UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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| x | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material Pursuant to § 240.14a-12 |
Volterra Semiconductor Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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VOLTERRA SEMICONDUCTOR CORPORATION
47467 Fremont Blvd.
Fremont, California 94538
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 22, 2011
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of Volterra Semiconductor Corporation, a Delaware corporation. The meeting will be held on Friday, April 22, 2011 at 9:00 a.m. local time at Volterra’s offices at 47467 Fremont Blvd., Fremont, California, 94538 for the following purposes:
| 1. | To vote on the two directors nominated by Volterra and named in the Proxy Statement accompanying this Notice, to hold office until the 2014 Annual Meeting of Stockholders. |
| 2. | To provide an advisory vote on Volterra’s executive compensation payments and practices for the Named Executive Officers as described in the Compensation Discussion and Analysis section of this Proxy Statement. |
| 3. | To provide an advisory vote on how frequently Volterra shall seek a shareholder advisory vote on executive compensation as disclosed in our Proxy Statement. |
| 4. | To ratify the selection by the Audit Committee of the Board of Directors of KPMG LLP as Volterra’s independent registered public accounting firm for its fiscal year ending December 31, 2011. |
| 5. | To conduct any other business properly brought before the meeting. |
These items of business are more fully described in the Proxy Statement accompanying this Notice.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders’ Meeting to be held on Friday, April 22, 2011, at 9:00 a.m. local time at 47467 Fremont Blvd., Fremont, CA 94538.
The Proxy Statement and annual report to stockholders are available at http://www.cfpproxy.com/5663. The Board of Directors recommends that you vote:
| • | FOR the election of the directors nominated by Volterra, as described herein. |
| • | FOR the approval of Volterra’s executive compensation payments and practice. |
| • | FOR the approval of Volterra’s recommendation to hold an executive compensation advisory vote EVERY YEAR. |
| • | FOR the ratification of the selection by KPMG as Volterra’s independent registered public accounting firm for its fiscal year ending December 31, 2011. |
The record date for the annual meeting is March 9, 2011. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.
| By Order of the Board of Directors |
/s/ DAVID OH |
| David Oh |
| Secretary |
Fremont, California
March 21, 2011
You are cordially invited to attend the meeting in person. For assistance in obtaining directions to attend the meeting and vote in person, please contact Volterra at (510) 743-1282. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy as promptly as possible in order to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.
VOLTERRA SEMICONDUCTOR CORPORATION
47467 Fremont Blvd.
Fremont, California 94538
PROXY STATEMENT
FOR THE 2011 ANNUAL MEETING OF STOCKHOLDERS
April 22, 2011
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I receiving these materials?
We sent you this Proxy Statement and the enclosed proxy card because the Board of Directors (“Board”) of Volterra Semiconductor Corporation (“Volterra” or the “Company”) is soliciting your proxy to vote at the 2011 Annual Meeting of Stockholders. You are invited to attend the annual meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card.
Volterra intends to mail this Proxy Statement and accompanying proxy card on or about March 21, 2011 to all stockholders of record entitled to vote at the annual meeting.
Who can vote at the annual meeting?
Only stockholders of record at the close of business on March 9, 2011 will be entitled to vote at the annual meeting. On this record date, there were 24,576,620 shares of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If on March 9, 2011 your shares were registered directly in your name with Volterra’s transfer agent, Registrar and Transfer Company, then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy card to ensure your vote is counted. If you plan on attending the physical meeting, you should be prepared to present a form of government-issued photo identification, such as a driver’s license, state-issued ID card, or passport.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If on March 9, 2011 your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent. If you plan on attending the physical meeting, you must provide proof of beneficial ownership as of the record date, such as an account statement or similar evidence of ownership, and should be prepared to present a form of government-issued photo identification, such as a driver’s license, state-issued ID card, or passport.
What am I voting on?
There are four matters scheduled for a vote:
| • | To vote on the election of the two directors nominated by Volterra and named in this Proxy Statement; |
| • | To provide an advisory vote on Volterra’s executive compensation payments and practices for the Named Executive Officers as described in the Compensation Discussion and Analysis section of this Proxy Statement. |
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| • | To provide an advisory vote on how frequently Volterra shall seek a shareholder advisory vote on executive compensation as disclosed in our Proxy Statement. |
| • | Ratification of KPMG LLP as Volterra’s independent registered public accounting firm for its fiscal year ending December 31, 2011. |
How do I vote?
For Proposal No. 1, the election of two directors nominated by Volterra, you may either vote “For” the nominees to the Board or you may “Withhold” your vote for the nominees. Volterra will not consider votes for any other nominees except as identified and described in this Proxy Statement.
For Proposal No. 2, the advisory vote on executive compensation, you may vote “For” or “Against” the approval of the executive compensation payments and practices as described in this Proxy Statement or you may abstain from voting.
For Proposal No. 3, the advisory vote on the frequency with which Volterra shall conduct a vote on executive compensation, you may vote to have Volterra conduct an advisory vote on executive compensation: “every year”, “every two years”, “every three years” or you may abstain from voting.
For Proposal No. 4, the ratification of the selection by the Audit Committee of KPMG LLP as Volterra’s independent registered public accounting firm for its fiscal year ending December 31, 2011, you may vote “For” or “Against” or you may abstain from voting.
The procedures for voting are as follows:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at the annual meeting or vote by proxy using the enclosed proxy card. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person if you have already voted by proxy.
| • | To vote in person, come to the annual meeting and we will give you a ballot when you arrive. |
| • | To vote using the proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the annual meeting, we will vote your shares as you direct. |
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than from Volterra. Simply complete and mail the proxy card to ensure that your vote is counted. To vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank, or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
How many votes do I have?
On each matter to be voted upon, you have one vote for each share of common stock you own as of March 9, 2011.
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What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any voting selections, your shares will be voted “For” the election of both nominees for director identified and described in this Proxy Statement, “For” the approval of the executive compensation payments and practices as described in this Proxy Statement, to have the Company conduct an advisory vote on executive compensation “every year” and “For” the ratification of the selection by the Audit Committee of KPMG LLP as Volterra’s independent registered public accounting firm for its fiscal year ending December 31, 2011.
If any other matter is properly presented at the meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of three ways:
| • | You may submit another properly completed proxy card with a later date. |
| • | You may send a written notice that you are revoking your proxy to Volterra’s Secretary at 47467 Fremont Blvd., Fremont, CA 94538. |
| • | You may attend the annual meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy. |
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
When are stockholder proposals due for next year’s annual meeting?
If you wish to submit a proposal to nominate a director, you must do so not later than the close of business on December 23, 2011 nor earlier than the close of business on October 24, 2011, to Volterra’s Secretary at 47467 Fremont Blvd., Fremont, CA 94538. If you wish to submit a proposal to be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing to Volterra’s secretary by November 21, 2011. If you wish to submit a proposal that is not to be included in next year’s proxy materials, your proposal must be submitted in writing to Volterra’s secretary not later than the close of business on December 23, 2011 nor earlier than the close of business on October 24, 2011.
You are also advised to review Volterra’s Bylaws, which contain additional requirements about advance notice of director nominations and stockholder proposals.
How are votes counted?
Votes will be counted by the inspector of election appointed for the meeting.
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For the proposal related to the election of directors, the inspector will separately count “For” and “Withhold” votes.
For the proposal related to the approval of Volterra’s executive compensation payments and practices, the inspector will separately count “For” and “Against” votes, abstentions and broker non-votes.
For the proposal related to the frequency of seeking a shareholder vote on executive compensation, the inspector will separately count votes for the selection of “every year”, “every two years”, “every three years”, abstentions and broker non-votes.
For the proposal related to the ratification of KPMG LLP, or other proposals, the inspector will separately count “For” and “Against” votes, abstentions and broker non-votes.
Abstentions will be counted towards the vote total for each proposal, and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal. A broker non-vote occurs when a nominee, such as a broker or bank, holding shares for a beneficial owner, does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner (despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions). In the event that a broker, bank, custodian, nominee or other record holder of Volterra’s common stock indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular proposal, then those shares will be treated as broker non-votes with respect to that proposal. Under the rules and interpretations of the New York Stock Exchange (“NYSE”), “non-routine” matters are matters that may substantially affect the rights or privileges of shareholders, such as mergers, shareholder proposals, election of directors (even if not contested) and, for the first time, under a new amendment to the NYSE rules, executive compensation, including the advisory shareholder vote on executive compensation and the frequency of shareholder votes on executive compensation.
How many votes are needed to approve each proposal?
| • | For Proposal No. 1, the election of two directors, the nominees receiving the most “For” votes (among votes properly cast in person or by proxy) will be elected. Only votes “For” or “Withheld” will affect the outcome. |
| • | To be approved, Proposal No. 2, the approval of Volterra’s executive compensation payments and practices, must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.Please note that the vote on Proposal No. 2 is a non-binding advisory vote. The Board and Compensation Committee shall review the voting results to determine the cause or causes of any significant negative voting results. |
| • | For Proposal No. 3, the frequency with which Volterra shall conduct a vote on executive compensation, the selection receiving the most votes (among votes properly cast in person or by proxy) will be considered the frequency preferred by the shareholders. Broker non-votes will have no effect.Please note that the vote on Proposal No. 3 is a non-binding advisory vote. The Board and Compensation Committee shall review the voting results in establishing the frequency of such matters. |
| • | To be approved, Proposal No. 4, the ratification of the selection by the Audit Committee of KPMG LLP as Volterra’s independent registered public accounting firm for its fiscal year ending December 31, 2011, must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect. |
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What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares entitled to vote are represented by stockholders present at the meeting or by proxy. On the record date (March 9, 2011), there were 24,576,620 shares outstanding and entitled to vote. Thus, assuming all such shares remain outstanding on the date of the annual meeting, 12,288,311 shares must be represented by stockholders present at the meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the votes present at the meeting may adjourn the meeting to another date.
How can I find out the results of the voting at the annual meeting?
Preliminary voting results will be announced at the annual meeting. Final voting results will be published by Volterra in a current report on Form 8-K which we expect to file within four business days after the annual meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.
What proxy materials are available on the internet?
The Proxy Statement and annual report to shareholders are available at http://www.cfpproxy.com/5663.
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PROPOSAL 1
ELECTIONOF DIRECTORS
Volterra’s Board of Directors is divided into three classes. Each class has a three-year term. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class shall serve for the remainder of the full term of that class, and until the director’s successor is elected and qualified. This includes vacancies created by an increase in the number of directors.
The Board presently has seven members. There are two directors, Dr. Fu-Tai Liou and Dr. Edward Ross, in the class whose term of office expires in 2011.
The nominees listed below are currently Volterra directors who were recommended for election to the Board by the Nominating and Corporate Governance Committee. Proxies may not be voted for any other person other than the nominees named herein. Dr. Ross was previously elected by the stockholders in 2008. Dr. Liou was appointed director by the Board upon the recommendation of the Nominating and Corporate Governance Committee in December 2008 and has not yet been subject to a vote by stockholders. If elected at the annual meeting, Dr. Liou and Dr. Ross would serve until the 2014 annual meeting and until their successors are elected and have qualified, or until their death, resignation or removal. It is Volterra’s policy to encourage directors and nominees for director to attend the annual meeting. In 2010, all of Volterra’s then-seated directors attended the annual meeting of stockholders.
The biographies of each of the nominees and continuing directors below contains information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, and information regarding involvement in certain legal or administrative proceedings, if applicable.
NOMINEESFOR ELECTIONFORA THREE-YEAR TERM EXPIRINGATTHE 2014 ANNUAL MEETING
Fu-Tai Liou
Dr. Fu-Tai Liou, age 57, has been a member of our Board since December 2008. Dr. Liou currently serves as President of Voltafield Technology Corporation, a privately held semiconductor company, since February 2009. From 1997 to 2008, Dr. Liou served in various capacities at United Microelectronics Corporation, a provider of semiconductor foundry services, including as UMC’s President, Quality & Reliability Assurance; President, America Business Group; Chief Officer Worldwide Sales & Marketing; Chief Technology Officer for Research & Development; and as a member of the UMC board of directors. Dr. Liou received a Ph.D. in materials science and engineering from State University of New York at Stony Brook, received a M.S. in physics from Auburn University, and graduated from the National Central University in Taiwan. We believe that Dr. Liou’s qualifications to serve on our Board of Directors include his significant leadership experience at UMC, in a wide range of roles in management, operations, quality and technology, as well as being a member of UMC’s board of directors. Dr. Liou brings a particular knowledge and understanding of operational and strategic issues that fabless semiconductor companies, such as Volterra, must address in working with third party foundries. Dr. Liou also brings his international experience to the Board’s discussions, as he has unique insights on doing business in Asia.
Edward Ross
Dr. Edward Ross, age 69, has been a member of our Board since May 2004. From January 2005 to December 2005, Dr. Ross served as the President Emeritus of TSMC North America, the U.S. subsidiary of Taiwan Semiconductor Manufacturing Company Ltd., a semiconductor manufacturer. From March 2000 to December 2004, he was the President and Chief Executive Officer of TSMC North America. From July 1998 to
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March 2000, Dr. Ross was Senior Vice President of the Professional Services Group at Synopsys, Inc., a semiconductor design software company. From September 1995 to July 1998, he served as President of Technology and Manufacturing at Cirrus Logic, Inc., a semiconductor manufacturer. Dr. Ross currently serves as a director of Atmel Corporation, a semiconductor company. Dr. Ross holds a B.S.E.E. from Drexel University and an M.S.E.E., M.A. and Ph.D. from Princeton University. We believe that Dr. Ross’ qualifications to serve on our Board of Directors include his experience in a senior management role at TSMC, a major provider of foundry services. He has gained a broad understanding of the semiconductor industry through his roles at TSMC and at Synopsys and Cirrus Logic and has an understanding of operational and strategic issues that fabless semiconductor companies, such as Volterra, must address in working with third party foundries. Dr. Ross also has significant experience in serving as a member of the board of directors of several public companies.
RECOMMENDATIONOFTHE BOARDOF DIRECTORS
The Board of Directors recommends that the stockholders voteIN FAVOR of each of the named Nominees.
