DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to

Section 14(a) of the Securities Exchange Act of 1934

(Amendment No. )

 

Filed by the Registrant Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

Allegro MicroSystems, Inc.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

No fee required

Fee paid previously with preliminary materials

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 


INNOVATION WITH PURPOSE 2023 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT

 

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2024 notice of annual meeting and proxy statement

 


LETTER TO SHAREHOLDERS

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Manchester, NH

June 26, 2024

Dear Shareholder,

You are cordially invited to attend the 2024 Annual Meeting of Shareholders (the “Annual Meeting”) of Allegro MicroSystems, Inc. (the “Company”) at 8:30 a.m. Eastern time on Thursday, August 8, 2024. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. We believe that the online, virtual meeting format enables the Annual Meeting to be accessible for all of our shareholders.

Holders of record of the Company’s outstanding shares of common stock, as of the close of business on June 12, 2024 are entitled to notice of and to vote at the Annual Meeting, or any continuation, postponement or adjournment of the Annual Meeting. The Annual Meeting may be continued or adjourned from time to time without notice other than by announcement at the Annual Meeting.

Every shareholder’s vote is important. Whether or not you plan to attend the Annual Meeting online, it is important that your shares of common stock be represented and voted at the Annual Meeting. Therefore, I urge you to promptly submit your proxy even if you plan to attend the Annual Meeting. To submit a proxy to vote your shares over the Internet or by telephone, please follow the instructions on your proxy card, Notice of Internet Availability of Proxy Materials or voting instruction form. If you decide to attend the Annual Meeting, you will be able to vote online, even if you have previously submitted your proxy.

On behalf of the Board of Directors, thank you for your support of Allegro MicroSystems, Inc.

Sincerely,

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Yoshihiro (Zen) Suzuki

Chairman of the Board of Directors

 

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ALLEGRO MICROSYSTEMS, INC.

NOTICE OF 2024 ANNUAL MEETING OF SHAREHOLDERS

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Date and Time

August 8, 2024 (Thursday) 8:30 a.m. Eastern time

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Location

Online at: meetnow.global/MSCDKJU

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Who Can Vote

Shareholders as of
June 12, 2024 are
eligible to vote

 

Time

8:30 a.m., Eastern time on Thursday, August 8, 2024.

 

 

Place

You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions during the Annual Meeting by visiting: meetnow.global/MSCDKJU at the meeting date and time. Beneficial holders may be required to register in advance to attend the Annual Meeting. See the attached proxy statement for additional information. There is no physical location for the Annual Meeting.

 

 

Items of Business

1.
To elect Katsumi Kawashima, Joseph R. Martin, Vineet Nargolwala and Mary G. Puma as Class I Directors to serve until the 2027 Annual Meeting of Shareholders, and until each such director’s respective successor is elected and qualified;
2.
To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 28, 2025;
3.
To approve, on an advisory basis, the Company’s executive compensation; and
4.
To transact such other business as may properly come before the Annual Meeting or any continuation, postponement, or adjournment of the Annual Meeting.

 

 

Voting

Your vote is very important. Please submit your proxy even if you plan to attend the Annual Meeting. To submit a proxy to vote your shares over the Internet or by telephone, please follow the instructions on your proxy card, Notice of Internet Availability of Proxy Materials or voting instruction form.

 

 

Who Can Vote

Holders of record of our outstanding shares of common stock as of the close of business on June 12, 2024 are entitled to notice of and to vote at the Annual Meeting, or any continuation, postponement or adjournment of the Annual Meeting. A complete list of such shareholders will be open to the examination of any shareholder for a period of ten days prior to the Annual Meeting for a purpose germane to the Annual Meeting at the Company’s offices during ordinary business hours at 955 Perimeter Road, Manchester, New Hampshire, 03103.

 

 

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TABLE OF CONTENTS

 

PROXY STATEMENT

1

FISCAL YEAR 2024 BUSINESS HIGHLIGHTS

3

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

4

QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS

11

PROPOSALS TO BE VOTED ON

15

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

26

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND OTHER MATTERS

27

CORPORATE GOVERNANCE

28

COMMITTEES OF THE BOARD

33

EXECUTIVE AND DIRECTOR COMPENSATION

37

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

69

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

71

SHAREHOLDERS’ PROPOSALS

74

OTHER MATTERS

74

SOLICITATION OF PROXIES

74

ANNUAL REPORT ON FORM 10-K

75

APPENDIX A – NON-GAAP FINANCIAL MEASURES

76

 

 

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PROXY STATEMENT

This proxy statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Allegro MicroSystems, Inc. (“we,” “us,” “our,” the “Company” or “Allegro”) of proxies to be voted at our Annual Meeting of Shareholders to be held on Thursday, August 8, 2024 (the “Annual Meeting”), at 8:30 a.m. Eastern time, and at any continuation, postponement, or adjournment of the Annual Meeting. In order to provide accessibility to the meeting to all shareholders, the Annual Meeting will be a completely virtual meeting conducted via live, online webcast. You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions during the Annual Meeting by visiting: meetnow.global/MSCDKJU at the meeting date and time. In order to attend, if you hold your shares through an intermediary, such as a bank, broker, or other nominee, you must register in advance prior to the deadline of 5:00 p.m. Eastern time on August 5, 2024. Please refer to “How can I attend the Annual Meeting?” for information on how to register. There is no physical location for the Annual Meeting.

Holders of record of our outstanding shares of common stock, $0.01 par value per share (“Common Stock”), as of the close of business on June 12, 2024 (the “Record Date”), will be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement, or adjournment of the Annual Meeting, and will vote as a single class on all matters presented at the Annual Meeting. As of the Record Date, there were 193,784,314 shares of Common Stock outstanding and entitled to vote at the Annual Meeting. Each share of Common Stock is entitled to one vote on any matter presented to shareholders at the Annual Meeting.

This proxy statement and the Company’s Annual Report to Shareholders for the fiscal year ended March 29, 2024 (the “2024 Annual Report”) will be released on or about June 26, 2024 to our shareholders as of the Record Date.

Information contained on, or that can be accessed through, our website is not incorporated by reference in this proxy statement and does not form a part of this proxy statement. The inclusion of links and website addresses in this proxy statement are textual references only.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON AUGUST 8, 2024

This proxy statement and our 2024 Annual Report are available at investors.allegromicro.com/financials/annual-reports.

Proposals

At the Annual Meeting, our shareholders will be asked:

 

Proposals

Board Vote Recommendation

For Further Details

To elect Katsumi Kawashima, Joseph R. Martin, Vineet Nargolwala and Mary G. Puma as Class I Directors to serve until the 2027 Annual Meeting of Shareholders, and until each such director’s respective successor is elected and qualified

“FOR” each director nominee

Page 15

To ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for the fiscal year ending March 28, 2025

“FOR”

Page 23

To approve, on an advisory basis, the Company’s executive compensation

“FOR”

Page 25

To transact such other business as may properly come before the Annual Meeting or any continuation, postponement, or adjournment of the Annual Meeting

 

 

We do not know of any other business that will be presented at the Annual Meeting. However, if any other matter properly comes before the shareholders for a vote at the Annual Meeting, the proxy holders named on the Company’s proxy card will have the discretionary authority to vote your shares in accordance with their best judgment.

 

 

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PROXY STATEMENT SUMMARY

Recommendations of the Board

The Board recommends that you vote your shares as indicated below. If you return a properly completed proxy card, or vote your shares by telephone or Internet, your shares of Common Stock will be voted on your behalf as you direct. If not otherwise specified, the shares of Common Stock represented by the proxies will be voted, and the Board recommends that you vote:

a.
FOR the election of each of Katsumi Kawashima, Joseph R. Martin, Vineet Nargolwala and Mary G. Puma as Class I Directors to serve until the 2027 Annual Meeting of Shareholders;
b.
FOR the ratification of the appointment of PwC as our independent registered public accounting firm for the fiscal year ending March 28, 2025; and
c.
FOR the approval, on an advisory basis, of the Company’s executive compensation.

If any other matter properly comes before the shareholders for a vote at the Annual Meeting, the proxy holders named on the Company’s proxy card will have the discretionary authority to vote your shares in accordance with their best judgment.

Information About This Proxy Statement

Why You Received this Proxy Statement. You have received these proxy materials because the Board is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement includes information that we are required to provide to you under the rules of the Securities and Exchange Commission (“SEC”) and that is designed to assist you in voting your shares.

Notice of Internet Availability of Proxy Materials. As permitted by SEC rules, we are making this proxy statement and our 2024 Annual Report available to our shareholders electronically via the Internet. On or about June 26, 2024, we mailed to our shareholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access this proxy statement and our 2024 Annual Report and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you specifically request them. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy statement and 2024 Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice.

Printed Copies of Our Proxy Materials. If you received printed copies of our proxy materials, then instructions regarding how you can vote are contained on the proxy card or voting instruction form included in the materials.

Householding. The SEC’s rules permit us to deliver a single set of proxy materials to one address shared by two or more of our shareholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered a single copy of the 2024 Annual Report, proxy statement or Notice, as applicable, to multiple shareholders who share an address, unless we received contrary instructions prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the 2024 Annual Report, proxy statement or Notice, as requested, to any shareholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of the 2024 Annual Report, proxy statement or Notice, or separate copies of proxy materials in the future, contact our transfer agent at (800) 736-3001 or write them at Computershare, P.O. Box 43006, Providence, RI 02940-3006.

If you are currently a shareholder sharing an address with another shareholder and wish to receive only one copy of future proxy materials for your household, please contact Computershare at the above phone number or address.

 

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FISCAL YEAR 2024 BUSINESS HIGHLIGHTS

 

 

Total Net Sales

 

Automotive net sales grew 17% over the prior year, led by continued momentum in e-Mobility applications
Industrial net sales grew 7% over the prior year, led by growth in broad-based industrial applications
Other net sales declined 44% over the prior year, driven by lower demand for consumer and smart home products
Magnetic sensor sales increased 9% over the prior year
Power product sales increased 7% over the prior year

$1,049 million

 

8% growth year-over-year

 

 

Gross Margins

 

Gross margins for the year on both a GAAP and non-GAAP basis declined slightly due to product and channel mix

54.8%

56.3%

 

GAAP basis

Non-GAAP basis (1)

 

GAAP gross margin declined from 56.1% in FY23 to 54.8% in FY24

 

 

 

 

 

Net Cash Provided by Operating Activities

 

Net cash provided by operating activities was 17% of total net sales

$182 million

 

The company ended the year with $222 million in cash, cash equivalents and restricted cash

 

(1) Non-GAAP gross margin is a non-GAAP financial measure. Refer to Appendix A for additional information regarding this measure, including a reconciliation to the most directly comparable GAAP financial measure.

 

 

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

Innovation with purpose is the driving force behind everything we do at Allegro, including our commitment to environmental, social and governance (“ESG”) initiatives across the Company. Our ESG strategy revolves around five signature initiatives: (1) maximizing the positive impact of our products, (2) minimizing our impact on the planet, (3) building a diverse and innovative workforce, (4) engaging our supply chain to advance sustainability, and (5) cultivating opportunities in our local communities. By striving to operate responsibly across all facets of our business, we aim to generate long-term value for our ecosystem of employees, customers, supply chain partners, and shareholders.

We are moving the world toward a safer, more sustainable future.

Our ESG strategy aligns with our core values and our commitment to innovate with purpose.

Our Values

Integrity is the foundation of what we do at Allegro. We seek to honor the spirit of our values, doing the right thing for the right reason at all times.

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Innovate With Purpose

We meet each challenge with thoughtful, impactful innovation - which leads to a better tomorrow

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Collaborate Globally

We work together as one team - which leads to the best business decisions

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Exceed Customer Expectations

We anticipate and exceed our customers’ needs - which leads to stronger business partnerships

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Empower With Trust

We encourage and trust employees to make sound decisions - which leads to a strong, enabled workforce

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Achieve With Excellence

We are never satisfied with the status quo - which leads to higher standards of performance

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Develop Timely Solutions

We proactively develop solutions and resolve issues effectively - which leads to greater success

Guided by our core values, we are committed to innovation with purpose.

Sustainability

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We are driving innovation to shape a more efficient and sustainable future. Our solutions empower the development of safe and eco-friendly technologies for tomorrow, starting today. By engineering our products with a focus on minimizing environmental impact and promoting social responsibility, we help enable our customers to tackle global challenges head-on, from reducing carbon emissions and boosting energy efficiency to advancing clean, renewable energy sources.

Our sensor and power semiconductors address critical global challenges related to energy efficiency, vehicle emissions, and clean and renewable energy. We apply our deep technology know-how to deliver magnetic sensing integrated circuits (“ICs”) and power IC solutions to:

Sense speed, position, and current to enable electric powertrains, improve vehicle fuel efficiency and carbon dioxide emissions, enable safer cars through advanced driver assistance systems and safety features, and enhance factory automation and clean energy systems;
Regulate systems to improve safety and power efficiency and ultimately reduce solution size; and
Drive motors through our advanced, proprietary algorithms that provide industry-leading reliability and energy efficiency, with minimal audible noise and vibration.

 

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ENVIRONMENTAL, SOCIAL & GOVERNANCE

Making an Impact: Product Highlights

We possess a long track record of innovations that have measurably improved the energy efficiency of powertrain, safety and comfort systems.

Two key technologies contributing to avoided emissions in automotive applications are our onboard chargers and DC/DC converters in xEV powertrain, as well as electric power steering (“EPS”) systems enablement. For xEV powertrain, current sensor ICs and high-voltage gate driver ICs enhance vehicle efficiency by reducing ohmic losses and enabling use of GaN or SiC transistors. For EPS, a combination of up to 15 ICs per car enables EPS systems to save upwards of 12 gallons of gas per vehicle per year compared to hydraulic steering systems.

These two technologies in automotive applications have resulted in an estimated cumulative avoided emissions of 8.9 million tons* of CO2 since the beginning of calendar year 2021 through the end of 2023. This number is expected to continue to grow as a result of the projected growth in the hybrid electric vehicle and electric vehicle (“EV”) markets.

Additionally, Allegro’s speed-sensor ICs were used to create the first speed and direction crank sensor for stop/start engine control. These sensors are used to control a variety of functions, including a fuel injection and ignition timing function that increases the efficiency of a vehicle’s gasoline use in miles per gallon by approximately five percent.

* Estimated avoided emissions based on vehicles sold with Allegro products and U.S. Department of Energy data for emissions produced/reduced. Sources included: U.S. Department of Energy Alternative Fuels Data Center: Emissions from Electric Vehicles (https://afdc.energy.gov/vehicles/electric_emissions.html), Automotive News Europe: Electric Steering turns on the Power (https://europe.autonews.com/article/20080303/ANE03/237416432/electric-steering-turns-on-the-power), and market data provided by Strategy Analytics Powered by TechInsights.

Sustainability is at the forefront of Allegro’s approach to semiconductor design and manufacturing. We strive to integrate sustainable practices throughout our supply chain and operations, prioritizing responsible resource use and fostering thriving local communities. Our commitment to social responsibility extends across our supply chain, accompanied by an effort to provide transparent disclosure of the environmental impact of our business activities. By embedding sustainability into many aspects of our processes, we strive to minimize our ecological footprint while upholding ethical business standards.

Additional information on the environmental policies and the codes of conduct listed below can be found on the “Sustainability” section of our website, allegromicro.com/en/about-allegro/corporate-responsibility/sustainability.

ESG Policies / Codes of Conduct / Statements
o
Environmental Policy
o
Climate Change Policy
o
Water Policy
o
Quality Policy
o
Conflict Minerals Report
o
Supplier Code of Conduct
o
Vendor Code of Conduct
o
UK Modern Slavery Act Statement

 

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ENVIRONMENTAL, SOCIAL & GOVERNANCE

 

Corporate Initiatives & Certifications

Membership & Reporting

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Member of Responsible Business Alliance since 2018
Disclosure to Carbon Disclosure Project (CDP) since 2018, reporting on Climate Change and Water Security. Our latest CDP submission is publicly available on our website at allegromicro.com/en/about-allegro/corporate-responsibility/sustainability.

