Oclaro, Inc.
OCLARO, INC. (Form: DEF 14A, Received: 09/21/2015 16:39:58)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
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Soliciting Material Pursuant to §240.14a-12
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OCLARO, INC.
2560 Junction Avenue
San Jose, California 95134
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 10, 2015
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 Tuesday, November 10, 2015, 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 Marissa Peterson and Greg Dougherty as Class II 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 issuance of shares of our common stock upon conversion of up to $65 million in aggregate principal amount of our 6.00% Convertible Senior Notes due 2020 issued in a private placement on February 19, 2015 in accordance with the terms of the Notes and the Indenture;
3.
To approve an amendment to the Restated Certificate of Incorporation to increase the number of authorized shares of our common stock;
4.
To approve an amendment to the Fifth Amended and Restated 2001 Long-Term Stock Incentive Plan;
5.
To approve the Amended and Restated Variable Pay Program;
6.
To approve the advisory resolution approving the compensation of our named executive officers; and
7.
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 27, 2015 with the proxy statement that accompanies this notice of meeting. The Annual Report on Form 10-K for the fiscal year ended June 27, 2015 contains consolidated financial statements and other information of interest to you. Holders of     our common stock at the close of business on September 11, 2015 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 21, 2015



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OCLARO, INC.
Proxy Statement for the Annual Meeting of Stockholders
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OCLARO, INC.
Proxy Statement for the Annual Meeting of Stockholders
To Be Held on November 10, 2015
This proxy statement is furnished to you in connection with the solicitation of proxies by our board of directors (the Board) for the 2015 annual meeting of stockholders (the Annual Meeting) to be held on Tuesday, November 10, 2015 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 27, 2015 (the 2015 Annual Report), which includes our audited financial statements for the fiscal year ended June 27, 2015 (fiscal year 2015), and the enclosed proxy card are first being mailed to stockholders on or about September 21, 2015.
We have elected to provide access to our proxy materials over the Internet. Accordingly, on or about September 21, 2015, 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
2015 Annual Meeting of Stockholders to be Held on November 10, 2015
This proxy statement and our 2015 Annual Report are available for viewing, printing and downloading at www.proxyvote.com.
You can also find this proxy statement and our 2015 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 2015 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 2015 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 9, 2015. 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.

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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 two nominated Class II directors for a three year term, the shares will be voted “FOR” the election of the two nominated Class II directors;
the approval of the issuance of shares of our common stock upon conversion of up to $65 million in aggregate principal amount of our 6.00% Convertible Senior Notes due 2020 issued in a private placement on February 19, 2015 in accordance with the terms of the Notes and the Indenture, the shares will be voted “FOR” the approval of such issuance;
the approval of an amendment to the Restated Certificate of Incorporation to increase the number of authorized shares of our common stock, the shares will be voted “FOR” the approval of the amendment;
the approval of an amendment to the Fifth Amended and Restated 2001 Long-Term Stock Incentive Plan, the shares will be voted “FOR” the approval of the amendment;
the approval of the adoption of the Amended and Restated Variable Pay Program, the shares will be voted “FOR” the approval of the adoption of the Amended and Restated Variable Pay Program;
the approval of the advisory resolution approving the compensation of our named executive officers, the shares will be voted “FOR” the approval of the advisory resolution approving 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.

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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.
Stockholders Entitled to Vote
The Board fixed September 11, 2015 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 11, 2015, there were 110,756,976 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. We believe that the proposals to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year and to amend the Restated Certificate of Incorporation to increase the number of authorized shares of our common stock are considered to be “routine” matters. Accordingly, we do not expect “broker non-votes” on these proposals. 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. We have a majority voting standard for the election of directors in an uncontested election, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected as of the tenth day preceding the date we first mail our notice of meeting for the Annual Meeting. Under this voting standard, each nominee for the two director seats must be elected by the affirmative vote of the majority of the votes cast by stockholders for that nominee (meaning the number of shares voted “for” a nominee’s election must exceed the number of shares voted “against” such nominee’s election). With respect to the proposal regarding the election of our directors, neither “broker non-votes” nor abstentions are counted as a vote cast either “for” or “against” that nominee’s election. It is the policy of the Board that incumbent director nominees, such as the two directors nominated for re-election at the Annual Meeting, must submit to the Chairman of the Nominating and Corporate Governance Committee of the Board or, in the case of such Chairman, to the Chairman of the Board, an advance irrevocable resignation that is conditioned upon (i) the director’s failure to receive the affirmative vote of the majority of the votes cast by stockholders for that director in an uncontested election, and (ii) the Board’s acceptance of such resignation. Each of Greg

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Dougherty and Marissa Peterson has submitted a conditional irrevocable resignation to the Chairman of the Nominating and Corporate Governance Committee of the Board in accordance with the Board’s policy.

For the proposal to amend the Restated Certificate of Incorporation to be approved, our Restated Certificate requires the affirmative vote of the holders of a majority in voting power of the outstanding shares of our common stock entitled to vote at the Annual Meeting. “Broker non-votes,” if any, and abstentions have the same effect as votes “AGAINST” this proposal.

For the other proposals to be approved, our by-laws require the affirmative vote of the holders of a majority in voting power of the shares of our common stock as of the record date that are present in person or represented by proxy and voting on such 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.
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, 2015 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 2015 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 of common stock that are exercisable within 60 days of September 1, 2015 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 110,148,368 shares of our common stock outstanding as of September 1, 2015. 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.

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Beneficial Owner
Number
of Shares
 
Percentage
of Total
5% Stockholders
 
 
 
Soros Fund Management, LLC (1)
888 Seventh Avenue, 33rdFloor
New York, NY 10106
12,051,281

 
10.9%
Hitachi, Ltd. (2)
6-6 Marunouchi 1-chome, Chiyoda-ku
Tokyo 100-8280, Japan
11,900,000

 
10.8%
Kopp Investment Advisors, LLC and affiliated persons (3)
8400 Normandale Lake Boulevard, Suite 1450
Bloomington, MN. 55437
10,768,344

 
9.8%
DNB Asset Management AS (4)
Dronning Aufemias Gate 30, Bygg M-12N
0191 Oslo, Norway
6,130,335

 
5.6%
BlackRock, Inc. (5)
55 East 52nd Street
New York, NY 10022
5,951,207

 
5.4%
Named Executive Officers and Directors
 
 
 
Greg Dougherty (6)
568,787

 
*
Pete Mangan (7)
158,485

 
*
Yves LeMaitre (8)
181,598

 
*
Jim Haynes (9)
318,960

 
*
Adam Carter (10)
107,011

 
*
Lori Holland (11)
199,248

 
*
Joel A. Smith, III (12)
199,083

 
*
Edward Collins (13)
279,248

 
*
William L. Smith (14)
183,141

 
*
Kendall Cowan (15)
177,720

 
*
Marissa Peterson (16)
168,584

 
*
All executive officers and directors as a group (14 persons) (17)
2,541,865

 
2.3%
*
less than 1%
(1)
This and the following information is based on a Schedule 13G filed with the Commission on February 23, 2015 by Soros Fund Management, LLC (SFM LLC), George Soros and Robert Soros and may not be current as of September 1, 2015. The Schedule 13G indicates that it relates to shares held for the account of Quantum Partners LP, a Cayman Islands limited partnership (Quantum Partners). SFM LLC serves as principal investment manager to Quantum Partners. As such, SFM LLC has been granted investment discretion over portfolio investments, including the shares, held for the account of Quantum Partners. George Soros serves as Chairman of SFM LLC and Robert Soros serves as President and Deputy Chairman of SFM LLC. The Schedule 13G indicates that SFM LLC has sole power to vote or direct the vote, and to dispose or direct the disposition of, these shares and that George Soros and Robert Soros have shared power to vote or direct the vote, and to dispose or direct the disposition of, these shares. These shares comprise shares of common stock issuable upon conversion of our 6.00% convertible senior notes due 2020 within 60 days of September 1, 2015.
(2)
This information is based on a Schedule 13G filed with the Commission on February 12, 2014 by Hitachi, Ltd., and may not be current as of September 1, 2015.
(3)
The number of shares listed is based on a Schedule 13F-HR filed with the Commission on August 14, 2015. The Schedule 13F-HR indicates that Kopp Investment Advisors, LLC has sole voting authority over 10,688,359 of these shares and no voting authority over 79,985 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

