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Volterra Semiconductor DEF 14A 2007 Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ) Filed by the Registrant þ
Filed by a Party other than the Registrant o Check the appropriate box:
Volterra Semiconductor Corporation
Payment of Filing Fee (Check the appropriate box):
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VOLTERRA
SEMICONDUCTOR CORPORATION
3839 Spinnaker Court Fremont, California 94538
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Volterra Semiconductor Corporation, a Delaware
corporation. The meeting will be held on Wednesday, May 30,
2007 at 9:00 a.m. local time at the Fremont Marriott, 46100
Landing Parkway, Fremont, California, for the following purposes:
1. To elect three directors to hold office until the 2010
Annual Meeting of Stockholders.
2. To consider a Company proposal to approve an amendment
and restatement of the 2004 Non-Employee Directors’ Stock
Option Plan, to increase the number of shares granted to new
non-employee directors and pursuant to annual grants to existing
non-employee directors. The Company is not proposing to increase
the number of shares authorized for issuance under such plan.
3. To ratify the selection by the Audit Committee of the
Board of Directors of KPMG LLP as the independent registered
public accounting firm of Volterra for its fiscal year ending
December 31, 2007.
4. To conduct any other business properly brought before
the meeting.
These items of business are more fully described in the Proxy
Statement accompanying this Notice.
The record date for the annual meeting is April 2, 2007.
Only stockholders of record at the close of business on that
date may vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
Greg Hildebrand
Secretary
Fremont, California
April 24, 2007
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please
complete, date, sign and return the enclosed proxy as promptly
as possible in order to ensure your representation at the
meeting. A return envelope (which is postage prepaid if mailed
in the United States) is enclosed for your convenience. Even if
you have voted by proxy, you may still vote in person if you
attend the meeting. Please note, however, that if your shares
are held of record by a broker, bank or other nominee and you
wish to vote at the meeting, you must obtain a proxy issued in
your name from that record holder.
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VOLTERRA
SEMICONDUCTOR CORPORATION
3839 Spinnaker Court Fremont, California 94538
PROXY
STATEMENT
FOR THE 2007 ANNUAL MEETING OF
STOCKHOLDERS
May 30,
2007
QUESTIONS
AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
We sent you this proxy statement and the enclosed proxy card
because the Board of Directors of Volterra Semiconductor
Corporation (sometimes referred to as the “Company” or
“Volterra”) is soliciting your proxy to vote at the
2007 Annual Meeting of Stockholders. You are invited to attend
the annual meeting to vote on the proposals described in this
proxy statement. However, you do not need to attend the meeting
to vote your shares. Instead, you may simply complete, sign and
return the enclosed proxy card.
Volterra intends to mail this proxy statement and accompanying
proxy card on or about April 24, 2007 to all stockholders
of record entitled to vote at the annual meeting.
Only stockholders of record at the close of business on
April 2, 2007 will be entitled to vote at the annual
meeting. On this record date, there were 24,488,744 shares
of common stock outstanding and entitled to vote.
If on April 2, 2007 your shares were registered directly in
your name with Volterra’s transfer agent, Registrar and
Transfer Company, then you are a stockholder of record. As a
stockholder of record, you may vote in person at the meeting or
vote by proxy. Whether or not you plan to attend the meeting, we
urge you to fill out and return the enclosed proxy card to
ensure your vote is counted.
If on April 2, 2007 your shares were held, not in your
name, but rather in an account at a brokerage firm, bank,
dealer, or other similar organization, then you are the
beneficial owner of shares held in “street name” and
these proxy materials are being forwarded to you by that
organization. The organization holding your account is
considered to be the stockholder of record for purposes of
voting at the annual meeting. As a beneficial owner, you have
the right to direct your broker or other agent on how to vote
the shares in your account. You are also invited to attend the
annual meeting. However, since you are not the stockholder of
record, you may not vote your shares in person at the meeting
unless you request and obtain a valid proxy from your broker or
other agent.
There are three matters scheduled for a vote:
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For Proposal No. 1, you may either vote
“For” all the nominees to the Board of Directors or
you may “Withhold” your vote for any nominee you
specify. For Proposal No. 2, the approval of an
amendment to our 2004 Non-Employee Directors’ Stock Option
Plan, you may vote “For” or “Against” or
abstain from voting. For Proposal No. 3, the
ratification of the selection by the Audit Committee of KPMG LLP
as the independent registered public accounting firm of the
Company for its fiscal year ending December 31, 2007, you
may vote “For” or “Against” or abstain from
voting. The procedures for voting are fairly simple:
If you are a stockholder of record, you may vote in person at
the annual meeting or vote by proxy using the enclosed proxy
card. Whether or not you plan to attend the meeting, we urge you
to vote by proxy to ensure your vote is counted. You may still
attend the meeting and vote in person if you have already voted
by proxy.
If you are a beneficial owner of shares registered in the name
of your broker, bank, or other agent, you should have received a
proxy card and voting instructions with these proxy materials
from that organization rather than from Volterra. Simply
complete and mail the proxy card to ensure that your vote is
counted. To vote in person at the annual meeting, you must
obtain a valid proxy from your broker, bank, or other agent.
Follow the instructions from your broker or bank included with
these proxy materials, or contact your broker or bank to request
a proxy form.
On each matter to be voted upon, you have one vote for each
share of common stock you own as of April 2, 2007.
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted “For” the
election of both nominees for director, “For” the
amendment of our 2004 Non-Employee Directors’ Stock Option
Plan, as described herein, and “For” the ratification
of the selection by the Audit Committee of the Board of
Directors of KPMG LLP as the independent registered public
accounting firm of the Company for its fiscal year ending
December 31, 2007. If any other matter is properly
presented at the meeting, your proxy (one of the individuals
named on your proxy card) will vote your shares using his or her
best judgment.
We will pay for the entire cost of soliciting proxies. In
addition to these mailed proxy materials, our directors and
employees may also solicit proxies in person, by telephone, or
by other means of communication. Directors and employees will
not be paid any additional compensation for soliciting proxies.
We may also reimburse brokerage firms, banks and other agents
for the cost of forwarding proxy materials to beneficial owners.
If you receive more than one proxy card, your shares are
registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
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Yes. You can revoke your proxy at any time before the final vote
at the meeting. If you are the record holder of your shares, you
may revoke your proxy in any one of three ways:
If your shares are held by your broker or bank as a nominee or
agent, you should follow the instructions provided by your
broker or bank.
To be considered for inclusion in next year’s proxy
materials, your proposal must be submitted in writing by
December 26, 2007, to Volterra’s Secretary at 3839
Spinnaker Court, Fremont, CA 94538. If you wish to submit a
proposal that is not to be included in next year’s proxy
materials or nominate a director, you must do so not later than
the close of business on March 31, 2008 nor earlier than
the close of business on March 1, 2008. You are also
advised to review Volterra’s Bylaws, which contain
additional requirements about advance notice of stockholder
proposals and director nominations.
Votes will be counted by the inspector of election appointed for
the meeting, who will separately count “For” and
“Withhold” and, with respect to proposals other than
the election of directors, “Against” votes,
abstentions and broker non-votes. Abstentions will be counted
towards the vote total for each proposal, and will have the same
effect as “Against” votes. Broker non-votes have no
effect and will not be counted towards the vote total for any
proposal. A broker non-vote occurs when a nominee, such as a
broker or bank, holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that proposal and has
not received instructions with respect to that proposal from the
beneficial owner (despite voting on at least one other proposal
for which it does have discretionary authority or for which it
has received instructions). In the event that a broker, bank,
custodian, nominee or other record holder of Volterra’s
common stock indicates on a proxy that it does not have
discretionary authority to vote certain shares on a particular
proposal, then those shares will be treated as broker non-votes
with respect to that proposal.
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A quorum of stockholders is necessary to hold a valid meeting. A
quorum will be present if at least a majority of the outstanding
shares entitled to vote are represented by stockholders present
at the meeting or by proxy. On the record date (April 2,
2007), there were 24,488,744 shares outstanding and
entitled to vote. Thus, assuming all such shares remain
outstanding on the date of the annual meeting,
12,244,373 shares must be represented by stockholders
present at the meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you
submit a valid proxy (or one is submitted on your behalf by your
broker, bank or other nominee) or if you vote in person at the
meeting. Abstentions and broker non-votes will be counted
towards the quorum requirement. If there is no quorum, a
majority of the votes present at the meeting may adjourn the
meeting to another date.
Preliminary voting results will be announced at the annual
meeting. Final voting results will be published in the
Company’s quarterly report on
Form 10-Q
for the second quarter of 2007.
Proposal 1
Volterra’s Board of Directors (the “Board”) is
divided into three classes. Each class consists, as nearly as
possible, of one-third of the total number of directors, and
each class has a three-year term. Vacancies on the Board may be
filled only by persons elected by a majority of the remaining
directors. A director elected by the Board to fill a vacancy in
a class shall serve for the remainder of the full term of that
class, and until the director’s successor is elected and
qualified. This includes vacancies created by an increase in the
number of directors.
The Board presently has seven members. There are three directors
in the class whose term of office expires in 2007: Alan King,
Jeffrey Staszak and Edward Winn.
Each of the three nominees listed below is currently a director
of the Company who was recommended for election to the Board by
the Nominating and Corporate Governance Committee of the Board.
Proxies may not be voted for a greater number of persons than
the number of nominees named. Mr. King was previously
elected as a director by the Board in 1996, Mr. Staszak was
previously elected as a director by the Board in 2000 and
Mr. Winn was previously elected as a director by the Board
in 2004. If elected at the annual meeting, each of these
nominees would serve until the 2010 annual meeting and until his
successor is elected and has qualified, or until the
director’s death, resignation or removal. It is the
Company’s policy to encourage directors and nominees for
director to attend the annual meeting. In 2006, the following
directors attended the annual meeting of stockholders: Alan
King, Mel Friedman, Christopher Paisley, Jeffrey Staszak,
Anthony Stratakos and Edward Winn.
The following is a brief biography of each nominee and each
director whose term will continue after the annual meeting.
Mr. Alan King, age 71, has been our Chairman of the
Board since October 1997 and a member of our Board since
November 1996. Mr. King served as our Chief Executive
Officer from November 1996 to August 2000. From September 1991
to November 1994, Mr. King served as President and Chief
Executive Officer of Silicon Systems, Inc., a semiconductor
company then affiliated with TDK Corporation. From September
1986 to September 1991, Mr. King served as President and
Chief Executive Officer of Precision Monolithics, Inc., a
semiconductor company. Mr. King holds a B.S. in Engineering
from the University of Washington.
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Mr. Jeffrey Staszak, age 54, joined Volterra as our
President and Chief Operating Officer in March 1999, and has
been our Chief Executive Officer since August 2000 and a member
of our Board since April 2000. Prior to joining Volterra,
Mr. Staszak was Senior Vice President in the Storage
Products Group of Texas Instruments Inc., a semiconductor
company, from July 1996 to March 1999. From May 1993 to July
1996, Mr. Staszak served as Senior Vice President and
General Manager of the Storage Products Division of Silicon
Systems, Inc., a semiconductor company then affiliated with TDK
Corporation. Mr. Staszak holds a B.S. in Industrial
Technology from the University of Wisconsin — Stout
and an M.B.A. from Pepperdine University.
Mr. Edward Winn, age 68, has been a member of our
Board since April 2004. From March 1992 to January 2000,
Mr. Winn served in various capacities at TriQuint
Semiconductor, Inc., a semiconductor company, most recently as
Executive Vice President, Finance and Administration and Chief
Financial Officer. From 1985 to 1992, Mr. Winn served in
various capacities at Avantek, Inc., a microwave component and
subsystem company, most recently as Product Group Vice
President. Mr. Winn serves as chairman of the board of
directors of Endwave Corporation, a radio frequency subsystem
company. Mr. Winn received a B.S. in Physics from
Rensselaer Polytechnic Institute and an M.B.A. from Harvard
Business School.
The Board of Directors
Recommends
a Vote in Favor of
each Named Nominee
Dr. Edward Ross, age 65, has been a member of our
Board since May 2004. From January 2005 to December 2005,
Dr. Ross served as the President Emeritus of TSMC North
America, the U.S. subsidiary of Taiwan Semiconductor
Manufacturing Company Ltd., a semiconductor manufacturer. From
March 2000 to December 2004, he was the President and Chief
Executive Officer of TSMC North America. From July 1998 to March
2000, Dr. Ross was Senior Vice President of the
Professional Services Group at Synopsys, Inc., a semiconductor
design software company. From September 1995 to July 1998, he
served as President of Technology and Manufacturing at Cirrus
Logic, Inc., a semiconductor manufacturer. Dr. Ross is a
member of the board of directors of California Micro Devices
Corporation, a semiconductor company, and Open Silicon, Inc., a
privately held semiconductor company. Dr. Ross holds a
B.S.E.E. from Drexel University and an M.S.E.E., M.A. and Ph.D.
from Princeton University.
