DEF 14A: Definitive proxy statements
Published on November 16, 2007
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
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by
the Registrant þ
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Preliminary
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Definitive
Proxy
Statement
o
Definitive
Additional
Materials
o
Soliciting
Material
Pursuant to Section 240.14a-12
EMCORE
CORPORATION
(Name
of
Registrant as Specified in its Charter)
Payment
of Filing Fee (Check the appropriate box):
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fee
required.
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computed on table
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EMCORE
Corporation
10420 Research Road, SE
Albuquerque, New Mexico 87123
10420 Research Road, SE
Albuquerque, New Mexico 87123
November
16, 2007
Dear
Shareholder:
You
are
cordially invited to the 2007 Annual Meeting of Shareholders of EMCORE
Corporation that will be held at the Marriott Albuquerque, 2101 Louisiana
Boulevard NE, Albuquerque, New Mexico on Monday, December 3, 2007, at 10:00
a.m.
local time. The principal items of business will be the election of
two directors, an advisory vote on the selection of the Company’s independent
auditors and the approval of the Company’s 2007 Directors’ Stock Award Plan.
Shareholders may raise other matters, as described in the accompanying
Proxy Statement. The Proxy Statement, proxy card and the Company’s
2006 Annual Report to Shareholders are first being sent or given to shareholders
on or about November 16, 2007.
Your
vote is important.We encourage you to carefully consider the
matters before us. To ensure that your shares are represented at the meeting,
you may complete and sign the proxy card or you may vote in person at the
Annual
Meeting.
Sincerely
yours,
/s/ Reuben F. Richards, Jr. Reuben F. Richards, Jr. Chief Executive Officer and Director |
EMCORE
CORPORATION
10420 Research Road, SE
Albuquerque, New Mexico 87123
10420 Research Road, SE
Albuquerque, New Mexico 87123
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, DECEMBER 3, 2007
TO BE HELD ON MONDAY, DECEMBER 3, 2007
To
our Shareholders:
The
2007
Annual Meeting of Shareholders (the “Annual Meeting”) of EMCORE Corporation (the
“Company”) will be held at 10:00 A.M. local time on Monday, December 3, 2007, at
the Marriott Albuquerque, 2101 Louisiana Boulevard NE, Albuquerque, New Mexico
for the following purposes:
(1)
|
To
elect two (2) members to the Company’s Board of
Directors;
|
(2)
|
To
ratify the selection of Deloitte & Touche LLP as the Company’s
independent registered public accounting firm for the fiscal year
ending
September 30, 2007;
|
(3)
|
To
approve the Company’s 2007 Directors’ Stock Award Plan;
and
|
(4)
|
To
transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements
thereof.
|
The
Board
of Directors has fixed the close of business on November 12, 2007 as the record
date for determining those shareholders entitled to notice of, and to vote
at,
the Annual Meeting and any adjournments or postponements thereof. Whether or
not
you expect to be present, please sign, date, and return the enclosed proxy
card
in the enclosed pre-addressed envelope as promptly as possible. No postage
is
required if mailed in the United States.
By
Order
of the Board of Directors,
/s/ Keith J. Kosco
/s/ Keith J. Kosco
KEITH
J.
KOSCO
SECRETARY
November
21, 2007
Albuquerque, New Mexico
Albuquerque, New Mexico
THIS
IS
AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING
IN
PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A PROXY
CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY, AND VOTE THEIR
SHARES IN PERSON.
This page left blank intentionally.
EMCORE
CORPORATION PROXY STATEMENT
TABLE
OF CONTENTS
2007 Annual Shareholders Meeting Information |
Page
|
Information
Concerning Proxy
|
1
|
Purposes
of the Meeting
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2
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Outstanding
Voting Securities and Voting Rights
|
2
|
Proposal
I: Election of Directors
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3
|
Directors
and Executive Officers
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4
|
Recommendation
of the Board of Directors
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6
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Compensation
of Directors
|
7
|
Nominating
Committee
|
8
|
Executive
Compensation & Related Information
|
8
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Compensation
Committee Interlocks and Insider Participation
|
8
|
Report
of the Compensation Committee
|
9
|
Fiscal
2007 Executive Bonus Plan
|
13
|
Executive
Compensation
|
14
|
Option
Grants In Fiscal 2006
|
16
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Aggregated
Option Exercises in Fiscal 2006 and Year-End Option Values
|
16
|
Employment
Contracts and Termination of Employment and Change-in- Control
Arrangements
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17
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Certain
Relationships and Related Transactions
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19
|
Stock
Performance Graph
|
20
|
Ownership
of Securities
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21
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Security
Ownership of Certain Beneficial Owners and Management
|
21
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Equity
Compensation Plan Information
|
23
|
Section
16(a) Beneficial Ownership Reporting Compliance
|
23
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Proposal
II: Appointment of Independent Registered Public Accounting
Firm
|
24
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Fiscal
2006 & 2005 Auditor Fees and Services
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24
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Report
of the Audit Committee
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25
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Recommendation
of the Board of Directors
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26
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Proposal
III: To Approve EMCORE’s 2007 Directors’ Stock Award
Plan
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27
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Recommendation
of the Board of Directors
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28
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General
Matters
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29
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Appendix
A: Emcore Corporation 2007 Directors’ Stock Award
Plan
|
A-1
|
This page left blank intentionally.
EMCORE
CORPORATION
10420
Research Road, SE
Albuquerque,
New Mexico 87123
PROXY
STATEMENT ANNUAL MEETING OF SHAREHOLDERS
MONDAY,
DECEMBER 3, 2007
This
Proxy Statement is being furnished to shareholders of record of EMCORE
Corporation (“EMCORE”, “Company”, “we”, or “us”) as of November 12, 2007, in
connection with the solicitation on behalf of the Board of Directors of
EMCORE
of proxies for use at the 2007 Annual Meeting of Shareholders (the “Annual
Meeting”) to be held at 10:00 A.M. local time, on Monday, December 3, 2007, at
the Marriott Albuquerque, 2101 Louisiana Boulevard NE, Albuquerque, New
Mexico,
or at any adjournments thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. The approximate date that this
Proxy
Statement and the enclosed proxy are first being sent to shareholders is
November 21, 2007. Shareholders should review the information
provided herein in conjunction with the Company’s 2006 Annual Report to
Shareholders, which accompanies this Proxy Statement. The Company’s principal
executive office is located at 10420 Research Road, SE, Albuquerque, New
Mexico
87123. The Company’s main telephone number is (505) 332-5000. The Company’s
principal executive officers may be reached at the foregoing business address
and telephone number.