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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, 2015.
(4)
The number of shares listed is based on a Schedule 13F-HR filed with the Commission on July 7, 2015 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, 2015. The following information is based on a Schedule 13G/A filed with the Commission on February 4, 2015 by DNB.  DNB is the beneficial owner of 8,463,315 shares of our common stock. DNB is the investment manager of a number of funds and managed accounts and is deemed to be interested in voting rights in the Company by virtue of the investment management relationship. The Schedule 13G/A indicates that DNB has sole power to vote or direct the vote over these shares and sole power to dispose or direct the disposition of these shares. This information may not be current as of September 1, 2015.
(5)
This information is based on a Schedule 13G filed with the Commission on February 3, 2015 by BlackRock, Inc., and may not be current as of September 1, 2015. The Schedule 13G indicates that BlackRock, Inc. has sole power to vote or direct the vote over 5,851,871 of these shares and sole power to dispose or direct the disposition of 5,951,207 of these shares.
(6)
Represents 532,886 shares beneficially owned by Mr. Dougherty and 35,901 shares issuable pursuant to options exercisable within 60 days of September 1, 2015.
(7)
Represents 122,235 shares beneficially owned by Mr. Mangan and 36,250 shares issuable pursuant to options exercisable within 60 days of September 1, 2015.
(8)
Represents shares 99,771 beneficially owned by Mr. LeMaitre and 81,827 shares issuable pursuant to options exercisable within 60 days of September 1, 2015.
(9)
Represents 92,658 shares beneficially owned by Mr. Haynes and 226,302 shares issuable pursuant to options exercisable within 60 days of September 1, 2015.
(10)
Represents 77,845 shares beneficially owned by Dr. Carter and 29,166 shares issuable pursuant to options exercisable within 60 days of September 1, 2015
(11)
Represents 158,469 shares beneficially owned by Ms. Holland and 40,779 shares issuable pursuant to options exercisable within 60 days of September 1, 2015.
(12)
Represents 161,735 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, 2015.
(13)
Represents 95,738 shares beneficially owned by Mr. Collins, 77,731 held in trust, 70,000 shares owned by his spouse and 35,779 shares issuable pursuant to options exercisable within 60 days of September 1, 2015.
(14)
Represents 183,141 shares beneficially owned by Mr. Smith.
(15)
Represents 177,720 shares beneficially owned by Mr. Cowan.
(16)
Represents 151,538 shares beneficially owned by Ms. Peterson and 17,046 shares issuable pursuant to options exercisable within 60 days of September 1, 2015.
(17)
Includes 69,270 shares issuable pursuant to options exercisable within 60 days of September 1, 2015 held by our executive officers not listed in the table.
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 27, 2015 filed with the SEC, and actual results may vary materially.

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PROPOSAL I
ELECTION OF CLASS II DIRECTORS
We have three classes of directors, currently consisting of three Class I directors, two 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 2017, 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. Greg Dougherty and Marissa Peterson are each currently serving as Class II directors.
Upon the recommendation of our nominating and corporate governance committee, the Board has nominated Mr. Dougherty and Ms. Peterson for re-election to serve as Class II directors (the Nominees). If the Nominees are elected this year, they will be elected to serve as members of the Board until the 2018 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 Greg Dougherty and Marissa Peterson to serve as Class II directors is in the best interest of Oclaro and our stockholders and, therefore, unanimously recommends that the stockholders vote “FOR” the election of the Nominees.
Class I Directors — Terms Expiring 2017
Edward Collins, 72, has served as a director of Oclaro since May 2008. From 1995 to 2014, Mr. Collins 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. From 2012 to March 2015, Mr. Collins was Senior Counsel with the international law firm White and Case.  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, and was a director and chairman of the audit committee of the successor to TFC, the Shelton Greater China Fund, until 2012. Since 2009, Mr. Collins has served as non-executive Chairman of Branded Spirits, Ltd., a privately held company that sells branded spirits.  He served as non-executive Chairman of MedioStream, Inc., a software company,  from 2001 to 2014.  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.  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, 57 , 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. Ms. Holland served as a director and audit committee member of Credence Systems Corporation, a publicly-traded test equipment

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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,  58, 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 September 2014 has served as President, AT&T Technology 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 January 2010 to September 2014, Mr. Smith was President, AT&T Network Operations. 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. 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 — Nominees for Election to the Board at the Annual Meeting
Greg Dougherty , 55, 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 ("Avanex"), 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 , 53, 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

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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,  61, 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, 70 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 — Nominees for Election to the Board at the Annual Meeting” above.
Oclaro Management Team
Dr. Adam Carter, 51 , 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 Systems, Inc. ("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.

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Dr. Richard Craig , 60, 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 , 53, 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, 51 , 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 , 56 , 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.
Lisa Paul, 51, has served as Oclaro's Executive Vice President, Human Resources since November 2014. Prior to joining Oclaro, she served from April 2012 to November 2014 as the Vice President, Talent Management of Flextronics International, a public supply chain solutions company, and from June 2011 to March 2013 as the Vice President, Human Resources Business Partner of its Integrated Network Solutions Business Group. From May 2006 to June 2011 she served as a Human Resources Business Partner with Cisco. Prior to Cisco, Ms. Paul served in a variety of human resources roles at Sun Microsystems and other companies.
David Teichmann, 59, 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 &

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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.
Director Compensation
The Board believes that providing competitive compensation is necessary to attract and retain qualified non-employee directors. However, the Board is also mindful of our compensation budget and cash constraints. On July 30, 2014, the Board decided to maintain our current non-employee director compensation arrangements for fiscal year 2015 at the same levels in effect for the second half of fiscal year 2014. During fiscal year 2015, each of our non-employee directors received an annual retainer (paid quarterly) of $34,000, except the chairman, who received an additional annual retainer (paid quarterly) of $51,000. Other compensation (as described below) was paid in fiscal year 2015 for Board meetings in excess of five in-person meetings and four telephonic meetings per year. During fiscal year 2015, this compensation consisted of $1,000 for each additional in-person meeting 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 fiscal year 2015, the chairman of the audit committee received an additional annual retainer (paid quarterly) of $31,450, the chairman of the compensation committee received an additional annual retainer (paid quarterly) of $15,300 and the chairman of the nominating and corporate governance committee received an additional annual retainer (paid quarterly) of $14,025. Each member of the audit committee received an additional $8,500 per year (paid quarterly) for up to eight meetings annually and was eligible to receive additional compensation (as described above) for additional meetings during the year. Each member of the compensation committee received an additional $5,950 per year (paid quarterly) for up to eight meetings annually 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 $4,250 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 our non-employee directors for reasonable out-of-pocket expenses incurred in attending Board and committee meetings. The following table shows the Board and Board committee retainers for fiscal year 2015.
BOD/Committee Position
Annual Retainer
 
