Oclaro, Inc.
OCLARO, INC. (Form: DEF 14A, Received: 09/22/2014 15:12:33)

Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.     )  
 

Filed by the Registrant   x                              Filed by a Party other than the Registrant   ¨
Check the appropriate box:
¨
 
Preliminary Proxy Statement
 
 
¨
 
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
 
 
x
 
Definitive Proxy Statement
 
 
¨
 
Definitive Additional Materials
 
 
¨
 
Soliciting Material Pursuant to §240.14a-12
Oclaro, Inc.
(Name of Registrant as Specified In Its Charter)

n/a
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x
 
No fee required.
 
 
¨
 
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
     
 
 
¨
 
Fee paid previously with preliminary materials.
 
 
¨
 
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:
     
 




Table of Contents

OCLARO, INC.
2560 Junction Avenue
San Jose, California 95134
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 14, 2014
To the Stockholders of Oclaro, Inc.:
The annual meeting of stockholders of Oclaro, Inc., a Delaware corporation (Oclaro, we, us or our), will be held on Friday, November 14, 2014, at 8:00 a.m., local time, at our corporate headquarters, 2560 Junction Avenue, San Jose, California, for the purpose of considering and voting upon the following matters:
1.
To elect Edward Collins, Lori Holland and William L. Smith as Class I directors to serve three-year terms and until their successors are duly elected and qualified or until their earlier resignation or removal;
2.
To approve the Fifth Amended and Restated 2001 Long-Term Stock Incentive Plan;
3.
To conduct an advisory vote on the compensation of our named executive officers; and
4.
To ratify the selection of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year.
The stockholders will also act on such other business as may properly come before the annual meeting, including any postponements or adjournments thereof. Our board of directors has no knowledge of any other business to be transacted at the annual meeting.
The proxy statement accompanying this notice describes each of these items of business in detail. We are enclosing a copy of our Annual Report on Form 10-K for the fiscal year ended June 28, 2014 with the proxy statement that accompanies this notice of meeting. The Annual Report on Form 10-K for the fiscal year ended June 28, 2014 contains consolidated financial statements and other information of interest to you. Holders of      of our common stock at the close of business on September 15, 2014 are entitled to receive this notice and to vote at the annual meeting or any adjournment thereof.
YOUR VOTE IS VERY IMPORTANT. We encourage you to attend the annual meeting in person. However, in order to make sure that you are represented at the annual meeting, we urge you to vote your shares over the Internet or by telephone as provided in the instructions set forth on the proxy card, or complete, sign and return the enclosed proxy card as promptly as possible in the enclosed postage-prepaid envelope.
By order of the Board of Directors,
Marissa Peterson
Chairman of the Board of Directors
 
September 22, 2014



Table of Contents

OCLARO, INC.
Proxy Statement for the Annual Meeting of Stockholders
Table of Contents
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


i


Table of Contents

OCLARO, INC.
Proxy Statement for the Annual Meeting of Stockholders
To Be Held on November 14, 2014
This proxy statement is furnished to you in connection with the solicitation of proxies by our board of directors (the Board) for the 2014 annual meeting of stockholders (the Annual Meeting) to be held on Friday, November 14, 2014 at 8:00 a.m., local time, at our corporate headquarters, 2560 Junction Avenue, San Jose, California, including any postponements or adjournments thereof. The notice of the Annual Meeting, this proxy statement, our Annual Report on Form 10-K for the fiscal year ended June 28, 2014 (the 2014 Annual Report), which includes our audited financial statements for the fiscal year ended June 28, 2014 (fiscal year 2014), and the enclosed proxy card are first being mailed to stockholders on or about September 22, 2014.
We have elected to provide access to our proxy materials over the Internet. Accordingly, on or about September 22, 2014, we are sending a Notice Regarding the Availability of Proxy Materials (Notice) to certain of our stockholders of record, and we are sending a paper copy of the proxy materials and proxy card to other stockholders of record who we believe would prefer receiving such materials in paper form. Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar Notice. Stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the Notice and on the website referred to in the Notice.
Important Notice Regarding the Availability of Proxy Materials for the
2014 Annual Meeting of Stockholders to be Held on November 14, 2014
This proxy statement and our 2014 Annual Report are available for viewing, printing and downloading at www.proxyvote.com.
You can also find this proxy statement and our 2014 Annual Report on the Internet at our website at www.oclaro.com or through the Securities and Exchange Commission’s electronic data system, called EDGAR, at www.sec.gov . You may also obtain a copy of our 2014 Annual Report, as filed with the Securities and Exchange Commission (which we sometimes refer to herein as the Commission) without charge as provided in the Notice or upon written request to Oclaro, Inc., 2560 Junction Avenue, San Jose, California, 95134, Attn: Stock Administrator. We will provide the 2014 Annual Report without exhibits unless you specify in writing that you are requesting copies of the exhibits.
Certain documents referenced in this proxy statement are available on our website at www.oclaro.com . We are not including the information contained on our website, or any information that may be accessed by links on our website, as part of, or incorporating it by reference into, this proxy statement.
Voting Your Shares and Revocation of Proxies
You may vote by attending the Annual Meeting and voting in person or you may vote by submitting a proxy.
The method of voting by proxy differs (1) depending on whether you are viewing this proxy statement on the Internet or receiving a paper copy, and (2) for shares held as a record holder and shares held in “street name.” If you hold your shares of common stock as a record holder and you are viewing this proxy statement on the Internet, you may vote by submitting a proxy over the Internet by following the instructions on the website referred to in the Notice previously mailed to you. If you hold your shares of common stock as a record holder and you are reviewing a paper copy of this proxy statement, you may vote your shares by completing, dating and signing the proxy card that was included with the proxy statement and promptly returning it in the pre-addressed, postage paid envelope provided to you, or by submitting a proxy over the Internet or by telephone by following the instructions on the proxy card. If you hold your shares of common stock in “street name," which means your shares are held of record by a broker, bank or nominee, you will receive a Notice from your broker, bank or nominee that includes instructions on how to vote your shares. Your broker, bank or nominee may allow you to deliver your voting instructions over the Internet and may also permit you to vote by telephone. In addition, you may request paper copies of the proxy statement and proxy card from your broker, bank or nominee by following the instructions on the Notice provided by your broker, bank or nominee.
The Internet and telephone voting facilities will close at 11:59 p.m. Eastern Time on November 13, 2014. If you vote through the Internet, you should be aware that you may incur costs to access the Internet, such as usage charges from telephone companies or Internet service providers and that these costs must be borne by you. If you vote by Internet or telephone, then you need not return a written proxy card by mail.

1


Table of Contents

Your vote is very important . You should submit your proxy even if you plan to attend the Annual Meeting in person.
All shares held by stockholders who are entitled to vote and who are represented at the Annual Meeting by properly submitted proxies received before the polls are closed at the Annual Meeting will be voted in accordance with the instructions indicated on the proxy card, unless such proxy is properly revoked prior to the vote being taken on the matter submitted to the stockholders at the Annual Meeting.
A proxy may be revoked and your vote changed in advance of the Annual Meeting. If you are a stockholder of record, you can change your vote and revoke your proxy at any time before the vote is taken at the Annual Meeting by doing any one of the following:
filing with our corporate secretary, at or before the taking of the vote, a written notice of revocation bearing a later date than the proxy;
duly executing a later dated proxy relating to the same shares and delivering it to our corporate secretary before the taking of the vote;
accessing the Internet and following the instructions for voting by Internet that appear on the enclosed proxy card;
following the instructions that appear on the enclosed proxy card for voting by telephone; or
attending the Annual Meeting and voting in person. Attendance at the Annual Meeting, if a stockholder does not vote, will not be sufficient to revoke a proxy.
Any written notice of revocation or subsequent proxy should be sent to us at the following address: Oclaro, Inc., 2560 Junction Avenue, San Jose, California 95134, Attention: Corporate Secretary. If your shares are held in street name, you must follow the instructions of your broker, bank or nominee to revoke a previously given proxy.
If a proxy card does not specify how the proxy is to be voted with respect to:
the election of the three nominated Class I directors for a three year term, the shares will be voted “FOR” the election of the three nominated Class I directors;
the approval of the Fifth Amended and Restated 2001 Long-Term Stock Incentive Plan, the shares will be voted “FOR” the approval of the plan;
the advisory vote on the compensation of our named executive officers, the shares will be voted “FOR” the approval of the compensation of our named executive officers; and
the ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year, the shares will be voted “FOR” the ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year.
By submitting a proxy (whether by telephone, over the Internet or by signing a proxy card), you are conferring discretionary authority upon the named proxy holders with respect to amendments or variations to the matters identified in the accompanying notice of Annual Meeting and with respect to any other matters which may properly come before the Annual Meeting. The Board does not know of any other matters that may come before the Annual Meeting. If any other matter properly comes before the Annual Meeting, including consideration of a motion to adjourn the Annual Meeting to another time or place (including for the purpose of soliciting additional proxies), the persons named in the proxy will exercise their judgment in deciding how to vote, or otherwise act, at the Annual Meeting with respect to that matter or proposal.
If you receive more than one proxy card, it means you hold shares that are registered in more than one account. To ensure that all of your shares are voted, sign and return each proxy card or, if you submit a proxy by telephone or the Internet, submit one proxy for each proxy card you receive.
Attendance at the Annual Meeting
Only holders of our common stock as of the record date for the Annual Meeting, their proxy holders, and guests we may invite may attend the Annual Meeting. If you wish to attend the Annual Meeting in person but you hold your shares through someone else, such as a broker, you must bring proof of your ownership and photo identification to the Annual Meeting. For example, you could bring an account statement showing that you beneficially owned shares of our common stock as of the record date as acceptable proof of ownership. You must also contact your broker and follow their instructions in order to vote your shares at the Annual Meeting. You may not vote your shares at the Annual Meeting unless you have first followed the procedures outlined by your broker.

2


Table of Contents

Stockholders Entitled to Vote
The Board fixed September 15, 2014 as the record date for the determination of stockholders entitled to vote at the Annual Meeting. Only holders of record of our common stock at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting. On September 15, 2014, there were 108,681,108 shares of our common stock outstanding and entitled to vote. Each share of common stock will have one vote for each matter to be voted upon at the Annual Meeting.
A list of stockholders eligible to vote at the Annual Meeting will be available for inspection at the Annual Meeting, and at our corporate headquarters during regular business hours for a period of no less than ten days prior to the Annual Meeting.
Votes Required
The holders of at least a majority in voting power of the shares of our common stock issued and outstanding and entitled to vote at the Annual Meeting will constitute a quorum for the transaction of business at the Annual Meeting. Shares of common stock present in person or represented by proxy, including shares that abstain or do not vote with respect to one or more of the matters presented for stockholder approval, will be counted for purposes of determining whether a quorum is present at the Annual Meeting. If a broker indicates on its proxy that it does not have discretionary voting authority to vote shares for which it is the holder of record at the Annual Meeting, the shares will still be counted in determining whether a quorum is present.
Brokers or other nominees who hold shares of common stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the election of directors or for the approval of matters which are “non-routine,” without specific instructions from the beneficial owner. Only the proposal to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year is considered to be a “routine” matter. Accordingly, we do not expect “broker non-votes” on that proposal. The other proposals to be voted on at the Annual Meeting are not considered routine matters, and without your instruction, your broker cannot vote your shares. Accordingly, we expect “broker non-votes” on these proposals.
If the shares you own are held in “street name,” the bank, brokerage firm or nominee, as the record holder of your shares, is required to vote your shares in accordance with your instructions. In order to vote your shares held in “street name,” you will need to follow the directions that your bank, brokerage firm or nominee provides you. If you desire to vote your shares held in “street name” at the Annual Meeting by proxy, you will need to obtain a proxy card from the holder of record.

On all matters, each share has one vote. At the Annual Meeting, our directors will be elected by a plurality vote. Under this voting standard, the nominees for the three director seats who receive the most affirmative votes of shares outstanding as of the record date that are present in person or represented by proxy at the Annual Meeting will be elected to serve as directors. With respect to the proposal regarding the election of our directors, neither “broker non-votes” nor abstentions have the effect of votes “AGAINST” such proposal. For the other proposals to be approved, our bylaws require the affirmative vote of the holders of a majority of the shares as of the record date that are present in person or represented by proxy at the Annual Meeting and voting on these matters. “Broker non-votes” and abstentions are not included in the tabulation of the voting results and, accordingly, they do not have the effect of votes “AGAINST” such proposals.

