The grants will be made under the Company’s Amended and Restated 2010 Performance Incentive Plan. The RSUs will vest in equal annual installments over a period of three years on the anniversary date of the Grant Date, subject to the individual’s continued service with the Company through each such vesting date.
The PSUs will vest, if at all, following a2-year performance period, on the date the Compensation Committee certifies achievement of the performance criteria set forth below, subject to the individual’s continued service with the Company through such vesting date. Vesting of the PSUs will be based 50% on achievement of a cumulative fiscal 2020 and fiscal 2021 revenue target (the “PSU Revenue Target”) and 50% on achievement of a cumulative fiscal 2020 and fiscal 2021non-GAAP operating margin target (the “PSU Operating Margin Target”). As achievement of each financial target is considered independently from the other, the Company must meet a threshold for each factor in order for an individual to receive any credit for that factor. If the Company achieves 100% or more of a target financial metric, the PSUs will vest at 100% of target with respect to that financial metric component. Achievement of the PSU Revenue Target at a level between approximately 95.6% and 100% will result in a number of shares vesting for that metric that is scaled from 0% to 100% in a linear fashion. Achievement of the PSU Operating Margin Target at a level between approximately 97.8% and 100% will result in a number of shares vesting for that metric that is scaled from 0% to 100% in a linear fashion.
The Stretch PSUs will vest, if at all, following a2-year performance period, on the date the Compensation Committee certifies achievement of the performance criteria set forth below, subject to the individual’s continued service with the Company through such vesting date. Vesting of the Stretch PSUs will be based 50% on achievement of a cumulative fiscal 2020 and fiscal 2021 revenue target that is higher than the PSU Revenue Target (the “Stretch PSU Revenue Target”) and 50% on achievement of a cumulative fiscal 2020 and fiscal 2021non-GAAP operating margin target that is higher than the PSU Operating Margin Target (the “Stretch PSU Operating Margin Target”). As achievement of each financial target is considered independently from the other, the Company must meet a threshold for each factor in order for an individual to receive any credit for that factor. If the Company achieves 100% or more of a target financial metric, the Stretch PSUs will vest at 100% of target with respect to that financial metric component. Achievement of the Stretch PSU Revenue Target at a level between the PSU Revenue Target and 100% will result in a number of shares vesting for that metric that is scaled from 0% to 100% in a linear fashion. Achievement of the Stretch PSU GM Target at a level between the PSU GM Target and 100% will result in a number of shares vesting for that metric that is scaled from 0% to 100% in a linear fashion.
Letter Agreement with Mr. Mitchell
On August 14, 2019, Fabrinet and David T. Mitchell, Fabrinet’s Chairman of the Board, entered into a letter agreement (the “Amendment”) to amend two of Mr. Mitchell’s restricted share unit awards, one of which covers 61,758 ordinary shares of Fabrinet and was granted to him on August 18, 2016, and the other of which covers 69,885 ordinary shares of Fabrinet and was granted to him on August 24, 2017 (collectively, the “RSU Awards”). The RSU Awards were granted to Mr. Mitchell under Fabrinet’s 2010 Performance Incentive Plan and applicable award agreements thereunder. Under the terms of the RSU Award agreements, each of the RSU Awards is settled entirely in the form of Fabrinet ordinary shares when the RSU Award vests. As a result of the Amendment, upon the vesting of the RSU Awards on or after August 14, 2019, 42% of the shares otherwise issuable upon such vesting automatically will be settled instead in the form of cash.
The foregoing description of the Amendment is a summary and is qualified in its entirety by the terms of the Amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
