def14a
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 (Amendment No. )
Filed by
the Registrant þ
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Soliciting Material Pursuant to §240.14a-12 |
Finisar Corporation
(Name of Registrant as Specified In Its Charter)
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1389 Moffett Park Drive
Sunnyvale, California 94089
September 17, 2010
Dear Stockholder:
You are cordially invited to attend this years annual
meeting of stockholders on Thursday, October 28, 2010 at
10:00 a.m., local time. The meeting will be held at the
offices of DLA Piper LLP (US), located at 2000 University
Avenue, East Palo Alto, California.
We are pleased to again furnish proxy materials to stockholders
primarily over the Internet. We used this delivery process last
year and found that it expedited stockholders receipt of
proxy materials and lowered the costs and reduced the
environmental impact of our annual meeting. On
September 17, 2010, we mailed to our stockholders (other
than those who previously requested electronic or paper
delivery) a Notice of Internet Availability of Proxy Materials
(the Notice) containing instructions on how to
access our proxy materials, including our Proxy Statement and
Annual Report on
Form 10-K
for the fiscal year ended April 30, 2010. The Notice also
provides instructions on how to vote online or by telephone and
includes instructions on how to receive a paper copy of the
proxy materials by mail. If you received your annual meeting
materials by mail, the Notice of Annual Meeting of Stockholders,
Proxy Statement, Annual Report to Stockholders and proxy card
were enclosed.
The matters to be acted upon are described in the Notice of
Annual Meeting of Stockholders and Proxy Statement. Following
the formal business of the meeting, we will report on our
companys operations and respond to questions from
stockholders.
Whether or not you plan to attend the meeting, your vote is very
important and we encourage you to vote promptly and submit your
proxy by Internet, telephone or mail, as described in the proxy
materials. If you attend the meeting you will, of course, have
the right to revoke the proxy and vote your shares in person. If
you hold your shares through an account with a brokerage firm,
bank or other nominee, please follow the instructions you
receive from them to vote your shares. For the election of
directors, if you do not provide voting instructions via the
Internet, by telephone, or by returning a proxy card or
providing instructions to your broker, your shares will not be
voted.
We look forward to seeing you at the annual meeting.
Very truly yours,
Jerry S.
Rawls
Chairman of the Board
Eitan Gertel
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held Thursday, October
28, 2010
The Annual Meeting of stockholders of Finisar Corporation, a
Delaware corporation, will be held on Thursday, October 28,
2010, at 10:00 a.m. local time, at the offices of DLA Piper
LLP (US), 2000 University Avenue, East Palo Alto, California
94303, for the following purposes:
1. To elect two Class II directors to hold office for
a three-year term and until their respective successors are
elected and qualified.
2. To ratify the appointment of Ernst & Young LLP
as our independent auditors for the fiscal year ending
April 30, 2011.
3. To transact such other business as may properly come
before the meeting or any adjournment or postponement of the
meeting.
Stockholders of record at the close of business on
September 7, 2010 are entitled to notice of, and to vote
at, this meeting and any adjournment or postponement. For ten
days prior to the meeting, a complete list of stockholders
entitled to vote at the meeting will be available for
examination by any stockholder, for any purpose relating to the
meeting, during ordinary business hours at our principal offices
located at 1389 Moffett Park Drive, Sunnyvale, California 94089.
Your vote is very important, regardless of the number of
shares you own. Whether or not you plan to attend the Annual
Meeting of Stockholders, we urge you to vote and submit your
proxy as promptly as possible in order to assure the presence of
a quorum. Because of a change in the rules governing member
firms of the New York Stock Exchange, unlike previous annual
meetings, your broker will NOT be able to vote your shares with
respect to the election of directors if you have not given your
broker specific instructions to do so. You may vote by
telephone, Internet or mail. If you vote by telephone or
Internet, you do not have to mail in your proxy card. Voting in
advance will not prevent you from voting in person at the
meeting.
Christopher E.
Brown
Secretary
Sunnyvale, California
September 17, 2010
TABLE OF
CONTENTS
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Page
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SOLICITATION AND VOTING
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1
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PROPOSAL NO. 1 ELECTION OF DIRECTORS
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2
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CORPORATE GOVERNANCE
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6
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Independence of Directors
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6
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Board of Directors Leadership Structure
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Board of Directors Role in Risk Oversight
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6
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Executive Sessions
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7
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Meetings of the Board of Directors and Committees
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7
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Director Nominations
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8
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Communications by Stockholders with Directors
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9
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Director Attendance at Annual Meetings
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Committee Charters and Other Corporate Governance Materials
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Compensation Committee Interlocks and Insider Participation
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9
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DIRECTOR COMPENSATION
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PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
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12
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REPORT OF THE AUDIT COMMITTEE
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PRINCIPAL STOCKHOLDERS AND SHARE OWNERSHIP BY MANAGEMENT
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EXECUTIVE COMPENSATION AND RELATED MATTERS
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Compensation Discussion and Analysis
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Report of the Compensation Committee
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Summary Compensation Information
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Grants of Plan-Based Awards
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Outstanding Equity Awards at Fiscal Year-End
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Option Exercises and Stock Vested
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Potential Payments Upon Termination or Change in Control
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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EQUITY COMPENSATION PLAN INFORMATION
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Material Features of the 2001 Nonstatutory Stock Option Plan
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STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
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OTHER MATTERS
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i
1389 Moffett Park Drive
Sunnyvale, California 94089
PROXY
STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
The board of directors of Finisar Corporation is soliciting your
proxy for the 2010 Annual Meeting of Stockholders to be held on
Thursday, October 28, 2010, at 10:00 a.m., local time,
or at any adjournment or postponement thereof, for the purposes
set forth in the accompanying Notice of Annual Meeting of
Stockholders. This proxy statement and related materials are
first being made available to stockholders of the Company on or
about September 17, 2010. References in this proxy
statement to the Company, we,
our, us and Finisar are to
Finisar Corporation, and references to the annual
meeting are to the 2010 Annual Meeting of Stockholders.
When we refer to the Companys fiscal year, we mean the
annual period ending on April 30. This proxy statement
covers our fiscal 2010, which was from May 1, 2009 through
April 30, 2010 (fiscal 2010).
SOLICITATION
AND VOTING
Record Date. Our board of directors has fixed
the close of business on September 7, 2010 as the record
date for determination of stockholders entitled to notice of and
to vote at the meeting and any adjournment thereof. As of the
record date, 77,035,529 shares of common stock were
outstanding and entitled to vote.
Internet Availability of Annual Meeting
Materials. We are pleased to again take advantage
of the rules adopted by the U.S. Securities and Exchange
Commission (SEC) allowing companies to furnish proxy
materials over the Internet to their stockholders rather than
mailing paper copies of those materials to each stockholder. On
September 17, 2010, we mailed to our stockholders a Notice
of Internet Availability of Proxy Materials directing
stockholders to a web site where they can access our proxy
statement for the annual meeting and our Annual Report for the
fiscal year ended April 30, 2010 and view instructions on
how to vote via the Internet or by phone. If you would prefer to
receive a paper copy of our proxy materials, please follow the
instructions included in the Notice of Internet Availability of
Proxy Materials.
Quorum. A majority of the shares of common
stock issued and outstanding as of the record date must be
represented at the meeting, either in person or by proxy, to
constitute a quorum for the transaction of business at the
annual meeting. Your shares will be counted toward the quorum
only if you submit a valid proxy (or one is submitted on your
behalf by your broker or bank) or if you vote in person at the
meeting. Abstentions and broker non-votes (shares
held by a broker or nominee that does not have the authority,
either express or discretionary, to vote on a particular matter)
will each be counted as present for purposes of determining the
presence of a quorum.
Vote Required to Adopt Proposals. Each share
of our common stock outstanding on the record date is entitled
to one vote on each of the two director nominees and one vote on
each other matter. For the election of directors, the two
director nominees receiving the highest number of
FOR votes will be elected as Class II
directors. With respect to all other proposals, we must receive
a FOR vote from the majority of shares present and
entitled to vote either in person or by proxy.
Effect of Abstentions and Broker
Non-Votes. Shares not present at the meeting and
shares voted Abstain will have no effect on the
election of directors. For each of the other proposals,
abstentions will have the same effect as negative votes. If you
are a beneficial owner and hold your shares in street
name, it is critical that you cast your vote if you want
it to count in the election of directors. In the past, if you
held your shares in street name and you did not
indicate how you wanted your shares voted in the election of
directors, your bank or broker was allowed to vote these shares
on your behalf in the election of directors as they felt
appropriate. Under a recent rule change, banks or brokers that
hold your shares will not be authorized to vote your shares in
the election of directors on a discretionary basis if you do not
provide specific voting instructions. Accordingly, we encourage
you to vote promptly, even if you plan to attend the annual
meeting. Your bank or broker will, however, continue to have
discretion to vote any uninstructed shares on the ratification
of the selection of Ernst & Young LLP as our
independent auditors for the fiscal year ending April 30,
2011. Proxies and ballots will be received and tabulated by the
inspector of elections for the annual meeting.
Voting Instructions. If you complete and
submit your proxy card or voting instructions, the persons named
as proxies will follow your instructions. If you are a
stockholder of record and you submit a proxy card or voting
instructions but do not direct how to vote on each item, the
persons named as proxies will vote as the board recommends on
each proposal.
Depending on how you hold your shares, you may vote in one of
the following ways:
Stockholders of Record: You may vote by proxy
or over the Internet or by telephone. Please follow the
instructions provided in the Notice, or, if you requested
printed copies of the proxy materials, on the proxy card you
received, then sign and return it in the prepaid envelope. You
may also vote in person at the annual meeting.
Beneficial Stockholders: Your bank, broker or
other holder of record will enclose a voting instruction card
for you to use to instruct them on how to vote your shares.
Check the instructions provided by your bank, broker or other
holder of record to see which options are available to you.
However, since you are not the stockholder of record, you may
not vote your shares in person at the annual meeting unless you
request and obtain a valid proxy from your bank, broker or other
agent.
Votes submitted by telephone or via the Internet must be
received by 11:59 p.m., Eastern Time, on October 27,
2010. Submitting your proxy by telephone or via the Internet
will not affect your right to vote in person should you decide
to attend the annual meeting.
If you are a stockholder of record, you may revoke your proxy
and change your vote at any time before the polls close by
returning a later-dated proxy card, by voting again by Internet
or telephone as more fully detailed in your Notice or proxy
card, or by delivering written instructions to the Corporate
Secretary before the annual meeting. Attendance at the annual
meeting will not in and of itself cause your previously voted
proxy to be revoked unless you specifically so request or vote
again at the annual meeting. If your shares are held by a bank,
broker or other agent, you may change your vote by submitting
new voting instructions to your bank, broker or other agent, or,
if you have obtained a legal proxy from your bank, broker or
other agent giving you the right to vote your shares, by
attending the annual meeting and voting in person.
Solicitation of Proxies. We will bear the
entire cost of soliciting proxies. In addition to soliciting
stockholders by mail, we will request banks, brokers and other
intermediaries holding shares of our common stock beneficially
owned by others to obtain proxies from the beneficial owners and
will reimburse them for their reasonable expenses in so doing.
Solicitation of proxies by mail may be supplemented by
telephone, by electronic communications and personal
solicitation by our directors, officers and employees. No
additional compensation will be paid to directors, officers or
employees for such solicitation.
Voting
Results
We will announce preliminary voting results at the annual
meeting. We will report final results in a
Form 8-K
report filed with the U.S. Securities and Exchange
Commission.
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
Our Certificate of Incorporation provides that the authorized
number of members of the board of directors shall be fixed from
time to time by the board of directors and that the terms of
office of the members of the board of directors will be divided
into three classes. At each annual meeting of stockholders,
directors from one of the three classes are elected for a term
of three years to succeed those directors whose terms expire at
the annual meeting. The authorized number of directors is
currently set at nine, consisting of three classes of three
members each.
2
The terms of the Class II directors will expire on the date
of the upcoming annual meeting. The current Class II
members of the board of directors are Christopher J. Crespi,
David C. Fries and Robert N. Stephens. Messrs. Crespi and
Fries have each advised the Nominating and Governance Committee
and the board that they will be retiring from service on the
board as of the date of the annual meeting and will not stand
for re-election at the annual meeting. The board has determined
to reduce the size of the board from nine to seven members,
effective immediately upon the election of Class II
directors at the annual meeting. In connection with the
reduction in the size of the board, the board has also
determined to reconfigure the composition of the classes of the
board in order to make the size of the three classes as close to
equal as possible. In order to accomplish the reconfiguration of
the board, the Nominating and Governance Committee recommended
to the board that Jerry S. Rawls, currently a Class III
director whose term expires at the 2011 annual meeting of
stockholders, stand for re-election as a Class II director
at the annual meeting. Mr. Rawls has tendered his
resignation as a Class III director to be effective
immediately upon the election of Class II directors at the
annual meeting.
Accordingly, two persons are to be elected to serve as
Class II directors at the meeting. Managements
nominees for election by the stockholders to those two positions
are Mr. Rawls and Mr. Stephens, who is a continuing
Class II member of the board of directors. If elected, each
nominee will serve as a director until our annual meeting of
stockholders in 2013 and until their respective successors are
elected and qualified. If any of the nominees declines to serve
or becomes unavailable for any reason, or if a vacancy occurs
before the election (although we know of no reason to anticipate
that this will occur), the proxies may be voted for such
substitute nominees as we may designate. The proxies cannot vote
for more than two persons. If a quorum is present and voting,
the two nominees for Class II director receiving the
highest number of votes will be elected as Class II
directors.
The board of directors recommends a vote FOR the
nominees named above.
The following table sets forth information regarding our current
directors, including the nominees for Class II directors to
be elected at the annual meeting, as of August 15, 2010.
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Name
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Position with Finisar
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Age
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Director Since
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Michael C. Child
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Director
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55
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2010
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Christopher J. Crespi
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Director
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47
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2008
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Roger C. Ferguson
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Director
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67
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1999
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David C. Fries
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Director
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65
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2005
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Eitan Gertel
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Chief Executive Officer and Director
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48
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2008
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Thomas E. Pardun
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Director
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66
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2009
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Jerry S. Rawls
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Chairman of the Board
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66
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1989
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Robert N. Stephens
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Director
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64
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2005
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Dominique Trempont
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Director
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56
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2005
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Nominees
for Election for a Three Year Term Expiring at the 2013 Annual
Meeting of Stockholders
Jerry S. Rawls has served as a member of our board of
directors since March 1989 and as our Chairman of the Board
since January 2006. Mr. Rawls served as our Chief Executive
Officer from August 1999 until the completion of the Optium
merger in August 2008. Mr. Rawls also served as our
President from April 2003 until the completion of the Optium
merger and previously held that title from April 1989 to
September 2002. From September 1968 to February 1989,
Mr. Rawls was employed by Raychem Corporation, a materials
science and engineering company, where he held various
management positions including Division General Manager of
the Aerospace Products Division and Interconnection Systems
Division. Mr. Rawls holds a B.S. in Mechanical Engineering
from Texas Tech University and an M.S. in Industrial
Administration from Purdue University. Mr. Rawls
tenure with Finisar since 1989, including 19 years as
President
and/or Chief
Executive Officer, provides him personal knowledge of the
Companys history since shortly after its founding. This
experience, together with his management and industry
experience, enables him to provide the board with a unique
perspective on the Companys business and operations and
strategic issues.