Certifications at our Manufacturing Facility in the Philippines

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Certified in Quality Management Systems (IATF16949:2016 Automotive, ISO 26262, and ISO 9001)
Certified in Occupational Health & Safety Management System (ISO 45001)
Certified in Environmental Management Systems (ISO 14001)

Initiatives Across our Global Sites

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Infrastructure - Installing energy-conscious and eco-friendly infrastructure where possible in our facilities, such as LED lighting and low-flow water systems, as well as EV charging stations

Initiatives at our Manufacturing Facility in the Philippines

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Energy - Successfully completed several energy saving initiatives, which help saved approximately 4.47 GWh of electricity during fiscal year 2024

 

The 60kW photovoltaic solar panels at our facility continue to abate our need for externally sourced electricity by approximately 101,500 kWh/year

 

The water-cooled chiller for air-conditioning lowers our energy needs by approximately 2.9 GWh/year

 

Heat load reduction projects that divert ambient heat, resulting in approximately 810,300 kWh/day lower energy needs

 

Interconnection of the site’s vacuum systems, resulting in approximately 580,600 kWh/year lower energy needs

 

Lighting optimization and conversion to lower wattage, resulting in approximately 52,000 kWh/year lower energy needs

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Water & Waste - Successfully completed two water conservation initiatives, resulting in significant water recycling and reduction of organic acid waste in fiscal year 2024

 

Recycled approximately 3,780,000 gallons of water from our saw operation and recovery of final risk reject of deionized (DI) water system

 

 

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ENVIRONMENTAL, SOCIAL & GOVERNANCE

 

Social Responsibility

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We invest in our employee innovators. Our global team collaborates to move the world towards a safer and more sustainable future. That is why we foster a culture of inclusion, development, and engagement.

At Allegro, we pursue innovation with purpose, and our success stems from the dedication, talent, and commitment of our employees. As an equal opportunity employer, we are committed to fostering a diverse, inclusive, and globally collaborative environment that fuels our innovation. We invest in the growth and development of our existing employees while actively recruiting new talent from a diverse range of backgrounds and experiences across all functions and geographies. The diversity within our teams, coupled with individuals’ unique ideas and contributions, empowers us to work cohesively toward achieving Allegro’s vision and mission.

We are committed to cultivating a diverse workforce comprised of individuals with different backgrounds, passions and skill sets as we collaborate to innovate with purpose. We understand that a holistic commitment to diversity necessitates more than recruiting a diverse range of talent – it requires the cultivation of a workforce that is safe, creative and collaborative and where there are equitable opportunities for every employee. In fiscal year 2024, Allegro’s Diversity, Equity and Inclusion (“DEI”) Council provided comprehensive DEI education and specific annual training on topics such as unconscious bias, inclusive language and microaggressions. The DEI Council also focused on examining equitable hiring practices and providing interview training. We also established a third employee resource group, Veterans@Allegro, joining Women@Allegro and Early@Allegro. We have organizational metrics to monitor senior leadership, management, hiring and technical hiring by gender globally. We measure our population and hiring by race and ethnicity in the U.S.

Percentage of Gender and Racial/Ethnic Group Representation

 

 

Management

 

 

Technical Staff

 

 

All Other (Non-
Technical/Non-Management)

 

Gender*

 

M: 73.8% F: 26.2%

 

 

M: 79.7% F: 20.2% U: 0.1%

 

 

M: 44.7% F: 55.3%

 

Racial/Ethnic Group (U.S. only)

 

Black

 

 

0.4

%

 

 

2.8

%

 

 

2.2

%

Hispanic

 

 

3.0

%

 

 

2.8

%

 

 

4.3

%

Asian

 

 

21.0

%

 

 

28.3

%

 

 

25.1

%

White

 

 

75.2

%

 

 

65.3

%

 

 

67.9

%

Two or More

 

 

0.4

%

 

 

0.8

%

 

 

0.5

%

* M = Male, F = Female, U = Undeclared

Additionally:

We invest in the ongoing development of our employees and provide education assistance to help mitigate the costs of certification and degree programs, as well as assistance toward the repayment of student debt, an attractive and innovative benefit.
We curate a centralized and broadly used learning management system that houses our training courses, certifications, and compliance modules.
Our talent management system and processes promote career-focused discussions, development, and succession planning.
We have expanded our learning and professional development strategy to foster a culture of continuous learning, with a focus on leadership and management development, upskilling of employees, and employee coaching and mentoring.
We have a global, employee-led wellness team that delivers regular health content, team challenges, nutritious snacks and other perks to promote a healthy lifestyle for employees and their families worldwide.
We have launched a Global Employee and Family Assistance Program to better support employees and their families’ mental health and overall well-being.
We have strong participation in our periodic global employee surveys and partner with a third-party organization to formalize data collection focused on employee engagement.

 

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We also offer recognition programs, including a Spot Award program and a High Five peer-to-peer program through which employees can recognize each other’s achievements and contributions. Our annual bonus program is designed to pay for performance and to recognize outstanding employee contributions.
We have established technical career ladders and a process that supports career growth and development through professional or management tracks.
We are committed to providing a safe, healthy and environmentally responsible workplace for all employees by developing safe work practices, outlining operating procedures, and encouraging communication. All Allegro environmental, health and safety policies and procedures are developed in accordance with applicable federal, state, and local regulations. Additionally, our manufacturing site in the Philippines is ISO 45001 certified.

 

 

 

Making an Impact: Program Highlights in Fiscal Year 2024

We paid nearly $80K in tuition reimbursement for employees.

Our student debt assistance program has made a significant impact, contributing over $730K towards employee student debt reduction since its inception. This year alone, we have provided over $150K in assistance, saving employees both principal and interest on their loans.

Nearly 87% of our employees participated in our robust and ever-expanding learning management system, with over 166K course completions.

To date, we have supported nearly 90 students in the pursuit of higher education, which equates to over $400K in scholarship awards.

Globally we matched nearly $80K in charitable donations.

To date, our U.S. Dollars for Doers program has provided nearly $20K in support of organizations where employees have volunteered their personal time.

Allegro demonstrated its commitment to humanitarian aid by providing a $10K donation to the Japan Red Cross following a severe earthquake.

Allegro’s first global engagement survey resulted in a 93% response rate, representing over 4,300 employees. The survey results measured positively to the industry benchmark in several areas.

During fiscal year 2024, our teams recognized and celebrated the achievements of their peers over 500 times using our innovative High-Five program.

 

Community Impact

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We are committed to being a responsible corporate citizen in communities in which we operate

Our employees form the core of our organization, and we are committed to nurturing their passions, philanthropic endeavors, and community engagements, while prioritizing the well-being of Allegro employees and their families. While our vision is global, we empower our teams to drive local impact where they live and work. This localized approach is a key component of one of our ESG signature initiatives, aimed at supporting and uplifting our communities through cultivating opportunities for their betterment and advancement. We take pride in supporting the causes championed by our employees and matching their charitable contributions. Some of our community-focused programs include:

A generous matching gift program for employee donations to qualified nonprofit organizations;
A grant-based volunteer program, “Dollars for Doers” that provides in-kind monetary donations to qualified nonprofit organizations where employees perform volunteer hours;
Company volunteer days and community service projects, including community and coastal clean-ups and tree planting;

 

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Eight hours of volunteer time off per year for all full-time and part-time regular, non-factory employees to volunteer in non-profit community programs;
Our corporate sponsorship programming, targeted at science, technology, engineering and math education programs and community-related programs, such as FIRST Robotics and Cornell Racing; and
We have a history of uncapping our charitable donation matching policies for global disaster relief donations following unexpected or severe events. We prioritize the safety and well-being of our employees and their families and provide location-based support when faced with unexpected and extraordinary challenges.

Governance

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Our management and Board are committed to furthering our ESG program and are highly engaged in the work to maintain alignment of our long-term strategy and operations with these core values and goals.

Our ESG Steering Committee leads our sustainability efforts and has executive sponsorship from our SVP, General Counsel and Secretary. The ESG Steering Committee is a cross-functional team comprised of leaders and subject matter experts from across the Company that collaborates with our full-time ESG team to manage and oversee communications about sustainability topics with employees, investors, customers, suppliers, and other stakeholders. In addition, the committee works to monitor and assess our sustainability developments and to expand our awareness of ESG priorities by fostering a culture of commitment to sustainability within Allegro. As part of this work, they consider current and emerging ESG trends that may affect the Company or are otherwise relevant to our organization and stakeholders and make recommendations for how we can address these trends to ensure compliance and the success of our forward-looking initiatives.

On a quarterly basis, senior management reports on key ESG activities to the Board’s Nominating and Corporate Governance Committee (the “NCGC”). The NCGC provides direct oversight on ESG initiatives and reviews regular updates on our ESG strategy. Each year, our Board dedicates one of their scheduled meetings to matters related to the governance and promotion of ESG topics and initiatives at Allegro. The Board is engaged in our ESG strategy and involved in instituting a formal accountability process for our five goals that help inform our ESG strategy: maximize the positive impact of our products; minimize our impact on the planet; engage our supply chain to advance sustainability; build a diverse and innovative workforce; and cultivate opportunities in local communities.

Allegro appointed two accomplished women leaders to its Board in the last nine months. With these additions, three of our 11 Board members are women. This strategic move reflects the Company’s commitment to fostering equity and diversity at all levels of the organization, which aligns with our broader ESG objectives.

Additionally, Allegro formalized its enterprise risk management (ERM) program in fiscal year 2024 to systematically identify and manage the top risks facing the Company, including any ESG risks. Launching the ERM program involved compiling a risk register, evaluating risks based on impact/likelihood, and designing a program to assign risk owners to implement mitigation plans and regularly engage in formal risk review sessions. Under the ERM program, risks are reported quarterly to the Board’s Audit Committee and annually to the Board. An annual risk register review will be conducted to reassess the established baseline. This structured ERM program enables proactive risk management across the company.

Cybersecurity

Our cybersecurity program seeks to foster Allegro employees’ understanding of how and why they must remain vigilant in promoting comprehensive data protection throughout the Company. When it comes to data protection, we know it is up to all of us to do our part to keep Allegro and other stakeholders safe. We also have incident response procedures in place and are compliant with the EU General Data Protection Regulation (GDPR). By maintaining these procedures and a posture of vigilance, we collectively work to protect Allegro employees, data, and resources and promote a culture of data protection throughout the Company. Additionally, our VP, Chief Digital and Information Officer briefs the Board’s Audit Committee quarterly on cybersecurity matters and the Board periodically and as needed.

The Allegro cybersecurity team strives to provide the tools and education required to accomplish our cybersecurity goals. They provide training programs to our employees, host regular awareness campaigns about Company information security policies and security practices, disseminate tips and how-to information, and provide employees with a centralized digital

 

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ENVIRONMENTAL, SOCIAL & GOVERNANCE

cybersecurity portal. We host cybersecurity trainings for our employees. We also routinely conduct unplanned phishing tests.

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information, and our cybersecurity risk management program is integrated into our overall ERM program. Our cybersecurity team has the duty of carrying out cybersecurity risk assessments to our critical systems and information on a regular basis. The results from risk assessment activities are reviewed to prioritize the mitigation of identified risks, and the need for risk mitigation may influence business or operational strategy, project roadmaps and timelines, or other decision-making, as needed.

In fiscal year 2024, Allegro’s cybersecurity and legal teams engaged in a comprehensive review of the Company’s incident response capabilities and adopted a new cybersecurity incident response plan. The response plan establishes clear guidelines and procedures to detect, respond to, and recover from cyber incidents. Additionally, we have retained outside advisors to assist us in conducting tabletop exercises to evaluate our incident response plan and response capabilities, with our most recent tabletop exercises for our core incident response team and for senior management taking place in early 2024.

Underscoring our commitment to robust cybersecurity practices and data protection, Allegro pursued TISAX (Trusted Information Security Assessment Exchange) certification in fiscal year 2024 and is currently pending formal certification.

We intend to monitor our activities and achievements in these areas and report on them on our ESG webpage located at allegromicro.com/en/about-allegro/corporate-responsibility. We encourage our employees, community members, shareholders and other stakeholders to check this webpage for updates as we work to further our efforts and realize important results in these critical areas. References to websites or policies in this proxy statement are provided for reference and general information only, and the contents of such websites or policies are not incorporated by reference into this filing.

 

 

 

 

 

 

This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in this proxy statement, particularly pertaining to our ESG performance, goals, and initiatives, are subject to additional risks and uncertainties, including regarding gathering and verification of information and related methodological considerations; our ability to implement various initiatives under expected timeframes, cost, and complexity; our dependency on third-parties to provide certain information and to comply with applicable laws and policies; and other unforeseen events or conditions. These factors, as well as others, may cause results to differ materially and adversely from those expressed in any of our forward-looking statements.

Additionally, our discussion of various items herein, including our discussion of ESG matters, may include information that is not necessarily “material” under the federal securities laws for SEC reporting purposes. For many ESG matters, this is informed by various ESG standards and frameworks (including standards for the measurement of underlying data), and the interests of various stakeholders. Much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change. Our disclosures or underlying methodologies may evolve as well, including our methodologies for measuring and reporting on avoided emissions, and we cannot guarantee that our approach will align with the preferences of any particular stakeholder. For example, our disclosures based on any standards may change due to revisions in framework requirements, availability or quality of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control. We also expressly disclaim any duty to update disclosures if our information or methodologies change in the future, except as expressly required by law.

 

 

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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS

1.
Who is entitled to vote at the Annual Meeting?

The Record Date for the Annual Meeting is June 12, 2024. You are entitled to vote at the Annual Meeting only if you were a shareholder at the close of business on the Record Date. Each outstanding share of Common Stock is entitled to one vote for all matters before the Annual Meeting. Holders of Common Stock vote as a single class on any matter that is submitted to a vote of shareholders, unless otherwise required by law or our Third Amended and Restated Certificate of Incorporation. At the close of business on the Record Date, there were 193,784,314 shares of Common Stock outstanding and entitled to vote at the Annual Meeting.

2.
What is the difference between being a “registered” holder and holding shares in “street name” as a “beneficial” holder?

A “registered” holder is a shareholder of the Company that holds shares in his or her own name. A “beneficial” holder is a shareholder of the Company that holds shares in “street name,” meaning the shares are held in the name of a bank, broker, or other nominee on a person’s behalf.

3.
Am I entitled to vote if I am a beneficial holder that holds my shares in “street name” through a bank, broker, or other nominee?

Yes. If your shares are held by a bank, brokerage firm, dealer, or other similar organization, you are considered the beneficial owner of those shares held in “street name.” If your shares are held in street name, these proxy materials are being provided to you by your bank, brokerage firm, or other nominee, along with a voting instruction form, if you received printed copies of our proxy materials. As the beneficial owner, you have the right to direct your bank, brokerage firm, or other nominee how to vote your shares, and the bank, brokerage firm, or other nominee is required to vote your shares in accordance with your instructions. Alternatively, you may vote your shares by attending the Annual Meeting and voting during the virtual Annual Meeting. Please see the section below entitled “How can I attend the Annual Meeting?” for instructions on how to attend the virtual Annual Meeting and vote your shares.

4.
How many shares must be present to hold the Annual Meeting?

A quorum must be present at the Annual Meeting for any business to be conducted. The holders of a majority in voting power of our Common Stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at the Annual Meeting.

5.
How can I attend the Annual Meeting?

The Annual Meeting will be a completely virtual meeting of shareholders, which will be conducted exclusively by live, online webcast. You are entitled to participate in the Annual Meeting if you were a registered or beneficial holder as of the close of business on the Record Date. No physical meeting will be held.