Dr. Anthony Stratakos, age 36, co-founded Volterra and
has been our Vice President of Advanced Research and Development
and Chief Technology Officer since October 1997 and a member of
our Board since September 1996. From August 1996 to October
1997, Dr. Stratakos led our product development efforts.
Dr. Stratakos holds a B.S.E.E. and an M.S.E.E. from Johns
Hopkins University and a Ph.D. in electrical engineering from
the University of California at Berkeley.
Mr. Mel Friedman, age 68, has been a member of our
Board since May 2004. From July 2002 to December 2003,
Mr. Friedman served as a consultant to Sun Microsystems,
Inc., a network computing company. Mr. Friedman retired as
Senior Vice President of Customer Advocacy at Sun Microsystems
in July 2002 after serving in that position since July 2000.
From April 1989 to June 2000, Mr. Friedman served in
several other roles for Sun Microsystems, including President of
its Microelectronics Division, Vice President of Worldwide
Operations for its Systems Operation, Vice President of West
Coast Operations and Vice President of Supply Management.
Mr. Friedman formerly held executive positions at Prime
Computer, a minicomputer company, and
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Apollo Computer Corp., a computer workstation company that
was acquired by Hewlett-Packard Company. Mr. Friedman
currently serves on the board of directors of Electroglas, Inc.,
a semiconductor equipment company. He holds a B.S.M.E. from City
College of New York and has completed masters courses in
industrial management and mechanical engineering at the
Massachusetts Institute of Technology.
Mr. Christopher Paisley, age 54, has been a member of
our Board since April 2000. Since January 2001, Mr. Paisley
has served as the Dean’s Executive Professor of Accounting
and Finance at the Leavey School of Business at Santa Clara
University. Mr. Paisley retired from his position as Senior
Vice President of Finance and Chief Financial Officer of 3Com
Corporation, a networking products company, in May 2000 after
having served as an officer at 3Com since September 1985.
Mr. Paisley currently serves on the board of directors of
Electronics for Imaging, Inc., a printing solutions provider.
Mr. Paisley holds a B.A. in Economics from the University
of California at Santa Barbara and an M.B.A. from the University
of California at Los Angeles.
As required under the Nasdaq stock market (“Nasdaq”)
listing standards, a majority of the members of a listed
company’s board of directors must qualify as
“independent,” as affirmatively determined by the
board of directors. The board consults with the company’s
counsel to ensure that the board’s determinations are
consistent with all relevant securities and other laws and
regulations regarding the definition of “independent,”
including those set forth in pertinent listing standards of
Nasdaq, as in effect time to time.
Consistent with these considerations, after review of all
relevant transactions or relationships between each director, or
any of his or her family members, and the Company, its senior
management and its independent registered public accounting
firm, the Board has determined that all of the Company’s
directors are independent directors within the meaning of the
applicable Nasdaq listing standards, except for
Mr. Staszak, the President and Chief Executive Officer of
the Company and Dr. Stratakos, the Company’s Vice
President of Advanced Research and Development and Chief
Technology Officer.
The Board has established corporate governance guidelines to
ensure that the Board will have the necessary authority and
practices in place to review and evaluate the Company’s
business operations as needed and, where appropriate, to make
decisions that are independent of the Company’s management.
The guidelines are also intended to align the interests of
directors and management with those of the Company’s
stockholders. The corporate governance guidelines set forth the
practices the Board will follow with respect to: Board
organization and independence of directors; committee
composition; board meetings; communication with management,
employees stockholders, journalists, analysts and other outside
parties; retention of advisors; election and service of
directors; and continuing director education. The corporate
governance guidelines were adopted by the Board to, among other
things, reflect changes to the Nasdaq listing standards and
Securities and Exchange Commission rules adopted to implement
provisions of the Sarbanes-Oxley Act of 2002.
Persons interested in communicating with the independent
directors with their concerns or issues may address
correspondence to a particular director, or to the independent
directors generally, in care of the Chief Financial Officer of
Volterra Semiconductor Corporation at 3839 Spinnaker Court,
Fremont, CA 94538. If no particular director is named, letters
will be forwarded, depending on the subject matter, to the
Chairperson of the Audit, Compensation, or Nominating and
Corporate Governance Committee.
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The Board has three committees: an Audit Committee, a
Compensation Committee, and a Nominating and Corporate
Governance Committee. The following table provides membership
and meeting information for 2006 for each of the Board
committees:
Below is a description of each committee of the Board. Each of
the Audit and Compensation Committees has authority to engage
legal counsel or other experts or consultants, as it deems
appropriate to carry out its responsibilities. The Board has
determined that each member of each committee meets the
applicable rules and regulations regarding
“independence” and that each member is free of any
relationship that would interfere with his individual exercise
of independent judgment with regard to the Company.
The Audit Committee of the Board oversees the Company’s
corporate accounting and financial reporting process. For this
purpose, the Audit Committee performs several functions,
including:
Three directors currently comprise the Audit Committee:
Messrs. Paisley, Friedman and Winn. Mr. Paisley serves
as chairperson. The Audit Committee met eleven times during
2006. The Board has adopted a written Audit
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Committee Charter, which can be found at the
Governance — Committee Composition section of our
corporate website at http://investors.volterra.com.
The Board has reviewed the Nasdaq listing standards definition
of independence for Audit Committee members and has determined
that all members of the Company’s Audit Committee are
independent (as independence is currently defined in
Rule 4350(d)(2)(A)(i) and (ii) of the Nasdaq listing
standards). The Board has determined that Mr. Paisley
qualifies as an “audit committee financial expert,” as
defined in applicable Securities and Exchange Commission
(“SEC”) rules. The Board made a qualitative assessment
of Mr. Paisley’s level of knowledge and experience
based on a number of factors, including his formal education and
experience as the chief financial officer of a public company.
The Compensation Committee of the Board reviews and approves the
overall compensation strategy and policies for the Company. For
this purpose, the Compensation Committee performs several
functions, including:
The Company also has a Non-Officer Stock Option Committee, which
is a
sub-committee
of the Compensation Committee and is composed of the
Company’s Chief Executive Officer, Jeffrey Staszak and the
Company’s Vice-President of Finance and Chief Financial
Officer, Greg Hildebrand. The Non-Officer Stock Option Committee
may award stock options to new employees, excluding employees
who are executive officers, subject to certain guidelines
approved by the Board. The Company’s policy is that all
grants made by the Non-Officer Stock Option Committee are to be
reviewed and ratified by the Compensation Committee at its next
scheduled meetings.
Three directors currently comprise the Compensation Committee:
Messrs. Paisley and Winn and Dr. Ross. Dr. Ross
serves as chairperson. All members of the Company’s
Compensation Committee are independent (as independence is
currently defined in Rule 4200(a)(15) of the Nasdaq listing
standards). The Compensation Committee met five times and acted
by unanimous written consent one time during 2006. The
Compensation Committee charter can be found at the
Governance — Committee Composition section of our
corporate website at http://investors.volterra.com.
The Nominating and Corporate Governance Committee of the Board
is responsible for:
The Nominating and Corporate Governance Committee charter can be
found at the Governance — Committee Composition
section of our corporate website at
http://investors.volterra.com. Three directors comprise the
Nominating and Corporate Governance Committee:
Messrs. King, Friedman and Ross. Mr. King serves as
chairperson. All members of the Nominating and Corporate
Governance Committee are independent (as independence is
currently defined in Rule 4200(a)(15) of the Nasdaq listing
standards). The Nominating and Corporate Governance Committee
met six times during 2006.
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The Nominating and Corporate Governance Committee has not
established any stated specific, minimum qualifications that
must be met by a candidate for a position on our Board. The
Nominating and Corporate Governance Committee will consider all
of the relevant qualifications of Board candidates, including
such factors as possessing relevant expertise upon which to be
able to offer advice and guidance to management, having
sufficient time to devote to the affairs of Volterra,
demonstrated excellence in his or her field, having the ability
to exercise sound business judgment, having the commitment to
rigorously represent the long-term interests of our
stockholders, and whether the Board candidates will be
independent for Nasdaq purposes, as well as the needs of the
Board and Volterra. In the case of incumbent directors whose
terms of office are set to expire, the Nominating and Corporate
Governance Committee will also review such directors’
overall service to Volterra during their terms, and any
relationships and transactions that might impair such
directors’ independence. The Nominating and Corporate
Governance Committee will conduct any appropriate and necessary
inquiries into the backgrounds and qualifications of possible
candidates after considering the function and needs of the
Board. At this time, the Nominating and Corporate Governance
Committee does not believe that the establishment of stated
specific, minimum qualifications that must be met by a candidate
for a position on our Board is necessary or appropriate. To
date, the Nominating and Corporate Governance Committee has not
paid a fee to any third party to assist in the process of
identifying or evaluating director candidates.
The Nominating and Corporate Governance Committee will consider
director candidates recommended by stockholders. The Nominating
and Corporate Governance Committee does not intend to alter the
manner in which it evaluates candidates based on whether or not
the candidate was recommended by a stockholder. Stockholders who
wish to recommend individuals for consideration by the
Nominating and Corporate Governance Committee to become nominees
for election to the Board at the 2008 Annual Meeting may do so
by delivering a written recommendation to the Nominating and
Corporate Governance Committee at the following address:
3839 Spinnaker Court, Fremont, CA 94538 at least
120 days prior to the anniversary date of the mailing of
this proxy statement. Submissions must include the full name of
the proposed nominee, a description of the proposed
nominee’s business experience for at least the previous
five years, complete biographical information, a description of
the proposed nominee’s qualifications as a director and a
representation that the nominating stockholder is a beneficial
or record owner of our common stock. Any such submission must be
accompanied by the written consent of the proposed nominee to be
named as a nominee and to serve as a director if elected.
The Board met five times and acted by unanimous written consent
two times during 2006. All directors attended at least 75% of
the aggregate of the meetings of the Board and of the committees
on which they served, held during the period for which they were
a director or committee member, respectively.
The Company has not adopted a formal process for stockholder
communications with the Board. Nevertheless, every effort has
been made to ensure that the views of stockholders are heard by
the Board or individual directors, as applicable, and that
appropriate responses are provided to stockholders in a timely
manner. We believe our responsiveness to stockholder
communications to the Board has been excellent. Nevertheless,
the Nominating and Corporate Governance Committee will consider,
from time to time, whether adoption of a formal process for
stockholder communications with the Board has become necessary
or appropriate.
The Company has adopted a Code of Conduct that applies to all of
Volterra’s officers, directors and employees. The Code of
Conduct is available at the Governance section of the
Company’s website at http://investors.volterra.com. If the
Company makes any substantive amendments to the Code of Conduct
or grants any waiver from a provision of the Code of Conduct to
any executive officer or director, the Company will promptly
disclose the nature of the amendment or waiver on its website,
or as otherwise required by applicable law, rules or regulations.
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The Audit Committee of the Board currently consists of three
members: Messrs. Paisley, Friedman and Winn.
Mr. Paisley serves as Chairperson of the Audit Committee.
All members of Volterra’s Audit Committee are independent
(as independence is defined in Rules 4200(a)(15) and
4350(d) of the Nasdaq listing standards).
The Audit Committee oversees Volterra’s corporate
accounting and financial reporting process on behalf of the
Board. Management has primary responsibility for the financial
statements and the reporting process, including the systems of
internal controls and disclosure controls and procedures. In
fulfilling its oversight responsibilities, the Audit Committee
reviewed the audited financial statements in Volterra’s
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006 with
management, including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness
of significant judgments and the clarity of disclosures in the
financial statements.
The Audit Committee is responsible for reviewing, approving and
managing the engagement of the Company’s independent
registered public accounting firm, including the scope, extent
and procedures of the annual audit and compensation to be paid
thereto, and all other matters the Audit Committee deems
appropriate, including the independent registered public
accounting firm’s accountability to the Board and the Audit
Committee. The Audit Committee reviewed with the independent
registered public accounting firm, who are responsible for
expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting
principles, their judgments as to the quality, not just the
acceptability, of Volterra’s accounting principles and such
other matters as are required to be discussed with the Audit
Committee under generally accepted auditing standards and those
matters required to be discussed by the Statement on Auditing
Standards No. 61. In addition, the Audit Committee has
discussed with the independent registered public accounting firm
the auditors’ independence from management and Volterra,
including the matters in the written disclosures required by the
Independence Standards Board Standard No. 1, and has
considered the compatibility of non-audit services with the
auditors’ independence.