3
Robert N. Stephens has served as a member of our board of
directors since August 2005 and as our Lead Director since March
2010. Mr. Stephens served as the Chief Executive Officer
since April 1999 and President since October 1998 of Adaptec,
Inc., a storage solutions provider, until his retirement in May
2005. Mr. Stephens joined Adaptec in November 1995 as Chief
Operating Officer. Before joining Adaptec, Mr. Stephens was
the founder and chief executive officer of Power I/O, a company
that developed serial interface solutions and silicon expertise
for high-speed data networking, that was acquired by Adaptec in
1995. Prior to founding Power I/O, Mr. Stephens was
President and CEO of Emulex Corporation, which designs, develops
and supplies Fibre Channel host bus adapters. Before joining
Emulex, Mr. Stephens was Senior Vice President, General
Manger, and founder of the Microcomputer Products Group at
Western Digital Corporation. He began his career at IBM, where
he served over 15 years in a variety of management
positions. Mr. Stephens holds a B.A. in Philosophy and
Psychology and an M.S. in Industrial Psychology from
San Jose State University. Mr. Stephens brings to the
board executive and industry experience in a number of strategic
and operational areas through his service as Chief Executive
Officer of Adaptec, Power I/O and Emulex and in executive roles
at Western Digital.
Directors
Continuing in Office until the 2011 Annual Meeting of
Stockholders
Eitan Gertel has served as our Chief Executive Officer
and as a director since the completion of the Optium merger in
August 2008. Mr. Gertel served as Optiums President
and as a director from March 2001 and as Chief Executive Officer
and Chairman of the Board of Optium from February 2004 through
the completion of the merger. Mr. Gertel served as
President and General Manager of the former transmission systems
division of JDS Uniphase Corporation from 1995 to 2001. JDSU is
a provider of broadband test and management solutions and
optical products. Mr. Gertel holds a B.S.E.E. from Drexel
University. As our Chief Executive Officer, Mr. Gertel
brings to the board significant senior leadership, industry and
technical experience. As Chief Executive Officer,
Mr. Gertel is in a position to provide the board with
insight and information related to the Companys business
and operations and to participate in the ongoing review of
strategic issues.
Dominique Trempont has served as a member of our board of
directors since August 2005. Mr. Trempont is also a member
of the board of directors of Energy Recovery, Inc., a
manufacturer of efficient energy recovery devices utilized in
the water desalination industry, and chairs its Audit Committee
and its Nominating and Governance Committee. He also serves on
the board of directors of Real Networks, Inc., which provides
products and services to enable consumers to save, store and
access digital media on many different devices.
Mr. Trempont served as a director of 3Com Corporation from
2006 until April 2010 when it was acquired by Hewlett-Packard
Company. Mr. Trempont was CEO in residence at Battery
Ventures from August 2003 until June 2004. Prior to joining
Battery Ventures, Mr. Trempont was Chairman, President and
Chief Executive Officer of Kanisa, Inc., a software company
focused on enterprise self-service applications, from November
1999 to November 2002. Mr. Trempont was President and Chief
Executive Officer of Gemplus Corporation, a smart card company,
from May 1997 to June 1999. Prior to Gemplus, Mr. Trempont
served as Chief Financial Officer and head of Operations at NeXT
Software. Mr. Trempont began his career at Raychem
Corporation. Mr. Trempont received an undergraduate degree
in Economics from College Saint Louis (Belgium), a B.A. in
Business Administration and Computer Sciences from the
University of Louvain (Belgium), with high honors, and a Master
in Business Administration from INSEAD (France/Singapore).
Mr. Trempont brings to the board broad executive and
financial experience, including expertise in accounting and
financial reporting, through his service as Chief Executive
Officer of Kanisa and Gemplus, as Chief Financial Officer of
NeXT, his service on the boards of other publicly-held
technology companies and his service on the audit committees of
Energy Recovery and 3Com Corporation.
Directors
Continuing in Office until the 2012 Annual Meeting of
Stockholders
Michael C. Child has served as a member of our board of
directors since June 2010. Mr. Child has been employed by
TA Associates, Inc., a private equity firm, since 1982 where he
currently serves as a Managing Director. Mr. Child
previously served as a director of Finisar from November 1998
until October 2005. Mr. Child also serves on the board of
directors of IPG Photonics, which designs and manufactures high
performance fiber lasers and amplifiers, and served on the board
of directors of Eagle Test Systems, a manufacturer of high
performance automated test equipment for the semiconductor
industry, from 2003 until November 2008 when it was acquired by
Teradyne, Inc. Mr. Child holds a B.S. in Electrical
Engineering from the University of California at
4
Davis and an M.B.A. from the Stanford Graduate School of
Business. Mr. Child has more than 25 years
experience investing in and acquiring technology and
technology-related companies and has served on the boards of
directors of numerous public and private companies, including
companies in the fiber optics and semiconductor industries. This
broad financial and industry experience enables Mr. Child
to make a valuable contribution to the board. He also brings
significant knowledge regarding the Company and its operations
from his previous years of service on our board.
Roger C. Ferguson has served as a member of our board of
directors since August 1999. From June 1999 to December 2001,
Mr. Ferguson served as Chief Executive Officer of Semio
Corp., an early stage software company. Mr. Ferguson served
as a principal in VenCraft, LLC, a venture capital partnership,
from July 1997 to August 2002. From August 1993 to July 1997,
Mr. Ferguson was Chief Executive Officer of DataTools,
Inc., a database software company. From 1987 to 1993,
Mr. Ferguson served as Chief Operating Officer of Network
General Inc., a network analysis company. Mr. Ferguson
holds a B.A. in Psychology from Dartmouth College and an M.B.A.
from the Amos Tuck School at Dartmouth. Mr. Ferguson brings
senior leadership experience and strategic and financial
expertise to the board from his prior work as a senior executive
of a public company and several private companies and as chief
financial officer of a public company. Mr. Ferguson has
extensive experience in both the hardware and software segments
of the computer and telecommunications industries.
Thomas E. Pardun has served as a member of our board of
directors since December 2009. Mr. Pardun is currently the
Chairman of the Board of Directors of Western Digital
Corporation, a manufacturer of hard-disk drives for the personal
computer and home entertainment markets. Mr. Pardun has
served in this capacity from January 2000 to January 2002 and
again since April 2007. Mr. Pardun was President of
MediaOne International, Asia-Pacific (previously U.S. West
International, Asia-Pacific, a subsidiary of U.S. West,
Inc.), an owner/operator of international properties in cable
television, telephone services and wireless communications
companies, from May 1996 until his retirement in July 2000.
Prior to 1996, Mr. Pardun served as President and CEO of
U.S. West Multimedia Communications, a communications
company. Before joining U.S. West, Mr. Pardun was
President of the Central Group for Sprint, as well as President
of Sprints West Division, and Senior Vice President of
Business Development for United Telecom, a predecessor company
to Sprint. Mr. Pardun also held a variety of management
positions during a
19-year
tenure with IBM, concluding as Director of product-line
evaluation. He is also a director of CalAmp Corporation, Occam
Networks, Inc. and MaxLinear, Inc. Mr. Pardun holds a
B.B.A. in Business Administration from the University of Iowa.
Mr. Pardun brings to the board extensive management and
operations experience in the computer and telecommunications
industries, including marketing and product development
expertise, as well as his service in senior management positions.
Retiring
Directors
Christopher J. Crespi has served as a member of our board
of directors since the completion of the Optium merger in August
2008. Mr. Crespi served as a director of Optium from
November 2005 through the completion of the merger. Since July
2010, Mr. Crespi has been a research analyst for Auriga
USA, LLC, a wholly owned subsidiary of Auriga Securities S.V.,
an investment firm. Mr. Crespi served as a Managing
Director of ICAP LLC, a wholly owned subsidiary of ICAP plc, an
interdealer broker headquartered in London, from December 2009
until July 2010. Since May 2004, Mr. Crespi has served as
president of Pacific Realm, LLC, a small investment fund which
invests in private growth companies and equity funds, which he
co-founded. Mr. Crespi worked as managing director of Banc
of America Securities LLC from November 1999 until his
retirement in January 2004. Mr. Crespi served as a director
of Sirenza Microdevices, Inc., a supplier of radio frequency
components for commercial communications, consumer and
aerospace, defense and homeland security markets, from January
2006 until November 2007 when it was acquired by RF Micro
Devices, Inc. Mr. Crespi holds a B.S.E.E. from the
University of California at Davis and an M.B.A. from Kellogg
Graduate School of Management at Northwestern University.
Mr. Crespis broad experience in the financial and
investment industries, and as a director of public companies,
enables him to provide financing and industry expertise as well
as outside director experience to the board.
David C. Fries has served as a member of our board of
directors since June 2005. Dr. Fries has been employed by
VantagePoint Venture Partners, a venture capital investment
firm, since August 2001 where he currently serves as a Managing
Director. Prior to joining VantagePoint, he was the Chief
Executive Officer of Productivity Solutions, Inc., a
Florida-based developer of automated checkout technologies for
food and discount retailers, from 1995 to
5
1999. For seven years prior to that, he was a general partner of
Canaan Partners, a venture capital firm. Dr. Fries served
17 years in numerous executive roles in engineering,
manufacturing, senior management and finance at General Electric
Company, including directing GE Venture Capitals
California operation, which later became Canaan Partners.
Dr. Fries served as a director of Aviza Technology, Inc., a
supplier of advanced semiconductor equipment and process
technologies for the global semiconductor industry, from 2003
until November 2007. Dr. Fries holds a B.S. in Chemistry
from Florida Atlantic University and a Ph.D. in Physical
Chemistry from Case Western Reserve University. Dr. Fries
brings to the board extensive management and finance experience
in several industry and operational areas from his prior
experience as an executive of several companies and a venture
capital investor.
There are no family relationships between any of our directors
or executive officers.
CORPORATE
GOVERNANCE
Independence
of Directors
The board of directors has determined that, other than Jerry S.
Rawls, our Chairman of the Board, and Eitan Gertel, our Chief
Executive Officer, each of the current members of the board is
an independent director for purposes of the Nasdaq
Listing Rules and
Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934, as the term applies
to membership on the board of directors and the various
committees of the board of directors.
Board of
Directors Leadership Structure
Jerry S. Rawls serves as Chairman of our board of directors,
Eitan Gertel serves as our Chief Executive Officer and
Messrs. Rawls and Gertel constitute our co-principal
executive officers. The board believes that it is appropriate
for Mr. Rawls to serve as Chairman given his long tenure
with the Company and familiarity with our business strategy and
our industry. The board also believes that having an executive
officer serve as Chairman facilitates the flow of information
between the board and management, thereby improving the
boards ability to focus on key policy and operational
issues and the long-term interests of our stockholders. In
August 2008, on the recommendation of the Nominating and
Governance Committee, the board established the position of lead
director. Mr. Stephens currently serves in that position.
The lead director serves as the principal liaison between the
independent directors and the Chairman. In that capacity, the
lead director presides over executive sessions of the
independent directors, chairs board meetings in the
Chairmans absence, and collaborates with the Chairman on
agendas, schedules and materials for board meetings. The board
believes that this leadership structure provides the appropriate
balance of management and non-management oversight.
Board of
Directors Role in Risk Oversight
We face a number of risks, including general economic risks,
operational risks, financial risks, competitive risks and
reputational risks. Management is responsible for the
day-to-day
management of the risks that we face, while the board of
directors, as a whole and through its committees, has
responsibility for the oversight of risk management.
While the full board of directors is charged with ultimate
oversight responsibility for risk management, committees of the
board also have responsibilities with respect to various aspects
of our risk oversight. In particular, the Audit Committee plays
a significant role in monitoring and assessing our financial and
operational risks. The Audit Committee reviews and discusses
with management areas of financial risk exposure and steps
management has taken to monitor and control such exposure. The
Audit Committee also is responsible for establishing and
administering our code of ethics and reviewing and approving
transactions between Finisar and any related parties. The
Compensation Committee monitors and assesses risks associated
with our compensation policies, and oversees the development of
incentives that encourage a level of risk-taking consistent with
our overall strategy. The Nominating and Governance Committee
has oversight responsibility for corporate governance risks,
including risks associated with director independence.
6
Our executive management meets regularly to discuss our strategy
and the risks that we face. Senior officers attend board
meetings where they are available to address questions or
concerns raised by the board on risk management-related matters.
We have recently instituted a comprehensive enterprise risk
management (ERM) program to assist management in
identifying, assessing, monitoring and managing a broad range of
risks. The ERM process is overseen by our Chief Financial
Officer who periodically reports to the board on risk assessment
and managements plans to manage or mitigate key risks. Our
Internal Audit Department also plays an important role in risk
management. Our Director of Internal Audit reports directly to
the Audit Committee, has direct and unrestricted access to the
Audit Committee and regularly meets with the Audit Committee in
executive session.
Executive
Sessions
Non-management directors generally meet in executive session
without management present at each regularly scheduled meeting
of the board.
Meetings
of the Board of Directors and Committees
The board of directors held eight meetings during the fiscal
year ended April 30, 2010. The board of directors has three
standing committees: an Audit Committee, a Compensation
Committee and a Nominating and Governance Committee. During the
last fiscal year, no director attended fewer than 75% of the
total number of meetings of the board and all of the committees
of the board on which such director served during that period.
Audit
Committee
The members of the Audit Committee during fiscal 2010 were
Messrs. Crespi, Ferguson, Pardun (beginning in March 2010),
Trempont and, until his death in January 2010, Larry D.
Mitchell. Mr. Child was appointed to the Audit Committee in
August 2010. Messrs. Ferguson and Trempont have been
designated as audit committee financial experts, as defined in
the applicable rules of the Securities and Exchange Commission.
The functions of the Audit Committee include oversight, review
and evaluation of our financial statements, accounting and
financial reporting processes, internal control functions and
the audits of our financial statements. The Audit Committee is
responsible for the appointment, compensation, retention and
oversight of our independent registered public accounting firm,
and establishing and observing complaint procedures regarding
accounting, internal auditing controls and auditing matters.
Additional information concerning the Audit Committee is set
forth in the Report of the Audit Committee immediately following
Proposal No. 2. The Audit Committee held eight
meetings during the fiscal year ended April 30, 2010.