INFORMATION
CONCERNING PROXY
The
enclosed proxy is solicited on behalf of the Company’s Board of Directors. The
giving of a proxy does not preclude the right to vote in person should
any
shareholder giving the proxy so desire. Shareholders have an unconditional
right
to revoke their proxy at any time prior to the exercise thereof, either
in
person at the Annual Meeting or by filing with the Company’s Secretary at the
Company’s headquarters a written revocation or duly executed proxy bearing a
later date; however, no such revocation will be effective until written
notice
of the revocation is received by the Company at or prior to the Annual
Meeting.
The
cost
of preparing, assembling, and mailing this Proxy Statement, the Notice
of Annual
Meeting of Shareholders, and the enclosed proxy is borne by the Company.
In
addition to the use of mail, employees of the Company may solicit proxies
personally and by telephone. The Company’s employees will receive no
compensation for soliciting proxies other than their regular salaries.
The
Company may request banks, brokers and other custodians, nominees, and
fiduciaries to forward copies of the proxy material to their principals
and to
request authority for the execution of proxies. The Company may reimburse
such
persons for their expenses in so doing.
1
PURPOSES
OF THE MEETING
At
the
Annual Meeting, the Company’s shareholders will consider and vote upon the
following matters:
(1)
|
To
elect two (2) members to the Company’s Board of
Directors;
|
(2)
|
To
ratify the selection of Deloitte & Touche LLP as the Company’s
independent registered
public accounting firm for the fiscal year ending September 30,
2007;
|
(3)
|
To
approve the Company’s 2007 Directors’ Stock Award Plan;
and
|
(4)
|
To
transact such other business as may properly come before the
Annual
Meeting and any adjournments or postponements
thereof.
|
Unless
contrary instructions are indicated on the enclosed proxy, all shares
represented by valid proxies received pursuant to this solicitation (and
that
have not been revoked in accordance with the procedures set forth above)
will be
voted: (1) FOR the election of the nominees for directors named below;
(2) FOR
ratification of the Company’s independent registered public accounting firm
named above; (3) FOR the approval of the Company’s 2007 Directors’ Stock Award
Plan; and (4) by the proxies in their discretion upon any other proposals
as may
properly come before the Annual Meeting. In the event a shareholder specifies
a
different choice by means of the enclosed proxy, such shareholder’s shares will
be voted in accordance with the specification so made.
OUTSTANDING
VOTING SECURITIES AND VOTING RIGHTS
As
of the
close of business on November 12, 2007 (the “Record Date”), the Company had
51,522,975 shares of no par value common stock (“Common Stock”) outstanding.
Each share of Common Stock is entitled to one vote on all matters presented
at
the Annual Meeting. The presence, either in person or by properly executed
proxy, of the holders of the majority of the shares of Common Stock entitled
to
vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. Attendance at the Annual Meeting will be limited to shareholders
as of
the Record Date, their authorized representatives, and guests of the
Company.
If
the
enclosed proxy is signed and returned, it may nevertheless be revoked at
any
time prior to the voting thereof at the pleasure of the shareholder signing
it,
either by a written notice of revocation received by the person or persons
named
therein or by voting the shares covered thereby in person or by another
proxy
dated subsequent to the date thereof.
Proxies
in the accompanying form will be voted in accordance with the instructions
indicated thereon, and, if no such instructions are indicated, will be
voted in
favor of the nominees for election as directors named below and for the
other
proposals herein.
The
vote
required for approval of each of the proposals before the shareholders
at the
Annual Meeting is specified in the description of such proposal below.
For the
purpose of determining whether a proposal has received the required vote,
abstentions and broker non-votes will be included in the vote total, with
the
result that an abstention or broker non-vote, as the case may be will have
the
same effect as if no instructions were indicated.
2
PROPOSAL
I: ELECTION OF DIRECTORS
Pursuant
to EMCORE’s Restated Certificate of Incorporation, the Board of Directors of
EMCORE is divided into three classes as set forth in the following table.
The
directors in each class hold office for staggered terms of three years.
The
Class B directors, Messrs. Scott and Hou, are being proposed for a three-year
term (expiring in 2010) at this Annual Meeting. Mr. Scott was elected in
2004
for a term that expires in 2007. Dr. Hou was elected to the Board of Directors
to fill the vacancy resulting from the resignation of Mr. Stall from the
Board
of Directors. Pursuant to EMCORE’s By-Laws, Dr. Hou holds his office until the
Annual Meeting.
The
shares represented by proxies returned executed will be voted, unless otherwise
specified, in favor of the nominees for the Board of Directors named below.
If,
as a result of circumstances not known or unforeseen, any of such nominees
shall
be unavailable to serve as director, proxies will be voted for the election
of
such other person or persons as the Board of Directors may select. Each
nominee
for director will be elected by a plurality of votes cast at the Annual
Meeting.
Proxies will be voted FOR the election of each of the nominees unless
instructions to “withhold” votes are set forth on the proxy card. Withholding
votes will not influence voting results. Abstentions may not be specified
as to
the election of directors.