Prior to the Annual Meeting, we expect our Board to amend our bylaws to provide that director nominees will be elected by the affirmative vote of the majority of votes cast at our 2015 annual meeting of stockholders and each annual meeting thereafter, with a plurality voting standard retained for contested director elections. Under a majority voting standard, in uncontested elections of directors, each director must be elected by the affirmative vote of a majority of the votes cast by the shares present in person or represented by proxy and entitled to vote at the annual meeting of stockholders. Following approval of the amendment to our bylaws, we will file a current report on Form 8-K, describing and attaching the amendment.
Security Ownership of Certain Beneficial Owners and Management
The following table shows the number of shares of our common stock beneficially owned as of September 1, 2014 by each entity or person who is known to us to own five percent or more of our common stock, each director, each executive officer listed in the Fiscal Year 2014 Summary Compensation Table below, and all directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the Commission. Except as indicated by footnote, to our knowledge, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Shares of our common stock issuable pursuant to options to purchase or other rights to acquire shares

3


Table of Contents

of common stock that are exercisable within 60 days of September 1, 2014 are deemed to be beneficially owned by the person holding such options or rights for the purpose of computing ownership of such person, but are not treated as outstanding for the purpose of computing the ownership of any other person. Applicable percentage of beneficial ownership is based on 108,681,108  shares of our common stock outstanding as of September 1, 2014. The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares.
The address of each of our executive officers and directors is c/o Oclaro, Inc., 2560 Junction Avenue, San Jose, California 95134.
Beneficial Owner
Number
of Shares
 
Percentage
of Total
5% Stockholders
 
 
 
Hitachi, Ltd. (1)
6-6 Marunouchi 1-chome, Chiyoda-ku
Tokyo 100-8280, Japan
11,900,000

 
10.9%
Kopp Investment Advisors, LLC and affiliated persons (2)
8400 Normandale Lake Boulevard, Suite 1450
Bloomington, MN. 55437
9,966,380

 
9.2%
DNB Asset Management AS (3)
Dronning Aufemias Gate 30, Bygg M-12N
0191 Oslo, Norway
6,154,536

 
5.7%
Executive Officers and Directors
 
 
 
Greg Dougherty (4)
525,673

 
*
Pete Mangan (5)
136,734

 
*
Yves LeMaitre (6)
213,029

 
*
Jim Haynes (7)
310,616

 
*
David Teichmann

 
*
Terry Unter (8)
122,020

 
*
Jerry Turin

 
*
Lori Holland (9)
149,248

 
*
Joel A. Smith, III (10)
149,083

 
*
Edward Collins (11)
139,248

 
*
William L. Smith (12)
133,141

 
*
Kendall Cowan (13)
127,720

 
*
Marissa Peterson (14)
118,584

 
*
All executive officers and directors as a group (15 persons)
2,125,096

 
 
*
less than 1%
(1)
This information is based on a Schedule 13G/A filed with the Commission on February 12, 2014 by Hitachi, Ltd., and may not be current as of September 1, 2014.
(2)
The number of shares listed is based on a Schedule 13F-HR filed with the Commission on August 1, 2014. The Schedule 13F-HR indicates that Kopp Investment Advisors, LLC has sole voting authority over 9,884,060 of these shares and no voting authority over 82,320 of these shares. The following information is based on a Schedule 13D/A filed with the Commission on September 20, 2013 by Kopp Investment Advisors, LLC, or KIA. KIA is the beneficial owner of 8,592,517 shares of our common stock owned by KIA’s clients and held in discretionary accounts managed by KIA. Kopp Holding Company, LLC is the parent of KIA and indirect beneficial owner of the shares beneficially owned by KIA. LeRoy C. Kopp may be deemed to beneficially own a total of 8,724,242 shares, including the shares indirectly beneficially owned by Kopp Holding Company (by virtue of his position as the control person of Kopp Holding Company), shares held in the Kopp Family Foundation, a 501(c)(3) corporation for which he serves as a director, and shares held in his wife’s individual retirement account. KIA, Kopp Holding Company and Mr. Kopp may each be deemed to have shared voting power and shared dispositive power with respect to 8,592,517 and 5,317,242 shares of our common stock, respectively. Mr. Kopp has the sole power to dispose of 3,407,000 shares. This information may not be current as of September 1, 2014.

4


Table of Contents

(3)
This information is based on a Schedule 13F-HR filed with the Commission on July 7, 2014 by DNB. The Schedule 13F-HR indicates that DNB has shared voting authority over these shares. This information may not be current as of September 1, 2014.
(4)
Represents 486,879 shares beneficially owned by Mr. Dougherty and 38,794 shares issuable pursuant to options exercisable within 60 days of September 1, 2014.
(5)
Represents 129,734 shares beneficially owned by Mr. Mangan and 7,000 shares issuable pursuant to options exercisable within 60 days of September 1, 2014.
(6)
Represents shares 135,369 beneficially owned by Mr. LeMaitre and 77,660 shares issuable pursuant to options exercisable within 60 days of September 1, 2014.
(7)
Represents 85,681 shares beneficially owned by Mr. Haynes and 224,935 shares issuable pursuant to options exercisable within 60 days of September 1, 2014.
(8)
Represents 62,273 shares beneficially owned by Mr. Unter and 56,747 shares issuable pursuant to options exercisable within 60 days of September 1, 2014.
(9)
Represents 108,469 shares beneficially owned by Ms. Holland and 40,779 shares issuable pursuant to options exercisable within 60 days of September 1, 2014.
(10)
Represents 111,649 shares beneficially owned by Mr. Smith individually, 86 shares beneficially owned by his spouse and 37,348 shares issuable pursuant to options exercisable within 60 days of September 1, 2014.
(11)
Represents 103,469 shares beneficially owned by Mr. Collins and 35,779 shares issuable pursuant to options exercisable within 60 days of September 1, 2014.
(12)
Represents 133,141 shares beneficially owned by Mr. Smith.
(13)
Represents 127,720 shares beneficially owned by Mr. Cowan.
(14)
Represents 101,538 shares beneficially owned by Ms. Peterson and 17,046 shares issuable pursuant to options exercisable within 60 days of September 1, 2014.
Forward-Looking Statements
This proxy statement contains “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995). These statements are based on our current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those set forth in the statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements. The forward-looking statements may include statements regarding actions to be taken by us. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements involve significant risks and uncertainties, including those mentioned in the risk factors in our Annual Report on Form 10-K for the year ended June 28, 2014 filed with the SEC, and actual results may vary materially.

5


Table of Contents

PROPOSAL 1
ELECTION OF CLASS I DIRECTORS
We have three classes of directors, currently consisting of three Class I directors, three Class II directors and two Class III directors. The Class I, Class II and Class III directors serve until the annual meeting of stockholders to be held in 2014, 2015, and 2016, respectively, or until their respective successors are elected and qualified. At each annual meeting, directors are elected for a full term of three years to succeed those whose terms are expiring. The terms of the three classes are staggered in a manner so that only one class is elected by stockholders annually. Edward Collins, Lori Holland and William L. Smith are each currently serving as Class I directors.
Upon the recommendation of our nominating and corporate governance committee, the Board has nominated Mr. Collins, Ms. Holland and Mr. Smith for re-election to serve as Class I directors (the “Nominees”). If the Nominees are elected this year, they will be elected to serve as members of the Board until the 2017 annual meeting of stockholders, or until their successors are elected and qualified. The Nominees have each indicated their willingness to serve on the Board, if elected; however, if any of them should be unable to serve, the person empowered to act pursuant to a validly submitted proxy may vote the proxy for a substitute nominee designated by the Board. The Board has no reason to believe that any of the Nominees would be unable to serve if elected. Proxies cannot be voted for a greater number of persons than the number of nominees named above.
For each member of the Board and person nominated to become a director there follows information given by each concerning his or her principal occupation and business experience for at least the past five years, the names of other public reporting companies of which he or she serves, or has during the past five years served, as a director and his or her age and length of service as one of our directors. In addition, for each director and person nominated to become a director, there follows information regarding the specific experience, qualifications, attributes or skills that led to the conclusion of the Board that the person should serve as a director. There are no family relationships among any of our directors and executive officers. No director or executive officer is related by blood, marriage or adoption to any other director or executive officer. Other than as disclosed in the registration statement on Form S-4 (File No. 333-181254) filed by us with the Commission relating to the appointment of former Opnext directors to the Board in connection with our acquisition of Opnext, no arrangements or understandings exist between any director or person nominated for election as a director and any other person pursuant to which such person is to be selected as a director or nominee for election as a director.
Board Recommendation
The Board believes that the election of Edward Collins, Lori Holland and William L. Smith to serve as Class I directors is in the best interests of Oclaro and our stockholders and, therefore, unanimously recommends that the stockholders vote “FOR” the election of the nominees.
Class I Directors — Nominees for Election to the Board at the Annual Meeting
Edward Collins, 71, has served as a director of Oclaro since May 2008. Since January 2012, Mr. Collins has served as Senior Counsel at the international law firm of White & Case LLP. From 1995 to the present, Mr. Collins has served as the Managing Director and a Partner at ChinaVest Group, a private equity group investing in China. In connection with the winding up of ChinaVest V, LP, he was Chairman and CEO of Phoenix Liquidation, Inc. In addition, from 2007 to 2010, Mr. Collins served as Chairman, and is currently a director, of California Bank of Commerce. From 1999 to 2011 he served as chairman of the audit committee of TFC – the Taiwan Greater China Fund, listed on the NYSE. He is presently a director and chairman of the audit committee of the successor to TFC, the Shelton Greater China Fund. From 1988 to 1994, Mr. Collins was a partner at the law firm of McCutchen, Doyle, Brown, & Enersen, where he was responsible for the Greater China practice. He has served as counsel to various investment groups, banks and manufacturing companies in Hong Kong and Taiwan, and is a member of the State Bar of California. Mr. Collins also serves as non-executive Chairman of Branded Spirits, Ltd., a privately held company that sells wine and branded spirits in China, Hong Kong and Macau and of MedioStream, Inc., a software company since 2001. With his many years of experience in the private equity industry, Mr. Collins brings to our Board in-depth knowledge of finance and strategic investment strategy. Mr. Collins’ experience and training as a practicing attorney also enables him to bring valuable insights to the Board, including his thorough understanding of the legal risk of our business. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Mr. Collins should serve as a director.
Lori Holland, 56 , has served as a director of Oclaro since September 2004. Ms. Holland previously served as a director of Oclaro’s predecessor, Bookham Technology plc, from April 1999 until September 2004. Ms. Holland has more than 25 years of experience in senior finance leadership roles with high-technology companies and has been an independent financial consultant since 2003. She served as the CFO of Read-Rite Corporation, a publicly-traded supplier of magnetic recording heads, from 1990 to 1995. She also served as the CFO of technology companies NeoMagic Corporation from 1995 to 1996 and Zaffire, Inc. from 1999 to 2000.