Compensation
Committee
The members of the Compensation Committee during fiscal 2010
were Messrs. Fries, Stephens, Trempont and, until the
annual meeting of stockholders in November 2009, Morgan Jones, a
former director who declined to stand for re-election.
Mr. Child was appointed to the Compensation Committee in
June 2010. The Compensation Committee reviews and approves the
compensation and benefits of our executive officers and
establishes and reviews general policies relating to
compensation and benefits of our employees. Additional
information regarding the Compensation Committee is set forth in
Executive Compensation and Related Matters
Compensation Discussion and Analysis below. The
Compensation Committee held six meetings during the fiscal year
ended April 30, 2010.
Nominating
and Governance Committee
The members of the Nominating and Governance Committee during
fiscal 2010 were Messrs. Ferguson, Fries, Pardun (beginning
in March 2010), Stephens and, until his death in January 2010,
Mr. Mitchell. The Nominating and Governance Committee
identifies prospective candidates for appointment and nomination
for election to the board of directors and makes recommendations
to the board concerning such candidates, develops corporate
governance principles for recommendation to the board of
directors and oversees the evaluation of our directors. The
Nominating and Governance Committee held four meetings during
the fiscal year ended April 30, 2010.
7
Director
Nominations
The Nominating and Governance Committee is responsible for,
among other things, the selection and recommendation to the
board of directors of nominees for election as directors. When
considering the nomination of directors for election at an
annual meeting, the Nominating and Governance Committee reviews
the needs of the board of directors for various skills,
background, experience and expected contributions and the
qualification standards established from time to time by the
Nominating and Governance Committee. When reviewing potential
nominees, including incumbents, the Nominating and Governance
Committee considers the perceived needs of the board of
directors, the candidates relevant background, experience
and skills and expected contributions to the board of directors.
The Nominating and Governance Committee also seeks appropriate
input from the Chairman of the Board, the Chief Executive
Officer and other executive officers in assessing the needs of
the board of directors for relevant background, experience and
skills of its members.
The Nominating and Governance Committees goal is to
assemble a board of directors that brings to Finisar a diversity
of experience at policy-making levels in business and
technology, and in areas that are relevant to Finisars
global activities. Directors should possess the highest personal
and professional ethics, integrity and values and be committed
to representing the long-term interests of our stockholders.
They must have an inquisitive and objective outlook and mature
judgment. They must also have experience in positions with a
high degree of responsibility and be leaders in the companies or
institutions with which they are or have been affiliated.
Director candidates must have sufficient time available in the
judgment of the Nominating and Governance Committee to perform
all board and committee responsibilities that will be expected
of them. Members of the board of directors are expected to
rigorously prepare for, attend and participate in all meetings
of the board of directors and applicable committees. While we do
not have a specific policy regarding diversity, when considering
the nomination of directors, the Nominating and Governance
Committee does consider the diversity of its directors and
nominees in terms of knowledge, experience, background, skills,
expertise and other demographic factors. Other than the
foregoing, there are no specific minimum criteria for director
nominees, although the Nominating and Governance Committee
believes that it is preferable that a majority of the board of
directors meet the definition of independent
director set forth in Nasdaq and SEC rules. The Nominating
and Governance Committee also believes it appropriate for one or
more key members of the Companys management, including the
Chief Executive Officer, to serve on the board of directors.
The Nominating and Governance Committee will consider candidates
for directors proposed by directors or management, and will
evaluate any such candidates against the criteria and pursuant
to the policies and procedures set forth above. If the
Nominating and Governance Committee believes that the board of
directors requires additional candidates for nomination, the
Nominating and Governance Committee may engage, as appropriate,
a third party search firm to assist in identifying qualified
candidates. All incumbent directors and nominees will be
required to submit a completed directors and
officers questionnaire as part of the nominating process.
The process may also include interviews and additional
background and reference checks for non-incumbent nominees, at
the discretion of the Nominating and Governance Committee.
The Nominating and Governance Committee will also consider
candidates for directors recommended by a stockholder, provided
that any such recommendation is sent in writing to the board of
directors,
c/o Corporate
Secretary, 1389 Moffett Park Drive, Sunnyvale, California
94089-1113;
Fax:
(408) 745-6097;
Email address: corporate.secretary@finisar.com, at least
120 days prior to the anniversary of the date definitive
proxy materials were mailed to stockholders in connection with
the prior years annual meeting of stockholders and
contains the following information:
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the candidates name, age, contact information and present
principal occupation or employment; and
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a description of the candidates qualifications, skills,
background and business experience during at least the last five
years, including his or her principal occupation and employment
and the name and principal business of any company or other
organization where the candidate has been employed or has served
as a director.
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8
The Nominating and Governance Committee will evaluate any
candidates recommended by stockholders against the same criteria
and pursuant to the same policies and procedures applicable to
the evaluation of candidates proposed by directors or management.
In addition, stockholders may make direct nominations of
directors for election at an annual meeting, provided the
advance notice requirements set forth in our bylaws have been
met. Under our bylaws, written notice of such nomination,
including certain information and representations specified in
the bylaws, must be delivered to our principal executive
offices, addressed to the Corporate Secretary, at least
120 days prior to the anniversary of the date definitive
proxy materials were mailed to stockholders in connection with
the prior years annual meeting of stockholders, except
that if no annual meeting was held in the previous year or the
date of the annual meeting has been advanced by more than
30 days from the date contemplated at the time of the
previous years proxy statement, such notice must be
received not later than the close of business on the
10th day following the day on which the public announcement
of the date of such meeting is first made.
Communications
by Stockholders with Directors
Stockholders may communicate with the board of directors, or any
individual director, by transmitting correspondence by mail,
facsimile or email, addressed as follows: Board of Directors or
individual director,
c/o Corporate
Secretary, 1389 Moffett Park Drive, Sunnyvale, California
94089-1113;
Fax:
(408) 745-6097;
Email Address: corporate.secretary@finisar.com. The Corporate
Secretary will maintain a log of such communications and will
transmit as soon as practicable such communications to the board
of directors or to the identified director(s), although
communications that are abusive, in bad taste or that present
safety or security concerns may be handled differently, as
determined by the Corporate Secretary.
Director
Attendance at Annual Meetings
We attempt to schedule our annual meeting of stockholders at a
time and date to accommodate attendance by directors taking into
account the directors schedules. Directors are encouraged
to attend our annual meeting of stockholders, but the board has
not adopted a formal policy with respect to such attendance.
Three directors attended our last annual meeting of stockholders.
Committee
Charters and Other Corporate Governance Materials
We have a Code of Ethics, or the Code, that applies to all of
our employees, officers and directors. The Code is available at
http://investor.finisar.com/governance.cfm.
If we make any substantive amendments to the Code or grant any
waiver from a provision of the Code to any executive officer or
director, we will promptly disclose the nature of the amendment
or waiver on our website, as well as via any other means then
required by Nasdaq listing standards or applicable law.
Our board of directors has adopted a written charter for each of
the Audit Committee, Compensation Committee and Nominating and
Governance Committee. Each charter is available on our website
at
http://investor.finisar.com/documents.cfm.
Compensation
Committee Interlocks and Insider Participation
None of the members of the Compensation Committee are or have
been an officer or employee of Finisar. During fiscal 2010, no
member of the Compensation Committee had any relationship with
Finisar requiring disclosure under Item 404 of
Regulation S-K.
During fiscal 2010, none of Finisars executive officers
served on the compensation committee (or its equivalent) or
board of directors of another entity any of whose executive
officers served on Finisars Compensation Committee or
board of directors.
9
DIRECTOR
COMPENSATION
Under our policy for the compensation of non-employee directors
that was in effect during fiscal 2010, non-employee directors
(other than Morgan Jones, who declined compensation) were
entitled to receive an annual retainer of $30,000 and $2,000 for
attendance in person ($1,000 for attendance by telephone) at
each meeting of the board of directors or its committees (with
regular quarterly meetings of the board of directors and
committee meetings held on the day of such regular board
meetings considered to be a single meeting). The Lead Director
was entitled to receive an additional amount of $20,000 per year
for serving in that capacity. In addition, members of the
standing committees of the board were entitled to receive annual
retainers, payable quarterly, in the following amounts:
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Other
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Committee
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Chair
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Members
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Audit
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$
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20,000
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$
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10,000
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Compensation
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15,000
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7,500
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Nominating and Governance
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12,500
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6,000
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In February 2009, in connection with the broad-based 10%
reduction in base salaries of our employees, all cash
compensation payable to non-employee directors was temporarily
reduced by 10% from the amounts described above. On
September 9, 2009, the board of directors determined to
reverse the 10% reduction in non-employee director compensation,
effective November 2, 2009, concurrently with the reversal
of the broad-based 10% salary reductions affecting most of our
U.S.-based
employees.
Under the policy in effect during fiscal 2010, all new,
non-employee directors were granted an option to purchase
8,750 shares of our common stock upon their initial
election to the board and an option to purchase
3,750 shares of our common stock and an RSU for
1,250 shares on an annual basis thereafter. The grant of
the annual options and RSUs to non-employee directors was
generally made at the first meeting of the board of directors in
each fiscal year. The initial options vest over a period of
three years from the date of grant, and the annual options and
RSUs vest on the first anniversary of the date of grant. As with
all options, the per-share exercise price of each such option
equals the fair market value of a share of common stock on the
date of grant. In addition to the annual grants made during
fiscal 2010, in September 2009, to partially address the
diminished incentive value of their outstanding options, the
board approved a special award of options and RSUs to the
non-employee directors based on the number of shares of
underlying outstanding stock options having exercise prices
greater than the 52-week high trading price of Finisar common
stock as of the grant date.
In June 2010, the board of directors approved a revised policy
for the compensation of non-employee directors. Under the
revised policy, effective May 1, 2010 non-employee
directors receive an increased annual retainer of $50,000 but no
longer receive additional per-meeting fees for attendance at
board and committee meetings. The Lead Director receives an
additional amount of $10,000 per year for serving in that
capacity. In addition, members of the standing committees of the
board receive annual retainers, payable quarterly, in the
following amounts.
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Other
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Committee
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Chair
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Members
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Audit
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$
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16,000
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$
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8,000
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Compensation
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10,000
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5,000
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Nominating and Governance
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10,000
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5,000
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Under both the former and current policy, we also reimburse
directors for their reasonable expenses incurred in attending
meetings of the board and its committees.
In addition, under the revised policy all new non-employee
directors will receive an RSU award with a value of $100,000
upon their initial election to the board and an additional RSU
award with a value of $50,000 on an annual basis thereafter. The
grant of the annual RSU awards will generally be made at the
first meeting of the board in each fiscal year. The initial RSU
awards vest over a period of three years from the date of grant,
and the annual RSU awards vest on the first anniversary of the
date of grant. The number of shares subject to each RSU award
will be determined based on the per share value of our common
stock on the date of grant.
10
The following table presents the compensation paid to our
non-employee directors during or for the fiscal year ended
April 30, 2010:
Director
Compensation Table
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Fees Earned or
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Stock
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Option
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All Other
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Total
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Name
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Paid in Cash
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Awards(1)
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Awards(1)(2)
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Compensation
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Compensation
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Christopher J. Crespi
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$
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60,600
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$
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9,100
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$
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17,986
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$
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$
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87,686
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Roger C. Ferguson
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82,200
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27,300
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29,977
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139,477
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David C. Fries
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62,750
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21,840
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26,380
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110,970
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Morgan Jones
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Larry D. Mitchell
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62,651
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43,680
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40,769
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147,100
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Thomas E. Pardun
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17,500
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16,625
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78,688
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112,813
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Robert N. Stephens
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62,251
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21,840
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26,380
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110,471
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Dominique Trempont
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68,026
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21,840
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26,380
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116,246
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(1) |
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Valuation based on the grant date fair value of the equity
awards computed in accordance with FASB ASC Topic 718. The
assumptions used by us with respect to the valuation of option
grants are set forth in Finisar Corporation Consolidated
Financial Statements Notes to Financial
Statements Note 17
Stockholders Equity included in our annual report on
Form 10-K
for fiscal 2010. |
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(2) |
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The following table sets forth certain information with respect
to the stock options and RSUs granted during the fiscal year
ended April 30, 2010 to each non-employee member of our
board of directors: |
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Number of
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Shares of
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Exercise
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Common Stock
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Price of
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Grant Date
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Underlying
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Options and
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Fair Value of
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Options and
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Stock Awards
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Option and
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Name
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Grant Date
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Stock Awards
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($/Share)
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Stock Awards
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Christopher J. Crespi
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9/15/2009
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3,750
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(1)
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$
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7.28
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$
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17,986
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9/15/2009
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1,250
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(2)
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9,100
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Roger C. Ferguson
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9/15/2009
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6,250
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(1)
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7.28
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29,977
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9/15/2009
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3,750
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(2)
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27,300
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David C. Fries
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9/15/2009
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5,500
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(1)
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7.28
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26,380
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9/15/2009
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3,000
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(2)
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21,840
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Morgan Jones
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry D. Mitchell
|
|
|
9/15/2009
|
|
|
|
8,500
|
(1)
|
|
|
7.28
|
|
|
|
40,769
|
|
|
|
|
9/15/2009
|
|
|
|
6,000
|
(2)
|
|
|
|
|
|
|
43,680
|
|
Thomas E. Pardun
|
|
|
3/8/2010
|
|
|
|
8,750
|
(3)
|
|
|
13.30
|
|
|
|
78,688
|
|
|
|
|
3/8/2010
|
|
|
|
1,250
|
(2)
|
|
|
|
|
|
|
16,625
|
|
Robert N. Stephens
|
|
|
9/15/2009
|
|
|
|
5,500
|
(1)
|
|
|
7.28
|
|
|
|
26,380
|
|
|
|
|
9/15/2009
|
|
|
|
3,000
|
(2)
|
|
|
|
|
|
|
21,840
|
|
Dominique Trempont
|
|
|
9/15/2009
|
|
|
|
5,500
|
(1)
|
|
|
7.28
|
|
|
|
26,380
|
|
|
|
|
9/15/2009
|
|
|
|
3,000
|
(2)
|
|
|
|
|
|
|
21,840
|
|
|
|
|
(1) |
|
Stock option awards; includes both annual awards and the special
award, if any, described above. |
|
(2) |
|
RSU awards; includes both annual awards and the special award,
if any, described above. |
|
(3) |
|
Initial stock option award granted upon Mr. Parduns
election to the board. |
11
The non-employee directors held the following numbers of stock
options and unvested RSUs as of April 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Restricted
|
|
|
Stock Options
|
|
Stock Units
|
Name
|
|
Outstanding
|
|
Outstanding
|
|
Christopher J. Crespi
|
|
|
32,939
|
|
|
|
1,250
|
|
Roger C. Ferguson
|
|
|
25,209
|
|
|
|
3,333
|
|
David C. Fries
|
|
|
19,247
|
|
|
|
3,000
|
|
Thomas E. Pardun
|
|
|
8,750
|
|
|
|
1,250
|
|
Robert N. Stephens
|
|
|
22,166
|
|
|
|
3,000
|
|
Dominique Trempont
|
|
|
23,833
|
|
|
|
2,708
|
|
PROPOSAL NO. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee of our board of directors has selected
Ernst & Young LLP to serve as independent auditors to
audit the consolidated financial statements of Finisar for the
fiscal year ending April 30, 2011. Ernst & Young
LLP has acted in such capacity since its appointment in fiscal
1999. A representative of Ernst & Young LLP is
expected to be present at the annual meeting, with the
opportunity to make a statement if the representative desires to
do so, and is expected to be available to respond to appropriate
questions.
