defr14a
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)). |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Materials Pursuant to Section 240.14a-11(c) or Section 240.14a-12 |
CABOT MICROELECTRONICS CORPORATION
(Exact name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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Proposed maximum aggregate value of transaction: |
CABOT
MICROELECTRONICS CORPORATION
870 North Commons Drive
Aurora, Illinois 60504
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held March 4, 2008
To our Stockholders:
We are notifying you that the Annual Meeting of Stockholders of
Cabot Microelectronics Corporation will be held on Tuesday,
March 4, 2008 at 8:00 a.m. local time at Cabot
Microelectronics Corporation, 870 North Commons Drive, Aurora,
Illinois 60504 for the following purposes:
1. To elect three directors, each for a term of three years;
2. To approve an increase of 500,000 authorized shares of
common stock for issuance under the Cabot Microelectronics
Corporation Employee Stock Purchase Plan;
3. To ratify the selection of PricewaterhouseCoopers LLP,
an independent registered public accounting firm, as our
independent auditors for fiscal year 2008; and
4. To transact other business properly coming before the
meeting.
Each of these matters is described in further detail in the
enclosed proxy statement. We also have enclosed a copy of our
2007 Annual Report. Only stockholders of record at the close of
business on January 15, 2008 are entitled to vote at the
meeting or any postponements or adjournments of the meeting. A
complete list of these stockholders will be available at our
principal executive offices prior to the meeting.
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to Be Held March 4,
2008:
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The proxy statement and annual report to stockholders are
available at www.cabotcmp.com.
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Please use this opportunity to take part in our affairs by
voting your shares. You are cordially invited to attend the
meeting in person. If you wish to attend the meeting in person,
please bring a valid form of photo identification to the
meeting. If your stock is not registered in your own name and
you plan to attend the meeting and vote in person, you should
contact your broker or agent in whose name your stock is
registered to obtain a brokers proxy and bring it to the
meeting in order to vote at the meeting. Whether or not you plan
to attend the meeting, please complete the enclosed proxy card
and return it in the envelope provided as promptly as possible
or vote electronically through the Internet or by telephone.
Your proxy can be withdrawn by you at any time before it is
voted.
By order of the Board of Directors,
Chairman of the Board
Aurora, Illinois
January 22, 2008
Table Of
Contents
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CABOT
MICROELECTRONICS CORPORATION
870 North Commons Drive
Aurora, Illinois 60504
PROXY STATEMENT
The Board of Directors of Cabot Microelectronics Corporation is
asking for your proxy for use at the annual meeting of our
stockholders to be held on Tuesday, March 4, 2008 at
8:00 a.m. local time, at Cabot Microelectronics
Corporation, 870 North Commons Drive, Aurora, Illinois 60504 and
at any postponements or adjournments of the meeting. We are
initially mailing this proxy statement and the enclosed proxy to
our stockholders on or about January 22, 2008.
What
is the purpose of the annual meeting?
At our annual meeting, stockholders will act upon the matters
outlined in the accompanying notice of meeting, including the
election of three directors, the approval of an increase of
500,000 authorized shares of common stock for issuance under our
employee stock purchase plan and the ratification of the
selection of our independent auditors. In addition, our
management will report generally on the fiscal year ended
September 30, 2007 and respond to questions from
stockholders.
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to Be Held March 4,
2008:
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The proxy statement and annual report to stockholders are
available at www.cabotcmp.com.
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What
are our voting recommendations?
Our board of directors recommends that you vote your shares
FOR the election of each of the nominees named below
under ELECTION OF DIRECTORS, FOR the
increase of 500,000 authorized shares of common stock for
issuance under the Cabot Microelectronics Corporation Employee
Stock Purchase Plan (the ESPP) and FOR
the ratification of the selection of our independent auditors.
Only stockholders of record at the close of business on the
record date, January 15, 2008, are entitled to receive
notice of the annual meeting and to vote the shares of common
stock that they held on that date at the meeting, or any
postponements or adjournments of the meeting. Each outstanding
share of common stock entitles its holder to cast one vote,
without cumulation, on each matter to be voted on.
What
constitutes a quorum?
If a majority of the shares outstanding on the record date are
present at the annual meeting, either in person or by proxy, we
will have a quorum at the meeting permitting the conduct of
business at the meeting. As of the record date, we had
approximately 23,782,425 shares of common stock outstanding
and entitled to vote. Any shares represented by proxies that are
marked to abstain from voting on a proposal will be counted as
present for purposes of determining whether we have a quorum. If
a broker, bank, custodian, nominee or other record holder of our
common stock indicates on a proxy that it does not have
discretionary authority to vote certain shares on a particular
matter, the shares held by that record holder (referred to as
broker non-votes) will also be counted as present in
determining whether we have a quorum.
-1-
How
do I vote, and can I vote by telephone or through the
Internet?
You may vote in person at the annual meeting or you may vote by
proxy. You may vote in person by attending the meeting,
presenting a valid form of photo identification and delivering
your completed proxy card in person. You may vote by proxy by
signing, dating and mailing the enclosed proxy card. In
addition, you may vote by telephone or through the Internet by
following the instructions included in your proxy card.
To vote by telephone, if you are a record holder of our common
stock (that is, if you hold your stock in your own name in our
stock records maintained by our stock transfer agent,
Computershare Trust Company, N.A.,
P.O. Box 43078, Providence, Rhode Island
02940-3078),
call toll free
1-800-690-6903
and follow the instructions provided by the recorded message. To
vote by telephone if you are a beneficial owner of our common
stock, call the toll free number listed on your Voter
Instruction Card and follow the instructions provided by
the recorded message. For all holders of our common stock
(whether record or beneficial), to vote by the Internet, log on
to the Internet and go to www.proxyvote.com and follow
the steps on the secured website. You also may access the
proxyvote website or view our proxy materials by going to our
website, www.cabotcmp.com, selecting Investor
Relations on our Homepage, and then selecting Proxy
Materials from the Investor Information
section on the left side of the Investor Relations page.
If you vote by proxy, the individuals named on the proxy card as
proxy holders will vote your shares in the manner you indicate.
If you sign and return the proxy card without indicating your
instructions, your shares will be voted FOR:
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the election of the three nominees for director named below
under ELECTION OF DIRECTORS;
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the increase of 500,000 authorized shares of common stock for
issuance under the ESPP, and
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the ratification of the selection of our independent auditors.
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Can
I revoke my proxy or change my vote after I return my proxy card
or after I vote electronically or by telephone?
Yes. Even after you have submitted your proxy, you may revoke
your proxy or change your vote at any time before the proxy is
voted at the annual meeting by delivering to our Secretary a
written notice of revocation or a properly signed proxy bearing
a later date, or by attending the annual meeting and voting in
person. (Attendance at the meeting will not cause your
previously granted proxy to be revoked unless you specifically
so request.) To revoke a proxy previously submitted
electronically through the Internet or by telephone, you may
simply vote again at a later date, using the same procedures, in
which case the later submitted vote will be recorded and the
earlier vote revoked.
What
vote is required to approve each matter that comes before the
meeting?
Our bylaws provide that director nominees must receive the
affirmative vote of a plurality of the votes cast at the meeting
by stockholders entitled to vote thereon, meaning that the three
nominees for director with the most votes will be elected.
However, our Corporate Governance Guidelines, which are
available through our website, www.cabotcmp.com, provide
that in an uncontested election, any nominee for director who
receives a greater number of votes withheld from his
or her election than votes for such election (a
Majority Withheld Vote) shall promptly tender his or
her resignation following certification of the stockholder vote
for such election. In this situation, our nominating and
corporate governance committee then shall consider the
resignation offer and recommend to our board of directors
whether to accept it. The board of directors then will act on
the nominating and corporate governance committees
recommendation within ninety (90) days following
certification of the stockholder vote for such election.
Thereafter, the board of directors will promptly disclose its
decision whether to accept the directors resignation offer
(and the reasons for rejecting the resignation offer, if
applicable), in a press release to be disseminated in the manner
that we typically distribute press releases. The approval of the
increase in authorized shares of common stock for issuance under
the ESPP and the ratification of the selection of our
independent auditors requires the affirmative vote of a majority
of the votes cast at the meeting in person or by proxy by
stockholders entitled to vote thereon. Abstentions and broker
non-votes will not be counted for purposes of determining
whether an item has received the requisite number of votes for
approval.
-2-
What
happens if additional proposals are presented at the
meeting?
Other than the matters described in this proxy statement, we do
not expect any additional matters to be presented for a vote at
the annual meeting. If you vote by proxy, your proxy grants the
persons named as proxy holders the discretion to vote your
shares on any additional matters properly presented for a vote
at the meeting.
Who
will bear the costs of soliciting votes for the
meeting?
Certain directors, officers and employees, who will not receive
any additional compensation for such activities, may solicit
proxies by personal interview, mail, telephone or electronic
communication. We will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses for forwarding proxy and solicitation
materials to our stockholders. In addition to the mailing of
these proxy materials, we have hired the firm of D. F.
King & Co., Inc. to assist in the solicitation of
proxies at an estimated cost of approximately $8,500. We shall
bear all costs of solicitation.
-3-
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of January 15,
2008 (except as indicated below) by:
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all persons known by us to own beneficially 5% or more of our
outstanding common stock;
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each of our directors;
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each of the named executive officers in the Compensation
Discussion and Analysis Section and the Summary Compensation
Table included in this Proxy Statement; and
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all of our directors and executive officers as a group.
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Unless otherwise indicated, each stockholder listed below has
sole voting and investment power with respect to the shares of
common stock beneficially owned by such stockholder.
Stock
Ownership Table
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Number of Shares
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Beneficially
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Approximate
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Name and Address
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Owned(1)
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Percent of Class(1)
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CERTAIN BENEFICIAL OWNERS:
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1. Shapiro Capital Management LLC
3060 Peachtree Road, Suite 1555 N.W.
Atlanta, Georgia 30305
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2,559,807
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(2)
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10.8
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2. Royce & Associates, LLC
1414 Ave. of the Americas
New York, New York 10019
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2,137,300
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(3)
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9.0
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%
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3. Legg Mason, Inc.
100 Light Street
Baltimore, Maryland 21202
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2,050,993
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(4)
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8.6
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%
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4. Snyder Capital Management LP
One Market Plaza, Suite 1200
San Francisco, California 94105
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2,011,852
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(5)
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8.5
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5. Kornitzer Capital Management, Inc.
5420 W. 61st Place
Shawnee Mission, Kansas 66295
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1,886,705
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(6)
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7.9
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%
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6. Lord Abbett & Co. LLC
90 Hudson Street,
11th Floor
Jersey City, New Jersey 07302
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1,387,951
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(7)
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5.8
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DIRECTORS AND EXECUTIVE OFFICERS:
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William P. Noglows
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581,998
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(8)
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2.4
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Robert J. Birgeneau
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31,000
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(8)
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John P. Frazee, Jr.
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68,667
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(8)
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H. Laurance Fuller
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72,825
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(8)
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Edward J. Mooney
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35,957
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(8)
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Steven V. Wilkinson
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69,331
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(8)
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Bailing Xia
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6,375
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(8)
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Albert Y. C. Yu
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12,250
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(8)
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William S. Johnson
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187,918
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(8)
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Adam F. Weisman
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111,854
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(8)
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Clifford L. Spiro
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170,257
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(8)
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H. Carol Bernstein
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281,912
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(8)
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1.2
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All directors and executive officers as a group (17 persons)
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2,354,355
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(9)
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9.9
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%
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Beneficial ownership generally means any person who,
directly or indirectly, has or shares voting or investment power
with respect to a security or has the right to acquire such
power within 60 days. Shares of common stock subject to
options, warrants or rights that are currently exercisable or
exercisable within 60 days of January 15, 2008 are
deemed outstanding for computing the ownership percentage of the
person holding such options, warrants or rights, but are not
deemed outstanding for computing the ownership percentage of any
other person. The amounts and percentages are based upon
23,782,425 shares of our common stock outstanding as of
January 15, 2008. |
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Of the shares reported as beneficially owned, Shapiro Capital
Management LLC exercises (a) sole power to vote
2,204,363 shares, (b) shared power to vote 355,444,
(c) sole investment power over 2,559,807 shares, and
(d) shared investment power over 0 shares. The total
number of shares reported as beneficially owned is 2,559,807.
The number of shares indicated is based on information reported
in the Schedule 13F Holdings Report filed by Shapiro
Capital Management LLC on November 9, 2007. |
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Of the shares reported as beneficially owned, Royce &
Associates, LLC exercises (a) sole power to vote
2,137,300 shares, (b) shared power to vote
0 shares, (c) sole investment power over
2,137,300 shares and (d) shared investment power over
0 shares. The total number of shares reported as
beneficially owned is 2,137,300. The number of shares indicated
is based on information reported in Schedule 13F Holdings
Report filed by Royce & Associates, LLC on
November 6, 2007. |
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Of the shares reported as beneficially owned, Legg Mason, Inc.
exercises (a) sole power to vote 1,739,214 shares,
(b) shared power to vote 0 shares, (c) no power
to vote 311,779 shares, (d) sole investment power over
0 shares, and (e) shared investment power over
2,050,993 shares. The total number of shares reported as
beneficially owned is 2,050,993. This information is based on
information reported in the Schedule 13F Holdings Report
filed by Legg Mason, Inc. on December 28, 2007. Based
solely on information reported in such Schedule 13F filed
by Legg Mason, Inc., the investment power with respect to the
shares reported as beneficially owned by Legg Mason, Inc. is
also shared with Clearbridge Advisors, LLC, Smith Barney
Fund Management, LLC, and Legg Mason Private Portfolio
Group, LLC. |
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Of the shares reported as beneficially owned, Snyder Capital
Management LP exercises (a) sole power to vote
42,300 shares, (b) shared power to vote
1,816,497 shares, (c) no power to vote
153,055 shares, (d) sole investment power over
0 shares, and (e) shared investment power over
2,011,852 shares. The total number of shares reported as
beneficially owned is 2,011,852. The number of shares indicated
is based on information reported in the Schedule 13F
Holdings Report filed by Snyder Capital Management LP on
November 14, 2007. |
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Of the shares reported as beneficially owned, Kornitzer Capital
Management, Inc. exercises (a) sole power to vote
1,886,705 shares, (b) shared power to vote
0 shares, (c) no power to vote 0 shares,
(d) sole investment power over 1,886,705 shares, and
(e) shared investment power over 0 shares. The total
number of shares reported as beneficially owned is 1,886,705.
The number of shares indicated is based on information reported
in the Schedule 13F Holdings Report filed by Kornitzer
Capital Management, Inc. on November 9, 2007. |
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Of the shares reported as beneficially owned, Lord
Abbett & Co. LLC exercises (a) sole power to vote
1,387,951 shares, (b) shared power to vote
0 shares, (c) sole investment power over
1,297,651 shares, and (d) shared investment power over
90,300 shares. The total number of shares reported as
beneficially owned is 1,387,951. The number of shares indicated
is based on information reported in the Schedule 13F
Holdings Report filed by Lord Abbett & Co. LLC on
November 14, 2007. |
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Includes shares of our common stock that such person has the
right to acquire pursuant to stock options exercisable within
60 days of January 15, 2008, as follows: |
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Upon Exercise
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Name
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Shares Issuable
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Mr. Noglows
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514,375
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Mr. Birgeneau
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29,000
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Mr. Frazee
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46,500
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Mr. Fuller
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54,000
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Mr. Mooney
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29,000
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Mr. Wilkinson
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46,500
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Mr. Xia
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1,875
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Dr. Yu
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10,250
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Mr. Johnson
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162,500
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Mr. Weisman
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92,125
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Dr. Spiro
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143,125
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Ms. Bernstein
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264,750
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Also includes restricted shares of common stock awarded to such
executive officer pursuant to the Second Amended and Restated
Cabot Microelectronics Corporation 2000 Equity Incentive Plan,
as amended and restated September 26, 2006 (2000
Equity Incentive Plan), on December 1, 2006 and
November 30, 2007, respectively, that are still subject to
restrictions as of January 15, 2008, as set forth in the
table below. On December 1, 2006 and November 30,
2007, as part of our annual equity incentive award program, we
awarded restricted shares to our executive officers with
restrictions that lapse in equal increments upon each
anniversary over four years. The outstanding restricted stock
awards are eligible to receive dividends and have voting rights.
Prior to these awards, our compensation committee had awarded
only non-qualified stock option grants pursuant to our annual
grant program. As permitted by the 2000 Equity Incentive Plan,
beginning with the December 1, 2006 awards, our
compensation committee decided to award a blend of non-qualified
stock option grants and restricted stock awards (restricted
stock units for our
non-United
States employees) to all employees who were receiving annual
equity incentive awards, including the named executive officers
and other executive officers, according to approximately a
three-to-one ratio of non-qualified stock options granted to
shares of restricted stock awarded. Our compensation committee
made this decision primarily to address certain issues arising
pursuant to a new accounting standard requiring the expensing of
equity-based compensation issued by the Financial Accounting
Standards Board that became applicable to us as of
October 1, 2005, as well as to provide a more competitive
balance of the types of equity incentives being awarded to our
employees pursuant to the 2000 Equity Incentive Plan. |
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Annual Equity Incentive Program Restricted Shares
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Name
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12/1/2006
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11/30/07
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Mr. Noglows
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14,400
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18,000
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Mr. Johnson
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6,525
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9,200
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Mr. Weisman
|
|
|
7,125
|
|
|
|
7,500
|
|
Dr. Spiro
|
|
|
7,125
|
|
|
|
7,500
|
|
Ms. Bernstein
|
|
|
6,525
|
|
|
|
5,500
|
|
|
|
|
|
|
Also includes both restricted shares of common stock that such
executive officer has purchased at fair market value as
deposit shares and for which the executive officer
has been awarded a matching grant of award shares,
pursuant to our Executive Officer Deposit Share Program, that
are still subject to restrictions (with respect to award
shares) or conditions (with respect to deposit
shares) as of January 15, 2008 as set forth in the
table below. Under this program, our executive officers are
entitled to voluntarily use all or a portion of their after-tax
bonus compensation to purchase at fair market value shares of
restricted stock awarded under |
-6-
|
|
|
|
|
the 2000 Equity Incentive Plan. These shares are retained on
deposit with us until the third anniversary of the date of
deposit (deposit shares), and our company matches
the deposit with a restricted stock grant equal to 50% of the
shares deposited by the participant (award shares).
If the participant is employed by our company on the third
anniversary of the deposit date and the deposit shares have
remained on deposit with us through such date, the restrictions
on the award shares will lapse. Such executive officer has
dividend and voting rights with respect to the restricted shares. |
|
|
|
|
|
|
|
Deposit Share Program
|
Name
|
|
Restricted Shares
|
|
Mr. Noglows
|
|
|
5,192
|
|
Mr. Johnson
|
|
|
2,298
|
|
Mr. Weisman
|
|
|
685
|
|
Dr. Spiro
|
|
|
4,336
|
|
Ms. Bernstein
|
|
|
1,269
|
|
|
|
|
|
|
Also includes restricted shares of common stock awarded to such
non-employee director pursuant to the 2000 Equity Incentive Plan
that are still subject to restrictions as of January 15,
2008, as set forth in the table below. Prior to March 5,
2007, the Company awarded annual grants of 10,000 non-qualified
stock options and initial grants of 15,000 non-qualified stock
options, and did not award restricted stock, to non-employee
directors. The equity incentive element changes reflect a desire
to align the Companys equity awards for non-employee
directors with the Companys revised equity incentive
program for employees, including executive officers, as
described above. The revised equity awards reflect an
approximate three-to-one ratio of non-qualified stock options to
shares of restricted stock, which is consistent with the changes
to the annual equity incentive award program for employees,
including executive officers, and also effectively increased the
annual equity incentive award to each non-employee director from
an equivalent of 10,000 non-qualified stock options to an
equivalent of 12,000 non-qualified stock options. The initial
equity incentive award to a non-employee director remains an
equivalent of 15,000 non-qualified stock options. As with awards
to our employees, including our executive officers, for annual
equity awards to non-employee directors, restricted shares are
awarded with restrictions that lapse in equal increments upon
each anniversary over four years. Initial equity awards of
restricted shares to non-employee directors are made with
restrictions that lapse in equal annual increments beginning on
the date of the award. The outstanding restricted stock awards
are eligible to receive dividends and have voting rights. |
|
|
|
|
|
|
|
Non-Employee Director
|
Name
|
|
Restricted Shares
|
|
Mr. Birgeneau
|
|
|
2,000
|
|
Mr. Frazee
|
|
|
2,000
|
|
Mr. Fuller
|
|
|
2,000
|
|
Mr. Mooney
|
|
|
2,000
|
|
Mr. Wilkinson
|
|
|
2,000
|
|
Mr. Xia*
|
|
|
3,875
|
|
Dr. Yu
|
|
|
2,000
|
|
|
|
|
* |
|
Mr. Xia was elected a director on September 17, 2007,
and received both an initial and an annual non-employee director
equity award as of such date. |
-7-
|
|
|
|
|
Also includes phantom shares of our common stock that such
non-employee director has the right to acquire pursuant to the
Directors Deferred Compensation Plan as of
January 15, 2008, as follows: |
|
|
|
|
|
Name
|
|
Phantom Shares
|
|
Mr. Birgeneau*
|
|
|
|
|
Mr. Frazee**
|
|
|
10,167
|
|
Mr. Fuller
|
|
|
9,825
|
|
Mr. Mooney
|
|
|
4,952
|
|
Mr. Wilkinson**
|
|
|
11,471
|
|
Mr. Xia*
|
|
|
|
|
Dr. Yu*
|
|
|
|
|
|
|
|
* |
|
Messrs. Birgeneau and Xia and Dr. Yu are not
participants in the Directors Deferred Compensation Plan. |
|
** |
|
As of January 1, 2008, Messrs. Frazee and Wilkinson
have elected to cease deferral of their compensation pursuant to
the Directors Deferred Compensation Plan. |
|
|
|
(9) |
|
Includes 2,030,763 shares of our common stock that our
directors and executive officers have the right to acquire
pursuant to stock options exercisable within 60 days of
January 15, 2008, 142,275 restricted shares of our common
stock held by our executive officers still subject to
restrictions as of January 15, 2008, and 36,415 phantom
shares of our common stock that our non-employee directors have
the right to acquire pursuant to the Directors Deferred
Compensation Plan as of January 15, 2008. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and holders of more
than 10% of our common stock to file with the Securities and
Exchange Commission reports regarding their ownership and
changes in ownership of our common stock. Based solely on our
review of the reports furnished to us, we believe that all of
our directors and executive officers have complied with all
Section 16(a) filing requirements for fiscal year 2007.
Our board of directors is currently comprised of eight
directors. The board of directors is divided into three classes:
Class II, whose terms will expire at the upcoming annual
meeting of stockholders; Class III, whose terms will expire
at the annual meeting of stockholders to be held in 2009; and
Class I, whose terms will expire at the annual
meeting of stockholders to be held in 2010.
Messrs. Birgeneau, Wilkinson and Xia are currently in
Class II, Messrs. Frazee and Noglows and Dr. Yu
are currently in Class III, and Messrs. Fuller and
Mooney are currently in Class I.
At each annual meeting of stockholders, the successors to
directors whose terms will then expire will be elected to serve
from the time of election and qualification until the third
annual meeting following election. Our certificate of
incorporation provides that the authorized number of directors
may be changed only by resolution of the board of directors. Any
additional directorships resulting from an increase in the
number of directors will be distributed among the three classes
so that, as nearly as possible, each class will consist of
one-third of the total number of directors. Our certificate of
incorporation also provides that our board of directors may fill
any vacancy created by the resignation of a director or the
increase in the size of our board of directors.
The board of directors has nominated and urges you to vote
FOR the election of the three nominees named below
for terms of office ending in 2011. Proxies will be so voted
unless stockholders specify otherwise in their proxies.
In the event a nominee is not available to serve for any reason
when the election occurs, it is intended that the proxies will
be voted for the election of the other nominees and may be voted
for any substitute nominee. Our board of directors has no reason
to believe that any of the nominees will not be a candidate or,
if elected, will be unable or unwilling to serve as a director.
In no event will the proxies be voted for a greater number of
persons than the number of nominees named.
-8-
Our
board of directors recommends that you vote FOR the
election to the board of each of the nominees named
below.
Nominees
for election at this meeting for terms expiring in
2011:
Robert J. Birgeneau, 65, was elected a director of our
company in March 2005. He has been the Chancellor of the
University of California, Berkeley since September 2004. He also
holds a faculty appointment in the department of physics there.
From July 2000 until assuming his current position,
Mr. Birgeneau served as the President of the University of
Toronto. Prior to that, Mr. Birgeneau was the Dean of the
School of Science at the Massachusetts Institute of Technology,
and previously had been the chair of the physics department of
M.I.T. Mr. Birgeneau received his B.S. in mathematics from
the University of Toronto and his Ph.D. in physics from Yale
University.
Steven V. Wilkinson, 66, was elected a director of our
company in April 2000. He is also a director of Entergy
Corporation. Mr. Wilkinson has been retired since 1998.
Prior to retirement, he worked for Arthur Andersen LLP, where he
became a partner in 1974. Mr. Wilkinson received his B.A.
in economics from DePauw University and his M.B.A. from the
University of Chicago.
Bailing Xia, 52, was elected a director of our company in
September 2007. He is the Chairman and Chief Executive Officer
of Summer Leaf, Inc., a privately-held technology and project
development consulting company, headquartered in Toronto,
Canada, and has served in that role since 1996. In addition, he
also is the Chief Representative in North America for China
Central Television (CCTV) for education, science, technology,
culture and health programs, a position he has held since 1994.
Mr. Xia also has served as a director of Lingo Media
International, Inc., a publicly-traded leading publisher of
English-language
educational programs in China, since 2004. In addition, in April
2007 he was appointed a Member of the Planning Committee of the
China Development Bank. Mr. Xia holds a degree in Economics
from Anhui University, and also graduated from the
Sino-American
Scientific Technology, Industry and Business Administration
Program.