DIRECTORS CONTINUINGIN OFFICE UNTILTHE 2012 ANNUAL MEETING
Mel Friedman
Mr. Mel Friedman, age 72, has been a member of our Board since May 2004. From July 2002 to December 2003, Mr. Friedman served as a consultant to Sun Microsystems, Inc., a network computing company. Mr. Friedman retired as Senior Vice President of Customer Advocacy at Sun Microsystems in July 2002 after serving in that position since July 2000. From April 1989 to June 2000, Mr. Friedman served in several other roles for Sun Microsystems, including President of its Microelectronics Division, Vice President of Worldwide Operations for its Systems Operation, Vice President of West Coast Operations and Vice President of Supply Management. Mr. Friedman holds a B.S.M.E. from City College of New York and has completed numerous masters courses in industrial management and mechanical engineering at the Massachusetts Institute of Technology. We believe that Mr. Friedman’s qualifications to serve on our Board of Directors include his substantial senior leadership experience at Sun Microsystems, a major multinational public company. Mr. Friedman has a broad understanding of issues and challenges that affect large companies, and he is able to draw from his wide range of experience to understand and provide guidance on issues related to management, customer advocacy, operations and technology.
Christopher Paisley
Mr. Christopher Paisley, age 58, has been our Chairman of the Board since August 2007 and a member of our Board since April 2000. Since January 2001, Mr. Paisley has served as the Dean’s Executive Professor of Accounting and Finance at the Leavey School of Business at Santa Clara University. Mr. Paisley retired from his position as Senior Vice President of Finance and Chief Financial Officer of 3Com Corporation, a networking products company, in May 2000, after having served as an officer at 3Com since September 1985. Mr. Paisley currently serves as a member of the board of directors of Equinix, Inc., a provider of network-neutral data center and interconnection services and Fortinet, Inc., an internet security space company. Mr. Paisley holds a B.A. in Economics from the University of California at Santa Barbara and an M.B.A. from the University of California at Los Angeles. We believe that Mr. Paisley’s qualifications to serve on our Board of Directors include his substantial experience in the technology industry, including his experiences gained as Chief Financial Officer of 3Com Corporation, a major multinational technology company. Mr. Paisley has a broad understanding of financial issues, both as a senior executive and as a university professor, which allow him to understand and evaluate our business and financial model. Mr. Paisley has served as a member of the board of directors of several public companies in various technology areas, and is able to draw upon these diverse experiences to advise Volterra on strategic and operational issues.
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DIRECTORS CONTINUINGIN OFFICE UNTILTHE 2013 ANNUAL MEETING
Jeffrey Staszak
Mr. Jeffrey Staszak, age 58, joined Volterra as our President and Chief Operating Officer in March 1999 and has been our Chief Executive Officer since August 2000 and a member of our Board of Directors since April 2000. Prior to joining Volterra, Mr. Staszak was Senior Vice President in the Storage Products Group of Texas Instruments Inc., a semiconductor company, from July 1996 to March 1999. From May 1993 to July 1996, Mr. Staszak served as Senior Vice President and General Manager of the Storage Products Division of Silicon Systems, Inc., a semiconductor company then affiliated with TDK Corporation. Mr. Staszak holds a B.S. in Industrial Technology from the University of Wisconsin, Stout and an M.B.A. from Pepperdine University. We believe that Mr. Staszak’s qualifications to serve on our Board of Directors include his long tenure as Chief Executive Officer of the Company, which benefits the Company by providing in-depth insight to the Board on various risks and opportunities facing the Company. Mr. Staszak serves as an effective bridge between management and the Board for the regular flow of material information, and he provides a strategic and technical understanding of our business and industry gained from his significant experience in the semiconductor industry.
Ralph Quinsey
Mr. Ralph Quinsey, age 55, has been a member of our Board since January 2011. Mr. Quinsey is currently TriQuint Semiconductor’s President and Chief Executive Officer, and has served in such capacity since July 2002. From September 1999 to January 2002, Mr. Quinsey was with ON Semiconductor, a manufacturer of semiconductors for a wide array of applications, including as Vice President and General Manager of the Analog Division. Mr. Quinsey received a Bachelor of Science degree in Electrical Engineering from Marquette University. We believe that Mr. Quinsey’s qualifications to serve on our Board of Directors include his substantial experience in leadership roles in the semiconductor industry, including his role as President and Chief Executive Officer at TriQuint. We believe that Mr. Quinsey’s experience at a major semiconductor company with significant international operations and a multi-billion dollar market capitalization will help guide Volterra through its next phase of international growth.
Edward Winn
Mr. Edward Winn, age 72, has been a member of our Board since April 2004. From March 1992 to January 2000, Mr. Winn served in various capacities at TriQuint Semiconductor, Inc., a semiconductor company, most recently as Executive Vice President of Finance and Administration and Chief Financial Officer. Mr. Winn received a B.S. in Physics from Rensselaer Polytechnic Institute and an M.B.A. from Harvard Business School. We believe that Mr. Winn’s qualifications to serve on our Board of Directors include his substantial experience in the semiconductor industry, including his tenure in various capacities at TriQuint Semiconductor. Mr. Winn brings a broad financial and business understanding of the semiconductor industry, through his experience as Chief Financial Officer at TriQuint and his prior service on public company boards.
INDEPENDENCEOFTHE BOARDOF DIRECTORS
As required under the Nasdaq stock market (“Nasdaq”) listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. The Board consults with Volterra’s counsel to ensure that the board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.
Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and Volterra, its officers and its independent registered public accounting firm, the Board has determined that all of Volterra’s directors are independent directors within the
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meaning of the applicable Nasdaq listing standards, except for Mr. Staszak, Volterra’s President and Chief Executive Officer.
INFORMATION REGARDINGTHE BOARDOF DIRECTORSANDITS COMMITTEES
The Board has established corporate governance guidelines to ensure that it will have the necessary authority and practices in place to review and evaluate Volterra’s business operations as needed and, where appropriate, to make decisions that are independent of Volterra’s management. The guidelines are also intended to align the interests of directors and management with those of Volterra’s stockholders. The corporate governance guidelines set forth the practices the Board will follow with respect to: Board organization and independence of directors; committee composition; board meetings; communication with management, employees, stockholders, journalists, analysts and other outside parties; retention of advisors; election and service of directors; and continuing director education. The corporate governance guidelines were adopted by the Board to, among other things, reflect changes to the Nasdaq listing standards and Securities and Exchange Commission rules adopted to implement provisions of the Sarbanes-Oxley Act of 2002.
BOARD LEADERSHIP STRUCTURE
Volterra separates the roles of our Chief Executive Officer (who is also our President) from our Chairman of the Board, in recognition of the differences between the two roles. Our Chief Executive Officer is responsible for setting Volterra’s goals and steering our day to day operations, whereas our Chairman of the Board is an independent director that interfaces with the other Board members to provide objective guidance on our performance and strategy. This structure allows our Chief Executive Officer to focus on Volterra’s execution against our plans, while maintaining an important role for our Chairman and the independent directors in the review and oversight of these activities.
A key responsibility of the Chief Executive Officer and the Board is ensuring that an effective process is in place to provide management continuity. The Board regularly discusses succession planning for the Chief Executive Officer, as well as for several of our key officers. The Board and our Chief Executive Officer discuss future organization structures, candidates for senior management positions, and development plans for these senior management employees, to ensure continuity of leadership over the long term.
RISK OVERSIGHT
Management is responsible for identifying risk and risk controls related to Volterra’s business activities; mapping risks to company strategy and to develop programs and recommendations to balance the potential risk to the potential reward. The Board is actively involved in the oversight of risks that could affect Volterra’s business and operations by having management update the Board on the voluntary and involuntary risks that the company faces and the measures the company takes to control such risks. The Board does not have a standing risk management committee, but administers this oversight function directly through the Board as a whole, as well as through committees of the Board, as disclosed in the descriptions of each of the committees below. Generally, all of our committees meet on the same date as our full Board meetings, and each Board member attends each committee meeting, such that each Board member is aware of all of the considerations and actions of each committee. To the extent significant committee actions are taken outside of the full Board, such actions are generally reported or updated at the next full Board meeting.
COMPENSATION POLICIESAND PRACTICESAS THEY RELATETO RISK MANAGEMENT
The Compensation Committee establishes compensation programs that do not encourage excessive risk and we believe our programs will not have a material adverse effect on Volterra. Our bonus programs are centrally designed and administered and are similarly structured between functional organizations, but tailored based on such organizations’ specific operations and goals. Generally, our material compensation programs are designed to provide a balanced mix of cash and equity, based on peer group or industry analyses and comparisons. Our
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equity incentive grants generally have standard four year quarterly vesting, with the first year vesting occurring at the end of such year. We have bonus programs that are tied to company profitability and the achievement of annual operating plans. Such bonus programs have capped payouts that are dependent on individual performance, and reserve discretion to the Company or the Compensation Committee to reduce payments under such bonus programs. We believe these features of our compensation programs minimize excessive risk taking, and encourage employees to focus on performance and long term value creation.
DIRECTOR QUALIFICATIONSAND DIVERSITY
The Board, acting through the Nominating and Corporate Governance Committee, is responsible for assembling for shareholder consideration a group of nominees that, taken together with the directors continuing as members of the Board, have the experience, qualifications, attributes and skills appropriate for functioning effectively as a board. The Nominating and Corporate Governance Committee will consider all of the relevant qualifications of Board candidates, including such factors as:
| • | relevant expertise upon which to be able to offer advice and guidance to management; |
| • | availability of sufficient time to devote to Volterra’s affairs; |
| • | demonstrated excellence in his or her field; |
| • | ability to exercise sound business judgment; |
| • | commitment to rigorous representation of the long-term interests of our stockholders; and |
| • | independence for Nasdaq purposes, or as required under general securities regulations. |
In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee will also review such directors’ overall service to Volterra during their terms, and any relationships and transactions that might impair such directors’ independence. The Nominating and Corporate Governance Committee will conduct any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. At this time, the Nominating and Corporate Governance Committee has not established specific, minimum qualifications that must be met by a candidate for a position on our Board. In 2010, Volterra engaged David Powell, Inc., a third party consultant to assist in the identification and recruitment of director candidates, and in 2010 Volterra had paid approximately $26,000 in fees and expenses in connection with such director search, including the recruitment of Mr. Ralph Quinsey, who was subsequently appointed to our Board in January 2011. Volterra expects to continue to work with David Powell, Inc. in 2011.
The Nominating and Corporate Governance Committee seeks a diverse group of individuals who have a complementary mix of backgrounds and skills necessary to provide meaningful oversight of the Company’s activities. As a growing, fabless semiconductor company, we seek directors who have experience in the semiconductor industry in general and look for individuals experienced with the operational issues that we face in our dealings with third party foundries and assembly and test vendors. Some of our directors have strong financial backgrounds and experience in dealing with multinational public companies to help us in our evaluation of our infrastructure and our financial model. We face unique challenges as we expand our sales and operational efforts internationally, particularly in Asia, and have therefore sought directors with broad geographical knowledge and experience. The Nominating and Corporate Governance Committee annually reviews the Board’s composition in light of the company’s changing requirements.
In addition to its own targeted searches, the Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not alter the manner in which it evaluates candidates based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board at the 2012
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Annual Meeting may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at the following address: 47467 Fremont Blvd., Fremont, CA 94538 at least 120 days prior to the anniversary date of the mailing of this Proxy Statement. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record owner of our common stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
COMMITTEESOFTHE BOARD
The Board has three committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, and the following table provides membership and meeting information for 2010 for each of the Board committees. This table does not include Mr. Ralph Quinsey, who joined Volterra’s Board and became an additional member of the Compensation Committee and Nominating and Corporate Governance Committee on January 21, 2011.
Name | Audit | Compensation | Nominating and Corporate Governance | |||||||||
Mel Friedman | X | X | * | |||||||||
Fu-Tai Liou | X | |||||||||||
Christopher Paisley | X | X | ||||||||||
Edward Ross | X | * | X | |||||||||
Jeffrey Staszak | ||||||||||||
Edward Winn | X | * | X | |||||||||
Total meetings in fiscal year 2010 | 9 | 8 | 4 | |||||||||
| * | Committee Chairperson |
Below is a description of each committee of the Board. The Audit Committee has the authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. The Compensation Committee has the authority to obtain advice and assistance from legal counsel or other experts, as it deems appropriate, and has the authority to retain the services of a compensation consultant to assist it in evaluating executive compensation.
The Board has determined that each member of each committee meets the applicable rules and regulations regarding “independence” and that each member is free of any relationship that would interfere with his individual exercise of independent judgment with regard to Volterra.
Audit Committee
The Audit Committee oversees Volterra’s corporate accounting and financial reporting process. For this purpose, the Audit Committee performs several functions, including:
| • | evaluating the performance of our independent auditor, assessing their qualifications and independence, and determining and approving their engagements; |
| • | reviewing our annual financial statements, discussing with management and our independent auditor the results of our annual audit, and discussing with management and our auditor the results of the auditors’ review of our quarterly financial statements; |
| • | reviewing with management and our auditor significant issues that arise regarding accounting principles and financial statement presentation; |
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| • | reviewing and discussing with management and our independent auditor, as appropriate, our guidelines and policies with respect to risk assessment and risk management; |
| • | reviewing with our independent auditor any significant difficulties with our annual audit or any restrictions on the scope of their activities or access to required records, data and information, significant disagreements with management and management’s response, if any; |
| • | reviewing with our independent auditor and management any conflicts or disagreements between management and our independent auditor regarding financial reporting or accounting practices or policies and resolving any such conflicts regarding financial reporting; |
| • | conferring with our independent auditor and management regarding the scope, adequacy and effectiveness of our internal financial reporting controls; and |
| • | reviewing and approving related-party transactions and reviewing other issues arising under our Code of Conduct or similar policies. |
The Audit Committee is responsible for oversight of risks relating to accounting matters, financial reporting and legal and regulatory compliance. To satisfy these oversight responsibilities, the Audit Committee meets regularly with our management team and independently with our independent auditors. The Audit Committee also receives regular reports regarding issues such as the status and findings of audits by our independent auditors, the status of material litigation, accounting changes that could affect our financial statements and proposed audit adjustments.
Three directors currently comprise the Audit Committee: Mssrs. Friedman, Winn and Paisley. Mr. Winn currently serves as chairperson. The Audit Committee met nine times during 2010. The Board has adopted a written Audit Committee Charter, which can be found at the Governance – Committee Composition section of our corporate website at http://investors.volterra.com.
The Board has reviewed the Nasdaq listing standards definition of independence for Audit Committee members and has determined that all members of Volterra’s Audit Committee are independent under the rules of the Securities and Exchange Commission (“SEC”) and Nasdaq (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii) of the Nasdaq listing standards). The Board has determined that Mssrs. Paisley and Winn each qualify as an “audit committee financial expert,” as defined in applicable SEC rules. The Board made a qualitative assessment of Mr. Paisley’s and Mr. Winn’s level of knowledge and experience based on a number of factors, including their formal education and each of their past experience as chief financial officer of a public company.
