The 2009 Plan expired in July 2019 and no new grants may be made under the 2009 Plan following such date. The ESPP has no expiration date.
| Plan Category | Number of Shares of Common Stock to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($) (b)(1) | Number of Shares of Common Stock Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected | ||||||||||||
Equity Compensation plans approved by stockholders | 12,021,758 | (2) | $ | 47.07 | 23,967,559 | (3) | |||||||||
Employee stock purchase plans approved by stockholders | 7,549,088 | (4) | |||||||||||||
Equity compensation plans not approved by stockholders | 14,145,388 | (5) | $ | 73.45 | 93,067,570 | (6)(7) | |||||||||
Total | 26,167,146 | $ | 50.14 | 124,584,217 | (3)(7) | ||||||||||
| Plan Category | Number of Shares of Common Stock to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($) (b)(1) | Number of Shares of Common Stock Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) |
Equity Compensation plans approved by stockholders | 15,084,650(2) | $ 49.20 | — |
Employee stock purchase plans approved by stockholders | 7,116,791 | ||
Equity compensation plans not approved by stockholders | 28,909,131(3) | $ 73.60 | 85,017,727(4)(5) |
| Total | 43,993,781 | $ 51.83 | 92,134,518(5) |
| (1) | Shares of common stock issuable upon vesting of RSU awards have been excluded from the calculation of the weighted average exercise price because they have no exercise price associated with them. |
| (2) | Represents |
| (3) |
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Represents (i) |
| (4) | Represents shares of common stock available for issuance under the LSI Plan and the 2012 Plan, of which |
| (5) | The 2012 Plan has an automatic annual share renewal provision pursuant to which the aggregate number of shares of common stock available for issuance under the 2012 Plan increases automatically on the first trading day of January each calendar year by 12,195,965 shares of common stock. In accordance with this provision, on January 2, |
For additional information regarding our equity compensation plans, please refer to Note 910 of Notes to Consolidated Financial Statements included in Part II, Item 8 of our 2018 Form10-K.
each named executive officer; each of our directors and nominees for director; and all of our executive officers and directors as a group. Number of Shares Common Stock Percentage of Common Stock 5% Stockholders: Capital World Investors(2) 333 South Hope Street Los Angeles, CA 90071 The Vanguard Group(3) 100 Vanguard Blvd. Malvern, PA 19355 Capital International Investors(4) 11100 Santa Monica Boulevard 16th Floor Los Angeles, CA 90025 BlackRock, Inc.(5) 55 East 52nd Street New York, NY 10055 Capital Research Global Investors(6) 333 South Hope Street Los Angeles, CA 90071 Named Executive Officers, Directors and Nominees: Hock E. Tan(7) Thomas H. Krause, Jr.(8) Charles B. Kawwas, Ph.D.(9) Mark D. Brazeal(10) Bryan T. Ingram(11) Diane M. Bryant(12) Gayla J. Delly(13) James V. Diller(14) Lewis C. Eggebrecht(15) Eddy W. Hartenstein(16) Check Kian Low(17) Donald Macleod(18) Peter J. Marks(19) Henry Samueli, Ph.D.(20) Harry L. You(21) All 16 executive officers and directors as a group(22) Represents beneficial ownership of less than 1%.11, 20196, 2020 for:11, 20196, 2020 and RSUs that vest within 60 days of February 11, 20196, 2020 are deemed to be outstanding and to be beneficially owned by the person holding the equity award for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.396,103,899399,458,586 shares of common stock outstanding as of February 11, 2019. Shares Beneficially Owned(1) Name and Address of Beneficial Owner 46,835,295 11.8 % 32,304,597 8.2 % 30,918,914 7.8 % 25,711,481 6.5 % 25,273,366 6.4 % 2,265,250 * 44,842 * 99,318 * 5,761 * 51,977 * 255 * 1,051 * 144,204 * 11,454 * 34,948 * 2,101 * 54,565 * 33,012 * 9,661,185 2.4 % 223 * 12,440,113 3.1 % Name and Address of Beneficial Owners Number of
Shares Common
StockPercentage
of Common
Stock5% Stockholders: 46,299,089 11.6% 333 South Hope Street Los Angeles, CA 90071 32,549,055 8.1% 100 Vanguard Blvd. Malvern, PA 19355 30,981,014 7.8% 11100 Santa Monica Boulevard 16th Floor Los Angeles, CA 90025 28,648,555 7.2% 333 South Hope Street Los Angeles, CA 90071 25,939,870 6.5% New York, NY 10055 Named Executive Officers, Directors and Nominees: 1,896,560 * 42,342 * 79,839 * 11,309 * 32,104 * 1,030 * 1,826 * 115 * 35,723 * 2,822 * 33,787 * 1,913 * 9,688,006 2.4% 998 * 11,828,565 3.0% *
| (1) | Amounts shown in the table above include securities held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account. |
| (2) | Number of shares of common stock is based solely on information reported by Capital World Investors on the Schedule 13G/A filed with the SEC on February 14, |
| (3) | Number of shares of common stock is based solely on information reported by The Vanguard Group on the Schedule |
| (4) | Number of shares of common stock is based solely on information reported by Capital International Investors on the Schedule |
| (5) |
|
Number of shares of common stock is based solely on information reported by Capital Research Global Investors on the Schedule 13G/A filed with the SEC on February 14, |
| (6) | Number of shares of common stock is based solely on information reported by BlackRock, Inc. on the Schedule 13G/A filed with the SEC on February 10, 2020, reporting ownership as of December 31, 2019. According to such Schedule 13G/A, BlackRock, Inc. has sole dispositive power over these shares and sole voting power over 22,789,349 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 6, 2020. |
| (7) | Shares shown in the table above include |
| (8) | Shares shown in the table above include |
| (9) | Shares shown in the table above include |
| (10) | Shares shown in the table above include |
| (11) | Shares shown in the table above |
| (12) | Shares shown in the table above include 32 shares held by the The Diane M. Bryant Trust u/a/d 11/08/17 and |
| (13) | Shares shown in the table above include |
| (14) | Shares shown in the table above include |
| (15) | Shares shown in the table above include |
|
| (16) | Shares shown in the table above include |
| (17) | Shares shown in the table above include |
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| (18) | Shares shown in the table above include 673 shares that Ms. Page has the right to acquire within 60 days after February 6, 2020 upon the vesting of RSUs. |
| (19) | The shares in the table include 7,019 shares that Dr. Samueli has the right to acquire within 60 days after February |
| (20) | Shares shown in the table above include |
| (21) | Shares shown in the table above include |
2018,2019, all Reporting Persons complied with all applicable filing requirements.
