Oclaro, Inc.
OCLARO, INC. (Form: DEF 14A, Received: 09/27/2017 16:11:23)


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

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OCLAROFULLCOLOR2016A01.JPG
OCLARO, INC.
225 Charcot Avenue
San Jose, California 95131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 17, 2017
To the Stockholders of Oclaro, Inc.:
The annual meeting of stockholders of Oclaro, Inc., a Delaware corporation (Oclaro, the Company, we, us or our), will be held on Friday, November 17, 2017, at 8:00 a.m., local time, at our corporate headquarters, 225 Charcot Avenue, San Jose, California, for the purpose of considering and voting upon the following matters:
1.
To elect Edward Collins, Denise Haylor and William L. Smith as Class I directors to serve three-year terms and until their successors are duly elected and qualified or until their earlier death, resignation or removal;
2.
To approve an amendment to the Fifth Amended and Restated 2001 Long-Term Stock Incentive Plan;
3.
To approve the advisory resolution approving the compensation of our Named Executive Officers;
4.
To conduct an advisory vote on the frequency with which we will hold future stockholder advisory votes on the compensation of our Named Executive Officers; and
5.
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 July 1, 2017 with the proxy statement that accompanies this notice of meeting. The Annual Report on Form 10-K for the fiscal year ended July 1, 2017 contains consolidated financial statements and other information of interest to you. Holders of     our common stock at the close of business on September 21, 2017 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,
MARISSASIGNATUREA04.JPG
Marissa Peterson
Chairman of the Board of Directors
 
September 27, 2017



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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 17, 2017
This proxy statement is furnished to you in connection with the solicitation of proxies by our board of directors (the Board) for the 2017 annual meeting of stockholders (the Annual Meeting) to be held on Friday, November 17, 2017 at 8:00 a.m., local time, at our corporate headquarters, 225 Charcot Avenue, San Jose, California, 95131, including any postponements or adjournments thereof.
We have elected to provide access to our proxy materials over the Internet. Accordingly, on or about September 27, 2017, 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. For those who receive proxy materials in paper form, the notice of the Annual Meeting, this proxy statement, our Annual Report on Form 10-K for the fiscal year ended July 1, 2017 (the 2017 Annual Report), which includes our audited financial statements for the fiscal year ended July 1, 2017, and the enclosed proxy card are first being mailed to stockholders on or about September 27, 2017.
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to be Held on November 17, 2017
This proxy statement and our 2017 Annual Report are available for viewing, printing and downloading at www.proxyvote.com.
You can also find this proxy statement and our 2017 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 2017 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., 225 Charcot Avenue, San Jose, California, 95131, Attn: Stock Administrator. We will provide the 2017 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 16, 2017. If you vote by Internet or telephone, then you need not return a written proxy card by mail.
Your vote is very important . You should submit your proxy even if you plan to attend the Annual Meeting in person.

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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; 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., 225 Charcot Avenue, San Jose, California 95131, Attention: Corporate Secretary. If your shares are held in street name, you must follow the instructions of your broker, bank or nominee to revoke a previously given proxy.
If a proxy card does not specify how the proxy is to be voted with respect to:
the election of the three nominated Class I directors for a three year term, the shares will be voted “FOR” the election of the three nominated Class I directors;
the approval of 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 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;
the advisory vote on the frequency with which we hold future stockholder advisory votes on the compensation of our Named Executive Officers, the shares will be voted for every "1 Year" with respect to such frequency; and
the ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year, the shares will be voted “FOR” the ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year.
By submitting a proxy (whether by telephone, over the Internet or by signing a proxy card), you are conferring discretionary authority upon the named proxy holders with respect to amendments or variations to the matters identified in the accompanying notice of Annual Meeting and with respect to any other matters which may properly come before the Annual Meeting. The Board does not know of any other matters that may come before the Annual Meeting. If any other matter properly comes before the Annual Meeting, including consideration of a motion to adjourn the Annual Meeting to another time or place (including for the purpose of soliciting additional proxies), the persons named in the proxy will exercise their judgment in deciding how to vote, or otherwise act, at the Annual Meeting with respect to that matter or proposal.
If you receive more than one proxy card, it means you hold shares that are registered in more than one account. To ensure that all of your shares are voted, sign and return each proxy card or, if you submit a proxy by telephone or the Internet, submit one proxy for each proxy card you receive.
Attendance at the Annual Meeting
Only holders of our common stock as of the record date for the Annual Meeting, their proxy holders, and guests we may invite may attend the Annual Meeting. If you wish to attend the Annual Meeting in person but you hold your shares through someone else, such as a broker, you must bring proof of your ownership and photo identification to the Annual Meeting. For example, you could bring an account statement showing that you beneficially owned shares of our common stock as of the record date as acceptable proof of ownership. You must also contact your broker and follow their instructions in order to vote your shares at the Annual Meeting. You may not vote your shares at the Annual Meeting unless you have first followed the procedures outlined by your broker.

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Stockholders Entitled to Vote
The Board fixed September 21, 2017 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 21, 2017, there were 168,776,492 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 proposal to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year is considered to be a “routine” matter. Accordingly, we do not expect “broker non-votes” on this proposal. The other proposals to be voted on at the Annual Meeting are not considered routine matters, and without your instruction, your broker cannot vote your shares. Accordingly, we expect “broker non-votes” on these proposals.
If the shares you own are held in “street name,” the bank, brokerage firm or nominee, as the record holder of your shares, is required to vote your shares in accordance with your instructions. In order to vote your shares held in “street name,” you will need to follow the directions that your bank, brokerage firm or nominee provides you. If you desire to vote your shares held in “street name” at the Annual Meeting by proxy, you will need to obtain a proxy card from the holder of record.

On all matters, each share has one vote. 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 three 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 three 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 Edward Collins, Denise Haylor and William L. Smith 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 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.

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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, 2017 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 2017 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, 2017 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 168,669,501 shares of our common stock outstanding as of September 1, 2017. 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., 225 Charcot Avenue, San Jose, California 95131.
Beneficial Owner
Number
of Shares
 
Percentage
of Total
5% Stockholders
 
 
 
BlackRock, Inc. (1)
55 East 52 Street
New York, NY 10055
 
16,826,906

 
10.0%
Kopp Holding Company, LLC (2)
8400 Normandale Lake Boulevard, Suite 1450
Bloomington, MN 55437
8,629,754

 
5.1%
Named Executive Officers and Directors
 
 
 
Greg Dougherty (3)
845,220

 
*
Jim Haynes (4)
411,896

 
*
Edward Collins (5)
326,081

 
*
Marissa Peterson (6)
290,417

 
*
     Adam Carter (7)
251,613

 
*
Joel A. Smith, III (8)
251,575

 
*
William L. Smith (9)
229,974

 
*
Kendall Cowan (10)
224,553

 
*
David Teichmann (11)
219,245

 
*
Pete Mangan (12)
217,331

 
*
Yves LeMaitre (13)
72,906

 
*
Denise Haylor (14)
38,785

 
*
Ian Small (15)
23,391

 
*
All executive officers and directors as a group (16 persons) (16)
3,453,555

 
2.0%
*
less than 1%

(1)
The following information is based on a Schedule 13G filed with the Commission on July 10, 2017 by BlackRock, Inc. (BlackRock). BlackRock is the beneficial owner of and has sole dispositive power with respect to 16,826,906 shares of our common stock, and sole voting power with respect to 16,488,948 shares of our common stock.
(2)
    The following information is based on Amendment No. 1 to Schedule 13G filed with the Commission on January 6, 2017 by Kopp Family Office, LLC (KFO), Kopp Holding Company, LLC (Holdco), which is the parent of KFO, and LeRoy C. Kopp, who is the control person of Holdco. KFO is the beneficial owner of 7,804,643 shares of our common stock. KFO has shared voting power and shared dispositive power with respect to these shares of our common stock. HoldCo beneficially owns and has shared voting power with respect to 8,629,754 shares of our common stock and has shared dispositive power with respect to 5,310,839 shares of our common stock. Mr. Kopp beneficially owns 8,669,179 shares of

