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Asyst Technologies 10-K 2008 Documents found in this filing:Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No. 1
(Mark One)
For the fiscal year ended March 31, 2008
or
Commission file number 0-22430
Asyst Technologies, Inc.
(Exact name of registrant as specified in its charter)
46897 Bayside Parkway, Fremont, California 94538
(Address of principal executive offices) Registrant’s telephone number, including area code:
(510) 661-5000 Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to
the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Act). Yes o No þ
The aggregate market value of the voting and non-voting common equity held by non-affiliates
as reported by the NASDAQ Global Market as of the last business day (September 28, 2007) of the
registrant’s most recently completed second fiscal quarter was $171,164,000.
There were 50,518,807 shares of common stock, no par value, outstanding as of July 23, 2008.
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ASYST TECHNOLOGIES, INC.
Explanatory Note: We are filing this Amendment No. 1 to our Annual Report on Form 10-K for the fiscal year ended
March 31, 2008, originally filed with the Securities and Exchange Commission on June 12, 2008,
solely for the purpose of including the information in Part III of the Form 10-K, as permitted
under General Instruction G(3) to Form 10-K. We are filing herewith currently dated certifications
in Exhibits 31.1, 31.2 and 32.1, all listed in the exhibit index below. Except as described above,
no other changes have been made to the original filing of that Annual Report, and this Form 10-K/A
does not amend or update any other information contained in that original filing.
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ASYST TECHNOLOGIES, INC.
TABLE OF CONTENTS
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PART III
Item 10 — Directors, Executive Officers, and Corporate Governance
Directors
The names of the incumbent directors currently serving on Asyst’s Board of Directors and
related biographical information are set forth below in the following table and under the caption
“Retiring Board Member.” We currently expect to nominate for election at our next annual meeting
six individuals to serve as our directors, and these six nominees are listed in the table below.
Dr. Schwartz has served as Chair of our Board since January 2003. He has been a director of
Asyst since August 2002, when he was elected to the Board in conjunction with his appointment as
our President and Chief Executive Officer. He joined Asyst in January 2001 as Senior Vice
President, Product Groups and Operations, and became Executive Vice President, Product Groups and
Operations in October 2001. Prior to joining us, he served as President of Consilium, a software
company and wholly owned subsidiary of Applied Materials, Inc., from May 1999 to January 2001.
Between May 1997 and May 1999, Dr. Schwartz served as Vice President and General Manager of Applied
Materials’ Global Service Business, a supplier of products and services to the global semiconductor
industry. From September 1992 to May 1997, Dr. Schwartz also served as General Manager of Applied
Materials’ High Temperature Films Division. From 1987 to 1992, Dr. Schwartz held various marketing,
business development and engineering positions at Applied Materials. He has been a director of
Semiconductor Equipment and Materials International, or SEMI, since July 2003.
Mr. Grubel has served as a director of Asyst since January 1997. He served as a Vice President
and General Manager of Philips Semiconductor Manufacturing, Inc. from June 2000 until his
retirement in 2001. Prior to such time, he served as Chief Executive Officer of MiCRUS, a
semiconductor manufacturing company, from September 1994 through June 2000. Between January 1990
and September 1994, he served in various executive positions for IBM. Since May 1999, he has also
served as a director of CH Energy Group, Inc.
Mr. McNamara has served as a director of Asyst since October 1999. He currently is President
and Chief Executive Officer of LVI Services, Inc., an emergency response and environmental
remediation company. Mr. McNamara retired in 2007 as Senior Group Executive of Fluor Corporation,
an engineering, procurement, construction and maintenance company, a position he held beginning in
2004. From 2001 to 2004, he served as Group Executive of Fluor. From June 1999 to 2001, he served
as Group President of the Manufacturing and Life Sciences Strategic Business Unit of the Fluor
Daniel division of Fluor. From October 1996 to June 1999, Mr. McNamara served as a Vice President
of Fluor Daniel. Prior to such time, he served as President and Chief Operations Officer of
Marshall Contractors from 1982 until Marshall was acquired by Fluor in October 1996.
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Mr. Santelli has served as a director of Asyst since May 2001. He served as Executive Vice
Chairman of USA Global Link, a telecommunications and information services company, from August
1999 until retiring in May 2001. From March 1997 until July
1999, Mr. Santelli served as a General Manager of IBM Printing Systems Company. From November
1995 to March 1997, Mr. Santelli was General Manager, Product and Brand Management, of IBM Personal
Computer Company.
Mr. Simon has served as a director of Asyst since January 2005. From February 2001 to July
2004, Mr. Simon was a director of Duane Reade, Inc., serving as chair of its audit committee and as
its audit committee financial expert. From July 1998 to 2002, Mr. Simon held various executive
positions with BearingPoint, Inc., a business and systems integration consulting firm (which, prior
to its public offering in 2001, was the consulting entity of KPMG LLP). From 2001 until his
retirement from BearingPoint in 2002, Mr. Simon served as its Executive Vice President,
International Consulting, and from July 1998 to 2001 as its CEO, Latin America Consulting.
Mr. Simon held various positions with KPMG LLP over a 37-year period, including until his
retirement in June 1998 as its National Managing Partner for the firm’s Manufacturing, Retailing
and Distribution Practice (a vice chair position). Mr. Simon also served as Partner in Charge of
KPMG’s Management Consulting and Audit Practices (vice chair positions), as well as serving as
Chair of its Audit and Management Consulting Practice Committees.
Mr. Wilson has served as a director of Asyst since January 1995. Since October 2000, he has
been a business consultant. From 1989 until he retired in October 2000, Mr. Wilson held numerous
management positions at Solectron Corporation, a provider of electronics manufacturing and
integrated supply chain services, most recently as its Senior Vice President, Business Integration.
Retiring Board Member
Tsuyoshi E. Kawanishi, who is a current member of the Asyst Board of Directors, has notified
us that he will not be standing for re-election at the Annual Meeting but intends to serve out the
remainder of his term.
Mr. Kawanishi, age 79, has served as a director of Asyst since June 2003 (and previously
during the period 1996 – 2001). He currently also serves as a director of Semiconductor
Manufacturing International Corporation, a semiconductor foundry in the People’s Republic of China,
and TEK Consulting. Mr. Kawanishi previously served on the board of Applied Materials, Inc. from
1994 to 2001. He is a former Executive Senior Vice President and director of Toshiba Electronic
Co., Ltd. He currently serves as chairman of The Society of Semiconductor Industry Seniors in
Japan, and previously served on the International Advisory Panel for Singapore Technologies Pte
Ltd.
The practical and logistical difficulties of participating in the increasing number of our
board meetings over recent years due to scheduling and the time difference between Japan and
California, has made it very difficult for Mr. Kawanishi to meet not only his expected level of
participation but also the attendance standard for board meetings under evolving US governance
principles. As a result, he and our Board reached the mutual decision that he would not stand for
re-election. Asyst and our full Board of Directors express deep appreciation for his years of
service and significant and unique contributions to our company, as both a member of our Board and
senior adviser for our operations in Asia, and we expect that he will continue to provide advisory
services relating to our operations in Asia going forward.
Committee Membership
There are three standing committees of our Board: Audit Committee, Governance and Nominating
Committee, and Compensation Committee. The members of these committees currently are:
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Director Independence
Our Board determined in July 2008 that each of the incumbent directors and nominees, other
than Dr. Schwartz, is an independent director as defined in Rule 4200 of the NASDAQ listing
standards. The Board considered that Mr. Santelli’s son-in-law is employed
by Asyst as one of its vice presidents managing post-installation product services
and that he is not an executive officer of the company and does not act in that capacity, is not a
member of the executive management team reporting to the CEO, does not have a key strategic role in
the company, and is not in charge of any policy-making function. In addition, the Compensation
Committee, on which Mr. Santelli serves as its Chair, has no role in the establishment of the
son-in-law’s cash compensation, including setting or determination of his bonus, and Mr. Santelli
is not involved in any Committee actions with direct or particular affect on his son-in-law.
Accordingly, the Board determined that the son-in-law’s employment relationship and related
compensation are not material and do not affect Mr. Santelli’s independence.
The Board also considered the continuing consulting services that Mr. Kawanishi (an incumbent
director who is not standing for re-election) provides directly to Asyst Japan Holding Co., Inc.,
and the associated fees he receives (see Note 3 to “Non-Employee Director Compensation Table,”
below). However, our Board determined that this consulting relationship and compensation are not
material and do not affect Mr. Kawanishi’s independence.
The foregoing independence determination also included the conclusions of our Board that each
of the members of its Audit Committee, Governance and Nominating Committee, and Compensation
Committee listed above is independent, as defined under the NASDAQ listing standards, and, with
respect to the Audit Committee, independent under additional SEC rules defining independence for
members of an audit committee.
Executive Officers
The names of our current executive officers and related biographical information are set forth
below:
Biographical information for Dr. Schwartz is set forth under “Directors,” above.
Mr. Bonora joined Asyst in 1984 and has been Executive Vice President, Research and
Development of Asyst since 1986, Chief Technical Officer since January 1996, and Asyst Fellow since
April 2000. From 1975 to 1984, Mr. Bonora held various management positions at Siltec Corporation,
a manufacturer of products for the semiconductor industry, including Vice President, Research and
Development and General Manager of its Cybeq equipment division. Mr. Bonora holds Bachelor’s and
Master’s degrees in mechanical engineering from the University of California, Berkeley.
Mr. Sicuro joined Asyst as Senior Vice President and Chief Financial Officer in January 2007.
From January 2004 to June 2006, Mr. Sicuro was Chief Financial Officer for Progressive Gaming
International Corp., a publicly traded technology company serving the gaming industry. From 2001 to
2004, Mr. Sicuro was Chief Financial Officer for Lightspan, Inc., a publicly traded company that
provided curriculum-based instructional and assessment resources for use both in schools and homes,
and from 1996 to 2000 Mr. Sicuro was Chief Financial Officer for ITLA Capital, a publicly traded
specialty finance holding company. Before joining ITLA Capital, he held positions as Chief
Financial Officer of Blue Cross of California (WellPoint Health Networks) and of U.S. Bancorp
Mortgage, and held senior financial positions with several other large financial organizations.
Mr. Sicuro holds a Bachelor’s degree in business administration from Kent State University, Ohio.
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Ms. LuPriore joined Asyst in 2002 as Vice President and General Manager of Software, and was
appointed Senior Vice President, Automated Solutions Group in January 2007 with responsibility for
the company’s entire product offering and product development programs. Prior to joining Asyst, she
held various Vice President positions at IBM, most recently as its Vice President for Storage
Networking Products, with responsibility for software and hardware engineering, product management
and marketing, and professional services. Ms. LuPriore holds a Bachelor’s degree in applied
mathematics from the University of Rhode Island.
