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
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o |
|
Preliminary Proxy Statement |
|
o |
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
þ |
|
Definitive Proxy Statement |
|
o |
|
Definitive Additional Materials |
|
o |
|
Soliciting Material Pursuant to §240.14a-12 |
ULTRA CLEAN HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ |
|
No fee required. |
|
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
|
1) |
|
Title of each class of securities to which transaction applies:
|
|
|
|
|
|
|
2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
3) |
|
Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined): |
|
|
|
|
|
|
4) |
|
Proposed maximum aggregate value of transaction:
|
|
|
|
|
|
|
5) |
|
Total fee paid: |
|
|
|
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing. |
|
1) |
|
Amount Previously Paid: |
|
|
|
|
|
|
2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
3) |
|
Filing Party: |
|
|
|
|
|
|
4) |
|
Date Filed: |
|
|
|
|
ULTRA
CLEAN HOLDINGS, INC.
150 Independence Drive
Menlo Park, CA 94025
NOTICE OF 2008 ANNUAL MEETING
OF STOCKHOLDERS OF
ULTRA CLEAN HOLDINGS, INC.
|
|
|
Date: |
|
June 5, 2008 |
|
Time: |
|
Doors open at 1:30 p.m. Pacific time Meeting begins at
2:00 p.m. Pacific time |
|
Place: |
|
Davis Polk & Wardwell 1600 El Camino Real Menlo Park,
CA 94025 |
|
Purposes: |
|
Elect our directors
|
|
|
|
Ratify the appointment of Deloitte &
Touche LLP as our independent registered public accounting firm
|
|
|
|
Conduct other business that may properly come before
the annual meeting or any adjournment or postponement thereof
|
|
Who Can Vote: |
|
April 25, 2008 is the record date for voting. Only
stockholders of record at the close of business on that date may
vote at the annual meeting or any adjournment thereof. |
|
|
|
All stockholders are cordially invited to attend the meeting. At
the meeting you will hear a report on our business and have a
chance to meet some of our directors and executive officers. |
|
|
|
Whether you expect to attend the meeting or not, please
complete, sign, date and promptly return the enclosed proxy card
in the postage-prepaid envelope we have provided. You may change
your vote and revoke your proxy at any time before the polls
close at the meeting by following the procedures described in
the accompanying proxy statement. |
Sincerely,
Jack Sexton
Vice President, Chief Financial Officer and Secretary
Menlo Park, California
April 25, 2008
ULTRA
CLEAN HOLDINGS, INC.
2008 ANNUAL MEETING OF
STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
10
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
13
|
|
|
|
|
13
|
|
|
|
|
13
|
|
|
|
|
14
|
|
|
|
|
14
|
|
|
|
|
19
|
|
|
|
|
20
|
|
|
|
|
21
|
|
|
|
|
21
|
|
|
|
|
22
|
|
|
|
|
22
|
|
|
|
|
23
|
|
|
|
|
23
|
|
|
|
|
24
|
|
|
|
|
25
|
|
ULTRA
CLEAN HOLDINGS, INC.
150 Independence Drive
Menlo Park, CA 94025
PROXY
STATEMENT FOR 2008 ANNUAL MEETING OF STOCKHOLDERS
June 5, 2008
INFORMATION
CONCERNING SOLICITATION AND VOTING
Your vote is very important. For this reason our Board of
Directors is requesting that you permit your shares of common
stock to be represented at our 2008 Annual Meeting of
Stockholders by the proxies named on the enclosed proxy card.
This proxy statement contains important information for you to
consider in deciding how to vote on the matters brought before
the meeting.
General
Information
Ultra Clean Holdings, Inc., referred to in this proxy statement
as Ultra Clean, the Company or we, is soliciting the enclosed
proxy for use at our Annual Meeting of Stockholders to be held
June 5, 2008 at 2:00 p.m., Pacific time or at any
adjournment thereof for the purposes set forth in this proxy
statement. Our annual meeting will be held at the offices of
Davis Polk & Wardwell, 1600 El Camino Real, Menlo
Park, California 94025.
We will initiate mailing this proxy statement and the enclosed
proxy card on April 28, 2008 to stockholders entitled to
vote at the meeting.
Who May
Vote at Our Annual Meeting
All holders of our common stock, as reflected in our records at
the close of business on April 25, 2008, the record date
for voting, may vote at the meeting.
Each share of common stock that you owned on the record date
entitles you to one vote on each matter properly brought before
the meeting. As of the record date, there were issued and
outstanding 21,638,550 shares of our common stock,
$0.001 par value.
Holding
Shares as a Beneficial Owner (or in Street
Name)
Most stockholders are considered the beneficial
owners of their shares, that is, they hold their shares
through a broker, bank or nominee rather than directly in their
own names. As summarized below, there are some distinctions
between shares held of record and those owned beneficially or in
street name.
Stockholder of Record. If your shares are
registered directly in your name with our transfer agent, you
are considered the stockholder of record with respect to those
shares. If you are a stockholder of record, we are sending these
proxy materials directly to you. As our stockholder of record,
you have the right to grant your voting proxy directly to us or
to vote in person at the annual meeting. We have enclosed a
proxy card for your vote.
Beneficial Owner. If your shares are held in a
stock brokerage account or by a bank or nominee, you are
considered the beneficial owner of shares held in street name,
and these proxy materials are being forwarded to you by your
broker, bank, or nominee (who is considered the stockholder of
record with respect to those shares). As the beneficial owner,
you have the right to direct your broker, bank, or nominee how
to vote if you follow the instructions you receive from your
broker, bank, or nominee. You are also invited to attend the
annual meeting. However, since you are not the stockholder of
record, you may not vote these shares in person at the annual
meeting
1
unless you bring to the meeting an account statement or letter
from the nominee stating that you beneficially owned the shares
on April 25, 2008, the record date for voting.
How to
Vote
You may vote in person at the meeting or by proxy. All valid
proxies properly executed and received by us prior to or at the
meeting will be voted in accordance with the instructions they
contain. We recommend that you vote by proxy even if you plan to
attend the meeting. You may change your vote at the meeting even
if you have previously submitted a proxy.
How
Proxies Work
This proxy statement is furnished in connection with the
solicitation of proxies by Ultra Clean for use at the annual
meeting and at any adjournment of that meeting. If you give us
your proxy you authorize us to vote your shares at the meeting
in the manner you direct. You may vote for all, some or none of
our director candidates. You may also vote for or against the
other proposals, or you may abstain from voting.
If you give us your proxy but do not specify how your shares
shall be voted on a particular matter, your shares will be voted
FOR the election of each of the named nominees for director, FOR
the ratification of the appointment of Deloitte &
Touche LLP as our independent registered public accounting firm
and, with respect to any other matter that may come before the
annual meeting, as recommended by our Board of Directors or
otherwise in the proxies discretion.
If you hold your shares in street name, your broker, bank or
nominee will include a voting instruction card with this proxy
statement. You should vote your shares by following the
instructions provided on the voting instruction card. Your
broker, bank or nominee may provide instructions for voting by
telephone or over the Internet.
Changing
Your Vote
You have the right to revoke your previously submitted proxy at
any time before the polls close at the annual meeting.
If you are a stockholder of record, you may revoke your proxy
before it is voted by:
|
|
|
|
|
submitting a new proxy with a date later than the date of your
previously submitted proxy;
|
|
|
|
notifying our Secretary in writing before the meeting that you
wish to revoke your previously submitted proxy; or
|
|
|
|
voting in person at the meeting.
|
If you are a beneficial owner and your shares are held in the
name of your broker, bank or nominee and you wish to revoke your
previously submitted proxy, you should follow the instructions
provided to you by your broker, bank or nominee. You may also
revoke your proxy by voting in person at the meeting, provided
you comply with the requirements indicated below.
Important
Notice Regarding Delivery of Stockholder Documents
Only one proxy statement and set of accompanying materials is
being delivered by us to multiple stockholders sharing an
address until we receive contrary instructions from one or more
of the stockholders. We will deliver, promptly upon written or
oral request, a separate copy of the proxy statement and
accompanying materials to a stockholder at a shared address to
which a single copy of the documents was delivered. A
stockholder who wishes to receive a separate copy of the proxy
statement and accompanying materials now or in the future, or
stockholders sharing an address who are receiving multiple
copies of proxy materials and wish to receive a single copy of
such materials, should submit a written request to us at the
address on page 5.
2
Attending
in Person
Any stockholder of record may vote in person. All meeting
attendees will be required to present a valid, government-issued
photo identification, such as a drivers license or
passport, in order to enter the meeting.
If you are a beneficial owner and your shares are held in the
name of your broker, bank or nominee, you must bring to the
meeting an account statement or letter from the nominee
indicating that you beneficially owned the shares at the close
of business on April 25, 2008, the record date for voting.
Votes
Needed to Hold the Meeting and Approve Proposals
In order to carry on the business of the annual meeting,
stockholders entitled to cast a majority of the votes at a
meeting of stockholders must be represented at the meeting,
either in person or by proxy. In accordance with Delaware law,
only votes cast for a matter constitute affirmative
votes. A properly executed proxy marked abstain with
respect to any matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum.
Since abstentions will not be votes cast for a particular
proposal, they will have the same effect as negative votes or
votes against that proposal. Broker non-votes are also counted
for the purpose of determining the presence of a quorum. Broker
non-votes occur when shares held by a broker on behalf of a
beneficial owner are not voted with respect to a particular
proposal, which generally occurs when the broker has not
received voting instructions from the beneficial owner and lacks
the discretionary authority to vote the shares itself. We
believe that the election of directors and ratification of our
independent registered public accounting firm are considered
routine proposals for which brokerage firms may vote shares held
on behalf of beneficial owners who have not voted with respect
to the particular proposal.
The election of directors requires a plurality of the votes cast
for the election of directors. Plurality
means that the six nominees who receive the highest number of
votes will be elected as directors. In the election of
directors, votes may be cast in favor of or withheld from any or
all nominees. The affirmative vote of the holders of a majority
of the shares of common stock present in person or represented
by proxy and entitled to vote on the item will be required to
ratify the appointment of our independent registered public
accounting firm for the current fiscal year. Approval of any
other matter properly submitted to the stockholders at the
annual meeting generally will require the affirmative vote of
the holders of a majority of the shares of common stock present
in person or represented by proxy and entitled to vote on that
matter.
Security
Ownership of Certain Beneficial Owners and Management
The table below sets forth information as of March 31, 2008
regarding the beneficial ownership (as defined by
Rule 13d-3(d)(1)
under the Securities Exchange Act of 1934, as amended (the
Exchange Act)) of our common stock by:
|
|
|
|
|
each person or group known by us to own beneficially more than
five percent of our common stock;
|
|
|
|
each of our directors and named executive officers
individually; and
|
|
|
|
all directors and executive officers as a group.
|
In accordance with applicable rules of the Securities and
Exchange Commission (the SEC), beneficial ownership
includes voting or investment power with respect to securities
and includes the shares issuable pursuant to stock options that
are exercisable within 60 days of March 31, 2008.
Shares issuable pursuant to stock options are deemed outstanding
for the purpose of computing the ownership percentage of the
person holding such options but are not deemed outstanding for
computing the ownership percentage of any other person. The
percentage of beneficial ownership for the following table is
based on 21,629,179 shares of common stock outstanding as
of March 31, 2008.