6


Table of Contents

Ms. Holland served as a director and audit committee member of Credence Systems Corporation, a publicly-traded test equipment supplier, from September 2004 until August 2008 when Credence merged with LTX Corporation. Ms. Holland served as a director, audit committee member and nominating and corporate governance committee member of LTX-Credence Corporation with service ending December 2011. From June 2005 to December 2006, Ms. Holland served on the Board of Directors of WiderThan, a Korean company listed on the NASDAQ National Market. Ms. Holland also served as a director and chair of the audit committee, and was a member of the nominating and governance and compensation committees of Apache Design Solutions from January 2011 through July 2011, when the company was sold to Ansys and the entire Apache Board resigned. Ms. Holland earned a bachelor’s degree in economics from California Polytechnic State University and completed the Stanford Executive MBA program in 1993. Ms. Holland brings significant financial management and financial disclosure experience, as well as significant knowledge of our history and experiences to the Board. Ms. Holland brings to the Board her extensive knowledge in the areas of accounting, financial reporting and controls, and experience as a leader of several technology companies. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Ms. Holland should serve as a director.
William L. Smith,  57, has served as a director of Oclaro since July 2012. Prior to Oclaro, Mr. Smith served on Opnext’s Board of Directors from April 2009 to July 2012. Mr. Smith has been at AT&T since February 1979, and since January 2010 has served as President, AT&T Network Operations, where he is responsible for all network-related operations across AT&T’s global service footprint, including network planning and engineering, AT&T’s global network operations center, mobility and wireline central offices, undersea cable infrastructure, construction and engineering with wireless field operations, core installation and maintenance, U-verse field operations and customer care centers. From March 2008 to December 2009, Mr. Smith was President, Local Network Operations at AT&T, where he was responsible for all local network-related operations across AT&T’s domestic footprint. From October 2007 to March 2008, Mr. Smith was AT&T’s Executive Vice President — Shared Services, in charge of mass market and enterprise operations, corporate real estate, procurement, regional wireline planning, and business planning and integration, and from January 2007 to October 2007 he served as AT&T’s Senior Vice President of Network Operations in the Southeast. Before AT&T’s acquisition of BellSouth Corporation in December 2006, Mr. Smith served as Chief Technology Officer for BellSouth from 2001 until December 2006, responsible for setting the overall technology direction for BellSouth’s core infrastructure. In that position, he was responsible for network and operations technology, internet protocol applications, next generation strategy, and BellSouth Entertainment, LLC. Mr. Smith graduated with honors from North Carolina State University at Raleigh in 1979, and is on the board of advisors of its graduate school. He is the former chairman of the board of the Make a Wish Foundation of Georgia and Alabama and has served on several other non-profit boards. With Mr. Smith’s previous service as a director of Opnext, he brings to the Board extensive knowledge of our business, operations, products and industry. In addition, his more than three decades of service in various management and executive positions at a large, international telecommunications company enables Mr. Smith to make a significant contribution in his role as director, especially with respect to the operational and strategic issues we encounter. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Mr. Smith should serve as a director.
Class II Directors — Terms Expiring 2015
Greg Dougherty , 54, has served as Chief Executive Officer of Oclaro since June 2013 and has served as a director of Oclaro since April 2009. Prior to Oclaro, Mr. Dougherty served as a director of Avanex Corporation, a leading global provider of Intelligent Photonic solutions™, from April 2005 to April 2009, when Avanex and Bookham merged to create Oclaro. Mr. Dougherty also served as a director of Picarro, Inc., a manufacturer of ultra-sensitive gas spectroscopy equipment using laser-based technology, from October 2002 to August 2013, and as its Interim Chief Executive Officer from January 2002 to April 2004. He also served on the board of directors of the Ronald McDonald House at Stanford from January 2004 to December 2009. From February 2001 until September 2002, Mr. Dougherty was the Chief Operating Officer at JDS Uniphase Corporation (JDS), an optical technology company. Prior to JDS he was the Chief Operating Officer of SDL, Inc., from March 1997 to February 2001 when they were acquired by JDS. From 1989 to 1997, Mr. Dougherty was the Director of Product Management and Marketing at Lucent Technologies Microelectronics in the Optoelectronics Strategic Business Unit. Mr. Dougherty received a B.Sc. degree in Optics in 1983 from the University of Rochester. Mr. Dougherty brings significant leadership, operations, sales, marketing and general management experience to the Board. Mr. Dougherty provides the Board with valuable insight into management’s perspective with respect to our operations. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Mr. Dougherty should serve as a director.
Marissa Peterson , 52, was elected Chairman of the Board of Directors in June 2013 and has served as a director of Oclaro since July 2011. She currently runs an executive coaching and management consulting practice. Ms. Peterson was formerly Executive Vice President, Worldwide Operations, Services and Customer Advocacy for Sun Microsystems Inc., a seller of computers, computer components, computer software, and information technology services until her retirement in 2005 after 17 years with the company. From August 2008 to the present, Ms. Peterson has served as a director of Humana Inc., a healthcare provider, and is currently a member of their nominating and corporate governance and organization and compensation committees. From August 2006 to the

7


Table of Contents

present, she has served as a director for Ansell Limited, a public company listed on the Australia Stock Exchange and a global leader in healthcare safety and protection solutions, where she is currently a member of the audit and compliance committee and chairperson of the risk committee. In addition, Ms. Peterson currently serves as a director of Quantros, Inc., a software and services provider of data management, decision support analytics, and clinical business intelligence solutions to the healthcare industry. She previously served as a director of Supervalu Inc. and the Lucile Packard Children’s Hospital at Stanford, and served on the board of trustees of Kettering University. Ms. Peterson has received the distinction of being an NACD (National Association of Corporate Directors) Board Leadership Fellow. She earned an M.B.A. from Harvard University, and an honorary doctorate of management and a B.S. in mechanical engineering from Kettering University. Ms. Peterson brings to the Board her extensive knowledge in the areas of operations, management, and customer relations, as well as experience as a senior executive of a large, complex and well-respected technology company. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Ms. Peterson should serve as a director.
Class III Directors — Terms Expiring 2016
Kendall Cowan,  60, has served as a director of Oclaro since July 2012. Prior to Oclaro, Mr. Cowan served on Opnext’s Board of Directors from March 2007 through July 2012. Mr. Cowan has served as Chairman and Chief Executive Officer of The Cowan Group, LLC, an investment and consulting firm, since January 2000, and Chairman and Chief Executive Officer of Cowan Holdings, Inc., since October 2006. Mr. Cowan is also a shareholder and board member of several privately owned businesses. In addition, Mr. Cowan currently serves as a board member of Lea County Bancshares, Inc., and served as a board member and chairman of the audit committee of DBSD North America, Inc., a provider of satellite and terrestrial wireless service, from 2006 until March 2012. Mr. Cowan was the Chief Financial Officer of Alamosa Holdings, Inc., a wireless telephone network operator, from December 1999 until February 2006, and he served on the Board from April 2003 to February 2006. He became a partner in an international public accounting firm in 1983, and from January 1986 until September 1993 he was a partner at Coopers & Lybrand. Mr. Cowan received his Bachelor’s in Business Administration in accounting in 1976 from Texas Tech University. He is a Certified Public Accountant and a member of both the American Institute of Certified Public Accountants and the Texas Society of Certified Public Accountants. Mr. Cowan brings significant financial management and financial disclosure experience, as well as significant knowledge of Opnext’s history and experiences to the Board. Mr. Cowan also brings to the Board his extensive knowledge in the areas of finance, management, financial reporting, and controls and experience as a leader of a well-respected telecommunications company and as a partner at a large international public accounting firm. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Mr. Cowan should serve as a director.
Joel A. Smith III, 69 has served as a director since April 2009 and served as lead independent director of Oclaro between July 2011 and June 2013. Prior to Oclaro, Mr. Smith served as a director of Avanex Corporation from December 1999 to April 2009, when Avanex and Bookham merged to create Oclaro. Mr. Smith was the Dean of the Darla Moore School of Business of the University of South Carolina from October 2000 to December 2007. Previously, Mr. Smith served as the President of Bank of America East, a financial institution, from October 1998 to September 2000. From July 1991 to October 1998, Mr. Smith served as President of Nations Bank Carolinas, a financial institution. Mr. Smith earned a bachelor’s degree in political science and economics from the University of the South. Mr. Smith brings significant financial management and financial disclosure experience, as well as significant knowledge of Avanex’s history and experiences to the Board. Mr. Smith brings to the Board his extensive knowledge in the areas of finance, management, financial reporting, and controls and experience as a leader of large, well-respected financial institutions. Mr. Smith also brings to the Board significant experience in corporate governance matters, which gives him the ability to assist in governance decisions and related responsibilities. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Mr. Smith should serve as a director.
Executive Officers
Greg Dougherty, see “Class II Directors — Terms Expiring 2015” above.
Oclaro Management Team
Dr. Adam Carter, 50 , has served as Oclaro's Chief Commercial Officer since July 2014. Prior to joining Oclaro, he served as the Senior Director and General Manager of the Transceiver Module Group at Cisco from February 2008 to July 2014, where he was instrumental in the acquisition of Lightwire, a Silicon Photonics start-up. He also served as a Marketing Director at Cisco from February 2007 to February 2008. From September 1994 to February 2007, Dr. Carter held various strategic marketing and business development roles at Avago Technologies, Agilent Technologies and Hewlett Packard. In addition, Dr. Carter was a Process and Device Engineer at British Telecom & Dupont from November 1989 to September 1994. Dr. Carter holds a B.Sc. (Honors) in Applied Physics from Portsmouth University and received a PhD from the University of Wales, Cardiff, for his research on plasma etching of III-V semiconductor materials.

8


Table of Contents

Dr. Richard Craig , 59, has served as Oclaro's President of Integrated Photonics Business since May 2014. Prior to joining the Company, from July 2011 to September 2013, Dr. Craig served as CEO and Chairman of Topanga Technologies, a privately held advanced lighting company. From August 2008 to October 2010 he served as CEO of Kaai, Inc., a privately held gallium nitride laser company, and simultaneously served as COO of Soraa Inc., a privately held LED company. From September 2001 to July 2006 he served as CEO of Santur Corp, a privately held optical components company that developed the industry leading position in tunable lasers under his management. From September 1989 to July 2001 he served in various technical and managerial roles at SDL Inc. (acquired by JDSU), an optical components company. Dr. Craig holds a bachelor's degree in Physical Sciences from the University of California, Berkeley and a PhD. degree in Electrical Engineering from the University of California, Los Angeles.
Jim Haynes , 52, has served as Oclaro's Chief Operating Officer since May 2014. Prior to this, Mr. Haynes was President of Integrated Photonics Business from November 2013 to April 2014. He was also President of Global Business from May 2012 to October 2013, with responsibility for Oclaro's Business Units. From January 2011 to May 2012, he was President and General Manager, Photonic Components, for Oclaro. From March 2005 until January 2011, he served as Chief Operating Officer of the company. From August 2004 to March 2005, Mr. Haynes was the company's Vice President, U.K. Operations. From June 2003 to August 2004, Mr. Haynes served as Vice President, Operations, and Site Leader, Caswell, for the company. From December 2000 to June 2003, Mr. Haynes served as Chief Operating Officer of Agility Communications, Inc., a tunable laser company. From 1998 to December 2000, Mr. Haynes served as Director of Technology for Nortel Networks Corporation. Mr. Haynes earned a bachelor's degree (honors) in material sciences and technology from Swansea University, Wales.
Yves LeMaitre, 50 , has served as Oclaro's President of Optical Connectivity Business since October 2013. Prior to this, Mr. LeMaitre was Oclaro's Chief Commercial Officer from July 2011 to September 2013. He previously served as Executive Vice President, Strategy and Corporate Development, from February 2011 to July 2011, and was Executive Vice President and General Manager of Oclaro's Advanced Photonic Solutions division from April 2009 to January 2011. Previously, Mr. LeMaitre served as Vice President of Telecommunications Sales and Corporate Marketing for the company from February 2008 to April 2009. From May 2005 to December 2007, Mr. LeMaitre was with Avanex, most recently serving as Chief Marketing Officer in charge of worldwide sales and marketing. Previously, Mr. LeMaitre was President and Chief Executive Officer of Lightconnect, a leading supplier of optical MEMS components and modules. In addition, he worked for Alcatel and its joint venture with Sprint International in a variety of general management, senior marketing and engineering positions in the United States, France, the Netherlands and Italy. Mr. LeMaitre earned a master's degree in mathematics and computer science from Nantes University in France. He also holds an engineering degree from Ecole Nationale Superieure des Telecommunications (ENST) in Paris.
Pete Mangan , 55 , has served as Chief Financial Officer (CFO) since November 2013. From May 2012 to November 2013, Mr. Mangan served as Oclaro’s Vice President of Corporate Finance where he was initially responsible for the global operations finance team and then the corporate accounting and tax group. Mr. Mangan brings Oclaro nearly 30 years of experience in a wide range of finance positions with leading companies including AMD, Trident Microsystems, FormFactor, Spansion, Asyst Technologies, and Sun Microsystems. Mangan served as CFO at Trident Microsystems from 1996 to 1998 and again from 2008 to 2012. Trident Microsystems, Inc. filed for Chapter 11 bankruptcy protection in January 2012 and subsequently liquidated in accordance with its plan of liquidation. He holds a bachelor's degree in Business Economics from the University of California, Santa Barbara.
David Teichmann, 58, has served as Oclaro's Executive Vice President, General Counsel and Corporate Secretary since January 2014. Prior to joining Oclaro, he served from April 2007 to December 2012 as the Executive Vice President, General Counsel and Corporate Secretary of Trident Microsystems, Inc., a public fabless semiconductor company that sold television and set top box integrated circuits. Trident Microsystems, Inc. filed for Chapter 11 bankruptcy protection in January 2012 and subsequently liquidated in accordance with its plan of liquidation. From August 1998 to February 2006, he served as the Senior Vice President, General Counsel and Secretary of GoRemote Internet Communications, Inc., a secure managed global remote access solutions provider, guiding the company through its initial public offering in 1999 and its acquisition by iPass, Inc. in 2006. From 1993 to July 1998, he served in various positions at Sybase, Inc., an enterprise software company, including Vice President, International Law as well as Director of European Legal Affairs based in The Netherlands. From 1989 to 1993, Mr. Teichmann was Assistant General Counsel for Tandem Computers Corporation, a fault tolerant computer company, handling legal matters in Asia-Pacific, Japan, Canada and Latin America. He began his legal career as an attorney with the Silicon Valley-based Fenwick & West LLP. Mr. Teichmann holds a B.A. degree in Political Science from Trinity College, an M.A.L.D. degree in Law & Diplomacy from the Fletcher School of Law & Diplomacy and a J.D. degree from the William S. Richardson School of Law at the University of Hawaii. He was also a Rotary Foundation Scholar at the Universidad Central de Venezuela, where he did post-graduate work in Latin American Economics and Law.