Mr. Kawano was appointed Senior Vice President, Automated Solutions Group in March 2007 with
joint responsibility with Ms. LuPriore for the company’s entire product offering and product
development programs. In February 2008, Mr. Kawano assumed responsibility for certain strategic
projects relating to product engineering and new product assessment. Mr. Kawano has also served
since 2002 as President of our wholly owned Japan subsidiary, Asyst Technologies Japan, Inc. Prior
to joining our company, Mr. Kawano held various senior positions over 35 years with Shinko Electric
Co., Ltd., including as Executive Managing Director in charge of its R&D Division, and as a member
of its Board of Directors. Mr. Kawano is a graduate of Kyoto University, with a degree in
electrical engineering.
Mr. Leitzke
joined Asyst as Vice President of Manufacturing Operations in August 2004, and was
appointed Senior Vice President, Global Operations in January 2007. Prior to joining Asyst, Mr.
Leitzke held senior operations executive positions with Siemens Information Systems, Applied
Materials, Inc., and Silicon Graphics, Inc. Mr. Leitzke holds a Bachelor’s degree in Mechanical
Engineering from the Indiana Institute of Technology.
Mr. Debenham joined Asyst in September 2003 as Vice President, General Counsel and Secretary.
From May 2000 to June 2003, Mr. Debenham was with myCFO, Inc., a financial services firm, most
recently as its Senior Vice President and General Counsel. From April 1998 to April 2000,
Mr. Debenham was Assistant General Counsel with Lam Research Corporation, a semiconductor equipment
manufacturer. Prior to joining Lam, Mr. Debenham was in private practice from December 1989 to
April 1998 with the law firm of Jackson Tufts Cole & Black, LLP, most recently as a partner with
its Litigation Practice Group. Mr. Debenham is a graduate of Stanford University and the University
of California, Hastings College of Law.
There are no family relationships among any of our directors or executive officers.
Audit Committee
Charter and Purposes. The charter of the Audit Committee was amended and restated by our
Board in May 2004 (and is available on our website at
www.asyst.com by clicking on “Investor
Relations,” then “Corporate Governance,” and then “Highlights”). The primary purposes of this
committee are to oversee on behalf of our Board: (a) Asyst’s accounting and financial reporting
processes and integrity of Asyst’s financial statements; (b) the audits of Asyst’s financial
statements and appointment, compensation, qualifications, independence and performance of Asyst’s
independent registered public accounting firm; (c) Asyst’s compliance with legal and regulatory
requirements; and (d) Asyst’s internal control over financial reporting.
Members. In addition to the determination by our Board of the independence of the members of
this committee, described above under “Director Independence,” our Board has also determined that
each of the members of the Audit Committee meets the requirement of the NASDAQ listing standards
that the member be able to read and understand fundamental financial statements, including a
company’s balance sheet, and income and cash flow statements. Additionally, our Board has
determined that Mr. Grubel, Mr. McNamara, Mr. Santelli, Mr. Simon and Mr. Wilson each meets the
requirement of the NASDAQ listing standards that at least one member of the Committee has past
employment experience in finance or accounting, requisite professional certification in accounting,
or other comparable experience or background which results in the individual’s financial
sophistication.
Audit Committee Financial Expert. Our Board has determined that incumbent director Mr. Simon
meets the definition of an “audit committee financial expert,” as defined in SEC rules.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons
who own more than ten percent of a registered class of our equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of our Common Stock and other
equity securities. Officers, directors and greater-than-ten-percent beneficial shareholders are
required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
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To our knowledge, based solely on a review of the copies of such reports furnished to us and
written representations that no other reports were required during the fiscal year ended March 31,
2008, our officers, directors and greater-than-ten-percent beneficial shareholders complied with
all Section 16(a) filing requirements applicable to them, except that on May 17, 2007, Forms 4 were
filed late to report transactions in which Asyst withheld shares then-vesting under stock awards to
satisfy income tax withholding obligations for the following officers (and with respect to the
number of tax withholding transactions indicated): Mr. Schwartz (4), Mr. Leitzke (2), Ms. LuPriore
(2), and Mr. Debenham (4).
Code of Ethics
Information relating to the Code of Ethics defined in SEC rules is set forth in Part I, Item 1
“Business — Additional Information and Governance Matters” in our Form 10-K for the fiscal year
ended March 31, 2008, that was filed on June 12, 2008, and is incorporated herein by reference.
Item 11 — Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
Overview of Compensation Program
The Compensation Committee of our Board of Directors has responsibility for establishing,
implementing and periodically monitoring adherence to the company’s compensation philosophy. In
this regard, a key objective of the Committee is that the total compensation paid to our Chief
Executive Officer, our Chief Financial Officer, and our other executives is fair, reasonable and
competitive for their respective positions.
In this Compensation Discussion and Analysis, except as the context otherwise indicates, we
define “executives” as those individuals who served during fiscal year 2008 as our Chief Executive
Officer and Chief Financial Officer, as well as the other named executive officers included in
“Summary Compensation Table,” below.
Executive Compensation Philosophy & Objectives
Our overall compensation program seeks to align compensation with the achievement of Asyst’s
business objectives and individual performance against these objectives. It also seeks to enable
Asyst to attract, retain and reward executives and other key employees who contribute to our
success and to incentivize them to enhance long-term shareholder value. For this reason, we offer a
total compensation package competitive with companies in the semiconductor industry (taking into
account relative company size, performance and geographic location, as well as individual
responsibilities and performance). In weighting the components of compensation for each executive
the Committee emphasizes pay for performance, both on an annual basis against company and
individual objectives for any fiscal year, and over the long term against company objectives to be
achieved over a longer term. We also consider the appropriate balance between incentives for
long-term and short-term performance. For these reasons, the Committee will adjust elements of our
executive compensation program that it perceives no longer serve the company’s objectives or the
Committee’s compensation philosophy, or may exercise discretion to adjust specific benefits under
our executive compensation program in order to reward achievement or where necessary to ensure that
actual benefits are appropriately aligned with company objectives and performance.
Consistent with this pay-for-performance philosophy, the Committee believes that more than
half of an executive’s total compensation should be weighted toward achievement of corporate and
individual performance objectives that are aligned with enhancing overall shareholder value over
the long-term. Accordingly, a significant portion of an executive’s total target compensation will
be in the form of a performance-based annual cash bonus and service and performance-based equity
awards. The allocation between annual and long-term compensation is based on market conditions,
with an emphasis on attracting and retaining key executives as well as motivating them to achieve
results. Typically, an executive will receive less than half of his or her total compensation in
base salary, and as an executive’s responsibilities increase within our company, his or her base
salary will increasingly be a less significant portion of the executive’s total potential
compensation.
In general, the company’s executives receive their salary and bonus in cash, while equity
awards provide our principal long-term incentive compensation. Historically, equity awards had been
given mostly in stock options. However, the company moved toward increasing use of stock awards,
including performance-based shares, and beginning in fiscal year 2007 the company eliminated the
use of stock options in all but exceptional instances. The Committee believes there is merit to
encourage ownership of our company’s
equity through stock awards. In addition, the Committee believes that greater use of stock
awards — as compared to stock options — enables the Committee to provide greater potential equity
incentives to our executives relative to potential shareholder dilution. The Committee has used an
increasingly greater proportion of performance-based shares compared to service-based shares for
stock awards to executives.
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While the Committee seeks to encourage long-term stock ownership by our executives, it does
not have established ownership guidelines and does not currently use this factor to determine
future equity awards to our executives. However, beginning with performance awards made to the
executives for our fiscal year 2008, the Committee has imposed “hold” requirements in addition to
performance-based vesting to encourage equity ownership and executive retention, as summarized
below under “Fiscal Year 2008 Executive Compensation Components — Annual Equity Awards.”
The total compensation program is also designed to be competitive with the programs of other
companies of comparable revenue size in the semiconductor capital equipment industry, and other
selected companies with which we compete for customers and executives, and to be fair and equitable
to both the company and the executives. Accordingly, for any given fiscal year the allocation
between annual and long-term compensation components may also be influenced by current market
conditions and the need to retain our most skilled executives. The Committee gives consideration to
each executive’s overall responsibilities, professional qualifications, business experience, job
performance, technical expertise and career potential, and the combined value of these factors to
our immediate and long-term performance and growth.
Specifically, our executive compensation program intends to:
The Committee strives to meet these objectives while maintaining market-competitive pay levels
(including effective use of equity incentives). In furtherance of these objectives, the Committee
has access to compensation experts (which it has sole authority to engage, direct, compensate and
terminate).
The Committee analyzes comparative executive compensation information from relevant peer
groups, approves executive salary adjustments, approves executive discretionary/incentive bonus
plans and payments, and oversees management’s administration of the company’s equity incentive
plans. The Committee also reviews and approves recommendations and input from our Chief Executive
Officer regarding individual annual performance objectives for the executives who report to him, as
well as his assessment of individual performance over the relevant fiscal year against those
objectives. Our Chief Executive Officer may also recommend to the Committee annual salary
adjustments, bonus amounts and annual equity awards for each executive that reports to him. The
Committee reviews these recommendations against comparative compensation information, but the
Committee exercises its own independent judgment in determining the final compensation payable to
each executive, including our Chief Executive Officer.
The Committee regularly meets in executive session, without the Chief Executive Officer or
other members of our executive management, and/or solely with consultants the Committee has
engaged, during which the Committee regularly assesses the performance of our Chief Executive
Officer and other executives. The Committee also annually reviews with our Chief Executive Officer
its assessment of his performance, including specific areas where the Committee determines that his
performance falls short of objectives and targets the Committee established for the year. As part
of this annual review, the Committee seeks input from other members of our Board of Directors.
The Committee assesses and determines the compensation for our Chief Executive Officer, using
the same criteria as for the other executives. When assessing our Chief Executive Officer’s
performance, or determining his annual salary adjustment, bonus amount and equity awards, the
Committee meets independently and without consultation with or the participation of our Chief
Executive Officer.
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Use of Comparative Peer Compensation Data & Assumptions
The Committee gives significant consideration to market information and executive compensation
survey data regarding the base salaries, cash bonuses, equity and other incentives and compensation
provided or paid to executives of companies comparable to us in the semiconductor industry. The
Committee uses comparisons of competitive pay practices taken from several semiconductor and
technology industry surveys, and as determined and aggregated by our consultants from a similar
group of publicly traded companies with annual revenues of between approximately $200 million and
$1 billion (collectively, the “Compensation Peer Group Data”).