 
Board Chairman
$
51,000

Board Retainer
$
34,000

Audit Committee Member
$
8,500

Audit Committee Chairman
$
31,450

Compensation Committee Member
$
5,950

Compensation Committee Chairman
$
15,300

Nominating and Corporate Governance Committee Member
$
4,250

Nominating and Corporate Governance Committee Chairman
$
14,025

On October 29, 2014, in recognition of the then-current market price of our common stock, the Board decided to amend its policy for granting restricted stock awards to our non-employee directors, on a one-time basis, to reduce the number of shares of restricted stock to be awarded on the date of the annual meeting for fiscal year 2014, or the 2014 Annual Meeting. Prior to this decision, each non-employee director serving at the conclusion of the 2014 Annual Meeting would have been granted a restricted stock award of 5,000 shares of our common stock plus a number of shares with a value equal to $100,000 divided by the average closing market price of our common stock for the 30 days ending on the date of the 2014 Annual Meeting (or a total of 68,775 shares). Instead, on the date of the 2014 Annual Meeting, each non-employee director was granted a restricted stock award of 50,000 shares of our common stock. 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 awards were granted in fiscal year 2015.





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Fiscal 2015 Director Compensation Table
The following table sets forth information concerning the compensation of our non-employee directors for fiscal year 2015:
Name (1)
Fees Earned or
Paid in Cash ($)
 
Stock
Awards
($)(2)(3)(4)
 
 
Option
Awards($)
 
All Other
Compensation($)
 
Total ($)
Edward B. Collins
$
50,150

 
$
84,000

 
 

 

 
$
134,150

Kendall Cowan
$
68,425

 
$
84,000

 
 

 

 
$
152,425

Lori Holland
$
84,150

 
$
84,000

 
 

 

 
$
168,150

Marissa Peterson
$
85,850

 
$
84,000

 
 

 

 
$
169,850

Joel A. Smith III
$
59,500

 
$
84,000

 
 

 

 
$
143,500

William L. Smith
$
38,675

 
$
84,000

 
 

 

 
$
122,675

 
(1)
The 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 27, 2015. 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 27, 2015 filed with the SEC on August 28, 2015.
(3)
Consists of the grant date fair value, computed in accordance with ASC 718, of the restricted stock awards granted on November 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 2015.
Name
 
Stock Awards (A)
 
Option Awards (B)
Edward B. Collins
 
50,000

 
35,779

Kendall Cowan
 
50,000

 

Lori Holland
 
50,000

 
40,779

Marissa Peterson
 
50,000

 
17,046

Joel A. Smith III
 
50,000

 
35,901

William L. Smith
 
50,000

 

 
 
(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.
 
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 2015, 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: Mr. Fernicola filed one late Form 4.

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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 2015 annual meeting of stockholders and in our Annual Report on Form 10-K for the year ended June 27, 2015.
Submitted by the compensation committee of the Board of Directors:
Kendall Cowan, Chairman
Lori Holland
Joel Smith

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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis provides information regarding the fiscal year 2015, or fiscal 2015, compensation program for our Chief Executive Officer, our Chief Financial Officer, and 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 2015. For fiscal 2015, these individuals were:
Greg Dougherty, our Chief Executive Officer;
Pete Mangan, our Chief Financial Officer;
Jim Haynes, our Chief Operating Officer;
Adam Carter, our Chief Commercial Officer; and
Yves LeMaitre, our President, Optical Connectivity Business.
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 2015.
Executive Summary
During fiscal 2015, we were one of the leading providers of optical components, modules and subsystems for the core optical transport, service provider, enterprise and data center markets. Leveraging over three decades of laser technology innovation, photonic integration and subsystem design, we provide differentiated solutions for optical networks and high-speed interconnects driving the next wave of streaming video, cloud computing, application virtualization and other bandwidth-intensive and high-speed applications.
For fiscal 2015, we continued to use long-term incentive compensation in the form of time-based and performance-based equity awards to focus our executive officers on achieving positive adjusted EBITDA, which we believe will help lead to continued growth and increased shareholder value. In addition, we continued to provide annual cash incentive compensation opportunities to our executive officers that link these cash awards to the goals reflected in our annual operating plan. As explained below, our executive compensation program resulted in payouts that reflected our performance against our principal objectives.
Fiscal 2015 Business Highlights
We operate in a highly competitive and cyclical industry. Starting fiscal 2015 facing significant financial challenges, we determined that our principal objective for the year was to significantly reduce our operating losses and the resulting use of cash, primarily by increasing revenues and reducing expenses. During fiscal 2015, we were able to achieve the following positive results:
We reported adjusted EBITDA of negative $14.4 million for the first half of fiscal 2015 and adjusted EBITDA of negative $6.5 million for the second half of fiscal 2015, as compared to adjusted EBITDA of negative $29.8 million and $21.7 million for the first half of fiscal 2014 and second half of fiscal 2014, respectively.
We increased our gross margin to 16.6% for fiscal 2015, as compared to 13.4% in fiscal 2014.
We sold $65 million of convertible notes in February 2015, raising cash to be used for general corporate purposes, including working capital for, among other things, further developing new products for the optical communications market for telecom and datacom.

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We sold our Komoro, Japan-based industrial and consumer business in October 2014 for $17.1 million.
Fiscal 2015 Executive Compensation Actions
On behalf of our Board of Directors, the Compensation Committee closely monitored our executive compensation levels throughout fiscal 2015. Key compensation decisions for fiscal 2015 were as follows:
Salary : We continued to maintain our executive officers’ base salaries at the levels set in early fiscal 2013, consistent with our broader corporate objective 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. As we hired on new executive officers during fiscal 2015, their base salaries were below the median of the compensation peer group, reflecting internal pay equity and fairness in light of the ongoing base salary reductions of our executive officers with longer tenures.
Annual Cash Incentive Awards : We continued to focus our executive officers on improving our adjusted EBITDA performance, with their annual cash incentive opportunities measured against our semi-annual performance during the first half and second halves of fiscal 2015. We established the target performance levels for each six-month period that were above our forward-looking guidance for this measure, so that our executive officers had to exceed expectations to earn their target bonuses. Payouts to our executive officers, including the Named Executive Officers, under our fiscal 2015 cash incentive compensation program were below target payout levels, consistent with management’s recommendation, and the Compensation Committee’s decision, to exercise negative discretion and not give our executive officers credit for the positive benefit of foreign exchange fluctuations on our adjusted EBITDA performance.
Equity Awards : We granted equity awards 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 goals. In August 2014, we granted each of Messrs. Dougherty, Mangan, Haynes and LeMaitre an annual equity award comprised of both a time-based restricted stock unit award and a performance-based restricted stock unit award. Almost two-thirds of the annual equity award value granted our Chief Executive Officer and half of the equity award value granted to each other executive officer was in the form of a performance stock unit award to be earned based on achievement of positive adjusted EBITDA for two consecutive fiscal quarters prior to the end of fiscal year 2017. The remaining equity award value was granted in the form of time-based restricted stock unit awards vesting over three years.
After taking into consideration the payouts under the annual cash incentive program, 58% of our Chief Executive Officer's target total direct compensation and, on average, over 44% of the target total direct compensation of the other Named Executive Officers who were with us for all of fiscal year 2015 was performance-based and, thus, only paid or earned to the extent that we achieved one or more pre-established performance objectives.