The following table sets forth the aggregate fees billed to us
for the fiscal years ended April 30, 2010 and
April 30, 2009 by our principal independent registered
public accounting firm, Ernst & Young LLP:
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
Audit fees(1)
|
|
$
|
2,452,000
|
|
|
$
|
2,650,000
|
|
Audit-related fees(2)
|
|
|
|
|
|
|
26,000
|
|
Tax fees(3)
|
|
|
18,200
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
2,470,200
|
|
|
$
|
2,776,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees consist of fees billed for professional services
rendered for the audit of our consolidated annual financial
statements, internal control over financial reporting and the
review of the interim consolidated financial statements included
in quarterly reports and services that are normally provided by
Ernst & Young LLP in connection with statutory and
regulatory filings or engagements, consultations in connection
with acquisitions and concerning financial reporting, and attest
services. |
|
(2) |
|
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. This category
includes fees related to employee benefit plan audits and
financial due diligence. |
|
(3) |
|
Tax fees consist of fees billed for professional services
rendered for tax compliance, tax advice and tax planning
(domestic and international). These services include assistance
regarding federal, state and international tax compliance,
acquisitions and international tax planning. |
The Audit Committee has determined that all services performed
by Ernst & Young LLP are compatible with maintaining
the independence of Ernst & Young LLP. The Audit
Committee has adopted a policy that requires advance approval of
all audit, audit-related, tax and other services provided by the
independent registered public accounting firm. The policy
provides for pre-approval by the Audit Committee of specifically
defined audit and non-audit services. Unless the specific
service has been pre-approved with respect to that year, the
Audit Committee must approve the permitted service before the
independent registered public accounting firm is engaged to
perform it. The Audit Committee has delegated to the chair of
the Audit Committee the authority to approve permitted services,
provided that the chair reports any decisions to the Audit
Committee at its next scheduled meeting. The
12
independent registered public accounting firm and management are
required to periodically report to the Audit Committee regarding
the extent of services provided by the independent registered
public accounting firm in accordance with this pre-approval
process.
Vote
Required and Recommendation of the Board of Directors
The affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote at the annual meeting is
required for approval of this proposal. If the stockholders do
not approve the ratification of the appointment of
Ernst & Young LLP as our auditors, the Audit Committee
will re-consider its selection.
The board of directors unanimously recommends that you vote
FOR the ratification of the appointment of
Ernst & Young LLP as our independent auditors for the
fiscal year ending April 30, 2011.
13
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee currently consists of five directors, each
of whom, in the judgment of the board of directors, is an
independent director as defined in the listing
standards for the Nasdaq Stock Market. The Audit Committee acts
pursuant to a written charter that has been adopted by the board
of directors. A copy of the charter is available on
Finisars website at
http://investor.finisar.com/documents.cfm.
The Audit Committee oversees Finisars financial reporting
process on behalf of the board of directors. The Audit Committee
is responsible for retaining Finisars independent
registered public accounting firm, evaluating their
independence, qualifications and performance and approving in
advance the engagement of the independent registered public
accounting firm for all audit and non-audit services. Management
has the primary responsibility for the financial statements and
the financial reporting process, including internal control
systems, and procedures designed to insure compliance with
applicable laws and regulations. Finisars independent
registered public accounting firm, Ernst & Young LLP,
is responsible for expressing an opinion as to the conformity of
our audited financial statements with generally accepted
accounting principles.
The Audit Committee has reviewed and discussed Finisars
audited financial statements with management. The Audit
Committee has discussed with Ernst & Young LLP 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 in Rule 3200T. In
addition, the Audit Committee has met with Ernst &
Young LLP, with and without management present, to discuss the
overall scope of Ernst & Young LLPs audit, the
results of its examinations, its audit of Finisars
internal controls and the overall quality of Finisars
financial reporting.
The Audit Committee has received from Ernst & Young LLP the
written disclosures and the letter required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accounting
firms communications with the Audit Committee concerning
independence, has discussed with Ernst & Young LLP any
relationship that may impact their objectivity and independence,
and has satisfied itself as to the auditors independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to Finisars board of directors that
Finisars audited financial statements be included in
Finisars Annual Report on
Form 10-K
for the fiscal year ended April 30, 2010.
AUDIT COMMITTEE
Roger C. Ferguson (Chair)
Michael C. Child
Christopher J. Crespi
Thomas E. Pardun
Dominique Trempont
The foregoing Audit Committee Report shall not be deemed
to be incorporated by reference into any filing of Finisar under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that Finisar specifically
incorporates such information by reference.
14
PRINCIPAL
STOCKHOLDERS AND SHARE OWNERSHIP
BY MANAGEMENT
The following table sets forth information known to us regarding
the beneficial ownership of our common stock as of July 31,
2010 by:
|
|
|
|
|
each of our directors;
|
|
|
|
each of our executive officers named in the Summary Compensation
Table for Fiscal 2010 in Executive Compensation and
Related Matters below; and
|
|
|
|
all of our executive officers and directors as a group.
|
To our knowledge, there are no stockholders who beneficially own
more than 5% of our common stock.
|
|
|
|
|
|
|
|
|
|
|
Shares of Common Stock
|
|
|
Beneficially Owned(1)
|
Name of Beneficial Owner(1)
|
|
Number
|
|
Percentage
|
|
Directors:
|
|
|
|
|
|
|
|
|
Jerry S. Rawls(2)
|
|
|
1,153,473
|
|
|
|
1.50
|
%
|
Eitan Gertel(3)
|
|
|
932,316
|
|
|
|
1.21
|
%
|
Michael C. Child(4)
|
|
|
5,979
|
|
|
|
|
*
|
Christopher J. Crespi(5)
|
|
|
34,478
|
|
|
|
|
*
|
Roger C. Ferguson(6)
|
|
|
32,474
|
|
|
|
|
*
|
David C. Fries(7)
|
|
|
18,611
|
|
|
|
|
*
|
Thomas E. Pardun
|
|
|
|
|
|
|
|
*
|
Robert N. Stephens(8)
|
|
|
22,780
|
|
|
|
|
*
|
Dominique Trempont(9)
|
|
|
24,317
|
|
|
|
|
*
|
Named Executive Officers:
|
|
|
|
|
|
|
|
|
Kurt Adzema(10)
|
|
|
79,366
|
|
|
|
|
*
|
Mark Colyar(11)
|
|
|
272,435
|
|
|
|
|
*
|
Todd Swanson(12)
|
|
|
60,066
|
|
|
|
|
*
|
Stephen K. Workman(13)
|
|
|
175,758
|
|
|
|
|
*
|
Joseph A. Young(14)
|
|
|
166,436
|
|
|
|
|
*
|
All executive officers and directors as a group
(15 persons)(15)
|
|
|
3,109,354
|
|
|
|
3.97
|
%
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
The address of each of the named individuals is:
c/o Finisar
Corporation, 1389 Moffett Park Drive, Sunnyvale, CA 94089.
Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes voting or investment power
with respect to securities. All shares of common stock subject
to options exercisable within 60 days following
July 31, 2010 and restricted stock units (RSUs) that vest
within that period are deemed to be outstanding and beneficially
owned by the person holding those options for the purpose of
computing the number of shares beneficially owned and the
percentage of ownership of that person. They are not, however,
deemed to be outstanding and beneficially owned for the purpose
of computing the percentage ownership of any other person.
Accordingly, percent ownership is based on
76,483,100 shares of common stock outstanding as of
July 31, 2010 plus any shares issuable pursuant to options
held by the person or group in question which may be exercised
within 60 days following July 31, 2010 and RSUs that
vest within that period. Except as indicated in the other
footnotes to the table and subject to applicable community
property laws, based on information provided by the persons
named in the table, these persons have sole voting and
investment power with respect to all shares of the common stock
shown as beneficially owned by them. |
|
(2) |
|
Includes 346,648 shares held by The Rawls Family, L.P.
Mr. Rawls is the president of the Rawls Management
Corporation, the general partner of The Rawls Family, L.P.
Includes (a) 435,344 shares issuable upon exercise |
15
|
|
|
|
|
of options exercisable within 60 days following
July 31, 2010 and (b) 7,813 RSUs that vest within
60 days following July 31, 2010. |
|
(3) |
|
Includes (a) 565,064 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010, (b) 7,813 RSUs that vest within 60 days
following July 31, 2010 and (c) 31,907 shares
issuable upon exercise of a warrant that is currently
exercisable. |
|
(4) |
|
Includes 5,061 shares held by the Child Family Trust. |
|
(5) |
|
Includes (a) 30,221 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010 and (b) 1,250 RSUs that vest within 60 days
following July 31, 2010. |
|
(6) |
|
Includes (a) 21,849 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010 and (b) 1,458 RSUs that vest within 60 days
following July 31, 2010. |
|
(7) |
|
Includes (a) 16,778 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010 and (b) 1,395 RSUs that vest within 60 days
following July 31, 2010. |
|
(8) |
|
Includes (a) 19,697 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010 and (b) 1,395 RSUs that vest within 60 days
following July 31, 2010. |
|
(9) |
|
Includes (a) 21,234 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010 and (b) 1,395 RSUs that vest within 60 days
following July 31, 2010. |
|
(10) |
|
Includes (a) 72,912 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010 and (b) 3,344 RSUs that vest within 60 days
following July 31, 2010. |
|
(11) |
|
Includes (a) 219,785 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010, (b) 3,750 RSUs that vest within 60 days
following July 31, 2010 and (c) 5,676 shares
issuable upon exercise of a warrant that is currently
exercisable. |
|
(12) |
|
Includes (a) 51,847 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010 and (b) 3,802 RSUs that vest within 60 days
following July 31, 2010. |
|
(13) |
|
Includes (a) 132,554 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010 and (b) 3,125 RSUs that vest within 60 days
following July 31, 2010. |
|
(14) |
|
Includes (a) 161,748 shares issuable upon exercise of
options exercisable within 60 days following July 31,
2010, (b) 4,688 RSUs that vest within 60 days
following July 31, 2010. |
|
(15) |
|
Includes (a) 1,871,117 shares issuable upon exercise
of options exercisable within 60 days following
July 31, 2010, (b) 44,353 RSUs that vest within
60 days following July 31, 2010 and
(c) 37,583 shares issuable upon exercise of warrants
that are currently exercisable. |
16
EXECUTIVE
COMPENSATION AND RELATED MATTERS
Compensation
Discussion and Analysis
Overview
The following discussion explains our compensation philosophy,
objectives and procedures and describes the forms of
compensation awarded to our Chairman of the Board, our Chief
Executive Officer, each of the executives who served as our
Chief Financial Officer during the fiscal year ended
April 30, 2010, and each of our three other most
highly-compensated executives (determined as of April 30,
2010). We refer to these individuals as our named
executive officers. This discussion focuses on the
information contained in the tables and related footnotes and
narrative included below, primarily for our 2010 fiscal year,
but also contains information regarding compensation actions
taken before and after fiscal 2010 to the extent we believe such
information enhances our executive compensation disclosure.
Philosophy,
Objectives and Procedures
Our fundamental compensation philosophy is to align the
compensation of our senior management with our annual and
long-term business objectives and performance and to offer
compensation that will enable us to attract, retain and
appropriately reward executive officers whose contributions are
necessary for our long-term success. We seek to reward our
executive officers contributions to achieving revenue
growth, increasing operating profits and controlling costs. We
operate in a very competitive environment for executive talent,
and we believe that our compensation packages must be
competitive when compared to our peers and should also be
aligned with our stockholders short and long-term
interests.
The Compensation Committee of our board of directors oversees
the design and administration of our executive compensation
program. The principal elements of the program are base salary,
annual cash bonuses and equity-based incentives which, to date,
have been in the form of stock options and restricted stock
units, or RSUs. In general, the Compensation Committees
policy is that the base salary component of our executive
officer compensation package should be comparable to the
compensation paid by peer companies to officers with comparable
responsibilities while incentive compensation, in the form of
annual cash bonuses and equity awards, should provide an
opportunity for our executive officers to earn total
compensation exceeding the median total compensation of their
counterparts at peer companies based on their individual
performance and Finisars operating results exceeding
targeted objectives.
Generally, the Compensation Committee reviews the compensation
of our executive officers in the early part of each fiscal year
and takes action at that time to award cash bonuses for the
preceding fiscal year, to set base salaries and target bonuses
for the current year and to consider long-term incentives in the
form of equity-based awards. In setting our executive
officers total compensation, the Compensation Committee
considers individual and company performance, as well as
compensation surveys, including the Radford Executive Survey,
and other market information regarding compensation paid by
comparable companies, including our industry peers.
In its annual review of compensation for our executive officers,
the Compensation Committee considers compensation data and
analyses assembled and prepared by our Human Resources staff. In
reviewing the performance of our Chairman of the Board and our
Chief Executive Officer, the Committee solicits input from the
other non-employee members of the board of directors. For the
other executive officers, the Chairman and the Chief Executive
Officer provide the Compensation Committee with a review of each
individuals performance and contributions over the past
year and make recommendations regarding their compensation that
the Compensation Committee considers.
In some years, the Compensation Committee retains compensation
consultants to assist it in its review of executive officer
compensation. The Compensation Committee engaged J.
Richard & Co., a compensation consulting firm, in
connection with its annual review of executive officer
compensation at the beginning of fiscal 2009. In part because of
temporary,
across-the-board
salary reductions that were in effect at the beginning of fiscal
2010, the Compensation Committee did not engage a compensation
consultant in connection with its review of executive officer
compensation for fiscal 2010. The Compensation Committee engaged
Assets Unlimited, Inc., a
17
compensation consulting firm, in connection with its review at
the beginning of fiscal 2011. The Compensation Committee
reviewed cash and equity compensation analyses prepared by
Assets Unlimited, Inc. and met with a representative of that
firm.