Unless otherwise indicated, the address of each of the named
individuals is
c/o Ultra
Clean Holdings, Inc., 150 Independence Drive, Menlo Park,
California 94025. To our knowledge, except as indicated in the
footnotes to this
3
table and pursuant to applicable community property laws, the
persons named in the table have sole voting and investment power
with respect to all shares of common stock.
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially Owned
|
Name and Address of Beneficial Owner
|
|
Number
|
|
Percent
|
|
Greater than 5% Stockholders
|
|
|
|
|
|
|
|
|
Wellington Management Company, LLP(1)
|
|
|
2,761,841
|
|
|
|
12.8
|
|
75 State Street
Boston, MA 02109
|
|
|
|
|
|
|
|
|
Artisan Partners Limited Partnership.(2)
|
|
|
2,440,400
|
|
|
|
11.3
|
|
875 East Wisconsin Avenue, Suite 800
Milwaukee, WI 53202
|
|
|
|
|
|
|
|
|
Northpointe Capital, LLC(3)
|
|
|
2,086,311
|
|
|
|
9.6
|
|
101 W. Big Beaver, Suite 745
Troy, MI 48084
|
|
|
|
|
|
|
|
|
Vaughan Nelson Investment Management, L.P.(4)
|
|
|
1,759,401
|
|
|
|
8.1
|
|
600 Travis Street, Suite 6300
Houston, TX 77002
|
|
|
|
|
|
|
|
|
Deutsche Bank AG(5)
|
|
|
1,341,766
|
|
|
|
6.2
|
|
Theodor-Heuss-Allee 70
60468 Frankfurt am Main
|
|
|
|
|
|
|
|
|
Federal Republic of Germany Putnam, LLC(6)
|
|
|
1,145,658
|
|
|
|
5.3
|
|
One Post Office Square
Boston, MA 02109
|
|
|
|
|
|
|
|
|
Named Executive Officers and Directors
|
|
|
|
|
|
|
|
|
Clarence L. Granger(7)
|
|
|
856,668
|
|
|
|
3.9
|
|
Jack Sexton(8)
|
|
|
116,437
|
|
|
|
*
|
|
Deborah Hayward(9)
|
|
|
140,876
|
|
|
|
*
|
|
Bruce Wier(10)
|
|
|
179,095
|
|
|
|
*
|
|
Leonid Mezhvinsky(11)
|
|
|
568,952
|
|
|
|
2.6
|
|
Brian R. Bachman(12)
|
|
|
28,125
|
|
|
|
*
|
|
Susan H. Billat(12)
|
|
|
33,125
|
|
|
|
*
|
|
Kevin C. Eichler(12)
|
|
|
33,125
|
|
|
|
*
|
|
David ibnAle(12)
|
|
|
27,500
|
|
|
|
*
|
|
Thomas M. Rohrs(13)
|
|
|
58,125
|
|
|
|
*
|
|
All executive officers and directors as a group
(12 persons)(14)
|
|
|
2,208,894
|
|
|
|
9.6
|
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
Based on a Schedule 13G filed with the Securities and
Exchange Commission (SEC) on February 14, 2008. |
|
(2) |
|
Based on a Schedule 13G filed with the SEC on
February 8, 2008. |
|
(3) |
|
Based on a Schedule 13G filed with the SEC on
February 14, 2008. |
|
(4) |
|
Based on a Schedule 13G filed with the SEC on
February 14, 2008. |
|
(5) |
|
Based on a Schedule 13G filed with the SEC on
February 6, 2008. |
|
(6) |
|
Based on a Schedule 13G filed with the SEC on
February 1, 2008. |
|
(7) |
|
Includes 539,823 shares subject to common stock options
exercisable within 60 days of March 31, 2008 and
53,700 restricted stock units that vest over 3 years. |
|
(8) |
|
Includes 93,437 shares subject to common stock options that
are exercisable within 60 days of March 31, 2008 and
23,000 restricted stock units that vest over 3 years. |
4
|
|
|
(9) |
|
Includes 120,625 shares subject to common stock options
exercisable within 60 days of March 31, 2008 and
18,000 restricted stock units that vest over 3 years. |
|
(10) |
|
Includes 113,250 shares subject to common stock options
exercisable within 60 days of March 31, 2008 and
12,500 restricted stock units that vest over 3 years. |
|
(11) |
|
Includes 50,000 shares subject to common stock options
exercisable within 60 days of March 31, 2008. |
|
(12) |
|
Represents shares subject to common stock options that are
exercisable within 60 days of March 31, 2008 and
restricted stock awards that vest on May 31, 2008. |
|
(13) |
|
Includes 40,625 shares subject to common stock options
exercisable within 60 days of March 31, 2008. |
|
(14) |
|
Includes shares of common stock, restricted stock units and
shares subject to common stock options owned by Sowmya Krishnan
and David Savage, executive officers who are not named
executive officers. Includes 77,916 shares subject to
common stock options exercisable within 60 days of
March 31, 2008 and 70,000 restricted stock units that vest
over 3 to 4 years. |
At the close of business on April 25, 2008, the record
date, we had 21,638,550 shares of common stock outstanding.
Each share of our common stock is entitled to one vote on all
matters properly submitted for stockholder vote.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) requires our directors and executive officers
and beneficial holders of 10% or more of a registered class of
our equity securities to file certain reports with the SEC
regarding ownership of, and transactions in, our equity
securities. We have reviewed copies of the reports we received
and written representations from the individuals required to
file the reports.
Based solely on our review of such reports and representations,
except as described in the following paragraph, we believe that
all of our directors, executive officers and beneficial holders
of 10% or more of a registered class of our equity securities
filed, on a timely basis, all reports required by
Section 16(a) of the Exchange Act for the year ended
December 31, 2006 and December 31, 2007.
The following is a list of all reports that we are aware were
not filed on a timely basis:
|
|
|
|
|
Form 4 related to acquisition of 315,000 shares
subject to common stock options granted to Mr. Mezhvinsky
on July 28, 2006 was filed late on August 10, 2007.
|
|
|
|
Form 4s related to acquisition of 212,000 shares
subject to common stock options granted to Messrs. Granger,
Mezhvinsky, Sexton, Wier and Ms. Hayward on April 27,
2007 was filed late on May 10, 2007.
|
|
|
|
Form 4 related to the exercise of options to purchase
4,000 shares of common stock and disposition of
2,000 shares of common stock by Clarence Granger on
May 22, 2007 was filed two days late.
|
|
|
|
Form 4 related to disposition of an aggregate of
388,528 shares of common stock by Mr. Mezhvinsky on
July 11, 2007, October 1, 2007, October 2, 2007
and October 4, 2007 were filed one or two days late.
|
|
|
|
Form 4 related to disposition of 15,000 shares of
common stock by Mr. Rohrs on November 30, 2007 was
filed late on January 3, 2008.
|
Cost Of
Proxy Solicitation
We will pay the cost of this proxy solicitation. Some of our
employees may also solicit proxies, without any additional
compensation. We may also reimburse banks, brokerage firms and
nominees for their expenses in forwarding proxy materials to
their customers who are beneficial owners of our common stock
and obtaining their voting instructions.
Deadline
for Receipt of Stockholder Proposals for the 2009 Annual
Meeting
If you wish to submit a proposal for inclusion in the proxy
statement for our 2009 Annual Meeting of Stockholders, you must
follow the procedures outlined in
Rule 14a-8
of the Exchange Act, and we must receive
5
your proposal at the address below no later than
December 29, 2008. If a stockholder intends to present a
proposal at the next annual meeting without the inclusion of
such proposal in the Companys proxy materials, proxies
solicited by us for the next annual meeting will confer
discretionary authority to vote on such proposal if presented at
the meeting so long as notice of the proposal is
(1) received before the close of business on March 14,
2009 and the Company advises stockholders in next years
proxy statement on nature of the proposal and as to how
management intends to vote on the matter or (2) received
after the close of business on March 14, 2009. Stockholder
proposals should be sent to us at the address below. The Company
reserves the right to reject, rule out of order or take other
appropriate action with respect to any proposal that does not
comply with these and other applicable requirements.
Contacting
Ultra Clean
If you have questions or would like more information about the
annual meeting, you can contact us in either of the following
ways:
|
|
|
|
|
By
telephone: (650) 323-4100
|
|
|
|
By writing Secretary
|
Ultra Clean Holdings, Inc.
150 Independence Drive
Menlo Park, CA 94025
PROPOSAL 1:
ELECTION OF DIRECTORS
Our Board of Directors, at the recommendation of the Nominating
and Corporate Governance Committee, has recommended for
nomination the director candidates named below. All of these
nominees currently serve as our directors. All of our directors
are elected for one-year terms.
If a director nominee becomes unavailable before the election,
your proxy authorizes the people named as proxies to vote for a
replacement nominee if the Nominating and Corporate Governance
Committee names one.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
Name
|
|
Age
|
|
|
Since
|
|
|
Brian R. Bachman
|
|
|
63
|
|
|
|
2004
|
|
Susan H. Billat
|
|
|
57
|
|
|
|
2004
|
|
Kevin C. Eichler
|
|
|
48
|
|
|
|
2004
|
|
Clarence L. Granger
|
|
|
59
|
|
|
|
2002
|
|
David T. ibnAle
|
|
|
36
|
|
|
|
2002
|
|
Leonid Mezhvinsky
|
|
|
53
|
|
|
|
2007
|
|
Set forth below is information about each of our nominees for
director:
Clarence L. Granger has served as our
Chairman & Chief Executive Officer since October 2006,
as our Chief Executive Officer since November 2002, as Chief
Operating Officer from March 1999 to November 2002 and as a
member of our Board of Directors since May 2002.
Mr. Granger served as our Executive Vice President and
Chief Operating Officer from January 1998 to March 1999 and as
our Executive Vice President of Operations from April 1996 to
January 1998. Prior to joining Ultra Clean in April 1996, he
served as Vice President of Media Operations for Seagate
Technology from 1994 to 1996. Prior to that, Mr. Granger
worked for HMT Technology as Chief Executive Officer from 1993
to 1994, as Chief Operating Officer from 1991 to 1993 and as
President from 1989 to 1994. Prior to that, Mr. Granger
worked for Xidex as Vice President and General Manager, Thin
Film Disk Division, from 1988 to 1989, as Vice President,
Santa Clara Oxide Disk Operations, from 1987 to 1988, as
Vice President, U.S. Tape Operations, from 1986 to 1987 and
as Director of Engineering from 1983 to 1986. Mr. Granger
holds a master of science degree in industrial engineering from
Stanford University and a bachelor of science degree in
industrial engineering from the University of California at
Berkeley.
6
Brian R. Bachman has served as a director of Ultra Clean
since March 2004. Mr. Bachman is a private investor.
Mr. Bachman was the Chief Executive Officer and Vice
Chairman of Axcelis Technologies, Inc. from May 2000 to January
2002. Mr. Bachman is on the board of directors of Keithley
Instruments, Inc. and Kulicke, Soffa Industries, Inc. and
Trident Microsystems, Inc.
Susan H. Billat has served as a director of Ultra Clean
since March 2004. Since 2002, Ms. Billat has been a
Principal at Benchmark Strategies, which she founded in 1990.
Prior to that, she was a Managing Director and Senior Research
Analyst for semiconductor equipment and foundries at Robertson
Stephens & Company from 1996 to 2002 and senior Vice
President of Marketing for Ultratech Stepper from 1994 to 1996.