If you are a registered holder as of the Record Date, you will be able to attend the Annual Meeting online and ask a question or vote during the Annual Meeting by visiting meetnow.global/MSCDKJU. Please follow the instructions on your proxy card that you received. During the Annual Meeting, you will be able to vote your shares electronically by clicking on the “Vote” link on the meeting center site.

If you are a beneficial holder as of the Record Date with shares that are held in “street name” through a bank, broker, or other nominee and want to attend the Annual Meeting online (with the ability to ask a question and/or vote, if you choose to do so), you must register in advance using the following instructions.

To register to attend the Annual Meeting online, you must submit proof of your proxy power (a “Legal Proxy”) reflecting your ownership of the Company’s Common Stock as of the Record Date, along with your name and email address to our transfer agent, Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. Eastern time on August 5, 2024. You will receive a confirmation of your registration by email after Computershare receives your registration materials.

 

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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS

Requests for registration should be directed to Computershare using either of the following:

 

By email:

 

Forward the email from your bank, broker, or other nominee granting you a Legal Proxy,

or attach an image of your Legal Proxy, to: legalproxy@computershare.com

By mail:

 

Computershare

 

 

Allegro MicroSystems, Inc. Legal Proxy

 

 

P.O. Box 43001

 

 

Providence, RI 02940-3001

Advance registration for the Annual Meeting is only required if you are a beneficial holder.

6.
What does it mean if I receive more than one Notice or more than one set of proxy materials?

It means that your shares are held in more than one account at the transfer agent and/or with banks, brokers or other nominees. Please vote all of your shares. To ensure that all of your shares are voted, for each Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or by signing, dating, and returning the enclosed proxy card in the enclosed envelope.

7.
How do I vote?

Whether or not you expect to attend the Annual Meeting online, we urge you to vote your shares as promptly as possible to ensure your representation and the presence of a quorum at the Annual Meeting. If you vote prior to the Annual Meeting, you may still decide to attend the Annual Meeting and vote your shares electronically during the Annual Meeting.

Registered Holders

Registered holders may vote online, by telephone and by mail prior to the Annual Meeting. Registered holders may vote online at www.envisionreports.com/ALGM, 24 hours a day, seven days a week. Registered holders may vote by telephone by calling 1-800-652-8683, 24 hours a day, seven days a week. Registered holders will need the control number included in their Notice or proxy card in order to vote online or by telephone. Registered holders that received a copy of the proxy card by mail may also vote by mail by completing, signing and dating the proxy card and returning it in the prepaid envelope to Proxy Services c/o Computershare Investor Services, P.O. Box 43006, Providence, RI 02940-3006. Registered holders submitting their vote by mail should sign their name exactly as it appears on the proxy card. Votes submitted by proxy cards must be received no later than 11:59 p.m. Eastern time on August 7, 2024.

Registered holders may also vote at the Annual Meeting. Please see the section above entitled “How can I attend the Annual Meeting?” for more information about how to attend the Annual Meeting online. During the Annual Meeting, registered Holders that attend will be able to vote their shares electronically by clicking on the “Vote” link on the meeting center site.

Beneficial Holders

If you are a beneficial holder with shares that are held in “street name” through a bank, broker, or other nominee, you will receive instructions on how to vote from the bank, broker, or other nominee. You must follow their instructions in order for your shares to be voted. Internet and telephone voting may also be offered to shareholders owning shares through certain banks, brokers, and other nominees.

Beneficial holders may also vote at the Annual Meeting. Please see the section above entitled “How can I attend the Annual Meeting?” for more information about how to attend the Annual Meeting online. During the Annual Meeting, beneficial holders that attend will be able to vote their shares electronically by clicking on the “Vote” link on the meeting center site.

8.
How can I change my vote after I submit my proxy?

If you are a registered holder, you may revoke your proxy and change your vote:

by submitting a duly executed proxy bearing a later date;
by granting a subsequent proxy through the Internet or by telephone;

 

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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS

by giving written notice of revocation to the Secretary of the Company prior to the Annual Meeting; or
by voting online at the Annual Meeting.

Your most recent proxy card or Internet or telephone proxy is the one that is counted. Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to the Secretary of the Company before your proxy is voted or you vote online at the Annual Meeting.

If your shares are held in “street name,” you may change or revoke your voting instructions by following the specific directions provided to you by your bank, broker or other nominee, or you may vote online at the Annual Meeting.

9.
Who will count the votes? Is my vote confidential?

A representative of Computershare will act as Inspector of Elections, supervise the voting, decide the validity of proxies, and receive and tabulate proxies. As a matter of policy, we keep confidential all shareholder meeting proxies, ballots and voting tabulations that identify individual shareholders. In addition, the vote of any shareholder is not disclosed except as may be necessary to meet legal requirements.

10.
What if I do not specify how my shares are to be voted?

If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board. See “Recommendations of the Board” above. For beneficial holders, proxies submitted without voting instructions could result in broker non-votes for certain matters. See “What are broker non-votes and do they count for determining a quorum?” below for additional information.

11.
Will any other business be conducted at the Annual Meeting?

We do not know of any other business that will be presented at the Annual Meeting. However, if any other matter properly comes before the shareholders for a vote at the Annual Meeting, the proxy holders named on the Company’s proxy card will have the discretionary authority to vote your shares in accordance with their best judgment.

12.
Why hold a virtual meeting instead of a physical meeting?

In order to make the meeting accessible to all shareholders, our Board has decided to hold a virtual Annual Meeting. With this live, online webcast format, we believe we will provide our shareholders with substantially the same opportunities to participate as you would have at an in-person meeting.

13.
What if I have trouble accessing the Annual Meeting virtually?

The virtual meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most up-to-date version of applicable software and plugins. Please note, Internet Explorer is not a supported browser. Participants should ensure that they have a strong WiFi connection at the location where they intend to participate in the meeting. We encourage you to access the Annual Meeting prior to the start time. If you need further assistance accessing the meeting, you may call 1-888-724-2416.

 

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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS

14.
How many votes are required for the approval of the proposals to be voted upon and how will abstentions and broker non-votes be treated?

Proposal

Votes required

Effect of Votes Withheld /
Abstentions and Broker Non-Votes

Proposal 1: Election of Directors

A plurality of the votes cast. This means that the four nominees receiving the highest number of affirmative “FOR” votes will be elected as Class I Directors.

Votes withheld and broker non-votes will have no effect on the outcome because they are not considered votes cast.

Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm

The affirmative vote of the holders of a majority in voting power of the votes cast.

Abstentions and broker non-votes, if any, will have no effect on the outcome because they are not considered votes cast. We do not expect any broker non-votes on this proposal.

Proposal 3: Advisory Vote on Executive Compensation

The affirmative vote of the holders of a majority in voting power of the votes cast.

Abstentions and broker non-votes will have no effect on the outcome because they are not considered votes cast.

15.
What is a “vote withheld” and an “abstention” and how will votes withheld and abstentions be treated?

A “vote withheld,” in the case of the proposal regarding the election of directors, or an “abstention,” in the case of the proposals regarding the ratification of the appointment of PwC as our independent registered public accounting firm and the approval, on an advisory basis, of our executive compensation represent a shareholder’s affirmative choice to decline to vote on such proposal. Votes withheld and abstentions are counted as present and entitled to vote for purposes of determining a quorum. Votes withheld have no effect on the election of directors. Abstentions have no effect on the ratification of the appointment of PwC or the approval, on an advisory basis, of our executive compensation.

16.
What are broker non-votes and do they count for determining a quorum?

Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker: (1) has not received voting instructions from the beneficial owner; and (2) lacks discretionary voting power to vote those shares. A broker is entitled to vote shares held for a beneficial owner on routine matters, such as the ratification of the appointment of PwC as our independent registered public accounting firm, without instructions from the beneficial owner of those shares. On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on non-routine matters, such as the election of directors and the approval, on an advisory basis, of our executive compensation. Broker non-votes do count for purposes of determining whether a quorum is present.

17.
Where can I find the voting results of the Annual Meeting?

We plan to announce preliminary voting results at the Annual Meeting, and we will report the final results in a Current Report on Form 8-K, which we intend to file with the SEC after the Annual Meeting.

 

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PROPOSALS TO BE VOTED ON

Proposal 1: Election of Directors

We currently have 11 directors on our Board. At the Annual Meeting, four Class I Directors, Katsumi Kawashima, Joseph R. Martin, Vineet Nargolwala and Mary G. Puma, are to be elected to hold office until the 2027 Annual Meeting of Shareholders and until each such director’s respective successor is elected and qualified or until each such director’s earlier death, resignation or removal.

The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the four nominees receiving the highest number of affirmative “FOR” votes will be elected as Class I Directors. Votes withheld and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal.

As set forth in our Third Amended and Restated Certificate of Incorporation, the Board is currently divided into three classes with staggered, three-year terms. At each annual meeting of shareholders, the successors to directors with expiring terms will be elected to serve from the time of election and qualification until the third annual meeting following election. The current class structure is as follows: Class I, whose term currently expires at the Annual Meeting and whose subsequent term will expire at the 2027 Annual Meeting of Shareholders; Class II, whose term will expire at the 2025 Annual Meeting of Shareholders; and Class III, whose term will expire at the 2026 Annual Meeting of Shareholders. The current Class I Directors are Katsumi Kawashima, Joseph R. Martin, Vineet Nargolwala and Mary G. Puma; the current Class II Directors are Yoshihiro (Zen) Suzuki, David J. Aldrich, Kojiro (Koji) Hatano and Paul Carl (Chip) Schorr IV; and the current Class III Directors are Richard R. Lury, Susan D. Lynch and Jennie M. Raubacher. In preparation for the initial public offering of our Common Stock in 2020 (the “IPO”), we entered into a stockholders agreement with Sanken Electric Co., Ltd. (“Sanken”) and OEP SKNA, L.P. (the “OEP Investor”), a fund affiliated with One Equity Partners (“OEP”). The stockholders agreement was amended and restated by the parties as of June 16, 2022 (as amended and restated, the “Stockholders Agreement”). Pursuant to the rights provided in the Stockholders Agreement, Messrs. Hatano, Kawashima and Lury were each designated by Sanken, and Mary G. Puma was jointly designated by Sanken and the OEP Investor. The OEP Investor’s rights to nominate directors under the Stockholders Agreement passed to the NCGC in February 2024 when the OEP Investor ceased to beneficially own at least five percent of the outstanding shares of Common Stock. As a result, the NCGC designated the other members of the Board. Based on Sanken’s aggregate voting power, we expect that Sanken will control the election of directors to the Board. For more information regarding the Stockholders Agreement, see “Corporate Governance—Stockholders Agreement” on page 29.

The division of our Board into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control of our Company. Our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of voting stock of the Company entitled to vote at an election of directors; provided, however, that the directors who were originally designated for nomination in accordance with the Stockholders Agreement may be removed with or without cause, but only in accordance with, and to the extent provided by, the terms of the Stockholders Agreement.

If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote the shares of Common Stock represented thereby for the election of each of Messrs. Kawashima, Martin and Nargolwala and Ms. Puma as a Class I Director. In the event that any of the nominees should become unable to serve, or for good cause will not serve, as a director, it is intended that votes will be cast for a substitute nominee designated by the Board, or the Board may elect to reduce its size. The Board has no reason to believe that any of Messrs. Kawashima, Martin or Nargolwala or Ms. Puma will be unable to serve if elected. Each of the nominees has consented to being named in this proxy statement and to serve if elected.

Vote Required

The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the four nominees receiving the highest number of affirmative “FOR” votes will be elected as Class I Directors.

Votes withheld and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal.

 

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board unanimously recommends a vote FOR the election of each of the below Class I Director nominees.

 

 

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PROPOSAL ONE: ELECTION OF DIRECTORS

Nominees For Class I Director (terms to expire at the 2027 Annual Meeting)

The principal occupations and business experience, for at least the past five years, of each Class I Director nominee for election at the Annual Meeting are as follows:

Katsumi Kawashima

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Age: 59

 

Mr. Kawashima has served as a member of our Board since June 2022. Since April 2022, Mr. Kawashima has served as Head of Corporate Design at Sanken. Mr. Kawashima has also served as a Senior Vice President of Sanken since June 2023. Prior to that, he was a Senior Corporate Officer of Sanken from June 2022 to June 2023, and a Corporate Officer of Sanken from June 2021 to June 2022. From April 2021 to March 2022, Mr. Kawashima served as Director of the General Affairs and Human Resources Division at Sanken, and from April 2018 to March 2021, he was the Deputy Director of this same division. Prior to joining Sanken, he was Senior Manager of the Market Planning Division of Resona Holdings, Inc. from April 2016 to March 2018. Mr. Kawashima has served on the board of directors of Sanken since June 2022 and also serves on the board of directors of a number of Sanken affiliates. Mr. Kawashima received his B.S. in Physics from Tokyo University of Science, Tokyo, Japan in 1989.

We believe Mr. Kawashima’s institutional knowledge and insight, acquired through numerous years of service to Sanken and its affiliates, make him well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: Sanken Electric Co., Ltd.

PAST FIVE YEARS: None

 

Joseph R. Martin

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Age: 76

Board Committees:

Audit (Chair)

NCGC

Strategy

Mr. Martin has served as a member of our Board since 2017. Previously, he served as Co-Chairman of Fairchild Semiconductor Corporation, and prior to that as its Senior Executive Vice President and Chief Financial Officer. He also served as the Vice Chairman of Fairchild’s board of directors. Mr. Martin has also previously served on the board of directors of other public companies, including Azenta Inc. (Chairman), Bionik Labs, ChipPac Inc. (chair of the Audit Committee), Collectors Universe (chair of the Nominating and Governance Committee) and Soitec Semiconductor (chair of the Audit Committee). Mr. Martin also serves on the board of trustees of Embry-Riddle Aeronautical University. Mr. Martin received a B.S. in Aeronautics in 1974 and was awarded an honorary Ph.D. in 2018, both from Embry-Riddle Aeronautical University. Mr. Martin received an M.B.A. from the University of Maine in 1976. Mr. Martin holds an Executive Master’s Professional Certification from the American College of Corporate Directors, a director education and credentialing organization.

We believe Mr. Martin’s extensive public company board experience and his knowledge and insight into the semiconductor industry, make him well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: None

PAST FIVE YEARS: Azenta Inc. (until February 2024); Bionik Labs (until 2023); Collectors Universe (until 2020)

 

 

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PROPOSAL ONE: ELECTION OF DIRECTORS

 

Vineet Nargolwala

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Age: 51

Board Committee:

Strategy

Mr. Nargolwala has served as our President and Chief Executive Officer and as a member of our Board since joining the Company in June 2022. Mr. Nargolwala is a technology executive with over 25 years of global executive leadership experience. Prior to joining the Company, Mr. Nargolwala previously served as Executive Vice President of Sensing Solutions at Sensata Technologies, a leading industrial technology company that develops sensors and sensor-based solutions for the automotive, heavy vehicle and off-road, industrial, and aerospace industries, from March 2020 to May 2022. Mr. Nargolwala joined Sensata as Vice President, Sensors Americas in February 2013 and was later promoted to Senior Vice President, Performance Sensing, North America, Japan and Korea in April 2016. In February 2019, he was appointed Senior Vice President, General Manager, Global Safety & Mobility, and in September 2019, he was appointed Senior Vice President, Sensing Solutions. Prior to Sensata, he was with Honeywell International Inc. (“Honeywell”) for over nine years in business strategy and P&L leadership roles of increasing responsibility. Prior to Honeywell, Mr. Nargolwala was at Nortel Networks in product management and engineering roles. He has been a member of the board of Brady Corporation, an international manufacturer and marketer of complete solutions that identify and protect people, products and places, since February 2022. Mr. Nargolwala holds a bachelor’s degree in Electrical Engineering from Maharaja Sayajirao University in Baroda, India, a master’s degree in Electrical Engineering from the University of Texas and a Master of Business Administration from Cornell University.

