Annual Reports

  • 10-K (May 16, 2012)
  • 10-K (Apr 27, 2012)
  • 10-K (Apr 29, 2011)
  • 10-K (Mar 15, 2011)
  • 10-K (Mar 12, 2010)
  • 10-K (Mar 12, 2009)

 
Quarterly Reports

 
8-K

 
Other

SatCon Technology 10-K 2012

Documents found in this filing:

  1. 10-K/A
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-31.2

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 10-K/A

(Amendment No. 2)

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Year Ended December 31, 2011

 

Commission file number 1-11512

 


 

SATCON TECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

 

DELAWARE

 

04-2857552

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer Identification Number)

 

25 Drydock Avenue, Boston, Massachusetts

 

02210

(Address of principal executive offices)

 

(Zip Code)

 

(617) 897-2400
(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Title of Class

 

Name of Exchange on Which Registered

 

 

Common Stock, $.01 Par Value

 

The NASDAQ Stock Market, LLC

 

 

Preferred Stock Purchase Rights

 

The NASDAQ Stock Market, LLC

 

 

Securities registered pursuant to Section 12(g) of the Act: None

 

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 x

 

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 x

 


 

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 x  No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. x

 

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):

 

Large accelerated filer o

 

Accelerated filer x

 

 

 

Non-accelerated Filer o
(Do not check if a smaller
reporting company)

 

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o  No x

 

The aggregate market value of the registrant’s Common Stock, $.01 par value per share, held by non-affiliates of the registrant was $218,914,302 based on the last reported sale price of the registrant’s Common Stock on the Nasdaq Capital Market as of the close of business on the last business day of the registrant’s most recently completed second quarter ($2.39). There were 131,915,619 shares of Common Stock outstanding as of March 1, 2012.

 

DOCUMENTS INCORPORATED BY REFERENCE:

None.

 

 

 



 

EXPLANATORY NOTE

 

We are filing this Amendment No. 2 to our Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission (“SEC”) on March 15, 2012 (the “Original Form 10-K”), as subsequently amended by Amendment No. 1 to Form 10-K filed on Form 10-K/A with the SEC on April 27, 2012 (the “Amended Form 10-K”), to correct certain inadvertent errors in the executive compensation data that was reported in the tables titled “Summary Compensation Table,” “Grants of Plan-Based Awards in Fiscal 2011,” and “Outstanding Equity Awards at Fiscal 2011 Year-End Table” in Item 11 (Executive Compensation) of Part III of the Amended Form 10-K. This Form 10-K/A does not reflect events occurring after the filing of the Original Form 10-K. Except for the amendments described above, this Form 10-K/A does not modify or update the disclosure in the Amended Form 10-K.

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PART III

 

Item 11. EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

Overview

 

The primary objectives of the Compensation Committee of our Board of Directors with respect to executive compensation are to attract, retain, and motivate the best possible executive talent in pursuit of our business strategy of being a premier developer and supplier of power management solutions for the renewable energy market sector.  The focus is to tie short and long-term incentives to achievement of specified corporate and individual performance objectives, and to align executives’ incentives with stockholder value creation.  Our executive compensation structure not only aims to be competitive in our market sector, but also to be fair relative to compensation paid to other professionals within our organization. As we continually develop our compensation approach, we aim to implement an approach that rewards our executives when we achieve our goals and objectives.  As our business evolves, we seek to foster a performance-oriented culture, where individual performance is aligned with organizational objectives.  Executives will be evaluated and rewarded based on their organizational contributions to the achievement of short and longer term objectives; their openness to challenging and improving current policies and structures; their willingness to foster a highly creative team-oriented environment; and their ability to take advantage of unique business opportunities and overcome difficult challenges within the emerging renewable energy business sectors. To achieve these goals, the Compensation Committee has implemented compensation plans that tie a significant portion of executives’ overall compensation to the achievement of the objectives listed above.

 

This Compensation Discussion and Analysis explains our compensation philosophy, objectives, policies and practices with respect to our CEO, CFO and the other three most highly compensated executive officers, which are collectively referred to as the named executive officers.

 

Role of the Compensation Committee

 

The Compensation Committee approves, administers and interprets our executive compensation and benefits policies.  Our Compensation Committee is appointed by the Board of Directors, and consists entirely of directors who are “independent” under the rules of The Nasdaq Stock Market, LLC, “outside directors” for purposes of Section 162(m) of the Internal Revenue Code and “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act.  Our Compensation Committee is composed of Mr. Dwight, who serves as Chairperson, Mr. Prend and Mr. Deutch.

 

Our Compensation Committee reviews and makes recommendations to the Board of Directors with respect to our executive compensation and benefit program to ensure alignment with our compensation philosophy, and, subject to the approval of our Board, is responsible for establishing the total compensation packages offered to our executive officers.

 

As discussed in more detail below, in making compensation-related decisions, the Compensation Committee considers, among other things, input from management and other independent directors, as well as benchmarking studies and surveys.

 

Compensation Benchmarking

 

The Compensation Committee believes that it is important when making compensation-related decisions to be informed as to the practices of publicly-held, technology-oriented companies of similar size, revenue and market focus.  Geographic location is also taken into consideration.  Management collects, analyzes and presents publicly available compensation data and subscription compensation survey data.  Specific surveys utilized are those produced by The Survey Group and the Economic Research Institute, which provide baseline data on eastern Massachusetts, San Francisco-Silicon Valley area and national technology-oriented companies, respectively, with revenues of less than $250,000,000.  We also benchmark our compensation practices in relation to other comparable companies in the renewable energy market sectors.  We believe that this group of companies provides an appropriate peer group because they consist of similar organizations against whom we compete for executive talent.  We intend to review annually the companies in our

 

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peer group and add or remove companies as necessary to insure that our peer comparisons are meaningful.  In 2011, we used data in proxy statements filings from companies including the following: Active Power, Inc., American Superconductor Corporation, Beacon Power Corporation, Capstone Turbine Corporation, Daystar Technologies, Inc, Enernoc, Inc., Fuel Cell Energy, Inc., Evergreen Solar, Inc., Mechanical Technology, Inc. and Plug Power Inc.

 

In addition to benchmarking studies, the Compensation Committee has historically taken into account input from other sources, including input from other independent members of the Board of Directors.  While benchmarking may not always be appropriate as a stand-alone tool for setting compensation due to the aspects of our business and objectives that may be unique to us, we generally believe that gathering this compensation information is an important part of our compensation-related decision making process.

 

Based on management’s analysis and recommendations, the Compensation Committee has approved a pay-for-performance compensation philosophy, which is intended to bring base salaries and total executive compensation in line with approximately the median (50th percentile) of the companies represented in the compensation data we review.  Short-term incentive compensation, based on the achievement of specified goals and objectives, may be awarded in the form of a cash performance bonus and/or equity awards.  Total compensation may vary significantly from year-to-year based on total company and business unit performance.