The Audit Committee discussed with Volterra’s independent
registered public accounting firm the overall scope and plans
for their audits. The Audit Committee meets with the independent
registered public accounting firm, with and without management
present, to discuss the results of their examinations, their
evaluation of Volterra’s internal controls and the overall
quality of Volterra’s financial reporting. The Audit
Committee held eleven meetings during the fiscal year ended
December 31, 2006.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board, and the Board has
approved, that the audited financial statements be included in
Volterra’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006 for filing with
the Securities and Exchange Commission. The Audit Committee has
also retained, subject to stockholder ratification described in
Proposal 3, KPMG LLP as Volterra’s independent
registered public accounting firm for the fiscal year ending
December 31, 2007.
AUDIT COMMITTEE
Christopher Paisley, Chairperson
Mel Friedman
Edward Winn
1 The
material in this report is not “soliciting material,”
is not deemed “filed” with the SEC and is not to be
incorporated by reference in any filing of the Company under the
Securities Act of 1933, as amended (the “Securities
Act”) or the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), whether made before or after the
date hereof and irrespective of any general incorporation
language in any such filing.
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Proposal 2
On May 17, 2004, the Board adopted, and the stockholders
subsequently approved, Volterra’s 2004 Non-Employee
Directors’ Stock Option Plan (the “Directors’
Plan”). Pursuant to the terms of the Directors’ Plan,
as of February 28, 2007 there were 187,500 shares of
common stock reserved for issuance under the Directors’
Plan. Under Directors’ Plan, the number of shares reserved
for issuance will be increased annually on December 31 of
each year, from 2005 and until 2013, by no more than the number
of shares of common stock subject to options granted during that
calendar year. The Board may act, prior to the last day of the
fiscal year, to increase the share reserve by such number as the
Board shall determine, which number shall be less than the
amount described above.
As of February 28, 2007 options (net of canceled or expired
options) covering an aggregate of 62,500 shares of our
common stock had been granted under the Directors’ Plan,
and 125,000 shares of common stock (plus any shares that
might in the future be returned to the Directors’ Plan as a
result of cancellations or expiration of options) remained
available for future grant under the Directors’ Plan as of
such date.
Stockholders are requested in this Proposal 2 to approve an
amendment to the Directors’ Plan, which would increase the
number of shares issuable pursuant to initial grants under the
Directors’ Plan from 15,600 shares to
30,000 shares, and would increase the number of shares
issuable pursuant to annual grants under the Directors’
Plan from 5,625 shares per year to 10,000 shares per
year. The Company is not proposing to increase the number of
shares authorized for issuance under such plan. The
affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote
at the meeting will be required to approve the Directors’
Plan, as amended. Abstentions will be counted toward the
tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not
counted for any purpose in determining whether this matter has
been approved.
The Board of Directors
Recommends
The essential features of the Directors’ Plan, as amended,
are outlined below. This summary, however, does not purport to
be a complete description of the Directors’ Plan. The
Directors’ Plan is attached to this proxy statement as
Appendix A. The following summary is qualified in its
entirety by reference to the complete text of the
Directors’ Plan.
The Directors’ Plan provides for the automatic grant of
nonstatutory stock options in accordance with a prescribed
formula. Options granted under the Directors’ Plan are not
intended to qualify as “incentive stock options”
within the meaning of Section 422 of the Code. See
“Federal Income Tax Information” for a discussion of
the tax treatment of nonstatutory stock options.
The Board adopted the Directors’ Plan to provide a means by
which non-employee directors of Volterra may be given an
opportunity to purchase our stock, to assist in retaining the
services of such persons, to secure and retain the services of
persons capable of filling such positions and to provide
incentives for such persons to exert maximum efforts for the
success of Volterra. Five of the current directors of Volterra
are non-employee directors and are eligible to participate in
the Directors’ Plan.
The Board administers the Directors’ Plan. The Board has
the power to construe and interpret the Directors’ Plan but
not to determine the persons to whom or the dates on which
options will be granted, the number of shares to be subject to
each option, the time or times during the term of each option
within which all or a portion of such option may be exercised,
the exercise price, the type of consideration or the other terms
of the option except to the extent not specified in the
Directors’ Plan.
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An aggregate of 187,500 shares of common stock is reserved
for issuance under the Directors’ Plan. If options granted
under the Directors’ Plan expire or otherwise terminate
without being exercised, the shares of common stock not acquired
pursuant to such options again come available for issuance under
the Directors’ Plan. The number of shares reserved for
issuance will be increased annually on December 31 of each
year, from 2005 and until 2013, by no more than the number of
shares of common stock subject to options granted during that
calendar year. The Board may act, prior to the last day of the
fiscal year, to increase the share reserve by such number as the
Board shall determine, which number shall be less than the
amount described above.
The Directors’ Plan provides that options may be granted
only to non-employee directors of Volterra. A “non-employee
director” is defined in the Directors’ Plan as a
director of Volterra who is not otherwise an employee of
Volterra or any affiliate.
The following is a description of the terms of options under the
Directors’ Plan:
Automatic Grants. Under the Directors’
Plan, each person who is appointed or elected for the first time
to be a non-employee director of Volterra is automatically
granted, subject to approval of this Proposal 2, a one-time
initial grant to purchase 30,000 shares of Volterra’s
common stock. Additionally, on the date of each annual meeting
of stockholders, each non-employee director of Volterra is
automatically granted an “annual grant” to purchase
10,000 shares of Volterra’s common stock; provided
that if the person has not been serving as a non-employee
director for the entire period since the preceding annual
meeting, then the number of shares subject to such annual grant
shall be reduced pro rata for each full quarter prior to the
date of grant during which such person did not serve as a
non-employee director.
Exercise Price; Payment. The exercise price of
options shall be 100% of the fair market value of the stock
subject to the option on the date of grant. Under the
Directors’ Plan, the fair market value of our common stock
is equal to the closing sales price as reported on the Nasdaq
Global Market on the last trading day prior to the date of
grant. As of February 28, 2007, the closing price of our
common stock as reported on the Nasdaq Global Market was $14.08
per share.
The exercise price of options granted under the Directors’
Plan may be paid in any combination of (i) cash or check,
(ii) delivery of other Volterra common stock or
(iii) pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of the exercised common stock,
results in either the receipt of cash (or check) by Volterra or
the receipt of irrevocable instructions to pay the aggregate
exercise price to Volterra from the sales proceeds.
Option Exercise. Options granted under the
Directors’ Plan pursuant to initial grants will become
exercisable in cumulative increments, with 1/3rd of the
shares vesting each year over three successive years. Options
granted pursuant to annual grants will vest and become
exercisable in full on the day prior to the date of the first
annual meeting following the date on which the grant was made.
An optionholder may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such option
(in addition to our right to withhold from any compensation paid
to the optionholder by us) by a cash payment upon exercise, by
authorizing us to withhold a portion of the stock otherwise
issuable to the optionholder, by delivering already-owned common
stock of Volterra or by a combination of these means.
Term. The term of options under the
Directors’ Plan is seven years. Options under the
Directors’ Plan terminate three months after termination of
the optionholder’s service unless (i) such termination
is due to the optionholder’s disability, in which case the
option may be exercised (to the extent the option was
exercisable at the time of the termination of service) at any
time within 12 months of such termination, or (ii) the
optionholder dies before the optionholder’s service has
terminated, or within three months after termination of such
service, in which case the option may be exercised (to the
extent the option was exercisable at the time of the
optionholder’s death) within 18 months of the
optionholder’s death by the optionholder’s estate or
by a person who acquired the right to
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exercise the option by bequest or inheritance. An optionholder
may designate a beneficiary who may exercise the option
following the optionholder’s death.
Other Provisions. The option agreement may
contain such other terms, provisions and conditions not
inconsistent with the Directors’ Plan as determined by the
Board.
Options shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the
lifetime of the optionholder only by the optionholder.
Notwithstanding the foregoing, the optionholder may, by
delivering written notice to us, in a form satisfactory to us,
designate a third party who, in the event of the death of the
optionholder, shall thereafter be entitled to exercise the
option.
Transactions not involving receipt of consideration by Volterra,
such as a merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate
structure or other transaction, may change the class(es) and
number of shares of common stock subject to the Directors’
Plan and outstanding options. In that event, the Directors’
Plan will be appropriately adjusted as to the class(es) and the
maximum number of shares of common stock subject to the
Directors’ Plan, and outstanding options will be adjusted
as to the class(es), number of shares and price per share of
common stock subject to such options.
The Directors’ Plan provides that, in the event of a
dissolution, liquidation or sale of substantially all of the
assets of Volterra, specified types of merger, or other
corporate transaction, any surviving corporation will be
required to either assume options outstanding under the
Directors’ Plan or substitute similar options for those
outstanding under the Directors’ Plan. If any surviving
corporation does not assume options outstanding under the
Directors’ Plan, or substitute similar options, then the
options will terminate if the optionholder does not exercise it
before the change in control. In addition, in the event of a
change in control, the vesting and exercisability of all initial
grants outstanding under the Directors’ Plan shall be
accelerated in full as of a date prior to the effective time of
such change in control as the Board of Directors shall determine.
The Board may suspend or terminate the Directors’ Plan
without stockholder approval or ratification at any time or from
time to time.
The Board may also amend the Directors’ Plan at any time or
from time to time. However, no amendment will be effective
unless approved by the stockholders of Volterra to the extent
stockholder approval is necessary to satisfy applicable laws.
The Board may submit any other amendment to the Directors’
Plan for stockholder approval.
Nonstatutory stock options granted under the Directors’
Plan generally have the following federal income tax
consequences.
There are no tax consequences to the optionholder or Volterra by
reason of the grant of a nonstatutory stock option. Upon
exercise of a nonstatutory stock option, the optionholder
normally will recognize taxable ordinary income equal to the
excess of the stock’s fair market value on the date of
exercise over the option exercise price. However, to the extent
the stock is subject to certain types of vesting restrictions,
the taxable event will be delayed until the vesting restrictions
lapse unless the participant elects to be taxed on receipt of
the stock. If the optionholder becomes an employee, Volterra is
required to withhold from regular wages or supplemental wage
payments an amount based on the ordinary income recognized.
Subject to the requirement of reasonableness and the
satisfaction
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of a tax reporting obligation, Volterra will generally be
entitled to a business expense deduction equal to the taxable
ordinary income realized by the optionholder.
Upon disposition of the stock, the optionholder will recognize a
capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any
amount recognized as ordinary income upon exercise of the option
(or vesting of the stock). Such gain or loss will be long-term
or short-term depending on whether the stock was held for more
than one year. Slightly different rules may apply to
optionholders who acquire stock subject to certain repurchase
options or who are subject to Section 16(b) of the Exchange
Act.
The following table presents certain information with respect to
options currently anticipated to be granted under the
Directors’ Plan within twelve months following
February 13, 2007 to all our non-employee directors as a
group, assuming Proposal 2 receives the necessary
stockholder approvals.
Proposal 3
The Audit Committee of the Board has selected KPMG LLP as the
Company’s independent registered public accounting firm for
the fiscal year ending December 31, 2007 and has further
directed that management submit the selection of independent
registered public accounting firm for ratification by the
stockholders at the annual meeting. KPMG LLP has audited the
Company’s financial statements since 1996. Representatives
of KPMG LLP are expected to be present at the annual meeting.
They will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Neither the Company’s Bylaws nor other governing documents
or law require stockholder ratification of the selection of KPMG
LLP as the Company’s independent registered public
accounting firm. However, the Audit Committee of the Board is
submitting the selection of KPMG LLP to the stockholders for
ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee
of the Board will reconsider whether or not to retain that firm.
Even if the selection is ratified, the Audit Committee of the
Board in its discretion may direct the appointment of different
independent registered public accounting firm at any time during
the year if they determine that such a change would be in the
best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote
at the annual meeting will be required to ratify the selection
of KPMG LLP. Abstentions will be counted toward the tabulation
of votes cast on this proposal and will have the same effect as
negative votes. Broker non-votes are counted towards a quorum,
but are not counted for any purpose in determining whether this
matter has been approved.
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The following table represents aggregate fees billed to the
Company for fiscal years ended December 31, 2006 and
December 31, 2005, by KPMG LLP, the Company’s
independent registered public accounting firm.
“Audit Fees” consist of fees billed for professional
services rendered for the audit of our consolidated financial
statements, audit of management’s assessment and the
effectiveness of our internal control over financial reporting,
and review of the interim consolidated financial statements
included in quarterly reports and services that are normally
provided by KPMG LLP in connection with statutory and regulatory
filings or engagements.