We believe Mr. Nargolwala’s experience and insight, acquired through his over 25 years as a technology executive, make him well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: Brady Corporation

PAST FIVE YEARS: None

 

 

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PROPOSAL ONE: ELECTION OF DIRECTORS

 

Mary G. Puma

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Age: 62

Board Committees:

Strategy (Chair)

Compensation

Ms. Puma has served as a member of our Board since October 2023. Ms. Puma has more than 40 years of technology experience, including 25 years in the semiconductor industry. Ms. Puma was the Executive Chairperson of Axcelis Technologies, Inc. (“Axcelis”) from May 2023 until May 2024, and previously served as President and Chief Executive Officer of Axcelis from January 2002 to May 2023. Prior to becoming CEO of Axcelis, she served as the company’s President and Chief Operating Officer beginning in July 2000. In 1998, Ms. Puma was appointed General Manager and Vice President of Axcelis’s predecessor, the Implant Systems Division of Eaton Corporation, a global diversified industrial manufacturer, after having joined in 1996 as general manager of Eaton’s Commercial Controls Division. Prior to Eaton, Ms. Puma spent 15 years in various marketing and general management positions at General Electric Company. Beginning in August 2023, Ms. Puma joined the board of directors of Ciena Corporation, a publicly traded networking systems and software company. Ms. Puma is also a director of SMART Global Holdings, Inc., a publicly traded memory-focused company engaging in the design and development of enterprise solutions. Until her retirement in 2023, Ms. Puma served on the board of directors of Nordson Corporation. Since December 2022, she has served as Chairperson of the Board of Semiconductor Equipment and Materials International, a global industry association serving the manufacturing supply chain for the micro- and nano-electronics industries. Ms. Puma holds a Bachelor of Arts degree in Economics from Tufts University and a Master of Science degree from the MIT Sloan School of Management.

We believe Ms. Puma’s extensive experience in our industry, acquired through her over 25 years of service to Axcelis and its predecessor, make her well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: Ciena Corporation; SMART Global Holdings, Inc.

PAST FIVE YEARS: Axcelis Technologies, Inc. (until May 2024); Nordson Corporation (until 2023)

 

 

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PROPOSAL ONE: ELECTION OF DIRECTORS

Continuing members of the Board:

The principal occupations and business experience, for at least the past five years, of each Class II Director (terms expiring at the 2025 Annual Meeting) and Class III Director (terms expiring at the 2026 Annual Meeting) are as follows:

Class II Directors

Yoshihiro (Zen) Suzuki

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Age: 65

Chairman of the Board

Board Committee:

Strategy

Mr. Suzuki has served as our Chairman and a member of our Board since 2018 and has served on our Board since 2001. From July 2013 until his retirement in June 2022, Mr. Suzuki served as a director and Senior Vice President at Sanken. Mr. Suzuki previously served as the Chairman and Chief Executive Officer of Polar Semiconductor, LLC (“PSL”) from July 2005 until his retirement in May 2022. In addition, from 2005 until his retirement in May 2022, Mr. Suzuki served as a member of the board of directors of PSL and its predecessor entity. Mr. Suzuki has served as a consultant to PSL since July 2022. From 2013 to 2018, Mr. Suzuki served on the board of directors of Sanken North America Inc. Mr. Suzuki has also served on the board of directors of a variety of other Sanken affiliates and has over 40 years of experience with Sanken and its affiliates. After joining Sanken in 1982, Mr. Suzuki held various senior leadership positions and general management roles, including Chief Executive Officer of Sanken North America, Inc. Mr. Suzuki has also served as an Honorary Advisor at the Institute of Management Studies in Japan since January 2024. Mr. Suzuki received his B.S. in Physics and Engineering Science from Chuo University, Tokyo, Japan in 1982.

We believe Mr. Suzuki’s institutional knowledge and insight, acquired through numerous years of service to Sanken and its affiliates, as well as his experience as a member of our Board, make him well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: None

PAST FIVE YEARS: Sanken Electric Co., Ltd. (until 2022)

 

David J. Aldrich

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Age: 67

Board Committees:

Compensation (Chair)

NCGC

Mr. Aldrich has served as a member of our Board since 2021. Mr. Aldrich served in numerous senior leadership positions at Skyworks Solutions, Inc. (“Skyworks”), an innovator of high-performance analog semiconductors connecting people, places and things, including as its Chairman from 2014 to 2021, Executive Chairman from 2016 to 2018, its Chief Executive Officer from 2014 to 2016, and its President and Chief Executive Officer from 2000 to 2014. From 2000 to May 2021, Mr. Aldrich also served as a member of the board of directors of Skyworks. Since 2007, Mr. Aldrich has served as a member of the board of directors of Belden, Inc., a publicly traded manufacturer of networking, connectivity, and cable products, and has served as chairman of the board since 2021. Mr. Aldrich is also currently chairman of the board of indie Semiconductor, a publicly traded automotive semiconductor and software company, a position he has held since 2021 and is a director of Mobix Labs, Inc., a publicly traded semiconductor company developing connectivity solutions, since February 2021. From 2017 until its 2021 acquisition by Cisco Systems, Inc., Mr. Aldrich served as a member of the board of directors of Acacia Communications, Inc., a publicly traded optical networking strategy and technology company. Mr. Aldrich received his B.A. in Political Science from Providence College in 1979 and an M.B.A. from the University of Rhode Island in 1981.

We believe that Mr. Aldrich’s knowledge and insight, gained through his executive roles at Skyworks and through his service as a board member of multiple public companies, make him well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: Belden, Inc., indie Semiconductor, Inc., Mobix Labs, Inc.

PAST FIVE YEARS: Acacia Communications, Inc. (until 2021), Skyworks Solutions, Inc. (until 2021)

 

 

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PROPOSAL ONE: ELECTION OF DIRECTORS

 

Kojiro (Koji) Hatano

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Age: 57

Mr. Hatano has served as a member of our Board since 2022. Mr. Hatano has served as General Manager of U.S. Business Enhancement for Sanken since April 2022 and has also served as Corporate Officer of Sanken since June 2022. In addition, he has served as Chairman and Chief Executive Officer of PSL since May 2022. Mr. Hatano also served as Manager of Business Performance for the Company from January 2006 until December 2022. In addition, since May 2021, Mr. Hatano has served as a member of the board of directors of PSL, and he has served on the board of directors of Sanken Electric Europe Limited since March 2020. Mr. Hatano received his B.A. in Social Science from Waseda University, Tokyo, Japan in 1991.

We believe Mr. Hatano’s institutional knowledge and insight, acquired through numerous years of service to the Company and Sanken and its affiliates, as well as his experience on other company boards, make him well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: None

PAST FIVE YEARS: None

 

 

Paul Carl (Chip) Schorr IV

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Age: 57

Board Committee:

Strategy

Mr. Schorr has served as a member of our Board since 2017. Mr. Schorr is the Managing Partner of Niobrara Capital, and founder and Chairman of First Global Reserve (aka Numium). Mr. Schorr is also an investor in and a manager of PS Investment Aggregator, L.P. Mr. Schorr served as a Senior Managing Director at OEP from 2015 until January 2024. From 2011 to 2015, Mr. Schorr served as Chairman and Managing Partner of Augusta Columbia Capital, a private equity firm of which he was a founder, which was acquired by OEP in 2015. In addition, Mr. Schorr was a Senior Managing Director at The Blackstone Group Inc. from 2005 to 2011, where he served as the Global Head of Technology Investing. Mr. Schorr was also a Managing Partner at Citigroup Venture Capital Equity Partners from 1996 to 2005. Throughout his career, Mr. Schorr has served on the boards of directors of numerous companies across a variety of industries. Since 2010, Mr. Schorr has served on the board of directors of Ameritas Mutual Holding Company and Ameritas Life Insurance Corp. Mr. Schorr has also served on the board of directors of Emso Asset Management Limited, a London-based alternative asset manager focused on emerging markets, since 2014. Mr. Schorr served on the board of directors of One Equity Partners Open Water I Corp., a special purpose acquisition company, from 2021 until the company went private in December 2022. Mr. Schorr also serves on the board of directors of various non-profit organizations including Jazz at Lincoln Center, the Whitney Museum in New York City, and the Snowmass Chapel. Mr. Schorr received a B.S.F.S. from The School of Foreign Service of Georgetown University in 1989. Mr. Schorr received his M.B.A. from Harvard Business School in 1993.

We believe Mr. Schorr’s extensive experience in leadership positions at financial institutions and his knowledge and insight in the technology sector, as well as his board experience, make him well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: None

PAST FIVE YEARS: One Equity Partners Open Water I Corp.

 

 

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PROPOSAL ONE: ELECTION OF DIRECTORS

Class III Directors

Richard R. Lury

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Age: 76

Board Committees:

NCGC (Chair)

Compensation

Mr. Lury has served as a member of our Board since 2007. Mr. Lury served on the board of directors of Sanken and various committees from June 2015 to June 2022. Mr. Lury has also served on the board of directors for Hitachi Zosen Corporation, a Japanese industrial and engineering corporation since June 2016. Mr. Lury was previously a partner at Kelley Drye & Warren LLP, a New York-based law firm, which he joined in September 1989 and at which he practiced as a member of the Corporate Department and Chair of the Japan Practice Group until his retirement from the firm in 2015. Although retired, Mr. Lury retains Life Partner status with the firm. Mr. Lury received his B.A. in Political Science and International Relations from the University of Pennsylvania in 1969. Mr. Lury received his J.D. from Syracuse University College of Law in 1972.

We believe Mr. Lury’s extensive legal expertise as an attorney and his insight gained as a member of the board of directors of Sanken, makes him well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: Hitachi Zosen Corporation

PAST FIVE YEARS: Sanken Electric Co., Ltd.

 

Susan D. Lynch

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Age: 62

Board Committee:

Audit

Ms. Lynch has served as a member of our Board since 2021. From August 2019 to September 2023, Ms. Lynch served as the Senior Vice President and Chief Financial Officer at V2X (formerly Vectrus, Inc.). From April 2016 to July 2019, Ms. Lynch was the Executive Vice President and Chief Financial Officer for Sungard Availability Services, which was involved in a pre-negotiated Chapter 11 bankruptcy restructuring in May of 2019. Before joining Sungard AS, from 2007 to 2015, Ms. Lynch was the Executive Vice President and Chief Financial Officer for Hitachi Data Systems (now Hitachi Vantara). From 2005 to 2007, Ms. Lynch was Vice President and Chief Financial Officer of Raytheon Technical Services. Before joining Raytheon, Ms. Lynch held a number of roles of increasing financial responsibility with Honeywell from 1984 to 2005. Ms. Lynch also serves on the board of directors of Onto Innovation Inc., a publicly traded company that designs, develops, manufactures and supports metrology and inspection tools for the semiconductor industry, since March 2024. Ms. Lynch received her B.A. in accounting and business administration from MidAmerica Nazarene University.

We believe Ms. Lynch’s knowledge and insight, gained through more than 25 years of financial experience through senior leadership roles in the technology, aerospace and defense, and industrial manufacturing industries make her well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: Onto Innovation Inc.

PAST FIVE YEARS: None

 

 

 

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PROPOSAL ONE: ELECTION OF DIRECTORS

 

Jennie M. Raubacher

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Age: 48

Board Committees:

Audit

Strategy

Ms. Raubacher has served on our Board since April 2024. Ms. Raubacher has over 25 years’ experience in investment banking focused on the technology and telecom sectors, and has advised numerous C-suite executives and boards of directors around the world on strategic and financing transactions. Ms. Raubacher served as Managing Director at Wells Fargo & Company (“Wells Fargo”), and led Wells Fargo’s global semiconductor and electronics investment banking practice from 2011 until March 2024. Prior to joining Wells Fargo in 2011, Ms. Raubacher was an investment banker focused on the technology, media and telecom sectors from 1998 to 2011 at Lehman Brothers and Barclays Capital (which acquired Lehman Brothers). Ms. Raubacher serves on the Women’s Leadership Council of the GSA (Global Semiconductor Alliance). Ms. Raubacher received her A.B. magna cum laude from Harvard University and her M.B.A. from Stanford University.

We believe Ms. Raubacher’s extensive experience in leadership positions at financial institutions and her knowledge and insight in the technology sector make her well qualified to serve as a member of our Board.

 

OTHER PUBLIC COMPANY BOARDS

CURRENT: None

PAST FIVE YEARS: None

 

 

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Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm

Our Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the fiscal year ending March 28, 2025. Our Board has directed that this appointment be submitted to our shareholders for ratification at the Annual Meeting. Although ratification of our appointment of PwC is not required, we value the opinions of our shareholders and believe that shareholder ratification of our appointment is a good corporate governance practice.

PwC has been engaged as our independent registered public accounting firm since June 7, 2022, including for the fiscal year ended March 29, 2024. Prior to that, Grant Thornton LLP served as our independent registered public accounting firm, including for the fiscal year ended March 25, 2022. Neither of the accounting firms nor any of either firm’s members have any direct or indirect financial interest in or any connection with us in any capacity other than as our auditors, providing audit and non-audit related services. We expect representatives of PwC to be present at the Annual Meeting. Representatives of PwC will have an opportunity to make a statement if they so desire and are expected to be available to respond to appropriate questions from shareholders.

In the event that the appointment of PwC is not ratified by the shareholders, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm, but it will not be obligated to do so. Even if the appointment of PwC is ratified, the Audit Committee retains the discretion to appoint a different independent registered public accounting firm at any time if it determines that such a change is in the best interest of the Company.

Changes in Certifying Accountant

On June 7, 2022, our Audit Committee dismissed Grant Thornton LLP as the Company’s independent registered public accounting firm. The reports of Grant Thornton LLP on the Company’s consolidated financial statements and internal control over financial reporting, which were included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 25, 2022, and the report on the Company’s consolidated financial statements, which was included in the Company’s Annual Report on Form 10‑K for the fiscal year ended March 26, 2021, did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

During the Company’s fiscal years ended March 25, 2022 and March 26, 2021, and the subsequent interim period through June 7, 2022, there were: (i) no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K between the Company and Grant Thornton LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Grant Thornton LLP’s satisfaction, would have caused Grant Thornton LLP to make reference thereto in Grant Thornton LLP’s reports; and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.

We previously provided Grant Thornton LLP with a copy of the above disclosures, as included in our Current Report on Form 8-K filed with the SEC on June 10, 2022, and requested that Grant Thornton LLP furnish us with a letter addressed to the SEC stating whether Grant Thornton LLP agreed with the statements made by us in response to Item 304(a) of Regulation S-K and, if not, stating the respects in which it does not agree. A copy of Grant Thornton LLP’s letter, dated June 9, 2022, is attached as Exhibit 16.1 to that Current Report on Form 8-K.

On June 7, 2022, our Audit Committee approved the engagement of PwC as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2023. During the Company’s fiscal years ended March 25, 2022 and March 26, 2021, and the subsequent interim period through June 7, 2022, neither the Company nor anyone on its behalf has consulted with PwC regarding: (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that PwC concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K; or (iii) any “reportable event” within the meaning of Item 304(a)(1)(v) of Regulation S-K.

 

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PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Vote Required

This proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast. Abstentions are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal. Because brokers have discretionary authority to vote on the ratification of the appointment of PwC, we do not expect any broker non-votes in connection with this proposal.

 

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board unanimously recommends a vote FOR the Ratification of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending March 28, 2025.

 

 

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Proposal 3: Advisory Vote on the Company’s Executive Compensation

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are providing our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the overall compensation of our named executive officers as disclosed in the Executive and Director Compensation section of this proxy statement. This advisory vote is commonly referred to as “say-on-pay.”