Compensation Committee
The Compensation Committee reviews and approves the overall compensation strategy and policies for Volterra. For this purpose, the Compensation Committee performs several functions, including:
| • | reviewing and approving the compensation of our Chief Executive Officer; |
| • | reviewing and approving the compensation policies, plans and programs for our executive officers and other senior management, as well as our overall compensation plans and structure; |
| • | recommending to our Board the compensation for our independent directors; and |
| • | overseeing the administration of our stock plans and employee benefit plans. |
The Committee may form and delegate its authority to separate committees, as it deems appropriate. Volterra also has a Non-Officer Equity Committee, which is a sub-committee of the Compensation Committee and is currently composed of Volterra’s Chief Executive Officer, Jeffrey Staszak and Volterra’s Vice President of Finance and Chief Financial Officer, Mike Burns. The Non-Officer Equity Committee may award stock
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options and restricted stock unit awards to new employees, excluding employees who are officers, subject to certain guidelines approved by the Compensation Committee. Volterra’s policy is that all grants made by the Non-Officer Equity Committee are to be reviewed and ratified by the Compensation Committee at its next scheduled meetings.
The Compensation Committee has the sole authority from the Board of Directors for the appointment, compensation and oversight of our outside compensation consultant. The Compensation Committee directly engaged Compensia, Inc. (“Compensia”), an independent compensation consultant, to advise it on a project or hourly basis with respect to its compensation decisions related to our executive and board of director compensation programs. Compensia’s fees for executive and director compensation consulting to the Compensation Committee in fiscal year 2010 were approximately $67,000. The executive compensation services provided include assisting in defining our executive compensation strategy, providing market benchmark information, supporting the design of incentive compensation plans, advising on the competitiveness of our director compensation, and providing regulatory guidance and updates.
During fiscal year 2010, Compensia was also retained by Volterra to provide a general review of our non-executive employee cash and equity compensation programs and for supporting the design of incentive compensation and bonus plans. The aggregate fees paid for those other services in fiscal 2010 were approximately $18,000. The Compensation Committee did not review or approve the other services provided by Compensia, as those services were approved by management in the normal course of business. Due to the limited nature and scope of Compensia’s services outside of the work it does on executive and board compensation, the Compensation Committee believes that the consulting advice it receives from Compensia is objective and not influenced by Compensia’s other relationships with Volterra.
Three directors comprised the Compensation Committee in 2010: Dr. Ross and Mssrs. Paisley and Winn. Dr. Ross serves as chairperson. In January 2011, the Compensation Committee was increased to four members, and Mr. Quinsey was appointed as a member of the Compensation Committee. All members of Volterra’s Compensation Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards) and all of the members are “non-employee directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”) and “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The Compensation Committee met eight times and acted by unanimous written consent one time during 2010. The Compensation Committee charter can be found at the Governance – Committee Composition section of our corporate website at http://investors.volterra.com.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for:
| • | establishing criteria for board membership and reviewing and recommending nominees for election as directors; |
| • | considering board nominations and proposals submitted by our stockholders; |
| • | assessing the performance of our Board and the independence of directors; |
| • | recommending to the Board the chairmanship and membership of each Board committee; and |
| • | developing our corporate governance principles. |
The Nominating and Corporate Governance Committee charter can be found at the Governance – Committee Composition section of our corporate website at http://investors.volterra.com. Three directors comprised the Nominating and Corporate Governance Committee in 2010: Mr. Friedman and Drs. Liou and Ross. In January 2011, the Nominating and Corporate Governance Committee was increased to four members, and Mr. Quinsey was appointed as a member of the Nominating and Corporate Governance Committee.
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Mr. Friedman serves as chairperson. All members of the Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 4200(a)(15) of the Nasdaq listing standards). The Nominating and Corporate Governance Committee met four times and acted by unanimous written consent one time during 2010.
The Nominating and Corporate Governance Committee is responsible for oversight of risks relating to management and Board succession planning and general corporate governance policies. To satisfy these oversight responsibilities, the Committee meets regularly with our Chief Executive Officer to discuss and evaluate matters such as progress against employees and succession planning programs and goals, trends in risk levels, the employee climate, risk management activities, and non-governmental and governmental policies or proposals that could affect our operations.
MEETINGSOFTHE BOARDOF DIRECTORS
The Board met five times and acted by unanimous written consent two times during 2010. All directors attended at least 75% of the aggregate of the meetings of the Board and of the committees on which they served.
STOCKHOLDER COMMUNICATIONSWITHTHE BOARDOF DIRECTORS
Volterra wants to ensure that the views of stockholders are heard by the Board or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. We believe our responsiveness to stockholder communications to the Board has been excellent. The Nominating and Corporate Governance Committee will consider, from time to time, whether these procedures need to be updated or changed. Persons interested in communicating with the independent directors with their concerns or issues may address correspondence to a particular director, or to the independent directors generally, in care of the General Counsel of Volterra Semiconductor Corporation at 47467 Fremont Blvd., Fremont, CA 94538. If no particular director is named, letters will be forwarded, depending on the subject matter, to the Chairperson of the Audit, Compensation, or Nominating and Corporate Governance Committee.
CODEOF CONDUCT
Volterra has adopted a Code of Conduct that applies to all of Volterra’s officers, directors and employees. The Code of Conduct is available at the Governance section of Volterra’s website at http://investors.volterra.com. If Volterra makes any substantive amendments to the Code of Conduct or grants any waiver from a provision of the Code of Conduct to any executive officer or director, Volterra will promptly disclose the nature of the amendment or waiver on its website, or as otherwise required by applicable law, rules or regulations.
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REPORTOFTHE AUDIT COMMITTEEOFTHE BOARDOF DIRECTORS(1)
The Audit Committee currently consists of three members: Mssrs. Friedman, Paisley, and Winn. Mr. Winn serves as Chairperson of the Audit Committee. All members of Volterra’s Audit Committee are independent (as independence is defined in Rules 5605(a)(2) and 5605(c) of the Nasdaq listing standards).
The Audit Committee oversees Volterra’s corporate accounting and financial reporting process on behalf of the Board. Management has primary responsibility for the financial statements and the reporting process, including the systems of internal controls and disclosure controls and procedures. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements in Volterra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 with management, including a discussion of the quality and acceptability of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.
The Audit Committee is responsible for reviewing, approving and managing the engagement of Volterra’s independent registered public accounting firm, including the scope, extent and procedures of the annual audit and compensation to be paid in connection therewith, and all other matters the Audit Committee deems appropriate, including the independent registered public accounting firm’s accountability to the Board and the Audit Committee. The Audit Committee reviewed and discussed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgment as to the quality, not just the acceptability, of Volterra’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards and those matters required to be discussed by the Statement on Auditing Standards No. 114. In addition, the Audit Committee has discussed with the independent registered public accounting firm the auditors’ independence from management and Volterra, and has received written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the auditors’ communications with the Audit Committee concerning independence, and has considered the compatibility of non-audit services with the auditors’ independence.
The Audit Committee discussed with Volterra’s independent registered public accounting firm the overall scope and plans for their audits. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the audit committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluation of Volterra’s internal controls and the overall quality of Volterra’s financial reporting. The Audit Committee held nine meetings during the fiscal year ended December 31, 2010.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in Volterra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 for filing with the Securities and Exchange Commission. The Audit Committee has also retained, subject to stockholder ratification described in Proposal 4, KPMG LLP as Volterra’s independent registered public accounting firm for the fiscal year ending December 31, 2011.
AUDIT COMMITTEE
Edward Winn, Chairperson
Mel Friedman
Christopher Paisley
| (1) | The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing by Volterra under the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
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COMPENSATION COMMITTEE REPORT(1)
Volterra’s Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated into Volterra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
COMPENSATION COMMITTEE
Edward Ross, Chairman
Christopher Paisley
Ralph Quinsey(2)
Edward Winn
| (1) | The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing by Volterra under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
| (2) | Mr. Quinsey became a member of the Compensation Committee on January 21, 2011. |
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PROPOSAL 2
ADVISORY VOTEON EXECUTIVE COMPENSATION
As required under the newly enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), our Board is submitting a “Say on Pay” proposal on compensation of the Company’s Named Executive Officers as described in this Proxy Statement for stockholder consideration. While the vote on executive compensation is advisory in nature, our Board and the Compensation Committee value the opinion of our stockholders and will review the voting results and seek to determine the causes of any significant negative voting result to better understand issues and concerns not previously presented. Stockholders who want to communicate with the Board or management should refer to the earlier section of this proxy statement entitled “Stockholder Communications with the Board of Directors” for additional information.
Executive compensation is an important matter for our stockholders. The core of our executive compensation philosophy and practice continues to be to pay for performance. Our executive officers are compensated in a manner consistent with our strategy, competitive practice, sound corporate governance principles, and stockholder interests and concerns. The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our Named Executive Officers, as described in this proxy statement.
Our Named Executive Officers are identified in the later Compensation Discussion and Analysis section of this proxy statement, which provides additional details on our executive compensation payments and practices, including our compensation philosophy and objectives.
We are asking stockholders to vote on the following resolution:
“RESOLVED, that Volterra’s stockholders approve, on an advisory basis, the compensation of Volterra’s named executive officers as disclosed in Volterra’s proxy statement for the 2011 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table for fiscal 2010 and the other related tables and disclosures).”
As indicated above, the stockholder vote on this resolution is advisory in nature and will not be construed to bind Volterra or the Board, or create or imply any change or addition to our fiduciary duties or those of the Board.
RECOMMENDATIONOFTHE BOARDOF DIRECTORS
The Board recommends that the stockholders voteFOR Proposal No. 2.
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PROPOSAL 3
ADVISORY VOTE REGARDINGTHE FREQUENCYOF VOTINGON EXECUTIVE COMPENSATION
Under the Dodd-Frank Act, we are also required to seek an advisory stockholder vote regarding the frequency of submission to stockholders of a “Say on Pay” advisory vote such as Proposal No. 2. The Dodd-Frank Act specifies that stockholders be given the opportunity to vote on our executive compensation programs either every year, every two years or every three years. Although this vote is advisory, our Board will review voting results and give serious consideration to the outcome of such voting.
Our Board recognizes the importance of receiving regular input from our stockholders on important issues such as our compensation programs, and has determined than an annual advisory vote on executive compensation will allow our shareholders to regularly provide direct input on Volterra’s executive compensation payments and practices as disclosed in our proxy statement each year. The Board currently believes than an annual vote is therefore consistent with Volterra’s efforts to promote an ongoing dialogue with our shareholders on compensation and corporate governance matters. Accordingly, as indicated below, the Board recommends that you vote in favor of an advisory vote on our compensation programs with a frequency ofevery year.
Stockholders may cast their vote on their preferred voting frequency by choosing the option of every year, every two years, every three years or abstain from voting when voting in response to the resolution set forth below:
“RESOLVED, that the option of once every year, two years or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which Volterra is to hold an advisory stockholder vote on executive compensation, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure shall include the Compensation Discussion and Analysis, the Summary Compensation Table for fiscal 2010 and the other related tables and disclosures).”
The option of every year, every two years or every three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation considered most preferred by stockholders. However, as indicated above, the stockholder vote on the frequency of stockholder approval of executive compensation is advisory in nature, and will not be construed to bind Volterra or the Board, or create or imply any change or addition to our fiduciary duties or those of the Board.
RECOMMENDATIONOFTHE BOARDOF DIRECTORS
The Board recommends that the stockholders voteFOR the option ofevery year as the frequency with which stockholders are provided an advisory vote on executive compensation, as disclosed pursuant to the compensation disclosure rules of the SEC.
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PROPOSAL 4
RATIFICATIONOF SELECTIONOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected KPMG LLP as Volterra’s independent registered public accounting firm for the fiscal year ending December 31, 2011 and has further directed that management submit the selection of independent registered public accounting firm for ratification by the stockholders at the annual meeting. KPMG LLP has audited Volterra’s financial statements since 1996. Representatives of KPMG LLP are expected to be present at the annual meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither Volterra’s Bylaws nor other governing documents or law require stockholder ratification of the selection of KPMG LLP as Volterra’s independent registered public accounting firm. However, the Audit Committee is submitting the selection of KPMG LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of Volterra and its stockholders.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to ratify the selection of KPMG LLP. Abstentions will be counted toward the tabulation of votes cast on this proposal and will have the same effect as negative votes. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether this matter has been approved.
PRINCIPAL ACCOUNTANT FEESAND SERVICES
The following table represents aggregate fees billed to Volterra for fiscal years ended December 31, 2010 and December 31, 2009, by KPMG LLP, Volterra’s independent registered public accounting firm.
| Fiscal Year Ended December 31, | ||||||||
| 2010 | 2009 | |||||||
Audit Fees | $ | 714,363 | $ | 782,400 | ||||
Audit-related Fees | 3,500 | 9,800 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
Total Fees | $ | 717,863 | $ | 792,200 | ||||
“Audit Fees” consist of fees billed for professional services rendered for the audit of our consolidated financial statements, audit of management’s assessment and the effectiveness of our internal control over financial reporting, and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings or engagements.
“Audit-related Fees” consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.”
“Tax Fees” include fees for tax compliance, tax and planning and tax advice. No such fees were billed during fiscal 2010 or 2009.
“All Other Fees” consist of fees for products and services other than the services described above. No such fees were billed during fiscal 2010 or 2009.
All fees described above were approved by the Audit Committee.
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During the fiscal year ended December 31, 2010, none of the hours billed on Volterra’s financial audit by KPMG LLP were provided by persons other than KPMG LLP’s full-time permanent employees.
PRE-APPROVALOF SERVICES
The Audit Committee has adopted procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm, KPMG LLP. The Audit Committee generally pre-approves specified services in the defined categories of audit services, audit-related services, and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual explicit case-by-case basis before the independent registered public accounting firm is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting.
The Audit Committee shall evaluate the nature of any non-audit services that KPMG may provide, to determine whether the rendering of such services is compatible with maintaining the independence of our independent registered public accounting firm.
RECOMMENDATIONOFTHE BOARDOF DIRECTORS
The Board recommends that the stockholders voteFOR the approval of KPMG LLP as Volterra’s independent registered public accounting firm for the fiscal year ending December 31, 2011.
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EXECUTIVE OFFICERS
Set forth below is information regarding our executive officers effective as of December 31, 2010. Information regarding our directors is set forth in “Proposal 1—Election of Directors” presented earlier in this Proxy Statement.