Prior to 1994, Ms. Billat spent eight years in executive
positions in the semiconductor equipment industry and twelve
years in operations management, engineering management and
process engineering in the semiconductor industry.
Ms. Billat is on the board of directors of PDF Solutions,
Inc. Ms. Billat holds bachelor and master of science
degrees in physics from Georgia Tech and completed further
graduate studies in electrical engineering and engineering
management at Stanford University.
Kevin C. Eichler has served as a director of Ultra Clean
since March 2004 and as our lead director since February 2007.
Mr. Eichler is the Senior Vice President and Chief
Financial Officer of Credence Systems Corporation.
Mr. Eichler was the Executive Vice President of Operations
and Chief Financial Officer of MarketTools, Inc. from March 2006
to December 2007. Mr. Eichler served as the Vice President
and Chief Financial Officer of MIPS Technologies, Inc. from June
1998 to February 2006. Prior to that, he was Vice President of
Operations and Chief Financial Officer of Visigenic Software
Inc. from 1996 to 1998, Executive Vice President of Finance and
Chief Financial Officer of National Information Group from 1995
to 1996 and Executive Vice President of Finance and Chief
Financial Officer of Mortgage Quality Management, Inc. from 1991
to 1995. Prior to 1991, Mr. Eichler held management
positions with NeXT Software and Microsoft. Mr. Eichler is
on the board of directors of SupportSoft, Inc. and Magma Design
Automation, Inc. Mr. Eichler holds a bachelor of science
degree in accounting from St. Johns University.
David T. ibnAle has served as a director of Ultra Clean
since November 2002 and as our lead director from February 2005
to February 2007. From April 2007 to March 2008, Mr. ibnAle
was a Partner of Francisco Partners and from December 1999 to
April 2007, he was an investment professional with Francisco
Partners. Prior to joining Francisco Partners, Mr. ibnAle was an
investment professional with Summit Partners L.P., and prior to
that he worked in the Corporate Finance Department of Morgan
Stanley & Co. Mr. ibnAle holds an A.B. in public
policy and an A.M. in international development policy from
Stanford University and a masters degree in business
administration from the Stanford University Graduate School of
Business.
Leonid Mezhvinsky has served as a director of Ultra Clean
since February 2007. Mr. Mezhvinsky served as our President
from June 2006 to December 2007, following our acquisition of
Sieger Engineering, Inc. He has more than two decades of
management experience and in depth knowledge of machine shop,
electro mechanical assemblies and system integration utilized in
semiconductor, medical and biotech OEM products. Prior to
joining Ultra Clean, Mr. Mezhvinsky was President and Chief
Executive Officer of Sieger Engineering, Inc. which he joined in
1982. Mr. Mezhvinsky holds the equivalent of a bachelor of
science in Industrial Automation from College of Industrial
Automation, Odessa, Ukraine.
There are no family relationships among any of our directors and
named executive officers.
Board
Recommendation
Our Board of Directors unanimously recommends that you vote
FOR each of the nominees to the Board of Directors
set forth in this Proposal One.
Structure
of Board of Directors and Corporate Governance
Information
Director Independence. We are required to
comply with the director independence rules of the NASDAQ Stock
Market (NASDAQ) and the SEC. These rules require
that the board of directors of a listed company be composed of a
majority of independent directors and that the audit committee,
compensation committee and nominating and corporate governance
committees be composed solely of independent directors.
7
Our Board of Directors has determined that Brian R. Bachman,
Susan H. Billat, Kevin C. Eichler, and David T. ibnAle are each
independent in accordance with applicable NASDAQ and SEC rules.
Accordingly, a majority of our Board of Directors is independent
as required by NASDAQ rules.
Director Responsibilities. We are governed by
our Board of Directors and its various committees that meet
throughout the year. Our Board of Directors currently consists
of seven directors. During 2007, there were five meetings of our
Board of Directors. We expect directors to attend and prepare
for all meetings of the Board of Directors and the meetings of
the committees on which they serve. Each of our directors,
except David ibnAle, attended more than 75% of the aggregate
number of meetings of the Board of Directors and the committees
on which he or she served during 2007.
Executive Sessions of the Independent
Directors. Our independent directors met in an
executive session during each regularly scheduled meeting of the
Board of Directors in 2007.
Chairman of the Board. On October 26,
2006, Clarence L. Granger was appointed Chairman of the Board of
Directors. The duties of the Chairman include:
(i) presiding over all meetings of the Board of Directors,
(ii) ensuring that the Board works as a cohesive team and
providing the leadership essential to achieve this objective,
(iii) ensuring that the Board has adequate resources in
support of its work and that the Board is provided with the
information it requires, (iv) setting the Boards
agenda in consultation with the lead director, and
(v) meeting, from time to time, with the Corporate
Governance and Nominating Committee to review the Board, Board
Committees, Committee chairs and Board members performance
and to discuss nominees and directors to be submitted to the
Board for approval.
Lead Director. On February 7, 2007, our
Board of Directors appointed Kevin C. Eichler to serve as our
lead director. The duties of the lead director include:
(i) presiding over all meetings of non-executive
independent directors, (ii) periodically providing the
Chief Executive Officer input coming out of the independent
directors meeting, (iii) approving the meeting agenda
for meetings of the Board of Directors and (iv) approving
meeting schedules to assure that there is sufficient time for
discussion of all items. The lead director also has the
authority to call meetings of the Board of Directors.
Corporate Governance. Our Board of Directors
has adopted corporate governance guidelines. These guidelines
address items such as the qualifications and responsibilities of
our directors and director candidates and the corporate
governance policies and standards applicable to us in general.
In addition, we have adopted a code of business conduct and
ethics that applies to all officers, directors and employees.
Our corporate governance guidelines and our code of business
conduct and ethics as well as the charters of the Nominating and
Corporate Governance Committee, Audit Committee and Compensation
Committee are available on our website at
http://www.uct.com/investors/governance.html.
Communicating with our Board of Directors. Any
stockholder wishing to communicate with our Board of Directors
may send a letter to our Secretary at 150 Independence Drive,
Menlo Park, California 94025. Communications intended
specifically for non-employee directors should be sent to the
attention of the Chairman of the Nominating and Corporate
Governance Committee.
Annual Meeting Attendance. Our Board of
Directors has adopted a policy that all members should attend
each annual meeting of stockholders when practical. Five
directors attended the 2007 annual meeting of stockholders.
Committees
of our Board of Directors
Our Board of Directors has three principal committees. The
following describes for each committee its current membership,
the number of meetings held during 2007 and its mission:
Audit Committee. Among other matters, the
Audit Committee:
|
|
|
|
|
hires and replaces our independent registered public accounting
firm as appropriate;
|
8
|
|
|
|
|
evaluates the independence and performance of our independent
registered public accounting firm, reviews and pre-approves any
audit and non-audit services provided by our independent
registered public accounting firm and approves fees related to
such services;
|
|
|
|
reviews and discusses with management, the internal auditors and
our independent registered public accounting firm our financial
statements and accounting principles;
|
|
|
|
oversees internal auditing functions and controls; and
|
|
|
|
prepares the Audit Committee report required by the rules of the
SEC.
|
A copy of the Audit Committees charter is available on our
website at
http://www.uct.com/investors/governance.html.
The members of the Audit Committee are Kevin C. Eichler, Brian
R. Bachman and Susan H. Billat. Our Board of Directors has
determined that each current member of the committee is
independent as defined under NASDAQ and SEC rules and has
concluded that all members of the Audit Committee qualify as an
audit committee financial expert as defined by SEC rules. The
Audit Committee met eight times in 2007.
Compensation Committee. Among other matters,
our Compensation Committee:
|
|
|
|
|
oversees our compensation and benefits policies generally,
including equity compensation plans;
|
|
|
|
evaluates senior executive performance and reviews our
management succession plan;
|
|
|
|
oversees and sets compensation for our senior
executives; and
|
|
|
|
approves the Compensation Discussion and Analysis required to be
included in our proxy statement by SEC rules.
|
A copy of the Compensation Committees charter is available
on our website at www.uct.com/investors/governance.html.
The members of the Compensation Committee are Brian R. Bachman,
David T. ibnAle, Thomas M. Rohrs and Susan H. Billat. Our Board
of Directors has determined each current member of the committee
is independent as defined under NASDAQ and SEC rules. The
Compensation Committee met four times in 2007.
Nominating and Corporate Governance
Committee. Among other matters, our Nominating
and Corporate Governance Committee:
|
|
|
|
|
identifies individuals qualified to fill independent director
positions and recommends directors for appointment to committees
of our Board of Directors;
|
|
|
|
makes recommendations to our Board of Directors as to
determinations of director independence;
|
|
|
|
evaluates the performance of our Board of Directors;
|
|
|
|
oversees and set compensation for our directors; and
|
|
|
|
develops, recommends and oversees compliance with our corporate
governance guidelines and code of business conduct and ethics.
|
A copy of the Nominating and Corporate Governance
Committees charter is available on our website at
www.uct.com/investors/governance.html.
The members of the Nominating and Corporate Governance Committee
are Susan H. Billat, Brian Bachman, Kevin C. Eichler, and Thomas
M. Rohrs. Our Board of Directors has determined that each
current member of the committee is independent as defined under
NASDAQ and SEC rules. The Nominating and Corporate Governance
Committee met twice in 2007.
9
Consideration
of Director Nominees
Director Qualifications. The Nominating and
Corporate Governance Committee Charter specifies the criteria
applied to nominees recommended by the Nominating and Corporate
Governance Committee for a position on our Board of Directors.
Candidates for director nominees are reviewed in the context of
the current composition of our Board of Directors, our operating
requirements and the interests of our stockholders. In
conducting its assessment the committee considers issues of
judgment, diversity, age, skills, background, experience and
such other factors as it deems appropriate given the needs of
the Company and the Board of Directors. The Nominating and
Corporate Governance Committee also considers the independence,
financial literacy and financial expertise standards required by
our committee charters and applicable laws, rules and
regulations, and the ability of the candidate to devote the time
and attention necessary to serve as a director and a committee
member.
Identifying and Evaluating Nominees for
Director. In the event that vacancies are
anticipated or otherwise arise, the Nominating and Corporate
Governance Committee considers various potential candidates for
director. Candidates may come to the attention of the Nominating
and Corporate Governance Committee through current directors,
professional search firms engaged by us, stockholders or other
persons. Candidates are evaluated at regular or special meetings
of the Nominating and Corporate Governance Committee and may be
considered at any point during the year.
Stockholder Nominees. Candidates for director
recommended by stockholders will be considered by the Nominating
and Corporate Governance Committee. Such recommendations should
include the candidates name, home and business contact
information, detailed biographical data, relevant qualifications
for membership on our Board of Directors, information regarding
any relationships between the candidate and Ultra Clean within
the last three years and a written indication by the recommended
candidate of the candidates willingness to serve, and
should be sent to the committee at the address listed on
page 5 of this proxy statement.
Director
Compensation
Employee directors do not receive any additional compensation
for their service on our Board of Directors.