 

Role of Independent Compensation Consultant

 

In 2012, the Compensation Committee engaged Pearl Meyer & Partners (PM&P) as its independent outside compensation consultant. As of the record date of this proxy, PM&P has assisted with developing a new peer group for assessing the competitiveness of executive and Director compensation, and provided a competitive analysis for making our 2012 annual equity grant determinations. As it relates to the newly-formed peer group for 2012, PM&P selected companies based on the following criteria:

 

·                  companies that are publicly traded and domiciled in the US;

 

·                  companies whose product and service offerings are similar, though not necessarily identical, to ours;

 

·                  companies with revenues of approximately one-half to two times our revenues; and

 

·                  companies with market capitalization of approximately one-fifth to five times our market capitalization.

 

The peer group was approved by the Compensation Committee in fiscal 2012 and consisted of the following companies:

 

·                  A123 Systems, Inc

·                  Active Power, Inc.

·                  American Superconductor Corporation

·                  Broadwind Energy, Inc.

·                  C&D Technologies, Inc.

·                  Capstone Turbine Corporation

·                  Comverge

·                  Enernoc, Inc.

·                  Fuel Cell Energy, Inc.

·                  Magnetek, inc.

·                  PowerSecure International, Inc.

·                  SL Industries, Inc.

·                  Vicor Corporation

 

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Compensation Risk Assessment

 

In reviewing the Corporation’s compensation policy and practices for its named executive officers and as well as for other employees, the Compensation Committee evaluated whether any unnecessary risk-taking was associated with the Corporation’s compensation policies.  The committee did not identify any risks arising from the Corporation’s compensation policies and practices reasonably likely to have a material adverse effect on the Corporation.

 

Executive Compensation Program

 

As discussed in more detail below, our compensation program consists of five components: base salary, annual bonus incentives, long-term incentives, benefits and, in some cases, severance/termination protection.

 

In determining each component of an executive’s compensation, numerous factors are considered, including:

 

·                  The individual’s particular background and circumstances, including prior relevant work experience;

·                  The demand for individuals with the individual’s specific expertise and experience;

·                  The individual’s role with us and the compensation paid to similar persons determined through benchmark studies;

·                  The individual’s performance and contribution to the achievement of company goals and objectives;

·                  Comparison to other executives within the Corporation; and

·                  Uniqueness of industry expertise and skills.

 

The Compensation Committee has implemented an annual performance management program, under which annual performance goals and expectations are determined for each executive, including the named executive officers.

 

Following the end of each year, corporate goals for the new year are jointly developed by management and the Compensation Committee, and are subject to Board approval.

 

The Compensation Committee meets outside the presence of all of the executive officers to consider appropriate compensation for our CEO.  For all other executive officers, the Compensation Committee meets outside the presence of all executive officers except our CEO.  The CEO annually reviews each other executive officer’s performance with the Compensation Committee and makes recommendations to the Compensation Committee with respect to the appropriate base salary, payments to be made under the short-term incentive plan, and the grants of long-term incentive awards for all executive officers, excluding himself.  Based in part on the CEO’s recommendations and other considerations, the Compensation Committee approves the total annual compensation package of our executive officers (other than the CEO).  Independently, the Compensation Committee annually evaluates the performance of the CEO and determines the base salary adjustment, short-term incentive award and long-term incentive award, if any, to be made for the given performance period.

 

Our policy for allocating between short-term and long-term compensation is to ensure adequate annual cash compensation to attract and retain personnel, while providing incentives (in the form of equity awards) to maximize long-term value for the Corporation and its stockholders.  Accordingly, (i) we provide cash compensation in the form of base salary and annual incentive bonuses to meet competitive salary norms and reward good performance on an annual basis and (ii) we provide non-cash compensation in the form of equity-based awards to reward superior performance against specific short-term goals and long-term objectives.

 

Compensation Components

 

Base Salary

 

Annually, the Compensation Committee reviews the individual salaries of our executive officers.  The base salary for each executive is based on consideration of median pay for our peer group and internal factors, such as the individual’s experience, skills and performance, and the pay of other members of the executive team.  We consider market median pay

 

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levels among individuals in comparable positions with transferable skills within the renewable energy market sector and comparable technology-based companies.  When determining the base salary of any executive, we also consider business requirements for certain skill sets, individual experience, and the responsibilities of the executive and other factors.  It is our belief that a competitive base salary is necessary to attract and subsequently retain a management team with the requisite skills to lead the Corporation.

 

Annual Incentive Bonus Plan

 

Historically, the Compensation Committee has annually established a management cash incentive bonus plan as a means of adding specific incentives towards achievement of specific business unit and company goals that are key factors in our success.  Eligible participants typically include (i) the President and CEO; (ii) the CFO; (iii) the Chief Technology Officer; (iv) the Vice President, Administration and Human Resources and Secretary; (v) the Executive Vice President of Worldwide Sales and Marketing; (vi) the Vice President Global Operations; (vii) the Vice President of Engineering; (viii) those individuals who directly report to the Executive Officers at the Vice-President and Director Level; (ix) those individuals who manage a group or function (Manager Level) who report to the Executive Officer or Director; and (x) Satcon Fellows.

 

The management incentive bonus plan, which is reviewed and revised on an annual basis, is an important component in the hiring of key executives.  Additionally, it is an important mechanism in focusing our executive’s efforts and rewarding executive officers for annual operating results that help create value for our shareholders.  In general, participants are eligible to receive cash bonuses conditioned upon successful performance against specified objectives, with an emphasis on both individual performance and overall company performance.

 

The objectives for management incentive bonus plan for fiscal 2011 (the “2011 Bonus Plan”) were established in December 2010, and are summarized as follows:

 

·                  President and CEO:  Overall corporate objectives included objectives related to the Corporation’s focus and market position, growth, product/service quality, profitability, financial condition, business practices, and establishment of prudent governance practices.

·                  Operations:  Operations objectives included objectives related to business operating models, manufacturing and plant capacity, customer performance and long-term strategies.

·                  Sales and Marketing:  Sales and marketing objectives included objectives related to direct sales team organization, sales methodology, forecast methodology and customer relationship management systems, global business development and channels organization, branding initiatives and field services organization.

·                  Engineering:  Engineering objectives included objectives related to product quality, design processes and new products.

·                  Finance:  Finance objectives included objectives related to management information, information systems, planning processes, financial operating models and control environment.

·                  Administration:  Administration objectives will include objectives related to compensation strategy, performance management systems, annual cash incentive programs, rewards programs, training, and staffing,

 

Potential awards under the 2011 Bonus Plan were as follows:

 

·                  President and CEO

 

·                  Up to 60% of Base Salary upon attainment of 100% of Corporate objectives

 

·                  Other Executive Officers and Vice-Presidents

 

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·                  Up to 30% of Base Salary in total - half of which is based upon attainment of 100% of personal objectives and half of which is based upon attainment of 100% of Corporate objectives.