The Compensation Peer Group, which is periodically reviewed and updated by the Committee,
consists of companies against which the Committee believes the company competes for talent and
shareholder investment. The Compensation Peer Group specifically comprised the following companies
for our fiscal year 2008 compensation decisions:
The Committee recognizes that the Compensation Peer Group reflects a significant variance in
revenue and market capitalization; however, the Committee believes that some variability in annual
revenue size amongst such companies is beneficial as a benchmark for components of total potential
compensation at assumed growth targets for the company. In addition, the Compensation Peer Group
may include companies, such as Applied Materials, Inc., who participate in the semiconductor
industry but who may be significantly larger than Asyst. The Committee feels that including such
companies, against whom we may compete to attract and retain key employees (including our
executives), is necessary to ensure that our compensation programs are sufficient and competitive
to provide long-term employee retention.
When assessing equity awards as a component of long-term incentive compensation, the Committee
relies on a Black-Scholes methodology to value stock options. Service-based stock awards are
assessed at face value (assuming no discount for potential forfeiture), but performance-based stock
awards are assessed at 80 percent of the face value to account for uncertainty of goal attainment.
In making executive compensation decisions for our fiscal year 2008, the Committee compared
each element of total potential compensation against executive compensation data and statistics for
the Compensation Peer Group.
Use of Independent Compensation Consultants
The Committee relies on the advice and input of independent consultants the Committee directly
engages. The Committee determines the scope of consultant services independent of any management
involvement or influence, and routinely meets with its consultants outside of management’s presence
and without management participation. The Committee relies on its consultants to collect and
actively review with the Committee data and statistics for the Compensation Peer Group, as well as
to identify and analyze for the Committee market trends from relevant peer groups regarding
executive compensation. The Committee also looks to its consultants to assist in identifying or
structuring elements of our executive compensation that better align incentives with specific
company objectives that the Committee articulates. The Committee believes that the advice and input
it receives from its consultants are unbiased, objective and not subject to management influence.
In April 2007, the Committee retained Mercer (US) Inc. (“Mercer”) to provide information,
analyses, and advice regarding executive and director compensation, as described below. The Mercer
consultant who performs these services reports directly to the Committee chair. The company may
also retain Mercer and its related entities to perform other services.
The Committee has established guidelines that it considers adequate to ensure that Mercer’s
advice to the Committee remains independent, objective and not influenced by the company’s
management. These procedures include but are not limited to a direct reporting relationship of the
Mercer consultant to the Committee and written assurances from Mercer that, within the Mercer
organization, the Mercer consultant who performs services for the company has a reporting
relationship and compensation determined separately from Mercer’s other lines of business and from
its other work for the company.
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At the Committee’s direction, Mercer provided the following services for the Committee during
our fiscal year 2008:
All of the decisions with respect to determining the amount or form of executive and director
compensation under the company’s executive and director compensation programs are made by the
Committee alone and may reflect factors and considerations other than the information and advice
provided by Mercer.
Fiscal Year 2008 Executive Compensation Components
The components of executive compensation consist of annual base salary, performance-based
annual cash bonus, and service and performance-based equity awards.
As a general matter, the Committee sets base salaries at between the 50th and
75th percentile, but sets target total compensation (including performance-based annual
cash bonus and equity awards) at greater than the 75th percentile relative to the
Compensation Peer Group. However, the Committee does not impose a strict or uniform percentile band
to determine base salaries or any other specific element of compensation for our executives for any
given fiscal year. In addition, the equity awards are weighted heavily toward performance-based
vesting (as opposed to service-based vesting). Typically, more than 50 percent of the value of
equity awards depends on achievement of performance objectives determined by the Committee. The
Committee believes this weighting, and specifically providing our executives a potential to achieve
total compensation greater than the 75th percentile upon the maximum achievement of
performance objectives, is consistent with the Committee’s overall “pay-for-performance” philosophy
and alignment of compensation incentives with corporate objectives targeted to increase overall
shareholder value. Accordingly, actual total compensation is typically below the target and below
the targeted 75th percentile of actual total compensation relative to the Compensation
Peer Group (in many cases, significantly).
Annual Base Salary
The Committee annually reviews each executive’s base salary, making an objective assessment of
individual and corporate performance, level of responsibility, experience, breadth of knowledge,
current performance, and the competitive marketplace for comparable executive talent.
Based on the Compensation Peer Group Data, for fiscal year 2008 base salaries for our
executives were at the following market levels: Dr. Schwartz, our CEO and President, was below the
25th percentile, Mr. Sicuro, our SVP and Chief Financial Officer, Ms. LuPriore, our SVP
of Automated Solutions, and Mr. Debenham, our General Counsel and Secretary, were all within 10
percent below the 50th percentile, and Mr. Leitzke, our SVP of Global Operations was at
the 75th percentile.
Specifically, annual base salary for each executive was as follows for our fiscal year 2008:
Dr. Schwartz, $450,000; Mr. Sicuro, $310,000; Ms. LuPriore, $305,000, Mr. Leitzke, $285,000 and Mr.
Debenham, $250,000.
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The Committee set fiscal year 2008 base salaries for each executive based on its assessment of
the executive’s continuing performance and changes in the executive’s responsibilities, as well as
the Committee’s intention to maintain competitive
compensation for each executive. The Committee also noted the company’s improved financial
performance in fiscal year 2007 compared to previous years, including sustaining significantly
increased revenue compared to previous years, improved balance sheet and EBITDA performance and
progress in achieving greater integration of our significant operations in Japan (following the
company’s acquisition in 2006 of the remaining equity of Asyst Technologies Japan, Inc., our
joint-venture in Japan with Shinko Electric Co., Ltd.).
Performance-Based Annual Cash Bonus
We pay performance-based annual cash compensation to our executives under our general
executive bonus plan. In determining the amount of any annual cash bonus paid to our executives, we
place great emphasis on rewarding achievement against annual performance goals (both individual and
corporate) that are directly linked to corporate initiatives and maximization of shareholder value.
The Committee annually reviews target and maximum annual cash bonus compensation levels for our
executives as a percentage of their base salary. We have designed our general executive bonus plan
so that our executives may earn higher than median annual cash bonus compensation for above-target
performance and lower than median annual cash bonus compensation for below-target performance (as
determined by Compensation Peer Group Data, which is generally equivalent to the amount an
executive could receive under our general executive bonus plan if he or she achieves 100 percent of
his or her goals and the company achieves 100 percent of corporate objectives). Consistent with our
pay-for-performance philosophy, where the company fails to meet minimum performance targets, an
executive may not receive an annual cash bonus for a given year (regardless of that executive’s
achievement of individual objectives).
For example, we did not pay annual cash bonuses to our executives for our fiscal years 2004
and 2005 under our general executive bonus plan (and only a reduced pay-out for our fiscal years
2006 and 2008) due to company performance below targeted objectives. In addition, to be eligible
and deemed to have earned a cash bonus under our general executive bonus plan, the executive must
also be employed in good standing as of the dates the Committee determines the bonus payment and
the payment is actually made by the company.
The Committee approves corporate and individual executive performance targets at the beginning
of each fiscal year. These performance goals vary by executive, and are typically weighted with
relation to the particular business unit or function for which the executive has responsibility.
Where practical, the Committee uses quantitative goals that both challenge performance and have a
significant impact on the improvement of a business unit or our overall performance. The Committee
also generally weights achievement of financial performance goals more heavily. However, in any
particular year the Committee may give significant weight to a specific initiative that will
promote our strategic objectives for that year (or position us to achieve a strategic objective
over the long-term).
For example, as discussed below, the Committee determined that certain New Product Development
initiatives were significant during our fiscal year 2008 to positioning the company for long-term
strategic growth and profitability. Accordingly, for our fiscal year 2008 executive bonus plan,
the Committee determined as part of the corporate objectives to give equal and independent weight
to achievement of financial targets as well as product development initiatives.
The Committee then reviews and approves annually each executive’s achievement of his
performance goals, based on an initial assessment provided by the Chief Executive Officer and the
Committee’s own assessment. The Committee independently assesses the performance of our Chief
Executive Officer against his performance goals established for the fiscal year.
Under our executive bonus plan for our fiscal year 2008, the Committee determined annual cash
bonus targets for each executive, based on a percentage of the executive’s base salary. In May
2007, the Committee set the target bonus for Dr. Schwartz at 125 percent of his base salary, and at
75 percent of base salary for each of our other executives. This placed the fiscal year 2008 total
target annual base and incentive bonus compensation for each of our executives between the
50th and 75th percentile based on the Compensation Peer Group data (except
for Mr. Leitzke and Mr. Debenham, whose total target annual base and incentive bonus compensation
was greater than the 75th percentile).
The actual bonus paid to our executives for fiscal year 2008 was determined based on a
combination of achievement of targeted corporate (70 percent) and individual executive (30 percent)
performance objectives. The Committee used the following formula to determine annual cash bonuses
to our executives for our fiscal year 2008:
Annual Base Salary X Target Bonus % X Performance Achievement
Where
Performance Achievement = (70% x corporate achievement) + (30% x individual achievement)
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For fiscal year 2008, the Committee set the corporate performance objective based on our
ability to increase our earnings per share above $0.50 (on a non-GAAP basis) and to demonstrate
significant progress toward developing and releasing a new generation of product solutions relating
to our new conveyor, DirectLoad™, VAO™ software and Gen 8 Flat Panel Display product offerings, as
well as to develop new service offerings to our existing customers. The Committee deemed these New
Product Development initiatives to be significant to the company’s long-term strategic success and
market positioning. Achievement under either corporate performance objective – Earnings Per Share
or New Product Development – was a separate and independent basis to fund and determine the actual
cash bonuses to our executives for our fiscal year 2008.
We reported non-GAAP earnings per share of $0.04 for our fiscal year 2008, which was below
minimum levels the Committee established for this corporate objective. Our non-GAAP earnings
measure excluded charges management considered to be outside our core operating results, as more
fully described and reconciled in our previous quarterly press releases announcing the financial
results (which we also furnished on Forms 8-K). However, the Committee determined that the company
demonstrated significant progress against identified corporate objectives for New Product
Development – specifically, our successful conveyor and DirectLoad product releases, achieving a
strategic customer commitment relating to our Gen 8 Flat Panel Display product, and obtaining
significant initial commitments and bookings from one of our strategic customers in Japan relating
to our VAO software and new service offerings during fiscal year 2008.