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our common stock, has shared voting power with respect to 8,629,754 shares of our common stock, has sole dispositive power with respect to 3,358,340 shares of our common stock and has shared dispositive power with respect to 5,310,839 shares of our common stock.
(3)
Represents 812,213 shares beneficially owned by Mr. Dougherty and 33,007 shares issuable pursuant to options exercisable within 60 days of September 1, 2017.
(4)
Mr. Haynes was an individual who would have qualified as one of the three most-highly compensated executive officers had he been an executive officer at the end of fiscal 2017. Represents 215,594 shares beneficially owned by Mr. Haynes and 196,302 shares issuable pursuant to options exercisable within 60 days of September 1, 2017.
(5)
Represents 142,571 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, 2017.
(6)
Represents 273,371 shares beneficially owned by Ms. Peterson and 17,046 shares issuable pursuant to options exercisable within 60 days of September 1, 2017.
(7)
Represents 172,447 shares beneficially owned by Mr. Carter and 79,166 shares issuable pursuant to options exercisable within 60 days of September 1, 2017.
(8)
Represents 218,482 shares beneficially owned by Mr. Smith individually, 86 shares beneficially owned by his spouse and 33,007 shares issuable pursuant to options exercisable within 60 days of September 1, 2017.
(9)
Represents 229,974 shares beneficially owned by Mr. Smith.
(10)
Represents 224,553 shares beneficially owned by Mr. Cowan.
(11)
Represents 142,891 shares beneficially owned by Mr. Teichmann and 76,354 shares issuable pursuant to options exercisable within 60 days of September 1, 2017.
(12)
Represents 206,081 shares beneficially owned by Mr. Mangan and 11,250 shares issuable pursuant to options exercisable within 60 days of September 1, 2017.
(13)
Represents 44,831 shares beneficially owned by Mr. LeMaitre and 28,075 shares issuable pursuant to options exercisable within 60 days of September 1, 2017.
(14)
Represents 38,785 shares beneficially owned by Ms. Haylor.
(15)
Represents 23,391 shares beneficially owned by Mr. Small.
(16)
Includes 42,500 shares issuable pursuant to options exercisable within 60 days of September 1, 2017 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 set forth under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended July 1, 2017 filed with the SEC, actual results may vary materially and investors should not unduly rely on such statements.

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PROPOSAL I
ELECTION OF CLASS I DIRECTORS
We have three classes of directors, currently consisting of three Class I directors, three Class II directors and two Class III directors. The Class I, Class II and Class III directors serve until the annual meeting of stockholders to be held in 2017, 2018, and 2019, respectively, or until their respective successors are elected and qualified. At each annual meeting, directors are elected for a full term of three years to succeed those whose terms are expiring. The terms of the three classes are staggered in a manner so that only one class is elected by stockholders annually. Edward Collins, Denise Haylor and William L. Smith are currently serving as Class I directors.
Upon the recommendation of our nominating and corporate governance committee, the Board has nominated Mr. Collins, Ms. Haylor and Mr. Smith for re-election to serve as Class I directors (the Nominees). If the Nominees are elected this year, they will be elected to serve as members of the Board until the 2020 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. No arrangements or understandings exist between any director or person nominated for election as a director and any other person pursuant to which such person is to be selected as a director or nominee for election as a director.
Board Recommendation
The Board believes that the election of Edward Collins, Denise Haylor and William L. Smith to serve as Class I 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 — Nominees for Election to the Board at the 2017 Annual Meeting
Edward Collins, 74, 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 an officer of Phoenix Liquidators LLC from 2011 to 2013. From 2012 to 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.
Denise Haylor , 53, has served as a director of Oclaro since August 2016. She has served as a Partner and Managing Director of The Boston Consulting Group since April 2017. From June 2014 to March 2017, she served as the Chief Human Resources Officer and member of the Executive Committee of Royal Philips, a global industrial company with businesses in lighting, healthcare and consumer lifestyle. Prior to joining Royal Philips, from February 2011 to November 2012, Ms. Haylor was the Senior Vice President, HR Operations, HR Business Partners and Talent Management of Flextronics, an electronics, manufacturing services and end to end supply chain solutions provider, and from November 2012 to June 2014, Ms. Haylor was the Chief Human Resources Officer of

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Flextronics. Ms. Haylor began her carrier in human resources with Siemens in 1988 and later joined Motorola in June 1998, where she held a number of HR roles within Motorola and worked in many businesses. She earned a master's degree in strategic human resource management from the Kingston Business School of the University of London, graduated from the advanced human resource executive program at the University of Michigan and earned a six sigma - black belt. Ms. Haylor brings to the Board her extensive knowledge in the area of human resources, as well as experience as a senior executive of a global, complex and large industrial company. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Ms. Haylor should serve as a director.
William L. Smith, 60 , 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. From September 2014 to September 2016, Mr. Smith served as President, AT&T Technology Operations, where he was responsible for all technology-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 data center operations. 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. He served in a variety of roles at AT&T between February 1979 and 2001. Mr. Smith graduated with honors from North Carolina State University at Raleigh in 1979, and was on the board of advisors of its graduate school for several years. He is the former chairman of the board of the Make a Wish Foundation of Georgia and Alabama and has served on several other non-profit boards. With Mr. Smith’s previous service as a director of Opnext, he brings to the Board extensive knowledge of our business, operations, products and industry. In addition, his more than three decades of service in various management and executive positions at a large, international telecommunications company enables Mr. Smith to make a significant contribution in his role as director, especially with respect to the operational and strategic issues we encounter. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Mr. Smith should serve as a director.
Class II Directors — Terms Expiring 2018
Greg Dougherty , 57, 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 bachelor's 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 , 55, 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 benefits and insurance provider, and is currently a member of their audit committee. From August 2006 to the present, she has served as a director for Ansell Limited, a public company listed on the Australia Stock Exchange and a global leader in safety and protection solutions, where she is currently a member of their risk committee and chairman of their human resources and compensation committee. She previously served as a director of Supervalu Inc., the Lucile Packard Children’s Hospital at Stanford, Quantros, Inc., and served on the board of trustees of

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Kettering University. Ms. Peterson has received the distinction of being an NACD (National Association of Corporate Directors) Board Leadership Fellow. She earned a master's degree from Harvard University in business administration, and an honorary doctorate of management and a bachelor's degree 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, global, 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.
Ian Small , 53, has served as a director of Oclaro since September 2017. He has served as the Chairman of the Board of TokBox, a platform-as-a-service provider of embedded video communications, since April 2014. From November 2013 to June 2016, he held a variety of positions at Telefonica S.A., a global broadband and telecommunications provider, most recently as its Chief Data Officer. From May 2009 to April 2014, he served as the CEO of TokBox, which was acquired by Telefonica in October 2012. Prior to joining TokBox, Mr. Small held a variety of technology and strategy positions at MarkLogic, marchFIRST and USWeb/CKS. He earned a master's degree in computer science and a bachelor's degree in engineering science from the University of Toronto. Mr. Small brings to the Board his extensive knowledge in the areas of communications services and digital services as well as experience as a senior executive of a global telecommunications company. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Mr. Small should serve as a director.
Class III Directors — Terms Expiring 2019
Kendall Cowan,  63, 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. Previously, Mr. Cowan served as a board member of Lea County Bancshares, Inc., a bank holding company, 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 degree in business administration in accounting 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, 72, has served as a director since April 2009 and served as lead independent director of Oclaro between July 2011 and June 2013. Prior to Oclaro, Mr. Smith served as a director of Avanex Corporation from December 1999 to April 2009, when Avanex and Bookham merged to create Oclaro. Mr. Smith was the Dean of the Darla Moore School of Business of the University of South Carolina from October 2000 to December 2007. Previously, Mr. Smith served as the President of Bank of America East, a financial institution, from October 1998 to September 2000. From July 1991 to October 1998, Mr. Smith served as President of Nations Bank Carolinas, a financial institution. Mr. Smith earned a bachelor’s degree in political science and economics from the University of the South. Mr. Smith brings significant financial management and financial disclosure experience, as well as significant knowledge of Avanex’s history and experiences to the Board. Mr. Smith brings to the Board his extensive knowledge in the areas of finance, management, financial reporting, and controls and experience as a leader of large, well-respected financial institutions. Mr. Smith also brings to the Board significant experience in corporate governance matters, which gives him the ability to assist in governance decisions and related responsibilities. Based on the Board’s identification of these qualifications, skills and experiences, the Board has concluded that Mr. Smith should serve as a director.
Executive Officers
Greg Dougherty, see “Class II Directors — Terms Expiring 2018” above.
Dr. Adam Carter, 53 , 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