A substantial percentage of our named executive officers’ compensation is directly tied to stock performance and the attainment of financial and other performance measures the Board believes promote long-term shareholder value and position us for long-term success. As described more fully in the Compensation Discussion and Analysis, the mix of fixed and performance-based compensation, the terms of our incentive compensation programs, and the weighting of variable compensation more heavily toward equity awards, are all designed to enable us to attract and retain top talent and align the interests of our executive officers with those of our shareholders, while balancing risk and reward. The Compensation Committee and the Board believe the design of the programs, and the compensation awarded to the named executive officers under the current programs, fulfills these objectives.

Although the vote is advisory and non-binding, the Board and the Compensation Committee will carefully consider the outcome of the vote in connection with their ongoing evaluation of the Company’s compensation programs. We currently intend to hold say-on-pay votes on executive compensation annually until the next vote to determine the frequency of such an advisory vote in 2028. Accordingly, we anticipate the next say-on-pay vote will be held at the Company’s 2025 Annual Meeting of Shareholders.

We are asking our shareholders to approve the compensation of our named executive officers by voting “FOR” the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

Vote Required

This proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast. Abstentions and broker non‑votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal.

 

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board unanimously recommends a vote “FOR” the approval, on an advisory basis, of the Company’s executive compensation.

 

 

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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The Audit Committee has reviewed the audited consolidated financial statements of the Company for the fiscal year ended March 29, 2024 and has discussed these financial statements with management and PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm for the fiscal year ended March 29, 2024. The Audit Committee has also discussed with the independent registered public accountants the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission.

The Company’s independent registered public accounting firm also provided the Audit Committee with the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. In addition, the Audit Committee discussed with the independent registered public accounting firm its independence from the Company.

Based on its discussions with management and the independent registered public accounting firm, and its review of the representations and information provided by management and the independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10‑K for the fiscal year ended March 29, 2024.

June 12, 2024

Joseph R. Martin (Chair)

Susan D. Lynch

Jennie M. Raubacher

 

The Audit Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and it shall not otherwise be deemed filed under such Acts.

 

 

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND OTHER MATTERS

The following table summarizes the fees of PwC, our independent registered public accounting firm, billed to us for each of the last two fiscal years:

 

 

Fiscal Year Ended

 

Fee Category

 

March 29, 2024

 

 

March 31, 2023

 

Audit Fees

 

$

2,937,650

 

 

$

2,630,000

 

Audit-Related Fees

 

 

285,000

 

 

 

 

Tax Fees

 

 

305,000

 

 

 

 

All Other Fees

 

 

900

 

 

 

9,150

 

Total Fees

 

$

3,528,550

 

 

$

2,639,150

 

 

Audit Fees

Audit fees consist of fees billed for professional services performed by PwC for the audit of our annual financial statements and the review of quarterly financial statements and audit services provided in connection with other statutory or regulatory filings.

Audit-Related Fees

Audit-related fees consist of services that are reasonably related to the performance of the audit or review of the Company’s financial statements and related services and which are not reported under “Audit Fees”. Audit-related fees in fiscal year 2024 were for professional services associated with acquisition due diligence.

Tax Fees

Tax fees consist of services for tax compliance and consulting.

All Other Fees

All other fees consist of license fees for an accounting research software license.

Audit Committee Pre-Approval Policy and Procedures

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services provided by the independent registered public accountants.

On an ongoing basis, management communicates specific projects and categories of services for which the advance approval of the Audit Committee is requested. The Audit Committee reviews these requests and advises management if the Audit Committee approves the engagement of the independent registered public accountants. On a periodic basis, management reports to the Audit Committee regarding the actual spending for such projects and services as compared to the approved amounts. The Audit Committee may also delegate the ability to pre-approve audit and permitted non-audit services to a subcommittee consisting of one or more members, provided that such pre-approvals are reported on at a subsequent Audit Committee meeting. All services performed for the fiscal year ended March 29, 2024 were pre-approved by the Audit Committee.

 

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CORPORATE GOVERNANCE

General

Our Board has adopted Corporate Governance Guidelines, a Code of Business Conduct and Ethics, and charters for our NCGC, Audit Committee, Compensation Committee, and Strategy Committee to assist the Board in the exercise of its responsibilities and to serve as a framework for the effective governance of the Company. You can access our current committee charters, our Corporate Governance Guidelines, and our Code of Business Conduct and Ethics in the “Governance” section under “Documents & Charters” in the investor relations section of our corporate website located at investors.allegromicro.com, or by writing to our Secretary at our offices at 955 Perimeter Road, Manchester, New Hampshire, 03103.

Board Composition

Our business and affairs are managed under the direction of our Board. Our Board currently consists of 11 members: Vineet Nargolwala, Yoshihiro (Zen) Suzuki, David J. Aldrich, Kojiro (Koji) Hatano, Katsumi Kawashima, Richard R. Lury, Susan D. Lynch, Joseph R. Martin, Mary G. Puma, Jennie M. Raubacher and Paul Carl (Chip) Schorr IV. Our Board is divided into three classes, with the directors in each class serving for a three-year term, and one class being elected each year by our shareholders.

When considering whether directors have the experience, qualifications, attributes or skills, taken as a whole, to enable our Board to satisfy its oversight responsibilities effectively in light of our business and structure, our Board focuses primarily on each person’s background and experience, as reflected in the information discussed in each director’s individual biography set forth in Proposal One above and in the director skills and experience matrix set forth below. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business.

Board Skills and Experience Matrix

The NCGC regularly reviews the skills, experience and background that it believes are desirable to be represented on the Board. The following identifies some of these key qualifications and skills and includes which directors possess these skills: board skills and experience matrix experience, skills or director) automotive industry senior management (public or private) finance / accounting international business legal/ regulatory / compliance corporate governance and public company board semiconductor / technology industries sales & marketing operations / manufacturing / supply chain esg / climate / sustainability key no experience some experience substantial experience expert-level experience

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Stockholders Agreement

In connection with our IPO, we entered into a stockholders agreement with certain stockholders of the Company, including Sanken and the OEP Investor. The stockholders agreement was amended and restated by the parties as of June 16, 2022 (the amended and restated agreement is referred to in this proxy statement as the “Stockholders Agreement”). Pursuant to the Stockholders Agreement, the parties agreed that:

the size of the Board is fixed at 11 directors;
for as long as Sanken, directly or indirectly, beneficially owns, in the aggregate, at least five percent (5%) of our Common Stock, Sanken will have the right to designate that number of individuals for nomination in any election of directors which, assuming all such individuals are successfully elected as directors, when taken together with any incumbent directors that have been nominated by Sanken not then standing for election, would result in there being three such directors designated by Sanken on our Board;
for as long as the OEP Investor, directly or indirectly, beneficially owned, in the aggregate, at least five percent (5%) of our Common Stock, the OEP Investor also had certain Board designation rights. In February 2024 when the OEP Investor ceased to beneficially own at least five percent of the outstanding shares of Common Stock (the “OEP Trigger”), its designation rights became rights of the NCGC, which now has the right to designate that number of individuals for nomination in any election of directors which, assuming all such individuals are successfully elected as directors, when taken together with any incumbent directors that have been nominated by the NCGC not then standing for election, would result in there being five such directors designated by the NCGC on our Board without the prior written approval of Sanken;
for as long as both Sanken and the OEP Investor each beneficially owned, directly or indirectly, in the aggregate, at least five percent (5%) of our Common Stock, Sanken and the OEP Investor had joint Board designation rights to designate that number of individuals for nomination in any election of directors which, assuming all such individuals were successfully elected as directors, when taken together with any incumbent directors that had been nominated pursuant to the joint designation right not then standing for election, would result in there being one such director on our Board appointed under the joint designation right (provided, that any individual jointly designated as described in this clause that is different from the individual designated by Sanken and the OEP Investor in the Stockholders Agreement required the prior written approval of both Sanken and the OEP Investor);
the NCGC will have the right to designate that number of individuals for nomination in any election of directors which, assuming all such individuals are successfully elected as directors, when taken together with any incumbent directors that have been nominated by the NCGC not then standing for election, would result in there being another director designated by the NCGC (the individual described in this clause being the “Nom/Gov Director”);
Mr. Suzuki is designated as the Nom/Gov Director and shall serve as the Chairperson of the Board until the 2025 annual meeting of shareholders, after which the Chairperson of the Board shall be appointed by the Board upon the recommendation of the NCGC; and
unless otherwise agreed, our then-current Chief Executive Officer will be designated for nomination by the Board in any applicable election.

Pursuant to the Stockholders Agreement, Sanken generally has the right to remove and replace directors that it has designated. Each of Sanken and the OEP Investor also agreed to vote, or cause to be voted, all of their outstanding shares of our Common Stock at any annual or special meeting of shareholders in which directors are elected, and to otherwise take all necessary action (as defined in the Stockholders Agreement) so as to cause the election or appointment of the designees described above. Additionally, pursuant to the Stockholders Agreement, the Company has agreed to take all commercially reasonable actions to cause (1) our Board to be comprised of the number of directors described above; (2) the individuals designated in accordance with the terms of the Stockholders Agreement to be included in the slate of nominees to be elected at the next annual or special meeting of our shareholders at which directors are to be elected, and at each annual meeting of our shareholders thereafter at which a director’s term expires; and (3) the individuals designated in accordance with the terms of the Stockholders Agreement to fill the applicable vacancies on our Board. The Stockholders Agreement allows for our Board to reject the nomination, appointment or election of a particular director if such nomination, appointment or election would constitute a breach of the Board’s fiduciary duties to our shareholders or does not otherwise comply with any requirements of our Third Amended and Restated Certificate of Incorporation or our Second Amended and Restated Bylaws (the “Bylaws”).

 

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In addition, the Stockholders Agreement provides Sanken with a consent right (subject to certain ownership minimums) over our entry into any transaction with the OEP Investor, any of their respective affiliates or any of our affiliates. The Stockholders Agreement also includes a covenant between Sanken and the OEP Investor that gives the OEP Investor the right to require Sanken to vote all of its shares in favor of any matter that our Board has determined is advisable and in the best interests of the shareholders and has recommended that the shareholders adopt. The Stockholders Agreement further provides that neither Sanken nor the OEP Investor will directly sell a portion of its Common Stock representing greater than 10% of our outstanding shares of Common Stock to a material competitor of the Company or of the other shareholder in a privately negotiated sale solely between such selling shareholder and such competitor, without the prior written consent of the OEP Investor (in the case of a sale by Sanken) or Sanken (in the case of a sale by the OEP Investor).

The Stockholders Agreement will terminate upon the earlier to occur of (a) each of (i) Sanken and its affiliates and (ii) the OEP Investor and its affiliates ceasing to own any shares of our Common Stock, and (b) the unanimous written consent of the parties thereto. In addition, the rights and obligations of Sanken and the OEP Investor under the Stockholders Agreement will terminate upon Sanken and its affiliates (in the case of Sanken) or the OEP Investor and its affiliates (in the case of the OEP Investor) ceasing to own any shares of our Common Stock. Notwithstanding the foregoing, because the OEP Investor and its affiliates cease to beneficially own, directly or indirectly, at least five percent (5%) of the issued and outstanding shares of Common Stock, any right or benefit to which the OEP Investor was entitled as a result of holding at least five percent (5%) of the issued and outstanding shares of Common Stock automatically became a right or benefit of the NCGC for so long as the Stockholders Agreement remains in effect, and the NCGC has the right to enforce any such rights or benefits mutatis mutandis as though it were the OEP Investor under any applicable provision (but without regard to any share ownership requirements set forth therein), leaving all of Sanken’s and the Company’s obligations in respect of any such provisions in full force and effect. Further, if the OEP Investor ceases to own any shares of Common Stock, the Stockholders Agreement shall remain in effect, and all other rights and obligations of the OEP Investor and its affiliates shall automatically become a right or obligation of the NCGC for so long as the Stockholders Agreement remains in effect, and the NCGC shall have the right to enforce any such rights mutatis mutandis as though it were the OEP Investor under any applicable provision, and accordingly all of Sanken’s and the Company’s obligations in respect of any such provisions shall remain in full force and effect.

Director Independence

Our Common Stock is listed on the Nasdaq Global Select Market (“Nasdaq”). Under Nasdaq rules, a director will only qualify as an “independent director” if that company’s board of directors affirmatively determines that such person does not have a relationship with the company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Our Board undertook a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise that director’s ability to exercise independent judgment in carrying out that director’s responsibilities. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that none of David J. Aldrich, Richard R. Lury, Susan D. Lynch, Joseph R. Martin, Mary G. Puma and Jennie M. Raubacher, representing six of our 11 directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under Nasdaq rules. Additionally, Paul Carl (Chip) Schorr IV was independent during fiscal year 2024, and Andrew G. Dunn was independent during the period he served on the Board in fiscal year 2024.

In making these determinations, our Board considered the current and prior relationships that each director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including their beneficial ownership of our capital stock and relationships with certain of our significant shareholders, and the transactions involving them described in the section entitled “Certain Relationships and Related Person Transactions.

Director Candidates

Other than director candidates designated by Sanken pursuant to the Stockholders Agreement, the NCGC is primarily responsible for searching for qualified director candidates for election to the Board and filling vacancies on the Board. To facilitate the search process, the NCGC may solicit current directors and executives of the Company for the names of potentially qualified candidates. The NCGC may also consult with outside advisors or retain search firms to assist in the search for qualified candidates or consider director candidates recommended by our shareholders. Once potential candidates are identified, the NCGC reviews the backgrounds of those candidates, evaluates candidates’ independence

 

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from the Company and potential conflicts of interest and determines if candidates meet the qualifications desired by the NCGC for candidates for election as a director. Mary Puma, who was elected to the Board in October 2024 and jointly designated by Sanken and the OEP Investor under the Stockholders Agreement, was identified as a potential director candidate and presented to the NCGC and the Board by a third-party recruiting firm, which was engaged by the NCGC to assist the NCGC in (i) identifying director candidates that meet the Company’s director qualifications set forth below, (ii) coordinating interviews with those qualified candidates selected by the NCGC for further consideration, and (iii) completing the due diligence work of the NCGC, as needed. Once identified as a candidate, the NCGC evaluated Ms. Puma following the process described below and recommended that she be elected to the Board.

In evaluating the suitability of individual candidates (both new candidates and current Board members), the NCGC, in recommending candidates for election, and the Board, in approving (and, in the case of vacancies, appointing) such candidates, may take into account many factors, including: personal and professional integrity, ethics and values; experience in corporate management, such as serving as an officer or former officer of a publicly held company; the categories of skills and experience identified in the director skills and experience matrix; strong finance experience; relevant social policy concerns; experience relevant to the Company’s industry; experience as a board member or executive officer of another publicly held company; relevant academic expertise or other proficiency in an area of the Company’s operations; diversity of expertise and experience in substantive matters pertaining to the Company’s business relative to other Board members; diversity of background and perspective, including, but not limited to, with respect to age, gender, race, place of residence and specialized experience; practical and mature business judgment, including, but not limited to, the ability to make independent analytical inquiries; and any other relevant qualifications, attributes or skills. The Board evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best perpetuate the success of the business and represent shareholder interests through the exercise of sound judgment using its diversity of experience in these various areas. In determining whether to recommend a director for re-election, the NCGC may also consider the director’s past attendance at meetings and participation in and contributions to the activities of the Board.

Shareholders may recommend individuals to the NCGC for consideration as potential director candidates by submitting the names of the recommended individuals, together with appropriate biographical information and background materials, to the NCGC, c/o Secretary, Allegro MicroSystems, Inc., 955 Perimeter Road, Manchester, New Hampshire, 03103. In the event there is a vacancy, and assuming that appropriate biographical and background material has been provided on a timely basis, the NCGC will evaluate shareholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.