“Audit-related Fees” consist of fees billed for
assurance and related services that are reasonably related to
the performance of the audit or review of our consolidated
financial statements and are not reported under “Audit
Fees.” No such fees were billed during fiscal 2006 or 2005.
“Tax Fees” include fees for tax compliance, tax and
planning and tax advice. No such fees were billed during fiscal
2006 and 2005.
“All Other Fees” consist of fees for products and
services other than the services described above. No such fees
were billed during fiscal 2006 and 2005.
All fees described above were approved by the Audit Committee.
During the fiscal year ended December 31, 2006, none of the
hours billed on the Company’s financial audit by KPMG LLP
were provided by persons other than KPMG LLP’s full-time
permanent employees.
The Audit Committee has adopted procedures for the pre-approval
of audit and non-audit services rendered by our independent
registered public accounting firm, KPMG LLP. The Audit Committee
generally pre-approves specified services in the defined
categories of audit services, audit-related services, and tax
services up to specified amounts. Pre-approval may also be given
as part of the Audit Committee’s approval of the scope of
the engagement of the independent registered public accounting
firm or on an individual explicit
case-by-case
basis before the independent registered public accounting firm
is engaged to provide each service. The pre-approval of services
may be delegated to one or more of the Audit Committee’s
members, but the decision must be reported to the full Audit
Committee at its next scheduled meeting.
The Audit Committee has determined that the rendering of the
services other than audit services by KPMG LLP is compatible
with maintaining the independent registered public accounting
firm’s independence.
The Board of Directors
Recommends
a Vote in Favor of
Proposal 3
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Set forth below is information regarding our executive officers
as of December 31, 2006. Information regarding our
directors is set forth in “Proposal 1 —
Election of Directors” presented earlier in this proxy
statement.
Mr. Jeffrey Staszak joined Volterra as our President and
Chief Operating Officer in March 1999, and has been our Chief
Executive Officer since August 2000 and a member of our Board
since April 2000. Prior to joining Volterra, Mr. Staszak
was Senior Vice President in the Storage Products Group of Texas
Instruments Inc., a semiconductor company, from July 1996 to
March 1999. From May 1993 to July 1996, Mr. Staszak served
as Senior Vice President and General Manager of the Storage
Products Division of Silicon Systems, Inc., a semiconductor
company then affiliated with TDK Corporation. Mr. Staszak
holds a B.S. in Industrial Technology from the University of
Wisconsin, Stout and an M.B.A. from Pepperdine University.
Mr. Greg Hildebrand co-founded Volterra and has been our
Treasurer since August 1996, our corporate Secretary since
December 1998, and our Vice President of Finance and Chief
Financial Officer since April 2004. In addition, from August
1996 to April 2004, Mr. Hildebrand held various finance and
management positions at Volterra, most recently as our Director
of Finance. Mr. Hildebrand holds a B.A. in Philosophy and
Economics and an M.B.A. from the University of California at
Berkeley.
Dr. David Lidsky co-founded Volterra and has been our Vice
President of Design Engineering since July 2004. Dr. Lidsky
has held various positions at Volterra since August 1996, most
recently as our Director of Design. Dr. Lidsky holds a
B.S.E.E from the University of Massachusetts at Amherst and an
M.S.E.E. and Ph.D. in electrical engineering from the University
of California at Berkeley.
Mr. William Numann joined Volterra as our Vice President of
Marketing in November 2000. Prior to joining Volterra,
Mr. Numann was Vice President of Standard Products of
Supertex, Inc., a semiconductor company, from October 1997 to
October 2000. From June 1985 to September 1997, Mr. Numann
served as Product Marketing and Applications Director at
Siliconix, Inc., a semiconductor company. Mr. Numann holds
a B.S.E.E. and an M.B.A. from Rensselaer Polytechnic Institute.
Dr. Anthony Stratakos co-founded Volterra and has been our
Vice President of Advanced Research and Development and Chief
Technology Officer since October 1997 and a member of our Board
since September 1996. From August 1996 to October 1997,
Dr. Stratakos led our product development efforts.
Dr. Stratakos holds a
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B.S.E.E. and an M.S.E.E. from Johns Hopkins University and a
Ph.D. in electrical engineering from the University of
California at Berkeley.
Dr. Craig Teuscher co-founded Volterra and has been our
Vice President of Sales and Applications Engineering since
January 2003. From September 1996 to May 2005, Dr. Teuscher
also served as a member of our Board. From July 1998 to January
2003, Dr. Teuscher served as our Director of Applications
Engineering. Dr. Teuscher holds a B.S.E.E. from Princeton
University and an M.S.E.E. and Ph.D. in electrical engineering
from the University of California at Berkeley.
Mr. Daniel Wark joined Volterra as our Vice President of
Operations in September 2000. Prior to joining Volterra,
Mr. Wark was Vice President, Operations of Pericom
Semiconductor Corporation, a semiconductor company, from April
1996 to September 2000. From May 1983 to December 1995,
Mr. Wark held various positions at Linear Technology
Corporation, a semiconductor company, most recently as Director
of Corporate Services. Other positions that Mr. Wark held
at Linear included Managing Director of its Singapore
subsidiary, Linear Technology.
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Security
Ownership of
Certain Beneficial Ownership and Management
The following table sets forth certain information regarding the
ownership of the Company’s common stock as of
February 28, 2007 by: (i) each director and nominee
for director; (ii) each of the executive officers named in
the Summary Compensation Table; (iii) all executive
officers and directors of the Company as of December 31,
2006 as a group; and (iv) all those known by the Company to
be beneficial owners of more than five percent of its common
stock. Unless otherwise indicated, the address for each listed
beneficial owner is c/o Volterra Semiconductor Corporation,
3839 Spinnaker Court, Fremont, CA 94538.
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The following table provides certain information with respect to
all of the Company’s equity compensation plans in effect as
of December 31, 2006.
Section 16(a) of the Exchange Act requires the
Company’s directors and executive officers, and persons who
own more than ten percent of a registered class of the
Company’s equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely on a review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended December 31, 2006, all
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Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial
owners were complied with.
Executive
Compensation
This section discusses the material principles underlying our
compensation policies and decisions regarding our Chief
Executive Officer, Chief Financial Officer and three most highly
compensated executive officers (the “named executive
officers”) and the most important factors relevant to an
analysis of these policies and decisions. It is intended to
provide qualitative information regarding the manner and context
in which compensation is awarded to and earned by our named
executive officers and places in perspective the data presented
in the tables and other quantitative information that follows
this section
Our Compensation Committee (the “Committee”) is
responsible for establishing and implementing Volterra’s
overall compensation plans and structure, including our equity
and bonus compensation program for our named executive officers.
The Committee, with input from our Chief Executive Officer and
an independent compensation consultant retained by the
Committee, strives to create
pay-for-performance
compensation packages for the named executive officers that are
fair and reasonable, that align the named executive
officer’s long term interests with the interests of
Volterra’s stockholders and that reward the
individual’s contributions to Volterra’s success. The
Committee is appointed by our Board of Directors, and consists
entirely of directors who are “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. The Committee is comprised of
Christopher Paisley, Edward Ross and Edward Winn.
The Committee annually performs a strategic review of our named
executive officers’ cash compensation and equity holdings
to determine whether they adequately compensate and motivate our
named executive officers. The Committee’s most recent
review occurred in January 2007, to establish base salary and
stock option grants for 2007 and to review cash bonus plan
awards under the 2006 Management Bonus Plan. Committee meetings
typically have included, for all or a portion of each meeting,
not only the committee members but also our Chief Executive
Officer and Chief Financial Officer. For compensation decisions,
including decisions regarding the grant of equity compensation
to named executive officers (other than our Chief Executive
Officer), the Committee typically considers the recommendations
of our Chief Executive Officer and our independent compensation
consultant. In setting compensation for named executive
officers, in addition to reviewing such person’s
performance, the Committee also considers the recent financial
performance of the company, including net revenue, gross margin
and operating income results, excluding the impact of
stock-based compensation charges, in light of our current
operating plan and prior year results.
Our compensation program is designed to attract and retain the
high quality, focused executive officers that we need to drive
Volterra’s continued growth and success. To achieve these
goals, we have implemented an executive compensation program
consisting of base salary, equity incentive compensation and a
discretionary, performance-based cash bonus plan. We believe
that these core compensation elements provide a clear and direct
link between the named executive officer’s performance, and
our goal of continuing Volterra’s growth, improving its
financial performance and increasing stockholder value. In
addition, we provide our executive officers with benefits that
are generally available to our salaried employees. At this time,
we do not believe that additional compensation such as material
perquisites, severance benefits or other types of equity
programs are necessary or appropriate in achieving our goals,
but we acknowledge that as Volterra continues to grow, the
company may be required to incorporate these features into its
compensation program.
Our total cash compensation typically has fallen below the
median levels for executive officers in comparable companies,
but we believe the value of our equity compensation has allowed
our total package to remain competitive in our industry. While
our determination of base salaries and annual management bonus
plan awards
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recognizes the individual contributions of our executive
officers in assisting Volterra achieve its financial and
operational goals, we want to maintain the named executive
officers’ focus on the long-term performance of Volterra
and the creation of stockholder value by emphasizing the equity
component of compensation.
The Committee reviews and takes into account the industry and
broader compensation surveys for guidance in establishing
compensation levels, but we do not believe Volterra’s
business and operations have matured to the point where the
adoption of formal benchmarking practices or formulaic
limitations is appropriate. As Volterra continues to grow and
mature, the Committee’s primary focus is to create the
proper incentives needed to satisfy our corporate objectives,
and recognize that we must retain the flexibility to exceed or
fall below industry or artificial benchmarks for any given named
executive officer, as needed to achieve such objectives. All of
our named executive officers are subject to the same elements of
compensation as the other named executive officers. As described
below, we have a few differences in the bonus criteria for two
named executive officers, given the unique nature and function
of their positions.
For our named executive officers, discussions of base salaries,
option grants and target management bonus plan awards for 2006
commenced at the end of 2005 and were approved in the beginning
of 2006. Management bonus plan awards for 2006 were finalized in
early 2007 at the time the Committee reviewed and established
compensation levels for 2007.
In order to tailor our compensation program to reflect the
contributions of the individual officers, the Committee works
closely with the Chief Executive Officer to better understand
the individual strengths and contributions of each named
executive officer to Volterra. As described below, the Committee
also has retained an independent compensation consultant to
educate the Committee and management on recent trends in
executive compensation and to provide comparative compensation
data, but ultimately the Committee relies on its collective
experience and judgment in establishing salary levels, equity
grants and management bonus plan awards. The Committee does not
delegate any of its functions to others and retains the
authority and responsibility for approving compensation packages.
In 2004, the Committee retained the services of
Meyercord & Associates, an independent compensation
consultant, to review the compensation packages for our named
executive officers and to periodically report to the Committee
on trends and new developments in compensation practices. The
compensation consultant proposed target salary ranges for the
Company, based in part on the median compensation packages for
executive officers from a peer group of 17 companies, with
similar revenues and market capitalizations:
In making compensation decisions for the 2006 fiscal year, the
Committee reviewed proposed salaries in light of these salary
target ranges, and determined that the target ranges continued
to be appropriate and reasonable. The Committee and independent
compensation consultant shall periodically review the list of
peer companies, as appropriate, and will establish new target
ranges in an attempt to ensure that the comparable data is
relevant and up to date.
With this information as a point of reference, we reviewed the
performance of our Chief Executive Officer, and approved his
base salary, equity compensation and management bonus plan
participation. Generally, with respect to the other Named
Executive Officers, compensation is established through an
iterative process between the Committee and the Chief Executive
Officer, in which the Committee provides guidance to the Chief
Executive Officer, and the Chief Executive Officer provides
proposals and justifications for compensation packages for the
Committee’s review and approval.
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In response to certain recent developments affecting a number of
high profile companies regarding the timing or backdating of
stock option grants, the Committee determined that it was in the
best interests of Volterra and its stockholders to document and
formalize Volterra’s historical stock option grant
practices, as previously established with input from its
independent compensation consultant and outside legal counsel,
to minimize the possibility of manipulating stock option grant
dates or exercise prices. The Company’s documented stock
option grant policy provides:
Currently, given the simplicity of our compensation program, we
do not believe it is necessary to establish policies whereby
compensation granted to named executive officers may be
subsequently revised or recovered by Volterra in the event of a
restatement of our financial results. To the extent our
compensation plan continues to evolve, we will determine whether
such policies are necessary or appropriate.