the amount involved exceeded or will exceed $120,000; and any director, nominee, executive officer, holder of more than 5% of our common stock, or any member of their immediate family had or will have a direct or indirect material interest. October 30, 2017,November 4, 2018, there was not, nor is there currently planned, any transaction or series of similar transactions to which we were or will be a party in which:Note Purchase Agreement with Silver LakeIn connection with our previously proposed acquisition of Qualcomm Incorporated (“Qualcomm”) on February 11, 2018, Broadcom and Broadcom-Singapore entered into a Note Purchase Agreement (“Purchase Agreement”) to sell up to $6 billion aggregate principal amount of our 3.00% Convertible Senior Notes (the “Convertible Notes”), with $3.5 billion principal amount of the Convertible Notes being issuable to Silver Lake Partners V, L.P., an investment fund affiliated with Silver Lake (“SLP Fund”). Mr. Kenneth Hao, a former director of our Company, is a Managing Partner and Managing Director of Silver Lake. The issuance of the Convertible Notes, and the terms thereof, and entry into other agreements relating to the issuance of the Convertible Notes to the investors, including the SLP Fund, were reviewed and approved by our Board with Mr. Hao recused from such review and approval.In March 2018, Broadcom withdrew and terminated its offer to acquire Qualcomm. The Purchase Agreement was also terminated with no Convertible Notes being issued pursuant thereto.20182019 these entities were (i) Symantec Corporation, on whose board of directors Mr. Hao serves as a director and (ii) TiVo Corporation and SIRUS XM Holdings, Inc., on whose boards of directors Mr. Hartenstein serves as a director.During Fiscal Year 2018, at our request, representatives of Silver Lake have provided advice and assistance Prior to us in connection with obtaining debt financingMr. Fernandez being considered as a candidate for acquisition transactions, given their extensive experience with debt financings of this nature. Silver Lake did not receive any compensation for the provision of such services.In addition, Silver Lake portfolio companies, such as Dell Inc.,director, we also entered into arrangements with us to purchase our products or to sell products to us in the ordinary course of theiran advertising and our business, andpublicity sponsorship agreement, on an arms’arm’s length basis.
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When: | March 30, 2020 | Time: | 11:00 a.m. Pacific Time | ||||||
Where: | 1320 Ridder Park Drive San Jose, California 95131 | Record Date: | February 6, 2020 | ||||||
18, 2020.
Thethe Internet Notice;
Aa proxy card;
Aa voting instruction card;
Aa brokerage statement or letter from a broker, bank or other nominee indicating ownership as of the Record Date; or
Aa legal proxy provided by your broker, bank or other nominee.
stockholdersholders of our common stock as of the close of business on the Record Date are entitled to vote at the Annual Meeting. Each share of our common stock has one vote for each matter. As of the Record Date, we had 396,103,899399,458,586 shares of common stock issued and outstanding.
by submitting a duly executed proxy card bearing a later date; by granting a subsequent proxy over the Internet or by telephone; by giving written notice of revocation to the Secretary of Broadcom prior to or at the Annual Meeting; or by voting in person at the Annual Meeting.Mail:complete, sign and date your proxy card and return it in the postage-paid envelope. You cannot vote by marking the Internet Notice and returning it.31,29, 2019.Proposal Voting Options VotingOptionsBoard RecommendationBoardRecommendationVote Required Effect of
AbstentionsEffect of Broker
Non-VotesTo elect each of the eightnine director nominees named for the next yearFor
Against
AbstainFor each nominee Affirmative vote of a majority of votes cast None None To ratify the appointment of PwC to serve as our independent auditors For
Against
AbstainFor Against AbstainForAffirmative vote of a majority of votes represented at the Annual Meeting and entitled to vote Against Broker has discretion to vote To hold an advisory vote to approve amendments to the Second Amended and Restated Employee Share Purchase Plancompensation of our named executive officers For
Against
AbstainFor Affirmative vote of a majority of votes represented at the Annual Meeting and entitled to vote Against None To hold an advisory vote to approve compensation of our named executive officersForAgainstAbstainForAffirmative vote of a majority of votes represented at the Annual Meeting and entitled to vote AgainstNone
By telephone: (800)579-1639 By email: sendmaterial@proxyvote.com 21, 2020.—- Hock E. Tan, Thomas H. Krause, Jr. and Mark D. Brazeal or any of them, with full power of substitution (together, the “Proxy Holders”) —- as recommended by the Board (see table above).20202021 Annual Meeting20202021 (“20202021 Annual Meeting”), your proposal (other than a proposal for director nomination) must comply with the procedures and requirements set forth in Rule14a-8 under the Exchange Act and be received no later than October 22, 2019.20202021 Annual Meeting, but not for inclusion in the proxy materials, must be received no earlier than the close of business on December 3, 2019November 30, 2020 and no later than the close of business on January 2,December 30, 2020. The proposal must be submitted by a stockholder of record and must set forth the information required by our Bylaws. If you
are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a registered stockholder.
21, 2020.
By Mail: Broadcom Inc., 1320 Ridder Park Drive, San Jose, California 95131, Attention: Secretary
By Email: compliance.officer@broadcom.com
2018 Form10-K.2019 Annual Report. The Proxy Statement incorporates by reference the information set forth in our 2018 Form10-K2019 Annual Report under the following headings: Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”; and Item 8, “Financial Statements and Supplementary Data.” Copies of this Proxy Statement and the 2018Form 10-K,2019 Annual Report, as filed with the SEC, are also available on our website at www.broadcom.com or you can request a copy free of charge by calling Investor Relations at(408) 433-8000 or emailing investor.relations@broadcom.com.
16, 2020.