Directors
whose terms continue until 2009:
John P. Frazee, Jr., 63, was elected a director of
our company in April 2000. He has been a private investor since
2001 and has served as a senior advisor to Greenhill &
Co., Inc. since November 2007. Prior to 1997, he served as
President and Chief Operating Officer of Sprint Corporation, and
before that as Chairman and Chief Executive Officer of Centel
Corporation. Mr. Frazee received his bachelors degree
in political science from Randolph-Macon College.
William P. Noglows, 49, has served as our Chairman,
President and Chief Executive Officer since November 2003.
Mr. Noglows also is a director of Littlefuse, Inc. From
1984 through 2003, he served in various management positions at
Cabot Corporation, culminating in serving as an executive vice
president and general manager. While at Cabot Corporation, he
was one of the primary founders of our company and was
responsible for identifying and encouraging the development of
the CMP application, which is the core of our business.
Mr. Noglows had previously served as a director of our
company from December 1999 until April 2002. Mr. Noglows
received his degree in Chemical Engineering from the Georgia
Institute of Technology.
Dr. Albert Y. C. Yu, 66, was elected a director of
our company in March 2005. He also is a director of Preferred
Bank, PDF Solutions, Inc., and Semiconductor Manufacturing
International Corporation. Dr. Yu is the Chairman of
OneAngstrom LLC, and prior to that he served as a Senior Vice
President and member of the corporate Management Committee of
Intel Corporation, until his retirement in 2002 following
service with Intel for almost thirty years. Dr. Yu received
a B.S. in electrical engineering from the California Institute
of Technology, and a M.S. and Ph.D., also in electrical
engineering, from Stanford University.
Directors
whose terms continue until 2010:
H. Laurance Fuller, 69, was elected a director of
our company in June 2002. He also is a director of Abbott
Laboratories. Mr. Fuller retired from the position of
Co-Chairman of BP Amoco, p.l.c., a global petroleum and
petrochemicals company, in 2000 after serving as Chairman and
Chief Executive Officer of Amoco Corporation since 1991 and
President since 1983. Mr. Fuller received his B.S. in
chemical engineering from Cornell University.
-9-
Edward J. Mooney, 66, was elected a director of our
company in March 2005. He also serves on the boards of directors
of FMC Corporation, FMC Technologies, Inc., the Northern
Trust Corporation and PolyOne Corporation. Mr. Mooney
was the Delegue General-North America, Suez Lyonnaise des Eaux
from March 2000 until his retirement in March 2001. From 1994 to
2000, he was Chairman and Chief Executive Officer of Nalco
Chemical Company, one of the worlds largest providers of
water and chemical treatment technologies and services.
Mr. Mooney received both a B.S. in chemical engineering and
a J.D. from the University of Texas.
BOARD
STRUCTURE AND COMPENSATION
Board
of Directors and Board Committees
Our board of directors has a standing audit committee, a
standing compensation committee and a standing nominating and
corporate governance committee to assist the board of directors
in the discharge of its responsibilities. Our board of directors
has adopted the Cabot Microelectronics Corporation Corporate
Governance Guidelines, which are available on our website,
www.cabotcmp.com, along with other corporate governance
materials, such as board of directors committee charters and our
Code of Business Conduct. During fiscal year 2007, our board of
directors held ten meetings and took action by written consent
once. Each of our directors (other than Mr. Xia, who was
elected September 17, 2007) attended our annual
meeting of stockholders in fiscal year 2007. Each of our
directors (other than Dr. Yu, and other than Mr. Xia,
who was elected September 17, 2007) attended at least
75% of all the meetings of the board and those committees on
which he served during fiscal year 2007. Since fiscal year end,
the board of directors has met twice. Stockholders and third
parties may communicate with our board of directors through the
Chairman of the Board,
c/o the
Secretary of our company at our offices at 870 North Commons
Drive, Aurora, Illinois 60504.
Independent Directors. The board of
directors has determined that seven of our eight directors,
including Messrs. Birgeneau, Frazee, Fuller, Mooney,
Wilkinson, and Xia and Dr. Yu, are independent
directors as defined in Rule 4200 of the National
Association of Securities Dealers Automated Quotation
(Nasdaq) Marketplace Rules and as defined in
applicable rules by the Securities and Exchange Commission
(SEC). In making its determinations of independence,
in addition to consideration of the relevant SEC and Nasdaq
rules (according to which the definition of independent
director is set forth in our Corporate Governance
Guidelines), the board of directors considered factors for each
director such as any other directorships, any employment or
consulting arrangements, and any relationship with our
companys customers, suppliers or advisors. With respect to
Mr. Frazee, the board considered the fact that in November
2007 Mr. Frazee became a Senior Advisor to
Greenhill & Co., Inc., an investment banking firm that
has served as a financial advisor to us in the past pursuant to
certain contractual arrangements, which have since been
terminated but which contain certain provisions that survive
such termination. With respect to Dr. Yu, the board
specifically considered the fact that Dr. Yu is a director
of Semiconductor Manufacturing International Corporation, a
customer of our company through one of our distributors. Our
independent directors hold regularly scheduled meetings in
executive session, at which only independent directors are
present. The Chairman of the nominating and corporate governance
committee, currently Mr. Frazee, serves as chairman of the
meetings of the independent directors in executive session, and
performs other responsibilities such as working with the
Chairman of the board of directors to plan and set the agenda
for meetings of the board of directors. Stockholders and third
parties may communicate with our independent directors through
the Chairman of the nominating and corporate governance
committee,
c/o the
Secretary of our company at our offices at 870 North Commons
Drive, Aurora, Illinois 60504. During fiscal year 2007, our
independent directors met in executive session five times. Since
fiscal year end, our independent directors have met in executive
session twice.
Audit Committee. The functions of the
audit committee include selecting, appointing, retaining,
compensating and overseeing our independent auditors, deciding
upon and approving in advance the scope of audit and non-audit
assignments and related fees, reviewing accounting principles we
use in financial reporting, and reviewing the adequacy of our
internal control procedures, including the internal audit
function. The members of the audit committee are
Messrs. Frazee, Fuller, and Wilkinson (Chairman), each of
whom, during fiscal year 2007 and currently:
|
|
|
|
|
is an independent director as defined in
Rule 4200(a)(15) of the Nasdaq Marketplace Rules;
|
|
|
|
meets the criteria for independence as required by applicable
rules adopted by the SEC;
|
-10-
|
|
|
|
|
has not participated in the preparation of our financial
statements or the financial statements of any of our current
subsidiaries at any time during the past three years; and
|
|
|
|
is able to read and understand fundamental financial statements.
|
Our board of directors has determined that the audit committee
has at least one member who qualifies as an Audit Committee
Financial Expert, as defined by relevant SEC rules, and has
designated Mr. Wilkinson, the Chairman of the committee, as
such Audit Committee Financial Expert. As previously stated,
Mr. Wilkinson is an independent director. The audit
committee operates under a written charter, a current copy of
which is attached to this proxy statement as Appendix B and
is available on our website, www.cabotcmp.com. The audit
committee reviews and reassesses the adequacy of the audit
committee charter on an annual basis. The audit committee has
established procedures for the receipt, retention, and treatment
of complaints received regarding accounting, internal accounting
controls or auditing matters, as well as for the pre-approval of
services provided by our independent auditors, both of which are
also available on our website, www.cabotcmp.com. A
current copy of the procedures for the pre-approval of services
provided by our independent auditors is attached to this proxy
statement as Appendix C. As set forth in the audit
committee charter, the audit committee is also responsible for
the review and approval of any related party transaction in
advance of the company entering into any such transaction; since
April 2002, we have not been engaged in any related party
transactions and none have been proposed to the audit committee
for consideration. The audit committee met eight times during
fiscal year 2007 and has met twice since fiscal year end with
respect to the audit of our fiscal year 2007 financial
statements and related matters. In fulfillment of the audit
committees responsibilities for fiscal year 2007,
Mr. Wilkinson, the audit committee Chairman, reviewed our
Annual Report on
Form 10-K
for the fiscal year ended September 30, 2007 (as did the
other members of the committee and board of directors), and our
Quarterly Reports on
Form 10-Q
before we filed them, and Mr. Wilkinson and other members
of the committee also reviewed quarterly earnings announcements
and related matters before we released them.
Compensation Committee. The functions
of the compensation committee include reviewing and approving
the compensation and benefits for our employees, evaluating and
deciding upon the compensation of our chief executive officer,
evaluating and deciding upon the compensation of our other
executive officers, which is done following consultation with
our chief executive officer, monitoring the administration of
our employee benefit plans, authorizing and ratifying stock
option grants, restricted stock awards and other incentive
arrangements, and authorizing employment and related agreements.
Our chief executive officer is neither present for voting or
deliberation on, nor votes upon decisions relating to, his
compensation. In addition, our chief executive officer does not
vote upon decisions related to the compensation of our other
executive officers. Also, our chief financial officer, who also
has responsibility for our human resources function, and his
staff support the compensation committee in its work by
providing input and recommendations on the overall mix and forms
of executive compensation as directed by the compensation
committee. Our chief financial officer and human resources staff
do not make specific recommendations or decisions regarding the
amount of compensation for our named executive officers or other
executive officers.
The compensation committee has engaged the services of a
compensation consultant, W.T. Haigh & Company, Inc.,
which reports directly to the committee. The consultant has been
engaged to advise the committee on executive compensation and
equity incentive matters and trends and to perform benchmark
comparison analysis of compensation practices of peer companies.
From time to time, and as part of the committees ongoing
and annual reviews of executive officer compensation matters,
the consultant recommends specific ranges of compensation for
our executive officers, including our named executive officers,
based on information provided by the committee regarding
different performance scenarios and desired market placement.
The consultant also advises the nominating and corporate
governance committee on non-employee director compensation
matters. The consultant provides no other services to our
company.
The members of the compensation committee are
Messrs. Birgeneau, Fuller (Chairman), and Mooney, and
Dr. Yu, each of whom was during fiscal year 2007 and is now
an independent director as defined in
Rule 4200(a)(15) of the Nasdaq Marketplace Rules and as
defined in applicable rules adopted by the SEC. The compensation
committee operates under a written charter that addresses
compensation matters, a current copy of which is available on
our website, www.cabotcmp.com. The compensation committee
reviews and reassesses the
-11-
adequacy of the compensation committee charter on an annual
basis. The compensation committee met five times during fiscal
year 2007 and has met three times since the fiscal year end with
respect to 2007 annual bonuses, salary increases, stock option
grants and restricted stock awards, and other matters.
Nominating and Corporate Governance
Committee. The functions of the nominating
and corporate governance committee include reviewing and
recommending a slate of nominees for the election of directors,
recommending changes in the number, classification and term of
directors, reviewing nominations by stockholders with regard to
the nomination process, reviewing and recommending compensation
and other matters for our directors, and attending to general
corporate governance matters. The members of the nominating and
corporate governance committee are Messrs. Frazee
(Chairman), Fuller and Wilkinson, each of whom was during fiscal
year 2007 and is now an independent director as
defined in Rule 4200(a)(15) of the Nasdaq Marketplace Rules
and as defined in applicable rules adopted by the SEC. The
nominating and corporate governance committee operates under a
formal charter that addresses the nominations process and such
related matters as may be required under the federal securities
laws and Nasdaq listing requirements, a current copy of which is
available on our website, www.cabotcmp.com. The
nominating and corporate governance committee reviews and
reassesses the adequacy of the nominating and corporate
governance charter on an annual basis. The nominating and
corporate governance committee met four times during fiscal year
2007 and has met once since fiscal year end. The nominating and
corporate governance committee acted unanimously to recommend
the nomination of the Class II director nominees to the
board of directors, subject to stockholder approval, as
discussed in ELECTION OF DIRECTORS, above.
Criteria
for Nominating Directors
The nominating and corporate governance committee considers
candidates to fill new directorships created by expansion and
vacancies that may occur and makes recommendations to the board
of directors with respect to such candidates. The nominating and
corporate governance committee considers suggestions from many
sources regarding possible candidates for director and will
consider nominees recommended by stockholders. Any such
stockholder nominations, together with appropriate biographical
information, should be submitted to the Chairman of the
nominating and corporate governance committee,
c/o the
Secretary of our company at our offices at 870 North Commons
Drive, Aurora, Illinois 60504. To be included in the proxy
statement, such nomination must be received by the Secretary of
our company not later than the 120th day prior to the first
anniversary of the date of the preceding years proxy
statement.
In fiscal year 2007, we did not pay a fee to any third party to
identify or evaluate potential director nominees; however, our
directors play a critical role in guiding our strategic
direction and overseeing the management of our company and
accordingly, in the future we may pay a fee to a third party to
identify or evaluate potential director nominees if the need
arises.
Board candidates are selected based upon various criteria
including their character, business experience and acumen. Some
of the factors that are considered in evaluating candidates for
the board of directors include experience in areas such as
technology, manufacturing, marketing, finance, strategy,
international business, and academia, as well as geographic and
cultural diversity. Board members are expected to prepare for,
attend and participate in all board of directors and applicable
committee meetings, and our annual meetings of stockholders. The
nominating and corporate governance committee considers a
directors past attendance record, participation and
contribution to the board of directors in considering whether to
recommend the reelection of such director.
-12-
Compensation
of Directors
The following table shows information concerning the
compensation that the Companys non-employee directors
earned during the last completed fiscal year ended
September 30, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
|
Stock
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
in Cash
|
|
|
|
Awards
|
|
|
|
Awards
|
|
|
|
Total
|
|
Name
|
|
|
($)(2)
|
|
|
|
($)(3)
|
|
|
|
($)(3)
|
|
|
|
($)
|
|
Robert J. Birgeneau
|
|
|
|
56,000
|
|
|
|
|
9,470
|
|
|
|
|
183,600
|
|
|
|
|
249,070
|
|
John P. Frazee, Jr.
|
|
|
|
76,500
|
|
|
|
|
9,470
|
|
|
|
|
111,969
|
|
|
|
|
197,939
|
|
H. Laurance Fuller
|
|
|
|
84,000
|
|
|
|
|
9,470
|
|
|
|
|
111,969
|
|
|
|
|
205,439
|
|
Edward J. Mooney
|
|
|
|
56,000
|
|
|
|
|
9,470
|
|
|
|
|
183,600
|
|
|
|
|
249,070
|
|
Steven V. Wilkinson
|
|
|
|
88,000
|
|
|
|
|
9,470
|
|
|
|
|
111,969
|
|
|
|
|
209,439
|
|
Bailing Xia(1)
|
|
|
|
36,500
|
|
|
|
|
30,712
|
|
|
|
|
54,004
|
|
|
|
|
121,216
|
|
Albert Y. C. Yu
|
|
|
|
45,500
|
|
|
|
|
9,470
|
|
|
|
|
183,600
|
|
|
|
|
238,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Bailing Xia was elected to the Companys Board of Directors
effective September 17, 2007. His initial term will expire
at the Annual Meeting of Stockholders in 2008. In connection
with Mr. Xias election, the Board increased its size
from seven to eight directors. |
|
(2) |
|
Includes an annual retainer fee, committee and board meeting
attendance fees, and, as applicable, committee chairperson
annual retainer fees, each as discussed in more detail below.
Dollar amounts are comprised as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Annual
|
|
|
Meeting
|
|
|
Committee
|
|
Name
|
|
Retainer Fee
|
|
|
Fees
|
|
|
Chair Fee
|
|
|
Robert J. Birgeneau
|
|
$
|
35,000
|
|
|
$
|
21,000
|
|
|
|
|
|
John P. Frazee, Jr.*
|
|
$
|
35,000
|
|
|
$
|
31,500
|
|
|
$
|
10,000
|
|
H. Laurance Fuller**
|
|
$
|
35,000
|
|
|
$
|
39,000
|
|
|
$
|
10,000
|
|
Edward J. Mooney
|
|
$
|
35,000
|
|
|
$
|
21,000
|
|
|
|
|
|
Steven V. Wilkinson***
|
|
$
|
35,000
|
|
|
$
|
33,000
|
|
|
$
|
20,000
|
|
Bailing Xia
|
|
$
|
35,000
|
|
|
$
|
1,500
|
|
|
|
|
|
Albert Y. C. Yu
|
|
$
|
35,000
|
|
|
$
|
10,500
|
|
|
|
|
|
|
|
|
* |
|
Nominating and corporate governance committee chairman |
|
** |
|
Compensation committee chairman |
|
*** |
|
Audit committee chairman |
|
|
|
(3) |
|
The amounts in the column headed Stock Awards
represent the dollar amount of equity compensation cost
recognized for financial reporting purposes in fiscal year 2007,
computed in accordance with Statement of Financial Accounting
Standards No. 123(R), Share-Based Payment
(SFAS 123R), excluding the impact of estimated
forfeitures for service-based vesting conditions. For restricted
stock awards, the fair value is calculated using the closing
price of our common stock on the grant date. The actual value
realized by a non-employee director related to stock awards will
depend on the market value of our common stock on the date the
stock is sold. |
|
|
|
The amounts in the column headed Option Awards
represent the dollar amount of equity compensation cost
recognized for financial reporting purposes in fiscal year 2007,
computed in accordance with SFAS 123R, excluding the impact
of estimated forfeitures for service-based vesting conditions.
See Note 10 of Notes to Consolidated Financial Statements
included in Item 8 of Part II of our Annual Report on
Form 10-K
for fiscal |
-13-
|
|
|
|
|
year 2007 for a description of the assumptions used in that
computation. The actual value realized by a non-employee
director related to option awards will depend on the difference
between the market value of our common stock on the date the
option is exercised and the exercise price of the option. |
The grant date fair market value, computed in accordance with
SFAS 123R, of each Stock Award to our non-employee
directors during fiscal year 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair Value
|
|
|
|
|
|
|
|
|
|
of Stock Awards
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Granted in
|
|
Name
|
|
Grant Date
|
|
|
2007 Expense ($)
|
|
|
Fiscal Year 2007 ($)
|
|
|
Mr. Birgeneau
|
|
|
3/6/07
|
|
|
|
9,470
|
|
|
|
64,940
|
|
Mr. Frazee
|
|
|
3/6/07
|
|
|
|
9,470
|
|
|
|
64,940
|
|
Mr. Fuller
|
|
|
3/6/07
|
|
|
|
9,470
|
|
|
|
64,940
|
|
Mr. Mooney
|
|
|
3/6/07
|
|
|
|
9,470
|
|
|
|
64,940
|
|
Mr. Wilkinson
|
|
|
3/6/07
|
|
|
|
9,470
|
|
|
|
64,940
|
|
Mr. Xia
|
|
|
9/17/07
|
|
|
|
28,932
|
|
|
|
106,825
|
|
|
|
|
9/17/07
|
|
|
|
1,780
|
|
|
|
85,460
|
|
Dr. Yu
|
|
|
3/6/07
|
|
|
|
9,470
|
|
|
|
64,940
|
|
The grant date fair market value, computed in accordance with
SFAS 123R, of each Option Award to our non-employee
directors during fiscal year 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair Value
|
|
|
|
|
|
|
|
|
|
of Option Awards
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Granted in Fiscal Year
|
|
Name
|
|
Grant Date
|
|
|
2007 Expense ($)
|
|
|
2007 ($)
|
|
|
Mr. Birgeneau
|
|
|
3/6/07
|
|
|
|
16,357
|
|
|
|
112,160
|
|
Mr. Frazee
|
|
|
3/6/07
|
|
|
|
16,357
|
|
|
|
112,160
|
|
Mr. Fuller
|
|
|
3/6/07
|
|
|
|
16,357
|
|
|
|
112,160
|
|
Mr. Mooney
|
|
|
3/6/07
|
|
|
|
16,357
|
|
|
|
112,160
|
|
Mr. Wilkinson
|
|
|
3/6/07
|
|
|
|
16,357
|
|
|
|
112,160
|
|
Mr. Xia
|
|
|
9/17/07
|
|
|
|
50,946
|
|
|
|
183,458
|
|
|
|
|
9/17/07
|
|
|
|
3,058
|
|
|
|
146,766
|
|
Dr. Yu
|
|
|
3/6/07
|
|
|
|
16,357
|
|
|
|
112,160
|
|
During fiscal year 2007, no awards to any of our non-employee
directors were adjusted, modified or cancelled (forfeited).
The aggregate number of stock awards and the aggregate number of
stock option awards for each non-employee director that were
outstanding as of the end of fiscal year 2007 are, as follows:
|
|
|
|
|
|
|
|
|
|
|
Aggregate Number of Awards
|
|
|
|
Outstanding as of September 30, 2007
|
|
Name
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Mr. Birgeneau
|
|
|
2,000
|
|
|
|
41,000
|
|
Mr. Frazee
|
|
|
2,000
|
|
|
|
58,500
|
|
Mr. Fuller
|
|
|
2,000
|
|
|
|
66,000
|
|
Mr. Mooney
|
|
|
2,000
|
|
|
|
41,000
|
|
Mr. Wilkinson
|
|
|
2,000
|
|
|
|
58,500
|
|
Mr. Xia
|
|
|
3,875
|
|
|
|
13,500
|
|
Dr. Yu
|
|
|
2,000
|
|
|
|
22,250
|
|
-14-
A director who is also our employee receives no additional
compensation for his services as a director. On March 5,
2007, our board of directors approved a compensation program for
the Companys non-employee directors that revised the
equity incentive elements of the program to match similar
revisions made to the equity incentive program elements for our
employees, including our executive officers. Effective
March 5, 2007, non-employee directors are eligible for the
following compensation:
|
|
|
|
|
Description of Director Compensation
|
|
Amount
|
|
|
Annual Retainer Fee, as of the effective date of
appointment, and subsequently, at the time of our annual meeting
|
|
$
|
35,000
|
|
Committee and Board Meeting Fees, for attendance at each
meeting of the board and committee of the board
|
|
$
|
1,500
|
|
Committee Chair Annual Retainer Fees:
|
|
|
|
|
Audit committee chairperson
|
|
$
|
20,000
|
|
Compensation committee chairperson
|
|
$
|
10,000
|
|
Nominating and corporate governance committee chairperson
|
|
$
|
10,000
|
|
Annual Non-qualified Stock Option Grant, which vests over
a four year period, at the effective date of appointment, and
subsequently, at the time of our annual meeting
|
|
|
6,000 options
|
|
Annual Restricted Stock Award
|
|
|
2,000 shares
|
|
Initial Non-qualified Stock Option Grant, which vests
over a three year period, at the effective date of appointment
to the board
|
|
|
7,500 options
|
|
Initial Restricted Stock Award
|
|
|
2,500 shares
|
|
Prior to March 5, 2007, the Company awarded annual grants
of 10,000 non-qualified stock options and initial grants of
15,000 non-qualified stock options. The Company did not award
restricted stock. The equity incentive element changes reflect a
desire to align the Companys equity awards for
non-employee directors with the Companys revised equity
incentive program for employees, including executive officers.
The revised equity awards reflect an approximate three-to-one
ratio of non-qualified stock options to shares of restricted
stock, which is consistent with the changes to the annual equity
incentive award program for employees. The revisions to the
annual equity awards also effectively increase the annual equity
incentive award to each non-employee director from an equivalent
of 10,000 non-qualified stock options to an equivalent of 12,000
non-qualified stock options. The initial equity incentive award
for a non-employee director remains an equivalent of 15,000
non-qualified stock options. Our non-employee directors received
an aggregate of 49,500 stock options and 16,500 shares of
restricted stock in fiscal year 2007.
Under our Directors Cash Compensation Umbrella Program,
which only applies to non-employee directors and is filed as an
exhibit to our Annual Report on
Form 10-K
filed with the SEC on December 10, 2003, each non-employee
director may choose to receive his compensation either in cash,
in fully vested restricted stock under our 2000 Equity Incentive
Plan (as of the date the fees are earned, the fees would be
converted into the equivalent number of fully vested restricted
shares, which would be beneficially owned and reported on
Form 4 filings), or as deferred compensation under our
Directors Deferred Compensation Plan, as amended
September 26, 2006, which became effective in March 2001,
and is filed as an exhibit to our Annual Report on
Form 10-K
filed with the SEC on November 29, 2006. Non-employee
directors continue to receive their respective annual retainer
fees, committee chair annual retainer fees and annual
non-qualified stock option grants at the time of our annual
meeting, or upon the effective date of a directors
original election to the board of directors, if other than the
annual meeting date. Non-employee directors also are eligible
for reimbursement of travel and other out-of-pocket costs
incurred in attending meetings. Non-employee directors are not
eligible for any other compensation arrangement.
Prior to January 1, 2008, Messrs. Frazee, Fuller,
Mooney, and Wilkinson had each elected to defer his compensation
to future periods under the Directors Deferred
Compensation Plan. As of January 1, 2008,
Messrs. Frazee and Wilkinson have each elected to no longer
defer his compensation under the plan. Under the Directors
Deferred Compensation Plan, deferred amounts are payable only in
the form of our common shares. A participating director is
required to elect a date on which deferred compensation will
begin to be distributed, which date generally must be at least
two years after the end of the year deferrals are made and no
later than the date
-15-
of termination. As of the date the compensation is earned, the
fees are converted into the right to acquire the equivalent
number of shares of common stock at the end of the deferral
period. These rights to acquire shares under the Directors
Deferred Compensation Plan are reported as beneficially owned on
Form 4 filings for each participating director. As of
January 15, 2008, an aggregate of approximately $1,306,290
of directors compensation was deferred under the plan, and
as of September 30, 2007, the amount was $1,271,790. The
American Jobs Creation Act, a law containing provisions
affecting deferred compensation plans, was enacted in 2004 with
an effective date of January, 2005. We believe we are currently
operating in compliance with the new law and plan to amend the
Directors Deferred Compensation Plan to the extent
necessary to comply with such law pursuant to, and according to
the December 31, 2008 time frame established by, relevant
United States Department of the Treasury guidance.