 

·                  Other (Director Level and Manager Level) Participants

 

·                  Up to 20% of Base Salary in total for Director Level participants (including Satcon Fellows) - half of which is based upon attainment of 100% of personal objectives and half of which is based upon attainment of 100% of Corporate objectives

 

·                  Up to 10% of Base Salary in total for Manager Level participants - half of which is based upon attainment of 100% of personal objectives and half of which is based upon attainment of 100% of Corporate objectives

 

The Compensation Committee also had the discretion under the 2011 Bonus Plan to grant additional cash bonuses to the other executive officers and participants if the Corporation met its objectives.

 

In March 2012, the Compensation Committee reviewed the performance of its executive officers under the 2011 Bonus Plan, as further described below, and reviewed the determinations with the Board.  Final determination of compensation was made by the Compensation Committee.

 

Long-term Equity Incentive Compensation/Stock Option Grant Practices

 

The Compensation Committee awards long-term incentive grants in the form of stock options to our executive officers, consistent with the practices of peer organizations.  These awards are consistent with our pay-for-performance principles and align the interests of our executive officers to the interest of our shareholders.

 

The Compensation Committee reviews and recommends to the independent members of the Board of Directors the amount of each award to be granted to each executive officer and the independent members of Board of Directors approve each award.

 

Our executive officers are eligible to receive annual awards of stock options, although an annual stock option grant is not guaranteed.  Individual determinations are made by the Compensation Committee with respect to the frequency and number of stock options to be recommended to be granted to the executive officers.  In making these determinations, the Compensation Committee considers performance relative to the strategic and financial objectives of the Corporation, the previous year’s individual performance of each executive officer and the market pay level for the executive officer.

 

We also award long-term incentive grants in the form of stock options to key new hires.  The initial grant of stock options vests over a four-year period.  The exercise price of these options are at the fair market value of our common stock on the date the options are granted which is the closing price of the stock on the date of grant or, if later, the date of hire. A new hire of an executive officer and any new hire grant in excess of 40,000 stock options requires the prior approval of the Compensation Committee.  We expect that we will continue to provide key new employees with initial option grants in 2012 to provide long-term compensation incentives and we will continue to rely on performance-based and retention grants to key employees.

 

Benefits

 

We provide the following benefits to our executives generally on the same basis as the benefits provided to all employees

 

1.              Health and dental insurance;

2.              Life Insurance;

3.              Short and long-term disability; and

 

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4.              401(k) Plan in the United States

 

These benefits are consistent with those offered by other companies and specifically with those companies with which we compete for employees.

 

Stockholder Advisory Vote on Executive Compensation

 

At our 2011 annual meeting of stockholders, we asked our stockholders to approve, on a non-binding advisory basis, the 2010 compensation of our named executive as disclosed in our 2011 proxy statement, or our Annual Report on Form 10-K for the fiscal year 2010 (including any amendments to such report), pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. Of those stockholders who voted, over 95% voted to approve the 2010 compensation of our named executive officers. The Compensation Committee took into account the results of this advisory vote when making compensation decisions through the remainder of 2011 and into 2012. The advisory vote affected the Compensation Committee’s executive compensation decisions and policies by reaffirming the Corporation’s compensation policies, and the Compensation Committee will continue to take these policies and past practice into consideration in determining future compensation decisions.  The Compensation Committee will continue to consider the results of the advisory vote on executive compensation in future executive compensation policies and decisions.  As described above under “Role of Independent Compensation Consultant”, the Compensation Committee engaged PM&P as its independent outside compensation consultant in 2012 who made recommendations regarding that the Compensation Committee will also consider in making decisions regarding executive compensation. Based on PM&P market analysis, the Compensation Committee approved increased equity compensation to certain executive officers of the Company.

 

Fiscal 2011 Compensation to Named Executive Officers

 

In 2011, the Corporation’s overall goals and objectives were to achieve profitability, continue global wide growth, maintain technical leadership, and maximize shareholder value.  Aligned with these overall goals, the Compensation Committee established a number of objectives that played a role in determining each of the key executive’s total compensation.  The 2011 corporate objectives included:

 

·                  Innovation and Solutions: Establish Satcon as a world leader in utility scale, high quality systems and solutions for distributed and alternative energy power conversion and grid interconnection.

·                  Growth: Leverage Satcon’s brand, innovations, solutions, partnerships & market leading position to drive growth worldwide.

·                  Operational Excellence: Develop or refine processes, practices and metrics that provide for world class responsiveness to customers, product/service performance, quality, and financial performance.

·                  Infrastructure and Administration: Ensure that our infrastructure and administrative processes support Satcon’s strategies for innovation, growth, operational excellence, financial performance, and governance.

·                  Financial Performance and Shareholder Value: Deliver industry leading financial performance that both enables Satcon’s corporate objectives and significantly increases shareholder value.

·                  Governance: Establish and observe governance practices, standards and processes necessary to meet Satcon’s shareholder representation, ethical, legal & regulatory requirements.

 

In assessing each executive’s contribution toward attainment of corporate objectives, the Compensation Committee evaluated the achievements and progress made in 2011 against each of the objectives listed above.  Some of the relevant achievements by the Corporation in 2011 considered by the Compensation Committee were as follows:

 

·                  Shipments doubled in North America and were on target for Asia Pacific;

 

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·                  Strong relations were maintained with key customers. Over 100 MW of platform systems were shipped;

·                  500kW Powergate product cost was greatly reduced;

·                  Service improved throughout the year and there were improvements in quality;

·                  Total revenue increased in the face of significant average selling price (“ASP”) compression; and

·                  Total shipments increased from 700MW in 2010 to 800MW in 2011.

 

Assessing each executive’s contribution to progress toward achievement of corporate objectives is a subjective analysis, as there are no stated absolute quantified objectives on which compensation-related decisions are based, either at the company level or the individual level.  In general, when making a compensation-related decision, the Compensation Committee considered the executive’s role in the attaining of the corporate objectives described above.

 

While the Corporation made progress in a number of areas, target operating income for fiscal year 2011 was significantly less than the threshold payout level.  As a result, the Compensation Committee determined and recommended to the Board that no base salary adjustments occur for the Corporation’s executive officers, and that there be no cash payout awards under the 2011 Annual Incentive Bonus Plan to its eligible participants.

 

As President and Chief Executive Officer, Mr. Rhoades’ was evaluated with respect to developing and implementing the Corporation’s core strategy for achieving corporate objectives.  Mr. Rhoades received no bonus under the 2011 Annual Incentive Bonus Plan as the Corporation did not achieve its threshold operating income target to qualify for a payout under the Plan nor was his base salary increased beyond that which has been previously reported.

 

Mr. Peck joined the Corporation on March 15, 2010 as Chief Financial Officer and Treasurer.  Mr. Peck’s employment with the Corporation terminated on May 10, 2011. Upon leaving the Corporation, he received base salary continuation for a one year period, health and dental coverage at the employee rate under COBRA and for twelve months after termination the right to exercise vested stock options.  Mr. Peck did not qualify to receive any bonus under the 2011 Annual Incentive Bonus Plan because of the date of termination of his employment with the Corporation.