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Process and Device Engineer at British Telecom & Dupont from November 1989 to September 1994. Dr. Carter holds a bachelor's degree (Honors) in applied physics from Portsmouth University and received a Ph.D. from the University of Wales, Cardiff, for his research on plasma etching of III-V semiconductor materials.
Craig Cocchi , 52, has served as Oclaro’s Chief Operating Officer since April 2017.   Prior to joining Oclaro, from June 2016 to April 2017, he served as the Executive Vice President, Operations of Fabrinet, a provider of advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers of complex products, such as optical communication components, modules and subsystems, industrial lasers and sensors. From January 2008 to February 2016, he served in a variety of management roles at Lumentum (formerly JDSU Corporation), most recently as Senior Vice President, Operations. Prior to Lumentum, Mr. Cocchi served in a variety of operations roles at SAE Magnetics and Read-Rite Corporation. Mr. Cocchi holds a bachelor’s degree in electrical engineering and a bachelor’s degree in sociology from the University of California, San Diego.
Yves LeMaitre, 53 , 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 Oclaro 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 also 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 , 58 , has served as Oclaro's 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 to 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. Mr. 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.

Dr. Beck Mason, 50, has served as Oclaro's President, Integrated Photonics Business, since September 2016.  From January 2015 to September 2016, Dr. Mason served as Oclaro’s Senior Vice President of R&D, Integrated Photonics Business.  Prior to joining Oclaro, from February 2007 to January 2015, he served in a variety of management positions at JDSU Corporation, a company that designed and manufactured products for optical communications networks, communications test and measurement equipment, lasers, optical solutions for authentication and decorative applications, and other custom optics, most recently as its Vice President of R&D for Transmission Products.  Prior to 2007, Dr. Mason served in a variety of technology management roles at Collinear, Finisar Corporation, Agere Systems and Lucent Technologies Bell Laboratories.  He holds a bachelor's degree in engineering from the University of Waterloo in Canada, a master's degree in aerospace engineering from the University of Toronto in Canada and a Ph.D. in electrical and computer engineering from the University of California, Santa Barbara.
Lisa Paul, 53, 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, 61, 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

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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 bachelor's degree in political science from Trinity College, a master's degree in law & diplomacy from the Fletcher School of Law & Diplomacy and a J.D. 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. The following table shows the Board and Board committee annual retainers (which are paid pro-rata on a quarterly basis) for fiscal 2017.
Board of Director/Committee Position
Fiscal 2017
Annual Retainer
 
 
Board Chairman
$
85,000

Board Member (non-Chairman)
$
34,000

Audit Committee Member (non-Chairman)
$
8,500

Audit Committee Chairman
$
39,950

Compensation Committee Member (non-Chairman)
$
5,950

Compensation Committee Chairman
$
21,250

Nominating and Corporate Governance Committee Member (non-Chairman)
$
4,250

Nominating and Corporate Governance Committee Chairman
$
18,275

No additional compensation was paid to any director based on the number of meetings attended in fiscal 2017. We reimbursed our non-employee directors for reasonable out-of-pocket expenses incurred in attending Board and committee meetings.
Fiscal 2017 Director Compensation Table
The following table sets forth information concerning the compensation of our non-employee directors for fiscal year 2017:
Name (1)
Fees Earned or
Paid in Cash ($)
 
Stock
Awards
($)(2)
 
Option
Awards($)
 
All Other
Compensation($)
 
Total ($)
Edward B. Collins
$
46,750

 
$
119,018

 

 

 
$
165,768

Kendall Cowan
$
79,900

 
$
119,018

 

 

 
$
198,918

Denise Haylor (3)
$
41,438

 
$
319,016

 

 

 
$
360,454

Lori Holland (3)
$
13,323

 

 

 

 
$
13,323

Marissa Peterson
$
85,000

 
$
119,018

 

 

 
$
204,018

Joel A. Smith III
$
60,775

 
$
119,018

 

 

 
$
179,793

William L. Smith
$
44,200

 
$
119,018

 

 

 
$
163,218

 
(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. Effective April 2017, Ms. Haylor no longer received any compensation from us due to the internal policies of her current employer, The Boston Consulting Group. Ian Small was appointed to our Board of Directors effective September 1, 2017, after the end of fiscal year 2017.
(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 July 1, 2017. 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 11 to our audited consolidated financial statements included in our 2017 Annual Report filed with the SEC on August 18, 2017. All the restricted stock awards

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listed were granted on November 18, 2016, with the exception of a grant of 26,702 restricted stock awards, valued at $199,998, granted to Ms. Haylor upon joining the Board in August 2016.
(3)
Ms. Holland resigned from the Board effective August 26, 2016. Ms. Haylor joined the Board effective August 26, 2016.

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 2017.
Name
 
Stock Awards (A)
 
Stock Option Awards (B)
Edward B. Collins
 
12,083

 
35,779

Kendall Cowan
 
12,083

 

Denise Haylor
 
38,785

 

Marissa Peterson
 
12,083

 
17,046

Joel A. Smith III
 
12,083

 
33,007

William L. Smith
 
12,083

 

 
 
(A) Stock awards consist of unvested shares of our common stock subject to such awards.
(B) Option awards include vested (but unexercised) 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 2017, 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: one Form 4 was filed late for Adam Carter reporting a sale of common stock and one Form 4 was filed late for Michael Fernicola reporting a forfeiture of shares to satisfy tax obligations.
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 2017 annual meeting of stockholders and in our 2017 Annual Report.
Submitted by the compensation committee of the Board of Directors:
Denise Haylor, Chair
Kendall Cowan
William Smith


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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis provides information regarding the fiscal year 2017, or fiscal 2017, compensation program for our Chief Executive Officer, our Chief Financial Officer, 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 2017 and Jim Haynes, who would have qualified as one of the three most-highly compensated executive officers had he been an executive officer at the end of fiscal 2017. Mr. Haynes is our former Chief Operating Officer, and, in April 2017, he notified us that he will retire on March 31, 2018. He will serve as an Executive Vice President until his retirement. For fiscal 2017, these individuals -- our Named Executive Officers -- were:
Greg Dougherty, our Chief Executive Officer;
Pete Mangan, our Chief Financial Officer;
Yves LeMaitre, our President, Optical Connectivity Business;
David Teichmann, our Executive Vice President, General Counsel and Corporate Secretary;
Adam Carter, our Chief Commercial Officer; and
Jim Haynes, our Executive Vice President.
Executive Summary
During fiscal 2017, we were one of the leading providers of optical components and modules for the long-haul, metro and data center markets. Leveraging over three decades of laser technology innovation and photonics integration, 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.
Given that we operate in this highly competitive and cyclical industry, we have focused on achieving positive EBITDA and controlling expenses during the past few years, doing so in part through the conservative use of cash and equity compensation for our executive officers and other employees. For fiscal 2017, our principal financial objective was to achieve higher levels of operating income, primarily by increasing revenues and improving gross margins. During fiscal 2017, we achieved or surpassed our operating income objectives, and thoughtfully rewarded our employees, including our executive officers, through cash and equity compensation.
Fiscal 2017 Business Highlights
For fiscal 2017, we achieved the following key financial results:
GAAP operating income of $119.0 million, as compared to GAAP operating income of $15.8 million and GAAP operating losses of $45.5 million in fiscal 2016 and fiscal 2015, respectively.
Non-GAAP operating income of $130.9 million, as compared to non-GAAP operating income of $25.1 million and non-GAAP operating losses of $38.4 million in fiscal 2016 and fiscal 2015, respectively.
Annual revenue of $601.0 million, a 47.3% increase from $407.9 million in fiscal 2016.
Adjusted EBITDA of $66.8 million and $84.8 million for the first and second halves of fiscal 2017, respectively, as compared to $13.2 million and $27.7 million for the first and second halves of fiscal 2016, respectively. 
Reduced operating expenses as a percentage of revenue over a three year period, from 29.9% in fiscal 2015, to 24.7% in fiscal 2016, and then to 19.3% in fiscal 2017.
Increased our gross margin to 39.1% for fiscal 2017, as compared to 28.5% in fiscal 2016.
Increased free cash flow (Adjusted EBITDA less capital expenditures) to $78.9 million for fiscal 2017, an increase from $4.7 million in fiscal 2016.
Please see Annex A for a reconciliation of our non-GAAP operating income, non-GAAP net income, Adjusted EBITDA and free cash flow to the most directly comparable GAAP measure.