Compensation
Committee Interlocks and Insider Participation
None of the current or former members of the compensation
committee are or have been our employees.
FEES
OF INDEPENDENT AUDITORS AND AUDIT COMMITTEE REPORT
Fees
Billed by Independent Auditors
During fiscal years 2006 and 2007, the audit committee
pre-approved 100% of all audit and non-audit services provided
by our independent auditors, PricewaterhouseCoopers LLP, an
independent registered public accounting firm. For such
pre-approval of services, the audit committee follows its policy
for the pre-approval of services provided by our independent
auditors, a current copy of which is attached to this proxy
statement as Appendix C and also is available on our
web-site, www.cabotcmp.com. The following table presents
fees for audit services rendered by PricewaterhouseCoopers LLP
for the audit of our annual financial statements for the fiscal
year ended September 30, 2007, and September 30, 2006,
and fees billed for other services rendered by
PricewaterhouseCoopers LLP during those periods.
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
Fiscal Year Ended
|
|
Fees
|
|
September 30, 2007($)
|
|
|
September 30, 2006($)
|
|
|
Audit Fees(1)
|
|
|
1,030,996
|
|
|
|
1,085,434
|
|
Audit-Related Fees(2)
|
|
|
0
|
|
|
|
40,345
|
|
Tax Fees(3)
|
|
|
246,352
|
|
|
|
243,978
|
|
All Other Fees(4)
|
|
|
3,000
|
|
|
|
13,000
|
|
Total
|
|
|
1,280,348
|
|
|
|
1,382,757
|
|
|
|
|
(1) |
|
Audit Fees include fees for professional services rendered by
PricewaterhouseCoopers LLP for the audit of our annual financial
statements and review of financial statements included in our
Form 10-Q
and for services that normally would be provided by
PricewaterhouseCoopers LLP in connection with statutory and
regulatory filings or engagements. In addition to including fees
for services necessary to perform an audit or review in
accordance with generally accepted auditing standards, this
category also may include services that generally only
PricewaterhouseCoopers LLP reasonably can provide, such as
comfort letters, statutory audits, attest services, consents and
assistance with and review of documents filed with the SEC. |
|
(2) |
|
Audit-Related Fees include assurance and related services
traditionally performed by PricewaterhouseCoopers LLP that are
reasonably related to the performance of the audit or review of
our financial statements and not reported under the Audit
Fee heading, including any employee benefit plan audits,
due diligence related to mergers and acquisitions, accounting
consultations and audits in connection with acquisitions,
internal control reviews, attest services that are not required
by statute or regulation and consultation concerning financial
accounting and reporting standards. For fiscal year 2006, the
only Audit-Related Services that PricewaterhouseCoopers LLP
performed were services for the audit of our 401(k) plan. For
fiscal year 2007, PricewaterhouseCoopers LLP did not render any
Audit-Related Services to us, and another auditing firm
performed the audit of our 401(k) plan. |
-16-
|
|
|
(3) |
|
Tax Fees include all services performed by professional staff in
PricewaterhouseCoopers LLPs and its foreign
affiliates tax divisions except those services related to
the audit, and include fees for tax compliance, tax planning,
and tax advice. Tax compliance generally involves preparation of
original and amended tax returns, claims for refund and tax
payment-planning services. Tax planning and tax advice encompass
a diverse range of services, including assistance with tax
audits and appeals, tax advice related to mergers and
acquisitions, employee benefit plans and requests for rulings or
technical advice from taxing authorities. For fiscal year 2007,
$106,022 out of the total $246,352 for Tax Fees was for tax
compliance services. For fiscal year 2006, $104,195 out of the
total $243,978 for Tax Fees was for tax compliance services. |
|
(4) |
|
All Other Fees include fees for fiscal year 2007 for access to
on-line accounting research software tools, and for fiscal year
2006 for access to on-line accounting and human resources
research software tools. |
Report
of the Audit Committee
The following report of the audit committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other of our filings under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent we specifically incorporate this
report by reference therein.
The audit committee of the board of directors is responsible for
providing independent, objective oversight of our accounting and
system of internal controls, the quality and integrity of our
financial reports, and the independence and the selection,
appointment, retention, compensation and oversight of the
performance of our independent auditors. The audit committee is
composed of independent directors and operates under a written
charter, a current copy of which is attached to this proxy
statement as Appendix B and is available on our website,
www.cabotcmp.com. The audit committee reviews and
reassesses the adequacy of the audit committee charter on an
annual basis. Our board of directors has determined that the
audit committee has at least one member who qualifies as an
Audit Committee Financial Expert, as defined by relevant
Securities and Exchange Commission (SEC) rules, and
has designated Mr. Wilkinson, the Chairman of the
committee, as such Audit Committee Financial Expert.
Management is responsible for our internal controls and the
financial reporting process. The independent auditors are
responsible for performing an independent audit of our financial
statements in accordance with generally accepted auditing
standards and issuing a report on those financial statements.
The audit committee monitors and oversees these processes.
In this context, the audit committee reviewed and discussed the
audited financial statements for fiscal year 2007 with
management and with the independent auditors. Specifically, the
audit committee has discussed with the independent auditors the
matters required to be discussed by Statement on Auditing
Standards No. 61 (Communications with Audit Committees),
which include, among other things:
|
|
|
|
|
methods used to account for any significant and unusual
transactions;
|
|
|
|
the effect of any significant accounting policies in
controversial or emerging areas for which there is a lack of
authoritative guidance or consensus;
|
|
|
|
the process used by management in formulating any particularly
sensitive accounting estimates and the basis for the independent
auditors conclusions regarding the reasonableness of those
estimates; and
|
|
|
|
any disagreements with management over the application of
accounting principles, the basis for managements
accounting estimates, and the disclosures in the financial
statements.
|
The audit committee believes strongly in the principles
underlying the requirement that independent auditors maintain
their independence in strict compliance with applicable
independence rules. The audit committee has received the written
disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1
(Independence Discussions With Audit Committees) and has
discussed with the independent auditors the issue of the
independent auditors independence from the company and
management. In addition, in accordance with the SECs
auditor independence requirements, the audit committee has
considered whether the independent auditors provision of
non-audit services to the company is compatible with maintaining
the independence of the independent auditors and has concluded
that it is.
-17-
Based on its review of the audited financial statements and the
various discussions noted above, the audit committee recommended
to the board of directors that the audited financial statements
be included in our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2007.
Respectfully submitted by the audit committee,
John P. Frazee, Jr.
H. Laurance Fuller
Steven V. Wilkinson, Chairman
-18-
COMPENSATION
DISCUSSION AND ANALYSIS
In this section, we discuss and analyze our executive officer
compensation program and how we compensated each of our named
executive officers identified in the following table in fiscal
year 2007. The individuals listed include our chief executive
officer, chief financial officer and our three other most highly
compensated executive officers based on total compensation.
|
|
|
|
Name
|
|
|
Title
|
William P. Noglows
|
|
|
Chairman of the Board, President and Chief Executive Officer
|
William S. Johnson
|
|
|
Vice President and Chief Financial Officer
|
Adam F. Weisman
|
|
|
Vice President, Business Operations
|
Clifford L. Spiro
|
|
|
Vice President, Research and Development
|
H. Carol Bernstein
|
|
|
Vice President, Secretary and General Counsel
|
|
|
|
|
General. Our executive compensation
program is administered by the compensation committee of our
board of directors, which is composed solely of independent
directors. The compensation committee is responsible for
determining the level of compensation paid to our named
executive officers and our other executive officers, and
determining awards under and administering the 2000 Equity
Incentive Plan. The compensation committee is also responsible
for reviewing and establishing all other executive officer
compensation programs and plans that we may adopt from time to
time. During and for fiscal year 2007, the compensation
committee made all decisions pertaining to the compensation of
our named executive officers and our other executive officers.
The compensation committee also reviewed and approved the
methodology used for compensation of our general employee
population. Our chief executive officer is neither present for
voting or deliberation on, nor votes upon decisions relating to,
his compensation. In addition, our chief executive officer does
not vote upon decisions related to the compensation of our other
executive officers. Although our chief executive officer
evaluates the performance of our other executive officers,
including the named executive officers, and makes
recommendations with respect to their compensation to our
compensation committee, the committee makes all final decisions
regarding the executive officers compensation. Also, our
chief financial officer, who also has responsibility for our
human resources function, and his human resources staff, support
the compensation committee in its work by providing input and
recommendations on the overall mix and forms of executive
officer compensation as directed by the compensation committee.
Our chief financial officer and human resources staff do not
make specific recommendations or decisions regarding the amount
of compensation for our named executive officers or other
executive officers.
Compensation Policy and Overall
Objectives. In determining the amount and
composition of executive officer compensation, the
committees goal is to provide compensation that will
enable us to:
|
|
|
|
|
attract and retain talented executives,
|
|
|
|
align compensation with business objectives and
performance, and
|
|
|
|
link the interests of our executive officers to the interests of
our stockholders.
|
In general, executive officers, including our Chairman,
President and Chief Executive Officer and our other named
executive officers, are eligible for, and participate in, our
compensation and benefits programs according to the same general
terms as those available to all of our employees. For example,
the terms and conditions of our annual equity incentive awards
under the 2000 Equity Incentive Plan are the same for our
executive officers as they are for our other employees.
Similarly, the health and welfare benefit programs are the same
for all of our employees, including our named executive officers
and other executive officers; all executive officers participate
in the same ESPP, 401(k) Plan and Supplemental Plan, according
to the same terms, as all of our employees. Aside from the
change-in-control
severance protection agreements with our named executive
officers and other executive officers, and employment agreements
with Mr. Noglows and Dr. Spiro, all of which are
described in greater detail in the Executive
Compensation section below, we do not have
post-termination of service agreements with our
-19-
executive officers. Our executive officers are eligible to
participate in our Executive Officer Deposit Share Program,
under which they are entitled to voluntarily use all or a
portion of their after-tax bonus compensation to purchase at
fair market value shares of restricted stock awarded under the
2000 Equity Incentive Plan. These shares are retained on deposit
with us until the third anniversary of the date of deposit
(deposit shares), and our company matches the
deposit with a restricted stock grant equal to 50% of the shares
deposited by the participant (award shares) subject
to certain terms and conditions, as described in greater detail
below.
Competitive Compensation and
Benchmarking. The compensation committee
believes that each element of the compensation program should
target compensation levels that take into account current market
practices. Offering market-comparable pay opportunities allows
us to maintain a stable, successful management team. Our direct
competitors in our core business of developing, manufacturing,
and selling chemical mechanical planarization (CMP)
slurries and pads are not stand-alone publicly-traded entities,
and our market for compensation comparison purposes is comprised
of a group of companies that develop, manufacture, supply or use
a variety of semiconductor products and processes, as well as
companies that have similar revenue levels, market
capitalizations, employment levels and geographic presence.
While the compensation committee may change the composition of
this group from time-to-time based on changes in our or
others business, in fiscal year 2007, this group was
comprised of the following companies:
|
|
|
Aeroflex Inc.
|
|
Mattson Technology, Inc.
|
AMI Semiconductor, Inc.
|
|
Photronics, Inc.
|
ATMI, Inc.
|
|
PMC Sierra, Inc.
|
Axcelis Technologies, Inc.
|
|
QLogic Corporation
|
Brooks Automation, Inc.
|
|
RF Micro Devices, Inc.
|
Cree, Inc.
|
|
Semtech Corporation
|
Cymer, Inc.
|
|
Triquint Semiconductor, Inc.
|
Entegris, Inc.
|
|
Varian Semiconductor Equipment Associates, Inc.
|
Integrated Device Technology, Inc.
|
|
Veeco Instruments, Inc.
|
MacDermid, Incorporated
|
|
|
In evaluating this comparison group for compensation purposes,
the compensation committee, in consultation with outside
compensation consultants hired by the committee, currently W.T.
Haigh & Company, Inc., exercises its discretion and
makes its judgment regarding executive officer compensation
matters after considering all relevant factors. In general, it
is the goal of the compensation committee that each element of
compensation and total compensation for our named executive
officers and our other executive officers fall within the
50th to
75th percentile
for comparable positions within the comparison group. However, a
direct correlation may not always exist between the roles and
responsibilities of each of our executive officers and those of
the position that appears to best correspond to such individual
at companies within the comparison group.
The key elements of our compensation program for our named
executive officers and other executive officers are:
|
|
|
|
|
base salary,
|
|
|
|
annual cash bonuses, and
|
|
|
|
long-term equity incentives.
|
In addition, we provide our named executive officers and other
executive officers with:
|
|
|
|
|
change in control severance protection agreements, and in some
limited circumstances post-termination agreements, and
|
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|
|
the same retirement and other benefits provided to our employees
generally.
|
-20-
Descriptions of these elements and the reasons we provide them
to our named executive officers and other executive officers are
provided in the following table:
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|
|
|
|
Element
|
|
|
Description
|
|
|
Reason Provided
|
Base Salary
|
|
|
Fixed amount paid in cash twice per month, as for all of our
employees.
|
|
|
As for all of our employees, provides named executive officers
with a steady, predictable amount of fixed income with merit
increases from time-to-time (if provided, usually effective on
January 1 of the next calendar year) based on performance and
market comparisons.
|
Annual Cash Bonuses (Annual Incentive Program)
|
|
|
Cash payment made within 75 days following completion of
fiscal year depending on company and individual performance, as
for all of our employees.
|
|
|
As for all of our employees, aligns compensation with business
objectives and performance by communicating goals and motivating
individuals to achieve these goals, and rewarding performance
actually achieved.
|
Long-Term Equity Incentives (2000 Equity Incentive Plan)
|
|
|
Restricted Stock Awards (Initial, Annual and Deposit Share
Program) and Stock Option Grants (Initial, Annual).
|
|
|
As for all of our employees who receive awards pursuant to our
equity incentive plan, at risk nature of equity
awards links interests with those of our stockholders. Provides
ongoing retention mechanism over vesting periods.
|
Change in Control Severance Protection Benefits for Executive
Officers and other Key Employees
|
|
|
Salary and other benefits paid if terminated within a certain
period pursuant to a Change in Control of our company (three
years for Chief Executive Officer; two years for
other Executive Officers other than Principal Accounting
Officer; one year for Key Employees and Principal Accounting
Officer).
|
|
|
Assures company of dedicated executive and key employee team,
notwithstanding the possibility, threat or occurrence of a
change in control; Provides for continuity of executive
management and key employees in the event of an actual or
threatened change in control.
|
Retirement and other Benefits
|
|
|
401(k) savings plan, Supplemental Plan, basic life and
disability insurance and limited perquisites, as for all of our
employees.
|
|
|
Represents market practice and competitive factors. Broad-based
programs for all employees.
|
|
|
|
|
|
|
|
Each of these elements is also addressed separately below. In
determining compensation for executive officers, the
compensation committee considers all elements of an executive
officers total compensation package in comparison to
current market practices, including change in control
arrangements, ability to participate in savings plans and other
benefits. On at least an annual basis, the compensation
committee considers the base salary, annual cash bonus, and
long-term equity incentive elements, and balance among each of
these elements, of each executive officers overall
compensation.
Base Salaries. The compensation
committee regularly reviews each executive officers base
salary. Base salaries for executive officers are initially
determined by evaluating the executive officers levels of
responsibility, prior experience, breadth of knowledge, internal
equity issues and external compensation practices, with
particular reference to the comparison group of companies.
Increases to base salaries are driven primarily by performance
and current market practices, and evaluated by the compensation
committee based on sustained levels of contribution to
-21-
the company in the context of our performance-based management
process. In the past several years, depending on the level of
performance of the company and each executive officer, this
generally has meant base salaries in the 50th to
75th percentile of the salary ranges of similarly
positioned executive officers in the comparison group of
companies.
The factors impacting base salary levels are not assigned
specific weights. Rather, the compensation committee reviews all
of the factors and makes base pay determinations that reflect
the compensation committees analysis of the aggregate
impact of these factors. Following fiscal year 2006 and upon
review of each executive officers performance in the
fiscal year and compensation, the compensation committee, in
considering merit salary increases to be effective
January 1, 2007 for the calendar year, decided to retain
the 2006 base salaries without an increase for all of our named
executive officers except Mr. Weisman, because the
compensation committee decided to decrease our executive
officers base salary towards the
50th percentile
of the salary ranges of similarly positioned executive officers
in the comparison group of companies, and shift slightly the
compensation emphasis to the solely performance-related elements
of bonus and equity incentive awards. Consequently, 2007 base
salaries of our named executive officers remained at their 2006
levels, except with respect to Mr. Weisman whose base
salary was increased by 5.3% to reflect the expansion of his
responsibilities in his role of Vice President, Business
Operations, which he assumed in September 2006 at the end of the
fiscal year. Following fiscal year 2007 and upon review of each
executive officers performance in the fiscal year and
compensation, the compensation committee, in considering merit
salary increases to be effective January 1, 2008 for the
calendar year, increased our named executive officers base
salaries in the range of 4% to 6.75% to remain competitive
within our peer group. The resulting base salaries for 2008, and
the 2007 base salaries, are as follows:
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|
|
|
|
|
|
|
|
Name
|
|
|
2008 Base Salary
|
|
|
|
2007 Base Salary
|
|
William P. Noglows
|
|
|
$
|
545,000
|
|
|
|
$
|
520,000
|
|
William S. Johnson
|
|
|
$
|
332,800
|
|
|
|
$
|
320,000
|
|
Adam F. Weisman
|
|
|
$
|
312,000
|
|
|
|
$
|
300,000
|
|
Clifford L. Spiro
|
|
|
$
|
298,900
|
|
|
|
$
|
280,000
|
|
H. Carol Bernstein
|
|
|
$
|
303,800
|
|
|
|
$
|
290,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Bonuses. All of the
companys employees are eligible to participate in the
companys cash bonus program, which is called our Annual
Incentive Program, with executive officer, including named
executive officer, bonuses, if any, determined by the
compensation committee. As with all employees, executive
officers opportunities to earn annual cash bonuses
correspond to the degree to which our company achieves these
annually-established goals. The compensation committee believes
that a cash bonus program allows us to communicate specific
goals that are of primary importance during each year and
motivates executive officers to achieve these goals.
Performance-Based Management Program and Company Performance
Objectives: At the beginning of each fiscal year, the
compensation committee and board of directors establish specific
performance goals for the company in accordance with our
performance-based management process. These objectives are set
to reflect the key elements of our annual plan and budget, and
provide a common platform for our initiatives for the year.
Throughout the year, our senior management periodically reviews
the companys progress in achieving these goals with our
board of directors and compensation committee. In November,
2006, the board of directors and compensation committee approved
our Fiscal Year 2007 Company Performance Objectives. From these
Company Performance Objectives, we select, upon approval of the
compensation committee, a few of the most significant that all
employees at our company influence to serve as our Corporate
Performance Goals. The other Company Performance Objectives
serve as functional goals of special focus to particular
functions or business teams in our company; in this regard, our
executive officers have certain Leadership Team Goals that are
selected from the functional measures and approved by the
compensation committee. As in prior years, the fiscal year 2007
Leadership Team Goals were chosen to encourage a particular and
enhanced focus on certain aspects of our companys business
strategy and objectives for which all of our executive officers
and other Leadership Team members collectively have
responsibility for influencing and driving.
-22-
Our Fiscal Year 2007 Company Performance Objectives, Corporate
Performance Goals, Functional/Business Team Goals, and
Leadership Team Goals, with corresponding Measures for
evaluating attainment of such, were as follows:
Fiscal Year 2007 Company Performance Objectives:
Fiscal Year 2007 Corporate Performance Goals (with
corresponding Measures):
|
|
|
|
|
Earnings Per Share (Earnings Per Share);
|
|
|
|
Revenue Objectives (Revenue);
|
|
|
|
Gross Margin (Gross Profit Margin as a percentage of revenue);
and,
|
|
|
|
Customer Satisfaction (Scores on Customer Scorecards).
|
Fiscal Year 2007 Functional and Business Team Goals (with
corresponding Measures):
|
|
|
|
|
Productivity Improvement for Core Products (Cost of Goods Sold
as a percentage of Revenue);
|
|
|
|
Securing New Opportunities (Number of design/business wins at
certain customers);
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|
|
|
Product Quality Improvement (Statistical quality measures);
|
|
|
|
New Product Introductions (Number of New Product Introductions);
|
|
|
|
Customer Return Rate (Percentage of sales in gallons);
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|
|
|
QED Acquisition Integration (QED Revenue/milestone achievements
per integration plan);
|
|
|
|
Quality Culture Enhancement (Score on Standardized Supplier
Quality Award (SSQA)); and,
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|
|
|
Engineered Surface Finishes (ESF) Growth (ESF Revenue/Gross
Margin).
|
Fiscal Year 2007 Leadership Team Goals (with corresponding
Measures):
|
|
|
|
|
One Particular CMP Application Business Growth (Revenue and
design/business wins);
|
|
|
|
Another Particular CMP Application Business Growth (Revenue and
design/business wins);
|
|
|
|
Engineered Surface Finishes (ESF) Growth (ESF Revenue/Gross
Margin); and,
|
|
|
|
SSQA (SSQA score).
|
Performance Goals, Bonus Pool and Bonus Calculation: As
in prior years, in fiscal year 2007, achievement of the noted
four Fiscal Year 2007 Corporate Performance Goals and particular
Functional and Business Team Goals that correspond to an
individuals function or business team within our company
served as the mechanism by which the company determined the
amount of funding for our Annual Incentive Program Bonus Pool
(AIP Bonus Pool), which is approved by the
compensation committee for all employees, including our named
executive officers and other executive officers (our executive
officers functional goals were the noted Fiscal Year 2007
Leadership Team Goals).
To determine the funding of the AIP Bonus Pool, the performance
goals generally are weighted, based on their relative importance
to achieving the companys overall goals. Then, for each
performance goal, threshold, target and
stretch metrics, or levels, of performance are
established. Because each year our performance goals are set to
reflect the key objectives of our annual plan and budget, the
threshold, target and
stretch metrics for each goal are designed to
reflect increasing levels of difficulty, improvement, and
motivation in achieving each level. As part of our senior
managements periodic review throughout the year of our
progress in meeting our Company Performance Objectives,
Corporate Performance Goals, and Functional and Business Team
Goals with the compensation committee and board of directors,
performance is discussed against a particular goals
threshold, target and
stretch levels.
The specific threshold, target, and
stretch metrics related to the Corporate, Functional
and Business Team, and Leadership Team Performance Goals noted
above are omitted from this discussion because disclosure of
-23-
such metrics would result in competitive harm to the company
because these metrics reflect our specific business strategies,
financial objectives, and proprietary product development,
manufacturing, and marketing plans. We are the global leader in
CMP slurries, and developing complementary businesses both
within and outside of the CMP consumables market, and our direct
competitors in our core business of developing, manufacturing,
and selling CMP slurries and pads, aggressively follow and seek
the competitive details of our business. Our direct competitors
are comprised of United States as well as foreign entities. In
addition, our competitors are not stand-alone publicly-traded
entities; rather, they are either privately-held entities or
divisions or functions within divisions of large publicly-held
companies. Thus, these competitors are not subject to the same
public company disclosure requirements and disclosure of the
specific metrics related to our Corporate and Leadership Team
Goals would place the company at a relative competitive
disadvantage.
The threshold level of performance for a particular
performance goal represents the lowest level of performance for
which any bonus would be earned on that goal. The
stretch level of performance represents the level
for which the maximum bonus would be earned for that particular
goal, and the target represents the target level of
performance. The actual bonus, if any, attributable to each
performance goal is calculated based on the actual performance
compared to these threshold, target and
stretch performance levels, and these are added
together for all the performance goals to determine the funding
of the AIP Bonus Pool. In turn, the AIP Bonus Pool is allocated
for payment of bonuses to employees and executive officers,
including our named executive officers. For fiscal year 2007,
the bonus for a particular employee or executive officer was
calculated by:
i) multiplying the salary of the employee or
executive officer by the bonus target level established for the
particular role or band of the employee or executive officer
(expressed as a percentage of the individuals base salary,
and set according to market pay practices), as described in
greater detail for executive officers below;
ii) multiplied by a factor related to the
achievement of the Corporate and Functional and Business Team
Performance Goals that relate to the functional group or
business team in which the employee works (expressed as a
percentage of the particular target level of
performance); and
iii) multiplied by a factor that corresponds to an
assessment of the individual performance of the employee or
executive officer relative to the individuals own
performance objectives.
In addition, for fiscal year 2007, in assessing the
companys overall performance and calculating the funding
of the AIP Bonus Pool for all of our employees, including our
named executive officers and other executive officers, the
compensation committee also considered our companys
achievement of additional performance factors that the committee
considered important in evaluating the companys
performance for fiscal year 2007, but that were not able to be
known to the company at the time the Fiscal Year 2007 Corporate
Performance Goals and Functional and Business Team (Leadership
Team) Goals were established. These Additional Performance
Factors were: the companys financial performance, both in
light of overall industry economic factors as well as versus
peer companies; implementation and completion of a corporate
strategy assessment project; progress on the manufacturing and
adoption aspects of a particular CMP application; implementation
and achievement of certain productivity initiatives; and the
receipt of certain customer quality awards.