Communications from Shareholders

The Board will give appropriate attention to written communications that are submitted by shareholders and will respond if and as appropriate. Our Secretary is primarily responsible for monitoring communications from shareholders and for providing copies or summaries to the directors as our Secretary considers appropriate.

Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that our Secretary considers to be important for the directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs or personal grievances. Shareholders who wish to send communications on any topic to the Board should address such communications to the Board of Directors in writing: c/o Secretary, Allegro MicroSystems, Inc. 955 Perimeter Road, Manchester, New Hampshire, 03103.

Board Leadership Structure and Role in Risk Oversight

Our Bylaws and Corporate Governance Guidelines provide our Board with flexibility to combine or separate the positions of Chairman of the Board and Chief Executive Officer in accordance with its determination that utilizing one or the other structure would be in the best interests of our Company. Currently, the roles are separated, with Yoshihiro Suzuki serving as Chairman of the Board and Vineet Nargolwala serving as President and Chief Executive Officer and as a director. Our Board has determined that separating the roles of Chairman of the Board and Chief Executive Officer allows our Chief Executive Officer to focus on the strategic management of our day-to-day business, while allowing the Chairman to focus on leading the Board in its fundamental role of providing advice to, and independently overseeing, management. The Board recognizes the time, effort, and energy that the Chief Executive Officer is required to devote to the position in the current business environment, as well as the commitment required to serve as our Chairman. The Board believes that having separate positions, with a non-executive director serving as the Chairman, is the appropriate leadership structure for our Company at this time and allows the Board to fulfill its role with appropriate independence. For these reasons and because

 

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of the strong leadership of Mr. Suzuki and Mr. Nargolwala, our Board has concluded that our current leadership structure is appropriate at this time.

However, our Board will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate. Our Corporate Governance Guidelines provide that whenever our Chairman of the Board is also a member of management or is a director that does not otherwise qualify as an independent director, the independent directors may elect a lead director. The Board does not currently have a lead director.

Our Board has an active role, as a whole and also at the committee level, in overseeing the management of our risks. Our Board is responsible for overseeing our risk management process. Our Board focuses on our general risk management strategy, the most significant risks facing us, and oversees the implementation of risk mitigation strategies by management. Our Audit Committee is also responsible for discussing our policies with respect to risk assessment and risk management and is responsible for overseeing the management of risks relating to accounting matters and financial reporting. Our Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. Our NCGC is responsible for overseeing the management of risks associated with the independence of our Board and potential conflicts of interest. Although each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through discussions with committee members and regular reports from management about such risks, as well as the actions taken by management to adequately address those risks.

Code of Business Conduct and Ethics

Our Board has adopted a written Code of Business Conduct and Ethics that applies to our directors, officers and employees (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions). A copy of the Code of Business Conduct and Ethics is posted on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents & Charters.” In addition, we have or intend to post on our website all disclosures that are required by law or Nasdaq rules concerning any amendments to, or waivers from, any provision of the code.

Attendance by Members of the Board at Meetings

There were five meetings of the full Board during the fiscal year ended March 29, 2024, not including special meetings convened in which only a subset of the Board were invited participants. During the fiscal year ended March 29, 2024, each director attended at least 75% of the aggregate of (i) all meetings of the Board and (ii) all meetings of the committees on which the director served during the period in which he or she served as a director.

Under our Corporate Governance Guidelines, which are available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents & Charters,” a director is expected to spend the time and effort necessary to properly discharge his or her responsibilities. Accordingly, a director is expected to regularly prepare for and attend meetings of the Board and all committees on which the director serves (including separate meetings of the non-management and independent directors), with the understanding that, on occasion, a director may be unable to attend a meeting. A director who is unable to attend a meeting of the Board or a committee of the Board is expected to notify the Chairman of the Board or the chair of the appropriate committee in advance of such meeting, and, whenever possible, participate in such meeting via teleconference in the case of an in-person meeting. We do not maintain a formal policy regarding director attendance at the Annual Meeting; however, it is expected that directors will attend, absent compelling circumstances. The 2023 virtual annual meeting was attended by Messrs. Suzuki, Aldrich, Hatano, Kawashima and Nargolwala and Ms. Lynch.

 

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COMMITTEES OF THE BOARD

Our Board has established four standing committees — Audit, Compensation, NCGC, and Strategy — each of which operates under a written charter that has been approved by our Board.

The current members of each of the Board committees and committee chairs are set forth in the following chart.

 

Name

 

Audit

 

Compensation

 

Nominating and
Corporate
Governance

 

Strategy

David J. Aldrich

 

 

 

Chair

 

X

 

 

Richard R. Lury

 

 

 

X

 

Chair

 

 

Susan D. Lynch

 

X

 

 

 

 

 

 

Joseph R. Martin

 

Chair

 

 

 

X

 

X

Vineet Nargolwala

 

 

 

 

 

 

 

X

Mary G. Puma

 

 

 

X

 

 

 

Chair

Jennie M. Raubacher

 

X

 

 

 

 

 

X

Paul Carl (Chip) Schorr IV

 

 

 

 

 

 

 

X

Yoshihiro (Zen) Suzuki

 

 

 

 

 

 

 

X

Number of meetings in fiscal year 2024*

 

14

 

9

 

5

 

5

* Does not include special committee meetings convened for specific purposes

 

Audit Committee

Our Audit Committee’s responsibilities include:

appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm;
discussing with our independent registered public accounting firm their independence from management;
reviewing with our independent registered public accounting firm the scope and results of their audit;
approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;
overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the quarterly and annual consolidated financial statements that we file with the SEC;
overseeing our financial and accounting controls and compliance with legal and regulatory requirements;
reviewing our policies on risk assessment and risk management and overseeing management of the material risks facing the Company;
reviewing related person transactions and the Company’s policies for reviewing and approving related person transactions;
establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters; and
preparing the Audit Committee Report required by SEC rules (which is included on page 26 of this proxy statement).

In addition to the foregoing, the Audit Committee is responsible under our Whistleblower Policy for receiving reports on and evaluating reported concerns, not just those related to accounting, auditing or internal controls.

The Audit Committee charter is available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents & Charters.” The members of the Audit Committee are Joseph R. Martin, Susan D. Lynch, and Jennie M. Raubacher. Mr. Martin serves as the chair of the Audit Committee. Our Board has affirmatively determined that each of Mr. Martin and Mses. Lynch and Raubacher qualifies as an “independent director” for purposes of serving on the Audit Committee under Rule 10A-3 under the Exchange Act and Nasdaq rules.

The members of our Audit Committee meet the requirements for financial literacy under the applicable Nasdaq rules. In addition, our Board has determined that each of Mr. Martin and Mses. Lynch and Raubacher qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.

 

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Compensation Committee

Our Compensation Committee is responsible for assisting the Board in the discharge of its responsibilities relating to the compensation of our executive officers, including the compensation of the named executive officers identified on page 37 of this proxy statement. Our Compensation Committee’s responsibilities include:

reviewing and approving, or recommending for approval by the Board, the compensation of our Chief Executive Officer and our other executive officers;
reviewing and approving or making recommendations to our Board, regarding our incentive compensation and equity-based plans and arrangements;
administering our equity-based plans and arrangements;
reviewing and making recommendations to our Board with respect to director compensation;
administering and, when appropriate, reviewing and revising, any policy or procedure that permits or requires us to recover compensation erroneously awarded to our employees;
appointing and overseeing any compensation consultants; and
reviewing and discussing with management the Compensation Discussion and Analysis section of our proxy statement and preparing the Compensation Committee Report required by SEC rules (which is included on page 52 of this proxy statement).

Under its charter, the Compensation Committee may form, and delegate authority to, subcommittees, as appropriate. To the extent permitted by and consistent with applicable law and the provisions of a given equity-based plan, the Compensation Committee may delegate to one or more executive officers of the Company the power to grant options or other stock or other equity-based awards pursuant to equity-based plan to employees of the Company or any subsidiary of the Company who are not officers (as defined in Rule 16a-1(f) under the Exchange Act) or directors of the Company. The Compensation Committee may consider, in its discretion, the Chief Executive Officer’s recommendations when making decisions regarding the compensation of non-employee directors and executive officers (other than the Chief Executive Officer). Pursuant to the Compensation Committee’s charter, which is available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents & Charters,” the Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities. In the fiscal year ended March 29, 2024, the Compensation Committee engaged Meridian Compensation Partners, LLC (“Meridian”) to provide guidance in reviewing our executive compensation program, including the composition of our peer group. Meridian consulted with the members of our management regarding various aspects of executive and director compensation, including with respect to our long-term incentive program.

The members of our Compensation Committee are David J. Aldrich, Richard R. Lury and Mary G. Puma. Mr. Aldrich serves as the chair of the Compensation Committee. Our Board has determined that each of Messrs. Aldrich and Lury and Ms. Puma qualifies as an “independent director” for purposes of serving on the Compensation Committee under Nasdaq rules, including the additional independence considerations for members of a compensation committee, and are “non-employee directors” as defined in Rule 16b-3 of the Exchange Act.

Compensation Committee Interlocks and Insider Participation

During all or a portion of our fiscal year ending March 29, 2024, Richard R. Lury, Mary G. Puma and Paul Carl (Chip) Schorr IV served on our Compensation Committee. During the fiscal year ended March 29, 2024, no such member of our Compensation Committee was an officer or employee of the Company, was formerly an officer of the Company or had related person transactions with the Company that required disclosure. During the fiscal year ended March 29, 2024, none of the Company’s executive officers served on the board of directors or the compensation committee of any other entity that had one or more of its executive officers serving on our Board or Compensation Committee.

 

 

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Nominating and Corporate Governance Committee

Our NCGC’s responsibilities include:

identifying individuals qualified to become Board members, consistent with criteria approved by our Board;
recommending to our Board the persons to be nominated for election as directors at our annual meeting of shareholders and to be appointed to fill Board vacancies;
recommending to the Board the directors to appoint to serve on each Board committee;
developing and recommending to our Board corporate governance guidelines, and reviewing and recommending to our Board proposed changes to our corporate governance guidelines from time to time;
periodically reviewing the Board’s leadership structure and recommending any changes to the Board;
periodically reviewing and discussing with the Board the Company’s policies, objectives and practices with respect to ESG matters; and
overseeing the evaluation of our Board and its committees to determine whether the Board and its committees are functioning effectively.

Pursuant to the NCGC charter, which is available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents & Charters,” the NCGC has the authority to retain or obtain the advice of independent legal counsel and other advisors to assist in carrying out its responsibilities. The NCGC leads a biennial evaluation of our Board and its committees. The next evaluation of the Board and its committees is scheduled to place in fiscal year 2025.

The members of the NCGC are Richard R. Lury, David J. Aldrich and Joseph R. Martin. Mr. Lury serves as the chair of the NCGC. Our Board has determined that each of Messrs. Aldrich, Lury and Martin qualifies as an “independent director” under Nasdaq rules.

Strategy Committee

Our Strategy Committee’s responsibilities include:

reviewing the Company’s strategies, including organic and inorganic initiatives to drive above market growth while meeting profitability objectives, including review of technology roadmaps, portfolio management initiatives, strategic partnerships and R&D investments as needed, as well as the periodic review of mergers and acquisitions pipeline and evaluation of strategic fit of potential targets;
conducting regular reviews with management of our performance relative to key performance indicators and the process for their measurement; and
reviewing organizational matters and talent capabilities related to technology strategy and implementation in conjunction with the Compensation Committee, where appropriate, including recommendations to the Board, as applicable.

The Strategy Committee’s charter is available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents & Charters.” The members of our Strategy Committee are Mary G. Puma, Joseph R. Martin, Vineet Nargolwala, Jennie M. Raubacher, Paul Carl (Chip) Schorr IV and Yoshihiro (Zen) Suzuki. Ms. Puma serves as the chair of the Strategy Committee.

Shareholder Engagement

We value our shareholders’ interests. We maintain an active dialogue with our shareholders to ensure we understand issues that are important to our shareholders and address their interests in a meaningful and effective way. We engage with our shareholders on a regular basis to discuss a range of topics, including our performance, strategy, risk management, compensation practices and ESG issues.

 

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Board Diversity Matrix

The table below provides certain information with respect to the composition of our Board. Each of the categories listed in the table has the meaning ascribed to it in Nasdaq Listing Rule 5605(f).

 

Board Diversity Matrix (as of June 26, 2024)

Total number of directors

 

 

11

 

 

Female

Male

Non-Binary

Did Not Disclose Gender

Part I: Gender Identity

 

 

 

 

Directors

3

8

-

-

Part II: Demographic Background

 

 

 

 

African American or Black

-

-

-

-

Alaskan Native or Native American

-

-

-

-

Asian

1

4

-

-

Hispanic or Latinx

-

-

-

-

Native Hawaiian or Pacific Islander

-

-

-

-

White

2

4

-

-

Two or More Races or Ethnicities

-

-

-

-

LGBTQ+

 

 

-

 

Did Not Disclose Demographic Background

 

 

-

 

 

Board Composition

The following charts show the composition of the 11 members of our Board of Directors by age, tenure, gender, and racial or ethnic diversity.

Age

Tenure

Gender

Race / Ethnicity

 

(in years)

 

 

70s 18% 40s 10% 50s 36% 60s 36% 4 to 8 36% 8+ 18% 1 to 3 46% female 9% male 91% racially or ethnically diverse 45% not racially or ethnically diverse 55%

https://cdn.kscope.io/c34e7154405784355aeb26b8dadbc372-img122907589_35.jpg60s 70s 40s 50s 36% 18% 10% 36% 8+ 4 to 8 0 to 3 18% 18% 64% female male 27% 73%racially or ethnically diverse not racially or ethnically diverse 45% 555

 

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EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes the philosophy, policies, practices, and material decisions underlying the compensation reported in the executive compensation tables included in this proxy statement for the following executive officers of the Company (the “NEOs” or “named executive officers”):

Executive Officers

 

Vineet Nargolwala

President and Chief Executive Officer (the “CEO”)

Derek P. D’Antilio

Senior Vice President, Chief Financial Officer and Treasurer1

Michael C. Doogue

Senior Vice President, Chief Technology Officer

Max R. Glover

Senior Vice President of Worldwide Sales

Sharon S. Briansky

Senior Vice President, General Counsel and Secretary

1. Following the end of the 2024 fiscal year, Mr. D'Antilio was promoted to Executive Vice President, Chief Financial Officer and Treasurer, effective in June 2024.

The total compensation of each NEO is reported in the Fiscal Year 2024 Summary Compensation Table presented on page 53 of this proxy statement.

Executive Summary

2024 Business Results

Allegro delivered record fiscal year 2024 sales of more than $1 billion, a company first, representing 8% year-over-year growth. We also achieved record level design wins of more than $1 billion. E-Mobility, which includes the increasing electrification of vehicles and higher adoption of advanced driver assistance systems and features, continues to drive Allegro’s above-market growth and accounted for more than half of fiscal year 2024 design wins. Emphasizing our ongoing commitment to innovation, since our IPO, we kicked off a record number of products in fiscal year 2024, while introducing over thirty new products to the market, including initial products in our Power-ThruTM isolated gate driver portfolio. We also extended our leadership position in magnetic sensing with our acquisition of Crocus Technology International Corp. and are seeing strong interest from customers for our highly differentiated XtremeSenseTM TMR technology.