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Fiscal 2015 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 2015:
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 2015 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 and Pledging Prohibited. We prohibit our employees from hedging any Company securities or plaedging any Company securities.
Fiscal 2014 Stockholder Advisory Vote on Executive Compensation
At our fiscal 2014 Annual Meeting of Stockholders, we conducted a stockholder advisory vote on the fiscal 2014 compensation of the Named Executive Officers (commonly known as a “Say-on-Pay” vote). Our stockholders approved the fiscal 2014 compensation of the Named Executive Officers with approximately 89% of the votes cast in favor of the proposal.
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 changes were made in response to the fiscal 2014 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.

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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 2015, 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 through 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 restricted stock units, and performance-based restricted stock units, to align the interests of our executive officers with those of our stockholders and to promote our retention objectives; and

Limited post-employment compensation arrangements 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.

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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 2015, 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 2015, 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; and
Annual share utilization and stockholder dilution levels resulting from our employee stock plans.
As part of its engagement with the Compensation Committee, Compensia also assisted us with our risk assessment of our compensation programs.
In fiscal 2015, Compensia provided no additional consulting services to us or to our Board of Directors apart from executive and director compensation matters and a review of our Fifth Amended and Restated 2001 Long-Term Stock Incentive Plan. The Compensation Committee has considered the independence of Compensia in light of the 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 2015, and after reviewing the then-current peer group selected for use in fiscal 2014, the Compensation Committee chose to not update the compensation peer group. The Compensation Committee and the Board recognized that our compensation decisions for fiscal 2015 had to be made based primarily on our financial outlook, our unique retention needs, and our limited available stock plan share reserves.

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Therefore, neither the Compensation Committee nor the Board relied on peer data as a material factor in making compensation decisions in fiscal 2015.
Explanation of Decisions Made with Respect to Fiscal 2015 Compensation
Base Salary
As noted above, we generally rely on base salaries to attract and retain key executives. At the start of fiscal 2015, 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 2014, which already included temporary reductions for four Named Executive Officers, which had been instituted in November 2013. We made this decision as a means to achieve one of our primary business objectives, the reduction of our overall operating expenses to improve overall profitability measures.

In connection with the commencement of his employment on July 21, 2014, the Compensation Committee set Dr. Carter's base salary at $300,000. The Compensation Committee selected this amount to provide internal pay equity with Messrs. Mangan and LeMaitre and other members of the executive team.
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 2015, our Compensation Committee recommended, and our Board approved, maintaining a semi-annual performance period structure. The Compensation Committee believed that, in our current environment, the semi-annual performance periods would enable us to set goals that allow our executives to respond more effectively to the rapid changes in our business.
For fiscal 2015, the Compensation Committee recommended, and the Board decided, that no changes would be made to the target bonus opportunities for each executive officer. As such, Mr. Dougherty’s target bonus opportunity remained at 100% of his base salary and each of our other executive officers continued to have a target bonus opportunity equal to 60% of his or her base salary. In connection with the Compensation Committee's decision to reduce the base salaries of our executive officers in fiscal 2014, the Compensation Committee recommended, and the Board approved, the decision to maintain the target bonus opportunities as a percentage of the pre-reduction rate of base 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 objectives that were intended to improve our financial condition. To promote internal pay equity with Messrs. Mangan and LeMaitre and other members of the executive team, the Compensation Committee set Dr. Carter's target bonus opportunity at 60% of his base salary.
First Half of Fiscal 2015
Our Chief Executive Officer and Chief Financial Officer recommended that the performance measure for the first half of fiscal 2015 (that is, the period ending December 27, 2014) be adjusted EBITDA, with a threshold level of negative $20 million (resulting in payout of 50% of the bonus opportunity), a target level of negative $15 million, and a stretch goal of negative $10 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. The Compensation Committee believed that establishing threshold and maximum payout levels under our program would provide a means to mitigate risk associated with executive compensation programs, while also providing motivation to exceed expectations.
For purposes of the fiscal 2015 annual cash incentives, "Adjusted EBITDA" was calculated as net income/loss excluding the impact of income taxes, net interest income/expense, depreciation and amortization, net gains/losses on foreign currency transactions, as well as restructuring, acquisition and related costs, non-cash compensation related to stock and options, and other unusual one-time charges.
At the end of the performance period, our management team recommended to our Compensation Committee that actual performance be determined excluding the impact on EBITDA of certain foreign currency exchange rate fluctuations. The Compensation Committee considered and agreed with this recommendation, noting that our management had no effect on these foreign currency fluctuations, and therefore those fluctuations should not result in a greater payout. As a result, our Board determined that we had achieved negative $17.5 million in adjusted EBITDA. This performance resulted in a payout of 75% of the bonus opportunity and our Board approved the payments to the Named Executive Officers as follows.

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Named Executive Officer
First Half Fiscal 2015
Maximum Cash Incentive Award Payment
First Half Fiscal 2015
Cash Incentive Award Payment
Mr. Dougherty
$
600,000

$
225,000

Mr. Mangan
$
157,500

$
78,750

Mr. LeMaitre
$
157,500

$
78,750

Mr. Haynes
$
167,441

$
83,720

Mr. Carter (1)
$
135,000

$
59,712

 
(1)
Mr. Carter began employment with the Company on July 21, 2014. As a result, his Maximum Cash Incentive Award Payment and First Half Fiscal 2015 Cash Incentive Award Payment were prorated at 88% of such amounts.
Second Half of Fiscal 2015
For the second half of fiscal 2015 (that is, the six-month period ending June 27, 2015), our Chief Executive Officer and Chief Financial Officer recommended, and our Board approved, that the performance measure be adjusted EBITDA, excluding the impact on EBITDA of certain foreign currency exchange rate fluctuations, with a threshold level of negative $10 million (resulting in payout of 50% of the bonus opportunity), a target level of negative $6 million, and a stretch goal of negative $2 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). At the end of the performance period, our Board determined that we had achieved negative $8.5 million in adjusted EBITDA, excluding the impact on EBITDA of certain foreign currency exchange rate fluctuations. This performance resulted in a payout of 69% of the bonus opportunity, and our Board approved the payments to the Named Executive Officers as follows.
Named Executive Officer
Second Half Fiscal 2015
Maximum Cash Incentive Award Payment
Second Half Fiscal 2015
Cash Incentive Award Payment
Mr. Dougherty
$
600,000

$
207,000

Mr. Mangan
$
157,500

$
72,450

Mr. LeMaitre
$
157,500

$
72,450

Mr. Haynes
$
167,441

$
77,023

Mr. Carter
$
135,000

$
62,100

Retention Bonuses
In October 2013, our Compensation Committee approved a one-time retention bonus program for certain key executive officers, to motivate these individuals to remain employed and focused on carrying out our short term business plan and restructuring program. The Compensation Committee set the target aggregate bonus amounts at approximately 65% - 70% of each selected executive officer’s then current base salary, to provide a meaningful retention incentive. These retention bonuses required continued employment through three specified dates, with the payouts weighted toward the later retention dates. Following the final retention date of July 1, 2014, the Company made the final payments under the retention program, pursuant to which Mr. Dougherty received $200,000, and Messrs. Haynes, LeMaitre and Mangan each received $100,000. These amounts were reported in the Summary Compensation Table last year, as these amounts were accrued and earned for fiscal year 2014 (despite being paid in fiscal year 2015).
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.
On August 11, 2014, each of Messrs. Dougherty, Mangan, Haynes, and LeMaitre received an annual equity award comprised of a time-based restricted stock unit award and a performance-based restricted stock unit award. In order to align the interests of our executive officers with the interests of our stockholders, half of the value of such annual equity award to each executive officer other than our Chief Executive Officer, and 62.7% of the value of such annual equity award granted