18, 2020
| Fiscal Year Ended | ||||||||||||
November 4, 2018 | October 29, 2017 | October 30, 2016 | ||||||||||
| (in millions) | ||||||||||||
Net revenue on GAAP basis | $ | 20,848 | $ | 17,636 | ||||||||
Acquisition-related purchase accounting revenue adjustment (1) | 14 | 29 | ||||||||||
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Net revenue on non-GAAP basis | $ | 20,862 | $ | 17,665 | ||||||||
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Net revenue on non-GAAP basis | $ | 20,862 | ||||||||||
Revenue from Acquired Businesses(2) | 81 | |||||||||||
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Adjusted net revenue on a non-GAAP basis | $ | 20,943 | ||||||||||
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Operating income on GAAP basis | $ | 5,135 | $ | 2,383 | ||||||||
Acquisition-related purchase accounting revenue adjustment (1) | 14 | 29 | ||||||||||
Purchase accounting effect on inventory | 70 | 4 | ||||||||||
Amortization of acquisition-related intangible assets | 3,545 | 4,275 | ||||||||||
Stock-based compensation expense | 1,227 | 920 | ||||||||||
Restructuring, impairment and disposal charges | 239 | 180 | ||||||||||
Litigation settlements | 14 | 122 | ||||||||||
Acquisition-related costs | 180 | 98 | ||||||||||
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Operating income on non-GAAP basis | $ | 10,424 | $ | 8,011 | ||||||||
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Operating income on non-GAAP basis | $ | 10,424 | ||||||||||
Provisions or accruals for anticipated payouts under APB Plan | 542 | |||||||||||
Other provisions or accruals, net (3) | 53 | |||||||||||
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Adjusted Operating income on non-GAAP basis | $ | 11,019 | ||||||||||
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Net cash provided by operating activities | $ | 8,880 | $ | 6,551 | $ | 3,411 | ||||||
Purchases of property, plant and equipment | (635) | (1,069) | (723) | |||||||||
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Free cash flow | $ | 8,245 | $ | 5,482 | $ | 2,688 | ||||||
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| Fiscal Year Ended | |||||||||
November 3, 2019 | November 4, 2018 | October 29, 2017 | |||||||
| (in millions) | |||||||||
| Operating income on GAAP basis | $ | 3,444 | $ | 5,135 | $ | 2,371 | |||
Acquisition-related purchase accounting revenue adjustment (1) | — | 14 | 29 | ||||||
| Purchase accounting effect on inventory | — | 70 | 4 | ||||||
| Amortization of acquisition-related intangible assets | 5,212 | 3,545 | 4,275 | ||||||
| Stock-based compensation expense | 2,185 | 1,227 | 920 | ||||||
| Restructuring, impairment and disposal charges | 813 | 239 | 180 | ||||||
| Litigation settlements | — | 14 | 122 | ||||||
| Acquisition-related costs | 275 | 180 | 98 | ||||||
| Operating income on non-GAAP basis | $ | 11,929 | $ | 10,424 | $ | 7,999 | |||
| Operating income on non-GAAP basis | 11,929 | ||||||||
| Provisions or accruals for anticipated payouts under APB Plan | 374 | ||||||||
| Adjusted Operating income on non-GAAP basis | $ | 12,303 | |||||||
| Net cash provided by operating activities | $ | 9,697 | $ | 8,880 | $ | 6,551 | |||
| Purchases of property, plant and equipment | (432) | (635) | (1,069) | ||||||
| Free cash flow | $ | 9,265 | $ | 8,245 | $ | 5,482 | |||
(2) Represents revenue from Brocade during Fiscal Year 2018 prior to the completion of our acquisition of Brocade that was taken into consideration in setting Fiscal Year 2018 performance goals.
(3) Represents expenses related to Brocade during Fiscal Year 2018 prior to the completion of our acquisition of Brocade, that were excluded in setting Fiscal Year 2018 performance goals.
settlements.
SECOND AMENDMENT TO THE
BROADCOM LIMITED
SECOND AMENDED AND RESTATED EMPLOYEE SHARE PURCHASE PLAN
February 6, 2019
This Second Amendment (this “Amendment”) to the Broadcom Limited Second Amended and Restated Employee Share Purchase Plan, as amended by the amendment dated April 4, 2018 (as amended, the “Plan”), is adopted by the Board of Directors of Broadcom Inc., a Delaware corporation (the “Company”), on the date first set forth above, effective as of the date it is approved by the Company’s stockholders. The Plan is hereby amended, subject to and effective as of the date of such stockholder approval, as follows:
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* * * * *
BROADCOM INC.
EMPLOYEE STOCK PURCHASE PLAN
(as amended and restated on ________, 2019)
Broadcom Inc., a company organized under the laws of Delaware (the “Company”), adopted this Employee Stock Purchase Plan on ______, 2019 (the “Plan”), which amends and restates in its entirety the Second Amended and Restated Broadcom Limited Employee Share Purchase Plan, effective as of March 15, 2016, which amended and restated in its entirety the Avago Technologies Limited Employee Share Purchase Plan, as amended and restated effective as of June 2, 2010.
1. Purpose. The purposes of the Plan are as follows:
(a) To assist employees of the Company and its Designated Subsidiaries (as defined below) in acquiring a share ownership interest in the Company.
(b) To help employees provide for their future security and to encourage them to remain in the employment of the Company and its Designated Subsidiaries.
This Plan includes two components: the Section 423 Component (as defined below) and theNon-Section 423 Component (as defined below). It is the intention of the Company to have the Section 423 Component qualify as an “employee stock purchase plan” under Section 423(b) of the United States Internal Revenue Code of 1986, as amended (the “Code”). The provisions of the Section 423 Component, accordingly, shall be construed so as to extend and limit participation on a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the Code. In addition, this Plan authorizes the grant of Options under theNon-Section 423 Component, which need not qualify as options granted pursuant to an “employee stock purchase plan” under Section 423 of the Code; such Options granted under theNon-Section 423 Component shall be granted pursuant to separate Offerings containing suchsub-plans, appendices, rules or procedures as may be adopted by the Administrator and designed to achieve tax, securities laws or other objectives for Eligible Employees and the Designated Subsidiaries in locations outside of the U.S. Except as otherwise provided herein, theNon-Section 423 Component will operate and be administered in the same manner as the Section 423 Component. Offerings intended to be made under theNon-Section 423 Component will be designated as such by the Administrator at or prior to the time of such Offering.
For purposes of this Plan, the Administrator may designate separate Offerings under the Plan, the terms of which need not be identical, in which Eligible Employees will participate, even if the dates of the applicable Offering Period(s) in each such Offering is identical, provided that the terms of participation are the same within each separate Offering under the Section 423 Component as determined under Section 423 of the Code.
2. Definitions.
(a) “Administrator” shall mean the administrator of the Plan, as determined pursuant to Section 14 hereof.