Individual Executive Officer Bonus Target Levels and Cash
Bonus Earned: As described above, actual payouts for cash
bonus awards are determined by the level of performance of our
company and the individual performance of each employee,
including each named executive officer and other executive
officers, and may be higher or lower than the established
individuals bonus target level depending upon performance
relative to the pre-established goals. The compensation
committee, in consultation with its outside compensation
consultant, has established bonus award targets for each
executive officer by evaluating factors such as external pay
practices, with particular reference to the comparison group of
companies (as described above, bonus award targets are
established for each of our employees based on an
individuals role or level). In this regard, for fiscal
year 2007 the compensation committee increased the bonus award
target for each named executive officer from each
individuals previous bonus award target:
Mr. Noglows was increased to 90 percent of his
base salary from 75 percent, Messrs. Johnsons,
-24-
Weismans, and Spiros from 50 percent to
65 percent, and Ms. Bernsteins from
50 percent to 55 percent. The bonus award targets and
actual amounts earned for our named executive officers for
fiscal year 2007 were as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Target ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Calculated
|
|
|
|
|
|
|
|
|
|
|
|
|
According to Base
|
|
|
|
|
|
|
|
|
Bonus Target (as %
|
|
|
|
Salary Earned in
|
|
|
|
|
|
Name
|
|
|
of Base Salary)
|
|
|
|
Fiscal Year 2007)
|
|
|
|
Actual Bonus Earned* ($)
|
|
William P. Noglows
|
|
|
|
90
|
%
|
|
|
$
|
468,000
|
|
|
|
$
|
470,000
|
|
William S. Johnson
|
|
|
|
65
|
%
|
|
|
$
|
208,000
|
|
|
|
$
|
234,400
|
**
|
Adam F. Weisman
|
|
|
|
65
|
%
|
|
|
$
|
192,563
|
|
|
|
$
|
167,500
|
|
Clifford L. Spiro
|
|
|
|
65
|
%
|
|
|
$
|
182,000
|
|
|
|
$
|
156,400
|
|
H. Carol Bernstein
|
|
|
|
55
|
%
|
|
|
$
|
159,500
|
|
|
|
$
|
184,100
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
In assessing our companys and executive officers
achievement of the noted Performance Goals for purposes of the
multiplier described above, the compensation committee concluded
that a factor of approximately 72 percent had been
achieved. In assessing each named executive officers
individual performance for fiscal year 2007, and for purposes of
the multiplier described above, the compensation committee
decided upon factors of approximately 1.20-1.45. |
|
** |
|
As with certain of our employees and other executive officers
who contributed directly to a particular strategy assessment
project in fiscal year 2007, Mr. Johnsons and
Ms. Bernsteins amounts include respective sums
approved by the compensation committee to reflect their work on
this initiative; without this additional recognition, the actual
bonus earned by each would have approximated that of their
respective bonus target percentages. |
Fiscal Year 2008 Performance Management Program and
Performance Goals. In November, 2007, the
compensation committee and board of directors set our Fiscal
Year 2008 Performance Goals for purposes of our Fiscal Year 2008
Annual Incentive Program, generally using the process described
above. These performance goals are: financial goals that include
earnings per share, gross margin as a percentage of revenue,
various revenue objectives, a cash flow measure; quality and
customer satisfaction goals, and various growth objectives. For
fiscal year 2008, in order to recognize and encourage the
cross-functional and interdependent nature of all of the
functions of our company, the functional group and business team
component of the bonus calculation has been eliminated.
Long-Term Equity Incentives. Long-term
equity incentives are provided to our named executive officers
and other executive officers pursuant to the 2000 Equity
Incentive Plan. All of the companys employees are eligible
to participate in our 2000 Equity Incentive Plan, with executive
officer, including named executive officer, awards pursuant to
it, if any, determined by the compensation committee. The
compensation committee believes that equity-based compensation
is an essential element in our overall compensation scheme.
Equity-based compensation is emphasized in the design of our
executive officer compensation program because it involves
at-risk components of compensation that directly link our
executive officers interests with those of our
stockholders. The compensation committee, in consultation with
its outside compensation consultants, evaluates the balance of
equity-based compensation with the base salary and cash bonus
elements of cash compensation by considering factors such as
external compensation practices, with particular reference to
the comparison group of companies, the ability to achieve a
desired balance between cash and equity-based compensation, and
the financial impact to our company of providing various kinds
and amounts of equity-based compensation to our employees,
including our executive officers.
Timing of Grants: Initial or new-hire options
and restricted stock may be awarded to employees, including our
executive officers when they join the company. Thereafter,
options and restricted stock may be awarded to employees,
including each executive officer annually and from time to time
based on performance. To enhance retention, options and
restricted stock awarded to executive officers, as with awards
to all other employees, are subject to vesting restrictions that
generally lapse over a four-year period. In addition to all
other forms of equity-based compensation and non-equity-based
compensation, stock option grants to executive officers, whether
new hire, occasional, or pursuant to our annual
incentive program, may only be made upon specific approval by
the
-25-
compensation committee. Our stock option grant practice
consistently has been that the exercise price for stock option
grants for all of our stock option grants, including those to
our executive officers, is the fair market value, as represented
by the closing price, of our stock on the stock option grant
date, as approved by the compensation committee. For new
hire grants, the grant date is the first day of employment
for the grant recipient; for grants made pursuant to our annual
grant program or at other times in particular circumstances, the
latter of which has not occurred for any of our executive
officers, the grant date is the date of approval by the
compensation committee or a subsequent date set by the committee
in its approval. For our annual grant program, our practice for
the past six annual cycles has been that the one grant date for
grants made to all employees, including all of our executive
officers, occurs within the week of the compensation
committees meeting (usually late November or early
December) to consider and decide upon performance and
compensation-related matters for our employees, including
specific evaluations and decisions regarding each of our
executive officers, such as annual cash bonuses, base salary
increases, and equity-based incentive awards following the close
of our fiscal year on September 30. It is our practice to
set a stock options grant date only for a date certain on
or subsequent to the date the grant is approved, and it is not
our practice to set a stock options grant date as a date
prior to the date of approval for a grant (i.e.,
backdating). In addition, it is not our practice to
make stock option grants while we are in possession, or in
coordination with the release, of material non-public
information regarding our company. To our knowledge, we have
followed our stock option grant practices throughout our history
as a publicly-traded company. While we do not have any current
plans to change our stock option grant practices, circumstances
may arise such that we might decide it is in the best interests
of our business to do so in the future.
Allocation Among Awards: Prior to our fiscal year 2007
awards and grants that the compensation committee made on
December 1, 2006, as part of our annual equity incentive
award program, our compensation committee had awarded only
non-qualified stock option grants pursuant to our annual grant
program. As permitted by the 2000 Equity Incentive Plan, on
December 1, 2006, our compensation committee decided to
award a blend of non-qualified stock option grants and
restricted stock awards (restricted stock units for our
non-United
States employees) to all employees who were receiving awards on
December 1, 2006, including the named executive officers
and other executive officers, according to approximately a
three-to-one ratio of non-qualified stock options granted to
restricted stock awarded. Our compensation committee made this
decision primarily to address the financial impact of the
expensing of equity-based compensation now required pursuant to
a new accounting standard issued by the Financial Accounting
Standards Board (SFAS 123R) that became applicable to us as
of October 1, 2005, as well as to more competitively
balance the types of equity incentives being awarded to our
employees pursuant to the 2000 Equity Incentive Plan. In
addition, for our fiscal year 2008 annual equity incentive award
program grant, which occurred on November 30, 2007, we
continued to provide this combination of restricted stock and
stock option awards for our employees, including our named
executive officers. For more information regarding these awards,
see Footnote no. 2 to the Grants of Plan-Based Awards table.
Size of Awards: When determining awards under the 2000
Equity Incentive Plan, the compensation committee considers the
companys and executive officers performance in the
prior year, the executive officers levels of
responsibility, prior experience and years of service,
historical award data and compensation practices at the
comparison group of companies. In determining award sizes, the
compensation committee does not assign specific weights to these
factors. Rather, the factors are evaluated on an aggregate
basis. For example, for our fiscal year 2007 annual equity
incentive awards, which occurred on December 1, 2006, we
reduced the overall units to be awarded to our
employees, including our named executive officers and other
executive officers, receiving such awards, relative to the
fiscal year 2006 grants generally in order to reduce our overall
equity award run rate, manage the financial impact of the
expensing of equity-based compensation pursuant to
SFAS 123R, and make our awards
-26-
more consistent in number with those of peer companies, and then
delivered the award in a combination of restricted stock and
stock options using the aforementioned three-to-one ratio, as
illustrated by the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2006
|
|
|
|
Fiscal Year 2007
|
|
|
|
Fiscal Year 2007
|
|
|
|
|
Non-Qualified Stock
|
|
|
|
Non-Qualified Stock
|
|
|
|
Restricted Stock
|
|
Name
|
|
|
Option Grant
|
|
|
|
Option Grant
|
|
|
|
Award
|
|
William P. Noglows
|
|
|
|
125,000
|
|
|
|
|
57,500
|
|
|
|
|
19,200
|
|
William S. Johnson
|
|
|
|
60,000
|
|
|
|
|
26,000
|
|
|
|
|
8,700
|
|
Adam F. Weisman
|
|
|
|
60,000
|
|
|
|
|
28,500
|
|
|
|
|
9,500
|
|
Clifford L. Spiro
|
|
|
|
70,000
|
|
|
|
|
28,500
|
|
|
|
|
9,500
|
|
H. Carol Bernstein
|
|
|
|
58,000
|
|
|
|
|
26,000
|
|
|
|
|
8,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In general, the compensation committee has not considered any
actual amounts that may have been realized from prior
equity-based compensation awards in awarding subsequent
equity-based compensation, or other elements of compensation.
However, in considering awards under the 2000 Equity Incentive
Plan to our employees, including executive officers, the
compensation committee does consider whether equity-based awards
that previously may have been made to them continue to fulfill
the purposes of motivation and retention.
Our executive officers are also eligible to participate in the
Executive Officer Deposit Share Program. See EXECUTIVE
COMPENSATION Executive Officer Deposit Share
Program, below. While all of our executive officers have
equity ownership in our company through participation in various
equity-based programs such as the Employee Stock Purchase Plan,
Executive Officer Deposit Share Program, and our annual equity
incentive award program, we do not currently have
equity-ownership requirements or guidelines for our executive
officers.
Change in Control Severance
Benefits. The terms and conditions of the
change in control severance protection agreements with our named
executive officers and the employment agreements with
Mr. Noglows and Dr. Spiro are described in more detail
in the section entitled Executive Compensation
below. The board of directors and compensation committee
originally determined the terms and conditions of the change in
control severance protection agreements, including the severance
benefit payable, and the triggering events for the payment of
such severance benefit, pursuant to such agreement, in
consultation with their compensation consultants and our
financial and other advisors, and considered external practices
at similarly situated companies regarding change in control
arrangements. The board of directors and compensation committee
also review the costs and benefits of the change in control
severance protection agreements approximately every three years,
most recently in June 2007. As a result of this review, the
board of directors and compensation committee, with advice from
the committees compensation consultant regarding market
practices, determined that the cost to the company and the
competitiveness of such agreements remain reasonable and
appropriate. The American Jobs Creation Act, a law containing
provisions affecting deferred compensation plans, was enacted in
2004 with an effective date of January, 2005. We believe we are
currently operating in compliance with the new law and plan to
amend the change in control severance protection agreements with
our executive officers and other key employees to the extent
necessary to comply with such law pursuant to, and according to
the December 31, 2008 time frame established by, relevant
United States Department of the Treasury guidance.
Retirement and Other Benefits. We have
adopted various employee benefit plans and arrangements for the
purpose of providing compensation and employee benefits to our
employees, including our executive officers. In general, the
same terms apply to all of our employees, including our
executive officers. These plans and arrangements include our
2000 Equity Incentive Plan, Employee Stock Purchase Plan, the
401(k) Plan, and the Supplemental Plan.
When Mr. Noglows joined our company in fiscal year 2004,
the compensation committee, in consultation with outside
advisors hired by the committee, used the executive compensation
practices described above to determine the terms of
Mr. Noglows employment offer and initial
compensation, comprised of base salary, cash bonus and
equity-based compensation elements, which are part of
Mr. Noglows employment agreement with our company, as
-27-
described in greater detail in the section entitled
Executive Compensation below. As part of the
agreement and his joining the company, Mr. Noglows also
entered into a
change-in-control
severance protection agreement and became eligible for the
reimbursement of certain relocation and other expenses, all of
which are described in greater detail in the section entitled
Executive Compensation below.
Upon completion of fiscal year 2007, the compensation committee,
in consultation with the outside compensation consultant hired
by the committee, used the executive compensation practices
described above, including the performance goals established by
the committee, to determine Mr. Noglows compensation,
composed of a cash bonus for fiscal year 2007, and a
non-qualified stock option grant and a restricted stock award as
part of the annual equity incentive award cycle for which all
employees were eligible. In addition, in setting both the
cash-based and equity-based elements of Mr. Noglows
compensation, the compensation committee made an overall
assessment of Mr. Noglows leadership in achieving the
companys long-term and short-term strategic, operational
and business goals. This included a favorable review of his
overall performance in leading the company and a desire to keep
his compensation competitive within our peer group and equitable
and consistent compared to our other executive officers. In
addition to these factors, Mr. Noglows cash bonus
award for fiscal year 2007, reflected the companys
performance against certain financial and other objectives in
fiscal year 2007, and the aspects of the overall pre-established
goals for fiscal year 2007 that were met, as assessed by the
compensation committee, using its discretion. These goals are
described in greater detail above. Based upon all of these
criteria, which included the compensation committees
assessment of the companys and Mr. Noglows
enhanced performance in various respects in fiscal year 2007 as
compared with fiscal year 2006, the compensation committee
awarded Mr. Noglows $470,000 as a cash bonus for fiscal
year 2007, which together with his $520,000 annual base salary
paid during fiscal year 2007, resulted in total cash
compensation to Mr. Noglows for fiscal year 2007 of
$990,000; this was $107,600 more than the $882,400 in total cash
compensation that Mr. Noglows received for fiscal year
2006. The committee also decided to increase
Mr. Noglows base salary to $545,000 for 2008
consistent with its review with the committees outside
compensation consultant of salary compensation information for
peer company chief executive officers, the committees
review of Mr. Noglows performance for fiscal year
2007, and its decision to increase the base salaries of the
other named executive officers from their fiscal year 2007
levels. In addition, as noted above and as reported in Footnote
no. 2 to the Grants of Plan-Based Awards table that
follows, on November 30, 2007, the compensation committee
awarded Mr. Noglows equity-based compensation in the form
of: (i) non-qualified stock options to purchase an
aggregate of 54,000 shares of the companys common
stock that vest in equal increments upon each anniversary over
four years and have a term of ten years that expires
November 30, 2017, at an exercise price of $37.40, which
was the closing price of our stock on the grant date; and
(ii) 18,000 shares of restricted stock with a fair
market value based on the closing price of our stock on the
award date of $37.40 per share that lapse in equal increments
upon each anniversary over four years. Aside from the number of
options granted and restricted stock awarded, the terms and
conditions of this option grant and restricted stock award are
the same as those for grants and awards made to our other
employees, including those that provide that any options that
are not vested and restricted stock on which restrictions have
not lapsed at the time of termination of employment are
forfeited. Because these equity awards were made after the
completion of fiscal year 2007, they are reported in the
referenced footnote and not specifically reported in the
compensation tables that follow.
As noted above, the compensation committee and the board of
directors reviews on a periodic basis the hypothetical costs to
the company of Mr. Noglows
change-in-control
severance protection agreement, and those of the companys
other executive officers and key employees who have such
agreements.
-28-
Regulatory
and Other Factors
Internal Revenue Code
Section 162(m). As one of the factors in
its review of compensation matters, the committee considers the
anticipated tax treatment to our company and to our executives
of various payments and benefits. The deductibility of some
types of compensation payments depends upon the timing of an
executives vesting or exercise of previously granted
rights. Furthermore, interpretations of and changes in the tax
laws and other factors beyond the compensation committees
control also affect the deductibility of compensation. For these
and other reasons, the compensation committee will not
necessarily limit executive compensation to that deductible
under Section 162(m) of the Internal Revenue Code of 1986,
as amended. The compensation committee will consider various
alternatives to preserving the deductibility of compensation
payments and benefits to the extent reasonably practicable and
to the extent consistent with its other compensation objectives.
At our annual meeting of stockholders held in March 2004, our
2000 Equity Incentive Plan was submitted to our stockholders for
approval, and our stockholders approved the plan. The 2000
Equity Incentive Plans predecessor plan, the Amended and
Restated Cabot Microelectronics Corporation 2000 Equity
Incentive Plan, previously had been approved by our stockholders
in March 2001. The 2000 Equity Incentive Plan is intended to
qualify certain compensation awarded under that plan for tax
deductibility under Section 162(m).
Other Factors. As described above, our
compensation committee began the use of awards of restricted
stock in addition to grants of non-qualified stock options
primarily to address the financial impact of the expensing of
equity-based compensation required under SFAS 123R. In
addition, the company has intended for its non-qualified
deferred compensation plans and other plans and agreements
subject to the requirements of Internal Revenue Code
Section 409A to be in operational compliance with such
requirements.
-29-
COMPENSATION
COMMITTEE REPORT
The following report of the compensation committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other of our filings under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent we specifically incorporate this
report by reference therein.
The compensation committee of the board of directors has
reviewed and discussed the Compensation Discussion and Analysis
with our companys management, and based on the review and
discussions, the compensation committee has recommended to the
board of directors that the Compensation Discussion and Analysis
be included in this proxy statement and the Companys
annual report on
Form 10-K
for the fiscal year ended September 30, 2007.
Submitted by the compensation committee,
Robert J. Birgeneau
H. Laurance Fuller, Chairman
Edward J. Mooney
Albert Y.C. Yu
-30-
The following tables set forth certain compensation information
for our Chief Executive Officer, Chief Financial Officer, and
three other most highly compensated executive officers of the
Company (collectively the named executive officers)
for the fiscal year ended September 30, 2007.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
Total
|
Name and
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Compen-
|
|
|
Compen-
|
Principal Position
|
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus ($)(1)
|
|
|
Awards ($)(2)(3)
|
|
|
Awards ($)(3)
|
|
|
sation ($)(4)
|
|
|
sation ($)
|
William P. Noglows
|
|
|
|
2007
|
|
|
|
|
520,000
|
|
|
|
|
470,000
|
|
|
|
|
154,049
|
|
|
|
|
2,197,517
|
|
|
|
|
62,075
|
|
|
|
|
3,403,641
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William S. Johnson
|
|
|
|
2007
|
|
|
|
|
320,000
|
|
|
|
|
234,400
|
|
|
|
|
66,109
|
|
|
|
|
752,467
|
|
|
|
|
30,944
|
|
|
|
|
1,403,920
|
|
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adam F. Weisman
|
|
|
|
2007
|
|
|
|
|
296,250
|
|
|
|
|
167,500
|
|
|
|
|
64,566
|
|
|
|
|
884,125
|
|
|
|
|
29,283
|
|
|
|
|
1,441,724
|
|
Vice President, Business Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clifford L. Spiro
|
|
|
|
2007
|
|
|
|
|
280,000
|
|
|
|
|
156,400
|
|
|
|
|
93,042
|
|
|
|
|
806,378
|
|
|
|
|
28,780
|
|
|
|
|
1,364,600
|
|
Vice President, Research and Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Carol Bernstein
|
|
|
|
2007
|
|
|
|
|
290,000
|
|
|
|
|
184,100
|
|
|
|
|
60,044
|
|
|
|
|
715,083
|
|
|
|
|
37,357
|
|
|
|
|
1,286,584
|
|
Vice President, Secretary and General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Certain amounts in the Bonus column were used to
purchase deposit shares of restricted stock under
our Executive Officer Deposit Share Program after the end of the
2007 fiscal year on December 12, 2007. See footnote 2 below
for more details. |
|
(2) |
|
Certain amounts in the Stock Awards column correspond to
matching grants of award shares of restricted stock
made pursuant to our Executive Officer Deposit Share Program,
which is described in more detail below. Under this program, our
executive officers are entitled to voluntarily use all or a
portion of their after-tax bonus compensation to purchase at
fair market value shares of restricted stock awarded under the
2000 Equity Incentive Plan. These shares are retained on deposit
with us until the third anniversary of the date of deposit
(deposit shares), and our Company matches the
deposit with a restricted stock grant equal to 50% of the shares
deposited by the participant (award shares). If the
participant is employed by our Company on the third anniversary
of the deposit date and the deposit shares have remained on
deposit with us through such date, the restrictions on the award
shares will lapse. This column does not include deposit shares
as these amounts were purchased by the participant after-tax
from amounts that were already disclosed in the
Bonus column. This column does include award share
grants made pursuant to this program. On December 13, 2006,
Mr. Noglows, Mr. Weisman, Dr. Spiro, and
Ms. Bernstein participated in the Executive Officer Deposit
Share Program receiving 761, 228, 304, and 152 respective award
shares on deposit under the program. The restrictions on these
award shares will lapse on December 13, 2009 if the
executive is employed by us at that time and the correspondence
deposit shares have remained on deposit with us through such
date. |
|
|
|
These amounts do not include award share grants made pursuant to
our Executive Officer Deposit Share Program to certain of our
named executive officers after the end of fiscal year 2007. On
December 12, 2007, Mr. Noglows, Mr. Johnson and
Ms. Bernstein participated in the Deposit Share Program
receiving 542, 339, and 271 respective award shares on deposit
under the program with a fair market value based on the closing
price of our stock on the award date of $36.84 per share. The
restrictions on these award shares will lapse on
December 12, 2010 if the participant is employed by us at
that time and the corresponding deposit shares have remained on
deposit with us through such date. Mr. Noglows,
Mr. Johnson and Ms. Bernstein purchased, |
-31-
|
|
|
|
|
respectively, 1,085, 678, and 542 deposit shares related to
these award shares after-tax from amounts that are disclosed in
the Bonus column above. |
|
(3) |
|
The amounts in the column headed Stock Awards
represent the dollar amount of equity compensation cost
recognized for financial reporting purposes in fiscal year 2007,
computed in accordance with SFAS 123R, excluding the impact
of estimated forfeitures for service-based vesting conditions.
For restricted stock awards, the fair value is calculated using
the closing price of our common stock on the grant date. The
actual value realized by a named executive officer related to
stock awards will depend on the market value of our common stock
on the date the stock is sold. |
|
|
|
The amounts in the column headed Option Awards
represent the dollar amount of equity compensation cost
recognized for financial reporting purposes in fiscal year 2007,
computed in accordance with SFAS 123R, excluding the impact
of estimated forfeitures for service-based vesting conditions.
See Note 10 of Notes to Consolidated Financial Statements
included in Item 8 of Part II of our Annual Report on
Form 10-K
for fiscal year 2007 for a description of the assumptions used
in that computation. The actual value realized by a named
executive officer related to option awards will depend on the
difference between the market value of our common stock on the
date the option is exercised and the exercise price of the
option. |
|
|
|
During fiscal year 2007, no awards to any of our named executive
officers were adjusted, modified or cancelled (forfeited). |
|
(4) |
|
These figures reflect (i) airline club membership fees for
fiscal year 2007 in the amount of $600 for Mr. Noglows,
$350 for Mr. Johnson, $300 for Dr. Spiro and $500 for
Ms. Bernstein; (ii) a transportation allowance for
fiscal year 2007 in the amount of $8,000 for Ms. Bernstein;
(iii) business club membership fees for fiscal year 2007 in
the amount of $4,350 for Mr. Noglows; and (iv) the
payment of financial planning fees of $10,000 on behalf of
Mr. Noglows in fiscal year, as per the terms of his
employment agreement. |
|
|
|
The information this column also includes contributions (both
matching and safe-harbor) made by us to
our tax-qualified savings plan (the 401(k) Plan) and
accruals under our non-qualified supplemental savings plan (the
Supplemental Plan) according to the standard terms
of each of these plans as applied to all of our employees,
including our executive officers. For the 401(k) Plan, this
means that we contribute the equivalent of 4% of each
employees eligible compensation (up to the I.R.S. eligible
compensation limit) to the plan on the employees behalf,
regardless of whether the employee makes a contribution to the
plan (safe-harbor contribution). In
addition, we make a matching contribution on the employees
behalf of 100% of the first 4%, and 50% of the next 2%, that the
employee contributes to the 401(k) Plan (matching
contribution). With respect to the Supplemental Plan,
which applies to all employees, including our executive
officers, at such time as they reach the I.R.S. eligible
compensation limit, employees are presently not able to make
contributions to the plan, but we continue to make the
safe harbor contribution of the equivalent of 4% of
each employees eligible compensation (over the I.R.S.
eligible compensation limit) to the Supplemental Plan on the
employees behalf. For fiscal year 2007, contributions as
such to the 401(k) Plan and the Supplemental Plan on behalf of
the named executive officers were made in the following amounts: |
|
|
|
|
|
|
|
|
|
Name
|
|
401(k) Plan
|
|
|
Supplemental Plan
|
|
|
Mr. Noglows
|
|
$
|
20,114
|
|
|
$
|
26,496
|
|
Mr. Johnson
|
|
$
|
20,250
|
|
|
$
|
9,828
|
|
Mr. Weisman
|
|
$
|
20,803
|
|
|
$
|
7,972
|
|
Dr. Spiro
|
|
$
|
19,791
|
|
|
$
|
8,208
|
|
Ms. Bernstein
|
|
$
|
20,091
|
|
|
$
|
8,268
|
|
|
|
|
|
|
In fiscal year 2007, we provided each of our named executive
officers with basic life insurance and accidental death and
dismemberment insurance coverage that was provided on the same
basis to all of our employees. There is no cash surrender value
associated with this insurance coverage. The value paid for this
coverage attributable to each named executive officer
(Mr. Noglows, $516; Mr. Johnson, $516;
Mr. Weisman, $508; Dr. Spiro, $481;
Ms. Bernstein, $499) is also reflected in the column headed
All Other Compensation for fiscal year 2007. |
-32-
On November 2, 2003, we entered into an employment
agreement with Mr. Noglows to become our Chairman,
President and Chief Executive Officer. Pursuant to this
employment agreement, among other terms, we agreed to pay
Mr. Noglows an annual base salary of $450,000 and a cash
bonus for fiscal year 2004 that would not be less than $160,000,
following the end of fiscal year 2004. Mr. Noglows
agreement provides that following the close of each fiscal year,
beginning with the end of fiscal year 2004, the compensation
committee of the board of directors will meet to consider an
increase in Mr. Noglows annual base salary in
accordance with its normal practices, and the compensation
committee has done so, as described in more detail; for 2007,
the compensation committee retained Mr. Noglows base
salary at its fiscal year 2006 level of $520,000, and for 2008,
the compensation committee has set his salary at $545,000. The
employment agreement also provided the grant of an option to
purchase 250,000 shares of our common stock with an
exercise price of $55.37, vesting in four equal annual
installments on each subsequent anniversary of November 3,
2003, his first date of employment, and an expiration of
November 3, 2013 (As described in greater detail below, to
address SFAS 123R, on September 27, 2004, the
compensation committee accelerated the vesting to
September 1, 2005 of all options granted previously to all
employees, including executive officers and directors, with an
option price of greater than $34.65, which action accelerated
the vesting to September 1, 2005 of 187,500 of the options
subject to this grant to Mr. Noglows). We also agreed to
provide Mr. Noglows with certain relocation and other
reimbursements and to allow Mr. Noglows to utilize
first-class air travel while he is employed by us.