For fiscal 2007, each non-employee director was paid a $20,000
annual retainer fee, as well as, if applicable, a $12,000 annual
fee for serving on the Audit Committee, a $5,000 annual fee per
committee for serving on the Compensation and the Nominating and
Corporate Governance Committees, a $20,000 annual fee for
serving as chairman of the Audit Committee, a $10,000 annual fee
for serving as chairman of the Compensation and Nomination and
Corporate Governance Committees and a $15,000 annual fee for
serving as lead director. In addition, upon initially joining
our board, each non-employee director is granted options to
purchase 15,000 shares of our common stock that vest over
four years. In fiscal 2007, on the date of our Annual Meeting of
Stockholders, each non-employee director was granted 5,000
restricted stock awards that fully vest on the first anniversary
of the grant date. The Compensation Committee annually reviews
the number of shares of restricted stock awards to be granted to
non-employee directors based on our average stock price and the
median equity compensation levels at peer companies. Director
compensation for fiscal 2008 will remain unchanged, except each
non-employee director will be granted 7,500 restricted share
units of our common stock that fully vest after one year.
The following table sets forth compensation for our non-employee
directors for fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
Brian R. Bachman
|
|
|
42,000
|
|
|
|
38,626
|
(2)
|
|
|
38,748
|
(3)
|
|
|
|
|
|
|
119,374
|
|
Susan H. Billat
|
|
|
42,000
|
|
|
|
38,626
|
(2)
|
|
|
38,748
|
(3)
|
|
|
|
|
|
|
119,374
|
|
Kevin C. Eichler
|
|
|
60,000
|
|
|
|
38,626
|
(2)
|
|
|
38,748
|
(3)
|
|
|
|
|
|
|
137,374
|
|
David ibnAle
|
|
|
25,000
|
|
|
|
38,626
|
(2)
|
|
|
32,071
|
(3)
|
|
|
|
|
|
|
95,696
|
|
Thomas M. Rohrs
|
|
|
35,000
|
|
|
|
147,626
|
(2)
|
|
|
52,896
|
(3)
|
|
|
|
|
|
|
235,522
|
|
|
|
|
(1) |
|
Amounts shown do not reflect compensation actually received by
the directors. The amounts shown are the compensation costs
recognized by the Company in fiscal 2007 for outstanding
restricted stock awards and |
10
|
|
|
|
|
options, respectively, as determined pursuant to Statement of
Financial Accounting Standards No. 123(R)
(FAS 123R). These compensation costs reflect
awards granted in and prior to fiscal 2007. The assumptions used
to calculate the value of restricted stock awards and option
awards are set forth under Note 1 of the Notes to
Consolidated Financial Statements included in the Companys
Annual Report on
Form 10-K
for fiscal 2007 filed with the SEC on March 12, 2008, or
for stock options granted in prior years, in our
Form 10-K
for the applicable fiscal year. |
|
(2) |
|
Messrs. Bachman, Eichler and ibnAle and Ms. Billat
each held an aggregate of 5,000 unvested restricted stock awards
at December 28, 2007. Mr. Rohrs held an aggregate of
20,625 unvested restricted stock awards at December 28,
2007. Each of these non-employee directors received a restricted
stock award during fiscal 2007 with an initial grant date fair
value of $67,000. |
|
(3) |
|
At December 28, 2007, each of the directors held the
following number of outstanding stock options: Mr. Bachman,
23,125 options; Mr. Eichler, 28,125 options; Mr. ibnAle,
22,500 options; Ms. Billat, 28,125 options; and
Mr. Rohrs, 40,625 options. No stock options were granted to
our directors during fiscal 2007. |
Mr. Granger and Mr. Mezhvinsky, our only employee
directors during fiscal 2007, are not included in the table
above because they received no separate compensation for
services as directors during 2007. Their compensation is
described below.
Stock
Ownership Guidelines
The Board of Directors has adopted stock ownership guidelines
for our directors to more closely align the interests of our
directors with those of our stockholders. The guidelines were
revised in February 2007 to provide that each director should
maintain an investment in our common stock with an aggregate
market value equal to three times the annual cash compensation
amount paid to each such director as retainer for Board
membership (currently a total of $60,000), and that each
director be allowed three years from either the date such
director joined the Companys Board of Directors or until
February 7, 2010, whichever is later, to accumulate such
number of shares of our common stock.
Certain
Relationships and Related Transactions
Relationship with Former Sieger
Stockholders. As consideration for their stock in
Sieger Engineering, Inc., we issued an aggregate of
2,599,393 shares of our common stock to former Sieger
stockholders when Sieger was merged into one of our subsidiaries
in June 2006. Set forth below is a brief description of the
existing agreement between us and former Sieger stockholders.
FP-Ultra Clean, L.L.C., Leonid Mezhvinsky, other former Sieger
stockholders and we have entered into an amended and restated
registration rights agreement. The registration rights agreement
provides that, at the request of FP-Ultra Clean, L.L.C. or
Leonid Mezhvinsky as the agent for the former Sieger
stockholders, we can be required to effect registration
statements, or demand registrations, registering the securities
held by FP-Ultra Clean, L.L.C. and the former Sieger
stockholders. FP-Ultra Clean, L.L.C does not currently own any
of our securities and therefore has no demand registration
right. Leonid Mezhvinsky can request us to register the
securities held by former Sieger stockholders only once through
December 29, 2009. We are required to pay the registration
expenses in connection with each demand registration. We may
decline to honor any of these demand registrations if the
aggregate gross proceeds expected to be received does not equal
or exceed $5 million or if we have effected a demand
registration within the preceding 90 days. If a demand
registration is underwritten and the managing underwriter
advises us that the number of securities offered to the public
needs to be reduced, priority of inclusion in the demand
registration shall be such that first priority shall be given to
the stockholder requesting registration.
In addition to our obligations with respect to demand
registrations, if we propose to register any of our securities,
other than on
Form S-8
or S-4 or
successor forms of these forms, whether or not such registration
is for our own account, former Sieger stockholders will have the
opportunity to participate in such registration. Expenses
relating to these incidental registrations are
required to be paid by us.
If an incidental registration is underwritten and the managing
underwriter advises us that the number of securities offered to
the public needs to be reduced, priority of inclusion shall be
such that first priority shall be given
11
to us and second priority shall be given to former Sieger
stockholders. We and the stockholders selling securities under a
registration statement are required to enter into customary
indemnification and contribution arrangements with respect to
each registration statement.
Transactions with Management and
Directors. The wife of Bruce Weir, our Sr. Vice
President of Engineering, is the sole owner of Acorn Travel,
Inc., our primary travel agency. We incurred fees for
travel-related
services, including the cost of airplane tickets, provided by
Acorn Travel to Ultra Clean for a total of $358,000 in the year
ended December 28, 2007.
The Company leases a facility from an entity controlled by
Leonid Mezhvinsky, one of our directors. In the year ended
December 28, 2007, the Company incurred rent and other
expense resulting from the lease of this facility of $281,000.
In addition, the sister, son and
sister-in-law
of Mr. Mezhvinsky worked for the Company during the year
ended December 28, 2007. These employees were employees of
Sieger prior to the date of acquisition. During the year ended
December 28, 2007, the Company made payments to these
individuals totaling $161,000.
Related Person Transaction Policy. Our Board
of Directors adopted a Related Person Transaction Policy in
February 2007. The policy requires the Board of Directors or the
Nominating and Corporate Governance Committee to review and
approve all related person transactions. Our directors and
officers are required to promptly notify our Chief Compliance
Officer of any transaction which potentially involves a related
person. The Board or the Nominating and Corporate Governance
Committee then considers all relevant facts and circumstances,
including without limitation the commercial reasonableness of
the terms of the transaction, the benefit and perceived benefit,
or lack thereof, to the Company, opportunity costs of alternate
transactions, the materiality and character of the related
persons direct or indirect interest, and the actual or
apparent conflict of interest of the related person. The Board
or the Nominating and Corporate Governance Committee will not
approve or ratify a related person transaction unless it has
determined that, upon consideration of all relevant information,
the transaction is in, or not inconsistent with, the best
interests of the Company and its stockholders.
PROPOSAL 2:
RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Deloitte & Touche
LLP to serve as our independent registered public accounting
firm for the fiscal year ending December 28, 2007. We are
asking you to ratify this appointment, although your
ratification is not required. In the event of a majority vote
against ratification, the Audit Committee may reconsider its
selection. Even if the appointment is ratified, the Audit
Committee may, in its discretion, direct the appointment of a
different independent registered public accounting firm at any
time during the year if the Audit Committee determines that such
a change would be in the Companys and its
stockholders best interests. A representative of
Deloitte & Touche LLP is expected to be present at the
meeting, will have the opportunity to make a statement and will
be available to respond to appropriate questions.
Set forth below are the aggregate fees incurred for the
professional services provided by our independent registered
public accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective
affiliates (collectively, Deloitte &
Touche), in 2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
December 28,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit fees
|
|
$
|
1,751,168
|
|
|
$
|
2,814,374
|
|
Tax fees
|
|
|
|
|
|
|
15,713
|
|
Other fees
|
|
|
|
|
|
|
|
|
Audit fees consist of services rendered to us and our
subsidiaries for the audit of our annual financial statements,
reviews of our quarterly financial statements and audit services
provided in connection with other statutory or regulatory
filings. Audit fees for 2007 include $663,336 for services
provided in connection with Sarbanes-Oxley Section 404
attestation.
12
Tax fees consist of fees billed for professional services for
tax compliance and tax advice. These services consist of
assistance regarding federal, state and international tax
compliance and assistance with the preparation of various tax
returns.
Preapproval
Policy of Audit Committee of Services Performed by Independent
Auditors
The Audit Committees policy requires that the committee
preapprove audit and non-audit services to be provided by the
Companys independent auditors before the auditors are
engaged to render services. The Audit Committee may delegate its
authority to pre-approve services to one or more Audit Committee
members; provided that such designees present any such approvals
to the full Audit Committee at the next Audit Committee meeting.
All services provided by Deloitte & Touche were
pre-approved in accordance with the Audit Committees
pre-approval policies.
Board
Recommendation
Our Board of Directors unanimously recommends that you vote
FOR ratification of the appointment of
Deloitte & Touche LLP as our independent registered
public accounting firm.
EXECUTIVE
OFFICERS
Set forth below is information concerning our executive officers
as of April 25, 2008:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Clarence L. Granger
|
|
|
59
|
|
|
Chairman & Chief Executive Officer
|
David Savage
|
|
|
46
|
|
|
President and Chief Operating Officer
|
Jack Sexton
|
|
|
44
|
|
|
Vice President and Chief Financial Officer
|
Bruce Wier
|
|
|
59
|
|
|
Senior Vice President of Engineering
|
Deborah Hayward
|
|
|
46
|
|
|
Senior Vice President of Sales
|
Sowmya Krishnan, Ph.D.
|
|
|
39
|
|
|
Vice President of Technology and Chief Technology Officer
|
Clarence L. Granger has served as our
Chairman & Chief Executive Officer since October 2006,
as our Chief Executive Officer since November 2002, as Chief
Operating Officer from March 1999 to November 2002 and as a
member of our Board of Directors since May 2002.
Mr. Granger served as our Executive Vice President and
Chief Operating Officer from January 1998 to March 1999 and as
our Executive Vice President of Operations from April 1996 to
January 1998. Prior to joining Ultra Clean in April 1996, he
served as Vice President of Media Operations for Seagate
Technology from 1994 to 1996. Prior to that, Mr. Granger
worked for HMT Technology as Chief Executive Officer from 1993
to 1994, as Chief Operating Officer from 1991 to 1993 and as
President from 1989 to 1994. Prior to that, Mr. Granger
worked for Xidex as Vice President and General Manager, Thin
Film Disk Division, from 1988 to 1989, as Vice President,
Santa Clara Oxide Disk Operations, from 1987 to 1988, as
Vice President, U.S. Tape Operations, from 1986 to 1987 and
as Director of Engineering from 1983 to 1986. Mr. Granger
holds a master of science degree in industrial engineering from
Stanford University and a bachelor of science degree in
industrial engineering from the University of California at
Berkeley.