The
following tables set forth certain information regarding the members of
and
nominees for the Board of Directors:
Name
and Other
Information
|
Age
|
Class
and
Year
in
Which
Term
Will
Expire
|
Principal
Occupation
|
Served
as Director
Since
|
NOMINEES
FOR ELECTION AT THE 2007 ANNUAL MEETING
|
||||
Charles
Scott(1)(2)(3)(4)
|
58
|
Class
B 2007
|
Chairman
of William Hill plc
|
1998
|
Hong
Q. Hou
|
42
|
Class
B 2007
|
President
and Chief Operating Officer, EMCORE Corporation
|
2006
|
DIRECTORS
WHOSE TERMS CONTINUE
|
||||
Thomas
J. Russell(2)(4)
|
75
|
Class
A 2008
|
Chairman
of the Board,
EMCORE
Corporation
|
1995
|
Reuben
F. Richards, Jr.
|
51
|
Class
A 2008
|
Chief
Executive Officer, EMCORE Corporation
|
1995
|
Robert
Bogomolny(1)(3)(4)
|
68
|
Class
A 2008
|
President,
University of Baltimore
|
2002
|
Thomas
G. Werthan
|
50
|
Class
C 2009
|
Chief
Financial Officer, Energy Photovoltaics, Inc.
|
1992
|
John
Gillen(1)(2)(3)(4)
|
65
|
Class
C 2009
|
Partner,
Gillen and Johnson,
P.A.,
Certified Public Accountants
|
2003
|
(1)
|
Member
of Audit Committee.
|
(2)
|
Member
of Nominating Committee.
|
(3)
|
Member
of Compensation Committee.
|
(4)
|
Determined
by the Board of Directors to be an independent
director.
|
3
DIRECTORS
AND EXECUTIVE OFFICERS
Set
forth
below is certain information with respect to each of the nominees for the
office
of director and other directors and executive officers of EMCORE.
THOMAS
J.
RUSSELL, Ph.D., 75, has been a director of the Company since May 1995 and
was
elected Chairman of the Board on December 6, 1996. Dr. Russell founded
Bio/Dynamics, Inc. in 1961 and managed the company until its acquisition
by IMS
International in 1973, following which he served as President of that company’s
Life Sciences Division. From 1984 until 1988, he served as Director, then
as
Chairman of IMS International until its acquisition by Dun & Bradstreet in
1988. From 1988 to 1992, he served as Chairman of Applied Biosciences,
Inc., and
was a Director until 1996. In 1990, Dr. Russell was appointed as a Director
of
Saatchi & Saatchi plc (now Cordiant plc), and served on that board until
1997. He served as a Director of adidas-Salomon AG from 1994 to 2001. He
also
served on the board of LD COM Networks until 2004. He holds a Ph.D. in
physiology and biochemistry from Rutgers University.
REUBEN
F.
RICHARDS, JR., 51, joined the Company in October 1995 and became Chief
Executive
Officer in December 1996. Mr. Richards has been a director of the Company
since
May 1995. From October 1995 to December 2006, Mr. Richards served as the
Company’s President. From September 1994 to December 1996, Mr. Richards was a
Senior Managing Director of Jesup & Lamont Capital Markets Inc. (an
affiliate of a registered broker-dealer). From December 1994 to December
1996,
he was a member and President of Jesup & Lamont Merchant Partners, L.L.C.
From 1992 through 1994, Mr. Richards was a principal with Hauser, Richards
&
Co., a firm engaged in corporate restructuring and management turnarounds.
From
1986 until 1992, Mr. Richards was a Director at Prudential-Bache Capital
Funding
in its Investment Banking Division.
HONG
Q.
HOU, Ph.D., 42, has served as a director of the Company since December
2006. Dr.
Hou joined the Company in 1998 and became President and Chief Operating
Officer
of the Company in December 2006. Dr. Hou co-started the Company’s Photovoltaics
division, and subsequently managed the Company’s Fiber Optics division. In 2005
and 2006, Dr. Hou was responsible for managing the Company’s CATV and analog
products business. From 1995 to 1998, Dr. Hou was a Principal Member of
Technical Staff at Sandia National Laboratories, a Department of Energy
weapon
research lab managed by Lockheed Martin. He was a Member of Technical Staff
at
AT&T Bell Laboratories from 1993 to 1995, where he engaged in research on
high-speed optoelectronic devices.
CHARLES
SCOTT, 58, has served as a director of the Company since February 1998.
Since
January 1, 2004, he has served as Chairman of the Board of Directors of
William
Hill plc, a leading provider of bookmaking services in the United Kingdom.
Prior
to that, Mr. Scott served as Chairman of a number of companies, including
Cordiant Communications Group plc, Saatchi & Saatchi Company plc, and Robert
Walters plc.
JOHN
GILLEN, 65, has served as a director of the Company since March
2003. Mr. Gillen has been a partner in the firm of Gillen and
Johnson, P.A., Certified Public Accountants since 1974. Prior to that time,
Mr.
Gillen was employed by the Internal Revenue Service and Peat Marwick Mitchell
& Company, Certified Public Accountants.
4
ROBERT
BOGOMOLNY, 68, has served as a director of the Company since April 2002.
Since
August 2002, Mr. Bogomolny has served as President of the University of
Baltimore. Prior to that, he served as Corporate Senior Vice President
and
General Counsel of G.D. Searle & Company, a pharmaceuticals manufacturer,
from 1987 to 2001. At G.D. Searle, Mr. Bogomolny was responsible at various
times for its legal, regulatory, quality control, and public affairs activities.
He also led its government affairs department in Washington, D.C., and
served on
the Searle Executive Management Committee.
THOMAS
G.
WERTHAN, 50, served as the Company’s Chief Financial Officer from June 1992 to
February 2007 and has been a member of the Board of Directors since 1992.
He is
currently Chief Financial Officer of EPV SOLAR, Inc. a private company.
Prior to
joining the Company, he was associated with The Russell Group, a venture
capital
partnership, as Chief Financial Officer for several portfolio companies.
The
Russell Group was affiliated with Thomas J. Russell, Chairman of the Board
of
Directors of the Company. From 1985 to 1989, Mr. Werthan served as
Chief Operating Officer and Chief Financial Officer for Audio Visual Labs,
Inc.,
a manufacturer of multimedia and computer graphics equipment.