Name | Age and Position as of December 31, 2010 | |||||
Jeffrey Staszak | 57 | President, Chief Executive Officer and Director | ||||
Mike Burns | 44 | Vice President of Finance, Chief Financial Officer and Treasurer | ||||
William Numann | 54 | Vice President of Marketing | ||||
Craig Teuscher | 43 | Vice President of World Wide Sales and Applications Engineering | ||||
Jeffrey Staszak
Mr. Jeffrey Staszak joined Volterra as our President and Chief Operating Officer in March 1999, and has been our Chief Executive Officer since August 2000 and a member of our Board since April 2000. Prior to joining Volterra, Mr. Staszak was Senior Vice President in the Storage Products Group of Texas Instruments Inc., a semiconductor company, from July 1996 to March 1999. From May 1993 to July 1996, Mr. Staszak served as Senior Vice President and General Manager of the Storage Products Division of Silicon Systems, Inc., a semiconductor company then affiliated with TDK Corporation. Mr. Staszak holds a B.S. in Industrial Technology from the University of Wisconsin, Stout and an M.B.A. from Pepperdine University.
Mike Burns
Mr. Mike Burns joined Volterra in August 2007 and currently serves as our Vice President of Finance, Chief Financial Officer and Treasurer. Prior to joining Volterra, Mr. Burns had a successful 15 year career at Intel Corporation. from 1992 to 2007 where he held several key positions in the United States and overseas, including as the Assistant Treasurer of Intel and most recently as the Finance Director and Controller of Intel Capital. Prior to joining Intel, Mr. Burns worked in public accounting. Mr. Burns earned his B.A. in economics and M.S. in industrial engineering from Stanford University, and his M.B.A. from the University of California at Berkeley’s Haas School of Business.
William Numann
Mr. William Numann joined Volterra as our Vice President of Marketing in November 2000. In January of 2011, Mr. Numann was appointed Senior Vice President of New Product Development. Prior to joining Volterra, Mr. Numann was Vice President of Standard Products of Supertex, Inc., a semiconductor company, from October 1997 to October 2000. From June 1985 to September 1997, Mr. Numann served as Product Marketing and Applications Director at Siliconix, Inc., a semiconductor company. Mr. Numann holds a B.S.E.E. and an M.B.A. from Rensselaer Polytechnic Institute.
Craig Teuscher
Dr. Craig Teuscher co-founded Volterra and has served as our Senior Vice President of Operations, Manufacturing Engineering and Quality Assurance since January 2011. Dr. Teuscher previously served as our Vice President of World Wide Sales and Applications Engineering from January 2009 to January 2011, as our Vice President of Sales and Applications Engineering from January 2003 to January 2009 and as our Director of Applications Engineering from July 1998 to January 2003. From September 1996 to May 2005, Dr. Teuscher also served as a member of our Board. Dr. Teuscher holds a B.S.E.E. from Princeton University and an M.S.E.E. and Ph.D. in electrical engineering from the University of California at Berkeley.
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SECURITY OWNERSHIPOF
CERTAIN BENEFICIAL OWNERSAND MANAGEMENT
The following table sets forth certain information regarding the ownership of Volterra’s common stock as of December 31, 2010 by: (i) each director and nominee for director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) all Volterra executive officers and directors as a group; and (iv) all those known by Volterra to be beneficial owners of more than five percent of its common stock. Unless otherwise indicated, the address for each listed beneficial owner is c/o Volterra Semiconductor Corporation, 47467 Fremont Blvd., Fremont, CA 94538.
| Amount and Nature of Beneficial Ownership (1) | ||||||||
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Class (%) | ||||||
BlackRock, Inc. | 1,915,541 | 7.86 | % | |||||
40 East 52nd Street | ||||||||
New York, NY 10022 | ||||||||
FMR Corp. | 4,031,005 | 15.79 | % | |||||
82 Devonshire Street | ||||||||
Boston, CA 92109 | ||||||||
Mike Burns (2) | 41,645 | * | ||||||
Mel Friedman (3) | 67,900 | * | ||||||
Fu-Tai Liou (4) | 24,800 | * | ||||||
William Numann (5) | 341,660 | 1.33 | % | |||||
Christopher Paisley (6) | 80,000 | * | ||||||
Edward Ross (7) | 60,750 | * | ||||||
Jeffrey Staszak (8) | 809,145 | 3.12 | % | |||||
Craig Teuscher (9) | 575,367 | 2.24 | % | |||||
Edward Winn (10) | 30,000 | * | ||||||
All executive officers and directors as a group (9 persons) (11) | 2,031,267 | 7.87 | % | |||||
| * | Less than one percent. |
| (1) | This table is based upon information supplied by officers and directors. With respect to the principal stockholders, the number of shares is based on holdings as of December 31, 2010 as reported to the SEC on Schedule 13G or Schedule 13G/A. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, Volterra believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages were based on a fraction, the numerator of which is the sum of (i) the number of shares of common stock beneficially owned by such owner at December 31, 2010, (ii) the number of shares issuable upon exercise of options beneficially owned by such owner and exercisable within 60 days of December 31, 2010 and (iii) the number of restricted stock units which vest within 60 days of December 31, 2010, and the denominator of which is the sum of (i) 24,382,754 shares outstanding and eligible to vote on December 31, 2010, adjusted as required by rules promulgated by the SEC, (ii) the aggregate number of shares of common stock issuable upon exercise of options beneficially owned by such owner and exercisable within 60 days of December 31, 2010 and (iii) the number of restricted stock units which vest within 60 days of December 31, 2010. |
| (2) | Includes (i) 6,082 shares held directly by Mr. Burns and (ii) 35,563 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
| (3) | Includes (i) 400 shares held directly by Mr. Friedman and (ii) 67,500 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
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| (4) | Includes (i) 9,900 shares held directly by Dr. Liou and (ii) 14,900 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
| (5) | Includes (i) 72,660 shares held directly by Mr. Numann and (ii) 269,000 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
| (6) | Includes (i) 15,000 shares held directly by Mr. Paisley and (ii) 65,000 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
| (7) | Includes (i) 6,250 shares held directly by Dr. Ross and (ii) 54,500 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
| (8) | Includes (i) 339,395 shares held directly by Mr. Staszak, (ii) 37,250 shares held by the Staszak Family Living Trust, of which Mr. Staszak is a co-trustee and (iii) 41,564 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
| (9) | Includes (i) 393,867 shares held by the Teuscher 2007 Trust, of which Dr. Teuscher is a co-trustee and (ii) 181,500 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
| (10) | Includes 30,000 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
| (11) | Includes (i) 880,804 shares held directly or indirectly by our directors and executive officers as of December 31, 2010 and (ii) 1,150,463 shares issuable upon exercise of options exercisable within 60 days of December 31, 2010. |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information with respect to all of Volterra’s equity compensation plans in effect as of December 31, 2010.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights or upon vesting of shares granted as restricted stock units (a) | Weighted-average exercise price of outstanding options, warrants and rights or upon vesting of shares granted as restricted grant units (b) | Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
Equity Compensation Plans Approved by Shareholders | ||||||||||||
Options | 5,370,668 | $ | 14.06 | — | ||||||||
Restricted Stock Units | 212,086 | n/a | — | |||||||||
Subtotal | 5,582,754 | $ | 14.06 | 7,899,958 | (1)(2) | |||||||
Equity Compensation Plans Not Approved by Shareholders | ||||||||||||
Options | n/a | n/a | n/a | |||||||||
Restricted Stock Units | n/a | n/a | n/a | |||||||||
Subtotal | — | — | — | |||||||||
Total | 5,582,754 | $ | 14.06 | 7,899,958 | ||||||||
| (1) | Under the 2004 Equity Incentive Plan, the number of authorized shares will be increased annually on December 31 of each year, from 2005 until 2013, by 5% of the number of fully-diluted shares of common stock outstanding; provided, however, that the Board may designate a smaller number of shares by which the authorized number of shares will be increased on such dates. Under the 2004 Non-Employee Directors’ Stock Option Plan, the number of authorized shares will be increased annually on December 31 of each year, from 2005 and until 2013, by no more than the number of shares of common stock subject to options granted during that calendar year. Under the 2004 Employee Stock Purchase Plan, the number of authorized shares will be increased on December 31 of each year, from 2005 until 2013, by the lesser of 1,000,000 shares of common stock or 1.75% of the fully-diluted number of shares of common stock outstanding; provided, however, that the Board may designate a smaller number of shares by which the authorized number of shares will be increased on such dates. |
| (2) | Includes 2,391,095 shares available for issuance under the 2004 Employee Stock Purchase Plan. |
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SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Volterra’s directors and executive officers, and persons who own more than ten percent of a registered class of Volterra’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Volterra’s common stock and other equity securities. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish Volterra with copies of all Section 16(a) forms they file.
To Volterra’s knowledge, based solely on a review of the copies of such reports furnished to Volterra and written representations that no other reports were required, during the fiscal year ended December 31, 2010, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with in the requisite timeframe.
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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSIONAND ANALYSIS
Executive Summary
Volterra’s promotes a pay for performance compensation philosophy for our management team (including our Named Executive Officers, as defined below), by creating a compensation framework that emphasizes the following features:
| • | Simple compensation structure.Total compensation for our management team in 2010 consisted of base salary, performance based bonuses and stock option grants. |
| • | Management bonus plan tied to straightforward financial metrics. Volterra maintains a management bonus plan, under which payments are tied in part to Volterra’s revenue and non-GAAP operating income targets established at the outset of the year and, with the exception of the management bonus for Mr. Staszak, in part to individual performance goals. Mr. Staszak’s performance is deemed to be synonymous with the Company’s financial performance, and as such, his management bonus is tied 100% to financial metrics. |
| • | Volterra continues to utilize stock options, not restricted stock or other stock awards or bonuses. Volterra grants stock options to its management team with standard time based vesting, such that realizable compensation from such options is tied to stock price appreciation. |
| • | No compensation guarantees. Volterra does not guarantee employment, salary increases, bonuses, pension arrangements, equity grants, or deferred compensation to its management. |
| • | Limited perquisites. In 2010, all of Volterra’s officers received the same basic perquisites as are available to our general employees, comprised of subsidized gym memberships, 401(k) partial contribution matching program and insurance coverage. No tax gross up payments on bonuses or payments are provided. No former or retired executive is entitled to any perquisites or benefits. |
| • | Reasonable severance benefits.Named Executive Officers are party to agreements which provide severance benefits related to “for cause” terminations, or “for cause” or “for good reason” terminations in connection with a change-in-control transaction. The amount of such severance benefits is less than three times base salary and bonus. |
| • | No hedging transactions. All executive officers are prohibited from engaging in any speculative transactions in Volterra securities, including engaging in short sales, engaging in transactions in put options, call options or other derivative securities, or engaging in any other forms of hedging transactions. |
| • | Annual reviews by independent compensation committee and consultant.Volterra’s Compensation Committee is comprised solely of independent directors. The Compensation Committee has the discretion to retain independent consultants and counsel, and it utilizes Compensia Inc. to provide guidance in conducting its annual executive compensation review. |
Fiscal 2010 was a banner year for Volterra, in which the company generated record levels of revenues and profits, despite some continuing softness in the global economy. Volterra achieved these strong results while also significantly growing its expenses in anticipation of continued growth to take advantage of recognized business opportunities. Volterra’s 2010 results improved dramatically from the prior fiscal year, as revenues grew to $153.6 million, with net income of $28.4 million and diluted earnings per share of $1.10, compared to $104.9 million, with net income of $10.9 million and diluted earnings per share of $0.45 in 2009. Volterra also grew its worldwide employee base from 205 to 274, increased its R&D spending by 32% over 2009 levels and ended the year with $100 million in cash. Volterra was able to achieve these financial results while maintaining non-GAAP gross margins at approximately 62%, at the high end of our target financial model, while also repurchasing $11.5 million in Volterra common stock.
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Volterra believes that our recent strong performance has been driven by the leadership of our management team, and Volterra’s practices have triggered historic stock price appreciation, with Volterra’s stock price closing at its all-time high in April 2010. A comparison of Volterra’s recent stock performance against the Nasdaq National Market, as a percentage growth from the start of 2009 to the end of 2010, reflects the strength of Volterra’s operational performance and how it has translated into gains for our shareholders.
Summary of 2010 and 2009 Executive Compensation
Our Named Executive Officers in 2010 were:
Name | Title as of December 31, 2010 | |
Jeffrey Staszak | President and Chief Executive Officer | |
Mike Burns | Vice President of Finance, Chief Financial Officer and Treasurer | |
William Numann | Vice President of Marketing | |
Craig Teuscher | Vice President of World Wide Sales and Applications Engineering |
Each of our Named Executive Officers served in their respective capacities during the entire 2010 calendar year. As noted above on page 21, Mr. Numann and Dr. Teuscher were recently promoted to Senior Vice President. For purposes of this Compensation Discussion and Analysis, we will identify such individuals by their prior positions, as their effective titles as of December 31, 2010.
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A summary of Volterra’s compensation payments to its Named Executive Officers in 2010, compared to payments made in 2009, are provided below:
Name | 2010 Salary | 2010 Management Bonus Plan | 2010 Discretionary Bonus | 2010 Equity Grant FMV | 2010 Total | 2009 Salary | 2009 Management Bonus Plan | 2009 Equity Grant FMV | 2009 Total | |||||||||||||||||||||||||||
Jeffrey Staszak | $ | 385,000 | $ | 346,500 | $ | 75,000 | $ | 845,025 | $ | 1,651,525 | $ | 385,000 | $ | 346,015 | $ | 267,102 | $ | 998,117 | ||||||||||||||||||
| President and Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
Mike Burns | $ | 250,000 | $ | 150,000 | $ | — | $ | 231,270 | $ | 631,270 | $ | 250,000 | $ | 143,798 | $ | 122,712 | $ | 516,510 | ||||||||||||||||||
| Vice President of Finance and Chief Financial Officer | ||||||||||||||||||||||||||||||||||||
William Numann | $ | 235,000 | $ | 141,000 | $ | 40,000 | $ | 231,270 | $ | 647,270 | $ | 235,000 | $ | 126,722 | $ | 92,034 | $ | 453,756 | ||||||||||||||||||
| Vice President of Marketing | ||||||||||||||||||||||||||||||||||||
Craig Teuscher | $ | 240,000 | $ | 144,000 | $ | 30,000 | $ | 231,270 | $ | 645,270 | $ | 240,000 | $ | 143,798 | $ | 92,034 | $ | 475,832 | ||||||||||||||||||
| Vice President of World Wide Sales and Applications Engineering | ||||||||||||||||||||||||||||||||||||
Overview of Compensation Program
Our Compensation Committee (the “Committee”) is responsible for establishing and implementing Volterra’s overall compensation plans and structure, including our equity and cash compensation programs for Volterra’s officers (including the Named Executive Officers). The Committee is appointed by our Board of Directors, and consists entirely of directors who are “outside directors” for purposes of Section 162(m) of the Internal Revenue Code and “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act. In 2010, the Committee was comprised of Christopher Paisley, Edward Ross and Edward Winn. In January 2011, the Compensation Committee was increased to four members, and Ralph Quinsey was appointed as a member of the Compensation Committee. In reviewing compensation decisions for 2010, the Committee was advised by Compensia, the independent compensation consultant originally retained by the Committee in 2007.