 

Mr. Gomolak joined the Corporation on February 1, 2010 as Senior Vice President, Global Operations.  On May 11, 2011, the Board of Directors appointed Mr. Gomolak to the position Executive Vice President, Chief Financial Officer and Treasurer following the termination of Mr. Peck, the former Chief Financial Officer and Treasurer.  Upon his appointment Mr. Gomolak was granted 400,000 stock options effective May 2011.  His performance goals for 2011 were tied to finances, planning processes, IT systems, financial operating models and control environment and establishment of prudent governance practices.  Mr. Gomolak received no bonus under the 2011 Annual Incentive Bonus Plan as the Corporation did not achieve its threshold operating income target to qualify for a payout under the plan nor was his base salary increased beyond that which has been previously reported.

 

Mr. DeGraff’s 2011 performance goals were tied to product sales, customer relationship management systems, global business development and channels organization, branding initiatives and field services support.  The increase in the base salary, bonus level and the stock option-based compensation reflect the performance of the Corporation during fiscal 2011 and the satisfactory achievement of his individual performance goals for the year.  In April 2012, the Compensation Committee approved a grant of 250,000 stock options to Mr. DeGraff in recognition of satisfactory achievement of individual performance goals for the year.  However, he received no bonus under the 2011 Annual Incentive Bonus Plan as the Corporation did not achieve its threshold operating income target to qualify for a payout under the plan nor was his base salary increased beyond that which has been previously reported.

 

Dr. Casey’s 2011 performance goals were tied to the attainment of engineering objectives related to product quality, design processes and new products.  In April 2012, the Compensation Committee approved a grant of 250,000 stock options to Dr. Casey in recognition of satisfactory achievement of individual performance goals for the year.  However, he received no bonus under the 2011 Annual Incentive Bonus Plan as the Corporation did not achieve its threshold operating income target to qualify for a payout under the Plan nor was his base salary increased beyond that which has been previously reported.

 

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Mr. Michael joined the Corporation on January 3, 2011 as Vice President, Global Supply Chain.  In recognition of increased responsibilities he was awarded 25,000 stock options in May 2011 and was promoted to Vice President, Global Operations in August 2011.  At the time of his promotion his annual base salary was increased by 10.5% to $205,000 and was awarded an additional 50,000 stock options. His 2011 performance goals were tied to development of business operating models, quality improvement, manufacturing and plant capacity, customer performance and long-term strategies.  In April 2012, the Compensation Committee approved a grant of 125,000 stock options to Mr. Michael in recognition of satisfactory achievement of individual performance goals for the year.  However, he received no bonus under the 2011 Annual Incentive Bonus Plan as the Corporation did not achieve its threshold operating income target to qualify for a payout under the plan nor was his base salary increased beyond that which has been previously reported.

 

Employment Agreements; Termination of Employment and Change-in-Control Arrangements

 

We have employment agreements in effect with the following current executives:  our President and Chief Executive Officer, Charles S. Rhoades, Executive Vice President, Chief Financial Officer and Treasurer, Aaron M. Gomolak, Executive Vice President and Chief Technology Officer, Leo F. Casey, Executive Vice-President Worldwide Marketing and Sales, Pete A. DeGraff and Vice President of Global Operations, Brian J. Michael.

 

Employment Agreement with Charles S. Rhoades.  In 2008, we entered into an employment agreement with Mr. Rhoades, our President and Chief Executive Officer.  The agreement provides Mr. Rhoades a starting annual salary of $400,000, standard medical and other employment benefits, and a potential annual cash bonus award of up to 60% of Mr. Rhoades’ annual salary based upon the achievement of performance metrics established by the Compensation Committee and approved by our Board of Directors.  If Mr. Rhoades’ employment is terminated by the Corporation without cause or is constructively terminated, his salary and medical benefits will be continued for 12 months following such termination, subject to his execution of a release agreement with the Corporation.  In addition, Mr. Rhoades received an initial stock option to purchase up to 4,796,020 shares of our common stock which vests over a four-year period.  These options expire immediately upon Mr. Rhoades’ termination for cause, 90 days after Mr. Rhoades resigns, and one year after Mr. Rhoades’ employment terminates without cause or as a result of his death, disability or constructive termination.  In addition, if a Change in Control (as defined below) transaction occurs while Mr. Rhoades is employed by the Corporation, all unvested shares under any options held by Mr. Rhoades will vest and become immediately exercisable, and he will be afforded the right to exercise the options at or prior to the closing of the Change in Control transaction.  If he chooses not to exercise, his options will be accorded the same treatment in the Change in Control transaction as outstanding options under the Corporation’s 2005 Incentive Compensation Plan.

 

Employment Agreement with Donald R. Peck.  On March 15, 2010, we entered into an employment agreement with Mr. Peck, our former Chief Financial Officer and Treasurer.  The agreement provided Mr. Peck a starting annual salary of $300,000, standard medical and other employment benefits, and a potential annual cash bonus award of up to 30% of Mr. Peck’s annual salary based upon the achievement of performance metrics established by the Compensation Committee and approved by our Board of Directors.  According to the Agreement, if Mr. Peck’s employment was terminated by the Corporation without cause or constructively terminated, his salary and medical benefits were to be continued for one year thereafter subject to his execution of a release agreement with the Corporation.  In addition, Mr. Peck received an initial stock option to purchase up to 1,000,000 shares of our common stock which was to vest over a four-year period.  These options were to expire immediately upon Mr. Peck’s termination for cause, 90 days after Mr. Peck resigns and one year after Mr. Peck’s employment terminates without cause or as a result of his death, disability or constructive termination.  In addition, if a Change in Control transaction occurred while Mr. Peck was employed by the Corporation, all unvested shares under the option were to vest and become immediately exercisable, and he was to be afforded the right to exercise his option at or prior to the closing of the Change in Control transaction.  If he chose not to exercise, his option was to be accorded the same treatment in the Change in Control transaction as outstanding options under the Corporation’s 2005 Incentive Compensation Plan.  Mr. Peck’s employment with the Corporation terminated on May 10, 2011.

 

Employment Agreement with Aaron Gomolak.  On May 11, 2011, we entered into a revised employment agreement with Mr. Gomolak, our Executive Vice President, Chief Financial Officer and Treasurer.  The agreement provides Mr.

 

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Gomolak an annual salary of $275,000, standard medical and other employment benefits, and a potential annual cash bonus award of up to 30% of Mr. Gomolak’s annual salary based upon the achievement of performance metrics established by the Compensation Committee and approved by our Board of Directors.  If Mr. Gomolak’s employment is terminated by the Corporation without cause or is constructively terminated, his salary and medical benefits will be continued for one year thereafter subject to his execution of a release agreement with the Corporation. Further, If Mr. Gomolak’s employment is terminated without cause or is constructively terminated or he becomes subject to a disability or dies while he is employed by the Corporation, he or his estate shall have 12 months after such termination without cause, constructive termination, determination of disability or date of death to exercise the option.  If a Change in Control transaction occurs, all unvested shares under any outstanding options held by Mr. Gomolak will vest, and he will have the right to exercise such options at or prior to the closing of the Change in Control transaction.  If he chooses not to exercise, his options will be accorded the same treatment in the Change in Control transaction as outstanding options under the Corporation’s 2005 Incentive Compensation Plan.

