This excerpt taken from the AMCC DEF 14A filed Jul 7, 2009.
ON EXECUTIVE COMPENSATION
The Comptroller of the City of New York, William C. Thompson, Jr. (the Comptroller), as custodian and trustee of the New York City Employees Retirement System, the New York City Teachers Retirement System, the New York City Police Pension Fund, and the New York City Fire Department Pension Fund, and custodian of the New York City Board of Education Retirement System (together, the Funds), has advised us that the Funds intend to present the following proposal and supporting statement at the annual meeting. The Comptrollers office represents that the Funds are the beneficial owner, in the aggregate, of 200,093 shares of our common stock. The Comptrollers address is: 1 Centre Street, New York, NY 10007-2341. The proposal and supporting statement that we received from the Comptrollers office are set forth below.
Our Board of Directors strongly opposes adoption of this proposal and requests that our stockholders read our Boards response to the proposal which follows the proposal and the proponents supporting statement below.
RESOLVED, that shareholders of Applied Micro Circuits Corporation (the Company) urge the board of directors to adopt a policy that shareholders be given the opportunity at each annual meeting of shareholders to vote on an advisory resolution, to be proposed by the Companys management to ratify the compensation of the named executive officers (NEOs) set forth in the proxy statements Summary Compensation Table (the SCT) and the accompanying narrative disclosure of material factors provided to understand the SCT (but not the Compensation Discussion and Analysis). The proposal submitted to shareholders should make clear that the vote is non-binding and would not affect any compensation paid or awarded to any NEO.
Investors are increasingly concerned about mushrooming executive compensation which sometimes appears to be insufficiently aligned with the creation of shareholder value. Additionally, recent media attention to questionable dating of stock options grants by companies has raised related investor concerns.
The SEC has created a new rule, with record support from investors, requiring companies to disclose additional information about compensation and perquisites for top executives. The rule goes into effect this year. In establishing the rule the SEC has made it clear that it is the role of market forces, not the SEC, to provide checks and balances on compensation practices.
We believe that existing U.S. corporate governance arrangements including SEC rules and stock exchange listing standards, do not provide shareholders with enough mechanisms for providing input to boards on senior executive compensation. In contrast to U.S. practices, in the United Kingdom, public companies allow shareholders to cast an advisory vote on the directors remuneration report, which discloses executive compensation. Such a vote isnt binding, but gives shareholders a clear voice that could help shape senior executive compensation.
Currently U.S. stock exchange listing standards require shareholder approval of equity-based compensation plans; those plans, however, set general parameters and accord the compensation committee substantial discretion in making awards and establishing performance thresholds for a particular year. Shareholders do not have any mechanism for providing ongoing feedback on the application of those general standards to individual pay packages. (See Lucian Bebchuk & Jesse Fried, Pay Without Performance 49 (2004))
Similarly, performance criteria submitted for shareholder approval to allow a company to deduct compensation in excess of $1 million are broad and do not constrain compensation committees in setting performance targets for particular senior executives. Withholding votes from compensation committee members who are standing for reelection is a blunt and insufficient instrument for registering dissatisfaction with the way in which the committee has administered compensation plans and policies in the previous year.
Accordingly, we urge Applied Micro Circuits Corporations board to allow Shareholders to express their opinion about senior executive compensation at the Company by establishing an annual referendum process. The results of such a vote would, we think, provide the Company with useful
information about whether shareholders view the companys senior executive compensation as reported each year, to be in shareholders best interests.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
This excerpt taken from the AMCC 10-K filed Jun 7, 2005.
The information required by this Item is incorporated by reference to the sections entitled Compensation of Executive Officers, Option Grants in Last Fiscal Year, Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values, Employment Severance and Change of Control Agreements, Report of the Compensation Committee, Compensation Committee Interlocks and Insider Participation, Summary Compensation Table, Option Exchange Program and Ten Year Option Exchange in the proxy statement.