Non-Director
Executive Officers
ADAM
GUSHARD, 37, joined the Company in December 1997 and has served as Interim
Chief
Financial Officer since February 2007. Previously, Mr. Gushard served as
Vice
President of Finance and has extensive experience with the Company's financial
operations, controls, and corporate strategy, having served as an assistant
controller, controller and corporate controller at the Company. Prior to
joining
the Company, Mr. Gushard was a certified public accountant with the public
accounting firm, Coopers & Lybrand LLP (now PriceWaterhouseCoopers LLP). Mr.
Gushard has a Bachelor of Science degree in Finance from Pennsylvania State
University.
KEITH
J.
KOSCO, ESQ., 55, joined the Company in January 2007 and serves as Chief
Legal
Officer, and Secretary of the Company. From 2003 to 2006, Mr. Kosco served
as
General Counsel and Corporate Secretary of Aspire Markets, Inc. and from
2002 to
2003 served as General Counsel and Corporate Secretary of 3D Systems
Corporation, a high technology capital goods manufacturer. From 1998
to 2001, Mr. Kosco served as Director of Mergers and Acquisitions and Assistant
General Counsel of Litton Industries, Inc., a technology and defense company
that was acquired by Northrop Grumman Corporation in 2001. Mr. Kosco
also has over 17 years of experience in private practice with the law firms
of
Squire Sanders & Dempsey and Morgan, Lewis & Bockius. Mr.
Kosco received his J.D. degree from Harvard Law School in 1979.
JOHN
IANNELLI, Ph.D., 42, joined the Company in January 2003 through the acquisition
of Ortel from Agere Systems and has served as Chief Technology Officer
since
June 2007. Prior to his current role, Dr. Iannelli was Senior Director
of
Engineering of EMCORE’s Broadband division (Ortel). Dr. Iannelli joined Ortel in
1995 and has led several development programs and products in the areas
of
analog and digital transmitters/transceivers. He has made seminal inventions
in
the areas of fiber optic transport in digital and broadband infrastructures.
He
has numerous publications and issued US patents. Dr. Iannelli holds a
Ph.D. and MS degree in Applied Physics from the California Institute of
Technology, a BS degree in Physics from Rensselaer Polytechnic Institute,
and a
Masters degree in Business Administration from the University of Southern
California.
5
Additional
Information Regarding Directors and Executive Officers
Mr.
Robert Louis-Dreyfus, after serving as a director of the Company since
March
1997, resigned his seat on the Company’s Board of Directors on October 30,
2007.
As
previously reported on Form 8-K filed with the Securities and Exchange
Commission (“SEC”) on December 20, 2006, Mr. Richards will continue to serve as
the Company’s Chief Executive Officer until the Company’s Annual Meeting in
2008, at which time he will become Executive Chairman and Chairman of the
Board
of Directors and Dr. Thomas Russell, the current Chairman, will become
Chairman
Emeritus and Lead Director. At that time, Dr. Hou will succeed Mr.
Richards as the Company’s Chief Executive Officer.
RECOMMENDATION
OF THE BOARD OF DIRECTORS
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
ELECTION OF EACH OF NOMINEES LISTED ABOVE UNDER PROPOSAL
I.
6
COMPENSATION
OF DIRECTORS
The
Board
of Directors held 9 regularly scheduled and special telephonic meetings
during
fiscal 2006, and took other certain actions by unanimous written consent.
During
fiscal 2006, all directors of the Company, except for Mr. Louis-Dreyfus,
attended at least 75% of the aggregate meetings of the Board and committees
on
which they served, during their tenure on the Board.
Pursuant
to its Directors’ Stock Award Plan, the Company pays non-employee directors a
fee in the amount of $3,000 per Board meeting attended ($3,600 for the
Chairman
of the Board) and $500 per committee meeting attended ($600 for the chairman
of
a committee), as well as reimburses a non-employee director's reasonable
out-of-pocket expenses incurred in connection with such Board or committee
meeting. From time to time, Board members are invited to attend meetings
of
Board committees of which they are not members. When this occurs, these
non-committee Board members receive a committee meeting fee of $500. Payment
of
fees under the Directors’ Stock Award Plan has historically been made in Common
Stock at the closing price on the NASDAQ National Market for the day prior
to
the meeting. If the 2007 Directors’ Stock Award Plan is approved at the Annual
Meeting, payment of fees under the 2007 Directors’ Stock Award Plan will be
made, beginning with fees paid for fiscal 2007, in Common Stock payable
in one
issuance annually based on the closing price on the NASDAQ National Market
for
the date of issuance.
In
addition, on October 20, 2005, the Board of Directors instituted an Outside
Directors Cash Compensation Plan providing for the payment of cash compensation
to outside directors for their participation at Board meetings. Director
compensation is established by the Board and periodically reviewed. One
of the
objectives of the Outside Directors Cash Compensation Plan is to provide
the
Company with an advantage in attracting and retaining outside directors.
Each
non-employee director receives a meeting fee for each meeting that he or
she
attends (including telephonic meetings, but excluding execution of unanimous
written consents) of the Board. In addition, each non-employee director
receives
a committee meeting fee for each meeting that he or she attends (including
telephonic meetings, but excluding execution of unanimous written consents)
of a
Board committee. Until changed by resolution of the Board, the meeting
fee is
$4,000 and the committee meeting fee is $1,500; provided that the meeting
fee
for special telephonic meetings (i.e., Board meetings that are not regularly
scheduled and in which non-employee directors typically participate
telephonically) is $750 and the committee meeting fee for such special
telephonic meetings is $600. Any non-employee director who is the chairman
of a
committee receives an additional $750 for each meeting of the committee
that he
or she chairs, and an additional $200 for each special telephonic meeting
of
such committee. Directors may defer cash compensation otherwise payable
under
the Outside Directors Cash Compensation Plan.
No
director who is an employee of the Company receives compensation for services
rendered as a director under either the Outside Directors Cash Compensation
Plan
or the Directors’ Stock Award Plan.