9


Table of Contents

Director Compensation
Fiscal year 2014
The Board believes that providing competitive compensation is necessary to attract and retain qualified non-employee directors. During the first half of fiscal year 2014, each of our non-employee directors received an annual retainer (paid quarterly) of $40,000, except the chairman, who received an additional annual retainer (paid quarterly) of $60,000. Other compensation (as described below) is paid for meetings in excess of five in-person meetings and four telephonic meetings per year. During the first half of fiscal year 2014, this compensation consisted of $1,000 for each additional in-person meeting during the year and $500 for each additional telephonic meeting lasting less than two hours and $1,000 for each additional telephonic meeting lasting two or more hours during the year. During the first half of fiscal year 2014, the chairman of the audit committee received an additional annual retainer (paid quarterly) of $37,000, the chairman of the compensation committee received an additional annual retainer (paid quarterly) of $18,000 and the chairman of the nominating and corporate governance committee received an additional annual retainer (paid quarterly) of $16,500. Each member of the audit committee received an additional $10,000 per year (paid quarterly) for up to eight meetings annually and was entitled to receive additional compensation (as described above) for additional meetings during the year. Each member of the compensation committee received an additional $7,000 per year (paid quarterly) for up to eight meetings and was eligible to receive additional compensation (as described above) for additional meetings during the year. Each member of the nominating and corporate governance committee received an additional $5,000 per year (paid quarterly) for up to six meetings annually and was eligible to receive additional compensation (as described above) for additional meetings during the year. We reimbursed non-employee directors for reasonable out-of-pocket expenses incurred in attending Board and committee meetings.
In November 2013, the Board determined to temporarily reduce all of the Board fees described above by 15%, in conjunction with the temporary reduction in the base salaries of certain members of the executive management team, effective January 1, 2014. Payments of Board compensation during the second half of fiscal year 2014 reflected this 15% reduction. A comparison of the retainers for the two periods is shown below:
BOD/Committee Position
1H FY2014
Annual Retainer
2H FY2014
Annual Retainer
 
 
 
Board Chairman
$
60,000

$
51,000

Board Retainer
$
40,000

$
34,000

Audit Committee Member
$
10,000

$
8,500

Audit Committee Chairman
$
37,000

$
31,450

Compensation Committee Member
$
7,000

$
5,950

Compensation Committee Chairman
$
18,000

$
15,300

N&CG Committee Member
$
5,000

$
4,250

N&CG Committee Chairman
$
16,500

$
14,025

On January 14, 2014, the date of the 2013 annual meeting of stockholders (the “2013 Annual Meeting”), each non-employee director was granted a restricted stock grant of 45,738 shares, which was equal to 5,000 shares plus a number of shares with a value equal to $100,000 divided by the average closing stock price for the 30 days ending on the date of the 2013 Annual Meeting, Such restricted stock vests on the one year anniversary of the grant date.
Fiscal Year 2015
On July 30, 2014, the Board decided to maintain our current non-employee director compensation arrangements for fiscal year 2015 at the same rates used in the second half of fiscal year 2014.
On the date of the Annual Meeting, each non-employee director will be granted a restricted stock grant of 5,000 shares plus a number of shares with a value equal to $100,000 divided by the average closing stock price for the 30 days ending on the date of the Annual Meeting. As with the awards granted at the 2013 Annual Meeting, these awards will vest on the first anniversary of the date of grant, subject to continued service. In our discretion, the Board may grant additional equity awards to our non-employee directors. No such additional grants were made in fiscal year 2014.

10


Table of Contents



Director Compensation Table
The following table sets forth information concerning the compensation of our non-employee directors for fiscal year 2014:
Name (1)
Fees Earned or
Paid in Cash ($)
 
Stock
Awards
($)(2)(3)(4)
 
 
Option
Awards($)
 
All Other
Compensation($)
 
Total ($)
Edward B. Collins
$
55,050

 
$
116,632

 
 

 

 
$
171,682

Kendall Cowan
$
72,975

 
$
116,632

 
 

 

 
$
189,607

Lori Holland
$
90,550

 
$
116,632

 
 

 

 
$
207,182

Marissa Peterson
$
94,350

 
$
116,632

 
 

 

 
$
210,982

Joel A. Smith III
$
65,213

 
$
116,632

 
 

 

 
$
181,845

William L. Smith
$
42,550

 
$
116,632

 
 

 

 
$
159,182

David Lee (5)
$
24,500

 

 
 

 

 
$
24,500

Harry Bosco (5)
$
20,000

 

 
 

 

 
$
20,000

 
(1)
Compensation information for Mr. Dougherty is set forth below under “Compensation Discussion and Analysis” and the corresponding compensation tables, footnotes and accompanying narratives.
(2)
The amounts reported in this column reflect the grant date fair value, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation ("ASC 718"), of the restricted stock awards granted during the fiscal year ended June 28, 2014. There can be no assurance that the ASC 718 amounts will ever be realized. The assumptions we used to calculate these amounts are included in Note 12 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 28, 2014. The restricted stock awards vest in full on the one-year anniversary of the grant date, subject to continued service.
(3)
Consists of the grant date fair value, computed in accordance with ASC 718, of the restricted stock award granted on January 14, 2014.
(4)
The following table sets forth the number of shares of our common stock subject to outstanding stock awards and option awards held by each of our non-employee directors as of the end of fiscal year 2014.
Name
 
Stock Awards (A)
 
Option Awards (B)
 
Edward B. Collins
 
45,738

 
35,779

 
Kendall Cowan
 
45,738

 

 
Lori Holland
 
45,738

 
40,779

 
Marissa Peterson
 
45,738

 
17,046

 
Joel A. Smith III
 
45,738

 
37,348

 
William L. Smith
 
45,738

 

 
David Lee
 

 

 
Harry Bosco
 

 

 
 
 
(A) Stock awards consist of unvested shares of our common stock subject to such awards.
(B) Option awards include vested (but unexercised) and unvested shares of our common stock subject to such awards.
 
(5)
Mr. Bosco and Mr. Lee did not stand for re-election to the Board at the 2013 Annual Meeting and ceased to be directors on January 14, 2014.


11


Table of Contents

Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and the holders of more than 10% of our common stock to file with the Commission initial reports of ownership of our common stock and other equity securities on a Form 3 and reports of changes in such ownership on a Form 4 or Form 5. Officers, directors and 10% stockholders are required by Commission regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of copies of reports filed by the reporting persons furnished to us, or written representations from such reporting persons, we believe that, during fiscal year 2014, all filings required to be made by our reporting persons were timely made in accordance with the requirements of Section 16(a) of the Exchange Act, except as follows: Messrs. Craig, Fernicola and Meldrum filed a late Form 3; Messrs. Bosco, Collins, Cowan, Dougherty, Fernicola, Lee, J. Smith, W. Smith and Turin, Ms. Holland, Ms. Peterson and Ms. Rundle each filed one Form 4 to report one transaction late; Messrs. Craig and Meldrum filed one Form 4 to report two transactions late; and Messrs. Haynes, Unter and LeMaitre filed two Forms 4 to report three transactions late.
COMPENSATION COMMITTEE REPORT
The information contained under this “Compensation Committee Report” shall not be deemed to be “soliciting material” or to be “filed” with the Commission, nor shall such information be incorporated by reference into any filings under the Securities Act of 1933, as amended, or under the Exchange Act, or be subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate this information by reference into any such filing.
The compensation committee of the Board has reviewed and discussed with management the Compensation Discussion and Analysis below. Based on this review and discussion, the compensation committee recommended to the Board that the Compensation Discussion and Analysis be included in our proxy statement for the 2014 annual meeting of stockholders and in our Annual Report on Form 10-K for the year ended June 28, 2014.
Submitted by the compensation committee of the Board of Directors:
Kendall Cowan, Chairman
Lori Holland
Joel Smith

12


Table of Contents

EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis provides information regarding the fiscal year 2014, or fiscal 2014, compensation program for our Chief Executive Officer, each individual who served as our Chief Financial Officer during fiscal 2014, our three most-highly compensated executive officers (other than our Chief Executive Officer and Chief Financial Officer) who were serving at the end of fiscal 2014 and the one other individual who would have qualified as one of the three most-highly compensated executive officers had he been employed at the end of fiscal 2014. For fiscal 2014, these individuals were:
Greg Dougherty, our Chief Executive Officer;
Pete Mangan, our Chief Financial Officer;
Jim Haynes, our Chief Operating Officer;
Yves LeMaitre, our President, Optical Connectivity Business;
David L. Teichmann, our Executive Vice President, General Counsel, and Corporate Secretary;
Jerry Turin, our former Chief Financial Officer; and
Terry Unter, our former Chief Operating Officer.
We refer to these executive officers collectively in this Compensation Discussion and Analysis and the related compensation tables as the “Named Executive Officers.”
Specifically, this Compensation Discussion and Analysis provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program, and each material component of compensation that we provide to the Named Executive Officers. In addition, we explain how and why the Compensation Committee of our Board of Directors (the “Compensation Committee”) arrived at the specific compensation policies and decisions involving the Named Executive Officers during fiscal 2014.
Executive Summary
During fiscal 2014, we were one of the largest providers of lasers and optical components, modules, and subsystems for the optical communications, industrial and consumer laser markets. Through in-house development and a series of strategic acquisitions and mergers, we have created one of the most extensive and vertically-integrated product portfolios in the fiber optics industry.
For fiscal 2014, we continued to use long-term incentive compensation in the form of time-based and performance-based equity awards to align the interests of our executive officers and our stockholders and to satisfy our retention objectives. In addition, we continued to provide annual cash incentive compensation opportunities to our executive officers that link these cash awards to goals reflected in our annual operating plan. As you will see below, our executive compensation program resulted in payouts that reflected our performance against our principal objectives.
Fiscal 2014 Business Highlights
As our stockholders know, we operate in a highly competitive and cyclical industry. We started fiscal 2014 facing significant financial challenges, and our principal objective for the year was to significantly reduce our operating losses and the resulting use of our cash, primarily by increasing revenues and reducing expenses. During fiscal 2014, we were able to achieve the following positive results:

We closed one transaction in September 2013 to sell our Oclaro Switzerland GmbH subsidiary and associated laser diodes and pump business for $99.5 million and another transaction in November 2013 to sell certain assets related to our amplifier and micro-optics businesses for $88.6 million.
 
We used the proceeds from the asset sale to (1) exchange $25 million in senior secured second lien notes for shares of our common stock, so that no such notes remained outstanding at December 24, 2013, and (2) commence a restructuring program, allowing us to reduce our headcount from approximately 2,900 to 1,300

13


Table of Contents

employees worldwide, and focus our business resources on our optical communications market for telecom and datacom.
  
We achieved adjusted EBITDA of negative $30 million for the first half of fiscal 2014, well above our stretch goal of negative $35 million used for our cash incentive bonus for the first half of fiscal 2014.

We increased our gross margin to 13.4% for fiscal 2014, as compared to 7.0% in fiscal 2013, despite higher than usual costs of sales.

We recorded net income of $17.8 million for fiscal 2014, as compared to a net loss of $122.7 million for fiscal 2013.
However, despite these successes, we were not able to achieve all of the performance goals under our fiscal 2014 compensation programs, due in part to delayed realization of potential synergies from merging with Opnext and generally adverse industry conditions. As a result, actual payouts under our cash and equity incentive award programs were not, in the aggregate, above target levels. Specifically:

We used non-GAAP operating income as a metric for the second half of our fiscal year 2014 cash incentive plan. While we reduced our non-GAAP operating loss for the year to $74.7 million, as compared to a non-GAAP operating loss of $119.9 million for fiscal 2013, our non-GAAP operating loss for the second half was negative $31.8, which did not achieve our threshold goal of negative $28 million for the second half of fiscal year 2014, and therefore no payouts were made to executives with respect to that goal.

We used adjusted EBITDA over a two year performance period as the performance metric for restricted stock unit awards granted in fiscal 2013. While our GAAP revenues were $390.9 million for fiscal 2014 and $404.6 million for fiscal 2013, and our adjusted EBITDA was negative $51.5 for fiscal 2014 and negative $89.9 for fiscal 2013, we did not achieve our threshold goals for these metrics, and therefore all shares granted under these awards were forfeited.
Fiscal 2014 Executive Compensation Actions
Given the significant challenges we were facing at the start of our fiscal 2014, and the fast pace of developments throughout the year, our Board and our Compensation Committee closely monitored and adjusted executive compensation throughout fiscal 2014. We think our stockholders should consider the following key decisions:

Salary : Unlike prior years, we decided to maintain our executives’ base salaries at the levels set in early fiscal 2013, in recognition of our broader corporate goal for the year of controlling expenses to increase profitability. Base salaries in fiscal 2013 were generally set close to the median of our peer group. We took additional action in November 2013 to reduce executives’ base salaries by approximately 9%-17% (based on role) in connection with a concurrent 15% reduction in cash compensation paid to our Board. And, as we hired on new executive officers during the year, those officers were hired in with base salaries below the median of the peer group, reflecting internal pay equity and fairness in light of the salary reductions faced by our executives with long tenures.