Based on our achievement during the year against of New Product Development objectives, the
Committee determined that we achieved 55 percent of our overall corporate performance objectives.
The Committee determined individual objectives for our fiscal year 2008 based on corporate
initiatives and objectives specific to the executive’s individual responsibilities. For our fiscal
year 2008, the Committee determined that our Chief Executive Officer achieved 69 percent of his
individual performance objectives, and the other executive achieved between 74 and 105 percent of
individual performance objectives for the year (for an average of 96.5 percent).
However, as noted above, the Committee retains the ability to exercise discretion to adjust
specific benefits under our executive compensation programs where necessary to ensure that actual
benefits are appropriately aligned with company objectives. In this regard, the Committee
identified specific areas of effective operating controls and project management relating to
certain large projects in Japan and Taiwan, where the company’s financial and operating performance
during our fiscal year 2008 fell short of our operating objectives (separate from the corporate and
individual objectives established for our executive bonus plan), and exercised its discretion to
reduce by 20 percent the actual bonuses to be paid to our top operating executives for our fiscal
year 2008. This included a 20 percent reduction in the bonus payment to our Chief Executive
Officer for our fiscal year 2008.
The table below provides a comparison for each executive of the actual bonus payment, the
bonus formula amount prior to the operating performance reduction discussed above, and the
respective initial target bonus for our fiscal year 2008 (with such respective initial target bonus
shown assuming 100 percent achievement of corporate objectives and 100 percent of individual
objectives). The indicated actual bonus payments were approved in May 2008 and made to the
executives in July 2008.
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Based on the actual incentive bonuses determined by the Committee, the fiscal year 2008 total
actual annual base and incentive bonus compensation for our executives was as follows (based on the
Compensation Peer Group Data):
Annual Equity Awards
Equity awards are designed to provide at-risk incentive compensation to align our executives’
financial interests with those of our shareholders, as well as to encourage ownership of our Common
Stock, support achievement of corporate short and long-term financial objectives, and provide
competitive equity reward opportunities.
The Committee utilizes our 2003 Equity Incentive Plan (the “2003 Plan”) as the primary vehicle
for providing long-term incentive compensation to our executives. The 2003 Plan provides for both
incentive and nonstatutory stock options and stock awards. There is a limited term typically of six
years from the date of grant in which recipients can exercise stock options. At the end of the
option term the right to purchase any unexercised options expires. Option holders generally forfeit
any unvested option if their employment with us terminates. However, optionees typically will have
a limited time following termination of their employment to exercise vested options, depending on
the terms outlined in the award agreement.
The Committee annually approves equity awards for our executives, typically in the first
quarter of each fiscal year to be able to reflect the company’s determination of its near-term and
strategic operating objectives and initiatives as part of our annual operating planning process for
that fiscal year. Historically, equity has been awarded to our executives in the form of stock and
stock options. However, over the prior three fiscal years the Committee has moved toward greater
use of stock instead of stock options. In December 2006, the Committee determined as a matter of
policy to rely principally on awards of restricted stock or stock units as long-term equity
incentive compensation for our employees (including our executives), and to award stock options on
an exceptions basis. The Committee utilizes a combination of service-based as well as
performance-based vesting for stock awards to our executives. Service-based stock awards typically
vest over three years, in equal installments on each of the first three anniversaries of the award
date. Performance-based awards to our executives vest upon the achievement of one or more
identified performance goals. Beginning for our fiscal year 2008, performance-based stock awards
for our executives also included a service-based “hold” requirement to encourage executive stock
ownership and long-term retention.
The Committee also reviews the company’s overall stock award activity against peer companies.
For example, the annual stock compensation expense we recognized for our fiscal year 2007 (the last
completed fiscal year for which peer company data is available) was 1.2 percent of our revenue for
the same period, which placed below the 25th percentile of peer companies.
The Committee determines equity awards for each executive based on a target potential value to
the executive in the event all service-based vesting occurs under the award and eighty percent of
the vesting occurs under performance-based awards. The target potential value is determined as a
percentage of the executive’s annual base salary for the fiscal year. For the fiscal year 2008
awards, the Committee set the target potential equity value for each executive using the following
approximate percentages of the executive’s annual base salary for the year: Dr. Schwartz,
250 percent; each other executive, 95 percent.
However, for the fiscal year 2008 awards the Committee determined to provide our executives
the opportunity to increase the maximum potential value for each executive by an additional
40 percent above the target level upon achievement of “stretch” performance objectives that the
Committee determined were significant to the company’s near-term strategic objectives.
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The performance objectives necessary for vesting under the performance-based equity awards to
our executives for fiscal year 2008 involve corporate objectives tied to targeted (a) company
profitability (on a non-GAAP basis) to be achieved over our fiscal years 2008 through 2010, and
(b) revenue and operating targets (including margin performance) relating to strategic product
development, placement and customer penetration to be achieved over our fiscal years 2008 through
2011. Actual shares earned will range from 0 percent to 100 percent of the theoretical maximum,
with approximately 62.5 of the performance-based shares being earned for “target” performance and
100 percent being earned for “stretch” performance (which stretch objectives represent a
significantly greater degree of difficulty over the “target” objectives, and will depend upon the
company’s ability to deliver operating performance and growth well in excess of recent trends). In
the event the performance objectives are met, any shares that vest will nonetheless be subject to a
mandatory deferral for three years following the award date. The Committee determined that this
three-year hold period would promote stock ownership and provide an additional retention incentive
for our executives.
The total equity awards the Committee approved to each of our executives for our fiscal year
2008 were weighted such that more than 60 percent of the target potential value to the executive
depends on the achievement of “target” performance objectives (with achievement of “stretch”
performance objectives weighting the maximum potential value at more than 75 percent
performance-based).
The Committee used $7.00 per share to calculate the target and maximum potential value under
the respective awards (which approximated the trading price per share of the company’s Common Stock
as of the Committee’s determination and approval of these awards). As noted above, the Committee
assesses service-based stock awards at face value, and performance-based stock awards at 80 percent
of the face value to account for uncertainty of goal attainment.
Given the significant weighting toward performance-based stock awards, more than 62 percent of
the target total cash and equity compensation for our Chief Executive Officer in fiscal year 2008
was “at risk” and more than 48 percent was similarly “at risk” for each of our other executives.
The table below provides a comparison of service and performance-based equity awards for our
executives for fiscal year 2008. The performance-based equity awards are shown both as the number
of total shares available on achievement of target objectives, and the number of additional shares
available on achievement of “stretch” objectives. A description of vesting terms is set forth in
notes 3 and 4 to the “Grants of Plan-Based Awards” table, below.
The Committee believes that the objectives used to determine vesting under performance-based
equity awards are achievable but, nonetheless, involve considerable risk and uncertainty. For
example, in May 2007 and May 2008 the Committee determined that the company failed to meet certain
performance objectives relating to appreciation in our market capitalization that the Committee
established under equity awards approved in May 2005 and May 2006, respectively; consequently,
80,952 shares otherwise eligible to vest under those awards to our executives were cancelled.
These cancellations included 43,524 shares otherwise available to our Chief Executive Officer under
such equity awards.
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Fiscal Year 2009 Executive Compensation Components
For fiscal year 2009 compensation decisions (and the benchmarking data identified below) the
Committee adjusted the Compensation Peer Group used for fiscal year 2008 compensation decisions.
The Compensation Peer Group specifically comprised the following companies for our fiscal year 2009
compensation decisions:
The Committee determined for fiscal year 2009 to add specific companies to the prior year’s
Compensation Peer Group – CREE, Inc., Lam Research Corporation, Novellus Systems, Inc. and
Semitool, Inc. – and to drop specific companies – LTX Corp., Mindspeed Technologies, Inc., and OSI
Systems, Inc. – in order for the Compensation Peer Group and Compensation Peer Group Data to
reflect more properly the companies against whom we compete both in our industry sector and for
executive talent.
In May 2008, management recommended that the Committee not adjust the base salaries or target
cash bonuses for our fiscal year 2009 for each of our executives, including our Chief Executive
Officer. Management determined that a freeze in executive base salaries was appropriate given the
current continuing slow-down in business activity affecting our company, and our company’s
initiative specifically to reduce our Sales, General & Administrative expenses. The Committee
accepted management’s recommendation.
Generally, fiscal year 2009 base salaries for our executives were within 10 percent below
market median levels (determined as the 50th percentile), based on the Compensation Peer
Group Data. However, the base salaries for Thomas Leitzke, Senior Vice President, Global
Operations, was at the 75th percentile. The base salary for Dr. Schwartz, our Chief
Executive Officer, was below the 25th percentile for our fiscal year 2009.
Specifically, annual base salary for each executive remained as follows for our fiscal year
2009: Dr. Schwartz, $450,000;Mr. Sicuro, $310,000; Ms. LuPriore, $305,000, Mr. Leitzke, $285,000
and Mr. Debenham, $250,000.
Performance-Based Annual Cash Bonus
Under our general executive bonus plan for our fiscal year 2009, the Committee maintained
target bonuses at 125 percent of base salary for Dr. Schwartz, and at 75 percent of base salary for
each of our other executives. As in the past, the Committee has discretion to award to individual
executives more or less than the target bonus amount, based on the Committee’s assessment of
performance against identified corporate and individual objectives; however, no individual may
receive more than 200 percent of the target bonus amount. For fiscal year 2009, the Committee set
targeted corporate performance objectives based on a combination of (a) sustained growth in our
non-GAAP earnings per share, and (b) strategic product development, placement and penetration.
Corporate achievement under either independent measure will result in funding our general executive
bonus plan (as was the case for our fiscal year 2008 plan). However, for our fiscal year 2009 the
Committee determined to emphasize strategic product penetration with key customers (as opposed to
product development objectives for our fiscal year 2008), in alignment with the next phase of our
strategic operating objectives.
As was the case under our fiscal year 2008 executive bonus plan, achievement under either
corporate performance objective – Earnings Per Share or New Product Penetration – is a separate
and independent basis to fund and determine the actual cash bonuses to our executives for our
fiscal year 2009. However, the Committee determined to adjust the relative weighting of corporate
and individual performance achievement, to give equal weight to achievement of targeted corporate
(50 percent) and individual executive (50 percent) performance objectives when determining the
actual bonus to be paid to our executives (as opposed to a relative weighting of 70 percent
targeted corporate achievement and 30 percent targeted individual achievement under the fiscal year
2008 plan). Accordingly, the Committee expects to use the following formula to determine annual
cash bonuses to our executives for our fiscal year 2009:
Annual Base Salary X Target Bonus % X Performance Achievement
Where
Performance Achievement = (50% x corporate achievement) + (50% x individual achievement)
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The Committee believes that equal weighting for corporate and individual achievement allows the
Committee to incentivize and recognize greater individual achievement amongst its executives, which
is consistent with the Committee’s overall “pay-for-performance” philosophy. Individual objectives for our fiscal year 2009 include personal and
organizational objectives — including margin performance, operating improvements and cost
initiatives specific to the executive’s respective area of responsibility.