7
NOMINATING
COMMITTEE
The
Company’s Nominating Committee currently consists of Messrs. Russell, Scott, and
Gillen, each of whom is an independent director, as that term is defined
by the
NASDAQ listing standards. The Nominating Committee recommends new members
to the
Company’s Board of Directors. A copy of the Charter of the Nominating Committee
is posted on the Company’s website, www.emcore.com. The Nominating Committee did
not meet in fiscal 2006.
When
considering a potential director candidate, the Nominating Committee looks
for
demonstrated character, judgment, relevant business, functional and industry
experience, and a high degree of acumen. There are no differences in the
manner
in which the Nominating Committee evaluates nominees for director based
on
whether the nominee is recommended by a shareholder. The Company does not
pay
any third party to identify or assist in identifying or evaluating potential
nominees.
The
Nominating Committee will consider suggestions from shareholders regarding
possible director candidates for election in 2008. Such suggestions, together
with appropriate biographical information, should be submitted to the Company’s
Secretary. See the section titled “Shareholder Proposals” below under “General
Matters” for details regarding the procedures and timing for the submission of
such suggestions. Each director nominated in this Proxy Statement was
recommended for election by the Board of Directors. The Board of Directors
did
not receive any notice of a Board of Directors nominee recommendation in
connection with this Proxy Statement from any shareholder.
EXECUTIVE
COMPENSATION & RELATED INFORMATION
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The
Company’s Compensation Committee currently consists of Messrs. Gillen,
Bogomolny, and Scott. The Compensation Committee reviews and recommends
to the
Board of Directors the compensation and benefits of all executive officers
of
the Company, reviews general policy matters relating to compensation and
benefits of executive officers and employees of the Company, and administers
the
issuance of stock options and stock appreciation rights and awards of restricted
stock to the Company’s officers and key salaried employees. No member of the
Compensation Committee is now or ever was an officer or an employee of
the
Company. No executive officer of the Company serves as a member of the
Compensation Committee of the Board of Directors of any entity one or more
of
whose executive officers serves as a member of the Company’s Board of Directors
or Compensation Committee. The Compensation Committee meets at least once
annually.
8
REPORT
OF THE COMPENSATION COMMITTEE
The
following Report of the Compensation Committee does not constitute soliciting
material, and should not be deemed filed or incorporated by reference into
any
other Company filing under the Securities Act of 1933, as amended (the
“Securities Act”) or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), except to the extent the Company specifically incorporates this
Report of the Compensation Committee by reference therein.
The
Committee’s Responsibilities
The
Compensation Committee of the Board of Directors is composed entirely of
independent directors. The Compensation Committee is responsible for setting
and
administering policies, which govern EMCORE’s executive compensation programs.
The purpose of this report is to summarize the compensation philosophy
and
policies that the Compensation Committee applied in making executive
compensation decisions in 2006. The Compensation Committee met 7 times
in fiscal
2006 (October 2005, February 2006 and May 2006).
Compensation
Philosophy
The
Compensation Committee has approved compensation programs intended
to:
•
|
Attract and retain talented executive officers and key employees by providing total compensation competitive with that of other executives employed by companies of similar size, complexity and lines of business; | |
•
|
Motivate executives and key employees to achieve strong financial and operational performance; | |
•
|
Emphasize performance-based compensation, which balances rewards for short-term and long-term results; | |
•
|
Reward individual performance; | |
•
|
Link the interests of executives with shareholders by providing a significant portion of total pay in the form of stock-based incentives and requiring target levels of stock ownership; and | |
•
|
Encourage long-term commitment to EMCORE. |
Compensation
Methodology
Each
year
the Compensation Committee reviews data from market surveys, proxy statements,
and independent consultants to assess EMCORE’s competitive position with respect
to the following three components of executive compensation:
•
|
Base salary; | |
•
|
Annual incentives; and | |
•
|
Long-term incentives.Long-term incentives. |
The
Compensation Committee also considers individual performance, level of
responsibility, and skills and experience in making compensation decisions
for
each executive.
9
Components
of Compensation
Base
Salary. Base salaries for executives are determined based upon job
responsibilities, level of experience, individual performance, comparisons
to
the salaries of executives in similar positions obtained from market surveys,
and competitive data obtained from consultants and staff research. The
goal for
the base pay component is to compensate executives at a level, which
approximates the median salaries of individuals in comparable positions
and
markets. The Compensation Committee reviews, adjusts, where appropriate,
and
approves the salary increases for executive officers, as such are recommended
to
the Committee by the Company’s Chief Executive Officer. Any salary increase for
the Chief Executive Officer is reviewed by the Committee in executive session.
Due to the Company’s improved financial performance in fiscal year 2005, the
Committee approved base salary increases of four percent for the Company’s
executive officers, including the Named Executive Officers (as defined
below),
in October 2005.
Annual
Incentives. Pursuant to the Fiscal 2006 Executive Bonus Plan, bonus targets
for each executive officer of the Company were established to promote the
achievement of performance objectives of the Company. Half of an
executive’s bonus target was related to the Company meeting revenue targets and
half of the bonus target was related to the Company meeting EBIT targets
set
forth in the Company’s fiscal 2006 budget. Based upon the Company’s performance
in fiscal 2006 and the recommendations of the Chief Executive Officer,
the
Company’s executive officers, including the Named Executive Officers, were
awarded bonuses ranging from 38% – 64% of their respective base
salaries.
Long-Term
Incentives. Long-term equity awards consist of stock options, which are
designed to give executive officers and other employees of the Company
an
opportunity to acquire shares of Common Stock, to provide an incentive
for such
employees to continue to promote the best interests of the Company and
enhance
its long-term performance and to provide an incentive for such employees
to join
or remain with the Company. Generally, stock options vest in equal
installments over a period of four or five years and expire ten (10) years
from
the grant date. In fiscal 2006, no stock options were awarded to any
of the Company’s executive officers.
Compliance
with Section 162(m) of the Internal Revenue Code
Under
Section 162(m) of the Internal Revenue Code, EMCORE may not deduct annual
compensation in excess of $1 million paid to certain employees, generally
its
Chief Executive Officer and its four other most highly compensated executive
officers, unless that compensation qualifies as performance-based compensation.