David Savage has served as our President and Chief
Operating Officer since January 2008. Before joining Ultra
Clean, Mr. Savage was Chief Executive Officer of Litel
Instruments, Inc., a semiconductor optical metrology business
from March 2007 to July 2007. Prior to Litel, Mr. Savage
was the President, Electronics Division of Meggitt USA, Inc.
where he led a division focusing on high performance sensors
from September 2002 to March 2007. Prior to Meggitt,
Mr. Savage founded and served as Chief Executive Officer of
DigMedia, a media delivery business focused on broadband service
providers from October 1998 to August 2002. Mr. Savage
holds a bachelor degree in metallurgical engineering from
Sheffield Hallam University in Sheffield, England. He holds
several patents in nuclear and semiconductor packaging materials.
Jack Sexton has served as our Vice President and Chief
Financial Officer since May 2005. Before joining Ultra Clean,
Mr. Sexton was Corporate Controller of Credence Systems
Corporation, a manufacturer of test equipment
13
and diagnostics and failure analysis products used for testing
semiconductor integrated circuits. He was Controller and Chief
Accounting Officer of NPTest from May 2002 until its sale to
Credence in May 2004. Prior to NPTest, Mr. Sexton was
Worldwide Controller for Schlumberger Resource Management
Services, now Actaris Metering Systems. Mr. Sexton joined
Schlumberger in 1990, prior to which he was a plant operations
controller for Texas Instruments. Mr. Sexton holds two
Bachelor of Science degrees, in finance and accounting from the
Carroll School of Management at Boston College, where he
graduated magna cum laude. He is also a Certified Public
Accountant.
Bruce Wier has served as our Senior Vice President of
Engineering since January 2007 and Vice President of Engineering
since February 2000. Mr. Wier served as our Director of
Design Engineering from July 1997 to February 2000. Prior to
joining Ultra Clean in July 1997, Mr. Wier was the
Engineering Manager for the Oxide Etch Business Unit at Lam
Research from April 1993 to June 1997. Prior to that,
Mr. Wier was the Senior Project Engineering Manager at
Genus from May 1990 to April 1993, the Mechanical Engineering
Manager at Varian Associates from November 1985 to May 1990, and
the Principal Engineer/Project Manager at Eaton Corporation from
February 1981 to November 1985. Mr. Wier is also on the
board of directors of, and is the Chief Financial Officer for,
Acorn Travel, a travel company formed by his wife in 1999.
Mr. Wier holds a bachelor of science degree cum laude
in mechanical engineering from Syracuse University.
Deborah Hayward has served as our Senior Vice President
of Sales since January 2007 and Vice President of Sales since
October 2002. Ms. Hayward served as our Senior Sales
Director from May 2001 to October 2002, as Sales Director from
February 1998 to May 2001 and as a major account manager from
October 1995 to February 1998. Prior to joining Ultra Clean in
1995, she was a customer service manager and account manager at
Brooks Instruments from 1985 to 1995.
Sowmya Krishnan, Ph.D. has served as our Vice
President of Technology since January 2004 and as our Chief
Technology Officer since February 2001. Dr. Krishnan served
as our Director of Technology Development from January 1998 to
January 2001, as Manager of Technology Development from January
1995 to December 1997 and as manager of a joint evaluation
program between Ultra Clean and VLSI Technology from February
1994 to December 1994. Dr. Krishnan holds a master of
science degree in chemical engineering and a doctorate degree in
chemical engineering from Clarkson University.
EXECUTIVE
OFFICER COMPENSATION
Compensation
Discussion and Analysis
Overview
of Compensation Program and Philosophy
Our compensation program is intended to meet three principal
objectives:
(1) attract, reward and retain officers and other key
employees;
(2) motivate key employees to achieve short-term and
long-term corporate goals that enhance stockholder
value; and
(3) promote pay for performance, internal equity and
external competitiveness.
To meet these objectives, we have adopted the following
overriding compensation policies:
|
|
|
|
|
Pay compensation that is competitive with the practices of our
peer group of high technology and electronics manufacturing
services (EMS) companies and industry surveys; and
|
|
|
|
Pay for performance by:
|
|
|
|
|
|
offering cash incentives upon achievement of challenging
performance goals; and
|
|
|
|
providing long-term, significant incentives in the form of stock
options and other equity, in order to retain those individuals
with the leadership abilities necessary for increasing long-term
stockholder value while aligning the interests of our officers
with those of our stockholders.
|
14
Our Compensation Committee (the Committee) considers
these policies in determining the appropriate allocation of
long-term compensation, current cash compensation, annual bonus
compensation and other benefits. Other considerations include
our business objectives, fiduciary and corporate
responsibilities (including internal equity considerations and
affordability), competitive practices and trends, and regulatory
requirements. In determining the particular elements of
compensation that will be used to implement our overall
compensation policies, the Committee takes into consideration a
number of factors related to corporate performance, such as
profitability, return on invested capital, revenue growth, and
operational and financial performance, as well as competitive
practices among our peer group.
Process
for Determining Executive Compensation
The Committee has engaged Radford Surveys + Consulting
(Radford) as its outside compensation consultant to
assist in creating and administering our compensation policies.
This consultant advises the Committee on all of the principal
aspects of executive compensation, including base salaries,
annual and long-term incentives and perquisites, as well as
other management benefits policies. The consultant advises the
Committee on designation of peer group companies and the
Committee approves the final list of peer group companies. The
consultant often attends meetings of the Committee and also
communicates with the Committee outside of meetings. The
consultant reports to the Committee rather than to management,
although the consultant meets with management from time to time
for purposes of gathering information on proposals that
management may make to the Committee. The Committee has the
authority to replace the compensation consultant or hire
additional consultants at any time.
The Committee on occasion meets with Mr. Granger and other
executives to obtain recommendations with respect to Company
compensation programs, practices and packages. Mr. Granger
makes recommendations to the Committee on executive performance,
base salary, bonus targets and equity compensation for the
executive team and other employees. Although the Committee
considers managements recommendations with respect to
executive compensation, the Committee makes all final decisions
on executive compensation matters. The Committee also typically
seeks input from its independent compensation consultant prior
to making any final determinations.
Mr. Granger attends most of the Committees meetings,
but the Committee also holds executive sessions not attended by
any members of management or non-independent directors. The
Committee makes decisions with respect to
Mr. Grangers performance and compensation without him
present. The Committee has the ultimate authority to make
decisions with respect to the compensation of our named
executive officers, but may, if it chooses, delegate some of its
responsibilities to subcommittees. The Committee has not
delegated authority with respect to the compensation of
executive officers. The Committee has delegated to
Mr. Granger the authority to grant stock options to
employees below the level of corporate vice president under
guidelines approved by the Committee and to make salary
adjustments and short-term bonus decisions for employees (other
than certain officers) under guidelines approved by the
Committee.
Elements
of Compensation
The following are the primary elements of our executive
compensation program:
(i) base salary;
(ii) annual performance-based cash incentive opportunities;
(iii) long-term incentives through equity awards; and
(iv) retirement and welfare benefit plans, including a
deferred compensation plan, a 401(k) plan, limited executive
perquisites and other benefit programs available generally to
all employees.
We have selected these elements because each is considered
useful
and/or
necessary to meet one or more of the principal objectives of our
compensation policy. For example, base salary and bonus target
percentage are set with the goal of attracting employees and
adequately compensating and rewarding them for their individual
performance, level of responsibility, time spent with the
Company and the Companys annual financial results, while
our equity programs are geared toward providing incentive and
reward for the achievement of long-term business
15
objectives and retaining key talent. We believe that these
elements of compensation, when combined, are effective, and will
continue to be effective, in achieving the objectives of our
compensation program.
The Committee reviews base salary, cash incentive programs and
long-term incentive programs on at least an annual basis. Other
programs are reviewed from time to time to ensure that benefit
levels remain competitive but are not included in the annual
determination of an executives compensation package. In
setting compensation levels for a particular executive, the
Committee takes into consideration the proposed compensation
package as a whole and each element individually, as well as the
executives past and expected future contributions to our
business.
Base
Salary and Annual Incentive Bonus
Base salaries and cash bonuses are a significant portion of our
executive compensation package. We believe this helps us remain
competitive in attracting and retaining executive talent.
Bonuses also are paid in order to motivate the achievement of
the Companys business goals. The Committee determines each
officers target total annual cash compensation (salary and
bonuses) after reviewing similar compensation information from a
group of 17 companies. The selected peer group includes a
broad range of companies in the high technology and EMS
industries with whom we compete for executive talent. For fiscal
2007, the Committee considered major high technology and EMS
competitors for executive talent and companies of at least a
similar size and scope to us, as measured by market
capitalization, revenue, net income and total shareholder
return. The Committee annually reviews and determines the peer
group companies. The peer group currently consists of the
following companies.
|
|
|
|
|
Advanced Energy Industries
|
|
Excel Technology
|
|
RadiSys
|
Asyst Technologies
|
|
Intevac
|
|
SMTC
|
Brooks Automation
|
|
Mattson Technology
|
|
Suntron
|
CTS
|
|
Merix
|
|
TTM Technologies
|
DDi Corp.
|
|
MKS Instruments
|
|
Zygo
|
Entegris
|
|
Multi-Fineline
|
|
|
Data on the compensation practices of this peer group generally
is gathered through searches of publicly available information,
including publicly available databases. Because publicly
available information does not typically include information
regarding target cash compensation, we also rely upon a
compensation survey prepared by Radford, the Committees
outside consultant, to benchmark target cash compensation levels
against the above peer group. Peer group data is gathered with
respect to base salary, bonus targets, equity awards and
perquisites, as well as other management benefits policies .
Our goal is to target total cash compensation (including base
pay and annual bonus) between the 25th and
50th percentile among the peer group. However, in
determining base salary, the Committee also considers other
factors such as job performance, skill set, prior experience,
the executives time in his or her position
and/or with
the Company, internal consistency regarding pay levels for
similar positions or skill levels within the Company, external
pressures to attract and retain talent, and market conditions
generally. Positioning base pay below the 50th percentile
of peer companies combined with targeting total compensation
(including equity) at or above the 50th percentile, and
therefore providing higher incentive compensation opportunity,
promotes pay for performance while controlling fixed costs,
rewards exceptional goal achievement and allows total
compensation to be more competitive as a whole, while taking
into account the cyclical nature of our business.
Base Salaries. For fiscal 2007,
Mr. Granger made recommendations to the Committee with
respect to proposed salaries for each of the named executive
officers other than himself based on the performance rating he
assigned to each executive. The Committee reviewed
Mr. Grangers recommendations in the context of peer
group data, industry surveys and our compensation philosophy and
set salaries that were appropriate to achieve the desired market
positioning for each executive. For fiscal 2007,
Mr. Grangers salary was increased approximately 6% to
$370,000, based on the Committees assessment of
Mr. Grangers quality of performance, his
organizational development, our financial performance for fiscal
2006 and over the 5 year preceding and including fiscal
2006, market share gains for the Company and customer
satisfaction, as well as the desired positioning of our
compensation level relative to the peer group. The Committee
considered the fact that Mr. Granger significantly and
directly influences our overall performance. The Committee
generally reviews salary levels each year.