On November 13, 2003, we entered into an employment
agreement with Dr. Spiro to become our Vice President,
Research & Development. Pursuant to this agreement,
among other terms, we agreed to pay Dr. Spiro an annual
base salary of $225,000. Dr. Spiros agreement states
that annual reviews by the compensation committee of the board
of directors with respect to any future salary adjustments are
usually held in the quarter following the close of our fiscal
year; for 2007, the compensation committee retained
Dr. Spiros base salary at its fiscal year 2006 level
of $280,000, and for 2008, the compensation committee has set
his salary at $299,000. Dr. Spiros agreement also
provided for the grant of an option to purchase
50,000 shares of our common stock, vesting in four equal
annual installments on each subsequent anniversary of
Dr. Spiros first day of employment, December 1,
2003. (As described in greater detail below, to address
SFAS 123R, on September 27, 2004, the compensation
committee accelerated the vesting to September 1, 2005 of
all options granted previously to all employees, including
executive officers and directors, with an option price of
greater than $34.65, which action accelerated the vesting to
September 1, 2005 of 37,500 of the options subject to this
grant to Dr. Spiro). Dr. Spiros employment
agreement provides that he is eligible to participate in our
annual cash incentive program with a target of 45% of base
salary, which, as described in greater detail above, has been
raised by the compensation committee to be a target of 65% of
base salary.
Standard
Employee Benefits
We have adopted various employee benefit plans and arrangements
for the purpose of providing compensation and employee benefits
to our employees, including our named executive officers and our
other executive officers. In general, the same terms apply to
all of our employees, including our named executive officers and
our other executive officers. These plans and arrangements
include the 2000 Equity Incentive Plan, the Employee Stock
Purchase Plan, the 401(k) Plan, and Supplemental Plan.
-33-
GRANTS
OF PLAN-BASED AWARDS
The following table shows all awards granted to the named
executive officers during the fiscal year ended
September 30, 2007 pursuant to the 2000 Equity Incentive
Plan.
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All Other
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All Other
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Stock
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Option
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Awards:
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Awards:
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Grant Date Fair
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Number of
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Number of
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Exercise or
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Value of Stock
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Shares of
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Securities
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Base Price of
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and Option
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Grant
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Stock or
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Underlying
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Option Awards
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Awards(3)
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Name
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Date
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Units (1)(#)
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Options(2)(#)
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($/Sh)
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($)
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William P. Noglows
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12/1/06
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19,200
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606,144
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12/1/06
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57,500
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31.57
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1,042,119
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12/13/06
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761
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24,968
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William S. Johnson
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12/1/06
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8,700
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274,659
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12/1/06
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26,000
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31.57
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471,219
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Adam F. Weisman
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12/1/06
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9,500
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299,915
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12/1/06
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28,500
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31.57
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498,875
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12/13/06
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228
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7,481
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Clifford L. Spiro
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12/1/06
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9,500
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299,915
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12/1/06
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28,500
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31.57
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516,528
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12/13/06
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304
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9,974
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H. Carol Bernstein
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12/1/06
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8,700
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274,659
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12/1/06
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26,000
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31.57
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471,219
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12/13/06
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152
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4,987
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(1) |
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The awards in this column that correspond to a Grant Date of
December 13, 2006 reflect the matching grants of
award shares of restricted stock made under our 2000
Equity Incentive Plan pursuant to our Executive Officer Deposit
Share Program, which is described in more detail below. Under
this program, our executive officers are entitled to voluntarily
use all or a portion of their after-tax bonus compensation to
purchase at fair market value shares of restricted stock awarded
under the 2000 Equity Incentive Plan. These shares are retained
on deposit with us until the third anniversary of the date of
deposit (deposit shares), and our Company matches
the deposit with a restricted stock grant equal to 50% of the
shares deposited by the participant (award shares).
If the participant is employed by our Company on the third
anniversary of the deposit date and the deposit shares have
remained on deposit with us through such date, the restrictions
on the award shares will lapse. This column does not include
deposit shares as these amounts were purchased by the
participant after-tax bonus compensation already disclosed in
the Bonus column of our Summary Compensation Table
of our 2007 Proxy Statement. As shown, on December 13,
2006, Mr. Noglows, Mr. Weisman, Dr. Spiro, and
Ms. Bernstein participated in the Executive Officer Deposit
Share Program receiving 761, 228, 304, and 152 respective award
shares on deposit under the program. The restrictions on these
award shares will lapse on December 13, 2009 if the
participant is employed by us at that time and the
correspondence deposit shares have remained on deposit with us
through such date. |
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The amounts in this column do not include award share grants
made pursuant to our Executive Officer Deposit Share Program to
certain of our named executive officers after the end of fiscal
year 2007. On December 12, 2007, Mr. Noglows,
Mr. Johnson and Ms. Bernstein participated in the
Deposit Share Plan receiving 542, 339, and 271 respective award
shares on deposit under the program with a fair market value
based on the closing price of our stock on the award date of
$36.84 per share. The restrictions on these award shares will
lapse on December 12, 2010 if the participant is employed
by us at that time and the corresponding deposit shares have
remained on deposit with us through such date. |
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These amounts in this column do not include restricted shares
awarded to our named executive officers after the end of fiscal
year 2007. On November 30, 2007, as part of our annual
equity incentive award program, we awarded restricted shares to
our named executive officers with a fair market value based on
the closing price of |
-34-
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our stock on the award date of $37.40 per share that lapse in
equal increments upon each anniversary over four years, in the
amounts set forth in the table below: |
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Name
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Restricted Stock Award
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Mr. Noglows
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18,000
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Mr. Johnson
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9,200
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Mr. Weisman
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7,500
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Dr. Spiro
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7,500
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Ms. Bernstein
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5,500
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(2) |
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As with all other grants of stock options and stock awards to
our named executive officers and other executive officers, other
than the number of options or restricted stock awarded, the
terms and conditions of the stock option grants in this column
are the same as those made to all other employees. This includes
a provision that if a participant retires (defined as the
voluntary termination of employment, where no circumstances for
termination for cause exist, upon the participants
achievement of at least 55 years of age and five years of
service), then the participant may retain any option previously
vested throughout the term of such option; as with our other
option grants, any options that have not yet vested as of
termination are forfeited. |
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Prior to these option grants on December 1, 2006 made as
part of our annual equity incentive award program, our
compensation committee had awarded only non-qualified stock
option grants pursuant to our annual grant program. As permitted
by the 2000 Equity Incentive Plan, on December 1, 2006, our
compensation committee decided to award a blend of non-qualified
stock option grants and restricted stock awards (restricted
stock units for our
non-United
States employees) to all employees who were receiving awards on
December 1, 2006, including the named executive officers
and other executive officers, according to approximately a
three-to-one ratio of non-qualified stock options granted to
restricted stock awarded. Our compensation committee made this
decision primarily to address the financial impact of the
expensing of equity-based compensation now required pursuant to
a new accounting standard issued by the Financial Accounting
Standards Board that became applicable to us as of
October 1, 2005, as well as to more competitively balance
the types of equity incentives being awarded to our employees
pursuant to the 2000 Equity Incentive Plan. The amounts in this
column that correspond to a Grant Date of December 1, 2006,
which are smaller relative to prior year grants, reflect the
restricted stock awards made by our compensation committee as a
result. |
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To address certain issues arising pursuant to the new accounting
standard issued (at the time proposed) by the Financial
Accounting Standards Board referenced above and as permitted by
the 2000 Equity Incentive Plan, on September 27, 2004, our
company, with the approval of the compensation committee,
accelerated to September 1, 2005 the vesting of those stock
options granted to all employees, officers and directors under
the 2000 Equity Incentive Plan prior to September 27, 2004
that have an option price equal to or greater than the fair
market value of our shares on September 27, 2004 ($34.65),
through amendment made and effective as of September 27,
2004 to the grant agreements for such stock options.
Approximately 1.3 million options with varying remaining
vesting schedules of fewer than three years as of
September 1, 2005 were subject to the acceleration
provision and became exercisable as of such date as a result,
including for the named executive officers as set forth below: |
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Number of
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Accelerated
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Name
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Options (#)
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Mr. Noglows
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187,500
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Mr. Johnson
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37,500
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Mr. Weisman
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Dr. Spiro
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37,500
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Ms. Bernstein
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79,250
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These amounts do not include options granted to our named
executive officers after the end of fiscal year 2007. On
November 30, 2007, as part of our annual equity incentive
award program, we granted options to our named executive
officers that have an exercise price of $37.40, which as with
all of our grants and awards to date was the fair market value
based on the closing price of our common stock on the date of
grant, vest in equal |
-35-
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increments upon each anniversary over four years and expire
November 30, 2017, in the amounts set forth in the table
below: |
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Securities
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Underlying
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Name
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Options
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Mr. Noglows
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54,000
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Mr. Johnson
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27,600
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Mr. Weisman
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22,500
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Dr. Spiro
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22,500
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Ms. Bernstein
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16,500
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(3) |
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As with all of our grants and stock awards to date, the exercise
price was the fair market value based on the closing price of
our stock on the date of grant. |
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These values were estimated using the Black-Scholes option
pricing formula on the basis of the following assumptions:
expected volatility: 52%; risk free rate of return: 4.4%;
annualized dividend yield: 0.0%; and expected time until
exercise: 6.25 years for people younger than the age of 46
at the date of grant and 6.76 years for people
46 years and older on the date of grant. On the
December 1, 2006 Grant Date, Mr. Weisman was younger
than 46, and Messrs. Noglows, Johnson, and Spiro and
Ms. Bernstein were 46 or older. |
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During fiscal year 2007, no awards to any of our employees,
including our named executive officers, were adjusted, modified
or cancelled (forfeited). |
2000
Equity Incentive Plan
The options granted on December 1, 2006 vest in equal
increments upon each anniversary over four years, and have a
term of ten years, expiring December 1, 2016. As with all
other grants of stock options and awards of restricted stock to
our named executive officers and other executive officers, other
than the number of options or restricted stock awarded, the
terms and conditions of these stock option grants are the same
as those made to all other employees. This includes a provision
that if a participant retires (defined as the voluntary
termination of employment, where no circumstances for
termination for cause exist, upon the participants
achievement of at least 55 years of age and five years of
service), then the participant may retain any option previously
vested throughout the term of such option; as with our other
option grants, any options that have not yet vested as of
termination are forfeited.
Prior to these option grants on December 1, 2006 made as
part of our annual equity incentive award program, our
compensation committee had awarded only non-qualified stock
option grants pursuant to our annual grant program. As permitted
by the 2000 Equity Incentive Plan, on December 1, 2006, our
compensation committee decided to award a blend of non-qualified
stock option grants and restricted stock awards (restricted
stock units for our
non-United
States employees) to all employees who were receiving awards on
December 1, 2006, including the named executive officers
and other executive officers, according to approximately a
three-to-one ratio of non-qualified stock options granted to
restricted stock awarded. Our compensation committee made this
decision primarily to address the financial impact of the
expensing of equity-based compensation now required pursuant to
a new accounting standard issued by the Financial Accounting
Standards Board that became applicable to us as of
October 1, 2005, as well as to more competitively balance
the types of equity incentives being awarded to our employees
pursuant to the 2000 Equity Incentive Plan. The restricted
shares granted on December 1, 2006 have a fair market value
based on the closing price of our stock on the award date of
$31.57 per share.
Executive
Officer Deposit Share Program
Our executive officers are eligible to participate in the
Executive Officer Deposit Share Program that our board of
directors adopted in March 2000. Under this program, our
executive officers are entitled to use all or a portion of their
after-tax bonus compensation to purchase at fair market value
shares of restricted stock awarded under the 2000 Equity
Incentive Plan. These shares are retained on deposit with us
until the third anniversary of the date of deposit
(deposit shares), and our Company matches the
deposit with a restricted stock grant equal to 50% of the shares
deposited by the participant (award shares). If the
participant is employed by us on the third anniversary of
-36-
the deposit date and the deposit shares have remained on deposit
with us through such date, the restrictions on the award shares
will lapse. Ten individuals currently participate in the deposit
share plan, and 21,208 shares (including award shares) are
currently on deposit under that program for all executive
officers. Of the named executive officers, Mr. Noglows,
Mr. Johnson, Mr. Weisman, Dr. Spiro and
Ms. Bernstein participate with (i) 3,462,
(ii) 1,532, (iii) 457, (iv) 2,891 and
(v) 846 respective deposit shares and (i) 1,730,
(ii) 766, (iii) 228, (iv) 1,445 and (v) 423
respective award shares on deposit under the program. These
amounts do not include the 9,943 shares (including award
shares) no longer under deposit or subject to restrictions as of
January 15, 2008, of which Mr. Noglows,
Mr. Johnson, Dr. Spiro and Ms. Bernstein
respectively had (i) 2,593 , (ii) 1,058,
(iii) 2,593, and (iv) 386 respective deposit shares
and (i) 1,296, (ii) 529, (iii) 1,296, and
(iv) 192 respective award shares. On December 13,
2006, Mr. Noglows, Mr. Weisman, Dr. Spiro, and
Ms. Bernstein participated in the Executive Officer Deposit
Share Program as follows: Mr. Noglows purchased 1,523
deposit shares and received 761 award shares; Mr. Weisman
purchased 457 deposit shares and received 228 award shares;
Dr. Spiro purchased 609 deposit shares and received 304
award shares; and Ms. Bernstein purchased 304 deposit
shares and received 152 award shares. The restrictions on the
award shares will lapse on December 13, 2009 if the
participant is employed by us at that time and the
correspondence deposit shares have remained on deposit with us
through such date. On December 12, 2007, Mr. Noglows,
Mr. Johnson and Ms. Bernstein participated in the
Executive Officer Deposit Share Program as follows:
Mr. Noglows purchased 1,085 deposit shares and received 542
award shares; Mr. Johnson purchased 678 deposit shares and
received 339 award shares; and Ms. Bernstein purchased 542
deposit shares and received 271 award shares. The restrictions
on the award shares will lapse on December 12, 2010 if the
participant is employed by us at that time and the corresponding
deposit shares have remained on deposit with us through such
date.
-37-
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table shows outstanding stock option awards
classified as exercisable and unexercisable as of
September 30, 2007 for each named executive officer. The
table also shows unvested and unearned stock awards assuming a
market value of $42.75 a share (the closing market price of the
Companys stock on September 28, 2007).
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Option Awards
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Stock Awards
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Number of
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Number of
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
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|
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Number of
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|
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Market Value
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
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|
|
Shares or Units
|
|
|
of Shares or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
of Stock That
|
|
|
Units of Stock
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
Option
|
|
|
Have Not
|
|
|
That Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
Name
|
|
|
Exercisable(1)
|
|
|
Unexercisable(1)
|
|
|
($)
|
|
|
Date
|
|
|
(#)(2)
|
|
|
($)
|
William P. Noglows
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
55.37
|
|
|
|
|
11/3/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
125,000
|
|
|
|
|
37.78
|
|
|
|
|
12/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250
|
|
|
|
|
93,750
|
|
|
|
|
30.51
|
|
|
|
|
12/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,500
|
|
|
|
|
31.57
|
|
|
|
|
12/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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21,684
|
|
|
|
|
926,991
|
|
|
William S. Johnson
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
42.72
|
|
|
|
|
4/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
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50,000
|
|
|
|
|
|
|
|
|
|
48.91
|
|
|
|
|
12/11/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
|
|
|
|
34,000
|
|
|
|
|
37.78
|
|
|
|
|
12/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
30.51
|
|
|
|
|
12/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,000
|
|
|
|
|
31.57
|
|
|
|
|
12/1/2016
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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9,451
|
|
|
|
|
404,030
|
|
|
Adam F. Weisman
|
|
|
|
17,500
|
|
|
|
|
12,500
|
|
|
|
|
30.10
|
|
|
|
|
5/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
25,000
|
|
|
|
|
37.78
|
|
|
|
|
12/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
45,000
|
|
|
|
|
30.51
|
|
|
|
|
12/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,500
|
|
|
|
|
31.57
|
|
|
|
|
12/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,728
|
|
|
|
|
415,872
|
|
|
Clifford L. Spiro
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
54.28
|
|
|
|
|
12/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
|
|
|
|
34,000
|
|
|
|
|
37.78
|
|
|
|
|
12/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
|
|
52,500
|
|
|
|
|
30.51
|
|
|
|
|
12/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,500
|
|
|
|
|
31.57
|
|
|
|
|
12/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,241
|
|
|
|
|
523,303
|
|
|
H. Carol Bernstein
|
|
|
|
47,000
|
|
|
|
|
|
|
|
|
|
67.07
|
|
|
|
|
5/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,000
|
|
|
|
|
|
|
|
|
|
49.80
|
|
|
|
|
5/1/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,500
|
|
|
|
|
|
|
|
|
|
51.37
|
|
|
|
|
12/11/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
48.91
|
|
|
|
|
12/11/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,500
|
|
|
|
|
31,500
|
|
|
|
|
37.78
|
|
|
|
|
12/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,500
|
|
|
|
|
30.51
|
|
|
|
|
12/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,000
|
|
|
|
|
31.57
|
|
|
|
|
12/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,942
|
|
|
|
|
382,271
|
|
|
|
|
|
(1) |
|
These option grants vest or vested over four years in equal
increments upon each anniversary of the grant date, other than
the April 1, 2003 grant to Mr. Johnson, which vested
over four years in equal increments beginning on the grant date,
with a term expiring on the tenth anniversary of the grant date,
other than the May 1, 2001 grant of options which expire on
May 1, 2008. As described in greater detail above, to
address certain new |
-38-
|
|
|
|
|
accounting rules, on September 27, 2004, the compensation
committee accelerated the vesting to September 1, 2005 of
all options granted previously to all employees, including
executive officers and directors, with an option price greater
than $34.65, which action accelerated the vesting to
September 1, 2005 of the options granted on
December 11, 2002, April 1, 2003, November 3,
2003, December 1, 2003 and December 11, 2003, each of
which has a term of ten years. |
|
|
|
(2) |
|
The restricted stock awards granted to Mr. Noglows vest as
follows: 19,200 shares vest over four years in equal
increments upon each anniversary of the December 1, 2006
grant date, 1,296 award shares vest on
December 22, 2007, 427 award shares vest on
December 21, 2008, and 761 award shares vest on
December 13, 2009. The restricted stock awards granted to
Mr. Johnson vest as follows: 8,700 shares vest over
four years in equal increments upon each anniversary of the
December 1, 2006 grant date, 324 award shares
vest on December 22, 2007, and 427 award shares
vest on December 21, 2008. The restricted stock awards
granted to Mr. Weisman vest as follows: 9,500 shares
vest over four years in equal increments upon each anniversary
of the December 1, 2006 grant date, and 228 award
shares vest on December 13, 2009. The restricted
stock awards granted to Dr. Spiro vest as follows:
9,500 shares vest over four years in equal increments upon
each anniversary of the December 1, 2006 grant date, 1,296
award shares vest on December 22, 2007, 1,141
award shares vest on December 21, 2008, and 304
award shares vest on December 13, 2009. The
restricted stock awards granted to Ms. Bernstein vest as
follows: 8,700 shares vest over four years in equal
increments upon each anniversary of the December 1, 2006
grant date, 90 award shares vest on
December 22, 2007, and 152 award shares vest on
December 13, 2009. |
OPTION
EXERCISES AND STOCK VESTED
The following table sets forth certain information regarding
stock options exercised during fiscal year 2007 and stock awards
vested during fiscal year 2007 for the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock Awards
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
|
Value
|
|
|
|
of Shares
|
|
|
|
Value
|
|
|
|
|
Acquired
|
|
|
|
Realized
|
|
|
|
Acquired
|
|
|
|
Realized
|
|
|
|
|
on
|
|
|
|
on
|
|
|
|
on
|
|
|
|
on
|
|
|
|
|
Exercise
|
|
|
|
Exercise
|
|
|
|
Vesting
|
|
|
|
Vesting
|
|
Name
|
|
|
(#)
|
|
|
|
($)(1)
|
|
|
|
(#)
|
|
|
|
($)(1)
|
|
William P. Noglows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William S. Johnson
|
|
|
|
15,000
|
|
|
|
|
198,536
|
|
|
|
|
205
|
|
|
|
|
6,921
|
|
|
Adam F. Weisman
|
|
|
|
20,000
|
|
|
|
|
208,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Clifford L. Spiro
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Carol Bernstein
|
|
|
|
14,500
|
|
|
|
|
203,600
|
|
|
|
|
102
|
|
|
|
|
3,444
|
|
|
|
|
|
(1) |
|
For option awards, the value realized on exercise is equal to
the aggregate difference between the exercise price of the
options and the fair market value of the shares on the date of
exercise. For stock awards, the value realized is the number of
shares vested multiplied by the fair market value of the shares
at the time of vesting. |
The Company does not maintain a defined benefit pension program.
-39-
NONQUALIFIED
DEFERRED COMPENSATION
The Company maintains the Cabot Microelectronics Corporation
Supplemental Employee Retirement Plan, a nonqualified
supplemental savings plan (the Supplemental Plan).
The following table discloses the earnings and balances of our
named executive officers under the Companys Supplemental
Plan that provides for compensation deferral on a
non-tax-qualified basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registrant
|
|
|
|
Aggregate
|
|
|
|
Aggregate
|
|
|
|
|
Contributions
|
|
|
|
Earnings
|
|
|
|
Balance at
|
|
Name
|
|
|
in Last FY ($)(1)
|
|
|
|
in Last FY ($)
|
|
|
|
Last FYE ($)
|
|
William P. Noglows
|
|
|
|
26,496
|
|
|
|
|
23,319
|
|
|
|
|
118,175
|
|
William S. Johnson
|
|
|
|
9,828
|
|
|
|
|
8,549
|
|
|
|
|
47,507
|
|
Adam F. Weisman
|
|
|
|
7,972
|
|
|
|
|
3,089
|
|
|
|
|
20,808
|
|
Clifford L. Spiro
|
|
|
|
8,208
|
|
|
|
|
3,059
|
|
|
|
|
25,716
|
|
H. Carol Bernstein
|
|
|
|
8,268
|
|
|
|
|
11,937
|
|
|
|
|
64,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These amounts are included in the All Other
Compensation column of the Summary Compensation Table. |
Effective May 1, 2000, the Company adopted the Supplemental
Plan covering all eligible employees as defined by the
Supplemental Plan. Participants in the Supplemental Plan,
including our named executive officers, do not make any
contributions to the Supplemental Plan. The purpose of the
Supplemental Plan is to provide for the deferral of the Company
contributions to certain highly compensated employees as defined
under the provision of the Employee Retirement Income Security
Act of 1974, as amended. Under the Supplemental Plan, the
Company contributes up to 4% of the named executive
officers eligible compensation. All amounts contributed by
the Company and earnings on these contributions are fully vested
at all times. The same menu of investment funds under the 401(k)
Plan is available under the Supplemental Plan. Like the 401(k)
Plan, all investment decisions are made by the participants.
Participants in the Supplemental Plan are not permitted to make
hardship withdrawals prior to termination and distributions
under the Supplemental Plan are paid in a lump sum.
-40-
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following tables and the accompanying narrative show
potential benefits payable to our named executive officers upon
the occurrence of the events specified herein, assuming such
events occurred on September 30, 2007 and excluding certain
benefits generally available to all salaried employees. Except
as noted, the amounts disclosed below reflect the aggregate
potential payments under each scenario and category. These
tables do not include amounts to the extent that the form and
amount of any payment or benefit are fully disclosed in an
earlier table.