While the Compensation Committee intends to structure performance-related
awards
in a way that will preserve the maximum deductibility of compensation awards,
the Compensation Committee may from time to time approve awards that would
vest
upon the passage of time or other compensation, which would not result
in
qualification of those awards as performance-based compensation.
10
Compensation
of the Chief Executive Officer
The
Compensation Committee reviews annually the compensation of the Chief Executive
Officer and recommends any adjustments to the Board of Directors for approval.
The Chief Executive Officer participates in the same programs and receives
compensation based upon the same criteria as EMCORE’s other executive officers.
However, the Chief Executive Officer’s compensation reflects the greater policy-
and decision-making authority that the Chief Executive Officer holds, and
the
higher level of responsibility that he has with respect to the strategic
direction of EMCORE and its financial and operating results.
The
components of Mr. Richard’s 2006 compensation were:
Base
Salary. After considering EMCORE’s overall performance and competitive
practices, the Compensation Committee recommended, and the Board of Directors
approved, a 4% increase in Mr. Richards’ base salary, to $400,400, effective
October 1, 2005.
Annual
Incentives. Annual incentive compensation for Mr. Richards is based upon
achievement of targets set by the Board of Directors. Based on the attainment
of
certain strategic corporate milestones, including the Company’s completion of
the sale of its membership interest in GELcore, LLC to General Electric
Corporation for $100 million and the sale of its Electronic Materials &
Device division to IQE RF, LLC for $16 million, in September 2006 Mr. Richards
received a payment of $255,000.
Pursuant
to due authorization from EMCORE's Board of Directors, EMCORE loaned $3.0
million to Mr. Reuben Richards, the Chief Executive Officer in February
2001
(“The Note”). The Note matured on February 22, 2006 and bore interest compounded
at a rate of (a) 5.18% per annum through May 23, 2002 and (b) 4.99% from
May 24,
2002 through maturity. All interest was payable at maturity. On February
13,
2006, Mr. Richards tendered 139,485 shares of Common Stock in partial payment
of
the Note. Principal plus accrued interest on the Note totaled approximately
$3.83 million. The Compensation Committee of EMCORE’s Board of Directors
specifically approved the tender of shares, as permitted by the Note, at
the
price of $8.25 per share, which was the closing price of our Common Stock
on
February 13, 2006. On February 28, 2006, the Compensation Committee resolved
to
forgive the remaining balance of the Note (approximately $2.7 million),
effective as of March 10, 2006. Mr. Richards’ tender of Common Stock
on February 13, 2006 was accepted as full payment and satisfaction of the
Note,
including principal and accrued interest. Additionally, the
Compensation Committee resolved to accelerate and vest the final tranche
of each
of the incentive stock option grants made in fiscal 2004 and 2005 to Mr.
Richards, which constitute a combined accelerated vesting of 111,250 shares.
In
considering this matter, the Compensation Committee carefully considered
Mr.
Richards’ past performance, including the recent appreciation in the stock price
and EMCORE’s improved financial performance, the facts and circumstances
surrounding the loan, Mr. Richards’ current compensation, Mr. Richards’
willingness to repay a portion of the Note and all resulting taxes totaling
$1.3
million, and the desire to retain Mr. Richards’ continued service to EMCORE.
EMCORE recorded a one-time charge of approximately $2.7 million in March
2006
for the partial forgiveness of the Note, plus a charge of approximately
$0.3
million in stock-based compensation expense under SFAS 123(R) relating
to the
accelerated ISO grants.
11
The
Compensation Committee conducts its annual review of Chief Executive Officer
performance and compensation after the close of the fiscal year, to assure
thorough consideration of year-end results.
This
report has been provided by the Compensation Committee.
October 29, 2007 | COMPENSATION COMMITTEE |
John
Gillen, Chairman
Charlie
Scott
Robert
Bogomolny
|
12
FISCAL
2007 EXECUTIVE BONUS PLAN
On
August
28, 2007, the Board of Directors of EMCORE adopted the Fiscal 2007 Executive
Bonus Plan. The purpose of the Fiscal 2007 Executive Bonus Plan is to establish
and implement a consistent, market-driven, performance-based approach to
compensation that is compatible with EMCORE’s compensation policy and supports
EMCORE’s strategic business plan and goals.
Under
the
Fiscal 2007 Executive Bonus Plan, a bonus target for each executive is
created,
representing a percentage of that executive’s base salary. The
following targets have been set based for the indicated officers:
Chief
Executive Officer and Chief Operating Officer: 80% of base salary
Chief
Financial Officer: 50% of base salary
General
Counsel/Chief Legal Officer and Chief Technical Officer: 35% of base
salary
The
portion of the individual officers’ targets to be paid is based on both
corporate and individual performance. Corporate performance is evaluated
based
on the company’s attainment of revenue and EBITDA goals, as set forth in
EMCORE’s Fiscal 2007 Budget (the “Fiscal 2007 Budget”), both of which goals are
weighted equally. A threshold level of 75% of revenue goals and 70%
of EBITDA goals is set. Achievement of 100% of revenue and EBITDA
goals correlates to payment of 100% of the bonus targets, and attainment
of
lesser percentages of the revenue and EBITDA goals correlates to payment
of
lesser percentages of the bonus targets. Attainment of 110% of the revenue
and
EBITDA goals will result in eligibility for 120% of the bonus
targets.
The
individual performance component acts as a multiplier and can accelerate
or
decelerate the target bonus percentage based upon individual performance
as
determined by the Chief Executive Officer and the Compensation
Committee. The multiplier ranges from 0% to 140% of the executive’s
target bonus. The Chief Executive’s individual performance is
reviewed by the Compensation Committee. The Chief Operating Officer’s
and other executive officers’ individual performance is reviewed by the Chief
Executive Officer and approved by the Compensation Committee.
Payment
of bonuses (if any) is normally made after the end of the performance period
during which the bonuses were earned. Bonuses normally will be paid in
cash in a
single lump sum, subject to payroll taxes and tax withholdings.