16
Incentive Bonuses. Our executive officers
participate in our Management Bonus Plan. In fiscal 2007, as
with base salary, Mr. Granger made recommendations to the
Committee with respect to proposed bonus targets for each of the
named executive officers other than himself. The Committee then
considered Mr. Grangers recommendations, peer group
and industry data and determined bonus targets at the medial
level of the peer group. As with base salary, in setting
Mr. Grangers target bonus, the Committee reviewed
Mr. Grangers performance, our financial results and
market competitive data.
Payment of bonus amounts, and therefore total cash compensation,
depends on the achievement of specified corporate performance
goals. For fiscal 2007, our corporate performance goal was
operating profit as a percent of revenue. Generally bonuses are
paid under our Management Bonus Plan only if the performance
goals that the Committee sets at the beginning of the fiscal
year are achieved, although the Committee retains the ability to
revise performance measures during the year or to adjust bonuses
based on extraordinary events or individual performance. The
Committee set a range of goals which would result in funding of
our bonus pool. For fiscal 2007, the Committee approved a
performance bonus pool equal to 32% of target amounts based on
the Companys financial results for 2007 compared to the
goals set at the beginning of the year based on the following
payout grid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Return on Sales
|
|
|
1.0%
|
|
|
|
2.0%
|
|
|
|
3.0%
|
|
|
|
4.0%
|
|
|
|
5.0%
|
|
|
|
6.0%
|
|
|
|
7.0%
|
|
|
|
8.0%
|
|
|
|
9.0%
|
|
|
|
10.0%
|
|
|
|
11.0%
|
|
% of Profit for Bonus Pool
|
|
|
0.0%
|
|
|
|
0.0%
|
|
|
|
0.0%
|
|
|
|
1.0%
|
|
|
|
2.0%
|
|
|
|
2.5%
|
|
|
|
3.0%
|
|
|
|
4.5%
|
|
|
|
5.5%
|
|
|
|
6.5%
|
|
|
|
7.5%
|
|
Individual bonus amounts were then distributed to those
participating in the Management Bonus Plan based on individual
target bonuses multiplied by 32%. We intend the performance
goals to be challenging and to reflect strong corporate
performance. The maximum allowable bonus under the plan is two
times an employees target annual bonus. To help achieve
our goal of retaining key talent, an executive must remain an
employee through the time the bonus is paid in order to be
eligible for any bonus under the Management Bonus Plan.
Over time, the Committee intends to target total cash
compensation to between the 25th and 50th percentile,
which the Committee feels is an appropriate range, when coupled
with our long-term incentive package, to enable us to attract
and retain key personnel and to motivate our executives to meet
our business goals.
Long-Term
Incentive Compensation
Our equity compensation program is intended to align the
interests of our officers with those of our stockholders by
creating an incentive for our officers to maximize stockholder
value. The equity compensation program also is designed to
encourage our officers to remain employed with us in a very
competitive labor market. We target the initial grant date value
of equity awards to be in the 50th to 75th percentile
of the peer group described above, based on information gathered
from publicly available sources supplemented by survey data
provided by Radford. Our philosophy, as stated earlier is to
target lower than median base salaries and median target bonus
rates compared to our peer group, resulting in lower than median
total cash compensation, but then offset such lower cash
compensation by targeting equity awards at the higher percentile
of the peer group. This philosophy is consistent with our pay
for performance practice and focuses total executive
compensation on the creation of long-term stockholder value.
Types of Equity Awards. We provide long-term
equity incentive compensation through awards of restricted stock
units and/or
stock options. Historically, our primary equity compensation
tool has been stock options which vest over a period of multiple
years of service (generally four years). During fiscal 2007, our
executive officers received only stock options. All option
grants have a per share exercise price equal to the fair market
value of our common stock on the grant date (which is defined
under the terms of our plan to be the closing price on the day
preceding the grant date). Stock options were considered an
effective tool for meeting our compensation goal of increasing
long-term stockholder value by tying the value of the stock
options directly to the performance of our stock price in the
future.
The Committee regularly monitors the changes in the business
environment in which we operate and periodically reviews changes
to our equity compensation program to help us meet our goals,
including achieving long-term stockholder value. In 2008, we
have begun to grant restricted stock units in lieu of (or in
conjunction with) stock options. In particular, we have granted,
and expect to grant in the future, both time-based and
performance-based restricted stock units to our executive
officers. The Committee believes this combination provides a
balance between awards that provide high incentive value (now in
the form of performance units, which
17
will only vest if we meet performance criteria combined with
service requirements) and awards that provide high retention
value (in the form of time-based restricted stock units, which
will have at least some value over time while imposing continued
service requirements, and allowing time-based vesting of the
performance units earned). We believe restricted stock units are
effective in retaining and motivating employees because they
provide a predictable, tangible value to employees while also
serving as an incentive to increase the value of our stock.
Restricted stock units are also an efficient way for us to
reduce the effects of equity awards on stockholder dilution and
to use our equity plan share reserve, because fewer performance
shares than stock options are needed to provide the same
retention and incentive value. In the near future, while the
Committee expects most of our grants to executives to be in the
form of restricted stock units and performance units, we may
also grant stock options from time to time.
2007 Awards. The Committee further believes
that our ability to attract, retain and motivate key executives
is critical to achieving strategic goals, which in turn helps
build long-term value creation. The number of equity awards the
Committee grants to each officer is determined based on a
variety of factors, including market data collected regarding
the equity grant ranges for the peer companies listed above,
industry surveys and our goal to award grants between the
50th to 75th percentile of this group, as well as the
performance rating each executive is given by Mr. Granger.
Mr. Granger assigns a performance rating to each member of
the executive team that reports to him based on a number of
factors, including the individuals accomplishments during
the prior fiscal year and over the course of his or her service,
how effectively the individual reflects Company values, and the
feedback regarding the executive from other employees who have
an interest in or are affected by the executives job
performance.
For fiscal 2007, the Committee relied upon the above factors to
approve equity awards for the named executive officers. In
determining the grant to Mr. Granger, the Committee
considered Mr. Grangers performance, peer group and
market pay data provided by its compensation consultant and the
strong belief that the Chief Executive Officer significantly and
directly influences our overall performance. The option awards
during fiscal 2007 are set forth under Grants of
Plan-Based Awards below.
Grant Practices. We have implemented
procedures to regularize our equity award grant process, such as
making new hire grants and annual executive grants on the same
day each month. The Committee has not granted, nor does it
intend in the future to grant, equity compensation awards to
executives in anticipation of the release of material nonpublic
information that is likely to result in changes to the price of
our common stock, such as a significant positive or negative
earnings announcement. Similarly, the Committee has not timed,
nor does it intend in the future to time, the release of
material nonpublic information based on equity award grant
dates. Because our equity awards typically vest over multiple
years, we believe recipients are motivated to see our stock
price grow in the long-term rather than benefit from an
immediate but short-term increase in the price of our stock
following a grant.
Other
Benefit Plans
Deferred Compensation. We maintain a
non-qualified deferred compensation plan, which allows eligible
employees, including executive officers and directors, to
voluntarily defer receipt of the portion of
his/her
salary above a specified amount and all or a portion of a bonus
payment until the date or dates elected by the participant,
thereby allowing the participating employee to defer taxation on
such amounts. This plan gives highly compensated employees the
opportunity to defer more compensation than they would otherwise
be permitted to defer under a tax-qualified retirement plan,
such as our 401(k) plan. We believe that deferred compensation
is a competitive practice to enable us to attract and retain top
talent. We do not make matching or other employer contributions
to the deferred compensation plan because we believe the
deferral opportunity is enough of a benefit on its own.
Executive Perquisites. In addition to health
care coverage that is generally available to our other
employees, our executive officers are eligible for annual
physical examinations more extensive than under the
Companys standard plans. Mr. Granger and employees in
sales and marketing also receive a car allowance.
Other Benefits. We also offer a number of
other benefits to the executive officers pursuant to benefit
programs that provide for broad-based employee participation.
For example, our retirement plan is a tax-qualified 401(k) plan,
which is a broad-based employee plan. Under the 401(k) plan, all
participating employees (including executive officers) are
eligible to receive limited matching contributions that are
subject to vesting over time.
18
The main objectives of our benefits programs are to give our
employees access to quality healthcare, financial protection
from unforeseen events, assistance in achieving retirement
financial goals, enhanced health and productivity and to provide
support for global workforce mobility, in full compliance with
applicable legal requirements. These generally available
benefits typically do not specifically factor into decisions
regarding an individual executives total compensation or
equity award package.
Employment
and Separation Agreements and Severance Policy
Our employment and separation agreements, together with our
recently adopted Severance Policy for executive officers who do
not otherwise have severance protection in the form of
employment agreement or offer letter, are described in this
proxy below. We believe the severance benefits under these
agreements or policies are reasonable in amount, and provide a
protection to key executive officers who would be likely to
receive similar benefits from our competitors. The Committee
reviews the potential costs and triggering events of employment
and severance agreements and policies before approving them and
will continue to consider appropriate and reasonable measures to
encourage retention.
Accounting
and Tax Considerations
In designing its compensation programs, the Committee generally
considers the accounting and tax effects as well as direct
costs. For example, we intend to limit the accounting expense
for our equity compensation programs in an amount determined by
the Committee from time to time. When determining how to
apportion between differing elements of compensation, the goal
is to meet our compensation objectives while maintaining cost
neutrality. For example, if we increase benefits under one
program resulting in higher compensation expense, we may seek to
decrease costs under another program based on our determination
of the affordability level. We recognize a charge to earnings
for accounting purposes when equity awards are granted. The
Committee considers the impact to dilution and overhang when
making decisions pertaining to equity instruments.
We do not require executive compensation to be tax deductible
for the Company, but instead balance the cost and benefits of
tax deductibility to comply with our executive compensation
goals.
Report of
the Compensation Committee
The Compensation Committee of the Board of Directors of Ultra
Clean has reviewed and discussed the Compensation Discussion and
Analysis, which appears in this proxy statement, with the
management of Ultra Clean. Based on this review and discussion,
the Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in
Ultra Cleans proxy statement.