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Fiscal 2017 Executive Compensation Actions
On behalf of our Board of Directors, the compensation committee of the Board (the "Compensation Committee") assessed our executive compensation levels for fiscal 2017. Key compensation decisions for fiscal 2017 for our executive officers, including our Named Executive Officers, were as follows:
Base Salary : During fiscal 2017, the Compensation Committee maintained the base salaries of our executive officers at the levels in effect since the beginning of calendar year 2016, keeping the majority of our executive officer's target total direct compensation in the form of equity compensation.
Annual Cash Incentive Awards : The Compensation Committee used non-GAAP operating income as the sole performance metric for our semi-annual cash incentive program during fiscal 2017, to keep the focus of our executive officers on profitable corporate growth. We exceeded the target levels established for the first half of fiscal 2017 and nearly achieved the target levels established for the second half of fiscal 2017.
Equity Awards : In August 2016, we granted each of the Named Executive Officers an annual equity award comprised of an equal number of shares of our common stock subject to a performance-based restricted stock unit award and a time-based restricted stock unit award. The performance-based restricted stock unit awards could only be earned if we achieve $25 million of free cash flow over any consecutive four fiscal quarter period ending prior to June 27, 2020. Both awards have four-year service-based vesting requirements.
Target Pay Mix
In fiscal 2017, 50% of our Chief Executive Officer's target total direct compensation was performance-based and, thus, only paid or earned to the extent that we achieved one or more pre-established performance objectives.

FISCAL2017CEOTARGETPAYMIXBLA.JPG
    

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Fiscal 2017 Executive Compensation Policies and Practices
We endeavor to design and implement our executive compensation policies and practices in accordance with sound governance standards. The Compensation Committee meets regularly throughout the year to review 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 continued in effect during fiscal 2017:
Independent Compensation Committee. The Compensation Committee is comprised solely of independent directors who have established effective means for communicating with our stockholders regarding their executive compensation ideas and concerns.
Independent Compensation Committee Advisor. The Compensation Committee engaged its own compensation consultant to assist with its fiscal 2017 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. Both the performance-based restricted stock unit awards and the time-based restricted stock unit awards granted to our executive officers in August 2016 had a four-year time-based vesting requirement. In addition, our employee stock plan contains a minimum required vesting period of one year, subject to certain exceptions (described in greater detail in Proposal 2 below).
Minimum Share Ownership Requirement. Our board members, including our Chief Executive Officer, are subject to a stock ownership policy (described in greater detail below).
Hedging and Pledging Prohibited. We prohibit our executive officers and other employees, from engaging in hedging transactions with respect to Company securities, including entering into any short sales, puts, calls or other derivative instruments based on Company securities. We also prohibit our executive officers and other employees from pledging any Company securities, except with respect to pledges in limited circumstances approved by the Company’s General Counsel.

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Fiscal 2017 Stockholder Advisory Vote on Executive Compensation
At our fiscal 2016 Annual Meeting of Stockholders, we conducted a stockholder advisory vote on the fiscal 2016 compensation of the Named Executive Officers (commonly known as a “Say-on-Pay” vote). Our stockholders approved the fiscal 2016 compensation of the Named Executive Officers with approximately 98% 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 to our executive compensation program in response to the fiscal 2016 Say-on-Pay vote. Further, any design changes resulting from the Say-on-Pay vote would not typically show up in compensation until the following fiscal year due to the timing of our annual meeting of stockholders compared to the timing of our annual executive compensation decisions.
We value the opinions of our stockholders and will continue to consider the outcome of future Say-on-Pay votes, including the vote to be held at this Annual Meeting, as well as feedback received throughout the year, when making compensation decisions for our executive officers, including the Named Executive Officers.
Based on the results of a separate stockholder advisory vote on the frequency of future stockholder advisory votes regarding the compensation of the Named Executive Officers (commonly known as a “Say-When-on-Pay” vote) conducted at our fiscal 2011 Annual Meeting of Stockholders, the Board determined that we will hold our Say-on-Pay votes on an annual basis. A Say-When-on-Pay vote is taking place as part of the 2017 Annual Meeting. See “Proposal 4: Advisory Vote on the Frequency With Which We Will Hold Future Stockholder Advisory Votes on the Compensation of our Named Executive Officers,” including the Board’s recommendation to vote “1 year” for an annual Say-on-Pay vote.
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 financial and strategic performance objectives that directly correlate to company objectives and the long-term 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 such as operating income and free cash flow, 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 2017, the Compensation Committee 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 executive officers;
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 using a mix of restricted stock unit and performance-based restricted stock unit awards, to align the interests of our executive officers with those of our stockholders and to promote our performance and 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 officer’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,” including cash and equity based incentives. In recent years, approximately half of the target total direct compensation for our Named Executive Officers was "at risk" subject to performance conditions. However, the Compensation Committee does not maintain formal policies for allocating between short-term and long-term compensation or between cash and non-cash compensation. Instead, the Compensation Committee maintains flexibility and adjusts different elements of

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compensation based upon its evaluation of our financial position (including cash needs), the impact on stockholder dilution, hiring and retention concerns, and the compensation mix paid by our compensation peer group.
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.
Compensation-Setting Process
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. Based on its review and assessment, the Compensation Committee either approves, or recommends to the Board for approval, the annual changes in our executive compensation program.
For fiscal 2017, the Compensation Committee reviewed and either approved, or recommended to the Board for approval, the compensation for each of our Named Executive Officers. The Compensation Committee also oversaw management’s decisions concerning the compensation of other company officers and employees, 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, which was most recently updated on April 26, 2017, 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 his assessment of the performance of each of the other executive officers and his recommendations on the compensation for each other executive officer. In addition, our Chief Executive Officer and Chief Financial Officer develop recommendations for performance metrics 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 2017, the Compensation Committee continued to directly engage Compensia, Inc., a national compensation consulting firm (“Compensia”), as its adviser for executive officer and director compensation, and broad based equity compensation matters. More specifically, Compensia:
Reviewed and provided market data on executive officer and director cash and equity compensation for fiscal 2017 compensation planning;
Reviewed and provided recommendations on the annual and long-term incentive compensation award design;
Reviewed and provided an analysis of annual share utilization and stockholder dilution levels resulting from our employee stock plans;
Reviewed and provided recommendations for the proposed amendment of our Fifth Amended and Restated 2001 Long-Term Stock Incentive Plan submitted to our stockholders for approval in our proxy statement for fiscal 2016; and
Reviewed and provided comments on the Compensation Discussion & Analysis section of our proxy statement for fiscal 2016.
In fiscal 2017, the Compensation Committee 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 a conflict of interest.