Cash Incentives : We retained our historical semi-annual bonus program, focusing executives on adjusted EBITDA performance for the first half and non-GAAP operating income for the second half. We established the target performance levels above our forward-looking guidance for these metrics, so that our executives had to beat expectations to earn their target levels of compensation.

Equity Awards : We started fiscal 2014 with lower available share reserves than we needed to provide meaningful, market-based levels of equity award grants to continuing employees. Therefore, we made the annual equity awards to our executive officers, as well as the new hire grants to our Chief Executive Officer, in the second half of fiscal 2014, only after our stockholders approved an amendment to our 2001 Long-Term Stock Incentive Plan to allow all of our employees to receive equity awards under that plan. Half of the annual equity award granted in February 2014 to each executive officer was granted subject to achievement of non-GAAP operating income breakeven for calendar year 2015 and half of the hire on award granted in

14


Table of Contents

February 2014 to our Chief Executive Officer was granted subject to performance-based vesting related to the Company’s sale of $150 million in assets prior to June 30, 2014.  
Fiscal 2014 Executive Compensation Policies and Practices
We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. The Compensation Committee evaluates our executive compensation program on an ongoing basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. The following policies and practices were in effect during fiscal 2014:
Independent Compensation Committee. The Compensation Committee is comprised solely of independent directors who have established effective means for communicating with stockholders regarding their executive compensation ideas and concerns.
Independent Compensation Committee Advisors. The Compensation Committee engaged its own compensation consultant to assist with its fiscal 2014 compensation reviews. This consultant performed no consulting or other services for the Company.
Annual Executive Compensation Review. The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review of our compensation peer group used for comparative purposes and a review of our compensation-related risk profile to ensure that our compensation-related risks are not reasonably likely to have a material adverse effect on the Company.
Executive Compensation Policies and Practices. Our compensation philosophy and related corporate governance policies and practices are complemented by several specific compensation practices that are designed to align our executive compensation with long-term stockholder interests, including the following:
Compensation At-Risk. Our executive compensation program is designed so that a significant portion of compensation is “at risk” based on corporate performance, as well as equity-based to align the interests of our executive officers and stockholders.
No Perquisites. We do not provide any perquisites or other personal benefits to our executive officers;
No Tax Reimbursements. We do not provide any tax reimbursement payments (including “gross-ups”) on any perquisites or other personal benefits, other than standard relocation benefits;
No Special Health or Welfare Benefits. Our executive officers participate in broad-based company-sponsored health and welfare benefits programs on the same basis as our other full-time, salaried employees;
No Post-Employment Tax Reimbursements. We do not provide any tax reimbursement payments (including “gross-ups”) on any severance or change-in-control payments or benefits;
“Double-Trigger” Change-in-Control Arrangements. All change-in-control payments and benefits are based on a “double-trigger” arrangement (that is , they require both a change-in-control of the Company plus a qualifying termination of employment before payments and benefits are paid);
Performance-Based Incentives. We use performance-based short-term and long-term incentives;
Multi-Year Vesting Requirements. The equity awards granted to our executive officers generally vest or are earned over multi-year periods, consistent with current market practice and our retention objectives; and
Hedging Prohibited. We prohibit our employees from hedging any Company securities.
Fiscal 2013 Stockholder Advisory Vote on Executive Compensation
At our fiscal 2013 Annual Meeting of Stockholders, we conducted a stockholder advisory vote on the fiscal 2013 compensation of the Named Executive Officers (commonly known as a “Say-on-Pay” vote). Our stockholders approved the fiscal 2013 compensation of the Named Executive Officers with approximately 98% of the votes cast in favor of the proposal. This follows our fiscal 2012 Say-on-Pay vote, for which 95% of the votes cast supported the compensation of the Named Executive Officers.
We believe that the outcome of the Say-on-Pay vote reflects our stockholders’ support of our compensation approach, specifically our efforts to attract, retain, and motivate the Named Executive Officers. Accordingly, no significant design

15


Table of Contents

changes were made in response to the fiscal 2013 Say-on-Pay vote. Further, any design changes resulting from the Say-on-Pay vote would not typically show up in compensation until the following fiscal year due to the timing of our annual meeting of stockholders compared to the timing of our annual executive compensation decisions.
We value the opinions of our stockholders and will continue to consider the outcome of future Say-on-Pay votes, including the vote to be held at this Annual Meeting, as well as feedback received throughout the year, when making compensation decisions for our executive officers, including the Named Executive Officers.
Based on the results of a separate stockholder advisory vote on the frequency of future stockholder advisory votes regarding the compensation of the Named Executive Officers (commonly known as a “Say-When-on-Pay” vote) conducted at our fiscal 2011 Annual Meeting of Stockholders, our Board of Directors determined that we will hold our Say-on-Pay votes on an annual basis. The next stockholder advisory vote on the frequency of future stockholder advisory votes regarding the compensation of the Named Executive Officers will take place at the fiscal 2017 Annual Meeting of Stockholders.
Compensation Philosophy and Objectives
We believe that the quality, skills, and dedication of our executive officers are critical factors affecting our performance and stockholder value. Accordingly, the key objective of our executive compensation program is to attract, retain, and motivate superior executive talent while maintaining an appropriate cost structure. In addition, we seek to implement an overarching pay-for-performance philosophy by designing our executive compensation program to link a substantial component of our executive officers’ target total direct compensation to the achievement of performance objectives that directly correlate to the enhancement of stockholder value. Thus, the Compensation Committee believes that the compensation paid to our executive officers should be closely aligned with our corporate performance on both a short-term and long-term basis, linked to specific, measurable results and that such compensation should assist us in motivating and retaining the key executive officers critical to our long-term success. Finally, our executive compensation program is designed to maintain an appropriate balance of annual and long-term incentive compensation opportunities to ensure an appropriate focus on operational objectives and the creation of long-term stockholder value.
Compensation Program Design
To accomplish the foregoing objectives, for fiscal 2014, the Compensation Committee has structured our executive compensation program to include the following principal compensation elements:

Base salaries at levels that we believe allow us to attract and retain key executives, but that also reflect our financial situation as distinguished from our peers (e.g., the salary freeze in early fiscal 2014, the salary reductions in fiscal 2014 and the maintenance of those salary levels at the start of fiscal 2015);

Semi-annual cash incentive compensation opportunities tied to the achievement of pre-established performance goals related to the important financial objectives set forth in our annual operating plan;

Long-term incentive compensation in a mix of options, restricted stock and restricted stock units, to align the interests of our executive officers with those of our stockholders and to promote our retention objectives; and

Limited severance benefits payable on an involuntary termination of employment, with the cash component not exceeding three times the executive’s annual cash compensation.
Generally, the Compensation Committee seeks to allocate a substantial portion of our executive officers’ target total direct compensation opportunity to elements that are performance-based and, therefore, “at risk.” The Compensation Committee also seeks to allocate a substantial portion of our executive officers’ target total direct compensation opportunity to long-term incentive compensation in the form of equity awards. Nonetheless, the Compensation Committee does not maintain formal policies for allocating among annual and long-term compensation or among cash and non-cash compensation. Instead, the Compensation Committee maintains flexibility and adjusts different elements of compensation based upon its evaluation of our key compensation objectives from year to year.
While compensation levels may differ among our executive officers, including the Named Executive Officers, based on the role, responsibilities and performance of each individual executive officer, there are no material differences in the compensation philosophy, policies, or practices among our executive officers.

16


Table of Contents

Compensation-Setting Process
Role of Compensation Committee
The Compensation Committee is the primary architect of our executive compensation program. The Compensation Committee conducts an annual review of our executive compensation strategy to ensure that it is appropriately aligned with our business strategy, reflective of our compensation philosophy and working toward our desired objectives. The Compensation Committee also reviews market trends and changes in compensation practices among our peers, as further described below. Based on its review and assessment, the Compensation Committee from time to time recommends to our Board of Directors, or otherwise approves of changes in our executive compensation program.
For fiscal 2014, the Compensation Committee approved the compensation for each of our executive officers, including our Chief Executive Officer and the other Named Executive Officers. The Compensation Committee also oversaw management’s decisions concerning the compensation of other company officers, administered our equity compensation plans, and evaluated the effectiveness of our overall executive compensation program.
The Compensation Committee’s authority, duties, and responsibilities are described in its charter, which is reviewed annually and revised and updated as warranted. The charter is available at investor.oclaro.com/governance.cfm.
Role of Executive Officers
In formulating its compensation decisions, the Compensation Committee meets with our Chief Executive Officer to obtain his feedback and recommendations with respect to the structure of our executive compensation program, as well as an assessment of the performance of each individual executive officer and his recommendations on the compensation for each individual executive officer. In addition, our Chief Executive Officer, Chief Financial Officer and senior Human Resources leaders develop recommendations for performance measures and target award opportunities under our annual cash incentive compensation plan based on management’s business forecast both at the company and business unit levels, as well as provide information at year end regarding individual and company performance. Our General Counsel also supports the Compensation Committee's review and deliberations on compensation programs, as and when requested by the Compensation Committee.
Role of Compensation Consultant
The Compensation Committee has the authority to retain the services of external advisors, including compensation consultants, legal counsel, accounting, and other advisors. During fiscal 2014, the Compensation Committee engaged Compensia, Inc., a national compensation consulting firm (“Compensia”), as its adviser for certain compensation matters, including the compensation of our executive officers. Compensia was engaged directly by the Compensation Committee to provide an independent review of our executive compensation program, including an analysis of both the competitive market and the design of the various elements of the program. More specifically, Compensia furnished the Compensation Committee with reports on competitive market practices relating to the following matters:
Annual and long-term incentive compensation plan design;
Annual share utilization and stockholder dilution levels resulting from our employee stock plans; and
Executive stock ownership and retention values.
As part of its engagement with the Compensation Committee, Compensia evaluated and recommended changes to our compensation peer group, and using this compensation peer group provided competitive market data and analysis relating to the compensation of our Chief Executive Officer and our other executive officers. Compensia also assisted us with our risk assessment of our compensation programs.
Compensia provided no additional consulting services to us or to our Board of Directors apart from executive and director compensation matters in fiscal 2014. The Compensation Committee has considered the independence of Compensia in light of the new listing standards of NASDAQ on compensation committee independence and the rules of the Securities and Exchange Commission. Based on these standards and rules, the Compensation Committee has concluded that the work performed by Compensia did not raise any conflict of interest.
Competitive Positioning
Given the financial challenges we faced at the start of fiscal 2014, the Compensation Committee chose to not update the peer group selected for use for fiscal 2013, or to request that Compensia provide updated information with respect to

17


Table of Contents

that fiscal 2013 peer group. The Compensation Committee and the Board recognized that our compensation decisions for fiscal 2014 had to be made based primarily on our financial outlook, our unique retention needs, and our limited available stock plan share reserves. Therefore, neither the Compensation Committee nor the Board relied on peer data as a material factor in making compensation decisions in fiscal 2014, and compensation was not benchmarked to a specific level of the historical peer data provided by Compensia for fiscal 2013.
Explanation of Decisions Made with Respect to Fiscal 2014 Compensation
Base Salary
As noted above, we generally rely on base salaries to attract and retain key executives. At the start of fiscal 2014, the Compensation Committee recommended, and the Board approved, the decision to maintain base salaries for our executive officers at the levels in effect at the end of fiscal year 2013. We made this decision as a means to achieve our primary business goal of reducing overall company operating expenses to improve overall profitability measures.
As the year progressed, the Compensation Committee and Board closely monitored our financial progress and, following consultation with our executives, and after considering the potential effect on retention, our Board decided to reduce base salaries for each executive officer, as an additional short term cost control measure. The Board did not commit to a timeline for reinstating or otherwise increasing base salaries. The Board did not create any deferred compensation opportunity or obligation with respect to the reduced amounts.
Named Executive Officer (1)
 
Original Fiscal 2014 Base Salary
 
Temporary Fiscal 2014 Base Salary
 
Percentage Decrease
Mr. Dougherty (2)
 
$
600,000

 
$
500,000

 
(16.7)%
Mr. Mangan (3)
 
$
350,000

 
$
300,000

 
(14.3)%
Mr. LeMaitre (4)
 
$
330,000

 
$
300,000

 
(9.1)%
Mr. Haynes (5)
 
$
402,900

 
$
342,550

 
(15.0)%
Mr. Unter (6)
 
$
330,000

 
$
300,000

 
(9.1)%
Mr. Turin (6)
 