2006
Executive Compensation Components
For the fiscal year ended December 31, 2006, the principal
components of compensation for our named executive officers were:
We view the three components of our compensation of named
executive officers as related but distinct. Although the
Committee does review the aggregate total compensation
represented by these components, it does not believe that
significant compensation derived from one component of
compensation should negate or reduce compensation from other
components. We determine the appropriate level for each
compensation component based in part, but not exclusively, on
our view of internal equity and consistency, individual
performance and other information we deem relevant. Except as
described below, the Committee has not adopted any formal or
informal policies or guidelines for allocating compensation
between long-term and currently paid out compensation, between
cash and non-cash compensation, or among different forms of
compensation. This is due to the small size of our executive
team and the need to tailor each named executive officer’s
award to attract and retain that executive officer.
Volterra provides our named executive officers with base salary
to compensate them for services rendered during the fiscal year.
Base salary ranges in 2006 for our Named Executive Officers were
determined for each executive officer based on his position and
responsibility, with the peer group guidance and target salary
ranges provided by our independent compensation consultant. Base
salary ranges in 2006 were designed to fall at or below the
projected median of base salaries in our peer group, although we
adjusted such salaries on an individual basis as deemed
appropriate by the Committee. In setting 2006 base salaries for
the named executive officers, the Committee primarily considered:
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The base salary of Mr. Staszak, our President and Chief
Executive Officer, was established in light of his role in and
overall responsibility for the company’s attainment of
certain operating goals, as reflected in the Company’s
financial success. The Committee met in an executive session to
review and approve Mr. Staszak’s salary, and the
Committee took into account the record revenues realized by the
company and improving operating margins and gross margins
achieved by the company during the past year. In 2006,
Mr. Staszak’s base salary equaled $298,138, a 7%
increase over his 2005 base salary of $277,823.
Based on extensive discussions with Mr. Staszak, the
Committee established base salaries for our other Named
Executive Officers. These amounts were determined at levels that
we concluded were appropriate based upon salaries for comparable
positions within the industry and the Committee’s general
experience. In determining annual salary increases, the
Committee took into consideration a combination of comparable
salaries within the industry and within similar-sized companies,
including information provided by our independent compensation
consultant. The Committee did not apply specific formulas to
determine increases. Generally, executive salaries were adjusted
at the first pay period following the approval of the new salary
levels. In 2006, the base salaries for Mr. Staszak and our
other Named Executive Officers were equal to:
For fiscal year 2006, Volterra’s Named Executive Officers
were eligible to participate in an annual management bonus plan,
adopted by the Committee in February 2006. The 2006 Management
Bonus Plan (the “Bonus Plan”) is a cash incentive
program designed to motivate and retain Volterra’s named
executive officers and reward them for assisting Volterra in
achieving certain financial goals for 2006. The Bonus Plan gives
the Committee flexibility in establishing and modifying
financial goals for Volterra, based on the net revenues, gross
margin and operating income results for 2006.
Under the Bonus Plan, target bonuses were established for each
named executive officer (except as noted below) in an amount
equal to 30% of his base salary. In recognition of the
significant responsibility our Vice President of Sales and
Applications Engineering has in achieving the market success and
attaining our financial goals, his target bonus was established
at 40% of his base salary. Similarly, because the Chief
Executive Officer has the ultimate responsibility for
Volterra’s ability to meet its financial goals, his target
bonus was established at 50% of his base salary.
In determining the levels of payouts under the Bonus Plan for
2006, the Committee reviewed Volterra’s financial
performance for 2006, in terms of net revenue, gross margin and
operating income, excluding the impact of any stock-based
compensation charges. The Committee was not bound by a strict
financial formula for determining the levels of bonuses to be
paid to the named executive officers, but generally reviewed
Volterra’s actual financial performance as compared to
Volterra’s operating plan for the year and prior year
results. Under the terms of the Bonus Plan, our Chief Executive
Officer was eligible to receive a bonus equal to 0% to 155% of
his target bonus, depending on the achievement of the financial
goals established by the Committee. Unlike the other named
executive officers, for which individual performance is a factor
in determining the level of bonus earned, the
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Committee believes the Company’s financial performance is
the best proxy for measuring the performance of our Chief
Executive Officer, given his overarching responsibility for
Volterra’s success. Named executive officers other than our
Chief Executive Officer are also eligible to receive a bonus
equal to 0% to 155% of their target bonus, but such bonuses are
weighted such that two-thirds of the target bonus is based on
Volterra’s financial performance and one-third is based on
individual performance criteria as established by our Chief
Executive Officer.
The Committee reviewed Volterra’s financial performance in
2006, taking note of Volterra’s record annual revenue and
operating income results, in spite of some operational
challenges throughout the course of the year. Based on these
results, the Committee established a total bonus pool of
approximately $391,000 for Volterra’s executive officers
(including officers who are not named executive officers), equal
to approximately 39% of the aggregate target bonus pool. After
determining the Bonus Plan award for the Chief Executive
Officer, the Committee directed our Chief Executive Officer to
establish, justify and recommend to the Committee for review,
individual bonus amounts out of the remainder of the pool for
the other Named Executive Officers, in accordance with the terms
of the Bonus Plan. A small preliminary award to Named Executive
Officers under the Bonus Plan was made in the second quarter of
2006, and the final awards were reviewed and approved by the
Committee on February 1, 2007. The aggregate total award
amounts under the Bonus Plan, and the percentage of base salary
are set forth below:
Equity-based compensation provides our named executive officers
with the opportunity to build an equity interest the company and
to share in the potential appreciation of the value of its
common stock. Stock options are granted at the “fair market
value” of our common stock on the date of the grant, which
under the terms of our 2004 Equity Incentive Plan, is equal to
the closing price of Volterra’s common stock as listed on
the Nasdaq stock market on the last trading day immediately
prior to the date of grant. We do not grant stock options at a
discount to fair market value or reduce the exercise price of
outstanding stock options except in the case of a stock split or
other similar event, as defined in the Company’s equity
compensation plans, nor do we grant stock options with a
so-called “reload” feature or loan funds to executive
officers to enable them to exercise stock options. Our long-term
performance ultimately determines the value of stock options,
because gains from stock option exercises are entirely dependent
on the long-term appreciation of our stock price.
The Named Executive Officers, like our other employees, are
eligible to receive option grants under our 2004 Equity
Incentive Plan. Volterra’s stock option program was
designed to enhance the link between the creation of stockholder
value and long-term executive incentive compensation, provide an
opportunity for increased equity ownership by named executive
officers and maintain competitive levels of total compensation.
Stock options for executive officers are typically granted upon
hiring or promotion or are granted in connection with an annual
“focal” review process. In 2006, none of the Named
Executive Officers were new hires or recent promotions and
therefore received grants in connection with the annual focal
review.
Stock option awards are determined based on market data and
various factors relating to the responsibilities of the
individual named executive officers and their expected future
contributions, and are established at the end of the
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prior fiscal year or at the beginning of the current fiscal
year. We work with our compensation consultant to get
information on grant levels and vesting schedules for such
grants for our named executive officers. In accordance with
Volterra’s option granting policies, option grants to our
named executive officers were made on February 3, 2006, the
fourth business day following the announcement of the prior
year’s fourth quarter results.
Options to named executive officers, including options granted
as part of the annual focal reviews, have historically vested
25% per year for each of four years. In establishing
vesting schedules for option grants, the Committee believes that
the retention value of stock options is maximized if the annual
vesting of all stock options held by such optionholder is kept
at a fairly level rate on a year to year basis. However, because
our Named Executive Officers have been with Volterra for a
significant period of time, the Committee did recognize that the
completion of vesting of earlier option grants would result in
dramatic variance in the annual vesting rate for such officers.
In an effort to streamline the number of option shares that vest
each year, the Committee bifurcated some of the option grants
for certain Named Executive Officers, to consist of an initial
option grant would begin vesting and would vest in full over the
fourth year following the date of grant, and in certain
instances, a second grant which would vest under a standard
four-year vesting schedule.
None of our Named Executive Officers are currently entitled to
payments upon termination of employment or in connection with a
change in control. All options to purchase common stock issued
to our Named Executive Officers may be subject to accelerated
vesting upon a change of control as follows. In the event of
specified corporate transactions, all outstanding options and
stock appreciation rights under the 2004 Equity Incentive Plan
may be assumed, continued or substituted for by any surviving or
acquiring entity (or its parent company). If the surviving or
acquiring entity (or its parent company) elects not to assume,
continue or substitute such awards, then (i) with respect
to any such options and stock appreciation rights that are held
by participants then performing services for us or our
affiliates, the vesting and exercisability provisions of such
options and stock appreciation rights will be accelerated in
full and such options and stock appreciation rights will be
terminated if not exercised prior to the effective date of the
corporate transaction, and (ii) all other outstanding
options and stock appreciation rights will be terminated if not
exercised prior to the effective date of the corporate
transaction. Other forms of equity awards under the 2004 Equity
Incentive Plan such as stock purchase awards may have their
repurchase or forfeiture rights assigned to the surviving or
acquiring entity (or its parent company). If such repurchase or
forfeiture rights are not assigned, then such equity awards will
become fully vested. Following specified change in control
transactions, the vesting and exercisability of specified equity
awards generally will be accelerated only if the awardee’s
award agreement so specifies. The potential benefits described
above are available generally to all salaried employees.
Volterra does not provide its Named Executive Officers with any
other compensation, material perquisites or material personal
benefits. Volterra provides Named Executive Officers with
benefits generally available to all employees, including life
insurance premiums and subsidized gym memberships, and the
aggregate annual value of these benefits does not exceed
$2,500 per year.
Volterra maintains a 401(k) plan in which substantially all of
its employees, including named executive officers, are entitled
to participate. Employees may contribute their own funds, as
salary deductions, on a pre-tax basis, up to certain specified
plan limits and other government limitations. Volterra also
maintains its 2004 Employee Stock Purchase Plan in which all
eligible employees, including named executive officers, may
purchase Volterra common stock at 85% of fair market value,
subject to specified limits and conditions,.
Section 162(m) of the Internal Revenue Code of 1986 limits
us to a deduction for federal income tax purposes of up to
$1 million of compensation paid to certain named executive
officers in a taxable year. Compensation above $1 million
may be deducted if it is “performance-based
compensation.” Stock option awards under our 2004 Equity
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Incentive Plan, to the extent the board of directors or a
committee of the board of directors granting such stock awards
is composed solely of “outside directors,” are
performance-based compensation within the meaning of
Section 162(m) and, as such, are fully deductible. As noted
above, Volterra’s compensation policy is primarily based
upon the practice of
pay-for-performance.
To maintain flexibility in compensating executive officers in a
manner designed to promote varying corporate goals, the
Committee has not adopted a policy requiring all compensation to
be deductible. However, the Committee intends to continue to
evaluate the effects of the compensation limits of
Section 162(m) and believes that Volterra should be able to
continue to manage its executive compensation program for Named
Executive Officers so as to preserve the related federal income
tax deductions, although individual exceptions may occur, in a
manner consistent with the best interests of our company and our
stockholders.
Beginning on January 1, 2006, Volterra began accounting for
stock-based payments under its stock option plans in accordance
with the requirements of Statement of Financial Accounting
Standards (SFAS) No. 123R. Under SFAS No. 123R,
we are required to estimate and record an expense for each award
of equity compensation over the vesting period of the award.
Compensation expense and tax considerations relating to the
expense of stock options under SFAS 123R are one of the
many factors considered in the determination of stock option
awards.
Our compensation strategy is necessarily tied to our stage of
development. Accordingly, the specific direction, emphasis and
components of our executive officer compensation program
continue to evolve in parallel with the evolution of our
business strategy. Our Compensation Discussion and Analysis
will, in the future, reflect these evolutionary changes.
The Compensation Committee of Volterra has reviewed and
discussed the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy
Statement and incorporated into Volterra’s Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006.
COMPENSATION COMMITTEE
Edward Ross, Chairman
Christopher Paisley
Edward Winn
2 The
material in this report is not “soliciting material,”
is not deemed “filed” with the SEC and is not to be
incorporated by reference in any filing of the Company under the
Securities Act or the Exchange Act, whether made before or after
the date hereof and irrespective of any general incorporation
language in any such filing.
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The table below summarizes the total compensation paid or earned
by our named executive officers for the fiscal year ended
December 31, 2006. None of the Named Executive Officers
received bonuses or stock awards in 2006, and Volterra does not
offer any pension or deferred compensation plan or program to
any officer, director or employee.
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Grants
of Plan Based Awards
The table below summarizes the total potential payments under
plan based awards and option grants to the named executive
officers. The amounts reflected in columns (b), (c) and
(d) are the potential payments the named executive officers
were eligible to receive under the 2006 Management Bonus Plan.
Total actual payments under the 2006 Management Bonus Plan are
reflected in column (c) of the Summary Compensation Table,
provided above. The information reflected in columns (a), (e),
(f) and (g) relate to stock option grants to the named
executive officers in connection with annual performance
reviews, also included in the Outstanding Equity Awards at
Fiscal Year End table provided below. The named executive
officers did not participate in any plan based equity incentive
awards, and did not receive any other stock awards in 2006.