Each year, the Committee reviews our compensation practices to determine whether our compensation program was effective in appropriately rewarding and motivating Volterra’s officers. Committee meetings in which compensation proposals are discussed and finalized typically have included, for all or a portion of each meeting, not only the committee members but also our Chief Executive Officer, provided however, that our Chief Executive Officer is not present during such portion of each meeting in which his compensation is finalized.
The Committee strives to create fair and reasonable compensation packages for Volterra’s officers that accomplish the following objectives:
| • | attract, motivate and retain high quality, focused executives that will drive Volterra’s future growth; |
| • | align the executive officer’s long term interests with the interests of Volterra’s stockholders; and |
| • | incorporate pay-for-performance compensation features that reward individual contributions to Volterra’s success. |
To achieve these goals, the Committee has implemented an executive compensation program consisting of base salary, equity incentive compensation in the form of stock option grants, and cash bonus awards. The Committee believes that these basic cash and equity compensation elements provide the clearest and most direct link between Volterra’s officers’ performance, and our overall objectives of continuing Volterra’s growth, improving our financial performance and increasing stockholder value. All of our Named Executive Officers are eligible to receive the same elements of compensation.
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Setting Executive Compensation
In making compensation decisions for 2010, the Committee and Compensia met in the fourth quarter of 2009 and the first quarter of 2010 to review and update Volterra’s peer group and to conduct a comprehensive compensation study against this peer group based on the publicly disclosed compensation information from the prior year. In comparison to the updated peer group, Compensia noted the following information regarding Volterra’s overall average compensation of all officers (including the Named Executive Officers) in 2010:
| • | Base salaries for Volterra officers (including Named Executive Officers) approximated the market 70th percentile, with individual variation between positions generally falling between the 50th and 75th percentile; |
| • | Target cash incentives as a percent of base salary were generally aligned with peer median; |
| • | Total target cash compensation (consisting of base salary plus target cash incentives) approximated the market 60th percentile; |
| • | Annual equity values (calculated using the Black Scholes value of options as of grant date, i.e. January 2009) generally fell between market 25th and 50th percentile of the peer group; and |
| • | Target total direct compensation (target total cash compensation plus the annual equity values awards) was aligned with the market median. |
Although Volterra outperformed its peer group in several key financial metric categories, the Committee determined that it would continue to set cash compensation with reference to the 50th-55th percentile of the peer group and annual equity grants with reference to the 45th-50th percentile of the peer group, provided that such annual equity grants would be consistent with a Company-wide annual equity grant rate target of 5.0% of the Company’s outstanding capitalization.
The Committee works with Compensia to obtain general compensation guidance and comparisons to peer group data and to understand industry and compensation trends, but it ultimately relies on its collective experience and judgment in establishing salary levels, equity grants and bonus awards. The Committee does not delegate any of its functions relating to executive compensation to others and retains the authority and responsibility for approving compensation packages.
In order to tailor our compensation program to best recognize and reward the contributions of the individual officers, the Committee works closely with the Chief Executive Officer to better understand the individual strengths and performance of each officer. Compensation decisions are the result of an iterative process between the Committee and Volterra’s Chief Executive Officer, based on guiding principles provided by the Committee. Compensation for Mr. Staszak is established separately by the Committee, based on the Committee’s observation of Volterra’s overall performance and Mr. Staszak’s management of Volterra and his contributions to its success. In setting compensation for all officers, the Committee also considered Volterra’s recent financial performance, including net revenue, gross margin and operating income results, in light of our current operating plan and prior year results. Based on such considerations, Mr. Staszak and the Committee discuss general performance objectives intended to reflect company and individual goals that are significant and critical value drivers and that they believe should be the focus in the upcoming year.
In the first quarter of 2010, the Committee established base salaries and annual stock option grants and established the terms of Volterra’s 2010 Management Bonus Plan for all of Volterra’s officers (which included our Named Executive Officers). The cash bonuses actually paid under the 2010 Management Bonus Plan were calculated in the first quarter of 2011, after the Committee reviewed Volterra’s financial performance and each individual officer’s performance over the course of 2010. Each of these components is described in detail in “Executive Compensation Components” below.
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Competitive Positioning
Volterra reviewed and updated its peer group for the 2010 compensation review in the fourth quarter of 2009, but did not adopt formulaic calculations to establish compensation levels against this peer group. The Committee’s primary focus has been to create the proper incentives needed to satisfy our corporate objectives, and retained the flexibility to exceed or fall below industry benchmarks for any given Named Executive Officer.
The Committee reviewed the 20 companies in Volterra’s 2009 peer group, as well as several other companies within our industry with similar financial performance, size and organizational characteristics. The Committee noted that two peer companies from 2009 were acquired and were removed from the existing group. The Committee, with input from Volterra’s Chief Executive Officer and Compensia, determined that no further additions were advisable at this point, and that maintaining the peer group at 18 companies continued to be appropriate, particularly in light of recent and continuing consolidation in the industry.
The updated peer group of 18 companies was set as follows:
1. Advanced Analogic Technologies | 11. Monolithic Power Systems | |
2. Authentec | 12. NetLogic | |
3. California Micro Devices | 13. Pericom Semiconductors | |
4. Cavium Networks | 14. Power Integrations | |
5. Cirrus Logic | 15. PLX Technology | |
6. Entropic Communications | 16. Supertex | |
7. Exar Corporation | 17. Techwell | |
8. Ikanos Communications | 18. Tessera Technologies | |
9. Intellon | ||
10. Microtune |
The Committee reviewed several financial metrics, for purposes of providing comparisons, such as trailing four quarters revenue and net income, stock price, market capitalization and market cap as a multiple of revenue, number of employees, and revenue and market capitalization per employee. The Committee noted the following data:
| Market Cap as of 10/27/09 | ||||||||||||||||||||||||||||||||||||
| Last Four Qrtrs Revenue ($MM) | Last Four Qrtrs Net Income | Employees at FYE | Stock Prices | Total Common Shares Outstanding | Market Cap ($MM) | Market Cap as a Multiple of Revenue | Revenue per Employee | Market Cap per Employee | ||||||||||||||||||||||||||||
75th Percentile | $ | 131.2 | $ | 2.8 | 394 | $ | 20.09 | 45,331,370 | $ | 618.0 | 4.5x | $ | 441,912 | $ | 1,665,405 | |||||||||||||||||||||
60th Percentile | $ | 111.9 | ($ | 2.6 | ) | 348 | $ | 10.40 | 37,898,840 | $ | 309.3 | 3.2x | $ | 404,429 | $ | 986,240 | ||||||||||||||||||||
50th Percentile | $ | 90.8 | ($ | 7.0 | ) | 286 | $ | 7.10 | 36,122,660 | $ | 246.8 | 2.4x | $ | 350,588 | $ | 796,750 | ||||||||||||||||||||
Average | $ | 112.2 | ($ | 18.8 | ) | 314 | $ | 12.42 | 36,690,418 | $ | 392.4 | 3.2x | $ | 382,189 | $ | 1,238,692 | ||||||||||||||||||||
25th Percentile | $ | 70.7 | ($ | 22.4 | ) | 181 | $ | 3.04 | 25,789,910 | $ | 118.8 | 1.7x | $ | 300,421 | $ | 608,473 | ||||||||||||||||||||
Volterra | $ | 93.5 | $ | 7.0 | 182 | $ | 14.53 | 25,138,370 | $ | 365.3 | 3.9x | $ | 513,846 | $ | 2,006,926 | |||||||||||||||||||||
Despite being one of the smaller companies in our peer group in terms of number of employees, Volterra’s performance exceeded the peer 50th percentile in terms of revenue, and far exceeded the 50th percentile in terms of net income over the last four quarters, market capitalization, market capitalization as a multiple of revenue, revenue per employee and market capitalization per employee.
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Other Compensation Policies and Issues
Currently, we do not believe it is necessary to establish policies whereby compensation granted to Named Executive Officers may be subsequently revised or recovered by Volterra in the event of a restatement of our financial results. As our compensation plan continues to evolve, we will continue to evaluate whether such policies are necessary, appropriate or required pending any compensation recovery requirements set forth by the Dodd-Frank Act.
Executive Compensation Components
For the fiscal year ended December 31, 2010, the principal components of compensation for our officers consisted of:
| • | base salary; |
| • | cash bonuses; and |
| • | equity incentive compensation. |
We view the three components of our officer compensation as being related but distinct. Although the Committee does review the aggregate total compensation represented by these components, it does not believe that significant compensation derived from one component of compensation should negate or reduce compensation from other components. Similarly, the Committee will not increase a component of compensation if an officer’s other components do not result in financial gain. We determine the appropriate level for each compensation component based in part, but not exclusively, on our view of market data and our peer group, internal equity and consistency, individual performance and other information we deem relevant. Except as described below, the Committee has not adopted any formal or informal policies or guidelines for allocating compensation between long-term and currently paid out compensation, between cash and non-cash compensation, or among different forms of compensation. This is due to the need to tailor each Named Executive Officer’s award to attract, retain and motivate that executive officer.
In 2010, we continued to emphasize that a high percentage of our Named Executive Officers’ total direct compensation (consisting of base salary, performance bonuses and the grant date value of long term equity compensation) consist of variable compensation (consisting of performance based bonuses and long term equity incentives). With the compensation structure currently in place, Volterra continues to focus on tying our Named Executive Officers’ compensation to the individuals’ and the company’s performance.
Total Direct Compensation(1)
Name | 2010 Salary | 2010 Management Bonus Plan | 2010 Discretionary Bonus | 2010 Equity Grant FMV | 2010 Total Direct Comp. | 2010 Total Variable Comp. | % Variable Comp. | |||||||||||||||||||||
Jeffrey Staszak | $ | 385,000 | $ | 346,500 | $ | 75,000 | $ | 845,025 | $ | 1,651,525 | $ | 1,266,525 | 77 | % | ||||||||||||||
Mike Burns | $ | 250,000 | $ | 150,000 | $ | — | $ | 231,270 | $ | 631,270 | $ | 381,270 | 60 | % | ||||||||||||||
William Numann | $ | 235,000 | $ | 141,000 | $ | 40,000 | $ | 231,270 | $ | 647,270 | $ | 412,270 | 64 | % | ||||||||||||||
Craig Teuscher | $ | 240,000 | $ | 144,000 | $ | 30,000 | $ | 231,270 | $ | 645,270 | $ | 405,270 | 63 | % | ||||||||||||||
| (1) | This table is not meant as a substitute for the Summary Compensation Table located on p.36 |
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Base Salary
Volterra provides its officers with base salary to compensate them for services rendered during the fiscal year. In setting base salaries for 2010 for Volterra’s officers (including our Named Executive Officers), the Committee reviewed information related to:
| • | market data and peer group information; |
| • | an internal review of the officer’s compensation, both individually and relative to other officers; and |
| • | the individual performance of such officer. |
In setting base salaries for 2010, the Committee elected to maintain the base salary levels for all of our Named Executive Officers, as being above the current market 50th percentile but consistent with our guiding principles and reasonable in light of the fact that such salaries were set in the prior year at approximately the 50th percentile for our peer group.
Name | 2010 Annualized Base Salary | (Market 50th percentile) | 2009 Annualized Base Salary | Percentage (%) Increase from 2009 Base Salary | ||||||||||||
Jeffrey Staszak | $ | 385,000 | $ | 356,500 | $ | 385,000 | 0 | % | ||||||||
Mike Burns | $ | 250,000 | $ | 246,100 | $ | 250,000 | (1) | 0 | % | |||||||
William Numann | $ | 235,000 | $ | 215,100 | $ | 235,000 | 0 | % | ||||||||
Craig Teuscher | $ | 240,000 | $ | 224,300 | $ | 240,000 | 0 | % | ||||||||
| (1) | In 2009, the salary for Mr. Burns increased from $230,000 to $250,000 on July 1, 2009, such that his actual compensation paid in 2009 was approximately $240,000, as described in the Summary Compensation Table. Mr. Burns’ annual salary rate at the end of 2009 was $250,000 and this was unchanged in 2010. |
Management Bonus Plan Compensation
Volterra maintains an annual Management Bonus Plan (the “Bonus Plan”) for its officers, which is designed as a cash incentive program to motivate Volterra’s officers and to reward them for assisting Volterra in achieving certain financial goals for 2010.
The market data reviewed by the Committee generally showed that target incentives as a percentage of base salary for Volterra’s officers were generally aligned with the market median. As such, no changes were proposed to the structure or operation of the Bonus Plan, and the Committee maintained the Chief Executive Officer’s target incentive at 60% of his salary paid during the year and maintained the other Named Executive Officers’ target incentives at 40% of his salary paid during the year. The higher percentage for the Chief Executive Officer was established historically and consistent with market practices in recognition of his increased responsibility for Volterra’s overall success and performance.
In establishing the Bonus Plan for 2010, the Committee maintained its belief that, to better link compensation to actual performance, fifty percent of an executive officer’s bonus (other than for Mr. Staszak) should be based on Volterra’s financial performance and fifty percent was based on individual performance criteria. For Mr. Staszak, the Committee believes that Volterra’s financial performance is the best proxy for measuring his performance, and his bonus award under the terms of the Bonus Plan is based solely on Volterra’s financial performance.
The Committee created minimum annual financial performance thresholds for revenue and non-GAAP operating income that needed to be achieved before any bonus would be considered earned under the Bonus Plan. Generally, these minimum annual financial thresholds approximated Volterra’s prior year revenue and non-GAAP operating income results. If neither of these financial thresholds were met, the bonus pool under the Bonus Plan would be reduced to zero. In 2010, both of these minimum annual financial thresholds were exceeded.