(b) “Board” shall mean the Board of Directors of the Company.
(c) “Code” shall mean the United States Internal Revenue Code of 1986, as amended.
(d) “Committee” shall mean the committee appointed to administer the Plan pursuant to Section 14 hereof.
(e) “Company” shall mean Broadcom Inc., a Delaware corporation.
(f) “Compensation” shall mean all base straight time gross earnings and commissions, exclusive of payments for overtime, shift premium, incentive compensation, incentive payments, bonuses, expense reimbursements, fringe benefits and other compensation.
(g) “Designated Subsidiary” shall mean any Subsidiary that has been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan, such designation to specify whether such participation is in the Section 423 Component orNon-Section 423 Component. For the avoidance of doubt, a Designated Subsidiary that participates in the Section 423 Component will not participate in theNon-Section 423 Component. The Administrator may designate, or terminate the designation of, a Subsidiary as a Designated Subsidiary in either the Section 423 Component orNon-Section 423 Component without the approval of the shareholders of the Company.
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(h) “Effective Date” shall mean July 31, 2009 (the date on which shareholders of the Company approved the original Employee Stock Purchase Plan).
(i) “Eligible Employee” shall mean an Employee of the Company or a Designated Subsidiary: (i) who does not, immediately after the Option is granted, own shares possessing five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company, a Parent or a Subsidiary; (ii) whose customary employment is for more than twenty (20) hours per week; and (iii) whose customary employment is for more than five (5) months in any calendar year. For purposes of clause (i), the rules of Section 424(d) of the Code with regard to the attribution of share ownership shall apply in determining the share ownership of an Employee, and shares which an Employee may purchase under outstanding Options shall be treated as shares owned by the Employee. Notwithstanding the foregoing the Administrator may exclude from participation in the Section 423 Component of the Plan as an Eligible Employee any Employee who is a citizen or resident of a jurisdiction other than the United States (without regard to whether they are also a citizen of the United States or a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) if either (A) the grant of the Option is prohibited under the laws of the jurisdiction governing such Employee, or (B) compliance with the laws of such jurisdiction would cause the Section 423 Component, any Offering thereunder or the Option granted thereunder to violate the requirements of Section 423 of the Code; provided that any such exclusion shall be applied in an identical manner under each Offering to all Employees in such Offering, in accordance with Treasury RegulationSection 1.423-2(e). Further notwithstanding the foregoing, with respect to theNon-Section 423 Component, sentences one through three hereof shall apply in determining who is an “Eligible Employee,” except (A) the Administrator may limit eligibility further within the Company or a Designated Subsidiary so as to only designate some Employees of the Company or a Designated Subsidiary as Eligible Employees, and (B) to the extent sentences one through three hereof are not consistent with applicable local laws, in which case applicable local laws shall control.
(j) “Employee” shall mean any person who renders services to the Company or a Subsidiary in the status of an employee within the meaning of Code Section 3401(c). “Employee” shall not include any director of the Company or a Subsidiary who does not render services to the Company or a Subsidiary in the status of an employee within the meaning of Code Section 3401(c). For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or Designated Subsidiary and meeting the requirements of Treasury RegulationSection 1.421-1(h) (2). Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the first day following such three (3)-month period.
(k) “Enrollment Date” shall mean the first Trading Day of each Offering Period.
(l) “Enrollment Deadline” shall have the meaning given to it in Section 5(a).
(m) “Equity Restructuring” means anon-reciprocal transaction (i.e. a transaction in which the Company does not receive consideration or other resources in respect of the transaction approximately equal to and in exchange for the consideration or resources the Company is relinquishing in such transaction) between the Company and its shareholders, such as a share split,spin-off, rights offering, nonrecurring share dividend or recapitalization through a large, nonrecurring cash dividend, that affects the Shares (or other securities of the Company) or the share price of Shares (or other securities) and causes a change in the per share value of the Shares underlying outstanding Options.
(n) “Exercise Date” shall mean the last Trading Day of each Offering Period.
(o) “Fair Market Value” shall mean, as of any date, the per share value of the Shares determined as follows:
(i) If the Shares are listed on any established stock exchange or a national market system, Fair Market Value shall be the per share closing sales price for the Shares (or the per share closing bid, if no sales were reported) as quoted on such exchange or system for such date, or if no bids or sales were reported for such date, then the per share closing sales price (or the per share closing bid, if no sales were reported) on the trading date immediately prior to such date during which a bid or sale occurred, in each case, as reported inThe Wall Street Journalor such other source as the Administrator deems reliable;
(ii) If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, Fair Market Value shall be the mean of the per share closing bid and asked prices for the Shares on such date, or if no per share closing bid and asked prices were reported for such date, the date immediately prior to such date during which closing bid and asked prices were quoted for the Shares, in each case, as reported inThe Wall Street Journalor such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Administrator.
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(p) “Non-Section 423 Component” shall mean those Offerings under the Plan, together with thesub-plans, appendices, rules or procedures, if any, adopted by the Administrator as a part of this Plan, in each case, pursuant to which Options may be granted tonon-U.S. Eligible Employees that need not satisfy the requirements for options granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code.
(q) “Offering” shall mean an offer under the Plan of an Option that may be exercised during an Offering Period as further described in Sections 4 and 8. Unless otherwise specified by the Administrator, each Offering to the Eligible Employees of the Company or a Designated Subsidiary shall be deemed a separate Offering, even if the dates and other terms of the applicable Offering Periods of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. To the extent permitted by U.S. Treasury RegulationSection 1.423-2(a)(1), the terms of each separate Offering under the Section 423 Component need not be identical, provided that the terms of the Section 423 Component and an Offering thereunder together satisfy U.S. Treasury RegulationSection 1.423-2(a)(2) and (a)(3).
(r) “Offering Date” shall mean March 15, 2016 and each September 15 and March 15 thereafter. Offering Dates may be changed pursuant to Section 4 of this Plan.
(s) “Offering Period” shall mean subject to Section 24, each approximately six (6) month period beginning on an Offering Date and ending on the next succeeding Exercise Date. The first Offering Period shall commence March 15, 2016. The duration and timing of Offering Periods may be changed pursuant to Section 4 of this Plan.
(t) “Option” means an option to purchase the Shares on an Exercise Date that is granted under the Plan.