 

Employment Agreement with Leo F. Casey.  On February 10, 2011, we entered into an employment agreement with Dr. Casey, our Executive Vice-President and Chief Technology Officer.  The agreement provides Dr. Casey a starting annual salary of $285,090, standard medical and other employment benefits, and a potential annual cash bonus award of up to 30% of Dr. Casey’s annual salary based upon the achievement of performance metrics established by the Compensation Committee.  If Dr. Casey’s employment is terminated by the Corporation without cause or is constructively terminated, his salary and medical benefits will be continued for one year thereafter subject to his execution of a release agreement with the Corporation. Further, if Dr. Casey’s employment is terminated without cause or is constructively terminated or he becomes subject to a disability or dies while he is employed by the Corporation he or his estate shall have 12 months after such termination without cause, constructive termination, determination of disability or date of death to exercise the option.  If a Change in Control transaction occurs, all unvested shares under any outstanding options held by Dr. Casey will vest, and he will have the right to exercise such options at or prior to the closing of the Change in Control transaction.  If he chooses not to exercise, his options will be accorded the same treatment in the Change in Control transaction as outstanding options under the Corporation’s 2005 Incentive Compensation Plan.  In addition, Dr. Casey agreed that, for a period of six months following termination of his employment (or such longer period for which he receives compensation or benefits from the following termination), he will not compete with or solicit customers, prospective customers, employees or consultants of the Corporation.

 

Employment Agreement with Pete A. DeGraff.  On February 10, 2011, we entered into an employment agreement with Mr. DeGraff, our Executive Vice President Worldwide Marketing and Sales.  The agreement provides Mr. DeGraff a starting annual salary of $330,070, standard medical and other employment benefits, a potential annual cash bonus award of up to 30% of Mr. DeGraff’s annual salary based upon the achievement of performance metrics established by the Compensation Committee and approved by our Board of Directors, and the opportunity to earn a cash bonus of up to 15% of his annual salary as a commission based on sales.  If Mr. DeGraff’s employment is terminated by the Corporation without cause or is constructively terminated, his salary and medical benefits will be continued for one year thereafter subject to his execution of a release agreement with the Corporation. Further, if Mr. DeGraff’s employment is terminated without cause or is constructively terminated or he becomes subject to a disability or dies while he is employed by the Corporation, he or his estate shall have 12 months after such termination without cause, constructive termination, determination of disability or date of death to exercise the option.  If a Change in Control transaction occurs, all unvested shares under any outstanding options held by Mr. DeGraff will vest, and he will have the right to exercise such options at or prior to the closing of the Change in Control transaction.  If he chooses not to exercise, his options will be accorded the same treatment in the Change in Control transaction as outstanding options under the Corporation’s 2005 Incentive Compensation Plan.  In addition, Mr. DeGraff agreed that, for a period of six months following termination of his employment (or such longer period for which he receives compensation or benefits from the following termination), he will not compete with or solicit customers, prospective customers, employees or consultants of the Corporation.

 

Employment Agreement with Brian J. Michael.  On August 2, 2011, we entered into an employment agreement with Mr. Michael our Vice President Global Operations.  The agreement provides Mr. Michael a starting annual salary of $205,000, standard medical and other employment benefits, and a potential annual cash bonus award of up to 30% of Mr. Michael’s annual salary based upon the achievement of performance metrics established by the Compensation Committee.  If Mr. Michael’s employment is terminated by the Corporation without cause or is constructively terminated, his salary and medical benefits will be continued for one year thereafter subject to his execution of a release agreement with the

 

11



 

Corporation. Further, if Mr. Michael’s employment is terminated without cause or is constructively terminated or he becomes subject to a disability or dies while he is employed by the Corporation he or his estate shall have 12 months after such termination without cause, constructive termination, determination of disability or date of death to exercise the option.  If a Change in Control transaction occurs, all unvested shares under any outstanding options held by Mr. Michael will vest, and he will have the right to exercise such options at or prior to the closing of the Change in Control transaction.  If he chooses not to exercise, his options will be accorded the same treatment in the Change in Control transaction as outstanding options under the Corporation’s 2005 Incentive Compensation Plan.  In addition, Mr. Michael agreed that, for a period of six months following termination of his employment (or such longer period for which he receives compensation or benefits from the following termination), he will not compete with or solicit customers, prospective customers, employees or consultants of the Corporation.

 

Under these agreements, a “Change in Control” is defined as the occurrence of any of the following:

 

1.              the acquisition by any person of beneficial ownership (within the meaning of Rule 13d-3 under the Securities and Exchange Act of 1934, as amended) of more than fifty percent (50%) of either (a) the then outstanding shares of common stock of the Corporation (the “Outstanding common stock”) or (b) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Voting Securities)” (such beneficial ownership referred to as a “Controlling Interest”); provided, however, that the following acquisitions will not constitute or result in a Change in Control: (i) any acquisition directly from the Corporation; (ii) any acquisition by the Corporation; (iii) any acquisition by any person that, as of May 18, 2005, beneficially owns a Controlling Interest; (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its subsidiaries; or (v) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of paragraph 3 below; or

 

2.              during any period of two consecutive years (not including any period prior to May 18, 2005), individuals who constituted the board of directors on May 18, 2005(the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors; provided, however, that any individual becoming a director subsequent to May 18, 2005 whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the board; or

 

3.              the consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Corporation or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Corporation, or the acquisition of assets or stock of another entity by the Corporation or any of its subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding common stock and Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such

 

12



 

Business Combination of the Outstanding common stock and Outstanding Voting Securities, as the case may be, (B) no person (excluding any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such Business Combination or any person that as of May 18, 2005 beneficially owns a Controlling Interest) beneficially owns, directly or indirectly, fifty percent (50%) or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Corporation’s board of directors, providing for such Business Combination; or

 

4.              Approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

 

Tax Implications

 

Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the deductibility on our tax return of compensation of over $1,000,000 to certain of the named executive officers unless, in general, the compensation is paid pursuant to a plan which is performance-related, non-discretionary and has been approved by our stockholders. We periodically review the potential consequences of Section 162(m) and may structure the performance-based portion of our executive compensation to comply with the exemptions available under Section 162(m). We believe that options granted under our incentive plans will generally qualify as performance-based compensation under Section 162(m). However, we reserve the right to use our judgment to authorize compensation payments that do not comply with these exemptions when we believe that such payments are appropriate and in the best interest of the stockholders, after taking into consideration changing business conditions or the officer’s performance.