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Competitive Positioning
During fiscal 2016, the Compensation Committee directed Compensia to develop and recommend a compensation peer group to be used as a reference in its executive compensation deliberations for fiscal 2017. In conducting this project, Compensia reviewed, but did not rely on, the compensation peer group used in fiscal 2016. Among other things, Compensia developed this compensation peer group to reflect our market capitalization, recognize our evolving business focus, and account for acquisitions of prior peer companies. The companies in this compensation peer group were selected on the basis of their similarity to us, based on the following criteria:
similar revenue size - ~0.5x to ~2.5x our last four fiscal quarter revenue of approximately $347 million (approximately $175 million to approximately $1.0 billion);
similar market capitalization - ~0.25x to ~4.0x our market capitalization of $564 million (approximately $150 million to approximately $2.0 billion);
industry - communications equipment (with a focus on optical networking) and semiconductor and hardware (with a focus on networking/communications);
executive positions similar in breadth, complexity, and/or scope of responsibility; and
competitors for executive talent.
As a result, the Compensation Committee approved a revised compensation peer group for use in fiscal 2017 consisting of the following companies:
Alliance Fiber Optic Product
Harmonic
NeoPhotonics
Applied Optoelectronics
II-VI
Newport
CalAmp
Inphi
QLogic
Calix
Ixia
Radisys
Comtech Telecommunications
Lumentum Holdings
ROFIN-SINAR Technologies
Electro Scientific
M/A-COM
Ruckus Technologies
Extreme Networks
MaxLinear
Semtech
To analyze the compensation practices of the companies in our compensation peer group, Compensia gathered data from public filings (primarily proxy statements) for the peer group companies. This market data, supplemented by additional compensation survey data, was then used as a reference point for the Compensation Committee to assess our current compensation levels in the course of its deliberations on compensation forms and amounts.
Going forward, the Compensation Committee intends to review and update the compensation peer group as needed and make adjustments to its composition, taking into account changes in both our business and the businesses of the companies in the peer group.
Fiscal 2017 Compensation Decisions
Base Salary
As noted above, we generally rely on base salaries to attract and retain key executive officers. At the start of fiscal 2017, the Compensation Committee evaluated our performance in fiscal 2016, considered our fiscal 2017 annual operating plan (including our compensation budget) for fiscal 2017, and reviewed the strong steady progress our Named Executive Officers have made in leading the Company to profitability over the past four years. Based on these considerations, the Compensation Committee maintained the base salaries of our executive officers, including our Named Executive Officers, at the levels in effect since the beginning of calendar year 2016.

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Annual Cash Incentive Compensation
We use performance-based cash incentives to motivate our executive officers, including our Named 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 at or above our pre-established levels of performance. For fiscal 2017, the Compensation Committee decided to maintain the semi-annual performance period structure we have used since fiscal 2008. The Compensation Committee believed that, since we initially achieved profitability in fiscal 2016, the semi-annual performance period structure remained appropriate to allow the Compensation Committee to closely monitor and respond to unexpected changes in the execution of our business plan and to maintain flexibility to solidify our operating strategy in the event of unanticipated internal or external developments.
For fiscal 2017, after reviewing market data and our annual operating budget for our cash compensation programs, the Compensation Committee approved, and the board ratified, that no changes would be made to the target bonus opportunities for each executive officer, including our Named Executive Officers. As such, Mr. Dougherty’s target bonus opportunity remained at 100% of his base salary and each of our other Named Executive Officers continued to have a target bonus opportunity equal to 60% of his or her base salary.
First Half of Fiscal 2017
Our Chief Executive Officer recommended to the Compensation Committee that the performance metric for the first half of fiscal 2017 (that is, the period ending December 31, 2016) be non-GAAP operating income, with a threshold performance level of $22 million (which would result in a payout of 50% of the target bonus opportunity for the performance period), a target performance level of $28 million, and a stretch goal of $34 million (which would result in a payout of 200% of the target bonus opportunity for Mr. Dougherty and 150% of the target bonus opportunity for the other executive officers). Our Compensation Committee agreed with our Chief Executive Officer's recommendation, and approved this metric and related performance levels without change, to encourage our executive officers to continue to work to achieve higher levels of profitability, as non-GAAP operating income which, as shown on Annex A, excludes items that our management and the Compensation Committee believe are not reflective of our core ongoing operations, 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 this incentive compensation program, while also providing motivation to exceed expectations.
At the conclusion of the first half of fiscal 2017, our Compensation Committee determined that we had achieved $57 million in non-GAAP operating income, as a result of management's ability to drive higher levels of revenue than anticipated at the outset of the performance period. This performance resulted in the maximum payout for our Named Executive Officers. The Compensation Committee approved the payments to the Named Executive Officers shown in the actual payout column below.
Named Executive Officer
First Half Fiscal 2017
Target Cash Incentive Award Payment
First Half Fiscal 2017
Maximum Cash Incentive Award Payment
First Half Fiscal 2017
Actual Cash Incentive Award Payment
Mr. Dougherty
$
300,000

$
600,000

$
600,000

Mr. Mangan
$
105,000

$
157,500

$
157,500

Mr. LeMaitre
$
105,000

$
157,500

$
157,500

Mr. Teichmann
$
99,000

$
148,500

$
148,500

Mr. Carter
$
90,000

$
135,000

$
135,000

Mr. Haynes
$
92,558

$
138,837

$
138,837

Second Half of Fiscal 2017
For the second half of fiscal 2017 (that is, the six-month period ending July 1, 2017), in light of our first half performance, our Chief Executive Officer recommended to the Compensation Committee that the performance metric continues to be non-GAAP operating income, with a threshold performance level of $60 million (which would result in a payout of 50% of the target bonus opportunity for the performance period), a target performance level of $75 million, and a stretch performance goal of $90 million (which would result in a payout of 200% for Mr. Dougherty and 150% for the other executive officers). Our Compensation Committee agreed with our Chief Executive Officer's recommendation, and approved this metric and related performance levels without change, to encourage our executive officers to continue to achieve higher levels of operating income.
At the end of the performance period, our Compensation Committee determined that we had achieved $73.8

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million of non-GAAP operating income, a 29% increase over our first half of fiscal 2017 results, and more than 193% of the non-GAAP operating income for all of fiscal 2016. This performance resulted in a payout of 96% of the bonus opportunity for each Named Executive Officer, including Mr. Dougherty. The Compensation Committee approved the payments to the Named Executive Officers shown in the actual payout column below.
Named Executive Officer
Second Half Fiscal 2017
Target Cash Incentive Award Payment
Second Half Fiscal 2017
Maximum Cash Incentive Award Payment
Second Half Fiscal 2017
Actual Cash Incentive Award Payment
Mr. Dougherty
$
300,000