William
P. Noglows
The following table shows the potential payments upon
termination with or without a change in control for named
executive officer William P. Noglows, assuming such events
occurred on September 30, 2007. Footnotes describing the
assumptions in calculations are included following the last
table in this section, as is a description of the employment
terms and plans providing benefits specified in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Not for Cause or Good Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon
|
|
|
|
|
|
|
In Connection with a
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
No Change in Control
|
|
|
|
Change in Control
|
|
|
|
Death
|
|
|
|
Disability
|
|
Salary Continuation
|
|
|
$
|
520,000
|
(1)
|
|
|
$
|
1,560,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Through Termination Date(2)
|
|
|
|
|
|
|
|
$
|
468,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation(2)
|
|
|
|
|
|
|
|
$
|
1,404,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions under Retirement Plans
|
|
|
|
|
|
|
|
$
|
139,830
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Stock Options(3)
|
|
|
$
|
853,838
|
|
|
|
$
|
2,411,600
|
|
|
|
$
|
2,411,600
|
|
|
|
$
|
2,411,600
|
|
|
Accelerated Vesting of Restricted Stock(4)
|
|
|
|
|
|
|
|
$
|
926,991
|
|
|
|
$
|
926,991
|
|
|
|
$
|
926,991
|
|
|
Post-termination Health Care(5)
|
|
|
|
|
|
|
|
$
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services
|
|
|
|
|
|
|
|
$
|
78,000
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax Gross Up
|
|
|
|
|
|
|
|
$
|
2,089,942
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
$
|
1,373,838
|
|
|
|
$
|
9,108,363
|
|
|
|
$
|
3,338,591
|
|
|
|
$
|
3,338,591
|
|
|
-41-
William
S. Johnson
The following table shows the potential payments upon
termination with or without a change in control for named
executive officer William S. Johnson, assuming such events
occurred on September 30, 2007. Footnotes describing the
assumptions in calculations are included following the last in
this section, as is a description of the employment terms and
plans providing benefits specified in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Not for Cause or Good Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Connection with a
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon Termination
|
|
|
No Change in Control
|
|
|
|
Change in Control
|
|
|
|
Death
|
|
|
|
Disability
|
|
Salary Continuation
|
|
|
|
|
|
|
|
$
|
640,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Through Termination Date(2)
|
|
|
|
|
|
|
|
$
|
208,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation(2)
|
|
|
|
|
|
|
|
$
|
416,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions under Retirement Plans
|
|
|
|
|
|
|
|
$
|
60,156
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Stock Options(3)
|
|
|
|
|
|
|
|
$
|
1,010,460
|
|
|
|
$
|
1,010,460
|
|
|
|
$
|
1,010,460
|
|
|
Accelerated Vesting of Restricted Stock(4)
|
|
|
|
|
|
|
|
$
|
404,030
|
|
|
|
$
|
404,030
|
|
|
|
$
|
404,030
|
|
|
Post-termination Health Care(5)
|
|
|
|
|
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services
|
|
|
|
|
|
|
|
$
|
48,000
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax Gross Up
|
|
|
|
|
|
|
|
$
|
775,141
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
$
|
3,581,787
|
|
|
|
$
|
1,414,490
|
|
|
|
$
|
1,414,490
|
|
|
Adam F.
Weisman
The following table shows the potential payments upon
termination with or without a change in control for named
executive officer Adam F. Weisman, assuming such events occurred
on September 30, 2007. Footnotes describing the assumptions
in calculations are included following the last table in this
section, as is a description of the employment terms and plans
providing benefits specified in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Not for Cause or Good Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Connection with a
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon Termination
|
|
|
No Change in Control
|
|
|
|
Change in Control
|
|
|
|
Death
|
|
|
|
Disability
|
|
Salary Continuation
|
|
|
|
|
|
|
|
$
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Through Termination Date(2)
|
|
|
|
|
|
|
|
$
|
195,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation(2)
|
|
|
|
|
|
|
|
$
|
390,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions under Retirement Plans
|
|
|
|
|
|
|
|
$
|
57,550
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Stock Options(3)
|
|
|
|
|
|
|
|
$
|
1,151,805
|
|
|
|
$
|
1,151,805
|
|
|
|
$
|
1,151,805
|
|
|
Accelerated Vesting of Restricted Stock(4)
|
|
|
|
|
|
|
|
$
|
415,872
|
|
|
|
$
|
415,872
|
|
|
|
$
|
415,872
|
|
|
Post-termination Health Care(5)
|
|
|
|
|
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services
|
|
|
|
|
|
|
|
$
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax Gross Up
|
|
|
|
|
|
|
|
$
|
789,982
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
$
|
3,665,209
|
|
|
|
$
|
1,567,677
|
|
|
|
$
|
1,567,677
|
|
|
-42-
Clifford
L. Spiro
The following table shows the potential payments upon
termination with or without a change in control for named
executive officer Clifford L. Spiro, assuming such events
occurred on September 30, 2007. Footnotes describing the
assumptions in calculations are included following the last
table in this section, as is a description of the employment
terms and plans providing benefits specified in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Not for Cause or Good Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Connection with a
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon Termination
|
|
|
No Change in Control
|
|
|
|
Change in Control
|
|
|
|
Death
|
|
|
|
Disability
|
|
Salary Continuation
|
|
|
$
|
280,000
|
(1)
|
|
|
$
|
560,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Through Termination Date(2)
|
|
|
|
|
|
|
|
$
|
182,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation(2)
|
|
|
|
|
|
|
|
$
|
364,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions under Retirement Plans
|
|
|
|
|
|
|
|
$
|
55,998
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Stock Options(3)
|
|
|
|
|
|
|
|
$
|
1,130,210
|
|
|
|
$
|
1,130,210
|
|
|
|
$
|
1,130,210
|
|
|
Accelerated Vesting of Restricted Stock(4)
|
|
|
|
|
|
|
|
$
|
523,303
|
|
|
|
$
|
523,303
|
|
|
|
$
|
523,303
|
|
|
Post-termination Health Care(5)
|
|
|
|
|
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services
|
|
|
|
|
|
|
|
$
|
42,000
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax Gross Up
|
|
|
|
|
|
|
|
$
|
771,967
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
$
|
280,000
|
|
|
|
$
|
3,649,478
|
|
|
|
$
|
1,653,513
|
|
|
|
$
|
1,653,513
|
|
|
H. Carol
Bernstein
The following table shows the potential payments upon
termination with or without a change in control for named
executive officer H. Carol Bernstein, assuming such events
occurred on September 30, 2007. Footnotes describing the
assumptions in calculations are included following the last
table in this section, as is a description of the employment
terms and plans providing benefits specified in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Not for Cause or Good Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Connection with a
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon Termination
|
|
|
No Change in Control
|
|
|
|
Change in Control
|
|
|
|
Death
|
|
|
|
Disability
|
|
Salary Continuation
|
|
|
|
|
|
|
|
$
|
580,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Through Termination Date(2)
|
|
|
|
|
|
|
|
$
|
185,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation(2)
|
|
|
|
|
|
|
|
$
|
370,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions under Retirement Plans
|
|
|
|
|
|
|
|
$
|
56,718
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Stock Options(3)
|
|
|
|
|
|
|
|
$
|
979,675
|
|
|
|
$
|
979,675
|
|
|
|
$
|
979,675
|
|
|
Accelerated Vesting of Restricted Stock(4)
|
|
|
|
|
|
|
|
$
|
382,271
|
|
|
|
$
|
382,271
|
|
|
|
$
|
382,271
|
|
|
Post-termination Health Care(5)
|
|
|
|
|
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services
|
|
|
|
|
|
|
|
$
|
43,500
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax Gross Up
|
|
|
|
|
|
|
|
$
|
697,018
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
$
|
3,314,182
|
|
|
|
$
|
1,361,946
|
|
|
|
$
|
1,361,946
|
|
|
-43-
|
|
|
(1) |
|
This figure reflects the lump sum value of twelve months of
salary continuation. |
|
(2) |
|
In accordance with the terms of the change in control agreements
described below, for purposes of calculating the bonus through
the termination date, the bonus amount for each named executive
officer is equal to the greatest of: (i) the target bonus
amount for the fiscal year in which the Change in Control
occurs, (ii) the target bonus amount for the fiscal year in
which the termination date occurs, and (iii) the highest
bonus amount paid or payable to the named executive officer in
respect of any of the three fiscal years preceding the fiscal
year in which the Change in Control occurs. Assuming a Change in
Control and termination date as of September 30, 2007, the
bonus amounts for Mr. Noglows, Mr. Johnson,
Mr. Weisman, and Dr. Spiro represent the target bonus
amounts for fiscal year 2007 (the fiscal year in which the
Change in Control and the termination date occurred). The bonus
amount for Ms. Bernstein represents the highest bonus
amount paid to Ms. Bernstein in one of the three fiscal
years preceding fiscal year 2007. The amount disclosed as bonus
continuation for Mr. Noglows represents three times his
bonus amount and the amount disclosed as bonus continuation for
Mr. Johnson, Mr. Weisman, Dr. Spiro, and
Ms. Bernstein represents two times their bonus amounts,
each in accordance with the terms of the change in control
agreements described below. |
|
(3) |
|
This figure represents the aggregate difference between the
exercise price of the options and $42.75, which was the fair
market value of a share of our common stock on
September 30, 2007. This figure does not include the value
of vested but unexercised options. The table below sets forth
the total value of all options, which includes the value of the
accelerated options and the vested but unexercised options. |
|
|
|
|
|
Named Executive Officer
|
|
Total Value of Options
|
|
|
Mr. Noglows
|
|
$
|
3,415,350
|
|
Mr. Johnson
|
|
$
|
1,180,640
|
|
Mr. Weisman
|
|
$
|
1,681,030
|
|
Dr. Spiro
|
|
$
|
1,513,390
|
|
Ms. Bernstein
|
|
$
|
1,136,230
|
|
|
|
|
|
|
For Mr. Noglows, the figure disclosed in the No
Change in Control column represents the value of his
outstanding and unexercisable options that were scheduled to
vest during the twelve months following termination, in
accordance with the terms of Mr. Noglows employment
agreement. For purposes of this table, the value of these
options was also calculated assuming a market price of $42.75,
which was the fair market value of a share of our common stock
on September 30, 2007. |
|
|
|
In the event of a termination of service by reason of death or
disability, the 2000 Equity Incentive Plan and the non-qualified
stock option grant agreements provide that unvested options
shall fully vest for all participants, including the named
executive officers. |
|
(4) |
|
This figure represents the number of shares vested multiplied by
$42.75, which was the fair market value of the shares on
September 30, 2007. This figure does not include the value
of restricted stock that has already vested, including shares on
deposit under our Executive Officer Deposit Share Program. |
|
|
|
In the event of a termination of service by reason of death or
disability, the 2000 Equity Incentive Plan and the restricted
stock award agreements provide that unvested restricted stock
shall fully vest for all participants, including the named
executive officers. |
|
(5) |
|
This amount assumes comparable health care coverage to that
which is currently provided under our existing plan. Our company
is self-insured, therefore there is no employer contribution
amount. We have estimated the cost of post-termination health
care to be $10,000 per person per year. This amount could vary
depending on the details of any new or replacement plan that may
be in place in the event of a change in control. |
Pursuant to the terms of the Companys equity incentive
plan and the awards granted thereunder, the named executive
officers receive the accelerated vesting of certain equity
awards in the event of a Change in Control without termination
of employment. The value of the accelerated vesting for each
named executive officer, assuming a change in control, is the
same value as disclosed in the In Connection with a Change
in Control column above.
-44-
Pursuant to Mr. Noglows November 3, 2003
employment agreement, if we terminate his employment without
cause or Mr. Noglows terminates his employment because we
breached the terms of his agreement, the Company must pay
Mr. Noglows one years base salary over the one year
period following such termination and to allow any options that
would vest during such period to vest during such time. Aside
from the requirements set forth in the employment agreement,
there are no other material conditions to receipt by
Mr. Noglows of these termination benefits, although
Mr. Noglows still would be subject to the terms of our
standard confidentiality, intellectual property and
non-competition agreement, which he entered into when he joined
our company, and of the relevant stock option grant agreements.
The amount and terms of this severance arrangement was
determined by our compensation committee, in consultation with
its compensation consultant, and included consideration of
market practices for similar arrangements for other chief
executive officers of comparable companies.
In addition to our agreement with Mr. Noglows, we have
entered into an employment agreement with Dr. Spiro, under
which we would be obligated to pay him one years base
salary over the one year period following such termination if we
terminate his employment without cause. The amount and terms of
this severance arrangement was determined by our compensation
committee, in consultation with its compensation consultant, and
included consideration of market practices for similar
arrangements for other similarly-situated individuals. Aside
from the requirements set forth in his employment agreement,
there are no other material conditions to receipt by
Dr. Spiro of the one years base salary, although
Dr. Spiro still would be subject to the terms of our
standard confidentiality, intellectual property and
non-competition agreement, which he entered into when he joined
our company.
Change
in Control Severance Protection Agreements
We have entered into Change in Control Severance Protection
Agreements (change in control agreements) with each
of the named executive officers, our other executive officers,
and certain key employees of our company, because we believe
such agreements are valuable aspects in enabling a smooth
transition and providing continuity of management in the event
of a change in control of our company. The form of change in
control agreements is available as Exhibit 10.23 to our
Form 10-K
filed on December 28, 2000. Under the change in control
agreements, each executive officer, including the named
executive officers, whose employment with us terminates
(including an executives voluntary termination of
employment for either good reason, as defined in the
agreement, or during the
thirty-day
period commencing on the first anniversary of a change in
control), other than for cause, disability, death, or
certain other specified reasons, within two years (in the case
of Mr. Johnson, Mr. Weisman, Dr. Spiro and
Ms. Bernstein) or three years (in the case of
Mr. Noglows) after a change in control of our
company (as such term is defined in the agreements), is entitled
to a severance benefit. The severance benefit includes:
|
|
|
|
|
accrued and unpaid compensation including: base salary,
reimbursement for reasonable and necessary expenses incurred by
the executive on our behalf through the date of termination,
vacation pay and bonuses and incentive compensation;
|
|
|
|
the Bonus Amount (which is the greatest of (i) the
executives target bonus amount for the fiscal year in
which the change in control occurs, (ii) the
executives target bonus amount for the fiscal year in
which the termination date occurs, and (iii) the highest
bonus paid or payable to the executive in respect of any of the
three fiscal years preceding the fiscal year in which change in
control occurs), pro-rated for the number of days that have
elapsed through the termination date;
|
|
|
|
two times (in the case of Mr. Johnson, Mr. Weisman,
Dr. Spiro and Ms. Bernstein) or three times (in the
case of Mr. Noglows), the executives annual base
salary plus the Bonus Amount plus an amount equal to the
contributions made or credited by us under all employee
retirement plans for the benefit of the executive for the most
recently completed plan year of each such plan (e.g., the 401(k)
Plan and Supplemental Plan), payable in a lump sum;
|
|
|
|
health and welfare benefits (consistent with health and welfare
benefits available to all employees for which they had been
eligible prior to their termination) for 24 months (in the
case of Mr. Johnson, Mr. Weisman, Dr. Spiro and
Ms. Bernstein) or 36 months (in the case of
Mr. Noglows) following the executives termination
date;
|
-45-
|
|
|
|
|
payment or reimbursement for the costs, fees and expense of
outplacement assistance services, up to a maximum of fifteen
percent of the executives annual base salary; and
|
|
|
|
a full
gross-up
payment of any and all excise taxes assessed on amounts
received under the change in control agreements, as well as all
other taxes that may become due as a result of the
gross-up
payment.
|
Cause as defined in the agreements means (i) the willful
and continued failure to perform substantially the duties
reasonably assigned to the executive and (ii) the willful
engaging in conduct that is demonstrably and materially
injurious to the Company, monetarily or otherwise.
The agreements define Good Reason as (i) a
change in the executives status, title, position or
responsibilities (including reporting responsibilities) which,
in the executives reasonable judgment, represents an
adverse change, (ii) an assignment of the executives
duties or responsibilities that are, in the executives
reasonable judgment, inconsistent with his or her status, title,
position or responsibilities, (iii) removal from any of his
or her offices or positions, or the failure to reappoint the
executive to any of his or her offices or positions,
(iv) reduction in the executives annual base salary
below the rate in effect as of the Change in Control or as of
any date following the Change in Control, (v) relocation of
the executives principal office more than twenty-five
miles from the location immediately prior to the Change in
Control, (vi) the requirement that the executive be based
anywhere other than the offices of the Company at which he or
she was previously employed immediately prior to the Change in
Control, unless the executive was not previously assigned to a
principal employment location, (vii) failure to pay the
executive any portion of his or her then current compensation or
installment of deferral compensation within seven days after the
date it is due, (viii) failure to continue in effect, or to
continue the executives participation in, any material
compensation or benefit plan in which the executive participated
immediately prior to the Change in Control, (ix) failure to
obtain a satisfactory agreement from any successor to assume and
agree to honor and perform the Companys obligations under
the agreement, and (x) the termination of executives
employment in violation of the agreement.
A Change in Control means (i) any person,
together with all affiliates and associates (within the meaning
of
Rule 12b-2
promulgated under the Exchange Act), acquires beneficial
ownership, directly or indirectly, or securities of the Company
representing at least thirty percent (30%) of the combined
voting power of the Companys then outstanding voting
securities, (ii) during any period of twenty-four
(24) consecutive months beginning on or after the date of
the agreement, individuals who, at the beginning of that
24-month
period, constitute the Board (the Incumbent
Directors), cease for any reason to constitute at least a
majority of the Board; provided, however, that a new director of
the Company whose election or nomination for election as a
director of the Company was approved by a vote of at least
two-thirds of the Incumbent Directors will be deemed to be an
Incumbent Director, (iii) one of the following events occur
at a special or annual meeting of the Companys
stockholder: (a) two or more nominees who are both
(A) nominees of and endorsed by the Company and
(B) not employees of the Company or any Affiliate at the
time of the election are not elected to serve as directors; and
(b) any person not a nominee of, and endorsed by, the
Company is elected to serve as a director of the Company,
(iv) the stockholders of the Company approve: (a) a
merger, consolidation or reorganization involving the Company,
unless the merger, consolidation or reorganization is a
Non-Control Transaction, (b) a complete
liquidation or dissolution of the Company; or (c) an
agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Change in Control Subsidiary).
Notwithstanding the foregoing, a Change in Control will not be
deemed to occur solely because a person acquires beneficial
ownership of more than the permitted amount of the then
outstanding voting securities as a result of the acquisition of
voting securities by the Company which, by reducing the number
of voting securities then outstanding, increases the percentage
of shares beneficially owned by the person. Notwithstanding the
foregoing, if a Change in Control would occur but for the
operation of the preceding sentence as a result of the
acquisition of voting securities by the Company, and after that
acquisition by the Company, the person described in the
preceding sentence increases the percentage of then outstanding
voting securities he or she owns, a Change in Control will occur.
We also have similar change in control severance protection
agreements providing for two times severance benefits in place
with our other executive officers (with the exception of our
Principal Accounting Officer, Thomas S. Roman, whose agreement
provides for one time severance benefits). Under the change in
control agreements, all amounts accrued or awarded to the
executive officers under any incentive compensation or benefit
plan, including
-46-
options and restricted stock awarded under the 2000 Equity
Incentive Plan, will immediately vest on each executives
respective termination date.
Our board of directors and compensation committee determined the
terms and conditions of the change in control severance
protection agreements, including the severance benefit payable,
and the triggering events for the payment of such severance
benefit, pursuant to such agreement, in consultation with their
compensation consultants and our financial and other advisors,
and considered external practices at similarly situated
companies regarding change in control arrangements.
Treatment
of Equity Awards
The 2000 Equity Incentive Plan provides that an award shall
immediately terminate on the date a participants service
terminates, unless otherwise set forth in an award agreement.
Similarly, in the event of a Change in Control, the compensation
committee has the discretion to provide for accelerated vesting
in an award agreement. In the event of a Change in Control that
is a merger or consolidation in which the Company is not the
surviving corporation or that results in the acquisition of
substantially all of the Companys outstanding stock or in
the event of a sale or transfer of all or substantially all of
the Companys assets (a Covered Transaction),
the compensation committee has the discretion to provide for the
termination of all outstanding options as of the effective date
of the Covered Transaction; provided, that, if the Covered
Transaction follows a Change in Control or would give rise to a
Change in Control, no option will be terminated prior to the
expiration of twenty days following the later of: (i) the
date on which the award became fully exercisable and
(ii) the date on which the participant receive written
notice of the Covered Transaction.
Under the 2000 Equity Incentive Plan, Change in
Control means: (a) any person as such
term is used in Sections 13(d) and 14(d) of the
1934 Act (other than (i) the Company, (ii) any
subsidiary of the Company, (iii) any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or of any subsidiary of the Company, or
(iv) any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or
becomes the beneficial owner (as defined in
Section 13(d) of the 1934 Act), together with all
Affiliates and Associates (as such terms are used in
Rule 12b-2
of the General Rules and Regulations under the 1934 Act) of
such person, directly or indirectly, of securities of the
Company representing thirty percent (30%) or more of the
combined voting power of the Companys then outstanding
securities; (b) or the stockholders of the Company approve
a merger or consolidation of the Company with any other company,
other than (i) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any subsidiary of the Company, at
least sixty percent (60%) of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) after
which no person (with the method of determining
beneficial ownership used in clause (a) of this
definition) owns more than thirty percent (30%) of the combined
voting power of the securities of the Company or the surviving
entity of such merger or consolidation; or (c) during any
period of two consecutive years (not including any period prior
to the execution of the Plan), individuals who at the beginning
of such period constitute the Board, and any new director (other
than a director designated by a person who has conducted or
threatened a proxy contest, or has entered into an agreement
with the Company to effect a transaction described in clause
(a), (b) or (d) of this definition) whose election by
the Board or nomination for election by the Companys
stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination
for election was previously so approved cease for any reason to
constitute at least a majority thereof; or (d) the
stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Companys assets.
Pursuant to the non-qualified stock option grant agreements, the
option grants will become fully vested in the event of a Change
in Control (as defined in the 2000 Equity Incentive Plan). In
the event of a Change in Control that constitutes a Covered
Transaction, the compensation committee may, in its sole
discretion, terminate any or all outstanding options as of the
effective date of the Covered Transaction; provided that the
compensation committee
-47-
may not terminate an option outstanding under the agreement
earlier than twenty days following the later of: (i) the
date on which the award became fully vested and (ii) the
date on which the participant received written notice of the
Covered Transaction. In the event of a termination of service by
reason of death or Disability, then any unvested portion of the
options will become fully vested. Disability has the meaning
provided under (i) first, an employment agreement between
the executive and the Company, (ii) second, if no
employment agreement exists, the long-term disability program
maintained by the Company or any governmental entity covering
the Participant, or (iii) third, if no such agreement or
program exists, permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
Pursuant to the restricted stock award agreements, the awards
will become fully vested and all restrictions will lapse in the
event of a participants death, Disability, or Change in
Control (as defined in the 2000 Equity Incentive Plan).
Disability has the meaning provided under (i) first, an
employment agreement between the participant and the Company,
(ii) second, if no such employment agreement exists, the
long-term disability program maintained by the Company or any
governmental entity covering the Participant, or
(iii) third, if no such agreement or program exists, as
defined under local law.
-48-
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Certain
Relationships
Although not a related party transaction, in November 2007
Mr. Frazee, one of our independent directors, became a
Senior Advisor to Greenhill & Co., Inc., an investment
banking firm that has served as a financial advisor to us in the
past pursuant to certain contractual arrangements, which have
since been terminated but which contain certain provisions that
survive such termination. Pursuant to the audit committee
charter and the nominating and corporate governance committee
charter and guidelines noted below, Mr. Frazee notified the
audit committee, the nominating and corporate governance
committee and the board of directors in advance of agreeing to
serve in such capacity with Greenhill & Co., Inc.
After reviewing this matter, each of the audit committee,
nominating and corporate governance committee and the board of
directors concluded that at present Mr. Frazees
intended service with Greenhill & Co., Inc. did not
present a conflict of interest with his continued service as a
director of our company. Mr. Frazee recused himself from
such review and decision by each of the audit committee,
nominating and corporate governance committee and the board of
directors.
Related
Party Transactions
Although at present we have no related party transactions, we
may from time to time enter into transactions with related
persons. Related persons include our directors and
executive officers, nominees for director, 5% or more beneficial
owners of our common stock, and immediate family members of such
persons. As set forth in our audit committee charter, a current
copy of which is attached to this proxy statement as
Appendix B and is also available on our website at
www.cabotcmp.com, any related person transaction must be
reviewed and approved in advance by our audit committee. All of
our employees, including our executive officers, and directors
are subject to our Code of Business Conduct, which is available
on our website. Our Code of Business Conduct prohibits any
relationship that may present, or appears to present, a conflict
of interest with our company. Among other things, this includes
a prohibition on the holding of more than a nominal financial
interest in any publicly held company with whom we do business
or compete, and prohibits any financial interest in such
entities if they are privately held. Any request for waiver of
our Code of Business Conduct for our directors and executive
officers may be approved only by our board of directors; to
date, no such waivers have been requested or approved. In
addition to the provisions of our Code of Business Conduct, our
nominating and corporate governance committee charter and our
corporate governance guidelines, both of which are also
available on our website, also contain provisions requiring the
review of potential conflicts of interest of prospective and
current directors and the requirement of notification, and offer
of tender of resignation, by directors, and review by the
nominating and corporate governance committee and the board of
directors of any change in employment or for-profit board
membership status.
Indemnification
Our bylaws and our certificate of incorporation require us to
indemnify our directors and officers to the fullest extent
authorized by the Delaware General Corporation Law. We have
entered into indemnification agreements with all of our
directors and executive officers in which we confirm that we
will provide to them the indemnification rights provided for in
our bylaws and agree to maintain directors and
officers liability insurance on their behalf.
-49-
APPROVAL
OF 500,000 ADDITIONAL SHARES FOR THE CABOT MICROELECTRONICS
CORPORATION EMPLOYEE STOCK PURCHASE PLAN
At a meeting of the board of directors on November 27,
2007, the board of directors approved, upon recommendation of
the compensation committee of the board of directors and subject
to stockholder approval, amendments to the Cabot
Microelectronics Corporation Employee Stock Purchase Plan
(referred to below as the Prior Plan) for the
primary purpose of increasing the number of shares of our common
stock authorized to be issued under the Plan by
500,000 shares, as more fully set forth below. As of
January 15, 2007, 345,571 shares of the
475,000 shares previously authorized under the Prior Plan
had been issued.
The Cabot Microelectronics Corporation 2007 Employee Stock
Purchase Plan is attached to this Proxy Statement as
Appendix A and is sometimes referred to below as the
Plan. Our board of directors has directed that the
Plan be submitted to our stockholders at this time for their
approval for two reasons in particular: (i) to comply with
Nasdaq rules, which require such approval, and (ii) to
comply with the Prior Plan, which, by its terms, requires such
approval.