 

Fiscal 2012 Incentive Bonus Plan

 

As a result of a review of general market and peer company practice, the Compensation Committee has established, for fiscal 2012, a written management incentive bonus plan (the “2012 Bonus Plan”) as a means of adding specific incentives towards achievement of specific business unit and Corporation goals that are key factors in our success in 2012.  Eligible participants are the (i) the President and Chief Executive Officer; (ii) the Executive Vice President, Chief Financial Officer & Treasurer; (iii) the Executive Vice President and Chief Technology Officer; (iv) the Vice President, Administration and Human Resources and Secretary; (v) the Executive Vice President of Worldwide Sales and Marketing; (vi) the Vice President Global Operations; (vii) the Vice President of Engineering; (viii) those individuals who directly report to the Executive Officers at the Vice President and Director Level; (ix) those individuals who manage a group or function (Manager Level) who report to the Executive Officer or Director; and (x) Satcon Fellows.  2012 Bonus Plan participants are eligible to receive cash bonuses conditional upon successful performance against specified objectives, with an emphasis on both individual performance and overall Corporation performance.  The Incentive Plan will be funded from the Corporation’s operating income.  2012 Plan performance is to be measured in six (6) month intervals.

 

The 2012 Bonus Plan will place emphasis on both individual performance and overall Corporation performance, with the primary criteria to funding the 2012 Incentive Plan is that the Corporation generates operating income.  General 2012 objectives are summarized as follows:

 

·                  President and Chief Executive Officer: overall corporate objectives will include objectives related to the Corporation’s focus and market position, growth, product/service quality, operating profitability, financial condition, business practices, and establishment of prudent governance practices.

 

13



 

·                  Operations:  Operations objectives will include objectives related to business operating models, manufacturing and plant capacity, customer performance and long-term strategies.

·                  Sales and Marketing:  Sales and marketing objectives will include objectives related to direct sales team organization, sales methodology, forecast methodology and customer relationship management systems, global business development and channels organization, branding initiatives and field services organization.

·                  Engineering: Engineering objectives will include objectives related to product quality, design processes and new products.

·                  Finance:  Finance objectives will include objectives related to management information, information systems, planning processes, financial operating models and control environment and establishment of prudent governance practices.

·                  Administration:  Administration objectives will include objectives related to compensation strategy, performance management systems, annual cash incentive programs, rewards programs, training, and staffing.

 

Potential awards under the 2012 Bonus Plan are as follows:

 

·                  President and Chief Executive Officer

·                  Up to 60% of Base Salary upon attainment of 100% of Corporate objectives

 

·                  Other Executive Officers and Vice Presidents

·                  Up to 30% of Base Salary in total - half of which is based upon attainment of 100% of personal objectives and half of which is based upon attainment of 100% of Corporate objectives.

 

·                  Other (Director Level and Manager Level) Participants

·                  Up to 20% of Base Salary in total for Sr. Director and Director Level participants (including Satcon Fellows) - half of which is based upon attainment of 100% of personal objectives and half of which is based upon attainment of 100% of Corporate objectives

 

·                  Up to 10% of Base Salary in total for Manager Level participants - half of which is based upon attainment of 100% of personal objectives and half of which is based upon attainment of 100% of Corporate objectives

 

After determining and approving incentive payments under the 2012 Bonus Plan, the Compensation Committee reviews the determinations with the Board.  Final determination of all compensation will be made by the Compensation Committee and will be paid by March 31, 2013.

 

Compensation Committee Report

 

We, the Compensation Committee, have reviewed and discussed the above Compensation and Discussion and Analysis with management.  Based on this review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Form 10-K/A.

 

 

 

COMPENSATION COMMITTEE

 

 

 

DANIEL R. DWIGHT, Chairman

 

DAVID PREND

 

PHILIP DEUTCH

 

14



 

Compensation Committee Interlocks and Insider Participation

 

The members of the Compensation Committee for fiscal 2011 were those individuals named above in the Compensation Committee Report.  No member of the Compensation Committee has ever served as an officer or employee of the Corporation.  See “Item 13. Certain Relationships and Related Transactions, and Director Independence” for a description of a transaction that occurred in 2011 in which Messrs. Prend and Deutch had an interest.  During fiscal 2011, no executive officer of the Corporation served on the board of directors or compensation committee of another entity that has or had an executive officer serving as a member of the Board or the Compensation Committee.

 

15



 

Compensation of Executive Officers

 

Set forth below is information regarding the compensation of (i) the Chief Executive Officer, (ii) the Chief Financial Officer, (iii) our former Chief Financial Officer and (iv) our three other most highly compensated executive officers for the year ended December 31, 2011 (“fiscal 2011”) who were serving as executive officers as of the end of fiscal 2011.  Such officers are collectively referred to as the “named executive officers.”

 

Summary Compensation Table.  The following table sets forth information regarding the named executive officers’ compensation for fiscal years 2011, 2010 and 2009.

 

SUMMARY COMPENSATION TABLE

 

Name and principal position

 

Year

 

Salary ($)

 

Bonus ($)

 

Option
Awards
($)

 

Non-Equity
Incentive Plan
Compensation
($)

 

All Other
Compensation
($)

 

Total ($)

 

 

 

 

 

 

 

 

 

(1)

 

(3)

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charles S. Rhoades (4)

 

2011

 

$

518,284

 

$

 

$

562,231

 

$

 

$

 

$

1,080,515

 

- Chief Executive Officer and President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

490,392

 

$

 

$

1,071,269

 

$

300,000

 

$

7,350

 

$

1,869,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

$

423,663

 

$

96,000

 

$

332,489

 

$

135,000

 

$

7,350

 

$

994,502

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aaron M. Gomolak (7)

 

2011

 

$

263,010

 

$

 

$

745,724

 

$

 

$

5,276

 

$

1,014,010

 

- Executive Vice President ,Chief Financial Officer and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

203,869

 

$

 

$

664,128

 

$

109,134

 

$

8,243

 

$

985,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leo F. Casey

 

2011

 

$

296,034

 

$

 

$

187,410

 

$

 

$

6,779

 

$

490,223

 

- Executive Vice President and Chief Technology Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

242,406

 

$

 

$

586,060

 

$

78,515

 

$

10,186

 

$

917,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

$

200,071

 

$

 

$

81,437

 

$

30,011

 

$

7,350

 

$

318,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brian J. Michael (5)

 

2011

 

$

185,849

 

$

 

$

473,020

 

$

 

$

946

 

$

659,815

 

- Vice President Global Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter F. DeGraff (6)

 

2011

 

$

344,644

 

$

 

$

187,410

 

$

 

$

6,035

 

$

538,089

 

- Executive Vice President of Worldwide Sales and Marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

279,833

 

$

50,000

 

$

800,313

 

$

126,000

 

$

9,268

 

$

1,265,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

$

232,427

 

$

 

$

81,437

 

$

52,162

 

$

7,350

 

$

373,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Donald R. Peck (8)

 

2011

 

$

320,366

 

$

 

$

 

$

 

$

4,561

 

$

324,927

 

- Former Chief Financial Officer and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

231,065

 

$

 

$

1,562,531

 

$

72,092

 

$

6,932

 

$

1,872,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

$

 

$

 

$

 

$

 

$

 

$

 

 


(1)         The amounts in this column reflect the aggregate grant date fair market value in accordance with FASB ASC Topic 718.