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to our Chief Executive Officer was granted subject to achievement of positive adjusted EBITDA for two consecutive fiscal quarters prior to the end of fiscal year 2017, while the remaining amount was granted in the form of restricted stock unit awards subject to time-based vesting over three years, as follows: 33.33% of share shares subject to the awards on August 11, 2015 and August 11, 2016, and as to 8.33% of the remaining shares on each of November 11, 2016, February 11, 2017, May 11, 2017 and August 11, 2017. The performance-based restricted stock unit awards will be earned, if at all, at a 100% target level, based upon the achievement of positive adjusted EBITDA for two consecutive fiscal quarters prior to the end of the Company's fiscal year 2017.
In addition, in connection with the commencement of his employment, Dr. Carter was granted stock options to purchase 100,000 shares of our common stock, with an exercise price equal to the closing market price of our common stock on the grant date. Dr. Carter’s option will vest and become exercisable as to 25% of the shares subject to the option on the first anniversary of the grant date and as to 2.083% of the remaining shares after each subsequent month of continuous service for the following three years. In addition, we granted Dr. Carter two restricted stock awards of 100,000 shares each. The first award of 100,000 shares of restricted stock vested as to 25% of the shares on August 11, 2015 and will vest as to 6.25% of the remaining shares on each February 11th, May 11th, August 11th and November 11th over the following three years of continuous service. The second award of 100,000 shares of restricted stock vested as to 100% of the shares on August 11, 2015.
Given our limited share reserves, our Compensation Committee and our Board did not consider peer compensation data or benchmarking as a material factor 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.
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 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" employment 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, the significance of his service as our Chief Executive Officer. We also used 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 (which we refer to as the "Retention Agreements"). These 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 of employment occurring in the absence of a change in control of the Company.

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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 Named Executive Officer is subsequently terminated without “cause” (or the Named 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 helps 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 payments and 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 our common stock and restricted stock awards for shares of our 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 such 10 th day or other date so determined is not a trading day). However, if the award is an option to purchase shares of our 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 Board of Directors, 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 10th day or other date so determined is not a trading day). However, if the award is an option to purchase shares of our 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 our common stock with exercise prices at least equal to the closing market price of our 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 members 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.

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In addition to the foregoing, our executive officers 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 incentive-based compensation arrangements once the SEC adopts final rules implementing the requirements 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 Code, the Compensation Committee has not prioritized full deductibility over the other goals of our executive compensation program. Instead, the Compensation Committee 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 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. While the Compensation Committee considers deductibility of compensation as one of many factors when determining the form, size and terms of executive compensation elements, 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 considers the accounting impact of equity awards when 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. However, accounting cost is just one factor considered when designing such compensation plans and arrangements for our executive officers and other employees.
COMPENSATION RISK ASSESSMENT
In April 2015, 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

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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 2015, 2014 and 2013 for our principal executive officer (Mr. Dougherty), our principal financial officer (Mr. Mangan), and our three other most highly-compensated executive officers (Mr. Carter, Mr. Haynes and Mr. LeMaitre) who served in that capacity at the end of fiscal year 2015. We refer to these officers collectively as our Named Executive Officers.
Fiscal Year 2015 Summary Compensation Table
 
Year (1)
 Salary ($)
 
 Bonus
 ($)(9)
Stock Awards
 ($)(2)
 Option
Awards
($)(2)
 Non-Equity
Incentive Plan
Compensation
 ($)
  All Other Compensation
($)
 
 Total
 ($)
Greg Dougherty
2015
$
500,000

 

$
633,150


$
432,000

$
10,400

(10)
$
1,575,550

Chief Executive Officer and
2014
$
536,539

 
$
400,000

$
2,024,000


$
300,000

$
10,200

(10)
$
3,270,739

Director (3)
2013
$
99,927

 
$
300,000

$
87,397




 
$
487,324

Pete Mangan
2015
$
289,568

 

$
236,250


$
151,200

$
10,400

(10)
$
687,418

Chief Financial Officer (4)
2014
$
299,231

 
$
250,000

$
425,180

$
104,688

$
105,000

$
10,200

(10)
$
1,194,299

Adam Carter
2015
$
282,693

 

$
378,000

$
105,820

$
121,812

$
4,846

(10)
$
893,171

Chief Commercial Officer (5)
 
 
 
 
 
 
 
 
 


Jim Haynes
2015
$
317,175

(8)

$
189,000


$
160,743

$
33,575

(8) (11)
$
700,493

Chief Operating Officer (6)
2014
$
364,402

(8)
$
260,830

$
215,680


$
120,984

$
37,096

(8) (11)
$
998,992

 
2013
$
360,240

(8)

$
155,400



$
33,572

(8) (11)
$
549,212

Yves LeMaitre
2015
$
300,000

 

$
189,000


$
151,200


 
$
640,200

President,
2014
$
350,428

 
$
250,000

$
271,180


$
79,880


 
$
951,488

Optical Connectivity Business (7)
 
 
 
 
 
 
 
 
 
 
 
(1)
The years in this column refer to the fiscal years ended June 27, 2015, June 28, 2014 and June 29, 2013.
(2)
The amounts reported in these columns reflect the grant date fair value, computed in accordance with ASC 718, 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 granted 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 27, 2015 filed with the SEC on August 28, 2015. For more information about these awards, see the discussion above under “Compensation Discussion and Analysis” and the narrative below.
(3)
Mr. Dougherty was appointed our Chief Executive Officer effective June 6, 2013.
(4)
Mr. Mangan was appointed 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)
Dr. Carter was appointed our Chief Commercial Officer effective July 21, 2014.
(6)
Mr. Haynes was appointed 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 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)
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 $1.57 on June 26, 2015, $1.70 on June 27, 2014, and $1.52 on June 28, 2013.
(9)
These amounts include the retention bonuses granted in fiscal year 2013, which amounts were accrued and earned for fiscal year 2014, but paid in July 2015.
(10)
The amount reported in this column includes Company matching contributions to our Named Executive Officers’ 401(k) plan accounts for fiscal 2015 and fiscal 2014.
(11)
The amounts reported in this column include pension contributions paid by the Company.


24


Table of Contents

Fiscal 2015 Grants of Plan-Based Awards Table
The following table sets forth information regarding each grant of an award made to our Named Executive Officers during fiscal year 2015 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 2015  
 
 
 
 
  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
Option 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
 
7/1/2014(4)
 
$
150,000

 
$
300,000

 
$
600,000

 
 
 
 

 

 
 

 
 
1/1/2015(5)
 
$
150,000

 
$
300,000

 
$
600,000

 
 
 
 

 

 
 

 
 
8/11/2014
 

 

 

 
 
 
 
125,000

 

 
 
$
236,250

 
 
8/11/2014
 

 

 

 
 
210,000
 
 

 

 
 
$
396,900

Pete Mangan
 
7/1/2014(4)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 
 

 
 
1/1/2015(5)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 
 

 
 
8/11/2014
 

 

 

 
 
 
 
62,500

 

 
 
$
118,125

 
 
8/11/2014
 

 

 

 
 
62,500
 
 

 

 

 
$
118,125

Adam Carter
 
7/1/2014(4)
 
$
39,808

 
$
79,615

 
$
119,423

 
 
 
 

 

 

 