The following sets forth certain details of our financial results for fiscal year 2024 and the returns delivered to shareholders, compared to certain benchmarks, for fiscal year 2024 and the year-over-year change from fiscal year 2023:

 

 

Revenue
$M

 

GAAP Gross Margin

 

Non-GAAP Gross Margin 1

 

GAAP Diluted EPS

 

EBITDA
$M
1

 

Adjusted EBITDA
$M
1

 

Non-GAAP Diluted EPS 1

Fiscal Year 2024 Result

 

$1,049.4

 

54.8%

 

56.3%

 

$0.78

 

$273.8

 

$364.2

 

$1.35

Year-Over-Year Change

 

8%

 

(130) bps

 

(50) bps

 

(20)%

 

4%

 

11%

 

5%

 

1.
Denotes a non-GAAP financial measure. See Appendix A for definitions of and additional information regarding non-GAAP financial measures, along with reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures.

The following compares, for the period beginning October 29, 2020, the initial trading date of our Common Stock on Nasdaq, and ending on March 29, 2024, the last day of our fiscal year 2024, the cumulative total stockholder return for our Common Stock, the Nasdaq Composite Index and the Philadelphia Semiconductor Index (the “SOX Index”), and assumes reinvestment of any dividends. The shareholder return in the table below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our Common Stock, and we do not make or endorse any predictions as to future shareholder returns. We selected these comparative groups due to industry similarities and the fact that they include several direct competitors.

 

 

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Shareholder value creation

 

October 29, 2020

 

 

March 26, 2021

 

 

March 25, 2022

 

 

March 31, 2023

 

 

March 29, 2024

 

Allegro’s Result

 

$

100.00

 

 

$

142.77

 

 

$

164.86

 

 

$

271.13

 

 

$

152.32

 

Nasdaq Composite Index

 

$

100.00

 

 

$

117.46

 

 

$

126.67

 

 

$

109.26

 

 

$

146.43

 

Philadelphia Semiconductor Sector Result

 

$

100.00

 

 

$

136.02

 

 

$

154.37

 

 

$

141.48

 

 

$

214.80

 

Important 2024 Compensation Actions

Our Compensation Committee, which consists entirely of independent directors, sets the compensation of our NEOs. In fiscal year 2024, the Compensation Committee took the following actions with respect to the compensation of our NEOs:

As part of our standard annual review cycle, reviewed the base salaries and, under the Company's Annual Incentive Plan (“AIP”), the annual target bonus opportunities for our NEOs, approving:
o
Salary increases of 10.0%, 6.3%, 2.6%, 3.9% and 6.7% for Messrs. Nargolwala, D’Antilio, Doogue and Glover, and Ms. Briansky, respectively;
o
An increase to Mr. Nargolwala’s target bonus opportunity from 110% to 125% of base salary and maintaining the annual target bonus opportunities under the AIP for each of our other NEOs;
Approved AIP performance metrics, weighting non-GAAP Operating Income, further adjusted for the operational impact of acquisitions (“Performance EBIT”) performance at 60%, revenue performance at 30% and adding a new metric for new products released to market weighted at 10%; and
Approved Long-Term Incentive (“LTI”) compensation, consisting of a combination of time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) to provide strong links to long-term shareholder value creation and promote alignment with investors.

As illustrated below, our executive compensation program utilizes annual and long-term incentive awards, including awards that are contingent on Company performance relative to our key performance metrics. The pay mix charts set forth below are based on target compensation and include annualized base salary, target annual bonus under the AIP, and annual long-term equity-based awards at target. The “Other NEO” average includes Messrs. D’Antilio, Doogue and Glover, and Ms. Briansky. variable, at risk compensation 90% base salary aip (Target) lti (annual equity award target fy2024 ceo compensation 78% 10% 12% 40% 60% fy2024 ceo target lti psus rsus variable, at risk compensation 82% fy2024 other neo avg compensation 68% 18% 14% base salary aip (target) lti (annual equity award target) 40% 60$ fy2024 other neo avg lti psus rsus

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Compensation Philosophy and Objectives

The overall objective of our compensation program is to encourage and reward the creation of sustainable, long-term value for our stakeholders. We pursue this objective via:

 

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Alignment with long-term shareholders’ interests. We believe our executives’ interests are more directly aligned with our shareholders’ interests when compensation programs emphasize an appropriate balance of short- and long-term financial performance.
External competitiveness. We believe an executive’s total pay at the target performance level should be competitive with the total target pay provided by companies of similar industry, size and complexity in order to attract qualified executives, motivate performance and retain, develop and reward executives with the abilities and skills needed to foster long-term value creation.
Motivating achievement of financial goals and strategic objectives. We believe an effective way to create value over the long term is to make a significant portion of an executive’s overall pay dependent on the achievement of our short- and long-term financial goals and strategic objectives.
Rewarding superior performance. We believe that although an executive’s total compensation should be tied to achievement of financial goals and strategic objectives and should be competitive with companies of similar industry, size and complexity at the target performance level, performance that exceeds target should be appropriately rewarded. We also believe there should be a downside risk of below-target payouts if our financial performance is below target and if we do not achieve our financial goals and strategic objectives.
Responding to change. We believe that as our industry continues to evolve and our opportunities for competitive business advantages change over time, we must also continue to evolve in order to continue to create value. Our compensation programs must likewise be tailored to our strategic priorities (which may require changing the performance measures in our incentive plans from time to time) and our current outlook (which may impact how we calibrate incentive plan payouts to various levels of performance).

Compensation Governance and Best Practices

We are committed to maintaining strong governance standards with respect to our compensation programs, procedures, and practices. For example:

 

 

What we do

Our executive compensation decisions are made by the non-employee members of our Board or by our Compensation Committee, which is made up exclusively of independent members.

Our Compensation Committee has retained an independent executive compensation consulting firm to provide objective analysis, advice and information.

We make a significant portion of each NEO’s overall compensation dependent on our performance measures against pre-determined targets for short- and long-term financial performance measures, targets that we believe are challenging, yet achievable.

We impose a limit on the maximum pool funding under our AIP and cap payouts on our PSUs, including a cap on TSR-based metrics at 100% of target for instances of negative absolute TSR.

We provide a significant portion of each NEO’s overall compensation opportunity in the form of at-risk, equity-based incentive awards to establish a strong link between an NEO’s compensation and our stock price performance.

Our NEOs and members of our Board who receive compensation from the Company for their Board service are subject to robust stock ownership guidelines.

Our Policy for Recovery of Erroneously Awarded Compensation (the “Clawback Policy”) provides for recovery of incentive-based compensation received by covered officers that exceeds the amount of incentive-based compensation that would have been received based on a restated financial measure in the event of a financial restatement.

We conduct an annual “say-on-pay” vote.

 

 

What we don’t do

X

We do not provide our NEOs with material executive perquisites.

X

We do not permit hedging or pledging of the Company’s equity securities by any officers, directors, or employees.

 

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X

We do not provide any tax gross ups to our NEOs, including in the event of a change in control of the Company (a “change in control”) or otherwise.

X

We do not provide for single-trigger vesting of unvested equity awards in the event of a change in control.

X

We currently have no outstanding stock option awards, but if we choose to grant option awards in the future, we do not permit the repricing or back-dating of stock option awards.

Role of the Compensation Committee, Compensation Consultant and Management

In setting executive compensation, the Compensation Committee considers a number of factors, including the CEO’s recommendations (other than with respect to his own compensation), the recommendations and competitive market data and analysis provided by the Compensation Committee’s independent compensation consultant, Company performance and each executive’s impact on that performance, each executive’s relative scope of responsibility and potential, each executive’s individual performance and demonstrated leadership, and each executive’s professional experience and tenure with the Company. The Compensation Committee also considers prior fiscal year adjustments to executive compensation, historical payments under our AIP and our historical equity award grant practices. The Compensation Committee has the final authority to approve annual compensation packages for all executives, with the exception of the compensation for the CEO, which the Compensation Committee recommends to the non-employee members of the Board for approval.

Prior to the start of each fiscal year, we develop Company performance metrics aligned with our annual operating plan for our employees, including our NEOs. These goals represent key performance objectives that are incorporated into the AIP framework and then submitted to the Compensation Committee for consideration and approval. After our fiscal year-end financial results are available, the Compensation Committee approves annual bonus payout amounts under our AIP for our executives for the just-completed fiscal year, with the exception of the annual bonus payout amount for the CEO, which the Compensation Committee recommends to the non-employee members of the Board for approval.

The Compensation Committee has engaged Meridian Compensation Partners, LLC (“Meridian”), an independent compensation consulting firm, to provide research and analysis and to make recommendations on the form and level of executive compensation. The Compensation Committee sought input from Meridian on executive compensation matters for the 2024 fiscal year, including the design and competitive position of our executive compensation program, our peer group (see below for additional information on our peer group), appropriate compensation levels, and evolving compensation trends.

Based on its consideration of the various factors set forth in the rules promulgated by the SEC and Nasdaq rules, the Compensation Committee has determined that the work performed by Meridian has not raised any conflict of interest.

Competitive Positioning

We perform a competitive market analysis of our executive compensation programs annually and director compensation programs biennially to ensure that the total compensation packages of our executive officers and the eligible, non-employee members of our Board are within a reasonably competitive range of companies of similar industry, size and complexity. In connection with its fiscal year 2024 compensation actions and decisions, the Compensation Committee considered a competitive market analysis prepared by Meridian in February of 2023 (see below for more information on the competitive market analysis). The Meridian analysis determined that the NEOs’ target cash compensation, comprised of annual base salary, plus annual target bonus under the AIP, was in aggregate below the 50th percentile relative to competitive market data in the aggregate. The analysis also found that the grant date fair values of equity incentive awards that we granted during fiscal year 2023 were also below the 50th percentile in aggregate.

 

The Compensation Committee considered these results in its compensation program decision-making for fiscal year 2024.

Competitive Market Analysis

In February 2023, Meridian conducted a competitive market analysis to support the Compensation Committee in connection with its executive and non-employee director compensation decisions for fiscal year 2024. To develop an understanding of the competitive marketplace, the Compensation Committee reviewed the executive compensation practices of a group of publicly traded companies based on compensation data gathered from publicly available filings. Meridian worked with the Compensation Committee to review and select the Company’s peer group.

In determining the peer group to be utilized in making compensation decisions for fiscal year 2024 (the “Peer Group”), the Compensation Committee and Meridian reviewed and considered factors such as industry, total revenue, market

 

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capitalization, growth, and profitability margins. The Peer Group was selected based on the evaluation of all of these factors. The Peer Group consisted of the following 14 companies, which was the same group of 14 companies that comprised the peer group used for fiscal year 2023:

 

Peer Group

Cirrus Logic, Inc.

ON Semiconductor Corporation

Diodes Incorporated

Power Integrations, Inc.

Lattice Semiconductor Corporation

Rambus Inc.

MACOM Technology Solutions Holdings, Inc.

Semtech Corporation

MaxLinear, Inc.

Silicon Laboratories Inc.

Microchip Technology Incorporated

Synaptics Incorporated

Monolithic Power Systems, Inc.

Wolfspeed, Inc.

 

As indicated in the table below, at the time of the competitive market analysis in February 2023, our revenue approximated the Peer Group 43rd percentile, our headcount the 79th percentile, and our market capitalization the 64th percentile.

Allegro Compared to Peer Group, Sorted from Highest to Lowest (as of February 2023)

Revenue

Headcount

Market Cap

ON Semiconductor Corporation

ON Semiconductor Corporation

Microchip Technology Incorporated

Microchip Technology Incorporated

Microchip Technology Incorporated

ON Semiconductor Corporation

Cirrus Logic, Inc.

Diodes Incorporated

Monolithic Power Systems, Inc.

Diodes Incorporated

Allegro MicroSystems, Inc.

Lattice Semiconductor Corporation

Monolithic Power Systems, Inc.

Wolfspeed, Inc.

Wolfspeed, Inc.

Synaptics Incorporated

Monolithic Power Systems, Inc.

Allegro MicroSystems, Inc.

MaxLinear, Inc.

Semtech Corporation

Silicon Laboratories Inc.

Silicon Laboratories Inc.

Silicon Laboratories Inc.

Synaptics Incorporated

Allegro MicroSystems, Inc.

MaxLinear, Inc.

Cirrus Logic, Inc.

Wolfspeed, Inc.

Synaptics Incorporated

Power Integrations, Inc.

Semtech Corporation

Cirrus Logic, Inc.

MACOM Technology Solutions Holdings, Inc.

MACOM Technology Solutions Holdings, Inc.

MACOM Technology Solutions Holdings, Inc.

Rambus Inc.

Lattice Semiconductor Corporation

Lattice Semiconductor Corporation

Diodes Incorporated

Power Integrations, Inc.

Power Integrations, Inc.

MaxLinear, Inc.

Rambus Inc.

Rambus Inc.

Semtech Corporation

Allegro = 43rd percentile

Allegro = 79th percentile

Allegro = 64th percentile

The Compensation Committee uses the market analysis as a reference point to ensure that our executive compensation program is competitive with market practice for our Peer Group. In the case of each executive officer, the Compensation Committee compares the overall compensation of each individual against the compensation data developed through the market analysis, if their position is sufficiently similar to the positions identified in the data to make the comparison meaningful. The Compensation Committee reviews a full array of competitive market data as part of this comparison process rather than isolating a particular percentile with respect to any portion of the executives’ pay. Ultimately, the Compensation Committee’s decisions with respect to each executive’s total compensation, and each individual compensation element, are based in large part on its assessment of the Company’s and individual’s performance, as well as other factors, such as internal equity across the organization.

 

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Compensation Elements

We use the following key elements to compensate our NEOs:

Compensation Element

Purpose

Timing of Payment(s)

Base Salary

Representing the only fixed element of total direct compensation

Provide a competitive fixed rate of pay relative to similar positions in the market.
Enable the Company to attract and retain critical executive talent.
Paid bi-weekly throughout the year

Annual Incentive Plan (AIP)

Cash-settled and tied to the achievement of short-term (one year or less) Company financial and / or strategic goals

Focus executive officers on achieving progressively challenging short-term performance goals that align with the Company’s annual operating plan and result in long-term value creation.
Lump-sum payment in the first quarter of the following fiscal year for executives as of the end of the fiscal year

Long-Term Incentives

Comprised of a selection of equity awards and vesting criteria tailored to promote long-term alignment of pay with shareholders

Focus our executive officers on long-term relative and absolute performance goals that strongly align with and drive shareholder value creation, as well as support the Company’s leadership retention strategy.
Annual equity awards generally vest over a three-year period from date of grant

Variation in competitive positioning among executives is to be expected, to recognize differences in individual performance, tenure, or scope of responsibility relative to market. However, we generally position each compensation element within a competitive range (+/- 15% for base salary and AIP target compensation, +/- 20% for grant date fair value of long-term incentives) of the market 50th percentile.

Fiscal Year 2024 Base Salaries

NEO base salaries are an important part of their total compensation package and are intended to reflect their respective positions, duties, and responsibilities. Our Compensation Committee annually reviews and determines the base salaries of our executives. During fiscal year 2024, the Compensation Committee reviewed the base salaries of the NEOs, approving the adjustments shown in the table below, as applicable, for all NEOs (with the exception of the CEO, whose base salary adjustment was recommended by the Compensation Committee and approved by the non-employee members of the Board). In deciding whether to make any annual adjustments, the Compensation Committee considered factors, including each NEO’s performance, tenure, and job responsibilities, in addition to considering market information from our February 2023 competitive analysis.

 

Name

 

FY 2023 Base Salary ($)

 

 

FY 2024 Base Salary ($)

 

 

Increase ($)

 

 

Increase (%)

 

 

Reason for Change

Vineet Nargolwala

 

 

600,000

 

 

 

660,000

 

 

 

60,000

 

 

 

10.0

%

 

Merit / Market adjustment 1

Derek P. DAntilio

 

 

400,000

 

 

 

425,000

 

 

 

25,000

 

 

 

6.3

%

 

Merit

Michael C. Doogue

 

 

390,000

 

 

 

400,000

 

 

 

10,000

 

 

 

2.6

%

 

Merit

Max R. Glover

 

 

385,000

 

 

 

400,000

 

 

 

15,000

 

 

 

3.9

%

 

Merit

Sharon S. Briansky

 

 

375,000

 

 

 

400,000

 

 

 

25,000

 

 

 

6.7

%

 

Merit

1.
Mr. Nargolwala had the lowest competitive position relative to market data among our NEOs both prior to and following his market adjustment.