Forms
of Compensation
In order to align executive compensation with our compensation
philosophy, our executive officer compensation package contains
three primary elements: base salary, annual cash bonuses and
long-term equity incentives. In addition, we provide to our
executive officers a variety of benefits that are available
generally to other salaried employees. The basic elements of our
executive compensation package are generally the same among all
of our named executive officers.
Base
Salaries
Base salaries for our executive officers are initially set based
on negotiation with the individual executive officer at the time
of his or her recruitment and with reference to salaries for
comparable positions in the fiber optics industry for
individuals of similar education and background to those of the
executive officer being recruited. We also give consideration to
the individuals experience, track record of contribution
in his or her industry and expected contributions to Finisar.
Salaries are reviewed annually by the Compensation Committee,
typically at the beginning of the fiscal year, and adjustments
are made based on (i) salary recommendations of our
Chairman of the Board and our Chief Executive Officer,
(ii) the Compensation Committees assessment of the
individual performance of the executive officers during the
previous fiscal year, (iii) Finisars financial
results for the previous fiscal year and (iv) changes in
competitive pay levels, based on compensation data and analyses
assembled and prepared by our Human Relations staff and, in
years when a compensation consultant is engaged to assist the
Compensation Committee, reports by such consultant.
In February 2009, in light of deteriorating global market
conditions and their effect on our then current and prospective
operating results and financial condition, the Compensation
Committee determined to temporarily reduce the base salaries of
our Chairman, Chief Executive Officer and all other executive
officers by 10%. This determination was not based on individual
performance, but was made as part of a broad-based 10% reduction
in base salary that affected all of our
U.S.-based
employees (provided that no base salary was reduced below
$50,000). This
across-the-board
salary reduction remained in effect throughout the first half of
fiscal 2010. In September 2009, the Compensation Committee
approved the reversal of the 10% reduction in officer salaries,
effective November 2, 2009, concurrently with the reversal
of the broad-based salary reduction affecting other employees.
During the second half of fiscal 2010, our executive officers
received base salaries at the levels in effect at the beginning
of fiscal 2009.
The Compensation Committee engaged Assets Unlimited, Inc., a
compensation consulting firm, to assist in its review of
executive compensation for fiscal 2011. Assets Unlimited, Inc.
prepared a report including a summary of compensation data for
the following companies, including our industry peers and
similarly-sized companies in our broader industry group (the
Peer Companies):
|
|
|
|
|
Applied Micro Circuits
|
|
Netgear
|
|
QLogic
|
Atheros Communications
|
|
Novellus
|
|
Quantum Corp.
|
Cadence Design
|
|
Oclaro
|
|
Smart Modular
|
Coherent
|
|
Omnivision
|
|
Triquint
|
Equinix
|
|
Opnext
|
|
Varian
|
Intersil
|
|
Plantronics
|
|
|
MRV Communications
|
|
PMC Sierra
|
|
|
In considering executive compensation levels for fiscal 2011,
the Compensation Committee took into account its general
compensation philosophy, as described above and various other
considerations, including the following:
|
|
|
|
|
the officers salary history, including the
across-the-board
salary reduction that had been in effect during the first half
of fiscal 2010;
|
18
|
|
|
|
|
specific contributions of individual officers during fiscal
2010, changes in their duties and responsibilities and their
expected contributions during fiscal 2011; and
|
|
|
|
the Companys financial performance during fiscal 2010 and
the then-current outlook for fiscal 2011.
|
The Committee also considered the report of Assets Unlimited,
Inc. on Peer Company compensation and other available
compensation data for comparable companies. In reviewing that
data, the Committee took into account differences between the
actual responsibilities of the Finisar officers and those
typical for the generic categories listed in the reports and the
recent change in Finisars peer group status as a result of
increased revenues resulting from the Optium merger.
On the basis of its review, in June 2010, the Compensation
Committee set new base salaries for our executive officers for
fiscal 2011, with increases of between 4% and 5% over the levels
in effect during fiscal 2009 and 2010 (excluding the period in
which the temporary salary reduction was in force). The fiscal
2011 base salaries of the named executive officers and data on
base salaries of officers of comparable companies that the
Committee considered are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median
|
|
|
Median
|
|
|
|
Fiscal 2011
|
|
|
Peer Company
|
|
|
Radford
|
|
Name
|
|
Base Salary
|
|
|
Base Salary(1)
|
|
|
Base Salary(2)
|
|
|
Jerry S. Rawls
|
|
$
|
461,760
|
|
|
$
|
531,692
|
|
|
$
|
603,000
|
|
Eitan Gertel
|
|
$
|
461,760
|
|
|
$
|
531,692
|
|
|
$
|
603,000
|
|
Joseph A. Young
|
|
$
|
369,200
|
|
|
$
|
304,750
|
|
|
$
|
334,400
|
|
Kurt Adzema
|
|
$
|
294,000
|
|
|
$
|
318,327
|
|
|
$
|
330,000
|
|
Mark Colyar
|
|
$
|
293,436
|
|
|
$
|
304,750
|
|
|
$
|
334,400
|
|
Todd Swanson
|
|
$
|
285,600
|
|
|
$
|
306,923
|
|
|
$
|
350,000
|
|
Stephen K. Workman
|
|
$
|
282,880
|
|
|
$
|
224,662
|
|
|
$
|
208,613
|
|
|
|
|
(1) |
|
Based on data compiled by Assets Unlimited, Inc. for base
salaries of officers with comparable duties at the Peer
Companies. |
|
(2) |
|
Based on data from the Radford Executive Survey for base
salaries of officers with comparable duties at companies with
annual revenues of between $500 million and $1 billion. |
Cash
Bonuses
Under our compensation policy, a substantial component of each
executive officers potential annual compensation takes the
form of a performance-based cash bonus. The amounts of cash
bonuses paid to our executive officers, other than the Chairman
and the Chief Executive Officer, are determined by the
Compensation Committee, in consultation with the Chairman and
Chief Executive Officer, based on Finisars financial
performance and the achievement of the officers individual
performance objectives. The amount of cash bonuses paid to the
Chairman and the Chief Executive Officer are determined by the
Compensation Committee, without participation by the Chairman or
the Chief Executive Officer, based on the same factors.
In September 2009, the Compensation Committee adopted an
executive officer bonus plan for the fiscal year ended
April 30, 2010 (the Fiscal 2010 Bonus Plan).
Under the Fiscal 2010 Bonus Plan, like previous plans, each
executive officer was eligible to receive a target cash bonus of
up to 100% of the executive officers annual base salary.
The amount, if any, of an executive officers annual bonus
under the Fiscal 2010 Bonus Plan was to be based 70% on the
percentage increase of Finisars operating cash flow in
fiscal 2010 over the previous fiscal year and 30% on a
discretionary determination by the Compensation Committee of the
applicable executive officers performance and achievement
of individual goals for the fiscal year. In addition,
notwithstanding the achievement of increased operating cash flow
and/or
individual performance goals, no executive officer was entitled
to receive a bonus under the Fiscal 2010 Bonus Plan unless cash
bonuses were granted generally to non-executive officer
employees with respect to the fiscal year ended April 30,
2010.
We did not achieve an increase in operating cash flow in fiscal
2010 over the previous year, due principally to the significant
investment in accounts payable and working capital that had been
required to support our growth in
19
the second half of the fiscal year. Accordingly, no bonuses
became payable under the formula-based portion of the Fiscal
2010 Bonus Plan. However, the Compensation Committee took note
of Finisars improved financial performance in the second
half of the fiscal year as well as managements success in
completing several significant transactions that substantially
improved its balance sheet. After considering these factors and
the individual performance of the executive officers, the
Committee granted the maximum discretionary bonus, of 30% of
each executive officers base salary, payable under the
Fiscal 2010 Bonus Plan. Original target bonuses for each of the
named executive officers under the Fiscal 2010 Bonus Plan,
bonuses actually paid under the plan for their services during
fiscal 2010 and data on bonuses and non-equity compensation paid
by comparable companies were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer Group
|
|
|
Median
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Radford Non-Equity
|
|
|
|
Fiscal 2010
|
|
|
Fiscal 2010
|
|
|
Incentive
|
|
|
Incentive
|
|
Name
|
|
Target Bonus
|
|
|
Bonus Paid
|
|
|
Compensation(1)
|
|
|
Compensation(2)
|
|
|
Jerry S. Rawls
|
|
$
|
440,000
|
|
|
$
|
133,200
|
|
|
$
|
271,531
|
|
|
$
|
483,000
|
|
Eitan Gertel
|
|
$
|
440,000
|
|
|
$
|
133,200
|
|
|
$
|
271,531
|
|
|
$
|
483,000
|
|
Joseph A. Young
|
|
$
|
335,000
|
|
|
$
|
106,500
|
|
|
$
|
73,959
|
|
|
$
|
167,000
|
|
Mark Colyar
|
|
$
|
282,150
|
|
|
$
|
84,645
|
|
|
$
|
73,959
|
|
|
$
|
167,000
|
|
Kurt Adzema
|
|
$
|
280,000
|
|
|
$
|
84,000
|
|
|
$
|
10,000
|
|
|
$
|
62,773
|
|
Todd Swanson
|
|
$
|
272,000
|
|
|
$
|
81,600
|
|
|
$
|
264,201
|
|
|
$
|
213,200
|
|
Stephen K. Workman
|
|
$
|
272,000
|
|
|
$
|
81,600
|
|
|
$
|
99,631
|
|
|
$
|
239,920
|
|
|
|
|
(1) |
|
Based on data compiled by Assets Unlimited, Inc. for bonuses and
other non-equity incentive payments to officers with comparable
duties at the Peer Companies. |
|
(2) |
|
Based on data from the Radford Executive Survey for bonuses and
other non-equity incentive payments to officers with comparable
duties at companies with annual revenues of between
$500 million and $1 billion. |
In June 2010, the Compensation Committee adopted an executive
bonus plan for the fiscal ending April 30, 2011 (the
Fiscal 2011 Bonus Plan). Under the Fiscal 2011 Bonus
Plan, the aggregate target bonuses for Messrs. Rawls and
Gertel are 100% of their annual base salary, and the aggregate
target bonus for each of the other named executive officers is
60% of their annual base salary. The aggregate bonus for each
executive officer under the Fiscal 2011 Bonus Plan will be based
70% on Finisars achievement of the pre-bonus non-GAAP
operating income called for by its fiscal 2011 operating plan
and 30% on a discretionary determination by the Compensation
Committee of the applicable executive officers performance
and achievement of individual goals for the fiscal year. Finisar
must achieve at least 58% of its pre-bonus non-GAAP operating
income target before a portion of the quantitative bonus can be
earned; the amount of the bonus will increase on a linear basis
thereafter, with no limit on the amount of the quantitative
bonus that may be earned. If Finisar achieves its pre-bonus
non-GAAP operating income target, the amount of the quantitative
portion of the bonus for each executive officer will equal 70%
of the aggregate target bonus for each named executive officer.
If Finisar exceeds its pre-bonus non-GAAP operating income
target, the amount of the quantitative bonus for each executive
officer will exceed 70% of the aggregate target bonus. Any bonus
amounts earned under the Fiscal 2011 Bonus Plan are expected to
be paid in cash. The Compensation Committee believes that
achieving the formula-based portion of the target bonuses will
be difficult. Achieving or exceeding the pre-bonus non-GAAP
operating income called for in our fiscal 2011 operating plan
will be dependent upon realizing significant revenue and
operating income growth in the face of operational challenges
and an environment of economic uncertainty. It will also be
dependent on increased sales of our customers products
over which we have no control. Finisar has achieved or exceeded
the non-GAAP operating income called for in its original annual
operating plan in two of its last five fiscal years.
Equity-based
Incentives
Longer term incentives are provided through equity-based awards
granted under Finisars 2005 Stock Incentive Plan, which
reward executives and other employees through the growth in
value of our stock. To date, these awards have been in the form
of stock options and RSUs. The Compensation Committee believes
that employee equity ownership is highly motivating, provides an
important incentive for employees to build
20
stockholder value and provides each executive officer with a
significant incentive to manage Finisar from the perspective of
an owner with an equity stake in the company.
All stock option awards to our employees, including executive
officers, are granted at fair market value on the date of grant,
and will provide value to the executive officers only when the
price of our common stock increases over the exercise price. We
have established a policy whereby stock options and other equity
awards to our employees, including executive officers, are
generally granted by the Compensation Committee at regular
quarterly meetings with an effective date that is the later of
the third trading day following the public announcement of
Finisars financial results for the preceding quarter or
the date of the meeting at which the grant is approved.
The vesting of stock options and RSUs held by our named
executive officers is subject to acceleration pursuant to the
terms of the Finisar Executive Retention and Severance Plan
described below and, with respect to one stock option held by
each of Eitan Gertel, our Chief Executive Officer, and Mark
Colyar, our Senior Vice President, Operations and Engineering,
pursuant to the applicable stock option agreement as described
below
The size of the stock option and RSU awards granted to each
executive officer during fiscal 2010 was set by the Compensation
Committee at levels that were intended to create a meaningful
opportunity for stock ownership based upon the individuals
current position, the individuals personal performance in
recent periods, the individuals potential for future
responsibility and promotion over the option term, comparison of
award levels in prior years and comparison of award levels
earned by executives at our peer companies and similarly-sized
companies in our broader industry group. The Compensation
Committee also took into account the number of unvested options
and RSUs held by the executive officer in order to maintain an
appropriate level of retention value for that individual. The
relative weight given to each of these factors varied from
individual to individual. In fiscal 2010, our executive officers
received two separate equity awards: (i) a regular annual
grant of stock options and RSUs in December 2009 based on the
factors described above, with the relative weight given to each
of these factors varying from individual to individual, and
(ii) a special grant of stock options and RSUs in December
2009 in light of concerns of the Compensation Committee with
respect to the diminished incentive value of outstanding stock
options held by our employees, including our executive officers,
with exercise prices greater than the 52-week high trading price
of Finisar common stock as of the grant date, based on the
employees holdings of such stock options.
During fiscal 2010, equity-based incentives accounted for
approximately 66% of the total compensation of our Chairman,
approximately 53% of the total compensation of our Chief
Executive Officer and an average of approximately 52% of the
total compensation of our other named executive officers.
In connection with its review of executive officer compensation
in June 2011, the Compensation Committee took into account the
same general criteria considered in fiscal 2010 as well as the
report of Assets Unlimited, Inc. and equity compensation data
for the Peer Companies that it had compiled. Based on its
review, the Compensation Committee granted RSUs to each of our
executive officers. The RSUs vest in annual installments over a
four-year period, subject to the officers continued
service. The numbers of shares of our common stock underlying
the RSUs granted to the named executive officers were as follows:
|
|
|
|
|
Name
|
|
RSU Shares
|
|
|
Jerry S. Rawls
|
|
|
114,140
|
|
Eitan Gertel
|
|
|
114,140
|
|
Joseph A. Young
|
|
|
42,872
|
|
Kurt Adzema
|
|
|
32,000
|
|
Mark Colyar
|
|
|
32,000
|
|
Todd Swanson
|
|
|
32,000
|
|
Stephen K. Workman
|
|
|
32,000
|
|
Other
Benefits and Perquisites
Our named executive officers and other executives are generally
eligible to receive the same health and welfare benefits offered
to all employees in the geographic area in which they are based.