The
Compensation Committee and the Chief Executive Officer retain the ability
to
modify individual executive bonuses based upon individual performance and
the
successful completion of business projects and other management performance
objectives. In addition, the Compensation Committee makes long-term incentive
grants to executive officers and employees, which are not covered under
the
terms of the Fiscal 2007 Executive Bonus Plan.
13
EXECUTIVE
COMPENSATION
The
following table sets forth certain information concerning the annual and
long-term compensation earned for services in all capacities to the Company
for
fiscal years ended September 30, 2006, 2005, and 2004 of those persons
who
during such fiscal year (i) served as the Company’s chief executive officer, and
(ii) were the four most highly-compensated officers (other than the chief
executive officer) (collectively, the “Named Executive Officers”):
Annual
Compensation
Name
and
Principal
Position
|
Fiscal
Year
|
Salary
|
Bonus
|
Other
Annual
Compensation
|
Long-term
Compensation
Securities
Underlying
Options
|
All
Other
Compensation
|
|||
Reuben
F. Richards, Jr.
|
2006
|
$400,400
|
$419,901
|
$2,683,495
|
(1) |
-
|
$384
|
(2) | |
President
and
|
2005
|
385,000
|
225,000
|
-
|
300,000
|
384
|
(2) | ||
Chief
Executive Officer
|
2004
|
356,923
|
325,000
|
-
|
145,000
|
384
|
(2) | ||
Richard
A. Stall(3)
|
|||||||||
Former
Executive Vice
|
2006
|
$249,600
|
$176,776
|
-
|
-
|
$7,678
|
(5) | ||
President
and Chief
|
2005
|
243,000
|
75,000
|
$28,304
|
(4) |
45,000
|
7,384
|
(5) | |
Technology
Officer
|
2004
|
231,615
|
100,000
|
-
|
50,000
|
8,350
|
(5) | ||
|
|||||||||
Thomas
G. Werthan(6)
|
|||||||||
Former
Executive Vice
|
2006
|
$248,440
|
$115,000
|
-
|
-
|
$7,232
|
(9) | ||
President
and Chief
|
2005
|
236,000
|
75,000
|
$22,123
|
(7) |
60,000
|
5,963
|
(9) | |
Financial
Officer
|
2004
|
218,269
|
125,000
|
-
|
80,000
|
(8) |
6,670
|
(9) | |
Howard
W. Brodie, Esq.(10)
|
|||||||||
Former
Executive Vice
|
2006
|
$223,600
|
$170,341
|
-
|
-
|
$3,480
|
(12) | ||
Prseident
and Chief Legal
|
2005
|
215,000
|
75,000
|
-
|
45,000
|
3,663
|
(12) | ||
Officer
|
2004
|
205,961
|
125,000
|
-
|
60,000
|
(11) |
5,187
|
(12) | |
Scott
T. Massie(13)
|
|||||||||
Former
Executive Vice
|
2006
|
$260,000
|
$100,000
|
-
|
-
|
$7,615
|
(14) | ||
President
and Chief
|
2005
|
250,000
|
93,750
|
-
|
67,500
|
7,384
|
(14) | ||
Operating
Officer
|
2004
|
197,482
|
80,000
|
-
|
40,000
|
6,884
|
(14) |
(1)
|
In
February 2001, the Company made a loan to Mr. Richards in the
amount of
$3.0 million to avoid the necessity of Mr. Richards selling
shares of the
Company’s stock during periods of market volatility, given his position
with the Company. At the time the loan was made, it was viewed
to be in
the best interests of the Company and its stockholders. In
February 2006,
Mr. Richarsd tendered approximately $1.15 million in stock
to the Company
in partial payment of the loan, which included approximately
$0.8 million
of interest. Later that same month, the Compensation Committee
forgave the
remaining balance of the loan of $2.7 million and Mr. Richards
agreed to
pay all income taxes incurred as a result of such loan forgiveness.
The
Company estimated that Mr. Richards’ tax liability was approximately $1.3
million.
|
(2)
|
Amounts
shown consist of life insurance premiums.
|
(3)
|
In
June 2007, Dr. Stall resigned from the Company.
|
(4)
|
In
November 2004, the Compensation Committee forgave a loan made
in 1994 by
the Company to Dr. Stall in the amount of $16,750. In light
of Dr. Stall’s
service to the Company, the Compensation Committee cancelled
the loan
through a bonus in the amount of $28,304, which includes repayment
of the
loan and additional cash to cover
taxes.
|
14
(5)
|
Amounts
shown for fiscal year 2006 consist of life insurance premiums of
$384 and
EMCORE’s matching contributions under its 401(k) plan of $7,294, which are
made in EMCORE common stock. Amounts shown for fiscal year 2005 consist
of
life insurance premiums of $384 and EMCORE’s matching contributions under
its 401(k) plan of $7,000, which are made in EMCORE common stock.
Amounts
shown for fiscal year 2004 consist of life insurance premiums of
$384 and
EMCORE’s matching contributions under its 401(k) plan of $7,966, which are
made in EMCORE common stock.
|
(6)
|
In
February 2007, Mr. Werthan resigned from the Company.
|
(7)
|
In
November 2004, the Compensation Committee forgave a loan made in
1994 by
the Company to Mr. Werthan in the amount of $13,450. In light of
Mr.
