UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 27, 2007
VITESSE SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-31614 77-0138960
(Commission File Number) (IRS Employer Identification No.)
741 Calle Plano, Camarillo, California 93012
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 388-3700
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
Directors' Compensation
As previously discussed, the Board of Directors of Vitesse Semiconductor
Corporation (the "Company") has launched a process to reconstitute its
membership. As part of this process, the Board has initiated searches for new
highly qualified directors who are independent of management. The Board
undertook this process concurrent with the efforts to address the Company's
operational, accounting and governance problems and to turn around the Company's
operating performance.
As part of this process, led by the Board's Nominating and Corporate
Governance Committee under its recently elected Chairperson, Willow Shire, the
Board announced that it will solicit recommendations from shareholders to
identify highly qualified, independent candidates for new directors of the
Company. The Board has engaged the recruiting firm of Russell Reynolds
Associates to assist with the process of finding and selecting candidates.
During this process, at least one candidate questioned the adequacy of the
compensation package for the directors of the Company. The Board, in response,
engaged a compensation consultant to advise the Board of Directors regarding the
compensation of directors, and to determine the level that would be appropriate
to attract and retain highly qualified and independent members. The Board has
now completed that review of the compensation and related practices. After
consultation with the compensation consultant, the Board determined that the
current compensation package for directors was well below the mid-point, when
compared to comparable companies. To bring its compensation into line with peers
and to assist in this recruiting effort, on July 27, 2007, the Board of
Directors adopted the following compensation package for directors:
(i) directors will receive an annual retainer of $25,000 paid
quarterly, $1,000 for each in-person Board meeting and $500 for each scheduled
conference call Board meeting;
(ii) the Chairperson of the Board (or Independent Lead Director
if the Chairperson of the Board is an executive of the Company) will receive an
annual retainer of $45,000 and the Chairpersons of the committees of the Board
will each receive an annual retainer of $10,000;
(iii) for each Committee meeting, the Chairperson of the
Committee will receive $1,250 and the other members of the Committee will
receive $1,000; and
(iv) the equity portion of the compensation package was changed
so that new directors after June 1, 2007 will receive an option to purchase
75,000 shares of the common stock of the Company and continuing directors will
continue to be entitled to receive an annual grant of an option to purchase
40,000 shares of the common stock of the Company, however the Board has
determined that the annual grants for all directors will be waived until the
Company has filed the required financial statements with the Securities and
Exchange Commission.
Amendment of Employment Agreement
The Board of Directors also considered the compensation arrangements in
place for Christopher Gardner, the Company's Chief Executive Officer, in light
of his accomplishments over the past year and the challenges facing the Company.
As a result, on July 27, 2007, the Company and Christopher Gardner entered into
an Amended and Restated Employment Agreement (the "Gardner Agreement") that
amends and restates the employment agreement between the Company and Mr. Gardner
dated as of June 26, 2006. A copy of the Gardner Agreement is attached to this
Form 8-K as Exhibit 10.1 and is incorporated herein by reference. The Gardner
Agreement amends Mr. Gardner's initial employment agreement to increase his base
salary to $350,000, effective from April 1, 2007, and to provide that "Severance
Pay" shall be 24 months of Mr. Gardner's base salary plus two times the average
of the maximum target bonus for the two most recent fiscal years prior to
termination, payable in a lump sum on the date of termination of employment
under certain specified circumstances. Also, the definition of "Change in
Status" was revised to provide that Mr. Gardner's guaranteed monthly
compensation for consulting following termination of his employment under
certain specified circumstances shall expire on the earlier of either three
years after the date of termination of his employment or one year after the
Company has an effective registration statement under the Securities Act of 1933
with respect to the shares to be issued upon exercise of options granted to him,
and his options will continue to vest normally during his service as a
consultant and will be exercisable until the earlier of 90 days following his
termination as a consultant and the normal expiration date of such options.
Amendments to 2001 Stock Incentive Plan
On July 27, 2007, the Board of Directors amended and restated the Company's
2001 Stock Incentive Plan to provide that new directors elected after June 1,
2007 will receive an option to purchase 75,000 shares of the common stock of the
Company and the additional grants of options to purchase 60,000 shares of the
common stock of the Company to the Chairperson of the Board have been
eliminated. A copy of the Amended and Restated 2001 Stock Incentive Plan is
attached to this Form 8-K as Exhibit 10.2 and is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
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10.1 Amended and Restated Employment Agreement,
dated July 27, 2007, between the Company and
Christopher Gardner
10.2 Amended and Restated 2001 Stock Incentive Plan
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 2, 2007
VITESSE SEMICONDUCTOR CORPORATION
By: /s/ MICHAEL B. GREEN
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Michael B. Green
Vice President, General Counsel
and Secretary
EXHIBIT INDEX
Exhibit No. Description
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10.1 Amended and Restated Employment Agreement, dated
July 27, 2007, between the Company and
Christopher Gardner
10.2 Amended and Restated 2001 Stock Incentive Plan