$
338,000

 
N/A

 
N/A
 

(1)
The Compensation Committee set Mr. Teichmann’s base salary at the commencement of his employment in January 2014 at $300,000. The Compensation Committee selected this amount to provide internal pay equity with Messrs. Mangan, LeMaitre and Unter.
(2)
Mr. Dougherty’s base salary was initially set at $600,000 in connection with the negotiation of his employment at the end of fiscal 2013.
(3)
Mr. Mangan’s base salary of $295,000 was determined at the start of fiscal 2014 as part of our broad based employee salary review, prior to the time he was promoted to executive officer status. In connection with his promotion to Chief Financial Officer, the Compensation Committee approved an increase of his base salary to $350,000, based on the increased scope, responsibility and critical nature of his role, the base salaries of the other executive officers prior to the salary reduction, and the base salary of Mr. Turin at the time of his departure.
(4)
In connection with Mr. LeMaitre’s promotion to President of our Optical Connectivity Business in October 2013, the Compensation Committee approved an increase in his base salary to $350,000, based on the increased scope, responsibility and critical nature of his role and the base salaries of the other executive officers prior to the salary reduction.
(5)
Mr. Haynes’ base salary at the start of fiscal 2014 was 237,000 U.K. pounds sterling, and 201,500 U.K. pounds sterling following the salary reduction. The amounts shown have been converted from U.K. pounds sterling to U.S. dollars using the noon buying rate of exchange of U.S. dollars to U.K. pounds sterling of $1.70 on June 27, 2014.
(6)
Mr. Turin resigned his position with the Company effective November 8, 2013. Mr. Unter resigned his position with the Company effective June 2, 2014.
Annual Cash Incentive Compensation
We use performance-based cash incentives to motivate our executive officers to focus on specific goals established by the Board in our annual operating plan, to provide additional cash compensation opportunities beyond base salary in a manner that is consistent with our peers’ practices, and to recognize and reward achievement above our targeted levels of performance. For fiscal 2014, our Compensation Committee recommended, and our Board approved, maintaining a semi-

18


Table of Contents

annual performance period structure. While we recognize that many of our peer companies use a single annual performance period, we believe the semi-annual performance periods allow us to set goals that allow our executives to respond more effectively to the rapid changes in our business.
The Compensation Committee recommended, and the Board decided, at the start of fiscal 2014 that no changes would be made to the target bonus opportunities for each executive officer. We set Mr. Dougherty’s target at 100% of base salary when he was hired in late fiscal 2013. To promote internal pay equity, each of our other executive officers has a target bonus opportunity of 60% of base salary. In connection with the salary reduction decision, the Compensation Committee recommended, and the Board approved, the decision to maintain target bonus opportunities as a percentage of the pre-reduction rate of salary, which we call the “reference salary,” to promote retention in the face of below-market levels of base salary, and to recognize and reward achievement of financial goals that were selected to improve our financial condition.
For fiscal 2014, our Chief Executive Officer and Chief Financial Officer recommended that the performance measure for the first half of fiscal 2014 (that is, the period ending December 28, 2013) be adjusted EBITDA, with a threshold level of negative $45 million (resulting in payout of 50% of the bonus opportunity), a target level of negative $39 million, and a stretch goal of negative $35 million (resulting in payout of 150% of the bonus opportunity for executives other than Mr. Dougherty, whose stretch payout was 200% of the bonus opportunity). Our Board approved this recommendation, as adjusted EBITDA is an important financial indicator of profitable growth and cash generation. Adjusted EBITDA is calculated as net income/loss excluding the impact of income taxes, net interest income/expense, depreciation and amortization, net foreign currency translation gains/losses, as well as restructuring, acquisition and related costs, non-cash compensation related to stock and options, and other unusual one-time charges. We believe that establishing threshold and maximum payout levels under our program provides a means to mitigate risk associated with executive compensation programs, while also providing retention and motivation to exceed expectations. At the end of the performance period, our Board determined that we had achieved negative $30 million in adjusted EBITDA. While this should have resulted in the maximum payout under our program, after taking into account management's recommendation to cap the payout at the threshold level, the Board determined to exercise negative discretion in light of our then-current financial situation and need to maintain continued vigilance in managing expenses, and only approved the payments set forth below. Mr. Teichmann was not eligible for a bonus for the first half of fiscal 2014 as he did not begin work until January 1, 2014.

Named Executive Officer
Maximum Cash Incentive Award Payment
First Half Fiscal 2014 Cash Incentive Award Payment
Mr. Dougherty
$
600,000

$
300,000

Mr. Mangan
$
157,500

$
105,000

Mr. LeMaitre
$
119,820

$
79,880

Mr. Haynes
$
177,171

$
118,114

Mr. Unter
$
148,500

$
99,000

Mr. Turin
N/A

N/A

For the second half of fiscal 2014 (that is, the six-month period ending June 28, 2014), our Chief Executive Officer and Chief Financial Officer recommended that the performance measure be non-GAAP operating income, with a threshold level of negative $28 million (resulting in payout of 50% of the bonus opportunity), a target level of negative $24 million, and a stretch goal of negative $17 million (resulting in payout of 150% of the bonus opportunity for executives other than Mr. Dougherty, whose stretch payout was 200% of the bonus opportunity). Our Board approved this recommendation, as operating income is also an important financial indicator of profitable growth and cash generation. At the end of the performance period, our Board determined that we had achieved negative $32 million in non-GAAP operating income, and, therefore, no bonuses were earned based on this performance.
Retention Bonus Opportunities
In October 2013, our Chief Executive Officer recommended that our Compensation Committee approve a one time retention bonus program for certain key executive officers, to motivate these officers to remain employed and focused on carrying out our short term business plan and restructuring program. On October 11, 2013, the Compensation Committee approved this program for certain of our executive officers, including the then-employed Named Executive Officers listed below. The Compensation Committee set the target aggregate amounts at approximately 65% - 70% of the executive’s then current base salary, to provide a meaningful retention incentive. These retention bonus opportunities required continued employment through three specified dates, with the payouts weighted toward the later retention dates. If an executive were to resign or be terminated by the Company with or without cause before a payment date, he or she would forfeit all future

19


Table of Contents

payments under the program. The retention bonuses were not included in any bonus calculation under our Executive Severance and Change of Control agreements, nor did the retention bonuses offset any severance or other termination payments, if any, that an executive officer was eligible to receive. The retention bonuses awarded to the Named Executive Officers serving in October 2013 were as follows:

Named Executive Officer
Amount Payable on November 1, 2013
Amount Payable on February 1, 2014
Amount Payable on July 1, 2014
Mr. Dougherty
$
100,000

$
100,000

$
200,000

Mr, Haynes
$
50,000

$
100,000

$
100,000

Mr. LeMaitre
$
50,000

$
100,000

$
100,000

Mr. Unter
$
50,000

$
100,000

$
100,000

Mr. Mangan
$
50,000

$
100,000

$
100,000

Mr. Turin
N/A

N/A

N/A

Long-Term Incentive Compensation
We provide equity compensation opportunities to our executive officers to align their financial interests with those of our stockholders, to provide compensation that is consistent with the practices of our peers so that we can attract and retain qualified talent, and to motivate our executives to achieve specific performance vesting goals, and to provide a retention mechanism through time based vesting. We generally provide newly hired executives with a mix of stock options and full value awards, to promote internal pay equity with our long term executives who hold both kinds of awards, and with respect to stock options, to provide a tax-advantaged motivation to work to increase the total return to our stockholders following the date of grant. We generally grant a mix of time-based and performance-based full value awards for annual retention and refresh grants, as we believe this is most consistent with current competitive market practices.
We started fiscal 2014 with lower available share reserves than we needed to provide meaningful, market-based levels of equity grants to our continuing executives. Therefore, we made the annual equity awards to our executive officers, as well as the new hire grants to our Chief Executive Officer, in the second half of fiscal 2014, only after our stockholders approved an amendment to our 2001 Long-Term Stock Incentive Plan to allow all of our employees to receive equity awards under that plan. Given our limited share reserves, our Compensation Committee and our Board did not rely on peer compensation data or benchmarking in setting award sizes, but instead focused on creating a meaningful retention and performance incentive, internal pay equity, and the impact of the award on our burn rate and available reserves. Rather, the Compensation Committee and our Board monitored the need or desirability to make equity award grants continually throughout fiscal 2014, taking into account promotions, new hires, retention, share reserve status, internal pay equity and notable individual performance.
At the start of fiscal 2014, the Compensation Committee approved a special one-time award of 50,000 shares of restricted stock to Mr. Mangan, prior to his promotion to executive officer, to reflect the critical nature of his role at the time and increasing scope of his responsibilities.
In August 2013, the Compensation Committee determined that we did not have sufficient available shares to make the ordinary course annual refresh grants that would normally have been considered at this time of year, and instead decided to make smaller awards of time-based restricted stock or restricted stock units (“RSU”) to provide motivation and retention incentive to key employees, including Messrs. Mangan, Haynes, LeMaitre, Turin and Unter, other than our Chief Executive Officer (given his recent hiring and related new hire grant). The Compensation Committee did not benchmark the award size but instead selected 20,000 shares for each of these executive officers to promote internal pay equity. The Compensation Committee selected a two year time based vesting schedule to address our retention concerns and keep these key employees focused on the critical projects ongoing at that time.
In connection with Mr. LeMaitre’s promotion in October 2013, the Compensation Committee approved a restricted stock award covering 25,000 shares, with vesting over four years. The Compensation Committee selected this size and vesting schedule to reflect internal pay equity and historical promotional grant practices.
In January 2014, in connection with Mr. Mangan’s appointment as our Chief Financial Officer in October 2013, our Board of Directors granted Mr. Mangan an option to purchase 60,000 shares of our common stock (vesting over four years) and a time-based restricted stock award for 60,000 shares of our common stock (vesting over four years). The

20


Table of Contents

Compensation Committee selected this size and vesting schedule to reflect internal pay equity (in light of his significant promotion) and historical promotional grant practices.
In February 2014, in connection with his appointment as our Chief Executive Officer in June 2013, our Board of Directors granted Mr. Dougherty a restricted stock unit award for 800,000 shares of the Company’s common stock. As agreed at the time of his hire in June 2013, the Company promised to make this grant on a future date pending approval by the Company’s stockholders of an amendment of the Company’s equity incentive plan to increase the share reserve of that plan. This approval occurred in January 2014. Half of the shares subject to this award were to vest over four years based upon Mr. Dougherty’s continued employment with the Company and half of the shares subject to this award were to vest over four years based upon Mr. Dougherty’s continued employment with the Company subject to achievement of a performance goal to be established by the Compensation Committee. Vesting of the entire 800,000 shares would accelerate in full upon the Company’s sale of $150 million in assets prior to June 30, 2014. In the first half of fiscal 2014, prior to the grant date, we successfully closed the sale of certain assets related to our laser diodes and pumps businesses and our amplifier and micro-optics businesses and therefore achieved the asset sale performance goal. As a result, Mr. Dougherty became fully vested in the entire award as of the grant date.
In February 2014, in connection with his appointment as our Executive Vice President, General Counsel and Corporate Secretary on January 1, 2014, our Board of Directors granted Mr. Teichmann an option to purchase 60,000 shares of our common stock and a time-based restricted stock award for 60,000 shares of our common stock. The Compensation Committee selected this mix, award size and the vesting schedules to reflect internal pay equity with existing executive officers and historical new hire grant practices.

In February 2014, following stockholder approval of the proposed amendment to increase eligibility for awards under our 2001 Long-Term Equity Incentive Plan, the Compensation Committee recommended, and the Board approved, the annual refresh grants for our then-current executive officers. Consistent with past practices, half of the annual award was in the form of four year time-based vesting restricted stock units, and half of the award was granted as restricted stock units that would vest subject to achievement of non-GAAP operating income breakeven for calendar year 2015. The Compensation Committee determined the size of the awards based on the recommendations of our Chief Executive Officer.
Named Executive Officer
 
Time-Based Restricted
Stock Unit Awards
(Number of Shares)
 
Performance-Based Restricted
Stock Unit Awards (Number
of Shares)
Mr. Mangan
 
32,000
 
32,000
Mr. Haynes
 
32,000
 
32,000
Mr. LeMaitre
 
32,000
 
32,000
Mr. Teichmann
 
5,000
 
5,000
Mr. Unter
 
32,000
 
32,000
 
In April 2014, the Board approved a special recognition grant of 25,000 restricted stock units and an option to purchase 25,000 shares of our common stock for Mr. Teichmann, reflecting the Board’s appreciation for his performance in his first quarter of employment and to promote internal pay equity, given the existing equity holdings of longer term executives and the equity awards promised to officers hired after his start date.