This placed the fiscal year 2009 total target annual base and incentive bonus compensation for
our executives between the 50th and 75th percentile based on the Compensation
Peer Group data (except for Mr. Leitzke, whose total target annual base and incentive bonus
compensation is at the 75th percentile, and Mr. Debenham, whose total target annual base
and incentive bonus compensation is greater than the 75th percentile).
The Committee believes the objectives necessary to achieve target bonus payments to the
executives are very difficult and would require significant achievement of corporate and individual
objectives. As was the case in fiscal year 2008, there is substantial uncertainty of actual bonus
payments at any of the targeted levels. During the three prior fiscal years, the company’s
achievement of corporate objectives ranged from 45 to 100 percent, indicating the difficulty and
uncertainty of achievement for any given fiscal year.
Annual Equity Awards
As was the case for fiscal year 2008 awards, the Committee determined equity awards for each
executive for our fiscal year 2009 as a target potential total value based on a percentage of the
executive’s annual base salary (assuming all service-based and 80 percent of performance-based
vesting occurs under the award). The Committee set a target potential value for each executive
using the following approximate percentages of the executives’ annual base salary for the year:
Dr. Schwartz, 170 percent; each other executive, 75 percent. However, for the fiscal year 2009
awards the Committee determined to increase the maximum potential value for each executive by an
additional 60 percent upon the achievement of “stretch” performance objectives that the Committee
determined were significant to the company’s near-term strategic objectives.
The performance objectives necessary for vesting under the performance-based equity awards to
our executives for fiscal year 2009 involve corporate objectives tied to targeted (a) company
profitability (on a non-GAAP basis) to be achieved over our fiscal years 2009 through 2011, and
(b) revenue and margin performance relating to strategic product development, placement and
penetration to be achieved over our fiscal years 2009 through 2012. Actual shares earned will
range from 0 percent to 100 percent of the theoretical maximum, with approximately 62.5 of the
performance-based shares being earned for “target” performance and 100 percent being earned for
“stretch” performance (which stretch objectives represent a significantly greater degree of
difficulty over the “target” objectives, and will depend upon the company’s ability to deliver
operating performance and growth well in excess of recent trends). In the event the performance
triggers are met, any shares that vest will nonetheless be subject to a mandatory deferral for
three years following the award date. In the event the company terminates an executive’s
employment at any time for any reason (other than for “cause,” which shall include, when committed
in the course of one’s employment duties or functions, fraud, willful misconduct, gross negligence
or breach of or failure to perform a material obligation or duty to or policy or term of employment
of the company) any shares subject to the “hold” that have otherwise vested as of the earlier
employment termination date shall be immediately accelerated and issued to the executive. However,
in the event prior to the expiration of the hold period the company terminates an executive for
cause, or the executive voluntarily terminates his or her employment, any shares that have
otherwise vested under the award shall be deemed forfeited. The Committee determined that this
three-year hold period would promote stock ownership and provide an additional retention incentive
for our executives.
The total equity awards the Committee approved to each of our executives for our fiscal year
2009 were weighted such that more than 60 percent of the target potential value to the executive
depends on the achievement of “target” performance objectives (with achievement of “stretch”
performance objectives weighting the maximum potential value at more than 80 percent
performance-based). This compares to a weighting of equity awards approved to each of our
executives for our fiscal year 2008 such that more than 60 percent of the potential value to the
executive depends on the achievement of “target” performance objectives and 75 percent depends on
the achievement of “stretch” performance objectives. The Committee used $5.00 per share to
calculate the target and maximum potential value under the respective awards.
Chief Executive Officer Compensation
The Committee assesses and determines the compensation for our Chief Executive Officer using
the same criteria as for the other executives. In May 2007, the Committee set Dr. Schwartz’s annual
base salary at $450,000 and set an annual target incentive cash bonus of 125 percent of his annual
base salary for our fiscal year 2008. In May 2007, the Committee approved a stock award to
Dr. Schwartz for our fiscal year 2008 totaling 201,921 shares of our Common Stock (based on a
target potential value equal to 250 percent of his annual base salary). Of these, 24 percent of
the maximum potential value of the award (49,179 shares) is service-based, and 76 percent
(152,742 shares) of the maximum potential value depends on achievement of specific performance
objectives.
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The performance bonus of $224,483 that Dr. Schwartz received for our fiscal year 2008
reflected the Committee’s determination that the company achieved 55 percent of corporate
objectives and Dr. Schwartz achieved 69 percent of individual objectives. As discussed above, this
performance bonus reflects a 20 percent reduction imposed by the Committee on Dr. Schwartz and
other executives based on specific areas where the company’s financial and operating performance
during our fiscal year 2008 fell short of our operating objectives (separate from the corporate and
individual objectives established for our executive bonus plan).
When determining Dr. Schwartz’s compensation, including base salary, target bonus and equity
awards, the Committee typically considers Dr. Schwartz’s individual performance, skills and
responsibilities, as well as our overall performance. With respect to setting Dr. Schwartz’s base
salary for fiscal year 2008, the Committee noted sustained revenue growth and bookings, overall
profitability, and development and integration of a global operating structure following our
successful acquisition of the remaining equity of our Japan joint venture, and successful
integration of our organizations and operating structures. The Committee also considered
Dr. Schwartz’s particular ability to continue to develop and lead our business strategy and
long-term strategic initiatives that will continue to enhance shareholder value. The Committee also
considered Compensation Peer Group Data for the relevant periods for presidents and chief executive
officers of skill, experience and responsibilities comparable to Dr. Schwartz. With respect to
setting Dr. Schwartz’s base salary for fiscal year 2009, the Committee accepted that management’s
recommendation that all executive base salaries not be adjusted from fiscal year 2008 levels, given
the current continuing slow down in business activity affecting our company, and our company’s
initiative specifically to reduce our Sales, General & Administrative expenses.
The Committee periodically reviews all components of Dr. Schwartz’s compensation — including
annual base salary, performance-based annual cash bonus and the realized and unrealized values of
his stock and option awards — and believes it has reasonably tied Dr. Schwartz’s incentive cash and
equity compensation directly to the company’s achievement of near and long-term objectives that are
significant to our success. The Committee also periodically reviews the potential value of
compensation and benefits Dr. Schwartz would receive in the event of a termination of his
employment (whether voluntary, involuntary or upon occurrence of a change of control).
The following table summarizes certain dollar values from the tables that follow this
discussion concerning (a) the compensation and benefits provided to Dr. Schwartz for our fiscal
year 2008, and (b) the value of compensation and benefits he would receive in the event of a
termination of his employment as of March 31, 2008 (whether voluntary, involuntary or upon
occurrence of a change in control).
As noted below under “Employment Agreements,” Dr. Schwartz would be entitled to specified
compensation or benefits upon involuntary termination of his employment (other than for cause),
including where such termination occurs under certain circumstances upon the occurrence of a change
in control. Dr. Schwartz would not be entitled to specified compensation or benefits upon
voluntary termination of his employment or termination by the company for cause.
For further details, including explanatory footnotes, refer to the discussions below regarding
Dr. Schwartz under “Summary Compensation Table,” “Employment, Severance and Change of Control
Agreements,” and “Potential Payments upon Termination or Change of Control.”
Other Equity Programs
Our executives are also eligible to participate in our Employee Stock Purchase Plan, on the
same terms and conditions as other employees. Under this plan, our executives may use payroll
deductions to purchase our Common Stock at specified semi-annual purchase dates, at a discount to
the market price on such dates. The number of shares that may be purchased during any year is
capped by applicable laws and the terms of the plan.
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Other Benefits
Our executives may also participate in our Executive Deferred Compensation Plan, which we
adopted in 2004 (but which has not been submitted for approval by our shareholders). For further
details regarding these agreements, refer to “Nonqualified Deferred Compensation,” below.
Our executives may also participate in our Long-Term Incentive Compensation Plan (“LTIP”),
which was adopted in 1998 and approved by our shareholders. Our LTIP will expire on the date that
is five years after the final award of units but no later than March 31, 2013. No current
executives participate in the plan; we do not currently anticipate renewing that plan in its
current form.
We did not award additional benefits or compensation to our executives for our fiscal year
2008. However, as company employees, they were and remain eligible to participate in company
benefit programs available to all our employees (such as group medical, life and disability
insurance, matching programs under the company’s tax-qualified 401(k) Plan, time-based service
awards, employee stock purchase plan programs (discussed above), and programs to encourage the
development of proprietary and patentable intellectual property). Under the 401(k) Plan, our
company may make a discretionary matching contribution of up to 50 percent of an employee’s salary
contribution (capped at six percent of an employee’s contribution during any pay period, and three
percent of an employee’s annual base salary and incentive cash bonus). Benefits, eligibility and
participation for our executives were subject to the same terms and conditions as for all other
company employees. The company’s 401(k) matching contributions to our executives are shown in the
“All Other Contribution” column in the Summary Compensation Table, below.
Change In Control Agreements
Each of our executives has entered agreements with the company providing certain compensation
and benefits in the event the executive’s employment is terminated by Asyst without cause, or the
executive resigns for good reason as defined in the agreement, within the two-year period following
a change in control of our company. The compensation and benefits may include the executive’s base
salary, annual or discretionary bonus, unused vacation, unreimbursed business expenses, deferred
compensation, and other compensation and benefits accrued or earned through the date of termination
of his employment. In addition, the executive may also receive under the agreement:
(a) compensation equal to two times the sum of (x) the executive’s annual base salary and (y) the
average of the executive’s annual bonuses paid for the three years prior to such termination;
(b) continuing coverage for two years under life, disability, accident and health benefit programs
covering senior executives; and (c) immediate accelerated vesting of any unvested stock options and
stock awards (whether service or performance-based vesting), with up to 12 months following
termination of the executive’s employment to exercise stock options (and, in addition in the case
of Dr. Schwartz, 24 months following termination of his employment to exercise certain options
covering 375,000 shares).
We believe these agreements are reasonable and appropriate to ensure long-term retention of
our key employees. For further details regarding these agreements, refer to “Employment, Severance
and Change of Control Agreements,” and “Potential Payments upon Termination or Change of Control,”
below.