 
 
1/1/2015(5)
 
$
45,000

 
$
90,000

 
$
135,000

 
 
 
 

 

 

 

 
 
8/11/2014
 

 

 

 
 
 
 
100,000

 

 

 
$
189,000

 
 
8/11/2014
 

 

 

 
 
 
 
100,000

 

 

 
$
189,000

 
 
8/15/2014
 

 

 

 
 
 
 

 
100,000

 
1.69

 
$
105,820

Jim Haynes(3)
 
7/1/2014(4)
 
$
55,814

 
$
111,627

 
$
167,441

 
 
 
 

 

 

 

 
 
1/1/2015(5)
 
$
55,814

 
$
111,627

 
$
167,441

 
 
 
 

 

 

 

 
 
8/11/2014
 

 

 

 
 
 
 
50,000

 

 

 
$
94,500

 
 
8/11/2014
 

 

 

 
 
50,000
 
 

 

 

 
$
94,500

Yves LeMaitre
 
7/1/2014(4)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 

 

 
 
1/1/2015(5)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 

 

 
 
8/11/2014
 

 

 

 
 
 
 
50,000

 

 

 
$
94,500

 
 
8/11/2014
 

 

 

 
 
50,000
 
 

 

 

 
$
94,500

 
(1)
On August 11, 2014, each of Messrs. Dougherty, Mangan, Haynes, and LeMaitre received a performance-based restricted stock unit award. These performance-based restricted stock unit awards will be earned, if at all, at a 100% target level, based upon the achievement of positive adjusted EBITDA for two consecutive fiscal quarters during a performance period ending on the last day of the Company's fiscal year 2017. These performance stock units will vest as to 100% of the shares of our common stock earned pursuant to such awards, subject to continuous service, on the later of (1) the first anniversary of the grant date and (2) the date the Compensation Committee or Board determine that the performance conditions have been satisfied. If the performance conditions are not satisfied, then the corresponding awards will be forfeited in the first quarter of fiscal year 2018. As of the grant date, and through June 27, 2015, we have determined that achieving the earnings targets is likely.
(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 27, 2015 as filed with the SEC on August 28, 2015.
(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 $1.57 on June 26, 2015.
(4)
For the first half of fiscal year 2015, the annual cash incentive plan was based on achieving an adjusted EBITDA target for the six months ended December 27, 2014. Performance had to at least meet 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 year 2015, the the annual cash incentive plan was based on achieving an adjusted EBITDA target for the six months ended June 27, 2015. Performance had to at least meet the threshold level for any amounts to be paid under this plan. For more information, see the discussion above under “Compensation Discussion and Analysis.”

25


Table of Contents

Narrative Disclosure to Fiscal 2015 Summary Compensation Table and Fiscal 2015 Grants of Plan Based Awards Table
A discussion of 2015 base salaries, bonuses, incentive plans, awards and employment agreements is set forth in “Compensation Discussion and Analysis,” including a discussion of the material terms and conditions of the fiscal year 2015 restricted stock awards.
Fiscal 2015 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 27, 2015.

26


Table of Contents

2015 Outstanding Equity Awards at Fiscal Year-End
 
 
Option Awards
 
Stock Awards
Name
Option Grant
Date
 Number of Securities Underlying Unexer-
cised 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 (#)
 
 Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)
Greg Dougherty
10/27/2005

1,447

 

 
$
10.40

 
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

 

 
$
1.50

 
11/12/2018

 

 




 
5/13/2009

3,334

 

 
$
3.10

 
5/13/2019

 

 




 
10/21/2009

8,000

 

 
$
5.80

 
10/21/2019

 

 




 
10/27/2010

3,898

 

 
$
13.68

 
10/27/2021

 

 




 
10/26/2011

14,881

 

 
$
3.54

 
10/26/2021

 

 




 


 

 

 

 
125,000

(2
)
$
282,500


 

 


 

 

 

 

 

210,000

(3
)
$
474,600

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pete Mangan
6/11/2012

9,000

 
3,000

(4
)
$
2.56

 
6/11/2022

 

 




 
1/14/2014

21,250

 
38,750

(4
)
$
2.55

 
1/14/2024

 

 




 


 

 

 

 
1,500

(5
)
$
3,390


 

 


 

 

 

 
25,000

(6
)
$
56,500


 

 


 

 

 

 
2,500

(7
)
$
5,650


 

 


 

 

 

 
37,500

(8
)
$
84,750


 

 


 

 

 

 
22,000

(9
)
$
49,720


 

 


 

 

 

 
62,500

(2
)
$
141,250


 

 


 

 

 

 

 

32,000

(10
)
$
72,320

 


 

 

 

 

 

62,500

(3
)
$
141,250

Adam Carter
8/15/2014


 
100,000

(4
)
$
1.69

 
8/15/2024

 

 




 


 

 
$

 

 
100,000

(11
)
226,000


 

 


 

 
$

 

 
100,000

(12
)
226,000


 

Jim Haynes
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

 

 
$
8.90

 
8/15/2018

 

 




 
5/13/2009

20,000

 

 
$
3.10

 
5/13/2019

 

 




 
8/13/2009

76,000

 

 
$
3.50

 
8/13/2019

 

 




 
8/16/2010

34,400

 

 
$
10.43

 
8/16/2020

 

 




 
8/15/2011

19,166

 
834

(4
)
$
4.33

 
8/15/2021

 

 




 


 

 

 

 
1,250

(13
)
2,825


 

 


 

 

 

 
18,750

(14
)
42,375


 

 


 

 

 

 
2,500

(7
)
5,650


 

 


 

 

 

 
22,000

(9
)
49,720


 

 


 

 

 

 
50,000

(2
)
113,000


 

 


 

 

 

 

 

1,563

(16
)
$
3,532

 


 

 

 

 

 

32,000

(10
)
$
72,320

 


 

 

 

 

 

50,000

(3
)
$
113,000

Yves LeMaitre
3/10/2008

4,875

 

 
$
6.15

 
3/10/2018

 

 


 

 
8/15/2008

6,000

 

 
$
8.90

 
8/15/2018

 

 


 

 
5/13/2009

7,876

 

 
$
3.10

 
5/13/2019

 

 


 

 
8/15/2009

25,876

 

 
$
3.50

 
8/15/2019

 

 


 

 
8/16/2010

13,947

 

 
$
10.43

 
8/16/2020

 

 


 

 
8/16/2010

3,253

 

 
$
10.43

 
8/16/2020

 

 


 

 
8/15/2011

3,513

 

 
$
4.33

 
8/15/2021

 

 


 

 
8/15/2011

15,746

 
741

(4
)
$
4.33

 
8/15/2021

 

 


 

 


 

 

 

 
1,250

(13
)
2,825


 

 


 

 

 

 
18,750

(14
)
42,375


 

 


 

 

 

 
2,500

(7
)
5,650


 

 


 

 

 

 
15,625

(15
)
35,313


 

 


 

 

 

 
22,000

(9
)
49,720


 

 


 

 

 

 
50,000

(2
)
113,000


 

 


 

 

 

 

 

1,563

(16
)
$
3,532

 


 

 

 

 

 

32,000

(10
)
$
72,320

 


 

 

 

 

 

50,000

(3
)
$
113,000


27


Table of Contents

 