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Outstanding
Equity Awards at Fiscal Year-End
The table below summarizes the total outstanding equity awards
outstanding as of December 31, 2006 held by the Named
Executive Officers. As of December 31, 2006, no Stock
Awards were outstanding and held by such Named Executive
Officers.
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The table below summarizes the total stock option exercises in
2006 by our Named Executive Officers. In 2006, no Stock Awards
were outstanding or held by such Named Executive Officers.
Volterra does not provide pension benefits or any nonqualified
deferred compensation to any executive officer or other employee.
Volterra uses a combination of cash and stock-based incentive
compensation to attract and retain qualified candidates to serve
on the Board. In setting director compensation, Volterra
considers the significant amount of time that Directors expend
in fulfilling their duties to Volterra as well as the
skill-level required by Volterra of members of the Board. Two of
our directors, Mr. Staszak and Dr. Stratakos, are
employees of the Company.
For the fiscal year ended December 31, 2006, members of the
Board who are not employees of Volterra are entitled to receive
the following cash compensation in connection with their service
on the Board of Directors and committees of the Board of
Directors. These payments were made in equal quarterly
installments, through the third quarter of 2006.
On August 9, 2006, the Board of Directors revised the cash
compensation of the non-employee directors as follows, which
payments were made effective on a pro rata basis for the fourth
quarter of 2006, and shall continue in 2007.
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Under the terms of the 2004 Non-Employee Directors’ Stock
Option Plan, upon being elected or appointed for the first time
as a non-employee director, such person shall receive an initial
grant to purchase fifteen thousand six hundred (15,600) shares
of common stock, and at each annual meeting, each non-employee
director shall automatically receive an annual grant to purchase
six thousand two hundred fifty (6,250) shares of common stock.
The initial grant shall vest in equal annual installments over a
three year period, and annual grants shall vest one year after
the date of grant. On May 18, 2006, the non-employee
directors received an option grant to purchase 6,250 shares
of common stock, at an exercise price of $14.36. Pursuant to the
terms of our 2004 Non-Employee Directors’ Stock Option
Plan, the exercise price of our granted options is equal to the
closing price of Volterra’s common stock as listed on the
Nasdaq stock market on the last trading day immediately prior to
the date of grant.
As described in Proposal 2, Volterra is soliciting approval
of an amendment to the 2004 Non-Employee Directors’ Stock
Option Plan, to change the number of option shares issuable to
non-employee directors under the initial grant from
15,600 shares to 30,000 shares and to change the
number of option shares issuable to non-employee directors under
the annual grants, from 6,250 shares to 10,000 shares.
If approved, this change would be effective for the grants made
to non-employee directors on the date of the annual meeting.
In the event that there is a specified type of change in our
capital structure, such as a stock split, the number of shares
reserved under the Directors’ Plan and the number of shares
subject to, and exercise price of, all outstanding stock options
will be appropriately adjusted.
In the event of specified corporate transactions, all
outstanding options under the Directors’ Plan may be
assumed, continued or substituted by any surviving or acquiring
entity (or its parent company). If the surviving or acquiring
entity (or its parent company) elects not to assume, continue or
substitute such options, then (i) with respect to any such
options held by optionees then performing services for us or our
affiliates, the vesting and exercisability of such options will
be accelerated in full and such options will be terminated if
not exercised prior to the effective date of such corporate
transaction and (ii) all other such outstanding options
will be terminated if not exercised prior to the effective date
of the corporate transaction. In the event of specified changes
in control, the vesting and exercisability of outstanding
options under the Directors’ Plan granted to non-employee
directors whose service has not terminated prior to such change
in control, other than as a condition of such change in control,
will be accelerated in full.
The table below summarizes the compensation paid by Volterra to
Directors for the fiscal year ended December 31, 2006.
Mr. Staszak, Volterra’s President and Chief Executive
Officer, is not included in this table as he is an employee of
Volterra and thus receives no compensation for his services as a
Director. The compensation paid to Dr. Stratakos consists
of his salary, cash bonus plan compensation and equity incentive
grants in his capacity as the Company’s Vice President of
Advanced Research & Development and Chief Technology
Officer. The non-employee directors did not receive any stock
awards and Volterra did not offer participation to the
non-employee directors in any non-equity incentive plan
compensation, any pension or any nonqualified deferred
compensation plan or program.
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As previous noted, our Compensation Committee consists of
Messrs. Ross, Paisley, and Winn. None of our executive
officers serve as a member of the board of directors or
compensation committee of any entity that has one or more
executive officers who serve on our Board or Compensation
Committee.
Certain
Relationships and Related Transactions
In addition to the indemnification provided for in our Amended
and Restated Certificate of Incorporation and Amended and
Restated Bylaws, we have entered, and we intend to continue to
enter, into separate indemnification agreements with each of our
directors and executive officers that may be broader than the
specific indemnification provisions contained in the Delaware
General Corporation Law. These indemnification agreements may
require us, among other things, to indemnify our directors and
executive officers for some expenses, including attorneys’
fees, judgments, fines and settlement amounts, incurred by a
director or executive officer in any action or proceeding
arising out of his service as a director, officer, employee or
other agent of Volterra or any of our subsidiaries or any other
company or enterprise to which the person provides services at
our request.
Edward Ross, a member of our Board, served until December 2004
as President and Chief Executive Officer of TSMC North America,
the U.S. subsidiary of Taiwan Semiconductor Manufacturing
Company, Ltd., or TSMC. From January 2005 to December 2005,
Dr. Ross served as President Emeritus of TSMC. TSMC is one
of our principal semiconductor foundries. In 2006, we made
payments to TSMC in the amount of $22.8 million. We believe
that our transactions with TSMC were on terms no less favorable
than could be obtained from other semiconductor foundries.
The company has adopted a Code of Conduct which generally
describes the Company’s policy relating to conflicts of
interest. In an effort to further avoid conflicts of interests
with our executive officers or directors, or the appearance of
such a conflict, the Company has also adopted a Related Persons
Transactions Policy applicable to them. Under such Related Party
Transactions Policy, a “related person transaction” is
described as a transaction, arrangement or relationship (or any
series of similar transactions, arrangements or relationships)
in which the company and any “related person” are,
were or will be participants in which the amount involved
exceeds $120,000,
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unless such transaction is not required to be disclosed under
Item 404 of
Regulation S-K
under the Securities Exchange Act of 1934, as amended. Under
such policy, the Company shall gather information relating to
the immediate family members of the officers and directors, to
determine whether there are any transactions or proposed
transactions that must be approved or ratified. Under the
policy, upon learning of a proposed related party transaction,
the Company shall submit the terms of such transaction to the
Audit Committee for consideration. The Audit Committee will
determine, in light of known circumstances at the time, whether
such transaction is in, or is not inconsistent with, the best
interests of the Company and its stockholders, as determined by
the Audit Committee in its good faith exercise of its discretion.
The Committee has determined that the Company has not entered
into any transactions that are considered Related Party
Transactions.
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with
respect to two or more stockholders sharing the same address by
delivering a single proxy statement and annual report addressed
to those stockholders. This process, which is commonly referred
to as “householding,” potentially means extra
convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are
Volterra Semiconductor Corporation stockholders will be
“householding” our proxy materials. A single proxy
statement and annual report will be delivered to multiple
stockholders sharing an address unless contrary instructions
have been received from the affected stockholders. Once you have
received notice from your broker that they will be
“householding” communications to your address,
“householding” will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in “householding” and
would prefer to receive a separate proxy statement and annual
report, please notify your broker and direct your written
request to Investor Relations, Volterra Semiconductor
Corporation, 3839 Spinnaker Court, Fremont, CA 94538.
Stockholders who currently receive multiple copies of the proxy
statement and annual report at their address and would like to
request “householding” of their communications should
contact their broker.
The Board of Directors knows of no other matters that will be
presented for consideration at the annual meeting. If any other
matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote
on such matters in accordance with their best judgment.
By Order of the Board of Directors
Greg Hildebrand
Secretary
April 24, 2007
A copy of the Company’s Annual Report to the Securities
and Exchange Commission on
Form 10-K
for the fiscal year ended December 31, 2006 is available
without charge upon written request to: Corporate Secretary,
Volterra Semiconductor Corporation, 3839 Spinnaker Court,
Fremont, CA 94538.
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APPENDIX A
2004
NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN
ADOPTED: MAY 17, 2004 APPROVED BY STOCKHOLDERS: JUNE 18, 2004 AMENDED BY THE BOARD OF DIRECTORS: MAY 17, 2006 AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: MAY 18, 2006 AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: FEBRUARY 13, 2007
(a) Eligible Option Recipients. The
persons eligible to receive Options are the Non-Employee
Directors of the Company.
(b) Available Options. The purpose of the
Plan is to provide a means by which Non-Employee Directors may
be given an opportunity to benefit from increases in value of
the Common Stock through the granting of Nonstatutory Stock
Options.
(c) General Purpose. The Company, by
means of the Plan, seeks to retain the services of its
Non-Employee Directors, to secure and retain the services of new
Non-Employee Directors and to provide incentives for such
persons to exert maximum efforts for the success of the Company
and its Affiliates.
2. Definitions.
As used in the Plan, the following definitions shall apply to
the capitalized terms indicated below:
(a) “Accountant” means the independent
public accountants of the Company.
(b) “Affiliate” means any parent
corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(c) “Annual Grant” means an Option granted
annually to all Non-Employee Directors who meet the specified
criteria pursuant to Section 6(b).
(d) “Annual Meeting” means the annual
meeting of the stockholders of the Company.
(e) “Board” means the Board of Directors
of the Company.
(f) “Capitalization Adjustment” has the
meaning ascribed to that term in Section 11(a).
(g) “Change In Control” means the
occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:
(i) any Exchange Act Person becomes the Owner, directly or
indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities other than by virtue
of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur (A) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof
or any other Exchange Act Person from the Company in a
transaction or series of related transactions the primary
purpose of which is to obtain financing for the Company through
the issuance of equity securities or (B) solely because the
level of Ownership held by any Exchange Act Person (the
“Subject Person”) exceeds the designated percentage
threshold of the outstanding voting securities as a result of a
repurchase or other acquisition of voting securities by the
Company reducing the number of shares outstanding, provided that
if a Change in Control would occur (but for the operation of
this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the
Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition
had not
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occurred, increases the percentage of the then outstanding
voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall
be deemed to occur;
(ii) there is consummated a merger, consolidation or
similar transaction involving (directly or indirectly) the
Company and, immediately after the consummation of such merger,
consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities
representing more than fifty percent (50%) of the combined
outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than fifty
percent (50%) of the combined outstanding voting power of the
parent of the surviving Entity in such merger, consolidation or
similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such transaction;
(iii) the stockholders of the Company approve or the Board
approves a plan of complete dissolution or liquidation of the
Company, or a complete dissolution or liquidation of the Company
shall otherwise occur;
(iv) there is consummated a sale, lease, license or other
disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries, other than a sale,
lease, license or other disposition of all or substantially all
of the consolidated assets of the Company and its Subsidiaries
to an Entity, more than fifty percent (50%) of the combined
voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such sale, lease,
license or other disposition; or
(v) individuals who, on the date this Plan is adopted by
the Board, are members of the Board (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the members of the Board; provided, however, that if
the appointment or election (or nomination for election) of
any new Board member was approved or recommended by a majority
vote of the members of the Incumbent Board then still in office,
such new member shall, for purposes of this Plan, be considered
as a member of the Incumbent Board.
The term Change in Control shall not include a sale of assets,
merger or other transaction effected exclusively for the purpose
of changing the domicile of the Company.
Notwithstanding the foregoing or any other provision of this
Plan, the definition of Change in Control (or any analogous
term) in an individual written agreement between the Company or
any Affiliate and the Optionholder shall supersede the foregoing
definition with respect to Options subject to such agreement (it
being understood, however, that if no definition of Change in
Control or any analogous term is set forth in such an individual
written agreement, the foregoing definition shall apply).
(h) “Code” means the Internal Revenue Code
of 1986, as amended.
(i) “Common Stock” means the common stock
of the Company.
(j) “Company” means Volterra Semiconductor
Corporation, a Delaware corporation.
(k) “Consultant” means any person,
including an advisor, who (i) is engaged by the Company or
an Affiliate to render consulting or advisory services and is
compensated for such services or (ii) is serving as a
member of the Board of Directors of an Affiliate and is
compensated for such services. However, service solely as a
Director, or payment of a fee for such services, shall not cause
a Director to be considered a “Consultant” for
purposes of the Plan.