We also offer participation in our
21
defined contribution 401(k) plan. We currently provide no other
perquisites to our named executive officers or other executive
officers.
During fiscal 2010, personal benefits accounted for less than 2%
of the total compensation of our Chairman, our Chief Executive
Officer and our other named executive officers.
Executive
Retention and Severance Plan
Our executive officers and certain other key executives
designated by the Compensation Committee are eligible to
participate in the Finisar Executive Retention and Severance
Plan adopted by the Compensation Committee in February 2003. The
Compensation Committee determined to provide change in control
arrangements in order to mitigate some of the risk that exists
for executives working in an environment where there is a
meaningful possibility that Finisar could be acquired or the
subject of another transaction that would result in a change in
its control. Finisars change in control and severance
arrangements are intended to attract and retain qualified
executives who may have attractive alternatives absent these
arrangements. The change in control arrangements are also
intended to mitigate potential disincentives to the
consideration and execution of an acquisition or similar
transaction, particularly where the services of these executive
officers may not be required by the acquirer. We believe that
our change in control benefits are comparable to the provisions
and benefit levels of other companies in our industry which
disclose similar plans in their public filings.
Participants in this plan who are executive officers are
entitled to receive cash severance payments equal to two years
base salary and health and medical benefits for two years in the
event their employment is terminated in connection with a change
in control of Finisar. In addition, in the event of a change in
control, vesting of stock options held by participants in the
plan will be accelerated by one year, if the options are assumed
by the acquiring company. If the options are not assumed by the
acquirer, or if the participants employment is terminated
in connection with the change in control, vesting of the options
will be accelerated in full. Upon any other termination of
employment, participants are entitled only to accrued salary and
any other vested benefits through the date of termination.
Our executive officers who were former officers of Optium are
parties to employment agreements and equity incentive agreements
that they entered into with Optium and that were assumed by
Finisar in connection with the Optium merger. See
Potential Payments Upon Termination or Change of
Control below. Benefits to these officers under the
Executive Retention and Severance Plan will be reduced by the
amount of comparable benefits to which they are entitled under
such agreements.
Accounting
for Executive Compensation
We account for equity compensation paid to our employees under
FASB ASC Topic 718, which requires us to measure and record an
expense over the service period of the award. Accounting rules
also require us to record cash compensation as an expense at the
time the obligation is incurred.
Tax
Considerations
The Compensation Committee intends to consider the impact of
Section 162(m) of the Internal Revenue Code in determining
the mix of elements of future executive compensation. This
section limits the deductibility of non-performance based
compensation paid to each of Finisars named executive
officers to $1 million annually. The equity awards granted
to our executive officers are intended to be treated as
performance-based compensation, which is exempt from the
limitation on deductibility under current federal tax law. The
Compensation Committee reserves the right to provide for
compensation to executive officers that may not be fully
deductible.
22
Report of
the Compensation Committee
We have reviewed and discussed with management the foregoing
Compensation Discussion and Analysis. Based on such reviews and
discussions, we recommended to the board of directors that the
Compensation Discussion and Analysis be included in this annual
report.
COMPENSATION COMMITTEE
David C. Fries (Chair)
Michael C. Child
Robert N. Stephens
Dominique Trempont
23
Summary
Compensation Information
The following table presents certain summary information
concerning compensation paid or accrued by us for services
rendered in all capacities during the fiscal year ended
April 30, 2010 for (i) our Chairman of the Board, our
Chief Executive Officer and each of the executives who served as
our Chief Financial Officer during the year and (ii) our
three other most highly compensated executives (determined as of
April 30, 2010) (collectively, the named executive
officers):
Summary
Compensation Table for Fiscal 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
Fiscal
|
|
|
|
|
|
Incentive Plan
|
|
Equity
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Compensation
|
|
Awards(1)
|
|
Total(1)
|
|
Jerry S. Rawls(2)
|
|
|
2010
|
|
|
$
|
420,092
|
|
|
|
|
|
|
$
|
133,200
|
|
|
$
|
1,063,108
|
|
|
$
|
1,616,400
|
|
Chairman of the Board
|
|
|
2009
|
|
|
|
438,881
|
|
|
|
|
|
|
|
|
|
|
|
367,950
|
|
|
|
806,831
|
|
|
|
|
2008
|
|
|
|
418,269
|
|
|
$
|
100,000
|
|
|
|
|
|
|
|
779,520
|
|
|
|
1,297,789
|
|
Eitan Gertel(3)
|
|
|
2010
|
|
|
|
420,092
|
|
|
|
|
|
|
|
133,200
|
|
|
|
621,496
|
|
|
|
1,174,789
|
|
Chief Executive Officer
|
|
|
2009
|
|
|
|
293,516
|
|
|
|
|
|
|
|
|
|
|
|
263,052
|
|
|
|
556,568
|
|
Kurt Adzema(4)
|
|
|
2010
|
|
|
|
264,923
|
|
|
|
|
|
|
|
84,000
|
|
|
|
247,589
|
|
|
|
596,512
|
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen K. Workman(5)
|
|
|
2010
|
|
|
|
257,354
|
|
|
|
|
|
|
|
81,600
|
|
|
|
380,795
|
|
|
|
719,749
|
|
Senior Vice President,
|
|
|
2009
|
|
|
|
263,892
|
|
|
|
|
|
|
|
|
|
|
|
83,558
|
|
|
|
347,450
|
|
Corporate Development and
Investor Relations
|
|
|
2008
|
|
|
|
257,310
|
|
|
|
40,000
|
|
|
|
|
|
|
|
146,160
|
|
|
|
443,470
|
|
Mark Colyar(6)
|
|
|
2010
|
|
|
|
266,957
|
|
|
|
|
|
|
|
84,645
|
|
|
|
410,757
|
|
|
|
762,359
|
|
Senior Vice President,
|
|
|
2009
|
|
|
|
185,062
|
|
|
|
|
|
|
|
|
|
|
|
135,703
|
|
|
|
320,765
|
|
Operations and
Engineering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd Swanson
|
|
|
2010
|
|
|
|
257,354
|
|
|
|
|
|
|
|
81,600
|
|
|
|
470,624
|
|
|
|
809,578
|
|
Senior Vice President,
Sales and Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph A. Young
|
|
|
2010
|
|
|
|
335,885
|
|
|
|
|
|
|
|
106,500
|
|
|
|
471,978
|
|
|
|
914,363
|
|
Senior Vice President,
|
|
|
2009
|
|
|
|
344,548
|
|
|
|
|
|
|
|
|
|
|
|
173,938
|
|
|
|
518,486
|
|
Operations and Engineering
|
|
|
2008
|
|
|
|
335,961
|
|
|
|
75,000
|
|
|
|
|
|
|
|
389,760
|
|
|
|
800,721
|
|
|
|
|
(1) |
|
Includes stock option and RSU awards. Valuation based on the
grant date fair value of the equity awards computed in
accordance with FASB ASC Topic 718. The assumptions used by us
with respect to the valuation of option grants are set forth in
Finisar Corporation Consolidated Financial
Statements Notes to Financial
Statements Note 17
Stockholders Equity included in our annual report on
Form 10-K
for fiscal 2010. As a result of recent changes in SEC disclosure
rules, amounts reported in the table for equity awards in fiscal
2008 and 2009 differ from amounts previously reported in the
Summary Compensation Tables for the same person in those years. |
|
(2) |
|
Mr. Rawls also served as our President and Chief Executive
officer until the completion of the Optium merger in August 2008. |
|
(3) |
|
Mr. Gertel became our Chief Executive Officer upon the
completion of the Optium merger in August 2008. |
|
(4) |
|
Mr. Adzema became our Senior Vice President, Finance and
Chief Financial Officer in March 2010. |
|
(5) |
|
Mr. Workman served as our Senior Vice President, Finance
and Chief Financial Officer until March 2010, when he was
appointed Senior Vice President, Corporate Development and
Investor Relations. Mr. Workman has announced his
resignation from the Company to be effective on or about
September 24, 2010. |
|
(6) |
|
Mr. Colyar became our Senior Vice President, Operations and
Engineering upon the completion of the Optium merger in August
2008. |
24
Grants of
Plan-Based Awards
The following table sets forth certain information with respect
to options and RSUs granted during or for the year ended
April 30, 2010 to each of our named executive officers.
Grants
of Plan-Based Awards in or for Fiscal 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
Option
|
|
|
Exercise
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Awards:
|
|
|
or Base
|
|
|
Date Fair
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Awards:
|
|
|
Number of
|
|
|
Price of
|
|
|
Value of
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Number of
|
|
|
Securities
|
|
|
Option
|
|
|
Stock and
|
|
|
|
Grant
|
|
|
Plan Awards(1)
|
|
|
Shares of
|
|
|
Underlying
|
|
|
Awards
|
|
|
Option
|
|
Name
|
|
Date
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Stock or Units
|
|
|
Options
|
|
|
($/Share)
|
|
|
Awards ($)
|
|
|
Jerry S. Rawls
|
|
|
|
|
|
|
|
|
|
$
|
444,000
|
|
|
$
|
444,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,250
|
|
|
|
8.29
|
|
|
|
430,996
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,250
|
|
|
|
|
|
|
|
|
|
|
|
632,113
|
|
Eitan Gertel
|
|
|
|
|
|
|
|
|
|
|
444,000
|
|
|
|
444,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,576
|
|
|
|
8.29
|
|
|
|
251,961
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,576
|
|
|
|
|
|
|
|
|
|
|
|
369,535
|
|
Kurt Adzema
|
|
|
|
|
|
|
|
|
|
|
280,000
|
|
|
|
280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,758
|
|
|
|
8.29
|
|
|
|
100,375
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,758
|
|
|
|
|
|
|
|
|
|
|
|
147,214
|
|
Stephen K. Workman
|
|
|
|
|
|
|
|
|
|
|
272,000
|
|
|
|
272,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,312
|
|
|
|
8.29
|
|
|
|
154,378
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,312
|
|
|
|
|
|
|
|
|
|
|
|
226,416
|
|
Mark Colyar
|
|
|
|
|
|
|
|
|
|
|
282,150
|
|
|
|
282,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,461
|
|
|
|
8.29
|
|
|
|
166,525
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,461
|
|
|
|
|
|
|
|
|
|
|
|
244,232
|
|
Todd Swanson
|
|
|
|
|
|
|
|
|
|
|
272,000
|
|
|
|
272,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,052
|
|
|
|
8.29
|
|
|
|
316,828
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,552
|
|
|
|
|
|
|
|
|
|
|
|
153,796
|
|
Joseph A. Young
|
|
|
|
|
|
|
|
|
|
|
355,000
|
|
|
|
355,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,852
|
|
|
|
8.29
|
|
|
|
191,345
|
|
|
|
|
12/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,852
|
|
|
|
|
|
|
|
|
|
|
|
280,633
|
|
|
|
|
(1) |
|
Represents the dollar value of the applicable range (threshold,
target and maximum amounts) of potential cash bonuses payable to
each named executive officer for fiscal 2010 under the executive
officer bonus plan for fiscal 2010 (the Fiscal 2010 Bonus
Plan). Additional information regarding the Fiscal 2010
Bonus Plan is set forth above under Compensation
Discussion and Analysis. The actual amount paid to each
executive officer for fiscal 2010 is set forth in the Summary
Compensation Table under the heading Non-Equity Incentive
Plan Compensation. |
25
Outstanding
Equity Awards at Fiscal Year-End
The following table summarizes the number of securities
underlying outstanding equity awards for each of our named
executive officers as of the end of our fiscal year on
April 30, 2010. Unless otherwise specified, options vest at
a rate of 20% over five years from the date of grant. Market
value for RSUs is determined by multiplying the number of shares
by the closing price of Finisar common stock on the Nasdaq
Global Select Market on the last trading day of the fiscal year
($14.96 on April 30, 2010).