In order to provide our employees with an opportunity to
continue to purchase our common stock through accumulated
payroll deductions, our board of directors has approved the
following material amendment to the Prior Plan:
4.01 Stock Subject to the Plan. Subject
to the provisions of Section 13.03 of the Plan, the Board
shall reserve for issuance under the Plan an amount equal to the
sum of (i) five hundred thousand (500,000) shares of the
Companys Common Stock, and (ii) the number of shares
of the Companys Common Stock previously reserved for
issuance under the Prior Plan but not issued before the adoption
of this Plan, which shares shall be authorized but unissued
shares of Common Stock, treasury shares, or shares of Common
Stock purchased by the Company or the Plan on an established
stock exchange or a national market system.
The other material features of the Prior Plan remain the same. A
summary of the Plan is set forth below. The summary is qualified
in its entirety by reference to the full text of the Plan, which
is attached to this Proxy Statement as Appendix A.
The Prior Plan provides for the issuance of up to
475,000 shares of our common stock. You are being asked to
approve the increase by 500,000 of shares available under the
Plan.
The Plan qualifies as an employee stock purchase
plan under Section 423 of the Internal Revenue Code.
The following is a description of the principal terms of the
Plan:
Administration; Eligible Employees. The
compensation committee administers the Plan. The compensation
committee, as Plan administrator, has full authority to adopt
administrative rules and procedures and to interpret the
provisions of the Plan. Each of our full-time employees, and
each full-time employee of any present future subsidiaries that
we designate as eligible to participate in the Plan, are and
will be eligible to participate in the Plan. In addition, the
Internal Revenue Code requires us to exclude some employees from
participating in the Plan and sets limits on how much common
stock a participant may purchase under the Plan, and we will
comply with these exclusions and limitations.
Securities Subject to the Plan. The
Plan would limit the number of shares of common stock reserved
for issuance under the Plan to an amount equal to the sum of
(i) five hundred thousand (500,000) shares of our common
stock, and (ii) the number of shares of our common stock
previously reserved for issuance under the Prior Plan but not
issued before the adoption of the Plan (which is 129,429 as of
January 15, 2008). The shares issuable under the Plan will
be made available from authorized but unissued shares of our
common stock or from shares that we purchase on the open market
from time to time.
-50-
Shown below is information as of January 15, 2008, with
respect to the shares of common stock that may be issued under
our Companys existing equity compensation plans.
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(a)
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(b)
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(c)
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Number of Securities to
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Weighted-Average
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Number of Securities Remaining
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be Issued Upon Exercise
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Exercise Price of
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Available for Future Issuance Under
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|
|
of Outstanding Options,
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Outstanding Options,
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|
|
Equity Compensation Plans (Excluding
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Plan Category
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Warrants and Rights
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|
|
Warrants and Rights
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|
Securities Reflected in Column (a))
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Equity compensation plans approved by security holders
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|
4,656,075
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(1)
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|
$
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42.85
|
(1)
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|
|
3,170,644
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(2)
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Equity compensation plans not approved by security holders
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Total
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|
4,656,075
|
(1)
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|
$
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42.85
|
(1)
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|
3,170,644
|
(2)
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|
(1) |
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Column (a) includes 36,415 shares that non-employee
directors, who defer their compensation under our
Directors Deferred Compensation Plan, have the right to
acquire pursuant thereto, and 24,777 shares that
non-U.S.
employees have the right to acquire upon the vesting of the
equivalent restricted stock units that they have been awarded
under our equity incentive plan. Column (b) excludes both
of these from the weighted average exercise price. |
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(2) |
|
Column (c) includes 129,429 shares available for
future issuance under the Prior Plan. |
Adjustments; Change in Control. In the
event that any change to the outstanding common stock occurs
(whether by reason of any recapitalization, stock dividend,
stock split, exchange or combination of shares or other change
in corporate structure), we will make appropriate adjustments to:
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the maximum number and class of securities issuable under the
Plan;
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the maximum number and class of securities purchasable per
participant during any Plan offering; and
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the number and class of securities and the price per share in
effect under each outstanding purchase right.
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It is intended that any adjustments will prevent any dilution or
enlargement of rights under the Plan. In the event of various
corporate events such as our dissolution or liquidation, or a
merger, or a sale of all or substantially all of our assets, the
Plan offering which would otherwise be in effect on the date of
the event will accelerate and will end on the last payday before
the date of the event. On that date, all outstanding purchase
rights will automatically be exercised.
Plan Offering Periods and Purchase
Rights. The Plan will offer shares of common
stock from time to time through a series of Plan offerings, each
with a duration of six months. The Plan offerings will commence
on the first trading date on or after January 1st and
terminate on the last trading day in the period ending
June 30th, or will commence on the first trading day on or
after July 1st and terminate on the last trading day
in the period ending the following December 31st. On the
day a Plan offering begins, each participant with respect to
that Plan offering will receive a right to purchase shares of
our common stock through payroll deductions made during that
Plan offering. In general, each participant may authorize
periodic payroll deductions in an amount of between one percent
and ten percent of his or her gross cash compensation for each
pay period during the Plan offering. A participant may elect to
reduce or increase future payroll deductions. The purchase date
of shares under the Plan will occur on the day that the Plan
offering ends, and whole and deemed fractional shares will be
purchased using the aggregate payroll deductions withheld from
the participant for the Plan offering. In general, a participant
may withdraw from the plan at any time by giving written notice.
Plan Offering Price. The price per
share of common stock in any Plan offering will in general be
85% of the lower of:
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the fair market value per share of common stock on the day the
Plan offering begins; and
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the fair market value per share of common stock on the day the
Plan offering ends.
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-51-
The fair market value will be determined by reference to the
closing price of our common stock on the Nasdaq on the relevant
date.
Amendment and Termination. We may, in
our sole discretion, terminate or amend the Plan, but the
amendment and termination of the Plan may not adversely affect
outstanding purchase rights without the consent of the holders
of those rights. The approval of the stockholders is required to
alter the aggregate number of shares that may be issued under
the Plan or the class of employees eligible to receive offerings
of shares under the Plan. If we terminate the Plan, we may end a
Plan offering and accelerate the exercise date of all
outstanding purchase rights. We will refund (without interest)
any remaining payroll deductions after we terminate the Plan.
Plan Benefits. Because the benefits
under the Plan will depend on elections to participate and the
fair market value of our common stock on various future dates,
we cannot determine the benefits that our executive officers and
other employees may receive under the Plan.
Required Vote. Approval of the Plan
requires the affirmative vote of a majority of the votes cast at
the meeting in person or by proxy by stockholders entitled to
vote thereon. If the Plan is not approved by our stockholders,
we will continue to administer and maintain the Prior Plan in
its current form.
Our board of directors recommends that you vote
FOR the approval of the increase of 500,000
authorized shares of common stock for issuance under the
employee stock purchase plan.
RATIFICATION
OF THE SELECTION OF INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, audited our financial statements for fiscal
year 2007, and has been selected by the audit committee of our
board of directors to audit our financial statements for fiscal
year 2008. A representative of PricewaterhouseCoopers LLP is
expected to attend our annual meeting, where he will have the
opportunity to make a statement, if he desires, and will be
available to respond to appropriate questions.
Stockholder ratification of the selection of
PricewaterhouseCoopers LLP as our independent auditors is not
required by our bylaws or otherwise. However, our board is
submitting the selection of PricewaterhouseCoopers LLP to our
stockholders for ratification as a matter of good corporate
practice. If our stockholders fail to ratify the selection, our
audit committee will review its future selection of auditors.
Even if the selection is ratified, the audit committee, in its
discretion, may direct the appointment of different independent
auditors at any time during the year if it determines that such
a change would be in the best interests of our company and our
stockholders.
For information regarding audit and other fees billed by
PricewaterhouseCoopers LLP for services rendered in fiscal year
2007 and fiscal year 2006, see FEES OF INDEPENDENT
AUDITORS AND AUDIT COMMITTEE REPORT Fees Billed by
Independent Auditors, above.
Our board of directors recommends that you vote
FOR the ratification of the selection of our
independent auditors.
2009
ANNUAL MEETING OF STOCKHOLDERS
The 2009 annual meeting of stockholders is presently scheduled
to be held on Tuesday, March 3, 2009. Any proposals of
stockholders intended for inclusion in the proxy statement for
our 2009 annual meeting of stockholders must be received by the
Secretary of our company at our offices at 870 North Commons
Drive, Aurora, Illinois 60504, by Tuesday, September 23,
2008. If a stockholder of the company intends to present a
proposal at the 2009 annual meeting of stockholders, such
stockholder must comply with the advance notice provisions of
our bylaws. Those provisions require that such proposal must be
received by our Secretary at 870 North Commons Drive, Aurora,
Illinois 60504, not earlier than Monday, November 3, 2008
and not later than Wednesday, December 3, 2008. Subject to
certain exceptions set forth in our bylaws, such proposals must
contain specific information concerning the person to be
nominated or the matters to be brought before the meeting and
concerning the stockholder submitting the proposal.
-52-
HOUSEHOLDING
OF PROXY MATERIALS
The SEC has adopted rules that permit companies and
intermediaries (e.g. brokers) to satisfy the delivery
requirements for proxy statements with respect to two or more
stockholders sharing the same address by delivering a single
proxy statement addressed to those stockholders. This process,
which is commonly referred to as householding,
potentially means additional convenience for stockholders and
cost savings for companies.
A number of brokers with accountholders who are stockholders
will be householding our proxy materials. As
indicated in the notice previously provided by these brokers to
stockholders, a single proxy statement will be delivered to
multiple stockholders sharing an address unless contrary
instructions have been received from an affected stockholder.
Once you have received notice from your broker or us that they
will be householding communications to your address,
householding will continue until you are notified
otherwise.
Stockholders who received a householded mailing this year and
would like to have additional copies of the proxy statement
mailed to them, or would like to opt out of this practice for
future mailings should submit a written request to our transfer
agent, Computershare Trust Company, N.A., at
P.O. Box 43010, Providence, Rhode Island
02940-3010
Attention: Shareholder Inquiries. We will promptly send
additional copies of the proxy statement upon receipt of such
request.
Stockholders who currently receive multiple copies of the proxy
statement at their address and would like to request
householding of their communications should contact
their broker or, if a stockholder is a direct holder of shares
of our common stock, they should submit a written request to our
transfer agent, Computershare Trust Company, N.A., at
P.O. Box 43010, Providence, Rhode Island
02940-3010
Attention: Shareholder Inquiries.
VOTING
THROUGH THE INTERNET OR BY TELEPHONE
Our stockholders voting through the Internet should understand
that there may be costs associated with electronic access, such
as usage charges from Internet access providers and telephone
companies, that must be borne by the stockholder. To vote by
telephone, call toll free
1-800-690-6903
and follow the instructions provided by the recorded message. To
vote by the Internet, log on to the Internet and go to
www.proxyvote.com and follow the steps on the secured
website. You also may access the proxyvote website by going to
our website, www.cabotcmp.com, selecting Investor
Relations on our Homepage, and then selecting Proxy
Materials from the Investor Information
section on the left side of the Investor Relations page.
-53-
Appendix A
CABOT
MICROELECTRONICS CORPORATION
2007 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
1.01 Purpose. The purpose of the
Cabot Microelectronics Corporation Employee Stock Purchase Plan
(the Plan) is to provide employees of Cabot
Microelectronics Corporation (the Company) and its
Designated Subsidiary Corporations with an opportunity to
purchase Common Stock of the Company through accumulated payroll
deductions.
1.02 Rules of Interpretation. It
is the intention of the Company to have the Plan qualify as an
employee stock purchase plan under Section 423 of
the Internal Revenue Code of 1986, as amended (the
Code), and the provisions of the Plan, accordingly,
shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the
Code; provided, however, that the Committee shall have the
discretion to cause the options granted in one or more Offering
Periods under the Plan to be options to which Section 423
of the Code does not apply.
ARTICLE II
DEFINITIONS
2.01 Board shall mean the Board
of Directors of the Company.
2.02 Change in Capitalization
shall mean any increase or reduction in the number of shares of
Common Stock, or any change (including, but not limited to, in
the case of a spin-off, dividend or other distribution in
respect of shares of Common Stock, a change in value) in the
shares of Common Stock or exchange of shares of Common Stock for
a different number or kind of shares, other equity interests or
other property of the Company or another entity, by reason of a
reclassification, recapitalization, merger, consolidation,
reorganization, spin-off,
split-up,
issuance of warrants or rights or debentures, stock dividend,
stock split or reverse stock split, cash dividend, property
dividend, combination or exchange of shares, repurchase of
shares, change in corporate structure or otherwise.
2.03 Change in Control shall be
as defined in Appendix A.
2.04 Code shall mean the Internal
Revenue Code of 1986, as amended.
2.05 Common Stock shall mean the
Common Stock of the Company.
2.06 Company shall mean Cabot
Microelectronics Corporation, a Delaware corporation.
2.07 Compensation shall mean the
gross cash compensation (including base salary, shift premium,
overtime earnings and cash bonuses exclusive of relocation and
sign-on bonuses) paid by the Company or a Designated Subsidiary
Corporation in accordance with the terms of employment, but
excluding all bonus payments, expense allowances and
compensation paid in a form other than cash.
2.08 Committee shall mean the
committee described in Article XI.
A-1
2.09 Designated Subsidiary
Corporation shall mean any Subsidiary of the
Company which has been designated by the Committee from time to
time in its sole discretion as eligible to participate in the
Plan.
2.10 Employee shall mean any
individual who is a common law employee of the Company or a
Designated Subsidiary Corporation for tax purposes whose
customary employment with the Company is at least twenty
(20) hours per week and more than five (5) months in
any calendar year.
2.11 Enrollment Date shall mean
the first day of each Offering Period.
2.12 Exercise Date shall mean the
last day of each Offering Period.
2.13 Fair Market Value shall
mean, as of any date, the value of a share of Common Stock
determined as follows:
2.13.1 If the Common Stock is listed on any established
stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap
Market of The Nasdaq Stock Market, its Fair Market Value shall
be the closing sales price for a share of Common Stock (or the
closing bid, if no sales were reported) as quoted on such
exchange or system on the date of such determination, as
reported in The Wall Street Journal or such other source
as the Committee deems reliable, or
2.13.2 If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean of the closing
bid and asked prices for a share of the Common Stock on the date
of such determination, as reported in The Wall Street Journal
or such other source as the Committee deems reliable, or
2.13.3 In the absence of an established market for the
Common Stock, the Fair Market Value of a share thereof shall be
determined in good faith by the Committee.
2.14 Offering Period shall mean a
period of approximately six (6) months commencing on the
first Trading Day on or after January 1st and
terminating on the last Trading Day in the period ending the
following June 30th, or commencing on the first Trading Day
on or after July 1st and terminating on the last
Trading Day in the period ending the following
December 31st, provided, however, that the first Offering
Period under the Plan shall commence on the first date on which
quotations are available for the Common Stock on any established
stock exchange or a national market system and shall end on a
Trading Day selected by the Committee consistent with
Section 423 of the Code. The duration of Offering Periods
may be changed pursuant to Sections 13.05 and 13.06.
2.15 Plan Representative shall
mean any person designated from time to time by the Committee to
receive certain notices and take certain other administrative
actions relating to participation in the Plan.
2.16 Plan shall mean the Cabot
Microelectronics Corporation Employee Stock Purchase Plan.
2.17 Prior Plan shall mean the
Cabot Microelectronics Corporation Employee Stock Purchase Plan,
effective March 24, 2000.
2.18 Purchase Price shall mean an
amount set by the Committee, but not less than the lesser of 85%
of the Fair Market Value of a share of Common Stock on the
Enrollment Date or on the Exercise Date, whichever is lower;
provided, however, that the Purchase Price may be adjusted by
the Board pursuant to Section 13.06.
2.19 Subsidiary shall mean a
corporation, domestic or foreign, of which not less than 50% of
the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
2.20 Trading Day shall mean a day
on which national stock exchanges and the Nasdaq System are open
for trading.
ARTICLE III
ELIGIBILITY
AND PARTICIPATION
3.01 Eligibility. Each Employee on
an Enrollment Date of an Offering Period shall be eligible to
participate in such Offering Period. Persons who are not
Employees shall not be eligible to participate in such Offering
Period. Employees of Cabot Corporation and its subsidiaries,
other than the Company and its Designated Subsidiary
Corporations, are not eligible to participate in the Plan.
3.02 Restrictions on
Participation. Notwithstanding any provision
of the Plan to the contrary, no Employee shall be granted an
option to purchase shares of Common Stock under the Plan:
3.02.1 If, immediately after the grant, such Employee would
own stock
and/or hold
outstanding options to purchase stock possessing 5% or more of
the total combined voting power or value of all classes of stock
of the Company (for purposes of this paragraph, the rules of
Section 424(d) of the Code shall apply in determining stock
ownership of any Employee); or
3.02.2 If such Employees rights to purchase stock
under all employee stock purchase plans of the Company accrue at
a rate which exceeds $25,000 of Fair Market Value of the stock
(determined at the time such option is granted) for each
calendar year in which such option is outstanding at any time.
3.03 Commencement of
Participation. An Employee may become a
participant by completing an authorization for payroll
deductions on the form provided by the Company and filing the
completed form with the Plan Representative on or before the
filing date set therefor by the Committee, which date shall be
prior to the next Enrollment Date. Payroll deductions for a
participant shall commence on the next following Enrollment Date
after the Employees authorization for payroll deductions
becomes effective and shall continue until termination of the
Plan, the participants earlier termination of
participation in the Plan, or the participants change in
payroll deductions pursuant to Section 5.03. Each
participant in the Plan shall be deemed to continue
participation until termination of the Plan or such
participants earlier termination of participation in the
Plan pursuant to Article VIII below.
ARTICLE IV
STOCK SUBJECT TO THE PLAN AND OFFERINGS
4.01 Stock Subject to the
Plan. Subject to the provisions of Section
13.03 of the Plan, the Board shall reserve for issuance under
the Plan an amount equal to the sum of (i) five hundred
thousand (500,000) shares of the Companys Common Stock,
and (ii) the number of shares of the Companys Common
Stock previously reserved for issuance under the Prior Plan but
not issued before the adoption of this Plan, which shares shall
be authorized but unissued shares of Common Stock, treasury
shares, or shares of Common Stock purchased by the Company or
the Plan on an established stock exchange or a national market
system.
4.02 Offerings. The Plan will be
implemented by two annual offerings of the Companys Common
Stock each calendar year. Each offering will be outstanding
during the applicable Offering Period.
ARTICLE V
PAYROLL DEDUCTIONS
5.01 Amount of Deduction. The form
described in Section 3.03 will permit a participant to
elect payroll deductions of any whole percentage from one
percent (1%) through ten percent (10%) of such
participants Compensation for each pay period during an
Offering Period.
5.02 Participants
Account. All payroll deductions made for a
participant shall be credited to an account established for such
participant under the Plan. A participant may not make any
separate cash payment into such account.
5.03 Changes in Payroll
Deductions. A participant may reduce or
increase future payroll deductions (within the limits described
in Section 5.01) by filing with the Plan Representative a form
provided by the Company for such purpose. The effective date of
any increase or reduction in future payroll deductions will be
the next following payroll period succeeding processing of the
change form.
ARTICLE VI
GRANTING OF OPTION
6.01 Number of Option Shares. On
an Enrollment Date each participant shall be deemed to have been
granted an option to purchase a number of shares of Common Stock
determined by dividing the participants accumulated
payroll deductions on the Exercise Date by the lower of
(i) 85% of the Fair Market Value of a share of Common Stock
on the Enrollment Date or (ii) 85% of the Fair Market Value
of a share of Common Stock on the Exercise Date; subject,
however, to any applicable limitations contained in this Plan.
In addition, the maximum number of shares a participant may
purchase with respect to any Offering Period is that number of
shares determined by dividing $12,500 by the Fair Market Value
of a share of Common Stock on the Enrollment Date; provided,
however, the maximum number of shares a participant may purchase
with respect to the first Offering Period is that number of
shares determined by dividing $25,000 by the Fair Market Value
of a share of Common Stock on the Enrollment Date.
ARTICLE VII
EXERCISE OF OPTION
7.01 Automatic Exercise. Subject
to the next following sentence, each Plan participants
option for the purchase of stock with payroll deductions made
during any Offering Period will be exercised automatically on
the applicable Exercise Date for the purchase of the number of
full and deemed fractional shares of Common Stock that the
accumulated payroll deductions in the participants account
at the time will purchase at the Purchase Price (but not in
excess of the maximum number of shares determined pursuant to
Section 6.01). The Committee shall have the discretion to
reduce the number of shares of Common Stock to be purchased by
participants with respect to an Offering Period and to allocate
such reduced number of shares of Common Stock among participants
in such Offering Period, so long as such reduction and
allocation is done in a manner consistent with Section 423
of the Code. Any payroll deductions not applied to the purchase
of shares of Common Stock by reason of the limitations of or
reduction pursuant to this Section 7.01 shall be promptly
refunded to participants after the Exercise Date of the Offering
Period to which such reduction applies.
7.02 Withdrawal of Account. No
participant in the Plan shall be entitled to withdraw any amount
from the accumulated payroll deductions in his or her account;
provided, however, that a participants accumulated payroll
deductions shall be refunded to the participant as and to the
extent specified in Section 8.01 below upon termination of
such participants participation in the Plan.
7.03 Fractional Shares. Fractional
shares of Common Stock will not be delivered under
Section 7.5 of the Plan. Any deemed fractional share of
Common Stock purchased by a Participant pursuant to
Section 7.01 hereof will be combined with any deemed
fractional shares purchased by the Participant in subsequent
Offering Periods and whole shares of Common Stock then issued
therefor. The Fair Market Value of all deemed fractional shares
shall be paid in cash.
7.04 Exercise of Options. During a
participants lifetime, options held by such participant
shall be exercisable only by such participant.
7.05 Delivery of Stock. As
promptly as practicable after each Exercise Date, the Company
will deliver to each participant the shares of Common Stock
purchased upon exercise of such participants option. The
Company may deliver such shares in certificated or book entry
form, at the Companys sole election.
ARTICLE VIII
WITHDRAWAL
8.01 In General. A participant may
stop participating in the Plan at any time by giving written
notice to the Plan Representative. Upon processing of any such
written notice, no further payroll deductions will be made from
the participants Compensation during such Offering Period
or thereafter, unless and until such participant elects to
resume participation in the Plan by providing written notice to
the Plan Representative pursuant to Section 3.03 above.
Such participants payroll deductions accumulated prior to
processing of such notice shall be applied toward purchasing
full and deemed fractional shares of Common Stock in the
then-current Offering Period as provided in Section 7.01
above unless the participant requests in writing to have the
accumulated payroll deductions and cash in lieu of deemed
fractional shares returned to him or her.
8.02 Effect on Subsequent
Participation. A participants
withdrawal from any Offering Period will not have any effect
upon such participants eligibility to participate in any
succeeding Offering Period or in any similar plan which may
hereafter be adopted by the Company and for which such
participant is otherwise eligible.
8.03 Termination of
Employment. Upon termination of a
participants employment with the Company or any Designated
Subsidiary Corporation (as the case may be) for any reason,
including retirement but excluding death, the participants
payroll deductions accumulated prior to such termination, if
any, shall be applied toward purchasing full and deemed
fractional shares of Common Stock in the then-current Offering
Period so long as the Exercise Date with respect to such
Offering Period occurs on or within three months following such
termination; provided, however, that (1) the participant
may request in writing to have the accumulated payroll
deductions and cash in lieu of deemed fractional shares returned
to him or her, and (2) upon termination of a
participants employment with the Company or any Designated
Subsidiary Corporation (as the case may be) as a result of the
participants death, the participants payroll
deductions accumulated prior to such termination and cash in
lieu of deemed fractional shares shall be paid to his or her
estate.
ARTICLE IX
INTEREST
9.01 Payment of Interest. No
interest will be paid or allowed on any money paid into the Plan
or credited to the account of or distributed to any participant.
ARTICLE X
STOCK
10.01 Participants Interest in Option
Stock. No participant will have any interest
in shares of Common Stock covered by any option held by such
participant until such option has been exercised as provided in
Section 7.01 above.
10.02 Registration of
Stock. Shares of Common Stock purchased by a
participant under the Plan will be recorded in the name of the
participant, or, if the participant so directs by written notice
to the Plan Representative prior to the applicable Exercise
Date, in the names of the participant and the participants
spouse as joint tenants with rights of survivorship or as
tenants by the entireties, to the extent permitted by applicable
law.
10.03 Restrictions on
Exercise. The Board may, in its discretion,
require as conditions to the exercise of any option that the
shares of Common Stock reserved for issuance upon the exercise
of such option shall have been duly listed, upon official notice
of issuance, upon a stock exchange or market, and that either:
10.03.1 a registration statement under the Securities Act
of 1933, as amended, with respect to said shares shall be
effective, or
10.03.2 the participant shall have represented at the time
of purchase, in form and substance satisfactory to the Company,
that it is his or her intention to purchase the shares for
investment and not for resale or distribution.
ARTICLE XI
ADMINISTRATION
11.01 Appointment of
Committee. The Plan shall be administered by
the Board or a Committee of members of the Board appointed by
the Board. The Board or its Committee shall have full and
exclusive discretionary authority to construe, interpret and
apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every
finding, decision and determination made by the Board or its
Committee shall, to the full extent permitted by law, be final
and binding upon all parties.
11.02 Authority of
Committee. Subject to the express provisions
of the Plan, the Committee shall have plenary authority in its
discretion to interpret and construe any and all provisions of
the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations deemed necessary or
advisable for administering the Plan. The Committees
determination of the foregoing matters shall be conclusive.
Except as otherwise prohibited by applicable law, the Committee
may delegate some or all of its authority specified herein to
the Plan Representative.