At the start of fiscal 2013, the Board had approved performance-vesting restricted stock awards for our then-current executive officers (as described in our Compensation Discussion & Analysis last fall). The performance measure for these awards was achievement of adjusted EBITDA as determined over any two consecutive fiscal quarters during the two year performance period of fiscal 2013 and fiscal 2014. The first 50% of the award could be earned if the adjusted EBITDA during two fiscal quarters was $20 million or more. The remaining 50% could only be earned if adjusted EBITDA during two fiscal quarters was $30 million or more and if such adjusted EBITDA equaled 7% or more of the Company’s revenues during those quarters. Our Board selected adjusted EBITDA as it is an important financial indicator of profitable growth and cash generation. In July 2014, the Board reviewed the Company’s performance of adjusted EBITDA during the two year performance period and determined that the threshold level of performance of $20 million over any two consecutive quarters had not been achieved, and therefore the awards were forfeited in their entirety.
Health, Welfare, and Other Benefits
Our executive officers, including the Named Executive Officers, are eligible to participate in our employee benefit plans, which are generally provided for all full-time employees, including a tax-qualified Section 401(k) savings plan. We

21


Table of Contents

currently match any contributions made to the Section 401(k) plan by our employees, including our executive officers, of up to 4% of the employee’s compensation (up to a $260,000 annual salary limit).
In addition, we provide other benefits to our executive officers, including the Named Executive Officers, on the same basis as all of our full-time employees in the country in which they are resident. These benefits include group health (medical, dental, and vision) insurance, group disability insurance, and group life insurance.
Perquisites and Other Personal Benefits

Currently, we do not provide any perquisites or other personal benefits to our executive officers, including the Named Executive Officers. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual executive officer in the performance of his or her duties, to make our executive officers more efficient and effective, and for recruitment, motivation or retention purposes. We do not expect that these perquisites or other personal benefits will be a significant aspect of our executive compensation program. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee.
Employment Agreements

We generally rely on at-will offer letters and do not have written employment agreements with a specified term of employment. However, we did enter into an at-will employment agreement with our current Chief Executive Officer, Mr. Dougherty after he was hired, reflecting the slightly more complicated terms of his hire on package and, given the significance of his service as our Chief Executive Officer. We also use a market-standard written agreement to document the terms and conditions of Mr. Haynes’ employment since such arrangements are customary in the United Kingdom.
Post-Employment Severance Benefits
Each of the Named Executive Officers other than Mr. Dougherty has entered into an Executive Severance and Retention Agreement. These Executive Severance and Retention Agreements provide, under certain circumstances, for payments and benefits upon an involuntary termination of employment following a change in control of the Company. In the case of Mr. Dougherty, his employment agreement provides for certain payments and benefits in similar circumstances (other than in connection with his death) as well as involuntary terminations occurring in the absence of a change in control.
The payments and benefits payable under these arrangements in the event of a change in control of the Company are subject to a “double trigger,” meaning that both a change in control of the Company and a subsequent involuntary termination of employment are required. In other words, the change in control of the Company does not by itself trigger any payments or benefits; rather, payments and benefits are paid only if the employment of the executive officer is subsequently terminated without “cause” (or the executive officer resigns for “good reason”) during a specified period following the change in control. We believe that a “double trigger” arrangement maximizes stockholder value because it prevents an unintended windfall to our executive officers in the event of a change in control of the Company, while still providing them appropriate incentives to cooperate in negotiating a transaction involving a potential change in control of the Company in which they believe they may lose their jobs.
We believe providing these arrangements help us compete for and retain executive talent. After reviewing the practices of companies represented in the compensation peer group, we believe that our severance and change of control benefits are generally comparable with severance packages offered to executives by the companies in the compensation peer group.
Other Compensation Policies
Equity Award Grant Policy

Our equity award grant policy provides that, in the case of newly-hired or newly-promoted executive officers, options to purchase shares of the Company’s common stock and restricted stock awards for shares of the Company’s common stock will be approved by the Compensation Committee at a regularly-scheduled quarterly meeting of our Board of Directors (or at a special meeting called between regularly-scheduled meetings of our Board of Directors). The grant date of equity awards for newly-hired executive officers approved by the Compensation Committee is (i) the 10th day of the month in which such approval occurs (if such approval occurs on or prior to the 8th day of such month), (ii) the 10th day of the following month (if such approval occurs after such 8th day) or (iii) such other date as the Compensation Committee determines, after giving due consideration to the purposes of this policy (or the next succeeding trading day on NASDAQ if

22


Table of Contents

such 10 th day or other date so determined is not a trading day); provided, however, that if the award is an option to purchase shares of the Company’s common stock and the tentative grant date falls on a date on which the Company’s trading window is closed, the grant date of such option will be the date on which the trading window reopens.

In accordance with our equity award grant policy, all new-hire and promotion equity awards for non-executive officers will be approved by the Compensation Committee, or, if so delegated, the Chairman of the Compensation Committee. The grant date of such equity awards is (i) the 10th day of the month in which award approval occurs (if such approval occurs on or prior to the 8th day of such month), (ii) the 10th day of the following month (if such approval occurs after such 8th day) or (iii) such other date as the Compensation Committee (or, if authority has been delegated, the Chairman of the Compensation Committee) determines, after giving due consideration to the purposes of the policy (or the next succeeding trading day on NASDAQ if such 10 th day or other date so determined is not a trading day).

All equity awards other than equity awards granted in connection with new hires or promotions will be approved by the Compensation Committee, or, if so delegated, the Chairman of the Compensation Committee. The grant date of such equity awards is (i) the 10th day of the month in which award approval occurs (if such approval occurs on or prior to the 8th day of such month), (ii) the 10th day of the following month (if such approval occurs after such 8th day) or (iii) such other date as the Compensation Committee (or, if authority has been delegated, the Chairman of the Compensation Committee) determines, after giving due consideration to the purposes of the policy (or the next succeeding trading day on NASDAQ if such 10 th day or other date so determined is not a trading day); provided that if the award is an option to purchase shares of the Company’s common stock and the tentative grant date falls on a date on which the Company’s trading window is closed, the grant date of such option will be the date on which the trading window reopens.

The Compensation Committee grants options to purchase shares of the Company’s common stock with exercise prices at least equal to the closing market price of the Company’s common stock on the date of grant.
Derivatives Trading and Hedging Policy
Our Board of Directors has adopted a policy regarding the trading of derivatives or the hedging of our equity securities by our employees, including our executive officers, and directors. This policy provides that all employees and member of our Board of Directors are prohibited from engaging in certain forms of hedging or monetization transactions, such as zero-cost collars and forward sales contracts, that allow the employee or director to continue to own the covered securities, but without the full risks and rewards of ownership.
In addition to the foregoing, our executive offers and members of our Board of Directors are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Compensation Recovery Policy
Currently, we have not implemented a policy regarding retroactive adjustments to any cash or equity-based incentive compensation paid to our executive officers and other employees where the payments were predicated upon the achievement of financial results that were subsequently the subject of a financial restatement. We intend to adopt a general compensation recovery (“clawback”) policy covering our annual and long-term incentive award plans and arrangements once the SEC adopts final rules implementing the requirement of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Tax and Accounting Considerations
Deductibility of Executive Compensation

The Compensation Committee considers the full deductibility of executive compensation as just one of many factors when determining the form, size and terms of executive compensation elements. However, given our recent financial history, our applicable tax rates, and the loss of flexibility that arises when trying to comply with the requirements for full deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, the Compensation Committee has not prioritized full deductibility over the other goals of our compensation program, and reserves the discretion, in its judgment, to authorize compensation payments that do not comply with an exemption from the deduction limit when it believes that such payments are in the best interests of the Company.
Taxation of “Parachute” Payments
Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in

23


Table of Contents

connection with a change in control of the Company that exceeds certain prescribed limits, and that the Company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We are not obligated to provide any Named Executive Officer with a “gross-up” or other reimbursement payment for any tax liability that he may owe as a result of the application of Sections 280G or 4999 in the event of a change in control of the Company. And, as noted above, while the Compensation Committee considers deductibility of compensation as one of many factors, deductibility is not a significant priority for the Compensation Committee at this time and therefore the Compensation Committee retains the discretion, in its judgment, to authorize compensation payments that may not be fully deductible under Section 280G of the Code when it believes that such payments are in the best interests of the Company.
Accounting for Stock-Based Compensation
The Compensation Committee takes accounting considerations into account in designing compensation plans and arrangements for our executive officers and other employees. Chief among these is Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”), the standard which governs the accounting treatment of stock-based compensation awards.
COMPENSATION RISK ASSESSMENT
In July 2014, the Compensation Committee reviewed our compensation policies and practices applicable to all employees and determined that our compensation programs do not encourage excessive or inappropriate risk-taking. The Compensation Committee believes that the design and mix of our compensation programs appropriately encourage our executive officers and employees to focus on the creation of long-term stockholder value. In its review, the Compensation Committee noted the following features:
payout levels under our annual cash incentive and sales incentive plans are capped and payout opportunities may be achieved on a straight-line interpolation basis between threshold and target levels, and between the target and stretch levels;
non-GAAP adjustments are made to align achievement of performance measures with our business strategy;
all non-GAAP adjustments are subject to Audit Committee approval to assure that actual payout levels appropriately reflect company and business unit performance; and
long-term performance-based incentive compensation constitutes an increasingly significant portion of our executive officers’ compensation thereby focusing such individuals on enhancing long-term stockholder value.
COMPENSATION TABLES
Summary Compensation Table
The following table sets forth certain information concerning the compensation for fiscal years 2014, 2013 and 2012 for our principal executive officer (Mr. Dougherty) and each individual who served as our principal financial officer (Mr. Mangan and Mr. Turin) during fiscal year 2014, our three other most highly-compensated executive officers (Mr. Haynes, Mr. LeMaitre and Mr. Teichmann) who served in that capacity at the end of fiscal year 2014 and one other individual who would have qualified as one of the three most-highly compensated executive officers had he been employed at the end of fiscal year 2014 (Mr. Unter). We refer to these officers collectively as our named executive officers.



24


Table of Contents

Fiscal Year 2014 Summary Compensation Table
 
Year (1)
 Salary ($)
 
 Bonus
 ($)
Stock Awards
 ($)(2)
 Option
Awards
($)(2)
 Non-Equity
Incentive Plan
Compensation
 ($)
  All Other Compensation
($)
 
 Total
 ($)
Greg Dougherty
2014
$
536,539

 
$
400,000

$
2,024,000


$
300,000

$
10,200

(11)
$
3,270,739

Chief Executive Officer and
2013
$
99,927

 
$
300,000

$
87,397




 
$
487,324

Director (3)
 
 
 
 
 
 
 
 
 
 
Pete Mangan
2014
$
299,231

 
$
250,000

$
425,180

$
104,688

$
105,000

$
10,200

(11)
$
1,194,299

Chief Financial Officer (4)
 
 
 
 
 
 
 
 
 
 
Jerry Turin
2014
$
117,000

 

$
22,400



$
498,451

(11) (12)
$
637,851

Former Chief Financial Officer (5)
2013
$
338,000

 

$
129,500



$
8,320

(11)
$
475,820

 
2012
$
338,000

 
$
50,000

$
173,200

$
81,699


$
6,240

 
$
649,139

Jim Haynes
2014
$
364,402

(10)
$
260,830

$
215,680


$
120,984

$
37,096

(10) (13)
$
998,992

Chief Operating Officer (6)
2013
$
360,240

(10)

$
155,400



$
33,572

(10)
$
549,212

 
2012
$
359,276

(10)
$
70,000

$
194,850

$
60,518


$
33,450

(10)
$
718,094

Yves LeMaitre
2014
$
350,428

 
$
250,000

$
271,180


$
79,880


 
$
951,488

President,
 
 
 
 
 
 
 
 
 
 
Optical Connectivity Business (7)
 
 
 
 
 
 
 
 
 
 
David Teichmann
2014
$
147,692

 

$
226,500

$
131,697


$
5,077

(11)
$
510,966

Executive Vice President,
 
 
 
 
 
 
 
 
 
 
General Counsel and Corporate Secretary (8)
 
 
 
 
 
 
 
 
 
 
Terry Unter
2014
$
289,039

 
$
150,000

$
215,680


$
99,000

$
616,731

(11) (14)
$
1,370,450

Former Chief Operating Officer (9)
2013
$
329,231

 

$
155,400



$
10,600

(11)
$
495,231

 
2012
$
310,000

 
$
85,000

$
216,500

$
114,984


$
10,070

 
$
736,554

 
(1)
The years in this column refer to the fiscal years ended June 28, 2014, June 29, 2013 and June 30, 2012.
(2)
The amounts reported in these columns reflect the grant date fair value, computed in accordance with ASC 718, of grants of time-based stock options, time-based restricted stock awards, performance-based restricted stock awards, time-based restricted stock unit awards, and performance-based restricted stock unit awards made during each fiscal year. There can be no assurance that the ASC 718 amounts will ever be realized. The assumptions we used to calculate these amounts are included in Note 12 to our audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 28, 2014. For more information about these awards, see the discussion above under “Compensation Discussion and Analysis” and the narrative below.
(3)
Mr. Dougherty was appointed as our Chief Executive Officer effective June 6, 2013.
(4)
Mr. Mangan was appointed as our Chief Financial Officer effective November 11, 2013. Mr. Mangan previously served as our Vice President of Corporate Finance from May 2012 to November 2013.
(5)
Mr. Turin resigned his position with the Company effective November 8, 2013.
(6)
Mr. Haynes was appointed as our Chief Operating Officer effective as of May 2014. Mr. Haynes previously served as our President, Integrated Photonics Business from November 2013 to April 2014, our President, Global Business from May 2012 until October 2013, our President and General Manager, Photonics Components from January 2011 until May 2012, and our Chief Operating Officer from March 2005 until January 2011.
(7)
Mr. LeMaitre was appointed as our President, Optical Connectivity Business effective October 22, 2013. Mr. LeMaitre previously served as our Chief Commercial Officer from July 2011 to September 2013, our Executive Vice President, Strategy and Corporate Development from February 2011 to July 2011, and our Executive Vice President and General Manager of Advanced Photonic Solutions from April 2009 to January 2011.
(8)
Mr. Teichmann was appointed as our Executive Vice President, General Counsel and Corporate Secretary effective January 1, 2014.
(9)
Mr. Unter resigned his position with the Company effective June 2, 2014.
(10)
Converted from U.K. pounds sterling to U.S. dollars using the noon buying rate of exchange of U.S. dollars to U.K. pounds sterling of $1.70 on June 27, 2014, $1.52 on June 28, 2013, and $1.56 on June 29, 2012.
(11)
The amount reported in this column includes Company matching contributions to the Named Executive Officers’ 401(k) plan accounts for fiscal 2013 and fiscal 2014.
(12)
The amounts reported in this column include $245,893 in salary and bonus payments as part of Mr. Turin’s termination of employment, $211,788 related to the accelerated vesting of outstanding equity awards, $40,250 paid as accrued vacation and other benefits, and $520 in Company matching contributions for Mr. Turin’s 401(k) plan account for fiscal 2014.