 

(2)         Amounts shown for 2011 reflect the value of shares of common stock obtained through participation in the Corporation’s employee stock purchase plan.  Amounts shown for 2009 and 2010 reflect contributions made by the Corporation to the 401(k) plan.

 

(3)         2010 non-equity incentive plan compensation represents cash payouts under the 2010 Incentive Bonus Plan.  The amount earned was based on achievement of defined performance goals for all participants. 2009 non-equity incentive plan compensation represents cash payouts under the 2009 Incentive Bonus Plan.  The amount earned was based on achievement of defined performance goals for all participants. The Annual Incentive Bonus Plan is discussed above in “Compensation Discussion and Analysis.”

 

(4)         Charles S. Rhoades joined the Corporation in May 2008 as the President and Chief Executive Officer.

 

16



 

(5)         Brian Michael joined the Corporation in January 2011as the Vice President Global Supply Chain and was promoted to Vice President Global Operations in August 2011.

 

(6)         Peter F. DeGraff joined the Corporation in June 2008 as the Executive Vice President of Sales and Marketing.

 

(7)         Aaron M. Gomolak joined the Corporation in February 2010 as its Senior Vice President of Global Operations and was promoted to Executive Vice President and Chief Financial Officer in May 2011.

 

(8)         Mr. Peck’s employment with the Corporation terminated on May 10, 2011.

 

Grants of Plan-Based Awards.  The following table sets forth certain information with respect to plan-based awards granted to the named executive officers in fiscal 2011.

 

GRANTS OF PLAN-BASED AWARDS IN FISCAL 2011

 

Name

 

Grant Date (1)

 

All Other
Option
Awards
Number of
Securities
Underlying
Options
(#)

 

Exercise
or Base
Price of
Option
Awards
($/Sh)

 

Grant Date Fair Value of
Stock and Option
Awards($)

 

Charles S. Rhoades

 

5/10/2011

 

300,000

 

$

2.99

 

$

562,231

 

 

 

 

 

 

 

 

 

 

 

Leo F. Casey

 

5/10/2011

 

100,000

 

$

2.99

 

$

187,410

 

 

 

 

 

 

 

 

 

 

 

Peter F. DeGraff

 

5/10/2011

 

100,000

 

$

2.99

 

$

187,410

 

 

 

 

 

 

 

 

 

 

 

Aaron M. Gomolak

 

5/10/2011

 

400,000

 

$

2.99

 

$

745,724

 

 

 

 

 

 

 

 

 

 

 

Brian Michael

 

1/3/2011

 

125,000

 

$

4.74

 

$

379,076

 

 

 

5/10/2011

 

25,000

 

$

2.99

 

$

43,924

 

 

 

8/2/2011

 

50,000

 

$

1.57

 

$

50,019

 

 

 

 

 

 

 

 

 

 

 

Donald R. Peck

 

 

 

 

 

 


(1)         These options vest over a four-year period as follows: 25% of the shares become exercisable on the first anniversary of the date of grant and 6.25% of the shares become exercisable on each quarterly anniversary thereafter.

 

17



 

Outstanding Equity Awards at Fiscal Year-End.  The following table sets forth certain information with respect to unexercised options held by the named executive officers at the end of fiscal year 2011.

 

OUTSTANDING EQUITY AWARDS AT FISCAL 2011 YEAR-END TABLE

 

 

 

 

 

Option Awards

 

 

 

Number of
Securities
Underlying
Unexercised
Options

(#)

 

Number of
Securities
Underlying
Unexercised
Options

(#) (1)

 

Equity
Incentive
Plan Awards
Number of
Securities
Underlying
Unexercised
Unearned
Options

 

Option
Exercise
Price

 

Option
Expiration

 

Name 

 

Exercisable

 

Unexercisable

 

(#)

 

($)

 

Date (2)

 

Charles S. Rhoades

 

 

 

 

 

 

 

 

 

 

 

 

 

4,196,518

 

599,502

 

 

$

1.9000

 

5/01/2018

 

 

 

171,875

 

78,125

(3)

 

$

1.1400

 

3/2/2019

 

 

 

56,250

 

43,750

(3)

 

$

1.8200

 

7/1/2019

 

 

 

109,375

 

119,298

(3)

 

$

2.3500

 

3/18/2020

 

 

 

62,500

 

187,500

 

 

$

4.2900

 

10/26/2020

 

 

 

 

 

300,000

(3)

 

$

4.2900

 

5/10/2021

 

Leo F. Casey

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

$

5.2600

 

2/4/2012

 

 

 

30,000

 

 

 

$

5.2600

 

2/4/2012

 

 

 

4

 

 

 

$

0.6300

 

7/7/2013

 

 

 

4,996

 

 

 

$

0.6300

 

7/7/2013

 

 

 

41,236

 

 

 

$

2.0500

 

10/18/2014

 

 

 

38,764

 

 

 

$

2.0500

 

10/18/2014

 

 

 

10,000

 

 

 

$

1.5500

 

3/27/2015

 

 

 

10,000

 

 

 

$

2.9500

 

5/7/2016

 

 

 

50,000

 

 

 

$

1.3800

 

11/3/2017

 

 

 

104,928

 

40,650

 

 

$

2.4600

 

6/29/2018

 

 

 

224,135

 

35,287

 

 

$

2.4600

 

6/29/2018

 

 

 

68,750

 

31,250

(3)

 

$

1.1400

 

3/2/2019

 

 

 

87,500

 

112,500

(3)

 

$

2.3500

 

3/18/2020

 

 

 

25,000

 

75,000

(3)

 

$

4.2900

 

10/26/2020

 

 

 

 

 

100,000

(3)

 

$

4.2900

 

5/10/2021

 

Peter F. DeGraff

 

 

 

 

 

 

 

 

 

 

 

 

 

262,500

 

37,500

 

 

$

2.5700

 

5/28/2018

 

 

 

68,750

 

31,250

(3)

 

$

1.1400

 

3/2/2019

 

 

 

109,375

 

140,625

(3)

 

$

2.3500

 

3/18/2020

 

 

 

37,500

 

112,500

(3)

 

$

4.2900

 

10/26/2020

 

 

 

 

 

100,000

(3)

 

$

4.2900

 

5/10/2021

 

 

18



 

 

 

 

 

Option Awards

 

 

 

Number of
Securities
Underlying
Unexercised
Options

(#)

 

Number of
Securities
Underlying
Unexercised
Options

(#) (1)

 

Equity
Incentive
Plan Awards
Number of
Securities
Underlying
Unexercised
Unearned
Options

 

Option
Exercise
Price

 

Option
Expiration

 

Name 

 

Exercisable

 

Unexercisable

 

(#)

 

($)

 

Date (2)

 

Aaron M. Gomolak

 

 

 

 

 

 

 

 

 

 

 

 

 

109,375

 

140,625

(3)

 

$

2.3500

 

2/01/2020

 

 

 

25,000

 

75,000

(3)

 

$

4.2900

 

10/26/2020

 

 

 

 

400,000

(3)

 

$

4.2900

 

5/10/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Brian J. Michael

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125,000

(3)

 

 

$

4.7400

 

1/3/2021

 

 

 

 

25,000

(3)

 

$

2.9900

 

5/10/2021

 

 

 

 

50,000

(3)

 

$

1.5700

 

8/2/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Donald R. Peck

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

250,000

(4)

 

$

2.330

 

3/15/2020

 

 


(1)         Except as otherwise noted, options become exercisable 25% on the date of grant and 75% vesting in equal annual installments over the four-year period from the date of grant.