$
600,000

$
288,000

Mr. Mangan
$
105,000

$
157,500

$
100,800

Mr. LeMaitre
$
105,000

$
157,500

$
100,800

Mr. Teichmann
$
99,000

$
148,500

$
95,040

Mr. Carter
$
90,000

$
135,000

$
86,400

Mr. Haynes
$
92,558

$
138,837

$
88,856

Long-Term Incentive Compensation
Given our commitment to containing cash expenses over the past four years, we have relied on equity compensation as a significant portion of our executive compensation program. We provide equity compensation opportunities to our executive officers, including our Named Executive Officers, to align their financial interests with those of our stockholders, to provide compensation that is consistent with the practices of our compensation peer group so that we can attract and retain qualified talent, and to motivate our executive officers to achieve specific performance objectives. We generally grant a mix of time-based and performance-based full value equity awards for annual retention and "refresh" purposes, as we believe this is most consistent with current competitive market practices.
On August 10, 2016, each of the Named Executive Officers received an annual equity award comprised of a time-based restricted stock unit award and a performance-based restricted stock unit award. To directly align the interests of our Named Executive Officers with the interests of our stockholders, half of the value of such annual equity award granted was granted in the form of a performance-based restricted stock unit award to be earned at the stated target value (that is, no minimum or maximum overachievement opportunity) if the Company achieved $25 million of positive free cash flow (defined as Adjusted EBITDA less capital expenditures) over any consecutive four fiscal quarters ending prior to June 27, 2020. Our Compensation Committee selected a four year performance period with a concurrent four year time-based service requirement, to focus our Named Executive Officers on long term sustained performance, retention and decision-making in an otherwise rapidly changing business environment. Following our achievement of profitability in fiscal 2016, our Compensation Committee chose free cash flow as the performance metric to focus our Named Executive Officers on continuing to invest prudently in our manufacturing business while still generating meaningful cash flow. After the conclusion of fiscal 2017, the Compensation Committee determined that the Company had achieved $78.9 million in free cash flow over the four quarters of fiscal 2017, underpinned by 50% revenue growth during the fiscal year. In July 2017, the Compensation Committee certified that the performance objectives for the August 2016 performance-based restricted stock unit awards had been satisfied by our Named Executive Officers. Twenty-five percent of the target value of the shares of our common stock subject to these awards vested on August 10, 2017, the first anniversary of the date of grant, with the remaining three-quarters of the earned awards to vest in equal quarterly installments over the following three years, subject to each Named Executive Officer's continued employment as of each vesting date.
The Compensation Committee granted the remaining target amount of the annual equity incentive award value in the form of restricted stock unit awards subject to time-based vesting over four years (with a one year cliff and quarterly vesting thereafter).
In determining the size and relative weight of each of these awards, the Compensation Committee and the Board considered competitive market data (based on the compensation peer group data), as well as the Compensation Committee's objective of creating a meaningful retention and performance incentive for each Named Executive Officer, managing internal pay equity, and balancing the impact of these awards on our burn rate and available reserves. Our Compensation Committee determined that all of these stock unit awards would be subject to four year time-based vesting, as opposed to the three years used by many of the companies in our compensation peer group, to maintain a long term focus on retention.

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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. In calendar year 2016, we matched contributions made to the Section 401(k) plan by our employees, including our executive officers, in amounts up to 4% of the employee’s compensation (capped at $10,600 for employees making more than $265,000 per year in eligible earnings).
In addition, consistent with market practices and our retention goals, we provide other benefits to our 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 insurance (medical, dental, and vision), 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 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
Generally, we 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 specific terms of his "new hire" compensation 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 Payments and 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.
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. Instead, 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 Named 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 these arrangements help us compete for and retain executive talent. After reviewing the practices of companies represented in the compensation peer group, we believe that our severance and change of control payments and benefits are generally comparable with severance packages offered to executive officers by the companies in the compensation peer group.

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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 and restricted stock unit awards for shares of our common stock will be approved by the Compensation Committee at a regularly-scheduled quarterly meeting of the Board (or at a special meeting called between regularly-scheduled meetings of the Board). 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 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.
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, 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 fair market value (based on the closing market price) of our common stock on the date of grant.
CEO and Director Stock Ownership Policy
In August 2016, we adopted a Director Stock Ownership Policy that applies to our non-employee directors and our Chief Executive Officer. Each of our non-employee directors must attain a stock ownership target of five times his or her annual cash board service retainer, and our Chief Executive Officer must attain a stock ownership target of three times his annual base salary. Compliance for any fiscal year is measured on the first day of such fiscal year. Only vested shares of our common stock directly owned by the individual (including joint ownership with a spouse or held in a permitted trust) and vested shares subject to a deferral election count toward the stock ownership target. Unexercised options to purchase shares of our common stock (even if vested) and unvested compensatory equity awards do not count toward the stock ownership target. Until his or her stock ownership target is achieved, each affected individual must retain 50% of his or her shares received on vesting or exercise of compensatory equity awards (determined after reduction for shares used to pay for taxes or the exercise price). As of the first day of fiscal 2018, our Chief Executive Officer and each of our continuing non-employee directors were in compliance with the Director Stock Ownership Policy. Ms. Haylor is required to achieve her stock ownership target by August 26, 2021 - the fifth anniversary of her appointment to the Board.
Derivatives Trading, Hedging and Pledging Policy
The Board has adopted a policy regarding the trading of derivatives or the hedging of our equity securities by our employees, including our executive officers, and members of the Board. This policy provides that all employees, executive officers and members of the Board are prohibited from engaging in hedging transactions, including entering into any short sales, puts, calls or other derivative instruments based on Company securities, that allow the employee,

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executive officer or director to continue to own the covered securities, but without the full risks and rewards of ownership.
In addition to the foregoing, our employees, including our executive officers, and members of the Board are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan, except in limited circumstances approved by the Company’s General Counsel.
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 deductibility of executive compensation as just one factor 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 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.

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COMPENSATION-RELATED RISKS
In April 2017, 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 other 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 the applicable performance measures with our business strategy;
all non-GAAP adjustments are subject to audit committee review and approval to ensure that actual payout levels appropriately reflect company and business unit performance; and
long-term performance-based incentive compensation constitutes a significant portion of our executive officers’ target total direct compensation opportunity, thereby focusing such individuals on enhancing long-term stockholder value.


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COMPENSATION TABLES
Summary Compensation Table
The following table sets forth certain information concerning the compensation for fiscal years 2017, 2016 and 2015 for our principal executive officer (Mr. Dougherty), our principal financial officer (Mr. Mangan), our three other most highly-compensated executive officers (Mr. LeMaitre, Mr. Teichmann and Mr. Carter) who served in that capacity at the end of fiscal year 2017 and the one other individual who would have qualified as one of the three most-highly compensated executive officers (Mr. Haynes) had he been an executive officer at the end of fiscal 2017. We refer to these officers collectively as our Named Executive Officers.
Fiscal 2017 Summary Compensation Table
 
Year (1)
 Salary ($)
 
 Bonus
 ($)
Stock Awards
 ($)(2)
 Option
Awards
($)(2)
 Non-Equity
Incentive Plan
Compensation
 ($)
  All Other Compensation
($)
 
 Total
 ($)
Greg Dougherty
2017
$
600,000

 

$
2,332,500


$
888,000

$
9,277

(6)
$
3,829,777

Chief Executive Officer and Director
2016
$
550,000

 

$
1,359,260


$
975,000

$
10,600

(6)
$
2,894,860

 
2015
$
500,000

 

$
633,150


$
432,000

$
10,400

(6)
$
1,575,550

Pete Mangan
2017
$
341,823

 

$
1,119,600


$
258,300

$
10,600

(6)
$
1,730,323

Chief Financial Officer
2016
$
325,000

 

$
522,480


$
288,750

$
10,600

(6)
$
1,146,830

 
2015
$
289,568

 

$
236,250


$
151,200

$
10,400

(6)
$
687,418

Yves LeMaitre
2017
$
350,000

 

$
1,119,600


$
258,300

$
10,600

(6)
$
1,738,500

President, Optical Connectivity
2016
$
325,000

 

$
522,480


$
288,750

$
6,346

(6)
$
1,142,576

Business
2015
$
300,000

 

$
189,000


$
151,200


 
$
640,200

David Teichmann
2017
$
330,000

 

$
870,800


$
243,540

$
10,600

(6)
$
1,454,940

Executive Vice President, General
2016
$
311,539

 

$
516,315


$
261,000

$
10,600

(6)
$
1,099,454

Counsel and Corporate Secretary
2015
$
300,000

 

$
189,000


$
129,600

$
10,400

(6)
$
629,000

Adam Carter
2017
$
300,000

 

$
870,800


$
221,400

$
10,600

(6)
$
1,402,800

Chief Commercial Officer (3)
2016
$
300,000

 

$
407,515


$
247,500

$
10,600

(6)
$
965,615

 
2015
$
282,693

 

$
378,000

$
105,820

$
121,812

$
4,846

(6)
$
893,171

Jim Haynes
2017
$
308,527

(5)