Members
of the Compensation Committee
Brian R. Bachman, Chairman
Susan H. Billat
David T. ibnAle
Thomas M. Rohrs
19
Summary
Compensation Table
The following table shows compensation information for fiscal
2007 and fiscal 2006 for our principal executive officer, our
principal financial officer and our other three most highly
compensated executive officers as of December 28, 2007
(collectively, our named executive officers).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)
|
|
|
Clarence L. Granger
|
|
|
2007
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
545,041
|
|
|
|
83,459
|
|
|
|
|
|
|
|
23,016
|
(5)
|
|
|
1,011,516
|
|
Chief Executive Officer
|
|
|
2006
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
412,432
|
|
|
|
157,500
|
|
|
|
|
|
|
|
20,794
|
|
|
|
940,726
|
|
Leonid Mezhvinsky
|
|
|
2007
|
|
|
|
297,500
|
|
|
|
|
|
|
|
|
|
|
|
373,093
|
|
|
|
52,726
|
|
|
|
|
|
|
|
1,030
|
|
|
|
724,348
|
|
Former President
|
|
|
2006
|
|
|
|
148,750
|
(9)
|
|
|
|
|
|
|
|
|
|
|
115,754
|
|
|
|
66,938
|
(9)
|
|
|
|
|
|
|
1,647
|
|
|
|
333,089
|
|
Deborah E. Hayward
|
|
|
2007
|
|
|
|
175,666
|
|
|
|
|
|
|
|
|
|
|
|
114,919
|
|
|
|
103,080
|
|
|
|
|
|
|
|
10,319
|
(6)
|
|
|
403,984
|
|
Senior Vice President, Sales
|
|
|
2006
|
|
|
|
166,400
|
|
|
|
|
|
|
|
|
|
|
|
76,205
|
|
|
|
148,433
|
|
|
|
|
|
|
|
13,005
|
|
|
|
404,042
|
|
Bruce C. Wier
|
|
|
2007
|
|
|
|
217,549
|
|
|
|
|
|
|
|
|
|
|
|
76,768
|
|
|
|
25,249
|
|
|
|
|
|
|
|
15,741
|
(7)
|
|
|
335,307
|
|
Senior Vice President, Engineering
|
|
|
2006
|
|
|
|
210,088
|
|
|
|
|
|
|
|
|
|
|
|
40,897
|
|
|
|
52,200
|
|
|
|
|
|
|
|
11,792
|
|
|
|
314,977]
|
|
John K. Sexton
|
|
|
2007
|
|
|
|
222,750
|
|
|
|
|
|
|
|
|
|
|
|
219,524
|
|
|
|
32,699
|
|
|
|
|
|
|
|
2,970
|
(8)
|
|
|
477,943
|
|
Chief Financial Officer
|
|
|
2006
|
|
|
|
208,333
|
|
|
|
|
|
|
|
|
|
|
|
169,982
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
453,315
|
|
|
|
|
(1) |
|
Amounts shown do not reflect compensation actually received by
the named executive officer. Instead, the amounts shown are the
compensation costs recognized by the Company in fiscal 2007 and
2006 for option awards as determined pursuant to FAS 123R.
These compensation costs reflect option awards granted in and
prior to fiscal 2007. The assumptions used to calculate the
value of option awards are set forth under Note 1 of the
Notes to Consolidated Financial Statements included in the
Companys Annual Report on
Form 10-K
for fiscal 2007 filed with the SEC on March 12, 2007. |
|
(2) |
|
Amounts consist of bonuses, and for Ms. Hayward, sales
commissions earned for services rendered in fiscal 2007 and 2006. |
|
(3) |
|
Amounts consist of above-market or preferential earnings during
fiscal 2007 and 2006 on compensation that was deferred in or
prior to fiscal 2007 under the Companys Executive Deferred
Compensation Plan (the EDCP). |
|
(4) |
|
Unless otherwise indicated, (a) the amounts in this column
consist of matching contributions made by the Company under its
tax-qualified 401(k) Plan, which provides for broad-based
employee participation, and (b) no named executive officer
other than Messrs. Granger, Sexton and Wier and
Ms. Hayward individually received perquisites or other
personal benefits with a value that exceeded $2,000 in the
aggregate. |
|
(5) |
|
This amount consists of (a) matching contribution of
$12,466 and $13,966 under the tax-qualified 401(k) Plan;
(b) payment on behalf of Mr. Granger of $7,141 and
$1,740 in term life insurance premiums, and (c) $3,409 and
$4,608 in car allowance, in each case, for 2007 and 2006,
respectively. |
|
(6) |
|
This amount consists of (a) matching contribution of $4,319
and $6,505 under the tax-qualified 401(k) Plan and
(b) $6,000 and$6,500 in car allowance, in each case, for
2007 and 2006, respectively. |
|
(7) |
|
This amount consists of (a) matching contribution of $9,015
and $9,450 under the tax-qualified 401(k) Plan, (b) payment
on behalf of Mr. Wier of $4,117 and $2,342 in term life
insurance premiums and (c ) compensation for
Mr. Wiers contribution to patent awards of $2,610 and
$0, in each case, for 2007 and 2006, respectively . |
|
(8) |
|
This amount consists of $2,970 in term life insurance premiums. |
|
(9) |
|
These amounts reflect compensation for Mr. Mezhvinsky from
June 20, 2006, the date he accepted the position as
President. |
20
Grants of
Plan-Based Awards
The following table shows all plan-based awards granted to the
named executive officers during fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards:
|
|
|
|
Closing
|
|
Grant Date
|
|
|
|
|
Cash
|
|
Shares
|
|
Exercise
|
|
Price on
|
|
Fair Value
|
|
|
Grant
|
|
Bonus
|
|
Underlying
|
|
Price of
|
|
Grant
|
|
of Option
|
Name and Position
|
|
Date
|
|
Target(1)
|
|
Options
|
|
Options
|
|
Date(2)
|
|
Awards
|
|
Clarence L. Granger
Chief Executive Officer
|
|
|
4/27/2007
|
|
|
$
|
259,000
|
|
|
|
80,000
|
|
|
$
|
14.90
|
|
|
$
|
15.10
|
|
|
$
|
585,784
|
|
Leonid Mezhvinsky
President
|
|
|
4/27/2007
|
|
|
$
|
163,625
|
|
|
|
47,000
|
|
|
$
|
14.90
|
|
|
$
|
15.10
|
|
|
$
|
344,148
|
|
Deborah Hayward
Senior Vice President, Sales
|
|
|
4/27/2007
|
|
|
$
|
119,500
|
|
|
|
30,000
|
|
|
$
|
14.90
|
|
|
$
|
15.10
|
|
|
$
|
219,669
|
|
Bruce Wier
Senior Vice President, Engineering
|
|
|
4/27/2007
|
|
|
$
|
78,355
|
|
|
|
25,000
|
|
|
$
|
14.90
|
|
|
$
|
15.10
|
|
|
$
|
183,058
|
|
John K. Sexton
Chief Financial Officer
|
|
|
4/27/2007
|
|
|
|
101,475
|
|
|
|
30,000
|
|
|
$
|
14.90
|
|
|
$
|
15.10
|
|
|
$
|
219,669
|
|
|
|
|
(1) |
|
This reflects target amounts under our Management Bonus Plan
described in the Compensation Discussion and Analysis above.
Actual amounts paid for fiscal 2007 are set forth in the Summary
Compensation Table above. |
|
(2) |
|
Under the terms of our stock incentive plan, fair market value
is defined as the closing price on the day preceding the grant
date. |
Outstanding
Equity Awards
The following table shows all outstanding equity awards held by
the named executive officers at the end of fiscal 2007, which
ended on December 28, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
Options (#)
|
|
Options (#)
|
|
Exercise
|
|
Expiration
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price ($)
|
|
Date
|
|
Clarence L. Granger
|
|
|
194,157
|
|
|
|
|
|
|
$
|
1.00
|
|
|
|
2/21/2013
|
|
|
|
|
258,333
|
|
|
|
141,667
|
(1)
|
|
$
|
6.55
|
|
|
|
5/9/2015
|
|
|
|
|
39,583
|
|
|
|
60,417
|
(2)
|
|
$
|
8.61
|
|
|
|
5/18/2016
|
|
|
|
|
|
|
|
|
80,000
|
(3)
|
|
$
|
14.90
|
|
|
|
4/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leonid Mezhvinsky
|
|
|
33,562
|
|
|
|
203,438
|
(4)
|
|
$
|
8.02
|
|
|
|
7/28/2016
|
|
|
|
|
|
|
|
|
47,000
|
(5)
|
|
$
|
14.90
|
|
|
|
4/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deborah E. Hayward
|
|
|
36,250
|
|
|
|
|
|
|
$
|
1.00
|
|
|
|
2/21/2013
|
|
|
|
|
16,250
|
|
|
|
|
|
|
$
|
1.00
|
|
|
|
7/29/2013
|
|
|
|
|
29,296
|
|
|
|
1,954
|
(6)
|
|
$
|
7.00
|
|
|
|
3/24/2014
|
|
|
|
|
16,145
|
|
|
|
8,855
|
(1)
|
|
$
|
6.55
|
|
|
|
5/9/2015
|
|
|
|
|
7,916
|
|
|
|
12,084
|
(2)
|
|
$
|
8.61
|
|
|
|
5/18/2016
|
|
|
|
|
|
|
|
|
30,000
|
(3)
|
|
$
|
14.90
|
|
|
|
4/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce C. Wier
|
|
|
73,000
|
|
|
|
|
|
|
$
|
1.00
|
|
|
|
2/21/2013
|
|
|
|
|
4,687
|
|
|
|
313
|
(6)
|
|
$
|
7.00
|
|
|
|
3/24/2014
|
|
|
|
|
16,145
|
|
|
|
8,855
|
(1)
|
|
$
|
6.55
|
|
|
|
5/9/2015
|
|
|
|
|
7,916
|
|
|
|
12,084
|
(2)
|
|
$
|
8.61
|
|
|
|
5/18/2016
|
|
|
|
|
|
|
|
|
25,000
|
(3)
|
|
$
|
14.90
|
|
|
|
4/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John K. Sexton
|
|
|
53,125
|
|
|
|
61,875
|
(7)
|
|
$
|
7.05
|
|
|
|
6/20/2015
|
|
|
|
|
11,875
|
|
|
|
18,125
|
(2)
|
|
$
|
8.61
|
|
|
|
5/18/2016
|
|
|
|
|
|
|
|
|
30,000
|
(3)
|
|
$
|
14.90
|
|
|
|
4/27/2017
|
|
|
|
|
(1) |
|
1/17 of unexercisable shares become exercisable on 1/9/2008 and
each month thereafter. |
21
|
|
|
(2) |
|
1/29 of unexercisable shares become exercisable on 1/18/2008 and
each month thereafter. |
|
(3) |
|
25% of unexercisable shares become exercisable on 4/27/2008 and
1/48 of shares each month thereafter. |
|
(4) |
|
50,000 of unexercisable shares become exercisable on 12/31/07
and the balance of unexercisable shares expire on 12/31/07. |
|
(5) |
|
100% of unexercisable shares expire on 12/31/07. |
|
(6) |
|
1/3 of unexercisable shares become exercisable on 1/24/2008 and
each month thereafter. |
|
(7) |
|
1/18 of unexercisable shares become exercisable on 1/20/2008 and
each month thereafter. |
Option
Exercises and Stock Vested
The following table shows all stock options exercised and value
realized upon exercise, and all stock awards vested and value
realized upon vesting, by the named executive officers during
fiscal 2007, which ended on December 28, 2007.
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
Clarence L. Granger
|
|
|
104,000
|
|
|
$
|
1,409,360
|
|
Leonid Mezhvinsky
|
|
|
78,000
|
|
|
$
|
492,016
|
|
Deborah E. Hayward
|
|
|
10,000
|
|
|
$
|
167,500
|
|
Bruce C. Wier
|
|
|
10,500
|
|
|
$
|
148,575
|
|
John K. Sexton
|
|
|
40,000
|
|
|
$
|
276,410
|
|
|
|
|
(1) |
|
The value realized equals the difference between the option
exercise price and the fair market value of the Companys
common stock on the date of exercise, multiplied by the number
of shares for which the option was exercised. |
Nonqualified
Deferred Compensation
We maintain a non-qualified deferred compensation plan, the
Ultra Clean Holdings, Inc. 2004 Executive Deferred Compensation
Plan (the EDCP), which allows eligible employees,
including executive officers, and directors to voluntarily defer
receipt of the portion of
his/her
salary above a specified amount and all or a portion of a bonus
payment until the date or dates elected by the participant,
thereby allowing the participating employee to defer taxation on
such amounts. Amounts credited to the EDCP consist only of cash
compensation that has been earned and payment of which has been
deferred by the participant. The amounts deferred under the EDCP
are credited with realized gains on investments and interest at
market rates on cash balances. We do not make matching or other
employer contributions to the EDCP.