(u) “Parent” means any entity, other than the Company, in an unbroken chain of entities ending with the Company if, at the time of the determination, each of the entities other than the Company owns shares possessing 50% or more of the total combined voting power of all classes of shares in one of the other entities in such chain.
(v) “Participant” means an Eligible Employee who is granted an Option under this Plan.
(w) “Plan” shall mean this Broadcom Inc. Employee Stock Purchase Plan, including both the Section 423 Component and theNon-Section 423 Component and any othersub-plans or appendices hereto, as amended and/or restated from time to time.
(x) “Purchase Price” shall mean 85% of the Fair Market Value of one Share on the Enrollment Date or on the Exercise Date, whichever is lower;provided,however, that the Purchase Price may be adjusted by the Administrator pursuant to Section 20.
(y) “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including, without limitation, any such regulations or other guidance issued after the Effective Date.
(z) “Section 423 Component” shall mean those Offerings under the Plan that are intended to meet the requirements set forth in Section 423(b) of the Code.
(aa) “Shares” shall mean shares of the Company’s common stock, par value $0.001 per share.
(bb) “Subsidiary” shall mean any entity, other than the Company, in an unbroken chain of entities beginning with the Company if, at the time of the determination, each of the entities other than the last entity in an unbroken chain owns shares possessing 50% or more of the total combined voting power of all classes of shares in one of the other entities in such chain.
(cc) “Trading Day” shall mean a day on which the Nasdaq Stock Market is open for trading.
3. Eligibility.
(a) Any Eligible Employee who shall be employed by the Company or a Designated Subsidiary on a given Enrollment Date for an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of Section 5 and, with respect to the Section 423 Component of the Plan, the limitations imposed by Section 423(b) of the Code.
(b) Each person who, during the course of an Offering Period, first becomes an Eligible Employee subsequent to the Enrollment Date will be eligible to become a Participant in the Plan on the first Enrollment Date following the day on which such person becomes an Eligible Employee, subject to the requirements of Section 5 and, with respect to the Section 423 Component of the Plan, the limitations imposed by Section 423(b) of the Code.
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(c) No Eligible Employee shall be granted an Option under the Plan which permits such Eligible Employee rights to purchase Shares under the Plan, and to purchase shares under all other employee share purchase plans of the Company, any Parent or any Subsidiary subject to the Section 423, to accrue at a rate which exceeds $25,000 of fair market value of such shares (determined at the time the Option is granted) for each calendar year in which the Option is outstanding at any time. For purpose of the limitation imposed by this subsection, the right to purchase Shares under an Option accrues when the Option (or any portion thereof) first becomes exercisable during the calendar year, the right to purchase Shares under an Option accrues at the rate provided in the Option, but in no case may such rate exceed $25,000 of fair market value of such Shares (determined at the time such Option is granted) for any one calendar year, and a right to purchase Shares which has accrued under an Option may not be carried over to any other Option. This limitation shall be applied in accordance with Section 423(b)(8) of the Code and the Treasury Regulations thereunder.
4. Offering Periods. Subject to Section 24, the Plan shall be implemented by successive approximately six (6) month Offering Periods, the first of which shall commence on March 15, 2016. A new Offering Period shall commence following the expiration of each preceding Offering Period until the Plan expires or is terminated in accordance with Section 20 hereof. The Administrator shall have the power to change the duration of Offering Periods (including the Offering Dates and the Exercise Dates thereof) with respect to future offerings if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected thereafter. In no event may an Offering Period exceed twenty-seven (27) months in duration.
5. Participation.
(a) An Eligible Employee may become a Participant in the Plan by completing a subscription agreement authorizing payroll deductions in a form acceptable to the Company and filing it with the Company’s payroll office or external stock plan agent, as determined by the Administrator, five (5) days (or such shorter or longer period as may be determined by the Administrator, in its sole discretion) prior to the applicable Enrollment Date (the “Enrollment Deadline”).
(b) Each person who first becomes an Eligible Employee subsequent to the Enrollment Date for any Offering Period, will be eligible to become a Participant in the Plan on the first Enrollment Date following the day on which such person becomes an Eligible Employee. Such person may become a Participant in the Plan by completing a subscription agreement authorizing payroll deductions in a form acceptable to the Company and filing it with the Company’s payroll office no later than the Enrollment Deadline.
(c) Except as provided in subsection (a), payroll deductions for a Participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 10 hereof.
(d) During a leave of absence approved by the Company or a Subsidiary and meeting the requirements of Treasury RegulationSection 1.421-1(h)(2), a Participant may continue to participate in the Plan through the Participant’s payroll deductions under the Plan. If a leave of absence is unapproved or fails to meet the requirements of Treasury RegulationSection 1.421-1(h)(2), the Participant will cease automatically to participate in the Plan. In such event, the Company will automatically cease the Participant’s payroll deductions under the Plan. The Company will pay to the Participant his or her total payroll deductions for the Offering Period, in cash in one lump sum (without interest), as soon as practicable after the Participant ceases to participate in the Plan.
(e) A Participant’s completion of a subscription agreement will enroll such Participant in the Plan for each successive Offering Period on the terms contained herein and therein until the Participant either submits a new subscription agreement, withdraws from participation under the Plan as provide in Section 10 hereof or otherwise becomes ineligible to participate in the Plan.
(f) Notwithstanding any other provisions of the Plan to the contrary, innon-U.S. jurisdictions where participation in the Plan through payroll deductions is prohibited, the Administrator may provide that an Eligible Employee may elect to participate through contributions to his or her account under the Plan in a form acceptable to the Administrator in lieu of or in addition to payroll deductions; provided, however, that, for any Offering under the Section 423 Component, the Administrator must determine that any alternative method of contribution is applied on an equal and uniform basis to all Eligible Employees in the Offering.
6. Payroll Deductions.
(a) At the time a Participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount from one percent (1%) to ten percent (10%) of the Compensation, up to a maximum of $25,000 in any Offering Period, which he or she receives on each pay day during the Offering Period.
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(b) All payroll deductions made for a Participant shall be credited to his or her account under the Plan and shall be withheld in whole percentages only. Except as described in Section 5(a) hereof, a Participant may not make any additional payments into such account.
(c) A Participant may discontinue his or her participation in the Plan as provided in Section 10 hereof. A Participant may not make any changes to the rate of his or her payroll deductions during the period starting on the day immediately following the Enrollment Deadline for an Offering Period and running through the end of the applicable Offering Period.