25


Table of Contents

(13)
The amounts reported in this column include $36,295 pension contribution and $801 in private medical allowance for fiscal 2014.
(14)
The amounts reported in this column include $570,922 in salary and bonus payments as part of Mr. Unter’s termination of employment, $28,265 paid out as accrued vacation and other benefits, $7,344 related to airfare paid for Mr. Unter’s spouse, and $10,200 in company matching contributions for Mr. Unter’s 401(k) plan account for fiscal 2014.
Fiscal 2014 Grants of Plan-Based Awards Table
The following table sets forth information regarding each grant of an award made to the Named Executive Officers during fiscal 2014 under any plan, contract, authorization or arrangement pursuant to which cash, securities, similar instruments or other property may be received.
Grants of Plan-Based Awards For Fiscal 2014  
 
 
 
 
  Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards ($)
 
Estimated Possible Payouts
Under Equity Incentive
Plan Awards in Shares of Stock
 
All Other
Stock
Awards:
Number of
Shares of
Stock
or Units
 
All Other
Awards:
Number of
Securities Underlying Awards
 
 Exercise or Base Price
of Option
Awards
($/Sh)
 
 Grant Date
Fair Value
 of Stock
 and Option
Awards ($)(2)
Name
 
Grant
Date
 
 Thresh-
hold
 
 Target
 
 Max-
imum
 
Thresh-
hold (1)
 
Target (1)
 
Max-
imum (1)
 
 
 
 
Greg Dougherty
 
7/1/2013(4)
 
$
150,000

 
$
300,000

 
$
600,000

 
 
 
 

 

 
 

 
 
1/1/2014(5)
 
$
150,000

 
$
300,000

 
$
600,000

 
 
 
 

 

 
 

 
 
2/10/2014
 

 

 

 
 
 
 
800,000

 

 
 
$
2,024,000

Pete Mangan
 
7/1/2013(4)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 
 

 
 
1/1/2014(5)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 
 

 
 
7/10/2013
 

 

 

 
 
 
 
50,000

 

 
 
$
56,500

 
 
8/15/2013
 

 

 

 
 
 
 
20,000

 

 
 
$
22,400

 
 
1/14/2014
 

 

 

 
 
 
 
60,000

 

 
 
$
153,000

 
 
1/14/2014
 

 

 

 
 
 
 

 
60,000

 
$
2.55

 
$
104,688

 
 
3/10/2014
 

 

 

 
 
32,000
 
 

 

 

 
$
96,640

 
 
3/10/2014
 

 

 

 
 
 
 
32,000

 

 

 
$
96,640

Jerry Turin
 
7/1/2013(4)
 
$
50,700

 
$
101,400

 
$
152,100

 
 
 
 

 

 

 

 
 
8/15/2013
 

 

 

 
 
 
 
20,000

 

 

 
$
22,400

Jim Haynes(3)
 
7/1/2013(4)
 
$
35,550

 
$
71,100

 
$
106,650

 
 
 
 

 

 

 

 
 
1/1/2014(5)
 
$
35,550

 
$
71,100

 
$
106,650

 
 
 
 

 

 

 

 
 
8/15/2013
 

 

 

 
 
 
 
20,000

 

 

 
$
22,400

 
 
3/10/2014
 

 

 

 
 
32,000
 
 

 

 

 
$
96,640

 
 
3/10/2014
 

 

 

 
 
 
 
32,000

 

 

 
$
96,640

Yves LeMaitre
 
7/1/2013(4)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 

 

 
 
1/1/2014(5)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 

 

 
 
8/15/2013
 

 

 

 
 
 
 
20,000

 

 

 
$
22,400

 
 
11/11/2013
 

 

 

 
 
 
 
25,000

 

 

 
$
55,500

 
 
3/10/2014
 

 

 

 
 
32,000
 
 

 

 

 
$
96,640

 
 
3/10/2014
 

 

 

 
 
 
 
32,000

 

 

 
$
96,640

David Teichmann
 
7/1/2013(4)
 
$
45,000

 
$
90,000

 
$
135,000

 
 
 
 

 

 

 

 
 
1/1/2014(5)
 
$
45,000

 
$
90,000

 
$
135,000

 
 
 
 

 

 

 

 
 
2/10/2014
 

 

 

 
 
 
 
60,000

 

 

 
$
151,800

 
 
2/10/2014
 

 

 

 
 
 
 

 
60,000

 
$
2.53

 
$
103,482

 
 
3/10/2014
 

 

 

 
 
5,000
 
 

 

 

 
$
15,100

 
 
3/10/2014
 

 

 

 
 
 
 
5,000

 

 

 
$
15,100

 
 
5/12/2014
 

 

 

 
 
 
 
25,000

 

 

 
$
44,500

 
 
5/12/2014
 

 

 

 
 
 
 

 
25,000

 
$
1.78

 
$
28,215

Terry Unter
 
7/1/2013(4)
 
$
45,000

 
$
90,000

 
$
135,000

 
 
 
 

 

 

 

 
 
1/1/2014(5)
 
$
45,000

 
$
90,000

 
$
135,000

 
 
 
 

 

 

 

 
 
8/15/2013
 

 

 

 
 
 
 
20,000

 

 

 
$
22,400

 
(1)
On March 10, 2014, each of Messrs. Mangan, Haynes, LeMaitre and Teichmann received a performance-based restricted stock unit award. These performance-based restricted stock unit awards will vest, if at all, at a 100% target level, based upon the achievement of certain earnings targets during a performance period ending December 31, 2015. Vesting is also contingent upon service conditions being met through February 2016. If the performance conditions are not achieved, then the corresponding awards will be forfeited in the third quarter of fiscal 2016. As of the grant date, and through June 28, 2014, we have determined that achieving the earnings targets is likely.

26


Table of Contents

(2)
The amounts reported in this column reflect the grant date fair value of the respective stock and option awards computed in accordance with ASC 718. There can be no assurance that the ASC 718 amounts will ever be realized. The assumptions we used to calculate these amounts are included in Note 12 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 28, 2014.
(3)
For Mr. Haynes, “threshold,” “target” and “maximum” estimated future payouts under non-equity incentive plan awards are converted from U.K. pounds sterling to U.S. dollars using the noon buying rate of exchange of U.S. dollars to U.K. pounds sterling of $1.70 on June 27, 2014.
(4)
For the first half of fiscal 2014, the annual cash incentive plan was based on achieving an adjusted EBITDA target for the six months ended December 28, 2013. The performance target level had to be met at the threshold level for any amounts to be paid under this plan. For more information, see the discussion above under “Compensation Discussion and Analysis.”
(5)
For the second half of fiscal 2014, the the annual cash incentive plan was based on achieving a non-GAAP operating income target for the six months ended June 28, 2014. As the minimum achievement requirements were not met, no amounts were paid out under this plan. For more information, see the discussion above under “Compensation Discussion and Analysis.”

Narrative Disclosure to Summary Compensation Table and Fiscal Year 2014 Grants of Plan Based Awards Table
A discussion of 2014 base salaries, bonuses, incentive plans, awards and employment agreement is set forth in “Compensation Discussion and Analysis,” including a discussion of the material terms and conditions of the 2014 restricted stock awards.
Fiscal 2014 Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth information concerning stock options that have not been exercised and unvested restricted stock awards and performance-based stock awards for each of the named executive officers as of June 28, 2014.
  2014 Outstanding Equity Awards at Fiscal Year-End
 
 
Option Awards
 
Stock Awards
Name
Option Grant
Date
 Number of Securities Underlying Unexercised Options (#) Exercisable
 
 Number of Securities Underlying Unexercised Options (#) Unexercisable
 
 Option Exercise Price ($)
 
Option Expiration Date
 
 Number of Shares or Units of Stock that Have Not Vested (#)
 
 Market Value of Shares or Units of Stock That Have Not Vested ($) (1)
 Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2)
 
 Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3)
Greg Dougherty
4/26/2005

2,893

 

 
$
17.7

 
4/25/2015

 

 


 

 
10/27/2005

1,447

 

 
$
10.4

 
10/26/2015

 

 


 

 
11/3/2006

1,447

 

 
$
21.05

 
11/2/2016

 

 


 

 
11/15/2007

1,447

 

 
$
21.75

 
11/14/2017

 

 


 

 
11/13/2008

1,447

 

 
$
1.5

 
11/12/2018

 

 


 

 
5/13/2009

3,334

 

 
$
3.1

 
5/13/2019

 

 


 

 
10/21/2009

8,000

 

 
$
5.8

 
10/21/2019

 

 


 

 
10/27/2010

3,898

 

 
$
13.68

 
10/27/2021

 

 


 

 
10/26/2011

14,881

 

 
$
3.54

 
10/26/2021

 

 


 

Pete Mangan
6/11/2012

6,000

 
6,000

(4
)
$
2.56

 
6/11/2022

 

 


 

 
1/14/2014


 
60,000

(4
)
$
2.55

 
1/14/2024

 

 


 

 


 

 

 

 
3,000

(5
)
$
6,450


 

 


 

 

 

 
37,500

(6
)
$
80,625


 

 


 

 

 

 
20,000

(7
)
$
43,000


 

 


 

 

 

 
60,000

(8
)
$
129,000


 

 


 

 

 

 
32,000

(9
)
$
68,800


 

 


 

 

 

 

 

32,000

 
$
68,800

Jim Haynes
9/22/2004

2,800

 

 
$
33.65

 
9/22/2014

 

 


 

 
11/11/2005

25,000

 

 
$
24.55

 
11/11/2015

 

 


 

 
6/12/2007

5,000

 

 
$
10.05

 
6/12/2017

 

 


 

 
1/28/2008

21,902

 

 
$
8.75

 
1/28/2018

 

 


 

 
8/15/2008

24,000

 

 
$
8.9

 
8/15/2018

 

 


 

 
5/13/2009

20,000

 

 
$
3.1

 
5/13/2019

 

 


 

 
8/13/2009

76,000

 

 
$
3.5

 
8/13/2019

 

 


 


27


Table of Contents

 
8/16/2010

32,966

 
1,434

(4
)
$
10.43

 
8/16/2020

 

 


 

 
8/15/2011

14,166

 
5,834

(4
)
$
4.33

 
8/15/2021

 

 


 

 


 

 

 

 
6,250

(10
)
$
13,438


 

 


 

 

 

 
33,750

(11
)
$
72,563


 

 


 

 

 

 
20,000

(7
)
$
43,000


 

 


 

 

 

 
32,000

(9
)
$
68,800


 

 


 

 

 

 

 

7,813

 
$
16,798

 


 

 

 

 

 

32,000

 
$
68,800

Yves LeMaitre
3/10/2008

4,875

 

 
$
6.15

 
3/10/2018

 

 


 

 
8/15/2008

6,000

 

 
$
8.9

 
8/15/2018

 

 


 

 
5/13/2009

7,876

 

 
$
3.1

 
5/13/2019

 

 


 

 
8/15/2009

25,876

 

 
$
3.5

 
8/15/2019

 

 


 

 
8/16/2010

13,230

 
717

(4
)
$