$
870,800


$
227,693


 
$
1,407,020

Executive Vice President (4)
2016
$
291,603

(5)

$
413,680


$
260,048

$
21,277

(5) (7)
$
986,608

 
2015
$
317,175

(5)

$
189,000


$
160,743

$
33,575

(5) (7)
$
700,493

 
(1)
The years in this column refer to the fiscal years ended July 1, 2017, July 2, 2016 and June 27, 2015.
(2)
The amounts reported in these columns reflect the grant date fair value, computed in accordance with ASC 718, of time-based and performance-based stock 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 11 to our audited consolidated financial statements included in our 2017 Annual Report filed with the SEC on August 18, 2017. With respect to the performance-based stock awards granted in fiscal year 2017, the amounts above reflect the probable payout percentage for the awards, which is based on the highest level of performance that can be achieved, calculated in accordance with ASC 718. For more information about these awards, see the discussion above under “Compensation Discussion and Analysis.”
(3)
Mr. Carter was appointed our Chief Commercial Officer effective July 21, 2014.
(4)
Mr. Haynes was appointed an Executive Vice President, and ceased being an executive officer, effective April 2017. He served as our Chief Operating Officer from May 2014 to April 2017. Mr. Haynes intends to retire on March 31, 2018.
(5)
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 $1.30 on July 2, 2017, $1.33 on July 1, 2016, and $1.57 on June 26, 2015.
(6)
The amount reported in this column includes Company matching contributions to our Named Executive Officers’ 401(k) plan accounts for fiscal years 2017, 2016 and 2015.
(7)
The amounts reported in this column include pension contributions paid by the Company.

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Table of Contents

Fiscal 2017 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 2017 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 2017  
 
 
 
 
  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
 
 Grant Date
Fair Value
 of Stock
Awards ($)(2)
Name
 
Grant
Date
 
 Threshold
 
 Target
 
 Maximum
 
Threshold (1)
 
Target
(1)
 
Maximum (1)
 
 
Greg Dougherty
 
7/3/2016 (4)
 
$
150,000

 
$
300,000

 
$
600,000

 
 
 
 

 

 
 
1/1/2017 (5)
 
$
150,000

 
$
300,000

 
$
600,000

 
 
 
 

 

 
 
8/10/2016
 

 

 

 
 
187,500
 
 

 
$
1,166,250

 
 
8/10/2016
 

 

 

 
 
 
 
187,500

 
$
1,166,250

Pete Mangan
 
7/3/2016 (4)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 
 
1/1/2017 (5)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 
 
8/10/2016
 

 

 

 
 
90,000
 
 

 
$
559,800

 
 
8/10/2016
 

 

 

 
 
 
 
90,000

 
$
559,800

Yves LeMaitre
 
7/3/2016 (4)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 
 
1/1/2017 (5)
 
$
52,500

 
$
105,000

 
$
157,500

 
 
 
 

 

 
 
8/10/2016
 

 

 

 
 
90,000
 
 

 
$
559,800

 
 
8/10/2016
 

 

 

 
 
 
 
90,000

 
$
559,800

David Teichmann
 
7/3/2016 (4)
 
$
45,000

 
$
99,000

 
$
148,500

 
 
 
 

 

 
 
1/1/2017 (5)
 
$
49,500

 
$
99,000

 
$
148,500

 
 
 
 

 

 
 
8/10/2016
 

 

 

 
 
70,000
 
 

 
$
435,400

 
 
8/10/2016
 

 

 

 
 
 
 
70,000

 
$
435,400

Adam Carter
 
7/3/2016 (4)
 
$
45,000

 
$
90,000

 
$
135,000

 
 
 
 

 

 
 
1/1/2017 (5)
 
$
45,000

 
$
90,000

 
$
135,000

 
 
 
 

 

 
 
8/10/2016
 

 

 

 
 
70,000
 
 

 
$
435,400

 
 
8/10/2016
 

 

 

 
 
 
 
70,000

 
$
435,400

Jim Haynes (3)
 
7/3/2016 (4)
 
$
46,279

 
$
92,558

 
$
138,837

 
 
 
 

 

 
 
1/1/2017 (5)
 
$
46,279

 
$
92,558

 
$
138,837

 
 
 
 

 

 
 
8/10/2016
 

 

 

 
 
70,000
 
 

 
$
435,400

 
 
8/10/2016
 

 

 

 
 
 
 
70,000

 
$
435,400

 
(1)
On August 10, 2016, each of Messrs. Dougherty, Mangan, Haynes, LeMaitre, Teichmann and Carter received a performance-based restricted stock unit award. These performance-based restricted stock unit awards will be earned at a 100% target level based upon the achievement of $25 million of positive free cash flow (defined as Adjusted EBITDA less capital expenditure) in any consecutive four fiscal quarter period ending on or prior to June 27, 2020. On July 25, 2017, the Compensation Committee certified that this performance condition was achieved during the quarter ended July 1, 2017. As a result, these performance-based restricted stock unit awards cliff vest with respect to 25 percent of the underlying shares on August 10, 2017, and with respect to 6.25 percent of the underlying shares each subsequent quarter over the following three years, subject to continuous service.
(2)
The amounts reported in this column reflect the grant date fair value of the stock awards computed in accordance with ASC 718. With respect to the performance-based stock awards granted in fiscal 2017, the amounts above reflect the probable payout percentage for the awards, which is based on the highest level of performance that can be achieved, calculated in accordance with ASC 718. The assumptions we used to calculate these amounts are included in Note 11 to our audited consolidated financial statements included in our 2017 Annual Report filed with the SEC on August 18, 2017.
(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 $1.30 on July 2, 2017.
(4)
For the first half of fiscal year 2017, the annual cash incentive plan was based on achieving a non-GAAP operating income target for the six months ended December 31, 2016. 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.”

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Table of Contents

(5)
For the second half of fiscal year 2017, the annual cash incentive plan was based on achieving a non-GAAP operating income target for the six months ended July 1, 2017. 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.”
Narrative Disclosure to Fiscal 2017 Summary Compensation Table and Fiscal 2017 Grants of Plan Based Awards Table
A discussion of 2017 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 2017 equity awards.
Fiscal 2017 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 our Named Executive Officers as of July 1, 2017.
 
 
Option Awards
 
Stock Awards
Name
Option/Award Grant
Date
 Number of Securities Underlying Unexercised Options (#) Exercisable
 Number of Securities Underlying Unexercised Options (#) Unexercisable
 
 Option Exercise Price ($)
Option Expiration Date
 
 Number of Shares or Units of Stock that Have Not Vested (#)
 
 Market Value of Shares or Units of Stock That Have Not Vested ($) (1)
 Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
 Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)
Greg
11/15/2007
1,447


 
$
21.75

11/14/2017

 
 



Dougherty

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

 
 



 
8/11/2014


 


 
10,417
(2)
$
97,295



 
8/10/2015


 


 
72,844
(3)
$
680,363



 
8/10/2015


 


 
93,656
(4)
$
874,747



 
8/10/2016


 


 
187,500
(5)
$
1,751,250



 
8/10/2016


 


 
187,500
(6)
$
1,751,250



Pete Mangan
1/14/2014
6,250

8,750

(12)
$
2.55

1/14/2024

 
 



 
1/14/2014


 


 
7,500
(7)
$
70,050



 
3/10/2014


 


 
6,000
(8)
$
56,040



 
8/11/2014


 


 
5,209
(2)
$
48,652



 
8/10/2015


 


 
37,462
(3)
$
349,895



 
8/10/2015


 


 
37,463
(4)
$
349,904



 
8/10/2016


 


 
90,000
(5)
$
840,600



 
8/10/2016
 
 
 
 
 
 
90,000
(6)
$
840,600

 
 
Yves
3/10/2008
4,875


 
$
6.15

3/10/2018

 
 



LeMaitre
8/15/2008
6,000


 
$
8.90

8/15/2018

 
 



 
8/16/2010
13,947


 
$
10.43

8/16/2020

 
 