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The sum of the target bonus amounts Named Executive Officers created an aggregate target bonus “pool” of approximately $521,000 under the Bonus Plan. The actual aggregate bonus pool to be awarded under the Bonus Plan could be 0% to 150% of this target pool, or $0 to approximately $781,500, depending on Volterra’s achievement of independently calculated revenue results and non-GAAP operating results in 2010. Similarly, the maximum incentive bonus each officer could receive under the Bonus Plan was equal to 150% of his target incentive bonus.
The actual bonus pool created in 2010 was weighted such that one-third of the bonus pool was related to our revenue results (based on a pre-established target range of $105 to $150 million), and two-thirds was related to our non-GAAP operating income results, excluding certain items such as stock based compensation expenses, intellectual property litigation expenses and the bonus pool expense (based on a pre-established target range of $22.0 to $42.2 million). Based on the Company’s 2010 record revenue results of approximately $153.6 million of revenue and non-GAAP operating results of approximately $42.9 million, the actual bonus pool for the Named Executive Officers equaled approximately $781,500, or the full 150% of the target bonus pool.
Target Bonus Pool (based on target percentage of participants’ salary) | = $ | 521,000 | ||
Revenue weighted payout: 150% * 1/3 * $521,000 | = $ | 260,500 | ||
Non-GAAP Op. Inc. weighted payout: 150% * 2/3 * $521,000 | = $ | 521,000 | ||
Total Bonus Pool: $260,500 + $521,000: | = $ | 781,500 |
As such, for our Named Executive Officers, the maximum individual bonus was equal to 150% of an officer’s target bonus amount. For the Chief Executive Officer, his bonus was based solely on Volterra’s financial performance, such that his 2010 bonus was equal to 150% of his 2010 target incentive bonus. For each of Mr. Burns, Mr. Numann and Dr. Teuscher, one-half of the bonus amount was based solely on Volterra’s financial performance, and one-half of the bonus amount was based on individual performance goals for each officer. In 2010, each of Mr. Burns, Mr. Numann and Dr. Teuscher was determined to have satisfied all of his respective performance goals for the year, based in part on Volterra’s record sales performance, record product output, strong improvements in margins and profitability, and successful sales and marketing efforts at new and existing major customers, including record design wins in notebook and server platforms. As such, each of Mr. Burns, Mr. Numann and Dr. Teuscher was entitled to receive the full 150% of his 2010 target incentive bonus amount. Although the Committee generally had discretion to change bonus awards for any particular executive officer, due to the strong performance of the Company despite economically challenging times, it determined that no such change would be appropriate.
The target and maximum incentive bonuses under the Bonus Plan for our Named Executive Officers for 2010 were equal to:
Name | Base Salary Paid | Target Incentive Opportunity | Target Incentive Bonus | Maximum Incentive Bonus | Actual Bonus Payment | |||||||||||||||
Jeffrey Staszak | $ | 385,000 | 60 | % | $ | 231,000 | $ | 346,500 | $ | 346,500 | ||||||||||
Mike Burns | $ | 250,000 | 40 | % | $ | 100,000 | $ | 150,000 | $ | 150,000 | ||||||||||
William Numann | $ | 235,000 | 40 | % | $ | 94,000 | $ | 141,000 | $ | 141,000 | ||||||||||
Craig Teuscher | $ | 240,000 | 40 | % | $ | 96,000 | $ | 144,000 | $ | 144,000 | ||||||||||
Discretionary Bonuses
For fiscal year 2010, Volterra paid discretionary cash bonuses to certain of the Named Executive Officers for their performance in such year, in the following amounts:
Name | 2010 Discretionary Bonus | |||
Jeffrey Staszak | $ | 75,000 | ||
William Numann | $ | 40,000 | ||
Craig Teuscher | $ | 30,000 | ||
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The bonus paid to Mr. Staszak was in recognition of his role and responsibility for driving Volterra’s overall performance to record levels in 2010, as described above in the executive overview. Mr. Staszak was heavily involved in visits with U.S. and international customers, suppliers and investors, to build and strengthen our relationships with our business partners and shareholders.
The bonus paid to Mr. Numann was in recognition of the much larger substantive role he played at Volterra in 2010, as he assumed responsibility for our design engineering activities in addition to his responsibilities as our Vice President of Marketing. Mr. Numann’s successful ability to handle our product development efforts resulted in the creation of and his promotion to, the role of Senior Vice President of New Product Development in January 2011. Mr. Numann also continued to drive our technical marketing efforts and helped shape new product markets and new product vectors.
The bonus paid to Dr. Teuscher was in recognition of his role in driving Volterra’s sales to record levels, by increasing business at existing customers, as well as gaining new customers and design wins, particular in the notebook market. Dr. Teuscher was also critical in building Volterra’s sales infrastructure, allowing the Company to handle a greater number of direct sales with our international customers, as opposed to relying on distributors, which provided an immediate and positive impact on our gross margins.
Equity Incentive Compensation
Equity-based compensation provides our officers with the opportunity to build an equity interest in the company and to share in the potential appreciation of the value of its common stock. Our officers, like our other employees, are eligible to receive option grants under our 2004 Equity Incentive Plan. Unlike other employees, however, Volterra officers do not also receive restricted stock unit awards, as the Company continues to believe that stock options are the best way to link management performance with the creation of shareholder value. If Volterra’s stock price does not appreciate over an extended period, given that such options vest over a four year period, the compensatory value of such stock options is minimized.
Stock options are granted at the “fair market value” of our common stock on the date of the grant, which under the terms of our 2004 Equity Incentive Plan, is equal to the closing price of Volterra’s common stock as listed on the Nasdaq stock market on the last trading day immediately prior to the date of grant. We have not granted stock options at a discount to fair market value or reduced the exercise price of outstanding stock options, nor have we granted stock options with a so-called “reload” feature or loan funds to executive officers to enable them to exercise stock options. Our long-term performance ultimately determines the value of stock options, because gains from stock option exercises are entirely dependent on the long-term appreciation of our stock price.
Volterra’s stock option program was designed to provide an opportunity for increased equity ownership by our officers and maintain competitive levels of total compensation. Stock options for officers are typically granted upon hire or promotion or are granted in connection with an annual “focal” review process. Volterra’s option grants in 2010 adhered to a pre-approved grant policy which provided:
| • | For new hires of Volterra employees, including executive officers, option grants were deemed to have been made on the first business day of the first month following such executive officer’s commencement of employment. |
| • | Option grants relating to the officers’ annual “focal” reviews were made on the fourth business day following Volterra’s announcement of its fourth quarter financial results. |
| • | All other option grants may be made from time to time, which grants are made at the time the Committee acts. |
In determining the stock option grant awards for Volterra officers in 2010, the Committee reviewed peer data provided by Compensia that was collected in the fourth quarter of 2009. Based on this data, and using a
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Black Scholes analysis based on criteria and assumptions set forth in Volterra’s Annual Report on Form 10-K, the Committee looked at equity guidelines based on an average of market 40th percentile based on grant values and market 40th percentile based on values as a percentage of market capitalization. Compensia also provided general grant guidelines that took into account some of the individual position-specific grant data to reflect Volterra’s internal peer relationships and values. The Committee also reviewed this data at the average of market 50th percentile for both grant values and values as a percentage of market capitalization.
Adjusted to take into account internal peer relationships and values, the market data provided an equity budget of 146,000 to 173,000 option shares for Volterra’s Named Executive Officers. The Committee reviewed all of this data for the entire Volterra management team, in light of burn rate limitations, equity budgeting, competitive market considerations and the impact of these awards on retention and performance, set an equity budget for the Named Executive Officers of 177,000 option shares. This budget, as part of the budget for all Volterra officers, met the Committee’s original guidelines to target annual equity grants for management at the 45th-50th percentile of the peer group, and also allowed Volterra to maintain an aggregate gross burn rate of 4.9% for 2010.
The option grant to Mr. Staszak exceeded the option grant to any other officer based on Mr. Staszak’s overarching responsibility for Volterra’s business and financial performance, and the grant for Mr. Staszak was at the 50th percentile grant level, as were the grants to Mr. Numann and Dr. Teuscher. The Committee believed that, on the basis of market data, job responsibilities and internal equity consistency, such amounts were appropriate. The stock option grant to Mr. Burns slightly exceeded the 50th percentile grant level, based on the Committee’s desire to maintain internal equity consistency among the officers and given his broad responsibility for the financial management of the company.
Option grants to the Named Executive Officers in 2010 were as follows:
Name | Market 40th to 50th percentile data | Adjusted 40th to 50th percentile data | 2010 Annual Option Grant | 2009 Annual Option Grant | ||||||||||||
Jeffrey Staszak | 84,000-95,000 | 84,000-95,000 | 95,000 | 90,000 | ||||||||||||
Mike Burns | 22,000-30,000 | 25,000-26,000 | 30,000 | 40,000 | ||||||||||||
William Numann | 12,000-26,000 | 15,000-26,000 | 26,000 | 30,000 | ||||||||||||
Craig Teuscher | 22,000-26,000 | 22,000-26,000 | 26,000 | 30,000 | ||||||||||||
In accordance with Volterra’s option granting policies, although the approvals occurred at a meeting of the Compensation Committee on January 22, 2010, option grants to our Named Executive Officers were made on January 29, 2010, the fourth business day following the announcement of the prior year’s fourth quarter results.
Options to our employees, including options granted as part of the annual focal reviews, vest 25% on the one year anniversary of the date of grant, with the remaining options vesting in equal quarterly installments over the subsequent three years.
Severance Benefit Plan
In connection with the compensation review for 2010, Compensia provided our Committee with data on the prevalence of severance benefit plans among our peer companies, and noted that Volterra was one of the few companies within this peer group which did not provide any severance benefits in connection with a management employee’s termination without cause, or termination or resignation in connection with a change of control transaction. Compensia provided data on common features of severance benefit plans, and the Committee determined that such plans would be beneficial to the Company as a tool to attract, retain and motivate our management. On January 22, 2010, our Compensation Committee approved the terms of a Severance Benefit Plan for several of our officers, including our Named Executive Officers. The terms of the Severance Benefit Plan are described in more detail below in the section entitled Potential Payments Upon Termination or Change in Control.
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Other Compensation, Perquisites and Other Personal Benefits
Volterra provides its Named Executive Officers with nominal personal benefits and perquisites. Volterra provides Named Executive Officers with personal benefits and perquisites generally available to all employees, including subsidized gym memberships, participation in Volterra’s 401(k) partial contribution matching program and nondiscriminatory group life insurance premiums paid by Volterra.
Tax and Accounting Implications
Tax Deductibility Under Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986 limits us to a deduction for federal income tax purposes of up to $1 million of compensation paid to certain Named Executive Officers in a taxable year. Compensation above $1 million may be deducted if it is “performance-based compensation.” Stock option awards under our 2004 Equity Incentive Plan, to the extent the Board or a committee of the Board granting such stock awards is composed solely of “outside directors,” are performance-based compensation within the meaning of Section 162(m) and, as such, are fully deductible. As noted above, Volterra’s compensation policy is primarily based upon the practice of pay-for-performance. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee has not adopted a policy requiring all compensation to be deductible. However, the Committee intends to continue to evaluate the effects of the compensation limits of Section 162(m) and believes that Volterra should be able to continue to manage its executive compensation program for Named Executive Officers so as to preserve the related federal income tax deductions, although individual exceptions may occur, in a manner consistent with the best interests of our company and our stockholders.
Accounting for Stock-Based Compensation
Effective January 1, 2006, Volterra began accounting for stock-based payments under its stock option plans in accordance with the requirements of Accounting Standards Codification (“ASC”) 718,Compensation-Stock Compensation. Under ASC 718 stock-based compensation cost is measured at the grant date, based on the fair value of the award that is ultimately expected to vest, and is recognized as an expense over the requisite service period. Compensation expense and tax considerations relating to the expense of stock options under SFAS 123R are one of the many factors considered in the determination of stock option awards.
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SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation paid or earned by our Named Executive Officers for the fiscal years ended December 31, 2010, 2009, and 2008. None of the Named Executive Officers received stock awards in 2010, 2009, or 2008, and Volterra does not offer any pension or deferred compensation plan or program to any officer, director or employee.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | |||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||||||||||
Jeff Staszak | 2010 | $ | 385,000 | $ | 75,000 | (3) | $ | 845,025 | $ | 346,500 | $ | 1,685 | (4) | $ | 1,653,210 | |||||||||||||
| President and Chief Executive Officer | 2009 | $ | 385,000 | $ | — | $ | 276,102 | $ | 346,015 | $ | 1,577 | $ | 1,008,694 | |||||||||||||||
| 2008 | $ | 383,384 | $ | — | $ | 261,713 | $ | 319,303 | $ | 8,431 | $ | 972,831 | ||||||||||||||||
Mike Burns | 2010 | $ | 250,000 | $ | — | $ | 231,270 | $ | 150,000 | $ | 8,783 | (5) | $ | 640,053 | ||||||||||||||
Vice President of Finance Chief Financial Officer | 2009 | $ | 239,461 | $ | — | $ | 122,712 | $ | 143,798 | $ | 8,660 | $ | 514,631 | |||||||||||||||
| 2008 | $ | 229,654 | $ | — | $ | 52,343 | $ | 127,168 | $ | 7,794 | $ | 416,959 | ||||||||||||||||
William Numann | 2010 | $ | 235,000 | $ | 40,000 | (3) | $ | 231,270 | $ | 141,000 | $ | 11,736 | (6) | $ | 659,006 | |||||||||||||
| Vice President of Marketing | 2009 | $ | 235,000 | $ | — | $ | 92,034 | $ | 126,722 | $ | 11,478 | $ | 465,234 | |||||||||||||||
| 2008 | $ | 234,308 | $ | — | $ | 174,475 | $ | 124,736 | $ | 8,434 | $ | 541,953 | ||||||||||||||||
Craig Teuscher | 2010 | $ | 240,000 | $ | 30,000 | (3) | $ | 231,270 | $ | 144,000 | $ | 8,768 | (7) | $ | 654,038 | |||||||||||||
Vice President of World Wide Sales and Apps. Eng. | 2009 | $ | 240,000 | $ | — | $ | 92,034 | $ | 143,798 | $ | 8,656 | $ | 484,488 | |||||||||||||||
| 2008 | $ | 239,192 | $ | — | $ | 139,580 | $ | 132,697 | $ | 8,079 | $ | 519,548 | ||||||||||||||||
| (1) | The amounts in column (c) represents the aggregate grant date fair value of these awards as calculated in accordance with ASC 718. Assumptions used in the calculation of this amount for 2010 are included in footnote 2(l) to Volterra’s audited financial statements for the fiscal year ended December 31, 2010 included in Volterra’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 8, 2011. |
| (2) | The amounts in column (d) reflect the cash awards to the named individuals under Volterra’s Management Bonus Plan. |
| (3) | Consists of discretionary performance bonuses paid to the Named Executive Officer for services rendered in 2010. |
| (4) | Includes payments made by Volterra on behalf of Mr. Staszak equal to $801 for a subsidized gym membership and $884 in group life insurance premiums |
| (5) | Includes payments made by Volterra on behalf of Mr. Burns equal to $801 for a subsidized gym membership, $884 in group life insurance premiums and $7,098 contributed towards Mr. Burns’ 401(k) account pursuant to a 401(k) matching contribution program discussed in further detail above under the heading “Other Compensation, Perquisites and Other Personal Benefits.” |
| (6) | Includes payments made by Volterra on behalf of Mr. Numann equal $884 in group life insurance premiums and $10,852 contributed towards Mr. Numann’s 401(k) account pursuant to a 401(k) matching contribution program discussed in further detail above under the heading “Other Compensation, Perquisites and Other Personal Benefits.” |
| (7) | Includes payments made by Volterra on behalf of Dr. Teuscher equal to $801 for a subsidized gym membership, $884 in group life insurance premiums and $7,083 contributed towards Dr. Teuscher’s 401(k) account pursuant to a 401(k) matching contribution program discussed in further detail above under the heading “Other Compensation, Perquisites and Other Personal Benefits.” |
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GRANTSOF PLAN BASED AWARDS
The table below summarizes the total potential payments under plan based awards and option grants to the Named Executive Officers. The amounts reflected in columns (b), (c) and (d) are the potential payments the Named Executive Officers were eligible to receive under the 2010 Management Bonus Plan. Actual payments made under the 2010 Management Bonus Plan are reflected in column (d) of the Summary Compensation Table, provided above. The information reflected in columns (a), (e), (f) and (g) relate to stock option grants to the Named Executive Officers in connection with annual performance reviews, also included in the Outstanding Equity Awards at Fiscal Year End table provided below. The Named Executive Officers did not participate in any plan based equity incentive awards, and did not receive any other stock awards in 2010.