(2)         The expiration date of each option occurs ten years after the date of grant of such option.

(3)         Options granted in fiscal 2011, 2010 and 2009 became exercisable 25% on the first anniversary of the date of grant and 6.25% on each quarterly anniversary thereafter.

(4)         Upon termination, Mr. Peck’s vested options were exercisable for one year.  Accordingly, unexercised options expired on May 10, 2012.

 

Option Exercises and Stock VestedOne of our named executive officers exercised options fiscal 2011.  In March 2011, Dr. Casey exercised 80,000 options with a strike price of $2.05 per option.  No stock awards vested in fiscal 2011.

 

 

 

Option Awards

 

Stock Awards

 

 

 

Name

 

Number of
Shares
Acquired
on
Exercise
(#)

 

Value
Realized
on
Exercise
($)

 

Number of
Shares
Acquired
on
Vesting
(#)

 

Value
Realized
on
Vesting
($)

 

Total Value
Realized on
Exercise
and
Vesting
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

Charles S. Rhoades

 

 

 

 

 

 

Leo F. Casey

 

80,000

 

$

131,982

 

 

 

$

131,982

 

Peter F. DeGraff

 

 

 

 

 

 

Aaron M. Gomolak

 

 

 

 

 

 

Brian J. Michael

 

 

 

 

 

 

Donald R. Peck

 

 

 

 

 

 

 

Director Compensation.  Non-employee directors receive annual cash fees, paid out in quarterly installments during the year, for their services as follows:

 

 

 

Board of
Directors

 

Audit
Committee

 

Compensation
Committee

 

Governance
Committee

 

Chair

 

$

28,000

 

$

10,000

 

$

8,000

 

$

5,000

 

Member

 

$

23,000

 

$

5,000

 

$

3,000

 

$

3,000

 

 

19



 

In addition, each non-employee director is reimbursed for his out-of-pocket costs incurred to attend any board meeting.

 

On April 11, 2002, to encourage ownership in the Corporation by outside directors, to provide such directors with a further incentive to remain as directors and to align the interests of such directors with the interests of the Corporation’s stockholders, the Board adopted a director stock option program. Pursuant to this program, (i) each individual who first becomes an outside director of the Corporation will receive a non-statutory stock option to purchase 15,000 shares of common stock on the date of his initial election to the Board; and (ii) on the date of each Annual Meeting of Stockholders of the Corporation (other than a director who was initially elected to the Board at any such Annual Meeting of Stockholders or, if previously, at any time after the prior year’s Annual Meeting of Stockholders), provided that he is serving as a director immediately following the date of such Annual Meeting of Stockholders, (a) each outside director who is serving on the Audit Committee will be granted a non-statutory stock option to purchase an additional 5,000 shares of common stock, (b) each outside director who is serving on the Compensation Committee will be granted a non-statutory stock option to purchase an additional 3,000 shares of common stock and (c) each outside director who is serving on the Corporate Governance and Nominating Committee will be granted a non-statutory stock option to purchase an additional 4,000 shares of common stock. All non-statutory stock options granted under the director stock option program will be immediately exercisable (unless otherwise determined by the Compensation Committee) and will have exercise prices equal to the closing price of the common stock on the Nasdaq Stock Market on the date of grant.

 

The following table sets forth information regarding the compensation of the Corporation’s non-employee directors during fiscal 2011.

 

DIRECTOR COMPENSATION TABLE

 

Name 

 

Fees Earned or
Paid in Cash

($)(1)

 

Option Awards
($)(2)

 

All Other
Compensation

($)

 

Total
($)

 

John M. Carroll

 

 

 

 

 

 

 

 

 

 

 

$

41,000

 

$

36,079

 

 

$

77,079

 

Philip J. Deutch

 

 

 

 

 

 

 

 

 

 

 

$

26,000

 

$

28,562

 

 

$

54,562

 

James J. Kirtley, Jr.

 

 

 

 

 

 

 

 

 

 

 

$

23,000

 

$

22,549

 

 

$

45,549

 

David J. Prend

 

 

 

 

 

 

 

 

 

 

 

$

29,000

 

$

34,575

 

 

$

63,575

 

Robert G. Schoenberger

 

 

 

 

 

 

 

 

 

 

 

$

33,000

 

$

36,079

 

 

$

69,079

 

Daniel R. Dwight

 

 

 

 

 

 

 

 

 

 

 

$

39,000

 

$

42,092

 

 

$

81,092

 

 


(1)          Mr. Rhoades is not included in this table as he was an employee of the Corporation during 2011 and accordingly received no compensation for his services as director. The compensation received by Mr. Rhoades as an employee is shown in the Summary Compensation Table above.

 

20



 

(2)          The amounts in this column reflect the aggregate grant date fair value, in accordance with FASB ASC Topic 718;

 

Name

 

Date of Award

 

Number of
Shares
underlying
Award (#)

 

Vesting Term

 

Grant Date Fair
Value ($)

 

Total Value
of Awards
($)

 

John M. Carroll

 

6/30/2011

 

24,000

 

Upon Grant

 

$

36,079

 

$

36,079

 

Philip J. Deutch

 

6/30/2011

 

19,000

 

Upon Grant

 

28,562

 

28,562

 

James J. Kirtley, Jr.

 

6/30/2011

 

15,000

 

Upon Grant

 

22,549

 

22,549

 

David J. Prend

 

6/30/2011

 

23,000

 

Upon Grant

 

34,575

 

34,575

 

Robert G. Schoenberger

 

6/30/2011

 

24,000

 

Upon Grant

 

36,079

 

36,079

 

Daniel R. Dwight

 

6/30/2011

 

28,000

 

Upon Grant

 

42,092

 

42,092

 

 

As of December 31, 2011, each non-employee director had the following number of options outstanding:

 

Non-Employee Director

 

# of Options
Outstanding

 

Mr. Carroll

 

298,000

 

Mr. Deutch

 

92,000

 

Dr. Kirtley

 

110,000

 

Mr. Prend

 

109,000

 

Mr. Schoenberger

 

103,000

 

Mr. Dwight

 

164,000

 

 

21



 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules

 

15(a)(3) Exhibits - The exhibits listed in the Exhibit Index immediately preceding the exhibits are filed as part of this Form 10-K/A.

 

22



 

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, in the City of Boston, Commonwealth of Massachusetts on May 16, 2012.

 

 

SATCON TECHNOLOGY CORPORATION

 

By:

 

 

/s/ CHARLES S. RHOADES

 

Charles S. Rhoades

 

President and Chief Executive Officer

 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

31.1

 

Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2

 

Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

23


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