 
8/16/2010
3,253


 
$
10.43

8/16/2020

 
 



 
11/11/2013


 


 
3,125
(9)
$
29,188



 
3/10/2014


 


 
6,000
(8)
$
56,040



 
8/11/2014


 


 
4,167
(2)
$
38,920



 
8/10/2015


 


 
37,462
(3)
$
349,895



 
8/10/2015


 


 
37,463
(4)
$
349,904



 
8/10/2016


 


 
90,000
(5)
$
840,600



 
8/10/2016


 


 
90,000
(6)
$
840,600



David
2/10/2014
50,000

10,000

(12)
$
2.53

2/10/2024

 
 



Teichmann
5/12/2014
19,270

5,730

(12)
$
1.78

5/12/2024

 
 



 
2/10/2014


 


 
11,250
(10)
$
105,075



 
3/10/2014


 


 
938
(8)
$
8,761



 
5/12/2014


 


 
6,250
(11)
$
58,375



 
8/11/2014


 


 
4,167
(2)
$
38,920



 
8/10/2015


 


 
37,462
(3)
$
349,895



 
8/10/2015


 


 
37,463
(4)
$
349,904




26


Table of Contents

 
8/10/2016


 


 
70,000
(5)
$
653,800



 
8/10/2016


 


 
70,000
(6)
$
653,800



Adam Carter
8/15/2014
70,833

29,167

(12)
$
1.69

8/15/2024

 
 



 
8/11/2014


 


 
31,250
(2)
$
291,875



 
8/10/2015


 


 
29,138
(3)
$
272,149



 
8/10/2015


 


 
29,138
(4)
$
272,149



 
8/10/2016


 


 
70,000
(5)
$
653,800



 
8/10/2016


 


 
70,000
(6)
$
653,800



Jim Haynes
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

 
 



 
8/15/2009
76,000


 
$
3.50

8/15/2019

 
 



 
8/16/2010
34,400


 
$
10.43

8/16/2020

 
 



 
8/15/2011
20,000


 
$
4.33

8/15/2021

 
 



 
3/10/2014


 


 
6,000
(8)
$
56,040



 
8/11/2014


 


 
4,167
(2)
$
38,920



 
8/10/2015


 


 
29,138
(3)
$
272,149



 
8/10/2015


 


 
29,138
(4)
$
272,149



 
8/10/2016


 


 
70,000
(5)
$
653,800



 
8/10/2016


 


 
70,000
(6)
$
653,800



 

(1)
Calculated by multiplying the number of unvested shares of our common stock by $9.34, the closing market price per share of our common stock on the NASDAQ Global Select Market on June 30, 2017.
(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)
These restricted stock unit awards will vest as to 33.33% of the number of shares subject to each award on August 10, 2016; and 8.33% of the number of shares subject to each such award shall vest on the November 10th, February 10th, May 10th, and August 10th following August 10, 2016 over the following two years.
(4)
On August 10, 2015, each of Messrs. Dougherty, Mangan, Haynes, LeMaitre, Teichmann and Carter received a performance-based restricted stock unit award. These performance-based restricted stock unit awards will be earned at a 100% target level, based upon the achievement of positive free cash flow (defined as EBITDA less capital expenditures) in any fiscal quarter ending prior to June 30, 2018. Vesting of these PSUs is contingent upon service conditions being met through August 10, 2018. The Compensation Committee certified that this performance condition was achieved during the quarter ended September 26, 2015. As a result, these PSUs vest as to 33.33% of the number of shares subject to each award on August 10, 2016; and 8.33% of the number of shares subject to each such award shall vest on the November 10th, February 10th, May 10th, and August 10th following August 10, 2016 over the following two years.
(5)
These restricted stock unit awards will vest as to 25% of the number of shares subject to each award on August 10, 2017; and 6.25% of the number of shares subject to each such award shall vest on the November 10th, February 10th, May 10th, and August 10th following August 10, 2017 over the following three years.
(6)
On August 10, 2016, each of Messrs. Dougherty, Mangan, Haynes, LeMaitre, Teichmann and Carter received a performance-based restricted stock unit award. These performance-based restricted stock unit awards will be earned at a 100% target level, based on the achievement of $25 million of positive free cash flow (defined as Adjusted EBITDA less capital expenditure) over any consecutive four fiscal quarter period ending prior to June 27, 2020. On July 25, 2017, the Compensation Committee certified that this performance condition was achieved during the quarter ended July 1, 2017. As a result, these performance-based restricted stock unit awards cliff vest with respect to 25 percent of the underlying shares on August 10, 2017, and with respect to 6.25 percent of the underlying shares each subsequent quarter over the following three years, subject to continuous service.
(7)
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.
(8)
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.
(9)
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.

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Table of Contents

(10)
The restricted stock awards vested as to 25% of the number of shares subject to each restricted stock award on February 10, 2015; and 6.25% of the number of shares subject to each such award shall vest on the May 10th, August 10th, November 10th, and February 10th following February 10, 2015 over the following three years.
(11)
The restricted stock awards vested as to 25% of the number of shares subject to each restricted stock award on May 12, 2015; 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 12, 2015 over the following three years.
(12)
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.
Fiscal 2017 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 July 1, 2017.
 
Fiscal 2017 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
 
 
 
372,417

 
$
2,871,537

Pete Mangan
 
57,000
 
$
378,845

 
185,033

 
$
1,402,799

Yves LeMaitre
 
53,752
 
$
293,131

 
160,242

 
$
1,202,812

David Teichmann
 
 
 
163,242

 
$
1,229,050

Adam Carter
 
 
 
113,224

 
$
864,808

Jim Haynes
 
 
 
130,641

 
$
980,630

______________
(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 2017.
(2)
The amounts reported in this column represent the number of shares of our common stock that vested during fiscal year 2017 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 restricted stock and/or restricted stock unit awards which vest based solely 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.

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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’ base 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 base salary during the period of his non-compete (up to a maximum of 6 months). In April 2017, Mr. Haynes notified us that he will retire on March 31, 2018.
Other Named Executive Officers . Each of our 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 30, 2017, 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 executive officer's 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 executive officer's separation from service.

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Table of Contents

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 30, 2017. The closing market price per share of our common stock on the NASDAQ Global Select Market on June 30, 2017 (the final business day of our fiscal year 2017) was $9.34.
 
 
Base Salary
($)(1)
 
Non-Equity Incentive Plan Compensation ($)
 
Accelerated Vesting of Options (2)
 
Accelerated Vesting of Restricted Stock Units (3)
 
Benefits ($)
 
Total
($)
Greg Dougherty
 
 
 
 
 
 
 
 
 
 
 
 
Type I event (4)
 
$
1,200,000

(6)
$
1,200,000

(8)
 
$
5,154,905

 
$
213,231

(9)
$
7,768,136

Type II event (5)
 
$
1,200,000

(6)
$
1,200,000

(8)
 
$
5,154,905

 
$
213,231

(9)
$
7,768,136

 
 
 
 
 
 
 
 
 
 
 
 
 
Pete Mangan
 
 
 
 
 
 
 
 
 
 
 
 
Type I event (4)
 
$
379,167

 
$
116,375

 
 
 
$
27,080

(10)
$
522,622

Type II event (5)
 
$
525,000

 
$
232,750

 
$
59,413

 
$
2,555,742

 
$
99,080

(11)
$
3,471,985

 
 
 
 
 
 
 
 
 
 
 
 
 
Yves LeMaitre
 
 
 
 
 
 
 
 
 
 
 
 
Type I event (4)
 
$
495,833

 
$
116,375

 
 
 
$
40,385

(10)
$
652,593

Type II event (5)
 
$
525,000

 
$
232,750

 
 
$
2,505,147

 
$
112,385

(11)
$
3,375,282

 
 
 
 
 
 
 
 
 
 
 
 
 
David Teichmann
 
 
 
 
 
 
 
 
 
 
 
 
Type I event (4)
 
$
302,500

 
$
105,690