(l) “Continuous Service” means that the
Optionholder’s service with the Company or an Affiliate,
whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the
Optionholder renders service to the Company or an Affiliate as
an Employee, Consultant or Director or a change in the entity
for which the Optionholder renders such service, provided that
there is no interruption or termination of the
Optionholder’s service with the Company or an Affiliate,
shall not terminate an
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Optionholder’s Continuous Service. For example, a change in
status from a Non-Employee Director of the Company to a
Consultant of an Affiliate or an Employee of the Company will
not constitute an interruption of Continuous Service. The Board
or the chief executive officer of the Company, in that
party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of any leave
of absence approved by that party, including sick leave,
military leave or any other personal leave.
Notwithstanding the foregoing, a leave of absence shall be
treated as Continuous Service for purposes of vesting in an
Option only to such extent as may be provided in the
Company’s leave of absence policy or in the written terms
of the Optionholder’s leave of absence.
(m) “Corporate Transaction” means the
occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:
(i) a sale or other disposition of all or substantially
all, as determined by the Board in its sole discretion, of the
consolidated assets of the Company and its Subsidiaries;
(ii) a sale or other disposition of at least ninety percent
(90%) of the outstanding securities of the Company;
(iii) a merger, consolidation or similar transaction
following which the Company is not the surviving
corporation; or
(iv) a merger, consolidation or similar transaction
following which the Company is the surviving corporation but the
shares of Common Stock outstanding immediately preceding the
merger, consolidation or similar transaction are converted or
exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of
securities, cash or otherwise.
(n) “Director” means a member of the Board
of Directors of the Company.
(o) “Disability” means the permanent and
total disability of a person within the meaning of
Section 22(e)(3) of the Code.
(p) “Employee” means any person employed
by the Company or an Affiliate. However, service solely as a
Director, or payment of a fee for such services, shall not cause
a Director to be considered an “Employee” for purposes
of the Plan.
(q) “Entity” means a corporation,
partnership or other entity.
(r) “Exchange Act” means the Securities
Exchange Act of 1934, as amended.
(s) “Exchange Act Person” means any
natural person, Entity or “group” (within the meaning
of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” shall not include (i) the
Company or any Subsidiary of the Company, (ii) any employee
benefit plan of the Company or any Subsidiary of the Company or
any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the
Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities,
(iv) an Entity Owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their Ownership of stock of the Company; or
(v) any natural person, Entity or “group” (within
the meaning of Section 13(d) or 14(d) of the Exchange Act)
that, as of the effective date of the Plan as set forth in
Section 14, is the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then
outstanding securities.
(t) “Fair Market Value” means, as of any
date, the value of the Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, the Fair Market Value of a share of Common
Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest
volume of trading in the Common Stock) on the last market
trading day prior to the day of determination, as reported in
The Wall Street Journal or such other source as the Board deems
reliable.
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(ii) In the absence of such markets for the Common Stock,
the Fair Market Value shall be determined by the Board in good
faith.
(u) “Initial Grant” means an Option
granted to a Non-Employee Director who meets the specified
criteria pursuant to Section 6(a).
(v) “IPO Date” means the first day that
the Common Stock is publicly traded.
(w) “Non-Employee Director” means a
Director who is not an Employee.
(x) “Nonstatutory Stock Option” means an
Option not intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(y) “Officer” means a person who is an
officer of the Company within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated
thereunder.
(z) “Option” means a Nonstatutory Stock
Option granted pursuant to the Plan.
(aa) “Option Agreement” means a written
agreement between the Company and an Optionholder evidencing the
terms and conditions of an individual Option grant. Each Option
Agreement shall be subject to the terms and conditions of the
Plan.
(bb) “Optionholder” means a person to whom
an Option is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Option.
(cc) “Own,” “Owned,”
“Owner,” “Ownership” A person or Entity
shall be deemed to “Own,” to have “Owned,”
to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote or to direct the voting,
with respect to such securities.
(dd) “Plan” means this Volterra
Semiconductor Corporation 2004 Non-Employee Directors’
Stock Option Plan, as amended.
(ee) “Rule 16b-3”
means
Rule 16b-3
promulgated under the Exchange Act or any successor to
Rule 16b-3,
as in effect from time to time.
(ff) “Securities Act” means the Securities
Act of 1933, as amended.
(gg) “Subsidiary” means, with respect to
the Company, (i) any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, Owned by
the Company, and (ii) any partnership in which the Company
has a direct or indirect interest (whether in the form of voting
or participation in profits or capital contribution) of more
than fifty percent (50%).
(a) Administration By Board. The Board
shall administer the Plan. The Board may not delegate
administration of the Plan to a committee.
(b) Powers Of Board. The Board shall have
the power, subject to, and within the limitations of, the
express provisions of the Plan:
(i) To determine the provisions of each Option to the
extent not specified in the Plan.
(ii) To construe and interpret the Plan and Options granted
under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise
of this power, may correct any defect, omission or inconsistency
in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan
fully effective.
(iii) To amend the Plan or an Option as provided in
Section 12.
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(iv) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the
best interests of the Company and that are not in conflict with
the provisions of the Plan.
(c) Effect Of Board’s Decision. All
determinations, interpretations and constructions made by the
Board in good faith shall not be subject to review by any person
and shall be final, binding and conclusive on all persons.
(a) Share Reserve. Subject to the
provisions of Section 11 relating to adjustments upon
changes in the Common Stock, the Common Stock that may be issued
pursuant to Options shall not exceed in the aggregate one
hundred twenty-five thousand (125,000) shares of Common Stock,
plus an annual increase for ten years beginning on
December 31, 2004 and ending on (and including)
December 31, 2013 equal to the number of shares subject to
Options granted during the calendar year ending on such date.
Notwithstanding the foregoing, the Board may act, prior to the
last day of any fiscal year of the Company, to increase the
share reserve by such number of shares of Common Stock as the
Board shall determine, which number shall be less than the
amount described in the prior sentence.
(b) Reversion Of Shares To The Share
Reserve. If any Option shall for any reason
expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not
acquired under such Option shall revert to and again become
available for issuance under the Plan.
(c) Source Of Shares. The shares of
Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
The Options, as set forth in Section 6, automatically shall
be granted under the Plan to all Non-Employee Directors who meet
the criteria specified in Section 6.
(a) Initial Grants. Without any further
action of the Board, each person who after May 30, 2007 is
elected or appointed for the first time to be a Non-Employee
Director automatically shall, upon the date of his or her
initial election or appointment to be a Non-Employee Director,
be granted an Initial Grant to purchase thirty thousand (30,000)
shares of Common Stock on the terms and conditions set forth
herein.
(b) Annual Grants. Without any further
action of the Board, on the date of each Annual Meeting,
commencing with the Annual Meeting in 2007, each person who is
then a Non-Employee Director automatically shall be granted an
Annual Grant to purchase ten thousand (10,000) shares of Common
Stock on the terms and conditions set forth herein; provided,
however, that if the person has not been serving as a
Non-Employee Director for the entire period since the preceding
Annual Meeting, then the number of shares subject to such Annual
Grant shall be reduced pro rata for each full quarter prior to
the date of grant during which such person did not serve as a
Non-Employee Director.
Each Option shall be in such form and shall contain such terms
and conditions as required by the Plan. Each Option shall
contain such additional terms and conditions, not inconsistent
with the Plan, as the Board shall deem appropriate. Each Option
shall include (through incorporation of provisions hereof by
reference in the Option or otherwise) the substance of each of
the following provisions:
(a) Term. For Options granted prior to
May 18, 2006, no such Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
For Options granted on or after May 18, 2006, no such
Option shall be exercisable after the expiration of seven
(7) years from the date it was granted.
(b) Exercise Price. The exercise price of
each Option shall be one hundred percent (100%) of the Fair
Market Value of the stock subject to the Option on the date the
Option is granted.
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(c) Consideration. The purchase price of
stock acquired pursuant to an Option may be paid, to the extent
permitted by applicable law, in any combination of (i) cash
or check, (ii) delivery to the Company of other Common
Stock or (iii) pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of Common Stock, results in either
the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds. The purchase price of
Common Stock acquired pursuant to an Option that is paid by
delivery to the Company of other Common Stock acquired, directly
or indirectly from the Company, shall be paid only by shares of
the Common Stock of the Company that have been held for more
than six (6) months (or such longer or shorter period of
time required to avoid a charge to earnings for financial
accounting purposes).
(d) Transferability. Except as otherwise
provided for in this Section, an Option is transferable only by
will or by the laws of descent and distribution and exercisable
only by the Optionholder during the life of the Optionholder.
However, an Option may be transferred for no consideration upon
written consent of the Board if (i) at the time of
transfer, a
Form S-8
registration statement under the Securities Act is available for
the issuance of shares by the Company upon the exercise of such
transferred Option or (ii) the transfer is to the
Optionholder’s employer at the time of transfer or an
affiliate of the Optionholder’s employer at the time of
transfer. Any such transfer is subject to such limits as the
Board may establish, and subject to the transferee agreeing to
remain subject to all the terms and conditions applicable to the
Option prior to such transfer. The forgoing right to transfer
the Option shall apply to the right to consent to amendments to
the Stock Option Agreement for such Option. In addition, until
the Optionholder transfers the Option, an Optionholder may, by
delivering written notice to the Company, in a form provided by
or otherwise satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.
(e) Vesting. Options shall vest as
follows:
(i) Initial Grants:
(1) Initial Grants made prior to May 18, 2006:
1/4th of the shares shall vest one year after the date of
grant and 1/16th of the shares shall vest quarterly
thereafter over three (3) years.
(2) Initial Grants made on or after May 18, 2006:
1/3rd of the shares shall vest each year over three
successive years.
(ii) Annual Grants:
(1) Annual Grants prior to May 17, 2006: 1/4th of
the shares shall vest one year after the date of grant and
1/16th of the shares shall vest thereafter over three
(3) years.
(2) Annual Grants made on or after May 17, 2006: All
of the shares shall vest on the day prior to the date of the
first Annual Meeting following the date on which the grant was
made.
(f) Early Exercise. The Option may, but
need not, include a provision whereby the Optionholder may elect
at any time before the Optionholder’s Continuous Service
terminates to exercise the Option as to any part or all of the
shares of Common Stock subject to the Option prior to the full
vesting of the Option. Any unvested shared of Common Stock so
purchased may be subject to a repurchase option in favor of the
Company or to any other restriction the Board determines to be
appropriate. The Company will not exercise its repurchase option
until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following exercise
of the Option unless the Board otherwise specifically provides
in the Option.
(g) Termination Of Continuous Service. In
the event that an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death or
Disability or upon a Change in Control), the Optionholder may
exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of
termination of Continuous Service) but only within such period
of time ending on the earlier of (i) the expiration of the
term of the Option as set forth in the Option Agreement or
(ii) the date three (3) months following the
termination of the Optionholder’s Continuous Service (or
such longer or shorter
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period specified in the Option Agreement). If, after termination
of Continuous Service, the Optionholder does not exercise his or
her Option within the time specified herein or in the Option
Agreement (as applicable), the Option shall terminate.
(h) Extension Of Termination Date. If the
exercise of the Option following the termination of the
Optionholder’s Continuous Service (other than upon the
Optionholder’s death or Disability) would be prohibited at
any time solely because the issuance of shares would violate the
registration requirements under the Securities Act, then the
Option shall terminate on the earlier of (i) the expiration
of the term of the Option as set forth in the Option Agreement
or (ii) the expiration of a period of three (3) months
after the termination of the Optionholder’s Continuous
Service during which the exercise of the Option would not be in
violation of such registration requirements.
(i) Disability Of Optionholder. In the
event an Optionholder’s Continuous Service terminates as a
result of the Optionholder’s Disability, the Optionholder
may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise it as of the date of
termination), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following
such termination or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her
Option within the time specified herein, the Option shall
terminate.
(j) Death Of Optionholder. In the event
(i) an Optionholder’s Continuous Service terminates as
a result of the Optionholder’s death or (ii) the
Optionholder dies within the three-month period after the
termination of the Optionholder’s Continuous Service for a
reason other than death, then the Option may be exercised (to
the extent the Optionholder was entitled to exercise the Option
as of the date of death) by the Optionholder’s estate, by a
person who acquired the right to exercise the Option by bequest
or inheritance or by a person designated to exercise the Option
upon the Optionholder’s death, but only within the period
ending on the earlier of (1) the date eighteen
(18) months following the date of death or (2) the
expiration of the term of such Option as set forth in the Option
Agreement. If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate.