11.03 Rules Governing the Administration of the
Committee. The Board may from time to time
appoint members of the Committee in substitution for or in
addition to members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one
of its members as its chairman, shall hold its meetings at such
times and places as it shall deem advisable, and may hold
telephonic meetings.
All determinations of the Committee shall be made by a majority
of its members. A decision or determination reduced to writing
and signed by a majority of the members of the Committee shall
be as fully effective as if it had been made by a majority vote
at a meeting duly called and held. The Committee may appoint a
secretary and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.
11.04 Rules and Procedures Applicable to Offering
Periods. The Committee shall have the
authority and discretion to adopt rules and procedures
applicable to one or more Offering Periods under the Plan. Any
such rules and procedures shall be established by the Committee
and communicated to participants in advance of any Offering
Period to which they apply. Such rules and procedures may, in
the discretion of the Committee, cause the options granted under
any such Offering Period to be options to which Section 423
of the Code does not apply.
ARTICLE XII
FOREIGN JURISDICTIONS
Notwithstanding any other provision in this Plan, the Committee
may adopt rules or procedures relating to the operation and
administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the
generality of the foregoing sentence, the Committee is
specifically authorized to adopt rules and procedures regarding
handling of payroll deductions, payment of interest, conversion
of local currency, payroll tax, withholding procedures and
handling of stock certificates which vary in accordance with the
requirements of such local law and procedures. To the extent
that any such rules or procedures are adopted with respect to
options granted in an Offering Period to which Section 423
of the Code is intended to apply, the Committee shall cause such
rules and procedures to be consistent with Section 423 of
the Code.
ARTICLE XIII
MISCELLANEOUS
13.01 Transferability. Neither
payroll deductions credited to any participants account
nor any option or other rights with regard to the exercise of an
option to receive Common Stock under the Plan may be assigned,
transferred, pledged, or otherwise disposed of in any way by the
participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge or
other disposition shall be without effect except that the
Company may, in its discretion, treat such act as an election to
withdraw from participation in the Plan in accordance with
Section 8.01.
13.02 Use of Funds. All payroll
deductions received or held by the Company under the Plan may be
used by the Company for any corporate purpose. The Company shall
not segregate such payroll deductions.
13.03 Adjustment Upon Changes in Capitalization;
Change in Control.
13.03.1 Changes in
Capitalization. Subject to any required
action by the stockholders of the Company, the Reserves, the
maximum number of shares each participant may purchase per
Offering Period (pursuant to Section 6.01), as well as the
Purchase Price and the number of shares of Common Stock covered
by each option under the Plan which has not yet been exercised
shall be proportionately adjusted for any Change in
Capitalization. Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class shall affect, and no
adjustment by reason thereof shall be made with respect to, the
number or Purchase Price of shares of Common Stock subject to an
option.
13.03.2 Change in Control. In the
event of a Change in Control, the Offering Period during which
the Change in Control would otherwise occur shall be accelerated
and shall end on the last payroll date immediately preceding the
Change in Control.
13.04 Amendment or
Termination. The Board shall have complete
power and authority to terminate or amend the Plan; provided,
however, that the Board shall not, without the approval of the
shareholders of the Company, alter (i) the aggregate number
of shares of Common Stock which may be issued under the Plan
(except pursuant to Section 13.03 above), or (ii) the
class of Employees eligible to receive options under the Plan,
other than to designate Subsidiaries as Designated Subsidiary
Corporations; and provided further, however, that, subject to
Section 13.05 no termination, modification, or amendment of
the Plan may, without the consent of an Employee then having an
option under the Plan to purchase shares of Common Stock,
adversely affect the rights of such Employee under such option.
In addition, and notwithstanding anything contained in this Plan
to the contrary, to the extent necessary under Section 423
of the Internal Revenue Code (or any successor rule or provision
or any applicable law or regulation), the Company shall obtain
stockholder approval in such a manner and to such a degree as so
required.
13.05 The Committee shall be entitled to change the
Offering Periods, limit the frequency
and/or
number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit
payroll withholding in excess of the amount designated by a
participant in order to adjust for delays or mistakes in the
Companys processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods
and/or
accounting and crediting procedures to ensure that amounts
applied toward the purchase of Common Stock for each participant
properly correspond with amounts withheld from the
participants Compensation, and establish such other
limitations or procedures as the Board (or its committee)
determines in its sole discretion advisable which are consistent
with the Plan, in each case so long as any such action is
consistent with Section 423 of the Code. None of the
foregoing actions shall be considered to have adversely affected
any right of any participant.
13.06 In the event that the Committee determines that the
ongoing operation of the Plan may result in unfavorable
financial accounting consequences, the Committee may, in its
discretion and, to the extent necessary or desirable, modify or
amend the Plan to reduce or eliminate such accounting
consequence including, but not limited to:
13.06.1 changing the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change
in Purchase Price;
13.06.2 shortening any Offering Period so that the Offering
Period ends on a new Exercise Date, including an Offering Period
underway at the time of such action; and
13.06.3 allocating shares of Common Stock to participants
pursuant to Section 7.01 hereof.
None of the foregoing actions shall be considered to have
adversely affected any right of any participant.
13.07 Notices. All notices or
other communications by a participant to the Company under or in
connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Company by the Plan
Representative.
13.08 Conditions Upon Issuance of
Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the shares may
then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. As a
condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at
the time of any such exercise that the shares are being
purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel
for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
13.09 Effective Date. The Plan
shall become effective as of its adoption by the Board, subject
to approval by the holders of a majority of the shares of Common
Stock, and shall continue in effect until the shares of Common
Stock reserved for issuance under the Plan have been depleted,
unless sooner terminated under Section 13.04 hereof. If the
Plan is not so approved, the Plan shall not become effective.
13.10 No Employment Rights. The
Plan does not, directly or indirectly, create in any person any
right with respect to employment or continuation of employment
by the Company or any Subsidiary, and it shall not be deemed to
interfere in any way with the Companys or any
Subsidiarys right to terminate, or otherwise modify, any
Employees employment at any time.
13.11 Effect of Plan. The
provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of
each Employee participating in the Plan, including, without
limitation, such Employees estate and the executors,
administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors
of such Employee.
13.12 Governing Law. The law of
the State of Delaware will govern all matters relating to this
Plan except to the extent superseded by the federal laws of the
United States.
APPENDIX A
A Change in Control shall be deemed to have occurred
if, following the Distribution (as defined in the
Master Separation Agreement, dated March 27, 2000, to which
the Company and Cabot Corporation are parties):
(a) any person as such term is used in
Sections 13(d) and 14(d) of the 1934 Act (other than
(i) the Company, (ii) any subsidiary of the Company,
(iii) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or of any
subsidiary of the Company, or (iv) any company owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock
of the Company), is or becomes the beneficial owner
(as defined in Section 13(d) of the 1934 Act),
together with all Affiliates and Associates (as such terms are
used in
Rule 12b-2
of the General Rules and Regulations under the 1934 Act) of
such person, directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Companys then outstanding securities; or
(b) the stockholders of the Company approve a merger or
consolidation of the Company with any other company, other than
(i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least
60% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) after which no
person (with the method of determining
beneficial ownership used in clause (a) of this
definition) owns more than 30% of the combined voting power of
the securities of the Company or the surviving entity of such
merger or consolidation; or
(c) during any period of two consecutive years (not
including any period prior to the execution of the Plan),
individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by
a person who has conducted or threatened a proxy contest, or has
entered into an agreement with the Company to effect a
transaction described in clause (a), (b) or (d) of
this definition) whose election by the Board or nomination for
election by the Companys stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period
or whose election or nomination for election was previously so
approved cease for any reason to constitute at least a majority
thereof; or
(d) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Companys assets.
Appendix B
CABOT
MICROELECTRONICS CORPORATION
AUDIT
COMMITTEE CHARTER
Purpose
The purpose of the Audit Committee (the Committee)
of the Board of Directors (the Board) of Cabot
Microelectronics Corporation (the Company) is to
oversee the Companys accounting and financial reporting
processes and the audit of its financial statements. The
Committee is responsible for overseeing the Companys
accounting and system of internal controls, the quality and
integrity of the Companys financial reports and the
independence and performance of the Companys independent
public accountants responsible for the annual audit and
quarterly reviews of the Companys financial statements
(independent auditor). In so doing, the Committee
should endeavor to maintain free and open means of communication
between the members of the Committee, other members of the
Board, the independent auditor, the senior and financial
management of the Company, and with any employees of the Company
or other individuals who desire to bring accounting, internal
accounting controls, auditing, or other matters to the
Committees attention.
In the exercise of its oversight responsibilities, it is not the
duty of the Committee to plan or conduct audits or to determine
that the Companys financial statements fairly present the
Companys financial position and results of operation and
are in accordance with generally accepted accounting principles.
Instead, such duties remain the responsibility of management and
the independent auditor. Nothing contained in this charter is
intended to alter or impair the operation of the business
judgment rule as interpreted by the courts under the
Delaware General Corporation Law. Further, nothing contained in
this charter is intended to alter or impair the right of the
members of the Committee under the Delaware General Corporation
Law to rely, in discharging their responsibilities, on the
records of the Company and on other information presented to the
Committee, Board or Company by officers of employees or by
outside experts such as the independent auditor.
Membership
The Committee shall consist of at least three members of the
Board. The members shall be appointed by action of the Board,
upon recommendation of the Nominating and Corporate Governance
Committee, and shall serve at the discretion of the Board. Each
Committee member shall satisfy the independence and
other requirements of relevant law, including rules adopted by
the Securities and Exchange Commission (SEC), and
the NASDAQ Stock Market LLC (NASDAQ). At least one
member of the Committee shall satisfy the financial
expert requirements of relevant law, including rules
adopted by the SEC, and NASDAQ. Each member of the Committee
shall be able to read and understand financial statements at the
time of his or her appointment.
Committee
Organization and Procedures
1. The Chair of the Committee shall be appointed by the
Board by majority vote. The Chair (or in his or her absence, a
member designated by the Chair) shall preside at all meetings of
the Committee.
2. The Committee shall have the authority to establish its
own rules and procedures consistent with the bylaws of the
Company for notice and conduct of its meetings, should the
Committee, in its discretion, deem it desirable to do so.
Members of the Committee may participate telephonically in any
meeting. A majority of the members of the Committee shall
constitute a quorum for the transaction of business and the
action of a majority of the members present at any meeting at
which there is a quorum shall be the act of the Committee.
B-1
3. The Committee shall meet as frequently as the Committee
in its discretion deems desirable.
4. The Committee may, in its discretion, include in its
meetings members of the Companys management,
representatives of the independent auditor, outside counsel, the
director of internal audit and other personnel employed or
retained by the Company, the Board or the Committee. The
Committee shall meet periodically and as it deems appropriate
with the independent auditor or the director of internal audit,
outside counsel or other advisors in separate executive sessions
to discuss any matters that the Committee believes should be
addressed privately, without managements presence, and
also shall meet periodically and as it deems appropriate in
separate executive sessions with the Companys management.
5. The Committee may, in its discretion, retain and utilize
the services of the Companys regular corporate legal
counsel with respect to legal matters or its other advisors with
respect to other matters or, at its discretion, retain other
legal counsel or other advisors if it determines that such
counsel or advice is necessary or appropriate under the
circumstances.
6. The Committee shall have its own funding from the
Company to pay for the services of the Companys
independent auditors and any legal counsel or other advisors
that are retained by the Committee.
7. The Secretary and General Counsel of the Company shall
serve as Secretary of the Committee.
Responsibilities
Independent
Auditor
8. The Committee has the sole and direct responsibility for
selecting, appointing, terminating, compensating and overseeing
the Companys independent auditor, as well as for resolving
any disagreements between the independent auditors and
management. The Committee shall only retain as independent
auditor a firm, including representatives of the firm
responsible for the Companys audit, that meets the
requirements of relevant law, the Public Company Accounting
Oversight Board, the SEC and NASDAQ. The independent auditor
shall be ultimately accountable to the Committee for all
matters, including the audit of the Companys annual
financial statements and related services. The Committee shall
select, appoint and periodically evaluate the performance of the
independent auditor and, if necessary, replace the independent
auditor. At the discretion of the Committee or to the extent
required by relevant law, NASDAQ or the SEC, the Committee shall
recommend to the Board the nomination of the independent auditor
for stockholder approval at any meeting of stockholders.
9. The Committee shall pre-approve the fees to be paid to
the independent auditor and any other terms of the engagement of
the independent auditor for any and all services (whether
auditing services, audit-related services, internal
control-related services, tax services or permitted other
(non-audit) services), to be provided by the independent
auditor, in advance of such services being provided. The
Committee may delegate such pre-approval of services to the
Committee Chair, and the Committee Chair shall provide
subsequent notification to the Committee of any such
pre-approval at the next scheduled meeting of the Committee.
10. The Committee shall receive from the independent
auditor and review, at least annually, a written statement
delineating all relationships between the independent auditor
and the Company, consistent with Independence Standards Board
Standard 1. The Committee shall actively engage in a dialogue
with the independent auditor with respect to any disclosed
relationships or services that, in the view of the Committee,
may impact the objectivity and independence of the independent
auditor. If the Committee determines that further inquiry is
advisable, the Committee shall take any appropriate action in
response to the independent auditors report to satisfy
itself of the auditors independence.
Annual
Audit
11. The Committee shall meet with the independent auditor
and management of the Company in connection with each annual
audit to discuss the scope of the audit and the procedures to be
followed.
12. The Committee shall review and discuss the audited
financial statements with the management of the Company.
13. The Committee shall discuss with the independent
auditor the matters required to be discussed by Statement on
Auditing Standards No. 61 as then in effect including,
among others, (i) the methods used to account for any
significant unusual transaction reflected in the audited
financial statements; (ii) the effect of significant and
critical accounting policies in any controversial or emerging
areas for which there is a lack of authoritative guidance or a
consensus to be followed by the independent auditor;
(iii) the process used by management in formulating
particularly sensitive accounting estimates and the basis for
the independent auditors conclusions regarding the
reasonableness of those estimates; and (iv) any
disagreements with management over the application of accounting
principles, the basis for managements accounting estimates
or the disclosures in the financial statements.
14. The Committee shall, based on the review and
discussions in paragraphs 11, 12, and 13 above, and based
on the disclosures received from the independent auditor
regarding its independence and discussions with the independent
auditor regarding such independence in paragraph 10 above,
recommend to the Board whether the audited financial statements
should be included in the Companys Annual Report on
Form 10-K
for the fiscal year subject to the audit.
15. The Committee shall review and discuss with management,
including the director of internal audit and, at its discretion,
any provider of internal audit services, and the independent
auditor the Companys internal controls report and the
independent auditors attestation of the report prior to
the filing of the Companys Annual Report on
Form 10-K
for the fiscal year subject to the audit.
Quarterly
Review
16. The independent auditor is required to review the
interim financial statements to be included in any
Form 10-Q
of the Company using professional standards and procedures for
conducting such reviews, as established by generally accepted
auditing standards as modified or supplemented by the SEC, prior
to the filing of the
Form 10-Q.
The Committee shall discuss with management and the independent
auditor in person, at a meeting, or by conference telephone
call, the results of the quarterly review including such matters
as significant adjustments, management judgments, accounting
estimates, significant new accounting policies and disagreements
with management. The Chair may represent the entire Committee
for purposes of this discussion.
Internal
Controls
17. The Committee shall discuss with the independent
auditor and the director of internal audit, as well as
management, at least quarterly, the adequacy and effectiveness
of the accounting, financial and internal controls of the
Company, and consider any recommendations for improvement of
such internal control procedures.
18. The Committee shall be provided, and discuss with, the
independent auditor and with management any material written
communications between the independent auditor and management,
including any summary of aggregated deficiencies or management
letter provided by the independent auditor (or other auditor)
and any other significant matters brought to the attention of
the Committee by the independent auditor (or other auditor) as a
result of its annual or other audit. The Committee should allow
management adequate time to consider any such matters raised by
the independent auditor (or other auditor).
19. The Committee shall meet with the Companys Chief
Executive Officer, Chief Financial Officer, and other Company
management as appropriate and as required by relevant law,
including rules adopted by the SEC and NASDAQ, on a regular
basis to discuss the Companys internal controls structure
and procedures and status, and disclosure controls and
procedures and status.
Internal
Audit
20. The Committee shall review and preapprove the selection
of the Companys director of internal audit, and any
termination of employment of such person. The Committee shall be
notified in advance of, and at its discretion review and
preapprove, the selection of any other provider of internal
audit services. The Chair may represent the entire Committee for
purposes of these matters.
21. The Committee shall discuss at least quarterly with the
director of internal audit and, at its discretion other
provider(s) of internal audit services (if any), the activities
and organizational structure of the Companys internal
audit function and the qualification of the primary personnel
performing such function.
22. Management shall furnish to the Committee Chairman a
copy of each internal audit report, and provide summaries
thereof to the Committee, to whom it shall furnish a copy of
each internal audit report if so requested by the Committee or
any of its members.
23. The Committee shall, at its discretion, meet with the
director of internal audit and other provider(s) of internal
audit services (if any) to discuss any reports or any other
matters brought to the attention of the Committee by the
director of internal audit or other provider(s) of internal
audit services (if any).
24. The director of internal audit and other provider(s) of
internal audit services (if any) shall be granted unfettered
access to the Committee.
Other
Responsibilities
25. The Committee shall review and reassess the
Committees charter at least annually and submit any
recommended changes to the Board for its consideration.
26. The Committee shall review and assess the
Committees fulfillment of its responsibilities pursuant to
the Committees charter at least annually and submit its
conclusions in this regard to the Board for its consideration.
27. The Committee shall provide the report for inclusion in
the Companys Annual Proxy Statement required by
Item 407 of
Regulation S-K
of the SEC.
28. The Committee shall establish procedures in compliance
with requirements of relevant law, including rules adopted by
the SEC, and NASDAQ, for addressing matters and complaints
brought to the Committees attention by employees of the
Company or other individuals regarding accounting, internal
accounting controls, auditing, or other matters, and shall
ensure that such complaints brought by employees are treated
confidentially and anonymously to the extent required by law.
29. The Committee shall be responsible for receiving,
dealing with, and responding to legal compliance reports
relating to actual or alleged material violations of the
securities laws, material breaches of fiduciary duties, or
similar material violations.
30. The Committee shall review and approve any related
party transaction in advance of the Companys entering into
any such related party transaction, and shall subsequently
inform the Board of any such approval.
The Committee, through its Chair, shall report periodically, as
deemed necessary or desirable by the Committee, but at least
following its regularly scheduled meetings, to the full Board
regarding the Committees actions and recommendations, if
any.
Appendix C
CABOT
MICROELECTRONICS CORPORATION
AUDIT
COMMITTEE PRE-APPROVAL POLICY FOR SERVICES TO BE PROVIDED
BY INDEPENDENT AUDITOR
The Audit Committee (the Committee) of Cabot
Microelectronics Corporation (the Corporation) has
the sole and direct responsibility for selecting, appointing,
terminating, compensating and overseeing the Companys
independent auditor, as well as for resolving any disagreements
between the independent auditors and management. Pursuant to the
Committees Charter, the Committee is required to
pre-approve the audit and non-audit services performed by the
Corporations independent auditor in order to assure that
the provision of such services does not impair the
auditors independence. Each type of service provided by
the independent auditor will require specific pre-approval at a
particular fee level by the Committee.
The Committee, through the Controller of the Corporation or
another designated individual, will maintain a list of the
Audit, Audit-related, Tax and All Other services that have been
pre-approved by the Committee as of the particular date of the
relevant list (the List), and will revise the list
periodically, based on subsequent determinations of the
Committee. The term of any pre-approval is twelve
(12) months from the date of pre-approval, unless the
Committee specifically provides for a different period.
The Committee has delegated pre-approval authority to the
Chairman of the Committee, and may delegate such pre-approval
authority to others members of the Committee. The Chairman will
report any pre-approval decisions to the Committee no later than
at its next scheduled meeting. The Committee does not delegate
its responsibilities to pre-approve services performed by the
independent auditor to management.
The annual Audit services engagement terms and fees will be
subject to the specific pre-approval of the Committee. The
Committee will approve, if necessary, any changes in terms,
conditions and fees resulting from changes in audit scope or
other matters.
In addition to the annual Audit services engagement approved by
the Committee, the Committee may grant pre-approval for other
Audit services, which are those services that only the
independent auditor reasonably can provide and such Audit
services will be placed on the List. All other Audit services
not on the List must be separately pre-approved by the Committee.
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III.
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Audit-Related
Services
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Audit-related services, including internal control-related
services, are assurance and related services that are reasonably
related to the performance of the audit or review of the
Corporations financial statements and that are
traditionally performed by the independent auditor. The
Committee believes that the provision of Audit-related services
does not impair the independence of the auditor. The List will
contain the pre-approved Audit-related services. All other
Audit-related services not on the List, and all internal
control-related services, must be separately pre-approved by the
Committee.
C-1
The Committee believes that the independent auditor can provide
Tax services to the Corporation such as tax compliance, tax
planning and tax advice without impairing the auditors
independence. However, the Committee will not permit the
retention of the independent auditor in connection with a
transaction initially recommended by the independent auditor,
the tax treatment of which may not be supported in the Internal
Revenue Code and related regulations. The List will contain
those Tax services that the Committee has pre-approved. All
other Tax services not on the List must be separately
pre-approved by the Committee.
The Committee may grant pre-approval to those permissible
non-audit services classified as All Other services that it
believes are routine and recurring services, and would not
impair the independence of the auditor. The List will contain
All Other services that the Committee has pre-approved.
Permissible All Other services not on the List must be
separately pre-approved by the Committee.
A list of the Security and Exchange Commissions
(SECs) prohibited non-audit services is attached to this
policy as Exhibit 1. The SECs rules and relevant
guidance should be consulted to determine the precise
definitions of these services and the applicability of
exceptions to certain of the prohibitions.
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VI.
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Pre-Approval
Fee Levels
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At the time of pre-approval of services to be provided by the
independent auditor, the Committee will establish an approved
fee level for such services. Any increase in the fee level for
such services will require additional specific pre-approval by
the Committee.
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VII.
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Supporting
Documentation
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With respect to each proposed pre-approved service, the
Committee will be provided with detailed
back-up
documentation, regarding the specific services to be provided.
Requests to provide services will be submitted to the Committee
by both the independent auditor and the Corporations Chief
Financial Officer, Treasurer, Controller, or other designated
officer, and each will state whether, in their view, the request
is consistent with the SECs rules on auditor independence.
EXHIBIT 1
PROHIBITED
NON-AUDIT SERVICES
Bookkeeping or other services related to the accounting records
or financial statements of the audit client*
Financial information systems design and implementation
Appraisal or valuation services*, fairness opinions or
contribution-in-kind
reports
Actuarial services*
Internal audit outsourcing services*
Management functions
Human resources
Broker-dealer, investment adviser or investment banking services
Legal services
Expert services unrelated to the audit
(* may be allowed in limited circumstances if reasonable to
conclude that the results of these services will not be subject
to audit procedures; check relevant SEC rules)
VOTE BY INTERNET www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card
in hand when you access the web site and follow the instructions to obtain your records and CABOT
MICROELECTRONICS CORPORATION to create an electronic voting instruction form.
870 NORTH COMMONS DRIVE ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER
AURORA, IL 60504 COMMUNICATIONS
If you would like to reduce the costs incurred by Cabot Microelectronics Corporation in mailing
proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual
reports electronically via e-mail or the Internet. To sign up for electronic delivery, please
follow the instructions above to vote using the Internet and, when prompted, indicate that you
agree to receive or access stockholder communications electronically in future years.
VOTE BY PHONE 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand when you call and
then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Cabot Microelectronics Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:CABMC1 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY CABOT
MICROELECTRONICS CORPORATION
A Proposals The Board of Directors recommends a vote FOR all the nominees listed and FOR
Proposals 2 and 3. For Withhold For All To withhold authority to vote for any individual All All
Except nominee(s), mark For All Except and write the
1. Election of Directors number(s) of the nominee(s) on the line below.
01 Robert J. Birgeneau 02 Steven V. Wilkinson 03 Bailing Xia Vote On Proposals For Against Abstain
2. Approval of 500,000 additional shares for the Cabot Microelectronics Corporation Employee Stock Purchase Plan.
3. Ratification of the selection of PricewaterhouseCoopers LLP as the companys independent auditors for fiscal year 2008.
4. In their discretion upon such other business as may properly come before the meeting or any adjournment thereof.
B Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
Please sign exactly as name(s) appears(s) hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date |
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting:
The proxy statement and annual report to stockholders are available at ww.cabotcmp.com
Proxy CABOT MICROELECTRONICS CORPORATION
ANNUAL MEETING OF STOCKHOLDERS MARCH 4, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned stockholder of CABOT MICROELECTRONICS CORPORATION, a Delaware corporation (the
Company), hereby appoints William P. Noglows and H. Carol Bernstein, and each of them, proxies
and attorneys-in-fact of the undersigned, each with full power of substitution, to attend and act
for the undersigned at the Annual Meeting of Stockholders to be held on Tuesday, March 4, 2008 at
8:00 a.m. local time at Cabot Microelectronics Corporation, 870 North Commons Drive, Aurora,
Illinois 60504, and at any adjournments or postponements thereof, and in connection therewith to
vote and represent all of the shares of common stock of the Company which the undersigned would be entitled to vote.
Each of the above-named proxies at said meeting, either in person or by substitute, shall have and
exercise all of the powers said hereunder. In their discretion, each of the above-named proxies is
authorized to vote upon such other business incident to the conduct of the Annual Meeting as may
properly come before the meeting or any postponements or adjournments thereof. The undersigned
hereby revokes all prior proxies given by the undersigned to vote at said meeting.
If no instructions are indicated herein, this proxy will be treated as a grant of authority to vote
for the proposals and any other matters to be voted upon at the Annual Meeting or at any
postponements or adjournments thereof.
SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE SEE REVERSE SIDE |