Employment Agreements
All of our executives are employees “at will,” and not for a fixed term. For further details
regarding the terms of any employment commitments and related severance or change of control
agreements, refer to “Employment, Severance and Change of Control Agreements,” below.
In December 2007, the company entered an agreement providing for certain terms governing Dr.
Schwartz’s employment, and benefits Dr. Schwartz could receive in the event of his termination
without cause (including following a change in control of our company). For further details
regarding this agreement, refer to “Employment, Severance and Change of Control Agreements,” and
“Potential Payments upon Termination or Change of Control.” The Committee determined to reimburse
Dr. Schwartz the amount of $15,735 for legal fees Dr. Schwartz personally incurred in conjunction
with the negotiation and preparation of that employment agreement (which reimbursement amount is
reflected as “Benefits/Other” in the table, above). The company did not provide any additional
payments or “gross up” benefits to Dr. Schwartz in this regard.
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Nonqualified Deferred Compensation
Asyst maintains a non-qualified deferred compensation plan, the Asyst Technologies, Inc.
Executive Deferred Compensation Plan (the “EDCP”), which allows our eligible employees (including
our executives) to defer until a future date portions of the employee’s base salary or annual cash
bonus. In particular, the EDCP Plan allows high-compensated employees (including executives) to
defer for tax purposes a greater amount of compensation than permitted under a tax-qualified plan,
such as our 401(k) Plan.
The Committee periodically evaluates the EDCP for competitiveness in the marketplace; however,
our executives do not currently participate in the EDCP Plan to a significant degree, and the
Committee does not typically take into account benefits available to our executives under the EDCP
Plan when reviewing and determining an executive’s total compensation for any particular year.
Tax Deductibility Considerations
Section 162(m) of the Internal Revenue Code generally provides that certain compensation in
excess of $1 million per year paid to executives covered by this law is not deductible by the
company unless the compensation qualifies under an exception. Section 162(m) provides an exception
to the deductibility limit for performance-based compensation if certain procedural requirements,
including shareholder approval of the material terms of the performance goal, are satisfied.
Compensation paid under our general executive cash bonus plan currently does not qualify for the
exception for performance-based compensation. In addition, our executives continue to receive stock
awards that provide for time-based vesting, and previously received performance-based stock awards
without shareholder-approved performance conditions, which would be subject to the Section 162(m)
deduction limitation. However, we believe that compensation attributed to the vesting of
performance-based equity awards would qualify for an exception to the deductibility limit to the
extent such awards are consistent with the performance-based vesting criteria approved by our
shareholders in December 2006, in conjunction with amendments to our 2003 Equity Incentive Plan. In
addition, we believe that such performance-based equity awards would also qualify for an exception
to the deductibility limit to the extent shareholder approval of the relevant performance-based
vesting criteria is obtained prior to vesting of shares under such awards. We intend to continue to
evaluate the effects of the Code and any Treasury regulations and the advisability of qualifying
its executive compensation for deductibility of such compensation. Our objective is to qualify its
executive compensation for deductibility under applicable tax laws to the extent practicable.
Section 280G and related sections of the Code sections provide that executive officers,
directors who hold significant stockholder interests and certain other service providers could be
subject to significant additional taxes if they receive payments or benefits in connection with a
change in control of the Company that exceeds certain limits, and that the company or its successor
could lose a deduction on the amounts subject to the additional tax. We have not provided any
executive officer with a commitment to gross-up or reimburse other tax amounts that the executive
might pay pursuant to Section 280G of the Code.
Section 409A of the Code also imposes additional significant taxes in the event that an
executive officer, director or service provider receives “deferred compensation” that does not meet
the requirements of Section 409A. To assist in the avoidance of additional tax under Section 409A,
the company intends, where practicable, to structure incentive compensation and equity awards in a
manner to comply with the applicable Section 409A requirements.
COMPENSATION COMMITTEE REPORT
The Compensation Committee reviewed and discussed the above Compensation Discussion and
Analysis (CD&A) with the company’s management. Based on the review and discussions, the
Compensation Committee recommended to the company’s Board of Directors that the CD&A be included in
this Proxy Statement.
Compensation Committee
Anthony E. Santelli, Chair
Stanley Grubel Walter W. Wilson 20
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SUMMARY COMPENSATION TABLE
The following table summarizes compensation information for our named executive officers for
our fiscal year ended March 31, 2008.
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GRANTS OF PLAN-BASED AWARDS — FISCAL YEAR 2008
The following table shows all plan-based awards that Asyst granted to the named executive
officers during fiscal year 2008. These awards are also reported in the Outstanding Equity Awards
table.
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EMPLOYMENT, SEVERANCE AND CHANGE IN CONTROL AGREEMENTS
The company entered an employment agreement with Dr. Schwartz in December 2007 providing for
certain terms governing Dr. Schwartz’s employment, and benefits Dr. Schwartz could receive in the
event of his termination (including following a change in control of our company).
Under the Employment Agreement, Dr. Schwartz will be entitled to certain compensation and
benefits in the event his employment is terminated by Asyst without cause, upon his death or
determination of disability, or if he resigns for good reason as defined in the agreement, at any
time during its term. Additional benefits available to Dr. Schwartz under the Employment Agreement
in the context of a change in control of our company are described below. Cause is generally
defined by reference to events of criminal, willful or grossly negligent misconduct. Good Reason is
generally defined to mean, without Dr. Schwartz’s prior written consent: removal from his position
as our Chief Executive, assignment of duties incompatible with that position, failure to maintain
the current position and its reporting relationship, or a substantial diminution in the nature of
authority or responsibilities; reduction in then-current base salary or in the bonus or incentive
compensation opportunities or benefits coverage, except pursuant to an across-the-board reduction
similarly affecting all senior executives of Asyst; or termination of Dr. Schwartz’s employment,
for any reason other than cause, death, disability or voluntary termination; relocation of the
executive’s principal place of business to a location more than 30 miles from the location at the
date of the agreement; or Asyst’s failure to pay Dr. Schwartz any material amounts otherwise vested
and due him hereunder or under any plan, program or policy of Asyst. Dr. Schwartz would not be
entitled to specified compensation or benefits upon voluntary termination of his employment.
The Employment Agreement currently will terminate on March 31, 2010; however, the company’s
failure to offer to extend the term of the Employment Agreement shall constitute termination of Dr.
Schwartz’s employment without cause.
The compensation and benefits to Dr. Schwartz upon such termination include his annual base
salary, annual or discretionary bonus, unused vacation, unreimbursed business expenses, deferred
compensation, and other compensation and benefits accrued or earned through the date of termination
of his employment. In addition, Dr. Schwartz also receives under the agreement: (a) compensation
equaling his annual bonus for the fiscal year in which the termination occurs, pro rated through
the date of termination (and assuming 100 percent achievement of both individual and corporate
performance targets and objectives for purposes of calculation); (b) compensation equal to two
times the sum of (x) Dr. Schwartz’s annual base salary and (y) the average of Dr. Schwartz’s annual
bonuses actually paid during the three years prior to such termination; (c) continuing coverage for
two years under life, disability, accident and health benefit programs then in-effect for Dr.
Schwartz; and (d) immediate accelerated vesting of any unvested service-based options and stock
awards, with up to 12 months following termination of Dr. Schwartz’s employment to exercise stock
options. In the event such termination occurs within the two-year period following a change in
control of our company, the Employment Agreement also provides that Dr. Schwartz will additionally
receive immediate accelerated vesting of any unvested performance-based options and stock awards,
with up to 12 months following termination of Dr. Schwartz’s employment to exercise stock options.
Under the Employment Agreement, Dr. Schwartz agrees to certain restrictions on his ability to
compete with our company and/or solicit our employees, and to provide continuing services to the
company as a consultant for the 12-month period following his termination.
The specific events constituting a change in control under the Employment Agreement are
described below, under “Potential Payments upon Termination or Change in Control.”
Under the Employment Agreement, our Board of Directors has agreed to use its best efforts to
cause Dr. Schwartz’ election and re-election during the term of the Employment Agreement as a
member of the Board and as its Chair. However, Dr. Schwartz’s failure to be elected, or re-elected
to our Board or as its Chair, will not constitute Good Reason under the Employment Agreement or
entitle Dr. Schwartz to specific compensation or benefits.
Asyst entered into an employment agreement in January 2007 with Mr. Sicuro under which he is
employed on an at-will basis at an annual base salary of $300,000 and, as discussed below, is
eligible to receive certain equity awards in conjunction with his continuing employment. Mr. Sicuro
was also eligible to participate in Asyst’s annual bonus plan for the fiscal year ending March 31,
2008 with a target bonus of 75 percent of his annual base salary. Mr. Sicuro also received a
lump-sum payment of $125,000; provided, however, that if his employment is terminated under
specified circumstances at any time during the first three years of his employment, he will be
obligated to return a proportionate amount of that sum to Asyst less amounts previously withheld
for taxes. Under the employment agreement, Asyst agreed to award Mr. Sicuro (i) an option to
purchase 150,000 shares of its Common Stock and (ii) 105,000 shares of restricted Common Stock. The
option and shares vest over a three-year period. If our company terminates Mr. Sicuro’s
employment
other than for cause, as defined pursuant to the agreement, during the first three years of
Mr. Sicuro’s
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employment, he will be entitled to an additional 12 months of vesting under these
awards. Pursuant to the employment agreement, Mr. Sicuro was also offered an indemnification
agreement comparable to that currently in-effect for Asyst’s other officers, and a change in
control agreement described below. In May 2007, the Compensation Committee set Mr. Sicuro’s base
salary at $315,000 and target bonus at 75 percent of base salary. In May 2008, the Committee
determined to continue Mr. Sicuro’s base salary and target bonus at then-current levels without
adjustment.
In October 2002, we entered into an at-will employment letter agreement with Ms. LuPriore to
join Asyst as its Vice President & General Manager for Connectivity Solutions. Under the terms of
the agreement, Ms. LuPriore receives an annual base salary and an annual management target bonus
(depending upon company and individual performance objectives achieved). The agreement also
provided that Ms. LuPriore would receive a guaranteed bonus of not less than $70,000 during each of
her first three (3) years of employment. The agreement also provided for an option award to
Ms. LuPriore to purchase 50,000 shares of our Common Stock — 1/42 of which award vests and becomes
exercisable per month, commencing as of the seventh month following the date of commencement of his
employment — and a further option to purchase 40,000 shares of Common Stock to be awarded in the
ensuing Fiscal Year 2004. Ms. LuPriore also received relocation and transition assistance under the
terms of her employment agreement. Ms. LuPriore is also eligible under the agreement to participate
in all employee welfare and benefit plans normally offered to other senior executives of Asyst.