(1)
Calculated by multiplying the number of unvested shares of our common stock by $2.26, the closing market price per share of our common stock on the NASDAQ Global Select Market on June 26, 2015.
(2)
These restricted stock unit awards will vest as to 33.33% of the number of shares subject to each award on August 11, 2015; 33.33% of the number of shares subject to each award on August 11, 2016; and 8.33% of the number of shares subject to each such award shall vest on the November 11th, February 11th , May 11th, and August 11th following August 11, 2016 over the following year.
(3)
On August 11, 2014, each of Messrs. Dougherty, Mangan, Haynes, and LeMaitre received a performance-based grant of restricted stock units. 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 on the last day of the Company's fiscal 2017. The performance stock unit awards will vest as to 100% of the underlying shares, subject to continuous service, on the later of (1) the first anniversary of the grant date and (2) the date the Compensation Committee or Board determine that the performance goal has been satisfied. If the performance conditions are not achieved, then the corresponding awards will be forfeited in the first quarter of fiscal 2018.
(4)
The options vest as to 25% of the shares subject to the option on the first anniversary of the date of grant and 1/48th of the shares subject to the option monthly thereafter over the remaining 36 months.
(5)
The restricted stock awards vested as to 25% of the number of shares subject to each restricted stock award on May 10, 2013; and 6.25% of the number of shares subject to each such award shall vest on the August 10th, November 10th, February 10th , and May 10th following May 10, 2013 over the following three years.
(6)
The restricted stock awards vested as to 25% of the number of shares subject to each restricted stock award on May 10, 2014; and 6.25% of the number of shares subject to each such award shall vest on the August 10th, November 10th, February 10th , and May 10th following May 10, 2014 over the following three years.
(7)
The restricted stock awards vested as to 50% of the number of shares subject to each restricted stock award on August 10, 2014; and 12.5% of the number of shares subject to each such award shall vest on the November 10th, February 10th , May 10th and August 10th following August10, 2014 over the following year.
(8)
The restricted stock awards vested as to 25% of the number of shares subject to each restricted stock award on January 10, 2015; and 6.25% of the number of shares subject to each such award shall vest on the February 10th, May 10th, August 10th, and November 10th following January 10, 2015 over the following three years.
(9)
The restricted stock units vested as to 25% of the number of shares subject to each restricted stock unit on February 10, 2015; and 6.25% of the number of shares subject to each such unit shall vest on the May 10th, August 10th, November 10th, and February 10th following February 10, 2015 over the following three years.
(10)
On March 10, 2014, each of Messrs. Mangan, Haynes, and LeMaitre received a performance-based grant of restricted stock units. These performance-based restricted stock unit awards will vest, if at all, based upon based on our ability to achieve operating income breakeven through calendar year 2015 as well as time-based over a four year period. If the performance conditions are not achieved, then the corresponding awards will be forfeited in the third quarter of fiscal year 2016. If the performance conditions are achieved, then the performance-based restricted stock unit awards will vest (a) with respect to 50% of the underlying shares, on February 10, 2016 (the “PSU Initial Vesting Date”) and (b) with respect to the remaining underlying shares, 6.25% of the shares on each February 10th, May 10th, August 10th and November 10th following the PSU Initial Vesting Date over the two years of continuous service thereafter.
(11)
The restricted stock unit award vested as to 25% of the number of the underlying shares subject to the restricted stock award on August 11, 2015; and 6.25% of the number of underlying shares shall vest on the November 11th, February 11th, May 11th, and August 11th following August 11, 2015 over the following three years.
(12)
The restricted stock unit award vested as to 100% of the number of underlying shares on August 11, 2015.
(13)
The restricted stock awards vested as to 25% of the number of shares subject to each restricted stock award on August 15, 2012; and 6.25% of the number of shares subject to each such award shall vest on the November 15th, February 15th , May 15th, and August 15th following August 15, 2012 over the following three years.
(14)
The restricted stock awards vested as to 25% of the number of shares subject to each restricted stock award on August 15, 2013; and 6.25% of the number of shares subject to each such award shall vest on the November 15th, February 15th , May 15th, and August 15th following August 15, 2013 over the following three years.
(15)
The restricted stock award vested as to 25% of the number of shares subject to the restricted stock award on November 10, 2014; and 6.25% of the number of shares subject to each such award shall vest on the February 10th, May 10th, August 10th, and November 10th following November 10, 2014 over the following three years.
(16)
On August 15, 2011, Messrs. Haynes, and LeMaitre received a performance-based grant of restricted stock. The performance conditions were achieved and the final vesting occurred on August 15, 2015.


28


Table of Contents

Fiscal 2015 Option Exercises and Stock Vested Table
The following table sets forth information regarding options exercised and the vesting of restricted stock awards held by our Named Executive Officers during the fiscal year ended June 27, 2015.
 
2015 Option Exercises and Stock Vested
 
 
 
 
 
 
 
 
 
 
 
 Option Awards
 
Stock Awards
Name
 
 Number of Shares Acquired on Exercise (#)
 
 Value Realized on Exercise ($)
 
 Number of Shares Acquired on Vesting (#)(1)
 
 Value Realized on Vesting ($)(2)
Greg Dougherty
 
 
 

 
$

Pete Mangan
 
 
 
64,000

 
$
114,628

Adam Carter
 
 
 

 
$

Jim Haynes
 
 
 
62,350

 
$
110,506

Yves LeMaitre
 
 
 
67,425

 
$
119,348

______________
(1)
The amounts reported in this column represent the number of shares of our common stock acquired with respect to full value awards that vested in fiscal year 2015.
(2)
The amounts reported in this column represent the number of shares of our common stock that vested during fiscal year 2015 multiplied by the closing market price of our common stock as quoted on the NASDAQ Global Select Market on each corresponding vesting date.
Potential Payments Upon Termination or Change in Control
Employment, Change in Control and Severance Arrangements

Our employment agreement with Mr. Dougherty provides that if we terminate his employment without “cause” or if he resigns his employment with “good reason” (a “Qualifying Termination”), then he will be eligible to receive the following payments and benefits:

A cash payment equal to the sum of twice his annual base salary and twice his target annual cash incentive award opportunity;
Accelerated vesting of all outstanding and unvested or unearned restricted stock and/or restricted stock unit awards which vest based on his continued employment; and
A monthly payment in the amount of $6,000 for 24 months in lieu of continuing other benefits, such as health and welfare benefits.

In addition, if Mr. Dougherty’s employment is terminated as the result of a Qualifying Termination in connection with a change in control of the Company, then the payments and benefits to which he would be eligible would include, in addition to those set forth above for a Qualifying Termination, accelerated vesting of all outstanding and unvested or unearned restricted stock and/or restricted stock unit awards, whether or not vesting is based on his continued employment.
For purposes of the employment agreement for Mr. Dougherty, the term “cause” means (a) a good faith finding by the Board (excluding the employee) that the employee has engaged in dishonesty, gross negligence or misconduct, or (b) the conviction of the employee of, or the entry of a pleading of guilty or nolo contendere by the employee to, any crime involving moral turpitude or any felony. Further, the term “good reason” means the following acts or omissions by the Company, taken without the employee’s written consent: (i) any material diminution in the employee’s base salary, (ii) a material diminution in the employee’s authority, duties or responsibilities or a material adverse change in reporting structure which means that the employee no longer reports directly to the Board of the Company or any successor company’s board, (iii) a material breach by the Company of the terms of the employment Agreement or (iv) a material adverse change by the Company in the location at which the employee performs employee’s principal duties for the Company to a new location that is both (a) outside a radius of 35 miles from the employee’s principal residence immediately prior to such change and (b) more than 20 miles from the location at which the employee performed employee’s principal duties for the Company immediately prior to such change without the prior consent of the employee.