(k) Termination Upon Change In
Control. In the event that an Optionholder’s
Continuous Service terminates as of, or within twelve
(12) months following a Change in Control, the Optionholder
may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date
of termination of Continuous Service) within such period of time
ending on the earlier of (i) the expiration of the term of
the Option as set forth in the Option Agreement or (ii) the
date twelve (12) months following the termination of the
Optionholder’s Continuous Service (or such longer or
shorter period specified in the Option Agreement). If, after
termination of Continuous Service, the Optionholder does not
exercise his or her Option within the time specified herein or
in the Option Agreement (as applicable), the Option shall
terminate.
The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as
may be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however,
that this undertaking shall not require the Company to register
under the Securities Act the Plan, any Option or any stock
issued or issuable pursuant to any such Option. If, after
reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel
for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of
such Options unless and until such authority is obtained.
Proceeds from the sale of stock pursuant to Options shall
constitute general funds of the Company.
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(a) Stockholder Rights. No Optionholder
shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such
Option unless and until such Optionholder has satisfied all
requirements for exercise of the Option pursuant to its terms
(b) No Service Rights. Nothing in the
Plan or any instrument executed or Option granted pursuant
thereto shall confer upon any Optionholder any right to continue
to serve the Company as a Non-Employee Director or shall affect
the right of the Company or an Affiliate to terminate
(i) the employment of an Employee with or without notice
and with or without cause, (ii) the service of a Consultant
pursuant to the terms of such Consultant’s agreement with
the Company or an Affiliate or (iii) the service of a
Director pursuant to the Bylaws of the Company or an Affiliate,
and any applicable provisions of the corporate law of the state
in which the Company or the Affiliate is incorporated, as the
case may be.
(c) Investment Assurances. The Company
may require an Optionholder, as a condition of exercising or
acquiring stock under any Option, (i) to give written
assurances satisfactory to the Company as to the
Optionholder’s knowledge and experience in financial and
business matters
and/or to
employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and
business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits
and risks of exercising the Option; and (ii) to give
written assurances satisfactory to the Company stating that the
Optionholder is acquiring the stock subject to the Option for
the Optionholder’s own account and not with any present
intention of selling or otherwise distributing the stock. The
foregoing requirements, and any assurances given pursuant to
such requirements, shall be inoperative if (1) the issuance
of the shares upon the exercise or acquisition of stock under
the Option has been registered under a then currently effective
registration statement under the Securities Act or (2) as
to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in
the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to,
legends restricting the transfer of the stock.
(d) Withholding Obligations. The
Optionholder may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition
of stock under an Option by any of the following means (in
addition to the Company’s right to withhold from any
compensation paid to the Optionholder by the Company) or by a
combination of such means: (i) tendering a cash payment;
(ii) authorizing the Company to withhold shares from the
shares of the Common Stock otherwise issuable to the
Optionholder as a result of the exercise or acquisition of stock
under the Option; provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to
the Company owned and unencumbered shares of the Common Stock.
(e) Electronic Delivery. Any reference
herein to a “written” agreement or document shall
include any agreement or document delivered electronically or
posted on the Company’s intranet.
(a) Capitalization Adjustments. If any
change is made in, or other events occur with respect to, the
stock subject to the Plan, or subject to any Option, without the
receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than
cash, stock split, liquidating dividend, combination of shares,
exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the
Company (each a “Capitalization Adjustment”)), the
Plan will be appropriately adjusted in the class(es) and maximum
number of securities subject both to the Plan pursuant to
Section 4 and to the nondiscretionary Options specified in
Section 6, and the outstanding Options will be
appropriately adjusted in the class(es) and number of securities
and price per share of stock subject to such outstanding
Options. The Board shall make such adjustments, and its
determination shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall
not be treated as a transaction “without receipt of
consideration” by the Company.)
(b) Dissolution Or Liquidation. In the
event of a dissolution or liquidation of the Company, then all
outstanding Options shall terminate immediately prior to the
completion of such dissolution or liquidation.
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(c) Corporate Transaction. In the event
of a Corporate Transaction, any surviving corporation or
acquiring corporation (or the surviving or acquiring
corporation’s parent company) may assume or continue any or
all Options outstanding under the Plan or may substitute similar
stock options for Options outstanding under the Plan (it being
understood that similar stock options include, but are not
limited to, options to acquire the same consideration paid to
the stockholders or the Company, as the case may be, pursuant to
the Corporate Transaction). In the event that any surviving
corporation or acquiring corporation (or its parent company)
does not assume or continue all such outstanding Options or
substitute similar stock options for such outstanding Options,
then with respect to Options that have been not assumed,
continued or substituted and are held by Optionholders whose
Continuous Service has not terminated prior to the effective
time of the Corporate Transaction, the vesting of such Options
(and, if applicable, the time at which such Options may be
exercised) shall (contingent upon the effectiveness of the
Corporate Transaction) be accelerated in full to a date prior to
the effective time of such Corporate Transaction as the Board
shall determine (or, if the Board shall not determine such a
date, to the date that is five (5) days prior to the
effective time of the Corporate Transaction), and the Options
shall terminate if not exercised (if applicable) at or prior to
such effective time. With respect to any other Options
outstanding under the Plan that have not been assumed, continued
or substituted, the vesting of such Options (and, if applicable,
the time at which such Options may be exercised) shall not be
accelerated unless otherwise provided in Section 11(d) or
in a written agreement between the Company or any Affiliate and
the holder of such Options, and such Options shall terminate if
not exercised (if applicable) prior to the effective time of the
Corporate Transaction.
(d) Change In Control. If a Change in
Control occurs and an Optionholder’s Continuous Service
with the Company has not terminated immediately prior to the
effective time of the Change in Control, then, immediately prior
to the effective time of such Change in Control (and contingent
upon the effectiveness of the Change in Control), the vesting
and exercisability of an Optionholder’s Options shall be
accelerated in full. In the event that an Optionholder is
required to resign his or her position as a Non-Employee
Director as a condition of a Change in Control, the outstanding
Options of such Optionholder shall become fully vested and
exercisable immediately prior to the effectiveness of such
resignation (and contingent upon the effectiveness of the Change
in Control).
(e) Parachute Payments. If the
acceleration of the vesting and exercisability of Options
provided for in Section 11(c), together with payments and
other benefits of an Optionholder, (collectively, the
“Payment”) (i) constitute a “parachute
payment” within the meaning of Section 280G of the
Code, or any comparable successor provisions, and (ii) but
for this Section 11(e) would be subject to the excise tax
imposed by Section 4999 of the Code, or any comparable
successor provisions (the “Excise Tax”), then such
Payment shall be either (1) provided to such Optionholder
in full, or (2) provided to such Optionholder as to such
lesser extent that would result in no portion of such Payment
being subject to the Excise Tax, whichever of the foregoing
amounts, when taking into account applicable federal, state,
local and foreign income and employment taxes, the Excise Tax,
and any other applicable taxes, results in the receipt by such
Optionholder, on an after-tax basis, of the greatest amount of
the Payment, notwithstanding that all or some portion of the
Payment may be subject to the Excise Tax.
Unless the Company and such Optionholder otherwise agree in
writing, any determination required under this
Section 11(e) shall be made in writing in good faith by the
Accountant. If a reduction in the Payment is to be made as
provided above, reductions shall occur in the following order
unless the Optionholder elects in writing a different order
(provided, however, that such election shall be subject to
Company approval if made on or after the date that triggers the
Payment or a portion thereof): reduction of cash payments;
cancellation of accelerated vesting of Options; reduction of
employee benefits. If acceleration of vesting of Options is to
be reduced, such acceleration of vesting shall be cancelled in
the reverse order of date of grant of Options (i.e., earliest
granted Option cancelled last) unless the Optionholder elects in
writing a different order for cancellation.
For purposes of making the calculations required by this
Section 11(e), the Accountant may make reasonable
assumptions and approximations concerning applicable taxes and
may rely on reasonable, good faith interpretations concerning
the application of the Code and other applicable legal
authority. The Company and the Optionholder shall furnish to the
Accountant such information and documents as the Accountant may
reasonably request in order to make such a determination. The
Company shall bear all costs the Accountant may reasonably incur
in connection with any calculations contemplated by this
Section 11(e). If, notwithstanding any reduction described
above, the Internal Revenue Service (the “IRS”)
determines that the Optionholder is liable for the Excise Tax as
a result of the Payment, then the Optionholder shall be
obligated to pay back to the Company, within thirty
(30) days after a final
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IRS determination or, in the event that the Optionholder
challenges the final IRS determination, a final judicial
determination, a portion of the Payment equal to the
“Repayment Amount.” The Repayment Amount with respect
to the Payment shall be the smallest such amount, if any, as
shall be required to be paid to the Company so that the
Optionholder’s net after-tax proceeds with respect to the
Payment (after taking into account the payment of the Excise Tax
and all other applicable taxes imposed on the Payment) shall be
maximized. The Repayment Amount with respect to the Payment
shall be zero if a Repayment Amount of more than zero would not
result in the Optionholder’s net after-tax proceeds with
respect to the Payment being maximized. If the Excise Tax is not
eliminated pursuant to this paragraph, the Optionholder shall
pay the Excise Tax.
Notwithstanding any other provision of this Section 11(e),
if (i) there is a reduction in the Payment as described
above, (ii) the IRS later determines that the Optionholder
is liable for the Excise Tax, the payment of which would result
in the maximization of the Optionholder’s net after-tax
proceeds of the Payment (calculated as if the Payment had not
previously been reduced), and (iii) the Optionholder pays
the Excise Tax, then the Company shall pay or otherwise provide
to the Optionholder that portion of the Payment that was reduced
pursuant to this Section 11(e) contemporaneously or as soon
as administratively possible after the Optionholder pays the
Excise Tax so that the Optionholder’s net after-tax
proceeds with respect to the Payment are maximized.
If the Optionholder either (i) brings any action to enforce
rights pursuant to this Section 11(e), or (ii) defends
any legal challenge to his or her rights under this
Section 11(e), the Optionholder shall be entitled to
recover attorneys’ fees and costs incurred in connection
with such action, regardless of the outcome of such action;
provided, however, that if such action is commenced by the
Optionholder, the court finds that the action was brought in
good faith.
(a) Amendment Of Plan. The Board, at any
time and from time to time, may amend the Plan. However, except
as provided in Section 11 relating to adjustments upon
changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent
stockholder approval is necessary to satisfy the requirements of
applicable laws.
(b) Stockholder Approval. The Board, in
its sole discretion, may submit any other amendment to the Plan
for stockholder approval.
(c) No Impairment Of Rights. Rights under any
Option granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (i) the
Company requests the consent of the Optionholder and
(ii) the Optionholder consents in writing.
(d) Amendment Of Options. The Board, at
any time, and from time to time, may amend the terms of any one
or more Options; provided, however, that the rights under any
Option shall not be impaired by any such amendment unless
(i) the Company requests the consent of the Optionholder
and (ii) the Optionholder consents in writing.
(a) Plan Term. The Board may suspend or
terminate the Plan at any time. No Options may be granted under
the Plan while the Plan is suspended or after it is terminated.
(b) No Impairment Of Rights. Suspension
or termination of the Plan shall not impair rights and
obligations under any Option granted while the Plan is in effect
except with the written consent of the Optionholder.
The Plan shall become effective on the IPO Date, but no Option
shall be exercised unless and until the Plan has been approved
by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan
is adopted by the Board.
15. Choice
Of Law.
The law of the state of Delaware shall govern all questions
concerning the construction, validity and interpretation of this
Plan, without regard to such state’s conflict of laws rules.
Table of Contents
ANNUAL MEETING OF
STOCKHOLDERS
MAY 30, 2007 The undersigned hereby appoints Jeffrey
Staszak and Greg Hildebrand, and each of them, each with full power of
substitution, to act as attorney and proxy for the undersigned to vote all
shares of common stock of Volterra Semiconductor Corporation which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
at Fremont Marriott, 46100 Landing Parkway, Fremont, California, on
Wednesday, May 30, 2007, at 9:00 a.m., and at any and all adjournments
thereof, as follows:
The Board of
Directors recommends a vote “FOR” each of the listed proposals.
In their discretion, the proxies are
authorized to vote on any other business that may properly come before the
Meeting or any adjournment thereof.
THIS PROXY IS
SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS This Proxy may be revoked at any time prior to the voting thereof. The undersigned acknowledge receipt from Volterra Semiconductor Corporation, prior to the execution of this Proxy, of a Notice of the Meeting, a Proxy Statement and an Annual Report to Stockholders. THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
Please sign as your name appears on the
envelope in which this card was mailed. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title. If shares are
held jointly, each holder should sign.
PLEASE ACT
PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY IF YOUR ADDRESS HAS
CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS
PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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