Ms. LuPriore was also offered an indemnification agreement comparable to that currently in-effect
for Asyst’s other officers, and a change in control agreement described below. In January 2007,
Ms. LuPriore was designated our Senior Vice President, Automated Solutions Group. In May 2007, the
Compensation Committee set Ms. LuPriore’s base salary at $305,000 and target bonus at 75 percent of
base salary. In May 2008, the Committee determined to continue Ms. LuPriore’s base salary and
target bonus at then-current levels without adjustment.
In June 2004, we entered into an at-will employment letter agreement with Mr. Leitzke to join
Asyst as its Vice President, Manufacturing Operations. Under the terms of the agreement,
Mr. Leitzke receives an annual base salary and an annual management target bonus (depending upon
company and individual performance objectives achieved). The agreement also provided for an option
award to Mr. Leitzke to purchase 50,000 shares of our Common Stock — one-third of which award
vested and became exercisable on each of the first three anniversaries of the grant date.
Mr. Leitzke is also eligible under the agreement to participate in all employee welfare and benefit
plans normally offered to other senior executives of Asyst. Mr. Leitzke was also offered an
indemnification agreement comparable to that currently in-effect for Asyst’s other officers, and a
change in control agreement described below. In January, 2007, Mr. Leitzke was designated our
Senior Vice President, Global Operations. In May 2007, the Compensation Committee set
Mr. Leitzke’s base salary at $285,000 and target bonus at 75 percent of base salary. In May 2008,
the Committee determined to continue Mr. Leitzke’s base salary and target bonus at then-current
levels without adjustment.
In August 2003, we entered into an at-will employment letter agreement with Mr. Debenham to
join Asyst as its Vice President, General Counsel and Secretary. Under the terms of the agreement,
Mr. Debenham receives an annual base salary and an annual management target bonus (depending upon
company and individual performance objectives achieved). The agreement also provided for an option
award to Mr. Debenham to purchase 100,000 shares of our Common Stock — 1/42 of which award vests
and becomes exercisable per month, commencing as of the seventh month following the date of
commencement of his employment. Mr. Debenham is also eligible under the agreement to participate
in all employee welfare and benefit plans normally offered to other senior executives of Asyst.
Mr. Debenham was also offered an indemnification agreement comparable to that currently in-effect
for Asyst’s other officers, and a change in control agreement described below. In May 2007, the
Compensation Committee set Mr. Debenham’s base salary at $250,000 and target bonus at 75 percent of
base salary. In May 2008, the Committee determined to continue Mr. Debenham’s base salary and
target bonus at then-current levels without adjustment.
Please refer to “Compensation Discussion and Analysis,” above, for a discussion of the
achievement of the named executive officers of performance targets under the company’s incentive
compensation programs during our fiscal year 2008.
We have also entered into change of control agreements with our named executive officers,
discussed below under “Potential Payments upon Termination or Change in Control.”
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OUTSTANDING EQUITY AWARDS AT MARCH 31, 2008
The following table shows all outstanding equity awards held by the named executive officers
as of March 31, 2008 (the end of fiscal year 2008):
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OPTION EXERCISES AND STOCK VESTED — FISCAL YEAR 2008
The following table shows all stock options exercised and value realized upon exercise, and
all stock awards vested and value realized upon vesting, by each named executive officer in fiscal
year 2008.
NONQUALIFIED DEFERRED COMPENSATION
Under Asyst’s Executive Deferred Compensation Plan, certain Asyst directors and key executives
are eligible to defer receipt of (i) up to 75 percent of their director fees or base salary and
(ii) up to 100 percent of their bonuses and commissions.
Asyst deposits all deferral amounts into a trust established with a third-party trustee to
hold the assets of the plan. Benefits under the plan represent an unfunded, unsecured promise by
Asyst to pay those benefits when due and, if Asyst were to become insolvent, participants would
have no greater right to the trust assets than general creditors. Plan assets in the trust remain
the property of Asyst until made available to participants, and those assets can only be used to
pay benefits under the plan, pay Asyst’s general creditors, and pay the expenses of administering
the plan and the trust.
Participants’ deferrals are fully vested at all times, and participants are allowed to direct
investment of their plan accounts in investment alternatives selected by the plan administrator.
Each account is valued as of the last day of each calendar quarter, and incremental earnings or
losses are then allocated to that account.
If a participant retires from Asyst, distributions from the plan must begin no later than
earlier of (i) January of the year the participant reaches age 70 or (ii) the tenth January after
that retirement. In the event of a participant’s death or termination of service with Asyst,
distributions from the plan must begin as soon as administratively feasible. Under certain
circumstances, distributions may also be made to the participant while he or she is still in
service with Asyst.
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The following table contains information related to the listed individuals’ accounts in the
plan.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We have entered into an Employment Agreement with Dr. Schwartz in December 2007 and Change in
Control Agreements with each of our other named executive officers in February 2008. The
Employment Agreement with Dr. Schwartz and Change in Control Agreements with each of our other
named executive officers replaced and superseded then-existing agreements providing certain
compensation and benefits to each of our named executive officers in the event his or her
employment is terminated following a change in control of our company. The benefits available to
Dr. Schwartz under the Employment Agreement in the event his employment is terminated by Asyst
without cause, upon his death or determination of disability, or if he resigns for good reason as
defined in the agreement, are described above under “Employment, Severance and Change in Control
Agreements.”
Terms of Our Change in Control Agreement with Each of Our Named Executive Officers
Under each agreement, the named executive officers (including Dr. Schwartz, under the
Employment Agreement) will be entitled to certain compensation and benefits in the event his or her
employment is terminated by Asyst without cause or the officer resigns for good reason as defined
in the agreement, within the two-year period following a change in control of our company.
Cause and Good Reason with respect to Dr. Schwartz’s Employment Agreement are identified
above. With respect to the other named executive officers, Cause is generally defined in their
respective change in control agreements by reference to events of criminal, willful or grossly
negligent misconduct. Good reason is generally defined to mean, without the executive’s prior
written consent: assignment of duties incompatible with the current position, failure to maintain
the current position and its reporting relationship, or a substantial diminution in the nature of
authority or responsibilities; reduction in then-current base salary or in the bonus or incentive
compensation opportunities or benefits coverage, except pursuant to an across-the-board reduction
similarly affecting all senior executives of Asyst; termination of the executive’s employment, for
any reason other than cause, death, disability or voluntary termination, within two years following
a change in control; within two years following a change in control, relocation of the executive’s
principal place of business to a location more than 30 miles from the location at the date of the
agreement; or Asyst’s failure to pay the executive any material amounts otherwise vested and due
him hereunder or under any plan, program or policy of Asyst.
A change in control, within the meaning of the agreements, can include (a) acquisition by a
group or individuals of 30 percent or more of Asyst’s Common Stock or voting securities, (b) change
in composition of a majority of our Board within a rolling two-year period (other than by
retirement or voluntary termination), or (c) a liquidation or dissolution of Asyst or a merger,
consolidation, transfer or sale of all or substantially all of Asyst’s assets.
The compensation and benefits include the executive’s annual base salary, annual or
discretionary bonus, unused vacation, unreimbursed business expenses, deferred compensation, and
other compensation and benefits accrued or earned through the date of termination of the
executive’s employment. In addition, the executive also receives under the agreement:
(a) compensation equaling the executive’s annual bonus for the fiscal year in which the termination
occurs, pro rated through the date of termination (and assuming 100 percent achievement of both
individual and corporate performance targets and objectives for purposes of calculation); (b)
compensation equal to two times the sum of (x) the executive’s annual base salary and (y) the
average of the executive’s annual bonuses actually paid during the three years prior to such
termination; (c) continuing coverage for two years under life, disability, accident and health
benefit programs covering senior executives; and (d) immediate accelerated vesting of any unvested
options and stock awards, with up to 12 months following termination of the executive’s employment
to exercise stock options.
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Each agreement remains in effect for two years after it is entered into (provided a change in
control has not occurred within that two-year period, in which case the agreement remains in effect
for the two-year period following the change in control). In the case of all agreements, there are
certain additional provisions relating to Section 409A of the Code, including an extended exercise
period that will not exceed the later of (x) the 15th day of the 3rd month following the date at
which, or (y) December 31 of the calendar year in which, the right to exercise such option would
have otherwise expired; provided that in no event will that exercise period extend beyond the date
that is one year after the termination of employment, and any payment that is “nonqualified
deferred compensation” subject to Section 409A of the Code will be delayed for six months following
termination of employment.
In the event of an acquisition of Asyst or certain other corporate transactions, as defined in
our 2003 Plan or 1993 Employee Stock Option Plan, any surviving or acquiring corporation may assume
or continue awards outstanding under the plans or may substitute similar awards (which would then
be subject to the terms and conditions described above regarding acceleration of vesting in the
event of a change in control of the Company). If any surviving or acquiring corporation does not
assume or continue such awards, or substitute similar awards, then with respect to awards held by
participants whose service with Asyst or an affiliate has not terminated as of the effective date
of the corporate transaction, the vesting of such awards (and, if applicable, the time during which
such awards may be exercised) will be accelerated in full, and the awards will terminate if not
exercised (if applicable) at or prior to such effective date.
The following table shows for each current named executive officer the value of the
compensation and benefits he or she would receive in the event of a termination without cause or
resignation for good reason (provided such termination or resignation occurs within 24 months
following a change in control that occurs during the term of the agreement).
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DIRECTOR COMPENSATION
The following summarizes our standard compensation arrangements for non-employee directors’
service on our Board and its committees. Dr. Schwartz, Chair, Chief Executive Officer and
President, does not receive additional compensation for his service as a director. Non-employee
directors also are reimbursed for their expenses incurred in connection with attendance at Board
and committee meetings, in accordance with our reimbursement policy. In the past, non-employee
directors have also been eligible to receive service awards as part of a company-wide recognition
program.
Sign-on equity award. Upon appointment to our Board, Asyst grants to each new non-employee
director a sign-on equity award, on a deferred basis, of shares of our Common Stock with a value
equal to $120,000 at the date of the award. The award vests over three years from the date of
award, but the vested shares subject to the award cannot be issued or delivered to the director, or
sold or transferred by the director, unless and until the director has ceased to be a member of our
Board for any reason. Until such actual issuance and delivery of shares, the award constitutes an
unfunded, unsecured promise by the company to deliver the shares as of such future date.