(d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(c) hereof, the Company may decrease a Participant’s payroll deductions to zero percent (0%) at any time during an Offering Period.
(e) At the time the Option is exercised, in whole or in part, or at the time some or all of the Shares issued under the Plan are disposed of, the Participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the Option or the disposition of the Shares. At any time, the Company may, but shall not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Shares by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period shall be granted an Option to purchase on the Exercise Date for such Offering Period (at the applicable Purchase Price) up to a number of Shares determined by dividing such Participant’s payroll deductions accumulated prior to such Exercise Date and retained in the Participant’s account as of the Exercise Date by the applicable Purchase Price; provided, however, that in no event shall a Participant be permitted to purchase during each Offering Period more than two thousand five hundred (2,500) Shares (subject to any adjustment pursuant to Section 19); and provided, further, that such purchase shall be subject to the limitations set forth in Sections 3(c) and 13 hereof. The Administrator may, for future Offering Periods, increase or decrease, in its sole discretion, the maximum number of Shares a Participant may purchase during each Offering Period. Exercise of the Option shall occur as provided in Section 8 hereof, unless the Participant has withdrawn pursuant to Section 10 hereof or otherwise becomes ineligible to participate in the Plan. The Option shall expire on the last day of the Offering Period.
8. Exercise of Option.
(a) Unless a Participant withdraws from the Plan as provided in Section 10 hereof or otherwise becomes ineligible to participate in the Plan, such Participant’s Option to purchase Shares shall be exercised automatically on the Exercise Date, and the maximum number of whole Shares subject to the Option shall be purchased for such Participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased; any payroll deductions accumulated in a Participant’s account which are not sufficient to purchase a full share shall be either retained in the Participant’s account for the subsequent Offering Period, or refunded to the Participant within sixty (60) days following the end of the applicable Offering Period, to be determined by the Administrator (in its sole discretion). During a Participant’s lifetime, a Participant’s Option to purchase shares hereunder is exercisable only by him or her.
(b) Where a Participant’s payroll deductions are made in a currency other than U.S. dollars, such contributions will be converted into U.S. dollars on the Exercise Date using an exchange ratio determined by the Administrator in its discretion.
(c) If the Administrator determines that, on a given Exercise Date, the number of shares with respect to which Options are to be exercised may exceed (i) the number of Shares that were available for sale under the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of shares available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company shall make a pro rata allocation of the Shares available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants exercising Options to purchase Shares on such Exercise Date, and continue all Offering Periods then in effect, or (y) provide that the Company shall make a pro rata allocation of the shares available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants exercising Options to purchase Shares on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 20 hereof. The Company may make pro rata allocation of the shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s shareholders subsequent to such
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Enrollment Date. The balance of the amount credited to the account of each Participant which has not been applied to the purchase of Shares shall be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Exercise Date, without any interest thereon.
9. Deposit of Shares. As promptly as practicable after each Exercise Date on which a purchase of Shares occurs, but in no event later than sixty (60) days after the applicable Exercise Date, the Company may arrange for the deposit, into each Participant’s account with any broker designated by the Company to administer this Plan, of the number of Shares purchased upon exercise of Participant’s Option.
10. Withdrawal.
(a) A Participant may withdraw all but not less than all of the payroll deductions credited to Participant’s account and not yet used to exercise Participant��s Option under the Plan by giving written notice to the Company in the form prescribed by the Company for use under the Plan at least five business days prior to an Exercise Date or such other deadline as is determined by the Administrator. All of the Participant’s payroll deductions credited to the Participant’s account during the Offering Period shall be paid to such Participant as soon as reasonably practicable after receipt of notice of withdrawal and such Participant’s Option for the Offering Period shall be automatically terminated (but in no event more than sixty (60) days thereafter), and no further payroll deductions for the purchase of Shares shall be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the Participant delivers to the Company a new subscription agreement.
(b) A Participant’s withdrawal from an Offering Period shall not have any effect upon the Participant’s eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the Participant withdraws.
11. Termination or Transfer of Employment. Upon a Participant’s ceasing to be an Eligible Employee, for any reason, the Participant shall be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such Participant’s account during the Offering Period, up to the date of such termination of employment, shall be paid to such Participant or, in the case of the Participant’s death, to the person or persons entitled thereto under Section 15 hereof, as soon as reasonably practicable and such Participant’s Option for the Offering Period shall be automatically terminated. If a Participant transfers employment from the Company or any Designated Subsidiary participating in the Section 423 Component to any Designated Subsidiary participating in theNon-Section 423 Component, such transfer shall not be treated as a termination of employment, but he or she shall immediately cease to participate in the Section 423 Component; however, any Contributions made for the Offering Period in which such transfer occurs shall be transferred to theNon-Section 423 Component, and such Participant shall immediately join the then current Offering under theNon-Section 423 Component upon the same terms and conditions in effect for his or her participation in the Section 423 Component, except for such modifications otherwise applicable for Participants in such Offering. A Participant who transfers employment from any Designated Subsidiary participating in theNon-Section 423 Component to the Company or any Designated Subsidiary participating in the Section 423 Component shall not be treated as terminating his or her employment and shall remain a Participant in theNon-Section 423 Component until the earlier of (i) the end of the current Offering Period under theNon-Section 423 Component, or (ii) the Enrollment Date of the first Offering Period in which he or she is eligible to participate following such transfer. Notwithstanding the foregoing, the Administrator may establish different rules to govern transfers of employment between companies participating in the Section 423 Component and theNon-Section 423 Component, consistent with the applicable requirements of Section 423 of the Code.
12. Interest. No interest shall accrue on the payroll deductions or lump sum contributions of a Participant in the Plan.
13. Shares Subject to Plan.
(a) Subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof, the maximum number of Shares which shall be available for sale under the Plan after February 3, 2019 is seven million five hundred forty-nine thousand eighty-eight (7,549,088).
(b) If any Option granted under the Plan shall for any reason terminate without having been exercised, the Shares not purchased under such Option shall again become available for issuance under the Plan. The Shares subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.
(c) With respect to Shares subject to an Option granted under the Plan, a Participant shall not be deemed to be a shareholder of the Company, and the Participant shall not have any of the rights or privileges of a
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shareholder, until such Shares have been issued to the Participant or the Participant’s nominee following exercise of the Participant’s Option. No adjustments shall be made for dividends (ordinary or extraordinary, whether in cash securities, or other property) or distribution or other rights for which the record date occurs prior to the date of such issuance, except as otherwise expressly provided herein.