29


Table of Contents

Mr. Haynes has an employment agreement which generally provides for three months’ notice in the case of a “no just cause” termination. Mr. Haynes may be paid out in lieu of notice under the terms of his employment agreement. In addition, Mr. Haynes receives financial protection in the amount of three months’ basic salary plus pay in lieu of notice (three months) in the case of a termination. Mr. Haynes’ employment agreement also provides non-compete and non-solicit covenants for a period of six months following his termination of employment. In certain situations, as defined in Mr. Haynes’ employment agreement, Mr. Haynes may receive continuation of his monthly basic salary during the period of his non-compete (up to a maximum of 6 months).
Other Named Executive Officers . Each of our currently employed Named Executive Officers (other than Mr. Dougherty) is party to a Retention Agreement. The Retention Agreement provides that if an executive officer dies or his employment with the Company is terminated without “cause” (and not due to Disability, as defined in the Retention Agreement) prior to a “change in control” of the Company, the executive officer will be eligible to receive the following payments and benefits, in addition to accrued benefits:
an amount (the Pro Rata Bonus) equal to the product of (i) the average of the executive’s bonuses earned during the last three full fiscal years (or such lesser number of years in which the executive earned a bonus), divided by 2, and (ii) a fraction, the numerator of which is the number of days before the “separation from service” (as defined under Treasury Regulations Section 1.409A-1(h)) in the current bonus period applicable to the current bonus, and the denominator of which is the total number of days in the current bonus period applicable to the current bonus; and
an amount equal to the result obtained by multiplying the executive’s "reference salary" by a fraction, the numerator of which is eight months plus one additional month of base salary for each whole year of the executive's employment by us (up to a maximum of 18 months) and the denominator of which is 12.
However, instead of receiving the payments and benefits set forth in the preceding paragraph, if the employment of an executive officer is terminated without “cause” (and not due to Disability), upon his or her death, or the executive officer leaves for “good reason” within 12 months following, or 30 days before, a “change in control” of the Company, and only if such termination constitutes a separation from service, the executive officer will be eligible to receive the following payments and benefits, in addition to accrued benefits:
an amount equal to 1.5 times the executive’s "reference salary" then in effect;
an amount equal to the average of the executive’s bonuses earned during the last 3 full fiscal years (or such lesser number of years in which the executive earned a bonus); and
a taxable lump-sum cash payment of $72,000 which the executive may, but is not required to, use to continue his or her existing group health coverage (medical, dental, and vision) then in effect.

In addition to the above payments and benefits, following a “change in control” of the Company, the executive officer will also receive full acceleration of his outstanding equity awards and will have until the earliest of (i) the first anniversary of the separation from service, (ii) the expiration of the original term of the option or (iii) on the first date on which a change in control occurs if options are not assumed or replaced by the successor entity, in order to exercise any outstanding stock option accelerated in accordance with such provisions.

If the employment of an executive officer is terminated by reason of his or her Disability, the executive officer will be eligible to receive an amount equal to the Pro Rata Bonus (defined above), in addition to accrued benefits. If the Disability termination had occurred on June 27, 2015, the executive officers would have received a Pro Rata Bonus in the amounts set forth below in the Table Regarding Amounts Payable, under the column Non-Equity Incentive Plan Compensation for a Type I event, as well as the unpaid accrued vacation time set forth under the column Benefits for a Type I event.

To receive any payments or benefits under the Retention Agreements, the executive officer must sign, and allow to become effective not later than the 55 th day after the separation from service, a separation agreement and release in a form reasonably acceptable to the Company that contains, among other standard provisions, the form of release of claims in substantially the form attached to the Retention Agreement. In addition, the executive officer must also continue to comply with his or her continuing obligations to the Company under applicable law and his or her confidential information and inventions assignment agreement. Payments will be made in a single lump sum on or before the 55 th day after the separation from service.

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For purposes of the Retention Agreements:
The term “cause” means: (i) the executive officer’s willful and continued failure to substantially perform his or her reasonable assigned duties as an employee of the Company (other than due to his or her physical or mental illness or any failure after the executive gives notice of resignation for good reason), and the failure is not cured within 30 days after the CEO gives the executive written notice that specifically identifies why the CEO believes the executive has not substantially performed the executive’s duties; or (ii) the executive officer’s willful engagement in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. No act or failure to act by the executive shall be considered “willful” unless it is done, or omitted to be done, in bad faith and without reasonable belief that the executive’s action or omission was in the best interests of the Company. The CEO must provide written notice to the executive within 90 days after the occurrence of the acts or omissions constituting the basis for cause. The executive will be given a reasonable opportunity to be heard by the Board, with such hearing occurring at least 15 days, but not more than 30 days, after receipt of that notice. The executive may, at his or her election, be represented by counsel. The Board’s decision after that hearing will be final and binding on all parties.
The term “good reason” means the occurrence, without the executive officer’s written consent, of any of the following events, but if and only (x) if the executive has given written notice to the Board within 90 days after the occurrence of the events constituting the basis for good reason, (y) the Company has not reasonably corrected the events by the 30th day after receipt of such notice, and (z) the executive’s separation from service is effective within 60 days after the last day of the Company’s 30 day cure period (that is, within 90 days after the executive gives written notice): (i) a material diminution in the executive’s authority, duties or responsibilities as in effect immediately prior to the measurement date; (ii) a material diminution in the executive’s base compensation as in effect immediately prior to the measurement date (or, if greater, the executive’s base compensation as increased after the measurement date); (iii) a change by the Company in the location at which the executive performs his or her principal duties for the Company to a new location that is both (1) outside a radius of 35 miles from the executive’s principal residence immediately prior to the measurement date and (2) more than 20 miles from the location at which the executive performed his or her principal duties for the Company immediately prior to the measurement date; or (iv) any other action or inaction that constitutes a material breach by the Company (or a successor entity) of the Retention Agreement.
The term “change in control” means one or more of the following events (including an event that constitutes a Change in Control under one trigger but is specifically exempted from another trigger): (i) the acquisition by a person of beneficial ownership of any capital stock of the Company if, after such acquisition, such person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of either (x) the then-outstanding shares of common stock of the Company (the Outstanding Company Common Stock) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a change in control: (1) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (4) any acquisition by any corporation pursuant to a transaction which complies with (x) and (y) below; (ii) such time as the Continuing Directors (as defined in the Retention Agreement) do not constitute a majority of the Board (or, if applicable, the board of directors of a successor corporation to the Company); (iii) the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company in one or a series of transactions (a Business Combination), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the Acquiring Corporation) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively; and (y) no person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of

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directors (except to the extent that such ownership existed prior to the Business Combination); or (d) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. However, if necessary for compliance with Internal Revenue Code Section 409A, no transaction will be a change in control unless it is also a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets, as provided in Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5).
Table Regarding Amounts Payable . The following table shows the payments and benefits potentially payable to each of our Named Executive Officers upon death, if his employment were terminated, if he resigned for good reason, or if a change of control of the Company occurred. These amounts are calculated assuming that the death, employment termination, resignation for good reason or change of control took place on June 27, 2015. The closing market price per share of our common stock on the NASDAQ Global Select Market on June 26, 2015 (the final business day of our fiscal 2015) was $2.26.
 
 
Base Salary
($)(1)
 
 
Non-Equity Incentive Plan Compensation ($)
 
 
Accelerated Vesting of Options (2)
 
Accelerating Vesting of Restricted Stock (3)
 
Benefits ($)
 
Total
($)
Greg Dougherty