Annual equity award. On April 2, 2007, each non-employee director received an annual
restricted stock unit award for 15,000 shares of our Common Stock, vesting in equal monthly
increments through March 31, 2008, assuming continuous Board service through that date, with a
mandatory deferral of delivery of all vested shares and restriction on the sale of vested shares
until March 31, 2010. On April 3, 2008, each non-employee director received an annual restricted
stock unit award for 15,000 shares of our Common Stock, vesting in equal monthly increments through
March 31, 2009, assuming continuous Board service through that date, with a mandatory deferral of
delivery of all vested shares and restriction on the sale of vested shares until March 31, 2011.
Delivery of shares vested under each such award will be accelerated as of the earlier date a
director ceases to be a member of our Board for any reason. However, until such actual delivery of
shares, each award constitutes an unfunded, unsecured promise by the company to deliver the shares
as of such future date.
Director cash retainer and board meeting fees. Each non-employee director receives:
Committee cash retainer and committee meeting fees. Each member of the Audit Committee, the
Compensation Committee and the Governance and Nominating Committee receives:
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Committee chair cash fees. The chair of the Audit Committee and, if the audit committee
financial expert is not also serving as the chair of the Audit Committee, the audit committee
financial expert each receives an additional annual cash retainer of $12,500, or pro-rated portion
thereof. The chair of the Compensation Committee and Governance and Nominating Committee each
receives an additional annual cash retainer of $7,500, or pro-rated portion thereof.
Other fees and reimbursements. An annual cash retainer of $5,000, or pro-rated portion
thereof, is paid to each non-employee director of our Board who also serves as a director of our
majority-owned subsidiary, Asyst Japan Holdings Co., Inc. Directors are not paid by the hour for
work performed on special projects. Instead, directors will receive $5,000 per assignment or $1,000
per day, as determined by the Board, for projects outside the United States. The non-employee
director designated as “lead director” by our Board also receives an annual cash retainer of
$7,500, or pro-rated portion thereof. The members of our Board also are reimbursed for their
expenses incurred in connection with attendance at Board and committee meetings and special
projects, in accordance with our reimbursement policy. For example, in May 2008 several members of
our Board attended a director education and certification program in Los Angeles, California,
sponsored by the UCLA Anderson School of Management. The attending directors were reimbursed their
tuition and expenses incurred in connection with attendance at this program (in accordance with our
reimbursement policy). The attending directors did not receive any additional fees or compensation
in connection with attending this program.
Non-Employee Director Compensation in Fiscal Year 2008
The table below summarizes the compensation our company paid to non-employee directors for the
fiscal year ended March 31, 2008. Dr. Schwartz is a director, but he is not included in the table
below because he does not receive any additional compensation for services provided as a director.
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Each director, except director Kawanishi, also received in fiscal year 2008 a $5,000 payment
associated with Board and committee meetings held in Tokyo, Japan in May 2007 (which payments are
reflected in the “Fees Earned or Paid in Cash” column in the table, above). This payment was in
addition to fees referenced above for Board and committee meetings held during such travel.
Director Kawanishi did not receive this payment, as the meetings did not require travel outside of
his country of residence.
Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the ownership of our Common Stock
as of June 30, 2008, by:
Beneficial ownership is determined in accordance with SEC rules, and generally includes voting
or investment power with respect to securities. Beneficial ownership also includes shares of our
Common Stock subject to options currently exercisable within 60 days after June 30, 2008. These
shares are not deemed outstanding for purposes of computing the percentage ownership of each other
person. Holders of restricted stock units which have vested but whose issuance and distribution has
been deferred do not have investment or voting power over those shares. However, if a director or
officer leaves the Board or employment with our company for any reason, those vested shares would
be immediately available to the former director or executive, and those shares that vest before or
within 60 days after June 30, 2008, are treated as beneficially owned by that individual in the
table below, but not as outstanding for computing percentage ownership of others. Footnotes
identify the number of restricted stock unit shares so treated. Percentage of beneficial ownership
is based on 50,470,384 shares of our Common Stock outstanding as of June 30, 2008.
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EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information as of our 2008 fiscal year-end, March 31,
2008, with respect to all our equity compensation plans then in effect.
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2001 Non-Officer Equity Plan
In January 2001, our Board adopted the 2001 Non-Officer Equity Plan, and subsequently amended
it in July 2001 and March 2002. The 2001 Non-Officer Equity Plan, as amended, or the 2001 Plan, has
not been approved by shareholders. The 2001 Plan reserves for issuance up to 2,100,000 shares of
our Common Stock pursuant to: (a) the exercise of options awarded under the 2001 Plan; (b) the
award of stock bonuses under the 2001 Plan; and (c) the award of restricted stock under the 2001
Plan. The number of shares available for future awards under the 2001 Plan is subject to adjustment
for any future stock dividends, splits, mergers, combinations, or other changes in capitalization
as described in the 2001 Plan.
Eligibility for Participation. Employees and consultants who are not Asyst directors or
officers for Section 16 reporting purposes are eligible to receive awards under the 2001 Plan.
Terms of Options. Nonstatutory stock options are available for award under the 2001 Plan. The
exercise price of options awarded under the 2001 Plan may not be less than 85 percent of the fair
market value of our Common Stock on the date of award. Payment of the exercise price may be made in
cash at the time the option is exercised or, at the discretion of the Board: (a) by delivery of
other Common Stock of Asyst; (b) pursuant to a deferred payment arrangement; or (c) in any other
form of legal consideration acceptable to the Board. The term of a stock option under the 2001 Plan
may not exceed ten years.
Options awarded under the 2001 Plan are generally made subject to vesting over time. Options
may also be made exercisable under conditions the Board may establish, such as if the optionee
remains employed until a specified date or if specified performance goals have been met. If an
optionee’s employment terminates for any reason, the option remains exercisable for a period of
time following termination, as determined by the Board and provided in the respective stock option
agreement.
Terms of Stock Bonuses and Purchases of Restricted Stock. The Board determines the purchase
price for a restricted stock award but the purchase price may not be less than 85 percent of the
fair market value of our Common Stock on the date of purchase. The Board may award stock bonuses in
consideration of past services without a purchase payment. The purchase price of stock acquired
pursuant to a restricted stock purchase agreement under the 2001 Plan must be paid either in cash
at the time of purchase or: (a) by delivery of other Common Stock of Asyst; (b) pursuant to a
deferred payment arrangement; or (c) in any other form of legal consideration acceptable to the
Board. Shares of stock sold or awarded under the 2001 Plan may, but need not, be subject to a
repurchase option in favor of Asyst in accordance with a vesting schedule as determined by the
Board. The Board has the power to accelerate the vesting of stock acquired pursuant to a restricted
stock purchase agreement under the 2001 Plan. Rights under a stock bonus or restricted stock bonus
agreement may not be transferred.
Effect of Certain Corporate Events. The 2001 Plan requires that, in the event of specified
types of merger or other corporate reorganization affecting us, any surviving or acquiring
corporation must either assume any stock awards outstanding under the 2001 Plan or substitute
similar stock awards for those outstanding under this plan. In the event that any surviving
corporation declines to assume or continue the stock awards outstanding under the 2001 Plan, or to
substitute similar stock awards, then stock awards under the 2001 Plan that are held by persons
then performing services as employees or as consultants for us become fully vested and exercisable,
and will terminate if not exercised prior to the merger or other corporate reorganization affecting
us.
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Item 13 — Certain Relationships and Related Transactions, and Director Independence
Policies and Procedures with Respect to Related-Person Transactions. The charter of the Audit
Committee provides that it is our policy not to enter into related-party transactions (as defined
by applicable SEC rules) unless the Committee or another independent body of our Board first
reviews and approves the transaction. Current SEC rules define a related-party transaction
generally to include any transaction, arrangement or relationship involving our company and in
which any of the following had or will have a direct or indirect material interest and where the
amount involved exceeds $120,000:
Our Audit Committee reviews transactions which potentially raise related-party issues, and the
Committee periodically reviews with our management its knowledge or understanding regarding the
existence of such transactions. In addition, the Audit Committee is responsible for reviewing and
investigating any matters pertaining to the integrity of our management — including conflicts of
interest and violations of our Code of Business Conduct. Under our Code, our directors, officers
and all other employees are expected to avoid any relationships and/or report any transactions or
activities that would cause or appear to cause a conflict of interest. In this regard, all our
employees (and our Finance employees specifically) are directed to report any such transactions to
their manager, our general counsel or directly to our Audit Committee (including through its
Chair).
The company maintains a hotline that allows for confidential reporting of any such a
transaction (or concerns regarding a potential transaction). A transaction raising such issues is
initially assessed by our Chief Financial Officer and General Counsel, who then report their
assessment of the transaction to the Audit Committee (including through its Chair). The Audit
Committee may then independently assess the facts of the transaction to determine whether it raises
any conflict of interest under our Code of Business Conduct or material issues affecting the
independence of any of our non-employee directors.
The information required under this item concerning Director Independence is hereby
incorporated by reference from Item 10 above, under the caption “Director Independence.”
Item 14 — Principal Accountant Fees and Services
The following is a summary of the fees and expenses billed to Asyst by PricewaterhouseCoopers
LLP for professional services with respect to audit fees billed for, and other listed services
rendered during, the fiscal years ended March 31, 2008, and March 31, 2007:
Audit Fees: This category includes fees and expenses for the audit of our annual financial
statements and audit of our internal control over financial reporting contained in our most
recently filed Form 10-K, review of the financial statements included in our quarterly reports on
Form 10-Q, services that are normally provided by the independent registered public accounting firm
in connection with statutory and regulatory filings or engagements for those fiscal years, and
statutory audits required by non-U.S. jurisdictions. Audit fees for the company’s fiscal year 2007
includes fees that totaled approximately $1,300,000 relating to the company’s stock option
investigation and related restatement of financial statements, which services were performed during
the company’s fiscal year 2007.
Audit-Related Fees: No services in this category were rendered during fiscal years 2008 or
2007.
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Tax Fees: The services in fiscal years 2008 and 2007 for the fees and expenses disclosed
under this category include tax return preparation, technical tax advice, and tax compliance.
All Other Fees: No services in this category were rendered during fiscal years 2008 or 2007.
The Audit Committee has currently delegated to its chair and audit committee financial expert,
William Simon, the authority to pre-approve permissible services, and he reports any services so
approved to the Committee at its next applicable meeting. Notwithstanding any pre-approval policies
that may be implemented, all permissible advisory services relating to internal control over
financial reporting are pre-approved by the Audit Committee.
PART IV
Item 15 — Exhibits and Financial Statement Schedules
(b) Exhibits
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: July 29, 2008
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EXHIBIT INDEX
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Table of Contents
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