14. Administration.
(a) The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee as set forth below. The Board may delegate administration of the Plan to a Committee comprised of two or more members of the Board, each of whom is a“non-employee director” within the meaning of Rule16b-3 which has been adopted by the United States Securities and Exchange Commission under the United States Securities Exchange Act of 1934, as amended, and which is otherwise constituted to comply with applicable law, and the term “Committee” shall apply to any persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Each member of the Committee shall serve for a term commencing on a date specified by the Board and continuing until the member dies or resigns or is removed from office by the Board. References in this Plan to the “Administrator” shall mean the Board unless administration is delegated to a Committee or subcommittee, in which case references in this Plan to the Administrator shall thereafter be to the Committee or subcommittee.
(b) It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with the provisions of the Plan. The Administrator shall have the power to interpret the Plan and the terms of the Options and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. Subject to Section 24, the Administrator shall have the discretion to include any restriction or limitation regarding Shares purchased pursuant to the Plan based on such factors as the Administrator, in its sole discretion, shall determine. The Administrator at its option may delegate its duties hereunder, including duties under Section 5(a) hereof, and may utilize the services of an agent to assist in the administration of the Plan, including establishing and maintaining an individual securities account under the Plan for each Participant. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan. For the avoidance of doubt, the Administrator shall have the exclusive authority to determine which Designated Subsidiaries shall participate in theNon-Section 423 Component and which shall participate in the Section 423 Component.
(c) All expenses and liabilities incurred by the Administrator in connection with the administration of the Plan shall be borne by the Company. The Administrator may, with the approval of the Board, employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Administrator, the Company and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon all Participants, the Company and all other interested persons. No member of the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Options, and all members of the Board shall be fully protected by the Company in respect to any such action, determination, or interpretation.
15. Designation of Beneficiary.
(a) Subject to applicable law, a Participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to an Exercise Date on which the Option is exercised but prior to delivery to such Participant of such shares and cash. In addition, subject to applicable law, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death prior to exercise of the Option. If a Participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.
(b) Subject to applicable law, such designation of beneficiary may be changed by the Participant at any time by written notice to the Company. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.
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16. Transferability.
(a) Neither payroll deductions credited to a Participant’s account nor any rights with regard to the exercise of an Option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15 hereof) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.
(b) Subject to Sections 19(c) and 19(d), no Shares issued upon exercise of an Option under this Plan may be assigned, transferred, pledged or otherwise disposed of in any way by the Participant until the six (6) month anniversary of the Exercise Date upon which such Shares were purchased. Notwithstanding the foregoing, in the event a Participant ceases to be an Eligible Employee for any reason, this Section 16(b) shall no longer apply to any Shares then held by such Participant.
17. Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions, provided, that nothing in this Section 17 shall diminish the Company’s obligations pursuant to Section 8(a) hereof.
18. Reports. Individual accounts shall be maintained for each Participant in the Plan. Statements of account shall be given to participating Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. In the event that any dividend or other distribution, reorganization, merger, consolidation, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs such that an adjustment is determined by the Administrator (in its sole discretion) to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Administrator shall, in such manner as it may deem equitable, adjust the number and class of Shares which have been authorized for issuance under this Plan but have not yet been placed under Option, the number of shares subject to the Plan and limitations provided in Section 13, the maximum number of shares each Participant may purchase each Offering Period (pursuant to Section 7), the number and class of Shares covered by each outstanding Option, the purchase price per share of Shares covered by each Option which has not yet been exercised.
(b) Equity Restructuring. In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Section 19(a), the number and type of securities subject to each outstanding Option and the purchase price per share thereof, if applicable, will be equitably adjusted by the Administrator. The adjustments provided under this Section 19(b) shall be nondiscretionary and shall be final and binding on the affected Participants and the Company.
(c) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”), and shall terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. In addition, the restrictions on transferability set forth in Section 16(b) shall immediately lapse. The New Exercise Date shall be before the date of the Company’s proposed dissolution or liquidation. The Administrator shall notify each Participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that the Participant’s Option shall be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
(d) Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding Option shall be assumed or an equivalent Option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, any Offering Period then in progress shall be shortened by setting a New Exercise Date and any Offering Periods then in progress shall end on the New Exercise Date. The New Exercise Date shall be before the date of the Company’s proposed sale or merger. In addition, the restrictions on transferability set forth in Section 16(b) shall immediately lapse. The Administrator shall notify each Participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that the Participant’s Option shall be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
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20. Amendment or Termination.
(a) The Administrator may at any time and for any reason terminate or amend the Plan. Except as provided in Section 19 hereof, no such termination can affect Options previously granted, provided that an Offering Period may be terminated by the Board if the Board determines that the termination of the Offering Period or the Plan is in the best interests of the Company and its shareholders. Except as provided in Section 19 and this Section 20 hereof, no amendment may make any change in any Option theretofore granted which adversely affects the rights of any Participant without the consent of such Participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision), with respect to the Section 423 Component, or any other applicable law, regulation or stock exchange rule, the Company shall obtain shareholder approval of any such amendment to the Plan in such a manner and to such a degree as required by Section 423 of the Code or such other law, regulation or rule.
(b) Without shareholder consent and without regard to whether any Participant rights may be considered to have been “adversely affected,” the Administrator shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Shares for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:
(i) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;
(ii) shortening any Offering Period so that the Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Administrator action; and
(iii) allocating Shares.
Such modifications or amendments shall not require shareholder approval or the consent of any Participants.
21. Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
22. Conditions To Issuance of Shares. The Company shall not be required to issue or deliver any certificate or certificates for Shares purchased upon the exercise of Options prior to fulfillment of all the following conditions:
(a) The admission of such shares to listing on all stock exchanges, if any, on which is then listed; and
(b) The completion of any registration or other qualification of such shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which it is required to withhold under federal, state or local law upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of the Option as the Administrator may from time to time establish for reasons of administrative convenience.
23. Term of Plan. The original Employee Stock Purchase Plan became effective on the Effective Date. The Plan shall be in effect until terminated under Section 20 hereof.