Outstanding
Equity Awards at Fiscal Year-End 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Market Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
or Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Option Awards
|
|
|
Unearned Shares,
|
|
|
Unearned Shares,
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
Units or
|
|
|
Units or
|
|
|
|
Number of Securities
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Other Rights
|
|
|
Other Rights
|
|
|
|
Underlying
|
|
|
Options (#)
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
That Have
|
|
|
That Have
|
|
Name
|
|
Options (#)
|
|
|
Unexercisable
|
|
|
per Share
|
|
|
Date
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Jerry S. Rawls
|
|
|
124,999
|
|
|
|
|
|
|
$
|
13.84
|
|
|
|
6/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
15.60
|
|
|
|
8/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
15.36
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
12,499
|
(1)
|
|
|
9.76
|
|
|
|
6/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
19,999
|
(2)
|
|
|
37.04
|
|
|
|
6/6/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
30,000
|
(3)
|
|
|
21.68
|
|
|
|
9/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
77,536
|
|
|
|
81,572
|
(4)
|
|
|
3.36
|
|
|
|
12/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
(5)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250
|
(6)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
(7)
|
|
$
|
673,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250
|
(8)
|
|
|
467,500
|
|
Eitan Gertel
|
|
|
205,308
|
|
|
|
|
(9)
|
|
$
|
0.64
|
|
|
|
4/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
81,536
|
|
|
|
|
(9)
|
|
|
1.36
|
|
|
|
6/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
97,843
|
|
|
|
|
(9)
|
|
|
6.88
|
|
|
|
2/13/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
32,614
|
|
|
|
|
(9)
|
|
|
7.36
|
|
|
|
3/13/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
68,482
|
|
|
|
20,359
|
(10)
|
|
|
26.64
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
50,685
|
|
|
|
60,689
|
(4)
|
|
|
3.36
|
|
|
|
12/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,326
|
(5)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250
|
(6)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,326
|
(7)
|
|
$
|
199,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250
|
(8)
|
|
|
467,500
|
|
Kurt Adzema
|
|
|
36,562
|
|
|
|
|
|
|
$
|
10.16
|
|
|
|
4/18/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
12,499
|
|
|
|
|
|
|
|
14.08
|
|
|
|
11/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
7,499
|
|
|
|
1,875
|
(11)
|
|
|
24.80
|
|
|
|
9/8/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
407
|
|
|
|
271
|
(12)
|
|
|
25.68
|
|
|
|
3/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
7,500
|
(3)
|
|
|
21.68
|
|
|
|
9/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
1,406
|
|
|
|
2,344
|
(13)
|
|
|
10.08
|
|
|
|
9/11/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
8,469
|
|
|
|
10,991
|
(4)
|
|
|
3.36
|
|
|
|
12/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,258
|
(5)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(6)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,1890
|
(14)
|
|
$
|
32,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,258
|
(7)
|
|
|
78,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(8)
|
|
|
187,000
|
|
Stephen K. Workman
|
|
|
12,499
|
|
|
|
|
|
|
$
|
14.40
|
|
|
|
6/19/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
8,124
|
|
|
|
|
|
|
|
14.40
|
|
|
|
6/19/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
24,999
|
|
|
|
|
|
|
|
14.40
|
|
|
|
6/19/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
9,374
|
|
|
|
|
|
|
|
15.60
|
|
|
|
8/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
15.36
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
5,625
|
|
|
|
3,750
|
(2)
|
|
|
37.04
|
|
|
|
6/6/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
3,752
|
|
|
|
5,622
|
(3)
|
|
|
21.68
|
|
|
|
9/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
28,285
|
|
|
|
28,079
|
(4)
|
|
|
3.36
|
|
|
|
12/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,812
|
(5)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(6)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,812
|
(7)
|
|
$
|
221,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(8)
|
|
|
187,000
|
|
Mark Colyar
|
|
|
44,029
|
|
|
|
|
(9)
|
|
$
|
0.64
|
|
|
|
4/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
13,046
|
|
|
|
|
(9)
|
|
|
1.04
|
|
|
|
2/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
29,352
|
|
|
|
|
(9)
|
|
|
1.20
|
|
|
|
4/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
71,752
|
|
|
|
|
(9)
|
|
|
11.84
|
|
|
|
4/13/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
19,007
|
|
|
|
5,649
|
(15)
|
|
|
26.64
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
28,210
|
|
|
|
28,248
|
(4)
|
|
|
3.36
|
|
|
|
12/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,461
|
(5)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(6)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,461
|
(7)
|
|
$
|
216,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(8)
|
|
|
224,400
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Market Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
or Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Option Awards
|
|
|
Unearned Shares,
|
|
|
Unearned Shares,
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
Units or
|
|
|
Units or
|
|
|
|
Number of Securities
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Other Rights
|
|
|
Other Rights
|
|
|
|
Underlying
|
|
|
Options (#)
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
That Have
|
|
|
That Have
|
|
Name
|
|
Options (#)
|
|
|
Unexercisable
|
|
|
per Share
|
|
|
Date
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Todd Swanson
|
|
|
6,250
|
|
|
|
|
|
|
$
|
14.32
|
|
|
|
8/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
|
|
|
|
9.60
|
|
|
|
8/16/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
(16)
|
|
|
8.32
|
|
|
|
8/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
6,249
|
|
|
|
|
|
|
|
14.08
|
|
|
|
11/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
750
|
(11)
|
|
|
24.80
|
|
|
|
9/8/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
408
|
|
|
|
271
|
(12)
|
|
|
25.68
|
|
|
|
3/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
1,201
|
|
|
|
1,798
|
(3)
|
|
|
21.68
|
|
|
|
9/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
300
|
|
|
|
450
|
(17)
|
|
|
14.88
|
|
|
|
12/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
338
|
|
|
|
562
|
(13)
|
|
|
10.08
|
|
|
|
9/11/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
7,655
|
|
|
|
19,633
|
(4)
|
|
|
3.36
|
|
|
|
12/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,552
|
(5)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,500
|
(6)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
526
|
(14)
|
|
$
|
7,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,552
|
(7)
|
|
|
53,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(8)
|
|
|
224,400
|
|
Joseph A. Young
|
|
|
49,999
|
|
|
|
|
|
|
$
|
11.76
|
|
|
|
10/29/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
5,000
|
(1)
|
|
|
9.76
|
|
|
|
6/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
15,001
|
|
|
|
9,999
|
(2)
|
|
|
37.04
|
|
|
|
6/6/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
408
|
|
|
|
270
|
(12)
|
|
|
25.68
|
|
|
|
3/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
10,001
|
|
|
|
14,999
|
(3)
|
|
|
21.68
|
|
|
|
9/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
36,315
|
|
|
|
36,180
|
(4)
|
|
|
3.36
|
|
|
|
12/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,102
|
(5)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
(6)
|
|
|
8.29
|
|
|
|
12/8/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,102
|
(7)
|
|
$
|
225,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
(8)
|
|
|
280,500
|
|
|
|
|
(1) |
|
The option was granted on June 8, 2005 and became fully
vested on June 8, 2010. |
|
(2) |
|
The option was granted on June 2, 2006 and will become
fully vested on June 2, 2011, assuming continued employment
with Finisar. |
|
(3) |
|
The option was granted on September 7, 2007 and will become
fully vested on September 7, 2012, assuming continued
employment with Finisar. |
|
(4) |
|
The option was granted on December 12, 2008. The option
became exercisable as to 25% of the shares on August 12,
2009 and vests with respect to an additional 6.25% of the shares
on each of the next 12 quarterly anniversaries thereafter, to be
fully vested on August 12, 2012, assuming continued
employment with Finisar. |
|
(5) |
|
The option was granted on December 8, 2009. The option will
become exercisable as to 25% of the shares on December 8,
2010 and vests with respect to an additional 6.25% of the shares
on each of the next 12 quarterly anniversaries thereafter, to be
fully vested on December 8, 2013, assuming continued
employment with Finisar. |
|
(6) |
|
The option was granted on December 8, 2009. The option will
become exercisable as to 25% of the shares on September 1,
2010 and vests with respect to an additional 6.25% of the shares
on each of the next 12 quarterly anniversaries thereafter, to be
fully vested on September 1, 2013, assuming continued
employment with Finisar. |
|
(7) |
|
The RSU was granted on December 8, 2009. The RSU will vest
as to 25% of the shares on December 8, 2010 and vests with
respect to an additional 6.25% of the shares on each of the next
12 quarterly anniversaries thereafter, to be fully vested on
December 8, 2013, assuming continued employment with
Finisar. |
|
(8) |
|
The RSU was granted on December 8, 2009. The RSU will vest
as to 25% of the shares on September 1, 2010 and vests with
respect to an additional 6.25% of the shares on each of the next
12 quarterly anniversaries thereafter, to be fully vested on
September 1, 2013, assuming continued employment with
Finisar. |
|
(9) |
|
The option was granted by Optium and was assumed by us upon the
closing of the Optium merger. |
|
(10) |
|
The option was granted by Optium and was assumed by us upon the
closing of the Optium merger. The option became exercisable as
to 25% of the shares on March 1, 2008 and vests monthly
thereafter, to be fully vested |
27
|
|
|
|
|
on March 1, 2011, assuming continued employment with
Finisar. The terms of this stock option award also provide for
the acceleration of vesting of (a) 25% of the shares
subject to the original grant (or 100% of the remaining unvested
portion if less) following termination without Cause or for
Constructive Termination prior to an Acquisition (each term as
defined in the optionees employment agreement) and
(b) 100% of the remaining unvested portion following
termination of employment without Cause or for Constructive
Termination within one year of an Acquisition (each term as
defined in the optionees employment agreement). |
|
(11) |
|
The option was granted on September 8, 2006. The option
became exercisable as to 20% of the shares on September 8,
2006 and vests annually with respect to an additional 20% of the
shares, to be fully vested on September 8, 2010, assuming
continued employment with Finisar. |
|
(12) |
|
The option was granted on March 8, 2007 and will become
fully vested on March 8, 2012, assuming continued
employment with Finisar. |
|
(13) |
|
The option was granted on September 11, 2008. The option
become exercisable as to 25% of the shares on September 11,
2009 and vests with respect to an additional 6.25% of the shares
on each of the next 12 quarterly anniversaries thereafter, to be
fully vested on September 11, 2012, assuming continued
employment with Finisar. |
|
(14) |
|
The RSU was granted on September 11, 2008. The RSU vested
as to 25% of the shares on September 11, 2009 and vests
with respect to an additional 6.25% of the shares on each of the
next 12 quarterly anniversaries thereafter, to be fully vested
on September 11, 2012, assuming continued employment with
Finisar. |
|
(15) |
|
The option was granted by Optium and was assumed by us upon the
closing of the Optium merger. The option became exercisable as
to 25% of the shares on March 1, 2008 and vests monthly
thereafter, to be fully vested on March 1, 2011, assuming
continued employment with Finisar. The terms of this stock
option award also provide for the acceleration of vesting of 25%
of the shares subject to the original grant (or 100% of the
remaining unvested portion if less) following termination of
employment without Cause or for Constructive Termination within
one year of an Acquisition (each term as defined in the Optium
option plan or any superseding employment agreement). |
|
(16) |
|
The option was granted on August 10, 2005 and became fully
vested on June 27, 2010. |
|
(17) |
|
The option was granted on December 10, 2007 and will become
fully vested on December 10, 2012, assuming continued
employment with Finisar. |
Option
Exercises and Stock Vested
The following table provides information on stock option
exercises by our named executive officers and vesting of RSUs
held by them during the fiscal year ended April 30, 2010.
Option
Exercises and Stock Vested in Fiscal 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Restricted Stock Unit Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Value
|
|
Shares
|
|
Value
|
|
|
Acquired
|
|
Realized
|
|
Acquired
|
|
Realized
|
Name
|
|
on Exercise (#)
|
|
on Exercise(1)
|
|
on Vesting (#)
|
|
on Vesting(2)
|
|
Jerry S. Rawls
|
|
|
|
|
|
|
|
|
|
|
6,725
|
|
|
$
|
85,744
|
|
Eitan Gertel
|
|
|
|
|
|
|
|
|
|
|
21,892
|
|
|
|
189,863
|
|
Kurt Adzema
|
|
|
5,662
|
|
|
$
|
76,097
|
|
|
|
5,548
|
|
|
|
45,902
|
|
Stephen K. Workman
|
|
|
|
|
|
|
|
|
|
|
4,125
|
|
|
|
52,594
|
|
Mark Colyar
|
|
|
|
|
|
|
|
|
|
|
11,124
|
|
|
|
101,522
|
|
Todd Swanson
|
|
|
22,769
|
|
|
|
292,575
|
|
|
|
4,439
|
|
|
|
55,384
|
|
Joseph A. Young
|
|
|
|
|
|
|
|
|
|
|
5,375
|
|
|
|
68,531
|
|
|
|
|
(1) |
|
Based on the difference between the closing sale price of
Finisars common stock on the date of exercise and the
exercise price. |
|
(2) |
|
Based on the closing sale price of Finisars common stock
on the vesting date. |
28
Potential
Payments Upon Termination or Change in Control
Cash
Payments and/or Acceleration of Vesting Following Certain
Termination Events
We have employment agreements with Eitan Gertel and Mark Colyar,
as well as a stock option agreement with each of them, that
provide for cash payments
and/or
acceleration of vesting following certain termination events.
Except as described below and in Executive
Retention and Severance Plan, no named executive officer
is entitled to any cash payments
and/or
acceleration of vesting following a change in control of Finisar
unless a termination event also occurs.
The tables below set forth the cash payments and the intrinsic
value (that is, the value based upon our stock price on
April 30, 2010, minus any exercise price) of any equity
incentives subject to acceleration of vesting that
Messrs. Gertel and Colyar would be entitled to receive in
the event that such executive officer (i) had been
terminated by us without cause on April 30, 2010,
(ii) had resigned following a demotion, reduction in base
salary or involuntary relocation, referred to as a resignation
for good reason, on April 30, 2010 or (iii) had been
terminated as the result of death or disability. The value of
the acceleration of vesting of equity incentives as of
April 30, 2010 utilizes a per share value of our common
stock of $14.96, the closing price of our common stock on the
Nasdaq Global Select Market on April 30, 2010. In each
case, the amounts set forth in the tables below are subject to
any deferrals required under Section 409A of the Internal
Revenue Code of 1986, as amended (the Internal Revenue
Code), and do not include any life insurance proceeds in
the event of death or disability benefits in the event of
disability.
Eitan Gertel. Mr. Gertel, our Chief
Executive Officer, executed an employment agreement with Optium
on April 14, 2006, which was assumed by us at the time of
the Optium merger and was amended and restated effective
December 31, 2008. The initial term of the agreement was
three years, provided that the term of the agreement is
automatically extended for an additional term of one year on the
third anniversary and each subsequent anniversary of the
commencement date unless either party gives not less than
90 days notice prior to the expiration of the term that it
does not wish to extend the agreement. The agreement entitles
Mr. Gertel to a base salary of $444,000, subject to
adjustment as provided in the agreement, and other incentive
compensation as determined by the board of directors. In the
event that Mr. Gertel is terminated without cause or if we
give notice that we do not intend to extend the employment
agreement, we will be obligated to pay him one year severance,
which in all cases includes base salary, bonus as calculated in
the agreement and accrued paid time off. In addition, if he
resigns for good reason, we will be obligated to pay him one
year severance. A partially vested stock option held by
Mr. Gertel that was also assumed in connection with the
Optium merger provides for the acceleration of vesting of all or
a portion of the unvested options upon any of the termination
events described above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Voluntary
|
|
|
|
|
|
Termination
|
|
|
|
Termination
|
|
|
Termination for
|
|
|
Termination
|
|
|
upon
|
|
Payments and Benefits
|
|
without Cause
|
|
|
Good Reason
|
|
|
upon Death
|
|
|
Disability
|
|
|
Cash severance
|
|
$
|
690,340
|
|
|
$
|
690,340
|
|
|
$
|
|
|
|
$
|
|
|
Health care benefits
|
|
|
19,808
|
|
|
|
19,808
|
|
|
|
19,808
|
|
|
|
19,808
|
|
Acceleration of options
|
|
|
0
|
(1)
|
|
|
0
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
710,148
|
|
|
$
|
710,148
|
|
|
$
|
19,808
|
|
|
$
|
19,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The exercise price of the option subject to acceleration was
greater than the closing sales price of Finisar common stock on
April 30, 2010, which was $14.96 per share. |
Mark Colyar. Mr. Colyar, our Senior Vice
President, Operations and Engineering, executed an employment
agreement with Optium on April 14, 2006, which was assumed
by us at the time of the Optium merger and was amended and
restated effective December 31, 2008. The initial term of
the agreement was two years, provided that the term of the
agreement is automatically extended for an additional term of
one year on the second anniversary and each subsequent
anniversary of the commencement date unless either party gives
not less than 90 days notice prior to the expiration of the
term that it does not wish to extend the agreement. The
agreement entitles Mr. Colyar to a base salary of $281,500,
subject to adjustment as provided in the agreement, and other
incentive compensation as determined by the board of directors.