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Awards (1) | All Other Option Awards: Number of Securities Underlying Options (2) | Exercise Price of Option Awards ($) (3) | Grant Date Fair Value ($) (4) | |||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||||||
Jeffrey Staszak | 1/29/10 | — | 231,000 | 346,500 | 95,000 | 20.23 | 845,025 | |||||||||||||||||||||
Mike Burns | 1/29/10 | — | 100,000 | 150,000 | 26,000 | 20.23 | 231,270 | |||||||||||||||||||||
William Numann | 1/29/10 | — | 94,000 | 141,000 | 26,000 | 20.23 | 231,270 | |||||||||||||||||||||
Craig Teuscher | 1/29/10 | — | 96,000 | 144,000 | 26,000 | 20.23 | 231,270 | |||||||||||||||||||||
| (1) | Represents 0, 100% and 150%, respectively, of the target bonus amount for each executive officer. The target bonus amount is equal to 60% of actual salary paid in 2010 for Mr. Staszak and 40% of actual salary paid in 2010 for each of the other Named Executive Officers. Such actual salary amounts are described in column (a) to the Summary Compensation Table provided above. |
| (2) | The amounts in column (e) represent the number of stock options granted to the Named Executive Officers in 2010. The vesting schedules of these options are described in the Outstanding Equity Awards at Fiscal Year-End table and related footnotes, provided below. |
| (3) | The exercise price for the stock options is equal to the closing sales price of Volterra’s common stock as reported on the Nasdaq Global Select Market on the last trading day prior to the date of grant. |
| (4) | The amounts in column (g) represent the aggregate grant date fair value of these awards as calculated in accordance with ASC 718. Assumptions used in the calculation of this amount for 2010 are included in footnote 2(l) to Volterra’s audited financial statements for the fiscal year ended December 31, 2010 included in Volterra’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 8, 2011. |
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OUTSTANDING EQUITY AWARDSAT FISCAL YEAR-END
The table below summarizes the total outstanding equity awards outstanding as of December 31, 2010 held by the Named Executive Officers. As of December 31, 2010, no Stock Awards were outstanding and held by such Named Executive Officers.
| Option Awards | ||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | ||||||||||||
Jeff Staszak | 37,500 | 0 | $ | 5.00 | 1/26/2014 | |||||||||||
| 90,000 | 0 | $ | 14.76 | 2/2/2015 | ||||||||||||
| 72,000 | 0 | $ | 19.09 | 2/2/2016 | ||||||||||||
| 18,000 | 0 | $ | 19.09 | 2/2/2016 | ||||||||||||
| 82,499 | 7,501 | (1) | $ | 13.45 | 2/1/2014 | |||||||||||
| 51,562 | 23,438 | (2) | $ | 9.18 | 1/31/2015 | |||||||||||
| 39,375 | 50,625 | (3) | $ | 7.16 | 1/29/2016 | |||||||||||
| 0 | 95,000 | (4) | $ | 20.23 | 1/28/2017 | |||||||||||
Mike Burns | 12,500 | 18,750 | (5) | $ | 10.86 | 8/30/2014 | ||||||||||
| 1,875 | 4,688 | (6) | $ | 9.18 | 1/31/2015 | |||||||||||
| 5,000 | 22,500 | (7) | $ | 7.16 | 1/29/2016 | |||||||||||
| 0 | 26,000 | (8) | $ | 20.23 | 1/28/2017 | |||||||||||
William Numann | 50,000 | 0 | $ | 5.00 | 1/26/2014 | |||||||||||
| 50,000 | 0 | $ | 14.76 | 2/2/2015 | ||||||||||||
| 26,000 | 0 | $ | 19.09 | 2/2/2016 | ||||||||||||
| 24,000 | 0 | $ | 19.09 | 2/2/2016 | ||||||||||||
| 54,999 | 5,001 | (9) | $ | 13.45 | 2/1/2014 | |||||||||||
| 34,375 | 15,625 | (10) | $ | 9.18 | 1/31/2015 | |||||||||||
| 13,125 | 16,875 | (11) | $ | 7.16 | 1/29/2016 | |||||||||||
| 0 | 26,000 | (12) | $ | 20.23 | 1/28/2017 | |||||||||||
Craig Teuscher | 40,000 | 0 | $ | 14.76 | 2/2/2015 | |||||||||||
| 30,000 | 0 | $ | 19.09 | 2/2/2016 | ||||||||||||
| 54,999 | 5,001 | (13) | $ | 13.45 | 2/1/2014 | |||||||||||
| 27,500 | 12,500 | (14) | $ | 9.18 | 1/31/2015 | |||||||||||
| 13,125 | 16,875 | (15) | $ | 7.16 | 1/29/2016 | |||||||||||
| 0 | 26,000 | (16) | $ | 20.23 | 1/28/2017 | |||||||||||
| (1) | 7,501 shares subject to the option vested on February 2, 2011. |
| (2) | 4,688 shares subject to the option vested on February 1, 2011, and an additional 4,688 shares shall vest at each subsequent quarter until the option is fully vested. |
| (3) | 5,625 shares subject to the option vested on January 30, 2011, and an additional 5,625 shares shall vest at each subsequent quarter until the option is fully vested. |
| (4) | 23,750 shares subject to the option vested on January 29, 2011, and an additional 5,937 shares shall vest at each subsequent quarter until the option is fully vested. |
| (5) | 6,250 shares subject to the option vested on March 1, 2011, and an additional 6,250 shares shall vest at each subsequent quarter until the option is fully vested. |
| (6) | 938 shares subject to the option vested on February 1, 2011, and an additional 938 shares shall vest at each subsequent quarter until the option is fully vested. |
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| (7) | 2,500 shares subject to the option vested on January 1, 2011, and an additional 2,500 shares shall vest at each subsequent quarter until the option is fully vested. |
| (8) | 6,500 shares subject to the option vested on January 29, 2011, and an additional 1,625 shares shall vest at each subsequent quarter until the option is fully vested. |
| (9) | 5,001 shares subject to the option vested on February 2, 2011. |
| (10) | 3,125 shares subject to the option vested on February 1, 2011, and an additional 3,125 shares shall vest at each subsequent quarter until the option is fully vested. |
| (11) | 1,875 shares subject to the option vested on January 30, 2011, and an additional 1,875 shares shall vest at each subsequent quarter until the option is fully vested. |
| (12) | 6,500 shares subject to the option vested on January 29, 2011, and an additional 1,625 shares shall vest at each subsequent quarter until the option is fully vested. |
| (13) | 5,001 shares subject to the option vested on February 2, 2011. |
| (14) | 2,500 shares subject to the option vested on February 1, 2011, and an additional 2,500 shares shall vest at each subsequent quarter until the option is fully vested. |
| (15) | 1,875 shares subject to the option vested on January 30, 2011, and an additional 1,875 shares shall vest at each subsequent quarter until the option is fully vested. |
| (16) | 6,500 shares subject to the option vested on January 29, 2011, and an additional 1,625 shares shall vest at each subsequent quarter until the option is fully vested. |
OPTION EXERCISESAND STOCK VESTED
The table below summarizes the total stock option exercises in 2010 by our Named Executive Officers. In 2010, no Stock Awards were outstanding or held by such Named Executive Officers.
| Option Awards | ||||||||
Name | Number of Shares Acquired on Exercise (#) (1) | Value Realized on Exercise ($)(2) | ||||||
Jeffrey Staszak | 451,000 | 10,029,885 | ||||||
Mike Burns | 76,875 | 911,188 | ||||||
William Numann | 72,125 | 1,506,941 | ||||||
Craig Teuscher | 150,000 | 3,330,000 | ||||||
| (1) | Represents shares issued upon exercise of outstanding stock options. |
| (2) | Value realized on exercise equals the aggregate difference between the price of Volterra’s common stock at time of exercise, less the exercise price, or in instances where the Named Executive Officer held the exercised options, the value realized on exercise equals the aggregate difference between the fair market value of Volterra’s common stock at time of exercise, less the exercise price. |
PENSION BENEFITSAND NONQUALIFIED DEFERRED COMPENSATION
Volterra does not provide pension benefits or any nonqualified deferred compensation to any executive officer or other employee.
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POTENTIAL PAYMENTSUPON TERMINATION
OR CHANGEIN CONTROL
During the fiscal year ended December 31, 2010, none of our Named Executive Officers received cash payments upon termination of employment or in connection with a change in control. On January 22, 2010, the Compensation Committee approved the terms of a Severance Benefit Plan for several of our officers, including our Named Executive Officers, which provides for payment of benefits to participants in connection with certain terminations of such Named Executive Officers employment with the Company.
The Severance Benefit Plan generally provides that in the event of a termination of the participant’s service by the Company without Cause more than two (2) months prior to or more than twelve (12) months following a Change in Control (a “Non-Change in Control Termination”), the Company would provide the participant:
| • | a lump sum payment equal to 12 months of participant’s base salary, and 12 months of continued COBRA health care coverage, in the case of Mr. Staszak. |
| • | a lump sum payment equal to 6 months of participant’s base salary, and 6 months of continued COBRA health care coverage, in the case of Mr. Burns, Mr. Numann and Dr. Teuscher |
Under the Severance Benefit Plan, in the event of a termination either by the Company without Cause or by the eligible employee for Good Reason if such termination occurs within two months prior to or within twelve (12) months following a Change in Control (a “Change in Control Termination”), the Company would provide the participant:
| • | a lump sum payment equal to 18 months of participant’s base salary and 150% of participant’s target bonus amount, and 18 months of continued COBRA health care coverage, in the case of Mr. Staszak. |
| • | a lump sum payment equal to 12 months of participant’s base salary and 100% of participant’s target bonus amount, and 12 months of continued COBRA health care coverage, in the case of Mr. Burns, Mr. Numann and Dr. Teuscher. |
In addition, in such change in control termination, a terminated participant will become immediately fully vested in all of his outstanding equity awards.
The severance benefits described above will be subject to the participant entering into a separation agreement and release of claims, and agreeing to certain non-compete, non-solicitation and non-disparagement provisions.
Under the Severance Benefit Plan, a “Change in Control” means one or more of the following events:
| • | a third party acquires more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction; |
| • | a merger, consolidation or similar transaction, after which the stockholders of the Company immediately own less than fifty percent (50%) of the combined outstanding voting power of the surviving entity; |
| • | a sale, lease, license or other disposition of all or substantially all of the assets of the Company; or |
| • | during any period of two consecutive years, individuals who, at the beginning of such period are members of the Board cease to constitute at least a majority of the members of the Board. |
Under the Severance Benefit Plan, “Cause” means one or more of the following:
| • | indictment, conviction of or plea of guilty or nolo contendere to, any crime that constitutes a felony under federal or state law; |
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| • | participation in any fraud or material dishonesty against the Company; |
| • | intentional misconduct or material failure to perform assigned duties; |
| • | material violation or breach of any Company policy, agreement with the Company, or any duty to the Company (including, but not limited to, unauthorized use or disclosure of the Company’s confidential information or trade secrets); or |
| • | failure to cooperate with the Company in any investigation or formal proceeding. |
Under the Severance Benefit Plan, “Good Reason” means the resignation of the participant if one of the following actions takes place without the participant’s prior written consent:
| • | there is a material diminution in the authority, duties or responsibilities,provided, however, that if the participant retains substantially the same position held prior to a Change in Control, but in a distinct legal entity or business unit of a larger entity following such Change in Control, that shall not constitute a resignation for good reason; |
| • | there is a material reduction in the participant’s base salary that is not a part of a Company-wide reduction plan; |
| • | the participant is required to relocate his or her principal place of employment to a location more than thirty-five (35) miles from his place of employment immediately prior to such change; or |
| • | any acquirer of the Company materially fails to assume and perform the obligations of the Company under the Severance Benefit Plan. |
The following table provides information regarding the amounts that would have been owed to our named executive officers if their employment with the Company had been terminated under the above scenarios as of December 31, 2010, the last business day of our fiscal year.