24. Equal Rights and Privileges. All Eligible Employees of the Company (or of any Designated Subsidiary) granted Options pursuant to an Offering under the Section 423 Component will have equal rights and privileges so that the Section 423 Component of this Plan qualifies as an “employee stock purchase plan” within the meaning of
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Section 423 of the Code or applicable Treasury regulations thereunder. Any provision of the Section 423 Component of this Plan that is inconsistent with Section 423 or applicable Treasury regulations will, without further act or amendment by the Company, the Board or the Administrator, be reformed to comply with the equal rights and privileges requirement of Section 423 or applicable Treasury regulations. Eligible Employees participating in theNon-Section 423 Component of this Plan need not have the same rights and privileges as Eligible Employees participating in the Section 423 Component.
25. No Employment Rights. Nothing in the Plan shall be construed to give any person (including any Eligible Employee or Participant) the right to remain in the employ of the Company, a Parent or a Subsidiary or to affect the right of the Company, any Parent or any Subsidiary to (i) terminate the employment of any person (including any Eligible Employee or Participant) at any time, with or without cause, or (ii) terminate or amend the Plan or any Offering Period in accordance with Section 20 hereof, in each case, subject to applicable law.
26. Notice of Disposition of Shares. Each Participant shall give prompt notice to the Company of any disposition or other transfer of any Shares purchased upon exercise of an Option granted pursuant to an Offering under the Section 423 Component of the Plan if such disposition or transfer is made: (a) within two (2) years from the Enrollment Date of the Offering Period in which the shares were purchased or (b) within one (1) year after the Exercise Date on which such shares were purchased. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Participant in such disposition or other transfer.
27. Rules Particular To Specific Countries. Notwithstanding anything herein to the contrary, the terms and conditions of the Plan with respect to Participants who are tax residents of a particular country or who are foreign nationals or employed innon-U.S. jurisdictions may be subject to an addendum to the Plan in the form of an appendix orsub-plan (which appendix orsub-plan may be designed to govern Offerings under the Section 423 Component or theNon-Section 423 Component, as determined by the Administrator). To the extent that the terms and conditions set forth in an appendix orsub-plan conflict with any provisions of the Plan, the provisions of the appendix orsub-plan shall govern. The adoption of any such appendix orsub-plan shall be pursuant to Section 17 above. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures, with respect to Participants who are who are foreign nationals or employed innon-U.S. jurisdictions, regarding the exclusion of particular Subsidiaries from participation in the Plan, eligibility to participate, the definition of Compensation, handling of payroll deductions or other contributions by Participants, payment of interest, conversion of local currency, data privacy security, payroll tax, withholding procedures, establishment of bank or trust accounts to hold payroll deductions or contributions, determination of beneficiary designation requirements, and handling of stock certificates. The Administrator also is authorized to determine that, to the extent permitted by U.S. Treasury RegulationSection 1.423-2(f), the terms of an Option granted under the Plan or an Offering to citizens or residents of anon-U.S. jurisdiction will be less favorable than the terms of Options granted under the Plan or the same Offering to Employees resident solely in the U.S. To the extent any appendix,sub-plan or changes thereto approved by the Administrator are inconsistent with the requirements of Section 423 of the Code or would jeopardize thetax-qualified status of the Section 423 Component, the Designated Subsidiaries affected thereby shall be considered Designated Subsidiaries in a separate Offerings under theNon-Section 423 Component instead of the Section 423 Component.
28. Governing Law. The validity and enforceability of this Plan shall be governed by and construed in accordance with the laws of the State of California without regard to otherwise governing principles of conflicts of law.
29. Section 409A. The Section 423 Component of the Plan and the Options granted pursuant to Offerings thereunder are intended to be exempt from the application of Section 409A. Neither theNon-Section 423 Component nor any Option granted pursuant to an Offering thereunder is intended to constitute or provide for “nonqualified deferred compensation” within the meaning of Section 409A. Notwithstanding any provision of the Plan to the contrary, if the Administrator determines that any Option granted under the Plan may be or become subject to Section 409A or that any provision of the Plan may cause an Option granted under the Plan to be or become subject to Section 409A, the Administrator may adopt such amendments to the Plan and/or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions as the Administrator determines are necessary or appropriate to avoid the imposition of taxes under Section 409A, either through compliance with the requirements of Section 409A or with an available exemption therefrom.
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Israeli Addendum
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280 Innovation
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Turn into theBroadcom campus, which is the second |
US-880: US-101:1. TakeMontague Expresswayexit and follow the signs toMontague Expressway WestExit onto US-880 North.2. TurnTake Brokaw Road exit and turn right ontoZanker Road.Brokaw Road and move into the left lane.3. rightleft ontoInnovation Drive.Ridder Park Drive.4. drivewaybuilding on the right, andat the building will be on your left.main entrance sign.US-101: I-880:1. San Tomas Expressway/Montague ExpresswayBrokaw Road exit and followturn right onto Brokaw Road and move into the signs toMontague Expresswayleft lane.2. Zanker Roadusing the second from the left lane.Ridder Park Drive.3. Turn right ontoInnovation Drive.4.drivewaybuilding on the right, andat the building will be on your left.main entrance sign.
BROADCOM INC. 1320 RIDDER PARK DRIVE SAN JOSE, CA 95131VOTE BY INTERNET - www.proxyvote.com
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.E57088-P17496BROADCOM INC.THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSThe undersigned, being a stockholder of Broadcom Inc. (“Broadcom”), hereby appoints Hock E. Tan, Thomas H. Krause, Jr. and Mark D. Brazeal, or each of them acting alone, each with full powers of substitution, as proxies (the “Proxies”) of the undersigned and hereby authorizes the Proxies to represent and to vote, as designated on the reverse side, all of the shares of common stock of Broadcom owned by the undersigned entitled to vote at the 2019 Annual Meeting of Stockholders of Broadcom to be held at 11:00 a.m. Pacific Time on April 1, 2019, at 280 Innovation Drive, San Jose, California 95134, and at any adjournment or postponement thereof.THIS PROXY WILL BE VOTED AS SPECIFIED, OR IF NO CHOICE IS SPECIFIED: “FOR” EACH OF THE BOARD NOMINEES (PROPOSAL NO. 1) AND “FOR” PROPOSALS NO. 2, 3 AND 4, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY BE PUT BEFORE THE 2019 ANNUAL MEETING OF STOCKHOLDERS AND ANY CONTINUATIONS(S) AND ADJOURNMENT(S) THEREOF. PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE THAT IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.Continued and to be signed on reverse side