In the event that Mr. Colyar is terminated without cause or
if we give notice
29
that we do not intend to extend the employment agreement, we
will be obligated to pay him one year severance, which in all
cases includes base salary, bonus as calculated in the agreement
and accrued paid time off. A partially vested stock option held
by Mr. Colyar that was also assumed in connection with the
Optium merger provides for the acceleration of vesting of all or
a portion of the unvested options upon any of the termination
events described above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Voluntary
|
|
|
|
|
|
Termination
|
|
|
|
Termination
|
|
|
Termination for
|
|
|
Termination
|
|
|
upon
|
|
Payments and Benefits
|
|
without Cause
|
|
|
Good Reason
|
|
|
upon Death
|
|
|
Disability
|
|
|
Cash severance
|
|
$
|
360,126
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Health care benefits
|
|
|
19,808
|
|
|
|
19,808
|
|
|
|
19,808
|
|
|
|
19,808
|
|
Acceleration of options
|
|
|
0
|
(1)
|
|
|
0
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
379,934
|
|
|
$
|
19,808
|
|
|
$
|
19,808
|
|
|
$
|
19,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The exercise price of the option subject to acceleration was
greater than the closing sales price of Finisar common stock on
April 30, 2010, which was $14.96 per share. |
Executive
Retention and Severance Plan
Our executive officers, including our named executive officers,
are eligible to participate in the Finisar Executive Retention
and Severance Plan. This plan provides that in the event of a
qualifying termination each of the participating executives will
be entitled to receive (i) a lump sum payment equal to two
years base salary (excluding bonus) and (ii) medical,
dental and insurance coverage for two years, or reimbursement of
premiums for COBRA continuation coverage during such period. A
qualifying termination is defined as an involuntary termination
other than for cause or a voluntary termination for good reason
upon or within 18 months following a change in control, as
such terms are defined in the plan. In addition, the plan
provides that the vesting of stock options and RSUs held by
eligible officers will be accelerated as follows: (i) one
year of accelerated vesting upon a change of control, if the
options are assumed by a successor corporation, (ii) 100%
accelerated vesting if the options are not assumed by a
successor corporation, and (iii) 100% accelerated vesting
upon a qualifying termination. In the event the employment of
any of our named executive officers were to be terminated
without cause or for good reason, within 18 months
following a change in control of Finisar, each as of
April 30, 2010, the named executive officers would be
entitled to payments in the amounts set forth opposite their
name in the following table:
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|
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Name
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Cash Severance
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Jerry S. Rawls
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|
$37,717 per month for 24 months
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Eitan Gertel
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|
$38,935 per month for 24 months
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Kurt Adzema
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$24,933 per month for 24 months
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Stephen K. Workman
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$23,877 per month for 24 months
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Mark Colyar
|
|
$25,448 per month for 24 months
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Todd Swanson
|
|
$24,145 per month for 24 months
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Joseph A. Young
|
|
$31,183 per month for 24 months
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Benefits to Messrs. Gertel and Colyar under the Executive
Retention and Severance Plan will be reduced by the amount of
comparable benefits to which they are entitled under the
employment agreements described above.
We are not obligated to make any cash payments to these
executives if their employment is terminated by us for cause or
by the executive other than for good reason. No severance or
benefits are provided for any of the executive officers in the
event of death or disability. A change in control does not
affect the amount or timing of these cash severance payments.
30
In the event the employment of any of our named executive
officers were to be terminated without cause or for good reason
within 18 months following a change in control of Finisar,
each as of April 30, 2010, the named executives would be
entitled to accelerated vesting of their outstanding stock
options and RSUs as described in the following table:
|
|
|
Name
|
|
Value of Equity Awards:(1)
|
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Jerry S. Rawls
|
|
Accelerated vesting of 220,320 options with a value of
$1,519,818 and 76,250 RSUs with a value of $1,140,700.
|
Eitan Gertel
|
|
Accelerated vesting of 125,624 options with a value of
$1,001,314 and 44,576 RSUs with a value of $666,857.
|
Kurt Adzema
|
|
Accelerated vesting of 40,739 options with a value of $252,531
and 19,947 RSUs with a value of $298,407.
|
Stephen K. Workman
|
|
Accelerated vesting of 64,763 options with a value of $507,887
and 27,312 RSUs with a value of $408,588.
|
Mark Colyar
|
|
Accelerated vesting of 63,358 options with a value of $524,182
and 29,461 RSUs with a value of $440,737.
|
Todd Swanson
|
|
Accelerated vesting of 82,016 options with a value of $620,988
and 19,078 RSUs with a value of $285,407.
|
Joseph A. Young
|
|
Accelerated vesting of 100,300 options with a value of $671,481
and 33,852 RSUs with a value of $506,426.
|
|
|
|
(1) |
|
Potential incremental gains are net values based on (i) the
aggregate difference between the respective exercise prices of
options and the closing sale price of Finisar common stock on
April 30, 2010 ($14.96 per share) and (ii) the number
of shares underlying RSUs multiplied by the closing sale price
of Finisar common stock on April 30, 2010. |
31
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to our Code of Ethics, our executive officers,
directors and employees are to avoid conflicts of interest,
except with the approval of the board of directors. A related
party transaction would be a conflict of interest. The board has
delegated to the Audit Committee the authority to review and
approve related party transactions. In approving or rejecting a
proposed transaction, the Audit Committee will consider the
relevant facts and circumstances and, if applicable, the impact
of the proposed transaction on the directors independence.
The Audit Committee will approve only those transactions that,
in light of known circumstances, are in, or are not inconsistent
with, our best interests, as the Audit Committee determines in
the good faith exercise of its discretion.
Other than as described below and the compensation arrangements
and other arrangements described in Director
Compensation and Executive Compensation and Related
Matters above, in our fiscal year ended April 30,
2010 there were no, and there is not currently proposed, any
transaction or series of similar transactions to which we were
or will be a party in which the amount involved exceeded or will
exceed $120,000 in which any director, any executive officer,
any holder of 5% or more of our capital stock or any member of
their immediate family had or will have a direct or indirect
material interest.
Guy Gertel, the brother of Eitan Gertel, our Chief Executive
Officer, provided sales and marketing services to Optium through
GHG Technologies, a company he owns. Subsequent to the Optium
merger in August 2008, GHG Technologies has continued to provide
such services to Finisar. For services rendered during fiscal
2010, we paid GHG Technologies $160,000 in cash compensation. In
addition, the Company granted to Guy Gertel, for no additional
consideration, 1,160 restricted stock units with a fair market
value of $9,616, which vest as follows: with respect to 456 of
the shares, 25% on September 1, 2010 and an additional
6.25% on each of the next 12 quarterly anniversaries thereafter,
to be fully vested on September 1, 2013; and with respect
to the remaining 704 shares, 25% on December 8, 2010
and an additional 6.25% on each of the next 12 quarterly
anniversaries thereafter, to be fully vested on December 8,
2013, in each case subject to Mr. Gertels continuing
to provide services to Finisar. We believe that the cash
payments to GHG were fair and reasonable and were comparable to
that which would have been paid to an unaffiliated party in an
arms length transaction. The restricted stock unit awards
to Guy Gertel were consistent with the type and size of grants
made to our other sales professionals.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers, directors and persons
who beneficially own more than 10% of our common stock to file
initial reports of ownership and reports of changes in ownership
with the SEC. Such persons are required by SEC regulations to
furnish us copies of all Section 16(a) forms filed by such
person.
Based solely on our review of such forms furnished to us, and
written representations from certain reporting persons, we
believe that all filing requirements applicable to our executive
officers, directors and more than 10% stockholders during the
fiscal year ended April 30, 2010 were satisfied, with the
exception of one Form 4 report for each of Christopher J.
Crespi, Roger C. Ferguson, David C. Fries, Larry D. Mitchell,
Robert N. Stephens and Dominique Trempont, each reporting one
transaction, and one Form 4 report for each of Todd Swanson
and Joseph A. Young, each reporting two transactions, that were
filed late.
32
EQUITY
COMPENSATION PLAN INFORMATION
We currently maintain four compensation plans that provide for
the issuance of our common stock to officers, directors, other
employees or consultants. These consist of the 2005 Stock
Incentive Plan, the 2009 Employee Stock Purchase Plan and the
2009 International Employee Stock Purchase Plan, which have been
approved by our stockholders, and the 2001 Nonstatutory Stock
Option Plan, or the 2001 Plan, which has not been approved by
our stockholders. The following table sets forth information
regarding outstanding options and shares reserved for future
issuance under the foregoing plans as of April 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Remaining
|
|
|
Number of Shares
|
|
Weighted-
|
|
Available for
|
|
|
to be Issued upon
|
|
Average
|
|
Future Issuance
|
|
|
Exercise of
|
|
Exercise Price
|
|
Under Equity
|
|
|
Outstanding
|
|
of Outstanding
|
|
Compensation
|
|
|
Options,
|
|
Options,
|
|
Plans (Excluding
|
|
|
Warrants and
|
|
Warrants and
|
|
Shares Reflected
|
|
|
Rights
|
|
Rights
|
|
in Column (a))
|
Plan Category
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by stockholders
|
|
|
8,183,136
|
|
|
$
|
11.91
|
|
|
|
8,062,686
|
(1)
|
Equity compensation plan not approved by stockholders(2)(3)
|
|
|
133,404
|
|
|
$
|
22.50
|
|
|
|
394,581
|
|
|
|
|
(1) |
|
Consists of shares available for future issuance under the
plans. In accordance with the terms of the 2009 Employee Stock
Purchase Plan, the number of shares available for issuance under
the 2009 Employee Stock Purchase Plan and the 2009 International
Employee Stock Purchase Plan will increase by
125,000 shares on May 1 of each calendar year until and
including May 1, 2015. In accordance with the terms of the
2005 Stock Incentive Plan, the number of shares of our common
stock available for issuance under the 2005 Stock Incentive Plan
will increase on May 1 of each calendar year until and including
May 1, 2015 by an amount equal to five percent (5%) of the
number of shares of our common stock outstanding as of the
preceding April 30. |
|
(2) |
|
Excludes options assumed by us in connection with acquisitions
of other companies. As of April 30, 2010,
1,423,378 shares of our common stock were issuable upon
exercise of these assumed options, at a weighted average
exercise price of $10.89 per share. No additional options may be
granted under the plans pursuant to which these assumed equity
rights were granted. |
|
(3) |
|
A total of 731,250 shares of our common stock have been
reserved for issuance under the 2001 Plan. As of April 30,
2010, a total of 203,265 shares of common stock had been
issued upon the exercise of options granted under the 2001 Plan. |
Material
Features of the 2001 Nonstatutory Stock Option Plan
As of April 30, 2010, 394,581 shares of our common
stock were reserved for issuance under the 2001 Plan. The 2001
Plan was adopted by our board on February 16, 2001 and
provides for the granting of nonstatutory stock options to
employees and consultants with an exercise price per share not
less than 85% of the fair market value of our common stock on
the date of grant. However, no person is eligible to be granted
an option under the 2001 Plan whose eligibility would require
approval of the 2001 Plan by our stockholders. Options granted
under the 2001 Plan generally have a ten-year term and vest at
the rate of 20% of the shares on the first anniversary of the
date of grant and 20% of the shares each additional year
thereafter until fully vested. Some of the options that have
been granted under the 2001 Plan are subject to full
acceleration of vesting in the event of a change in control of
Finisar.
STOCKHOLDER
PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Stockholder proposals may be included in our proxy materials for
an annual meeting so long as they are provided to us on a timely
basis and satisfy the other conditions set forth in applicable
SEC rules. For a stockholder proposal to be included in our
proxy materials for the 2011 annual meeting, the proposal (in
addition to compliance with applicable SEC rules) must be
received at our principal executive offices, addressed to the
Secretary, not later
33
than May 20, 2011. The advance notice provision in our
bylaws states that in order for stockholder business to be
properly brought before a meeting by a stockholder, such
stockholder must have given timely notice thereof in writing to
our Secretary. To be timely, a stockholder proposal must be
received at our principal executive offices not less than 120
calendar days in advance of the one year anniversary of the date
our proxy statement was released to stockholders in connection
with the previous years annual meeting of stockholders;
except that (i) if no annual meeting was held in the
previous year, (ii) if the date of the annual meeting has
been changed by more than 30 calendar days from the date
contemplated at the time of the previous years proxy
statement, or (iii) in the event of a special meeting, then
notice must be received not later than the close of business on
the tenth day following the day on which notice of the date of
the meeting was mailed or public disclosure of the meeting date
was made. Stockholder business that is not intended for
inclusion in our proxy materials may be brought before the
annual meeting so long as we receive notice of the proposal as
specified by our bylaws, addressed to the Secretary at our
principal executive offices, not later than the above date. All
stockholder proposals should be marked for the attention of the
Secretary of Finisar Corporation at 1389 Moffett Park Drive,
Sunnyvale, California 94089.
OTHER
MATTERS
At the date of this proxy statement, the board of directors
knows of no other business that will be conducted at the annual
meeting of stockholders of Finisar other than as described in
this proxy statement. If any other matter or matters are
properly brought before the meeting, or any adjournment or
postponement of the meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the proxy on
such matters in accordance with their best judgment.
Christopher E.
Brown
Secretary
September 17, 2010
34
1389 MOFFETT PARK DRIVE
SUNNYVALE, CA 94089-1133
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VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood,
NY 11717. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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For All |
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Withhold All |
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For All Except |
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To withhold authority to vote for any individual
nominee(s), mark For All Except and write the
number(s) of the nominee(s) on the line below.
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The Board of Directors recommends a
vote FOR the following:
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o
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o |
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o |
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1. |
Election of Directors
Nominees
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01 Jerry S. Rawls
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02 Robert N. Stephens
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The Board of Directors recommends a vote
FOR the following proposal: |
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For |
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Against |
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Abstain |
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2. |
To ratify the appointment of Ernst & Young LLP as Finisars
independent auditors for the fiscal year ending April 30, 2011.
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o
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o
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o |
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NOTE:
Such other business as may properly come before the meeting or any adjournment thereof.
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX] |
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Date |
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Signature (Joint Owners) |
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Date |
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Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting: The Notice & Proxy Statement, Annual Report is/are available at www.proxyvote.com.
FINISAR CORPORATION
Annual Meeting of Stockholders
October 28, 2010 10:00 AM
This proxy is solicited by the Board of Directors
The stockholder(s) hereby appoint(s) Jerry S. Rawls and
Kurt Adzema, or either of them, as proxies and attorneys-in-fact,
each with full power of substitution, and hereby authorizes them to represent and to vote,
as designated on the reverse side of this ballot, all of the shares of Common Stock of
Finisar Corporation that the stockholder(s) is/are entitled to vote at the Annual Meeting
of Stockholders to be held at 10:00 a.m., local time, on October 28, 2010, at the offices of DLA Piper LLP
(US), 2000 University Avenue, East Palo Alto, CA 94303, and any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such
direction is made, this proxy will be voted in accordance with the Board of Directors
recommendations.
Continued and to be signed on reverse side