Severance upon a “Non-Change in Control Termination”:
Name | Cash | Benefits (COBRA) Continuation | Total | |||||||||
Jeffrey Staszak | $ | 385,000 | $ | 11,979 | $ | 396,979 | ||||||
Mike Burns | $ | 125,000 | $ | 10,017 | $ | 135,017 | ||||||
William Numann | $ | 117,500 | $ | 6,977 | $ | 124,477 | ||||||
Craig Teuscher | $ | 120,000 | $ | 7,878 | $ | 127,877 | ||||||
Severance upon a “Change in Control Termination”:
Name | Cash | Bonus | Benefits (COBRA) Continuation | Equity Award Acceleration (1) | Total | |||||||||||||||
Jeffrey Staszak | $ | 577,500 | $ | 346,500 | $ | 17,968 | $ | 1,485,439 | $ | 2,427,408 | ||||||||||
Mike Burns | $ | 250,000 | $ | 100,000 | $ | 20,034 | $ | 732,343 | $ | 1,102,377 | ||||||||||
William Numann | $ | 235,000 | $ | 94,000 | $ | 13,955 | $ | 613,177 | $ | 956,132 | ||||||||||
Craig Teuscher | $ | 240,000 | $ | 96,000 | $ | 15,755 | $ | 569,490 | $ | 921,245 | ||||||||||
| (1) | Reflects the aggregate value of each officers unvested option grants, computed by multiplying (i) the difference between $23.16, the closing price per share on the NASDAQ Global Market at December 31, 2010, and the exercise price of each option, by (ii) the number of total unvested options held by the officer at December 31, 2010. |
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All options to purchase common stock issued to all of our employees, including our Named Executive Officers, may also be subject to accelerated vesting upon a change of control in certain limited circumstances as follows, pursuant to the terms of the 2004 Equity Incentive Plan. In the event of specified corporate transactions, all outstanding options and stock appreciation rights under the 2004 Equity Incentive Plan may be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company). If the surviving or acquiring entity (or its parent company) elects not to assume, continue or substitute such awards, then (i) with respect to any such options and stock appreciation rights that are held by participants then performing services for us or our affiliates, the vesting and exercisability provisions of such options and stock appreciation rights will be accelerated in full and such options and stock appreciation rights will be terminated if not exercised prior to the effective date of the corporate transaction, and (ii) all other outstanding options and stock appreciation rights will be terminated if not exercised prior to the effective date of the corporate transaction. Other forms of equity awards under the 2004 Equity Incentive Plan such as stock purchase awards may have their repurchase or forfeiture rights assigned to the surviving or acquiring entity (or its parent company). If such repurchase or forfeiture rights are not assigned, then such equity awards will become fully vested. Following specified change in control transactions, the vesting and exercisability of specified equity awards generally will be accelerated only if the awardee’s award agreement so specifies. The potential benefits described above are available generally to all salaried employees, and were included in the 2004 Equity Incentive Plan at the time of adoption, in an effort to ensure that participants’ rights were preserved in some fashion in connection with such corporate transactions.
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DIRECTOR COMPENSATION
Volterra uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, Volterra considers the significant amount of time that Directors expend in fulfilling their duties to Volterra as well as the skill-level required by Volterra of members of the Board. As of December 31, 2010, one of our directors, Mr. Staszak, was a Volterra employee.
In conjunction with the compensation review performed for Volterra’s officers, as described above, Volterra and Compensia reviewed the compensation to be paid to our non-employee directors, based on the same peer group used in making compensation decisions for Volterra’s officers. Compensia presented information on director compensation that evaluated a role-based differentiation of compensation levels, and based on comparisons to peer data, determined that Volterra’s non-employee director compensation approximated the median level, other than compensation to our Chairman of the Board, which was slightly below the median level. Based on this market data, the Committee determined that no further changes to cash compensation to our non-employee directors were necessary at this time.
The Committee also reviewed information regarding the equity compensation paid to non-employee directors, and reviewed information regarding market trends regarding equity awards. In light of the growing use of restricted stock unit awards, the Committee recommended, and the Board approved, an amendment to our non-employee director annual grant practice, to grant restricted stock unit awards in lieu of annual option grants, as described below. Volterra had previously adopted the practice of granting restricted stock unit awards to non-management employees, with each restricted stock unit weighted as approximately 2.5-3.0 stock option equivalents, and the Committee determined that such weighting would also be appropriate for non-employee director grants. The Committee recommended, and the Board approved a policy whereby, in lieu of the 10,000 share stock option grant awarded annually from the 2004 Non-Employee Director Stock Option Plan, each non-employee director would receive a restricted stock unit award of 3,600 shares of common stock from our 2004 Equity Incentive Plan, as described in more detail below.
Cash Compensation Paid to Board Members
For the fiscal year ended December 31, 2010, members of the Board who are not Volterra employees were entitled to receive the following cash compensation in connection with their service on the Board of Directors and committees of the Board of Directors. These payments are made in equal quarterly installments.
| 2010 Annual Compensation | ||||
Chairman of the Board of Directors: | $ | 10,000 | ||
Member of Board of Directors: | $ | 25,000 | ||
Member of Audit Committee: | $ | 7,000 | ||
Member of Compensation Committee: | $ | 3,500 | ||
Member of Nominating and Governance Committee: | $ | 2,500 | ||
Audit Committee Chair: | $ | 15,000 | ||
Compensation Committee Chair: | $ | 7,000 | ||
Nominating and Governance Committee Chair: | $ | 5,000 | ||
Non-Employee Director Equity Program
Under the terms of the 2004 Non-Employee Directors’ Stock Option Plan (the “Directors’ Plan”), upon being elected or appointed for the first time as a non-employee director, such person shall receive an initial stock option grant to purchase thirty thousand (30,000) shares of common stock, which grant shall vest in equal annual installments over a three year period.
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On March 3, 2010, the Board of Directors approved a change to the Company’s policy regarding non-employee directors’ equity grants. The Board of Directors amended the Directors’ Plan to eliminate the annual non-employee director stock option grant of ten thousand (10,000) shares of common stock, such that no annual grant would be made at the annual meeting to be held on April 23, 2010. Instead, the Board adopted a policy whereby each non-employee director would receive a restricted stock unit under the Company’s 2004 Equity Incentive Plan (the “Incentive Plan”) to acquire 3,600 shares of common stock on the date of each annual meeting, which grant shall vest in full on the earlier of (i) the first anniversary of such date of grant or (ii) the day prior to the date of the first annual meeting following the date such grant was made. For new directors, such annual grant shall be pro-rated depending on the length of service at the time of his or her first annual meeting.
In the event of specified corporate transactions, all outstanding equity awards under the Directors’ Plan or the Incentive Plan may be assumed, continued or substituted by any surviving or acquiring entity (or its parent company). If the surviving or acquiring entity (or its parent company) elects not to assume, continue or substitute such options, then (i) with respect to any such options held by optionees then performing services for us or our affiliates, the vesting and exercisability of such options will be accelerated in full and such options will be terminated if not exercised prior to the effective date of such corporate transaction and (ii) all other such outstanding options will be terminated if not exercised prior to the effective date of the corporate transaction. In the event of specified changes in control, the vesting and exercisability of outstanding options under the Directors’ Plan or the Incentive Plan granted to non-employee directors whose service has not terminated prior to such change in control, other than as a condition of such change in control, will be accelerated in full.
DIRECTOR COMPENSATION TABLE
The table below summarizes the compensation paid by Volterra to directors for the fiscal year ended December 31, 2010. Mr. Staszak, Volterra’s President and Chief Executive Officer, is not included in this table as he is a Named Executive Officer of Volterra and his employee compensation is provided in the Summary Compensation Table and related disclosures provided above. Mr. Staszak is a Volterra employee and thus received no compensation for his service as a Director. Volterra did not offer participation to the non-employee directors in any non-equity incentive plan compensation, any pension or any nonqualified deferred compensation plan or program.
Director Compensation
For Fiscal Year Ended December 31, 2010
Name (1) | Fees Earned or Paid in Cash ($) (a) | Stock Awards ($) (b) | All Other Compensation ($) (c) | Total ($) (d) | ||||||||||||
Mel Friedman | $ | 37,000 | $ | 98,748 | $ | — | $ | 135,748 | ||||||||
Fu-Tai Liou | $ | 27,500 | $ | 98,748 | $ | — | $ | 126,248 | ||||||||
Christopher Paisley | $ | 45,500 | $ | 98,748 | $ | — | $ | 144,248 | ||||||||
Edward Ross | $ | 34,500 | $ | 98,748 | $ | — | $ | 133,248 | ||||||||
Edward Winn | $ | 43,500 | $ | 98,748 | $ | — | $ | 142,248 | ||||||||
| (1) | As of December 31, 2010, the non-employee directors held options to purchase shares of Volterra’s common stock, in the following amounts: Mel Friedman: 67,500; Fu-Tai Liou: 25,100; Christopher Paisley: 65,000; Edward Ross: 54,500 and Edward Winn: 30,000. |
| (2) | The amounts in column (b) represents the aggregate grant date fair value of these awards as calculated in accordance with ASC 718. |
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COMPENSATION COMMITTEE INTERLOCKSAND INSIDER PARTICIPATION
As previous noted, our Compensation Committee consists of Dr. Ross and Mssrs. Paisley, Quinsey and Winn. None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers who serve on our Board or Compensation Committee.
CERTAIN RELATIONSHIPSAND RELATED TRANSACTIONS
Director and Officer Indemnification
In addition to the indemnification provided for in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, we have entered, and we intend to continue to enter, into separate indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification agreements may require us, among other things, to indemnify our directors and executive officers for some expenses, including attorneys’ fees, judgments, fines and settlement amounts, incurred by a director or executive officer in any action or proceeding arising out of his service as a director, officer, employee or other agent of Volterra or any of our subsidiaries or any other company or enterprise to which the person provides services at our request.
Policies and Procedures for Related Party Transactions
Volterra has adopted a Code of Conduct which generally describes Volterra’s policy relating to conflicts of interest. In an effort to further avoid conflicts of interests with our executive officers or directors, or the appearance of such a conflict, Volterra has also adopted a Related Persons Transactions Policy applicable to them. Under such Related Party Transactions Policy, a “related person transaction” is described as a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the company and any “related person” are, were or will be participants in which the amount involved exceeds $120,000, unless such transaction is not required to be disclosed under Item 404 of Regulation S-K under the Securities Exchange Act of 1934, as amended. Under such policy, Volterra shall gather information relating to the immediate family members of the officers and directors, to determine whether there are any transactions or proposed transactions that must be approved or ratified. Under the policy, upon learning of a proposed related party transaction, Volterra shall submit the terms of such transaction to the Audit Committee for consideration. The Audit Committee will determine, in light of known circumstances at the time, whether such transaction is in, or is not inconsistent with, the best interests of Volterra and its stockholders, as determined by the Audit Committee in its good faith exercise of its discretion.
The Audit Committee has determined that Volterra has not entered into any transactions that are considered Related Party Transactions.
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HOUSEHOLDINGOF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are Volterra Semiconductor Corporation stockholders will be “householding” our proxy materials. A single proxy statement and annual report will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report, please notify your broker and direct your written request to Investor Relations, Volterra Semiconductor Corporation, 47467 Fremont Blvd., Fremont, CA 94538 or contact Investor Relations at (510) 743-1718. Stockholders who currently receive multiple copies of the proxy statement and annual report at their address and would like to request “householding” of their communications should contact their broker.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for consideration at the annual meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors |
/s/ DAVID OH |
| David Oh |
| Secretary |
March 21, 2011
A copy of Volterra’s Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2010 is available without charge upon written request to: Corporate Secretary, Volterra Semiconductor Corporation, 47467 Fremont Blvd., Fremont, CA 94538.
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VOLTERRA SEMICONDUCTOR CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 2011
The undersigned hereby appointsJEFFREY STASZAK andMIKE BURNS, and each of them, as proxies for the undersigned, with full power of substitution and revocation, to vote all of the shares of stock ofVOLTERRA SEMICONDUCTOR CORPORATION that the undersigned may be entitled to vote at theANNUAL MEETINGOF STOCKHOLDERSofVOLTERRA SEMICONDUCTOR CORPORATION to be held at47467 FREMONT BOULEVARD, FREMONT, CA 94538onFRIDAY, APRIL 22, 2011at9:00a.m. (local time), and at any and all postponements and adjournments thereof, with all powers that the undersigned would possess if personally present, on the following matters and in accordance with the following instructions, with discretionary authority as to any other business that may properly come before the meeting.
This proxy, when properly executed and returned, will be voted in the manner directed herein. If no direction is indicated, this proxy will be voted (i) FOR all nominees listed in Proposal 1, (ii) FOR Proposal 2, (iii) for EVERY YEAR on Proposal 3, and (iv) FOR Proposal 4, as more specifically described in the proxy statement, and in the discretion of the proxy holders upon any other business as may properly come before the Annual Meeting of Stockholders or any adjournment or postponement thereof.
| detach here | ||||
The Board of Directors recommends a vote “FOR” the nominees for director listed below.
PROPOSAL 1: | To elect two directors to hold office until the 2014 Annual Meeting of Stockholders and until their successors are duly elected and qualified. | |||||||
| ¨ | FOR all nominees listed below (except | ¨ | WITHHOLD AUTHORITY to | |||||
Nominees: | Fu-Tai Liou, Edward Ross | |||||||
To withhold authority to vote for any nominee(s), write the name(s) of such nominee(s) below:
The Board of Directors recommends a vote “FOR” Proposal 2.
PROPOSAL 2: | To approve, on an advisory basis, the executive compensation payments and practices of the Company as disclosed in the proxy statement. | |||||||||||||||
¨ | FOR | ¨ | AGAINST | ¨ | ABSTAIN | |||||||||||
The Board of Directors recommends a vote for “EVERY YEAR” on Proposal 3. | ||||||||||||||||
PROPOSAL 3: | To indicate, on an advisory basis, the preferred frequency with which the Company shall conduct a vote on executive compensation. | |||||||||||||||
¨ | EVERY YEAR | ¨ | EVERY TWO YEARS | ¨ | EVERY THREE YEARS | ¨ | ABSTAIN | |||||||||
The Board of Directors recommends a vote “FOR” Proposal 4. | ||||||||||||||||
PROPOSAL 4: | To ratify the selection by theAUDIT COMMITTEEofKPMG LLP as the Company’s independent registered public accounting firm for its fiscal year endingDECEMBER 31, 2011. | |||||||||||||||
¨ | FOR | ¨ | AGAINST | ¨ | ABSTAIN | |||||||||||
Dated |
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| SIGNATURE(S) | ||||||
Please sign exactly as your name appears hereon. If the stock is registered in the names of two or more persons, each should sign. Executors, administrators, trustees, guardians and attorneys-in-fact should add their titles. If signer is a corporation, please give full corporate name and have a duly authorized officer sign, stating title. If signer is a partnership, please sign in partnership name by authorized person. | ||||||
Please vote, date and promptly return this proxy card in the enclosed return envelope which is postage prepaid if mailed in the United States.