The following table shows certain information for the named
executive officers under the EDCP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Earnings in
|
|
|
Withdrawals/
|
|
|
Balance at Last
|
|
|
|
Last Fiscal Year
|
|
|
Last Fiscal Year
|
|
|
Last Fiscal Year
|
|
|
Distributions
|
|
|
Fiscal Year End
|
|
Name
|
|
($)(1)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
Clarence L. Granger
|
|
|
8,075
|
|
|
|
|
|
|
|
10,989
|
|
|
|
|
|
|
|
199,907
|
|
Clarence L. Granger(3)
|
|
|
|
|
|
|
|
|
|
|
5,360
|
|
|
|
5,360
|
|
|
|
265,000
|
|
Leonid Mezhvinsky
|
|
|
56,779
|
|
|
|
|
|
|
|
(1,955
|
)
|
|
|
|
|
|
|
54,824
|
|
Deborah E. Hayward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce C. Wier
|
|
|
16,450
|
|
|
|
|
|
|
|
3,454
|
|
|
|
|
|
|
|
60,542
|
|
John K. Sexton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consists of salary reported in the Summary Compensation Table
under the columns entitled Salary. |
|
(2) |
|
Includes realized and unrealized gains and interest earned
during the 2007 fiscal year. |
|
(3) |
|
Amount deferred pursuant to Mr. Grangers employment
agreement described below. |
22
Employment
and Separation Agreements and Severance Policy
Employment Agreement with Clarence L.
Granger. We entered into an employment agreement
with Clarence L. Granger dated November 15, 2002, as
amended on March 2, 2004 and May 9, 2005. In October
2006, Mr. Granger agreed to serve as our Chairman and Chief
Executive Officer. His amended employment agreement has a term
through March 2009 and provides for a base salary of $350,000.
Pursuant to his original employment agreement, Mr. Granger
received a signing bonus, of which approximately $74,000 was
paid in cash, $88,000 was paid in cash but used to purchase our
common stock, and approximately $265,000 was placed in a
deferred compensation arrangement payable after seven years (or
earlier in the discretion of our Board of Directors). Under this
deferred compensation arrangement, we agreed to pay interest of
2.7% per year on the deferred amount, payable on June 30 and
December 31 of each year. Under his employment agreement,
Mr. Granger is eligible to receive an annual bonus of up to
$175,000, subject to the satisfaction of performance goals as
may be set by our Board of Directors. In the event that
Mr. Granger is terminated by us without cause at any time
or Mr. Granger resigns within six months after a change of
control with good reason, he is entitled to continue to receive
12 months of base salary (offset by any income earned by
him during such 12 months), health coverage and accelerated
vesting of stock options. If Mr. Granger had been
terminated on December 28, 2007, he would have received
$370,000 in severance, a value of approximately $11,000 in
health benefits and accelerated vesting of 158,333 options which
had an aggregate intrinsic value (based on our stock price as of
December 28, 2007, less the option exercise price) of
approximately $646,000.
Offer Letter to David Savage. Mr. Savage
started his employment with us on January 8, 2008 and so is
not included in the Summary Compensation Table above. We entered
into an Offer Letter dated December 7, 2007 with
Mr. Savage to serve as the Companys President and
Chief Operating Officer. We agreed to pay Mr. Savage an
annual base salary of $325,000, with an annual target bonus
equal to 60% of his base salary, and to grant him an option to
purchase 50,000 shares of our common stock, and an award of
50,000 restricted stock units, subject to the terms and
conditions of the Companys Amended and Restated Stock
Incentive Plan. We have agreed to reimburse Mr. Savage for
certain relocation expenses. In the event that Mr. Savage
is terminated by us without cause, or he resigns within
6 months after a change of control with good reason and he
signs a release of claims, he is entitled to receive
12 months of base salary, his earned but unpaid bonus,
health benefits under the Companys health plan for
12 months (or, if earlier, until he becomes eligible for
group health coverage with another employer) and 12 months
of accelerated vesting of his stock options and restricted stock
units.
Separation Agreement with Leonid
Mezhvinsky. We entered into a Separation
Agreement with Leonid Mezhvinsky dated December 31, 2007 in
connection with Mr. Mezhvinskys departure as our
executive officer. Mr. Mezhvinsky remains a member of our
board of directors. Pursuant to the agreement, we agreed to pay
Mr. Mezhvinskys earned but unpaid bonus for fiscal
2007. Mr. Mezhvinsky was entitled to the immediate vesting
of 50,000 stock options granted to him previously, as well
health benefits under the Companys health plan for
12 months (or, if earlier, until he becomes eligible for
group health coverage with another employer).
Severance Policy for Executive Officers. In
February 2008, we adopted a severance policy for executive
officers of the Company who do not otherwise have severance
protection. In the event that the executive officer is
terminated without cause and signs a release of claims, the
executive would receive 75% of the executives then current
salary, 50% of the executives average annual cash bonus
and cash incentive compensation as determined by us over the
prior three years and health benefits under the Companys
health plan for 9 months (or, if earlier, until he becomes
eligible for group health coverage with another employer). The
Company may revise or terminate this policy at any time prior to
a change in control.
Compensation
Committee Interlocks and Insider Participation
No member of our Compensation Committee is or was an officer or
employee of the Company during 2007. None of our executive
officers serves or served during 2007 as a member of the board
of directors or compensation committee of any entity that has
one or more executive officers serving as a member of our Board
of Directors or its Compensation Committee. Additional
information concerning transactions between us and entities
affiliated with members of our Compensation Committee is
included in this proxy statement under the caption Certain
Relationships and Related Transactions.
23
REPORT OF
THE AUDIT COMMITTEE
The following Report of the Audit Committee of the Board of
Directors shall not be deemed to be soliciting
material or to be filed with the SEC nor shall
this information be incorporated by reference into any future
filing under the Securities Act of 1933 (the Securities
Act) or the Securities Exchange Act of 1934 (the
Exchange Act), each as amended, except to the extent
that Ultra Clean specifically incorporates it by reference into
such filing.
The Audit Committee (the Committee) serves in an
oversight capacity and is not intended to be part of Ultra
Cleans operational or managerial decision-making process.
Ultra Cleans management is responsible for preparing the
consolidated financial statements, and its independent
registered public accounting firm, Deloitte & Touche
LLP, is responsible for auditing those statements. The
Committees principal purpose is to monitor these processes.
The Committee is currently composed of three directors, each of
whom meets the requirements of applicable NASDAQ Stock Market
and Securities and Exchange Commission rules for independence.
The key responsibilities of our committee are set forth in our
charter, which is available on our website at
www.uct.com/investors/governance.html.
The Committee regularly met and held discussions with management
and Deloitte & Touche LLP in 2007. Management
represented to us that Ultra Cleans consolidated financial
statements were prepared in accordance with generally accepted
accounting principles applied on a consistent basis, and we have
reviewed and discussed the quarterly and annual earnings press
releases and consolidated financial statements with management
and Deloitte & Touche LLP. We also discussed with
Deloitte & Touche LLP matters required to be discussed
by Statement on Auditing Standards No. 61 (Communication
With Audit Committees), as amended, and
rule 2-07
(communications with Audit Committee) of
Regulation S-X.
The Committee has discussed with Deloitte & Touche LLP
its independence from Ultra Clean and its management, including
the matters, if any, in the written disclosures required by
Independence Standards Board Standard No. 1 (Independence
Discussions With Audit Committees). The Committee also
considered whether Deloitte & Touche LLPs
provision of audit and non-audit services to Ultra Clean by
Deloitte & Touche LLP is compatible with maintaining
the independence of Deloitte & Touche from the Company.
The Committee discussed with the Companys internal and
independent auditors the overall scope and plans for their
respective audits. The Committee meets with the internal and
independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of
the Companys internal controls and the overall quality of
the Companys financial reporting. To avoid certain
potential conflicts of interest, the law prohibits a publicly
traded company from obtaining certain non-audit services from
its independent audit firm. The Company obtains these services
from other service providers as needed.
Based on the reviews and discussions referred to above, we
recommended to our Board of Directors, and our Board of
Directors approved, that the audited financial statements be
included in Ultra Cleans Annual Report on
Form 10-K
for the year ended December 28, 2007, for filing with the
Securities and Exchange Commission.
We have appointed Deloitte & Touche LLP as Ultra
Cleans independent auditors for 2008.
Members
of the Audit Committee
Kevin C. Eichler, Chairman
Brian R. Bachman
Susan H. Billat
The foregoing report has been furnished by the Audit Committee
of the Board of Directors of Ultra Clean Holdings, Inc.
24
OTHER
MATTERS
We know of no other matters to be submitted to the meeting. If
any other matters properly come before the meetings, it is the
intention of the persons named in the enclosed form of proxy to
vote the shares they represent as the Company or the
Companys management may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
Jack Sexton
Vice President, Chief Financial Officer and Secretary
Dated: April 25, 2008
25
ULTRA CLEAN HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, June 5, 2008
2:00 p.m. Pacific Daylight Time
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, CA 94025
|
|
|
|
|
|
|
|
|
|
Ultra Clean Holdings, Inc.
150 Independence Drive
Menlo Park, CA 94025
|
|
|
|
proxy |
|
This proxy is solicited by the Board of Directors for use at the Annual Meeting on Thursday, June
5, 2008.
If
no choice is specified, the proxy will be voted FOR Items 1 and 2.
By signing the proxy, you revoke all prior proxies and appoint Clarence L. Granger and Jack Sexton,
and each of them acting in the absence of the other, with full power of substitution, to vote your
shares on the matters shown on the reverse side and any other matters which may come before the
Annual Meeting and all adjournments.
See reverse for voting instructions.
ò Please
detach here ò
|
|
|
|
|
|
|
|
The Board of Directors Recommends a Vote FOR Items 1 and 2. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Election of directors:
|
|
01 Brian R. Bachman
|
|
04 Clarence L. Granger
|
|
o
|
|
Vote FOR
|
|
o
|
|
Vote WITHHELD |
|
|
|
|
02 Susan H. Billat
|
|
05 David ibnAle
|
|
|
|
all nominees
|
|
|
|
from all nominees |
|
|
|
|
03 Kevin C. Eichler
|
|
06 Leonid Mezhvinsky
|
|
|
|
(except as marked) |
|
|
|
|
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
|
|
|
|
|
|
|
|
|
|
|
|
|
2. Ratification of the Appointment of Deloitte & Touche LLP as the Independent
Registered Public Accounting Firm of Ultra Clean Holdings, Inc.
|
|
o
|
|
For
|
|
o
|
|
Against
|
|
o
|
|
Abstain |
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED
FOR EACH PROPOSAL.
|
|
|
|
|
|
|
|
|
|
|
Address Change? Mark Box
|
|
o
|
|
Indicate changes below:
|
|
|
|
Date |
|
|
|
|
|
|
|
|
|
|
|
|
Signature(s) in Box
Please sign exactly as your name(s) appears on Proxy. If held
in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations
should provide full name of corporation and title of authorized
officer signing the proxy.