Fiscal Year 2024 AIP

Each of our NEOs participates in our AIP, which is focused on rewarding our executive officers for annual operating performance that meets or exceeds pre-established goals. The Compensation Committee periodically reviews and determines each NEO’s target bonus opportunity (expressed as a percentage of base salary) under the AIP (with the exception of the CEO, whose target bonus opportunity is recommended by the Compensation Committee and approved by the non-employee members of the Board). During fiscal year 2024, the Compensation Committee reviewed each NEO’s target bonus opportunity, recommending that the Board approve the adjustment to Mr. Nargolwala’s target shown in the table below, in order to bring it to the market median level. The Compensation Committee considered the same factors as

 

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in its deliberations relating to base salaries, as well as our desire to motivate achievement of short-term financial objectives via meaningful annual incentive opportunities. Each NEO’s target bonus opportunity was generally aligned to the market 50th percentile, as detailed in the February 2023 competitive analysis.

 

Name

 

2023 Target AIP
(% of Base Salary)

 

 

2024 Target AIP
(% of Base Salary)

 

 

Increase
(%)

 

 

Reason for Change

Vineet Nargolwala

 

 

110.0

%

 

 

125.0

%

 

 

15.0

%

 

Market adjustment 1

Derek P. DAntilio

 

 

75.0

%

 

 

75.0

%

 

 

%

 

N/A

Michael C. Doogue

 

 

75.0

%

 

 

75.0

%

 

 

%

 

N/A

Max R. Glover

 

 

75.0

%

 

 

75.0

%

 

 

%

 

N/A

Sharon S. Briansky

 

 

70.0

%

 

 

70.0

%

 

 

%

 

N/A

1.
Mr. Nargolwala had the lowest competitive position relative to market data for target total cash among our NEOs prior to his market adjustment and remained below median after his market adjustment.

The actual amount of the annual bonuses paid under the AIP each year may be more or less than the applicable NEO’s target bonus opportunity, depending on Company performance against a set of pre-established performance metrics. For fiscal year 2024, these Company performance metrics included Performance EBIT (weighted 60%), revenue growth (weighted 30%), and a new metric for products released to market (“RTMs”) (weighted 10%). The RTM metric was added to increase the entire organization’s focus on advancing both the speed and volume of product development. The annual bonuses under the AIP are also subject to potential increase or reduction at the discretion of the Compensation Committee (or the Board in the case of the CEO), based on individual NEO performance during the fiscal year (the “Multiplier for Individual Performance”).

The table below illustrates AIP determinations at various levels of performance and the actual performance in fiscal year 2024 for each metric. For performance between points referenced in the table, straight line interpolation is used for the determination of actual achievement of performance metrics. target aip mix 60% 10% 30% performance ebit revenue rtm performance

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Weighting

Performance Metric

Threshold

Target

Maximum

Actual Performance

Weighted Pool Funding

60%

Performance EBIT1

Performance Goals ($M)

$304.0

$346.6

$378.0

$306.2

48.6%

% Pool Funding

80.0%

100.0%

200.0 %

81.0%

30%

Revenue

Performance Goals ($M)

$1,017.0

1,130.0

$1,210.0

$1,046.4

25.6%

% Pool Funding

80.0%

100.0%

200.0%

85.2%

10%

RTM

Performance Goals ($M)

26

28

35

29

11.4%

% Pool Funding

33.0%

100.0%

200.0%

114.3%

 

Total Pool Funding

85.6%

1.
Actual performance for Performance EBIT for the period is calculated from GAAP operating income, as adjusted as provided in Appendix A.

In May 2024, the Compensation Committee assessed the Company’s fiscal year 2024 achievement of the corporate performance objectives, as detailed in the table above. The sum of the Performance EBIT, revenue and RTM performance portions of the pool funding resulted in total pool funding at 85.6% of target. Additionally, the Compensation Committee did not choose to exercise upward or downward discretion based on individual performance for fiscal year 2024 AIP payout determinations, and so the Multiplier for Individual Performance for all NEOs was 1.0.

 

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The table below illustrates the final AIP payout determinations for each NEO.

 

Name

 

2024 Target AIP
($)

 

X

Pool Funding per Corporate Achievement

 

X

Multiplier for Individual Performance

 

=

Final AIP Payout ($)

 

Vineet Nargolwala

 

 

825,000

 

 

 

85.6

%

 

 

1.00

 

 

 

706,200

 

Derek P. D’Antilio

 

 

318,750

 

 

 

85.6

%

 

 

1.00

 

 

 

272,850

 

Michael C. Doogue

 

 

300,000

 

 

 

85.6

%

 

 

1.00

 

 

 

256,800

 

Max R. Glover

 

 

300,000

 

 

 

85.6

%

 

 

1.00

 

 

 

256,800

 

Sharon S. Briansky

 

 

280,000

 

 

 

85.6

%

 

 

1.00

 

 

 

239,680

 

The AIP payments with respect to fiscal year 2024 detailed above are expected to be paid to each NEO on June 28, 2024.

Fiscal Year 2024 Equity Compensation

We use equity awards as a form of long-term incentive compensation to motivate and reward executive officers for effectively executing longer-term strategic and financial objectives. The multi-year vesting provisions of these awards also support the Company’s leadership retention strategy. The value of these equity awards is based on the value of our Common Stock, and these awards help align the interests of our executive officers with those of the Company’s shareholders.

In fiscal year 2024, our annual equity awards consisted of a combination of RSUs and PSUs. Further details regarding awards granted during fiscal year 2024 are set forth below. The Compensation Committee elected to use PSUs as the primary equity vehicle for annual equity awards to NEOs to strengthen the alignment between rewards and the achievement of our longer-term strategic goals referenced in the PSUs.

For each eligible executive, the Committee considers the relative value of equity awards compared to the equity awards held by other executive officers, the desired incentive mix between PSU awards and RSU awards, a compensation analysis performed by Meridian, and the individual experience, skills and performance level of the executive officer to determine the size of equity awards.

 

 

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Annual Equity Awards

The annual equity awards granted to each of our NEOs consisted of RSUs (40% of each LTI award) and PSUs (60% of each LTI award). The RSUs are scheduled to vest in three equal installments on each of May 16, 2024, 2025, and 2026, subject to continued employment through the applicable vesting date. The PSUs vest based on achievement of four separate performance and service criteria, as outlined in the table below and described in greater detail following the table. psu award weighting (at target) 50% 15% 15% 20% relative tsr strategic product revenue cumulative performance ebitda cumulative cycle time

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Performance Metric

PSU Award Weighting (at target)

Performance Period

Additional Service-Based Vesting after Performance Period

Relative Total Shareholder Return (“Relative TSR”)

50%

Three years (fiscal years 2024 through 2026)

Earned shares (if any) based on this metric vest on May 16, 2026

Strategic Products Revenue

20%

One year (fiscal year 2024)

Earned portion of PSU shares (if any) based on this metric vest 50% on May 16, 2024, and 50% on May 16, 2025

Cumulative Performance EBITDA

15%

One-third allocated to each of one-year (fiscal year 2024), two-year (fiscal years 2024 and 2025) and three-year (fiscal years 2024 through 2026) performance periods

Earned portion of PSU shares (if any) based on this metric vest on May 16, 2026

Cumulative Cycle Time

15%

Three year (fiscal years 2024 through 2026)

Earned portion of PSU shares (if any) based on this metric vest on May 16, 2026

PSUs by metric are earned as follows:

The Relative TSR portion is earned based on our total shareholder return (“TSR”) performance, as measured relative to the performance of companies in the SOX Index over a three-year period (fiscal years 2024 through 2026);
The Strategic Products revenue portion is earned based on our revenue applicable to products that drove our growth in the e-Mobility and industrial markets in fiscal year 2024 (the “Strategic Products”), as compared to pre-established threshold, target and maximum goals;
The cumulative non-GAAP adjusted EBITDA, further adjusted for the operational impact of acquisitions (“Performance EBITDA”) portion is earned based on cumulative Performance EBITDA, as compared to threshold, target and maximum goals for each of fiscal year 2024, the two-year period encompassing fiscal years 2024 and 2025, and the three-year period encompassing fiscal years 2024, 2025 and 2026; and
The cumulative cycle time metric portion is earned based on the average number of weeks from product development kickoff to product RTM for 85% of the total products released to market as compared to a target number of cycle time weeks for the three-year period encompassing fiscal years 2024 through 2026.

 

 

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EXECUTIVE AND DIRECTOR COMPENSATION

For the Relative TSR metric, target vesting at 100% of this portion of the award is achieved if the Company’s TSR equals the TSR of the median company in the SOX Index. The actual number of PSUs that will be earned can range from 0% - 200% of the target amount, with a threshold vest (fixed at 50% of the target number of PSUs for this portion of the award) achieved if the Company’s TSR equals the TSR of the 25th percentile SOX Index company, and a maximum vest (fixed at 200% of the target number of PSUs for this portion of the award) achieved if the Company’s TSR equals or exceeds the TSR of the 75th percentile SOX Index company. Straight line interpolation is used for vesting determinations for performance between threshold and target or between target and maximum. If the Company’s TSR is negative during the performance period, vesting is capped at target for this portion of the award, regardless of what the award formula would otherwise specify for this portion of the award.

Performance Metric

 

 

 

 

 

Threshold

 

 

 

 

 

Target

 

 

 

 

 

Maximum

 

 

 

Goal

 

<25th

 

25th

 

 

37.5th

 

 

50th

 

 

62.5th

 

 

75th

 

Relative TSR - TSR percentile rank vs. SOX Index

 

Payout % (positive TSR)

 

—%

 

 

50.0

%

 

 

75.0

%

 

 

100.0

%

 

 

150.0

%

 

 

200.0

%

 

 

Payout % (negative TSR)

 

—%

 

 

50.0

%

 

 

75.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

The table below illustrates Strategic Products revenue PSU payout determinations at various levels of performance, including actual performance in fiscal year 2024, and the resulting payout (i.e., the percentage of target PSUs for this portion of the award that vested one half on May 16, 2024, with the remaining half to vest on May 16, 2025, subject to a recipient meeting the continued service requirement). For performance between points referenced in the table, straight-line interpolation was used for the PSU vesting determination.

Performance Metric

 

 

 

Threshold

 

 

Target

 

 

Maximum

 

 

Actual Performance

 

Strategic Products revenue FY24 ($ millions)

 

Goal ($ millions)

 

$

573.9

 

 

$

637.7

 

 

$

682.3

 

 

$

604.3

 

 

 

Payout %

 

 

80.0

%

 

 

100.0

%

 

 

200.0

%

 

 

89.5

%

 

The table below illustrates cumulative Performance EBITDA PSU payout determinations for the one-third of cumulative Performance EBITDA PSUs allocated to fiscal year 2024 performance, and the resulting payout (i.e., the percentage of PSUs allocated to fiscal year 2024 performance that vested on May 16, 2024 for this portion of the award. For performance between points referenced in the table, straight line interpolation was used for the PSU vesting determination.

Performance Metric

 

 

 

Threshold

 

 

Target

 

 

Maximum

 

 

Actual Performance 1

 

Fiscal Year 2024 Cumulative Performance EBITDA

 

Goal ($ millions)

 

$

327.8

 

 

$

409.7

 

 

$

441.1

 

 

$

370.1

 

 

 

Payout %

 

 

50.0

%

 

 

100.0

%

 

 

200.0

%

 

 

75.8

%

 

1.
Actual performance for cumulative Performance EBITDA for the period is calculated from GAAP net income, as adjusted as provided in Appendix A, with such number calculated above the baseline level of Performance EBITDA for fiscal year 2024.

The table below illustrates how payouts for this portion of the award will be determined for each of (1) the two-year period encompassing fiscal years 2024 and 2025, and (2) the three-year period encompassing fiscal years 2024, 2025, and 2026.

Performance Metric

 

Threshold

 

Target

 

Maximum

Fiscal Years 2024-2025 Cumulative Performance EBITDA

 

Goal

 

80.0% of Plan1

 

At Plan1

 

107.3% of Plan1

 

 

Payout %

 

50.0%

 

100.0%

 

200.0%

Fiscal Years 2024-2026 Cumulative Performance EBITDA

 

Goal

 

80.0% of Plan1

 

At Plan1

 

106.4% of Plan1

 

 

Payout %

 

50.0%

 

100.0%

 

200.0%

 

1.
Respective goals for “Plan” as approved by the Board for our 2024-2026 business plan.

 

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EXECUTIVE AND DIRECTOR COMPENSATION

Average cumulative cycle time was added as a performance metric to the PSUs to incentivize the speed and efficiency of our product development process for viable products in our product development pipeline.

 

The table below illustrates how the payout for this portion of the award will be determined. The payout is binary based on either achievement at 100% if the average cycle time for 85% of the RTMs is less than or equal to the target of 110 weeks, otherwise the payout is zero.

 

Performance Metric

 

 

 

Threshold / Maximum

Average Cumulative Cycle Time for 85% of RTMs in FY24-FY26 (# weeks)

 

Goal (# weeks)

 

>110.0

 

<=110.0

 

 

Payout %

 

—%

 

100.0%

Equity Awards Granted in Fiscal Year 2024

The table below summarizes all the equity awards granted to our NEOs in fiscal year 2024. There were no off-cycle awards made to any of the NEOs in fiscal year 2024.

 

Annual Equity Awards

 

 

 

PSUs At Target Level of Achievement
(60% of Total Award)

 

 

RSUs
(40% of Total Award)

 

Name

 

Relative TSR PSUs

 

+

Strategic Product Revenue PSUs

 

+

Cumulative Performance EBITDA PSUs

 

+

Cycle Time PSUs

 

=

Total PSUs

 

 

Total RSUs

 

Vineet Nargolwala

 

 

41,920

 

 

 

16,768

 

 

 

12,576

 

 

 

12,576

 

 

 

83,840

 

 

 

55,893

 

Derek P. D’Antilio

 

 

15,819

 

 

 

6,328

 

 

 

4,746

 

 

 

4,746

 

 

 

31,639

 

 

 

21,092

 

Michael C. Doogue

 

 

11,864

 

 

 

4,746

 

 

 

3,560

 

 

 

3,560

 

 

 

23,730

 

 

 

15,819

 

Max R. Glover

 

 

11,074

 

 

 

4,430

 

 

 

3,322

 

 

 

3,322

 

 

 

22,148

 

 

 

14,765

 

Sharon S. Briansky

 

 

8,701

 

 

 

3,481

 

 

 

2,611

 

 

 

2,611

 

 

 

17,404

 

 

 

11,601

 

Performance-Based Equity Awards with Performance Periods Ending in 2024

The following portions of PSUs granted in prior years had performance periods ending at the end of the 2024 fiscal year:

Fiscal Year of PSU Grant

 

PSU Award Component

 

Performance Period

 

Target Performance ($M)

 

Actual Performance ($M)

 

Payout (%)

 

 

Shares Earned

2022

 

Relative TSR

 

FY2022 - FY2024

 

50th %ile, positive TSR

 

36th %ile, positive TSR

 

 

71.4

%

 

(1)

2022

 

Performance EBITDA

 

FY2022 - FY2024

 

675.0

 

931.0

 

 

200.0

%

 

(2)

2023

 

Performance EBITDA

 

FY2023 - FY2024

 

657.6

 

715.5

 

 

200.0

%

 

(3)

2024

 

Strategic Products Revenue

 

FY2024

 

637.7

 

604.3

 

 

89.5

%

 

(4)