Werthan’s past and continued service to the Company, the Compensation
Committee cancelled the loan through a bonus in the amount of $22,123,
which includes repayment of the loan and additional cash to cover
taxes.
|
(8)
|
In
October 2006, Mr. Werthan voluntarily surrendered all rights to the
80,000
unexercised stock options granted during fiscal 2004, as they have
been
identified as misdated during fiscal year 2007.
|
(9)
|
Amounts
shown for fiscal year 2006 consist of life insurance premiums of
$384 and
EMCORE’s matching contributions under its 401(k) plan of $6,848, which are
made in EMCORE common stock. Amounts shown for fiscal year 2005
consist of life insurance premiums of $384 and EMCORE’s matching
contributions under its 401(k) plan of $5,579, which are made in
EMCORE
common stock. Amounts shown for fiscal year 2004 consist of life
insurance
premiums of $384 and EMCORE’s matching contributions under its 401(k) plan
of $6,286, which are made in EMCORE common stock.
|
(10)
|
In
April 2007, Mr. Brodie resigned from the Company.
|
(11)
|
In
October 2006, Mr. Brodie voluntarily surrendered all rights to the
60,000
unexercised stock options granted during fiscal 2004, as they have
been
identified as misdated during fiscal year 2007.
|
(12)
|
Amounts
shown for fiscal year 2006 consist of life insurance premiums of
$384 and
EMCORE’s matching contributions under its 401(k) plan of $3,096, which are
made in EMCORE common stock. Amounts shown for fiscal year 2005
consist of life insurance premiums of $384 and EMCORE’s matching
contributions under its 401(k) plan of $3,279, which are made in
EMCORE
common stock. Amounts shown for fiscal year 2004 consist of life
insurance
premiums of $374 and EMCORE’s matching contributions under its 401(k) plan
of $4,813, which are made in EMCORE common stock.
|
(13)
|
In
December 2006, Mr. Massie resigned from the Company.
|
(14)
|
Amounts
shown for fiscal year 2006 consist of life insurance premiums of
$384 and
EMCORE’s matching contributions under its 401(k) plan of $7,231, which are
made in EMCORE common stock. Amounts shown for fiscal year 2005
consist of life insurance premiums of $384 and EMCORE’s matching
contributions under its 401(k) plan of $7,000, which are made in
EMCORE
common stock. Amounts shown for fiscal year 2004 consist of life
insurance
premiums of $384 and EMCORE’s matching contributions under its 401(k) plan
of $6,500, which are made in EMCORE common
stock.
|
15
OPTION GRANTS IN FISCAL 2006
There
were no options granted to the Named Executive Officers during fiscal
2006.
AGGREGATED
OPTION EXERCISES IN FISCAL 2006
AND YEAR-END OPTION VALUES
AND YEAR-END OPTION VALUES
The
following table sets forth the number of shares acquired by the Named Executive
Officers upon options exercised during fiscal 2006 and the value thereof,
together with the number of exercisable and unexercisable options held
by the
Named Executive Officers on September 30, 2006 and the aggregate gains
that
would have been realized had these options been exercised on September
30, 2006,
even though such options had not been exercised by the Named Executive
Officers.
Total
Number of Unexercised
Options
at
September
30, 2006(2)
|
Value
of Unexercised
In-the-Money Options at September
30, 2006(3)
|
||||||||||
Name
|
Shares
Acquired
On
Exercise(1)
|
Value
Realized
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||
Reuben
F. Richards, Jr.
|
267,500
|
(4)
|
$847,450
|
286,250
|
186,250
|
$306,763
|
$494,263
|
||||
Richard
A. Stall
|
164,620
|
$536,405
|
198,750
|
58,750
|
$69,250
|
$166,625
|
|||||
Thomas
G. Werthan
|
37,546
|
$148,531
|
265,000
|
(5)
|
85,000
|
(6) |
$179,350
|
(5) |
$244,100
|
(6) | |
Howard
W. Brodie, Esq.
|
122,500
|
(7)
|
$192,023
|
68,750
|
(8)
|
33,750
|
$176,175
|
$84,375
|
|||
Scott
T. Massie
|
60,000
|
$359,800
|
26,876
|
70,625
|
$75,088
|
$192,363
|
(1)
|
A
total of 652,166 options were exercised by Named Executive Officers
in
fiscal 2006. This includes 162,500 options that were subsequently
identified as misdated as a result of the stock option review
discussed in
the Explanatory Note immediately preceding Part I of the Company’s Annual
Report on Form 10-K for fiscal 2006. The gains recognized by
Mr. Richards
and Mr. Brodie, as a result of the misdated options, were paid
back to the
Company in October 2006. See notes (4) and (7) below.
|
|
(2)
|
|
This
represents the total number of shares subject to stock options
held by
each Named Executive Officer at September 30, 2006. These options
were
granted on various dates during the fiscal years 1997 through
2005 and
includes 503,750 exercisable and 121,250 unexercisable shares
subject to
stock options that were subsequently identified as
misdated.
|
(3)
|
These
amounts represent the difference between the exercise price of
the stock
options and the closing price of the Company’s Common Stock on September
29, 2006 for all the in-the-money options held by each Named
Executive
Officer. The in-the-money stock option exercise prices range
from $2.63 to
$5.10.
|
|
(4)
|
Includes
192,500 shares acquired upon the exercise of stock options subsequently
identified as misdated. In October 2006, Mr. Richards voluntarily
tendered
payment of $166,625, representing the entire benefit from his
exercise and
sale of these misdated stock options.
|
|
(5)
|
Includes
187,500 options identified as misdated during fiscal year 2007,
which had
a value of $131,600. Mr. Werthan voluntarily surrendered all
rights to
these options in October 2006.
|
|
(6)
|
Includes
40,000 options identified as misdated during fiscal year 2007,
which had a
value of $131,600. Mr. Werthan voluntarily surrendered all rights
to these
options in October 2006.
|
|
(7)
|
Includes
42,500 shares acquired upon the exercise of stock options subsequently
identified as misdated. In October 2006, Mr. Brodie voluntarily
tendered
payment of $96,668, representing the entire benefit received
from 42,500
stock options exercised during fiscal year 2006 and 15,000 stock
options
exercised prior to fiscal year 2006.
|
|
(8)
|
Includes
57,500 options identified as misdated during fiscal year 2007,
which had a
value of $148,050. Mr. Brodie voluntarily surrendered all rights
to these
options in October 2006.
|
|
16
EMPLOYMENT
CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
AND CHANGE-IN-CONTROL ARRANGEMENTS
Agreements
with Named Executive Officers
The
Company has entered into agreements with certain Named Executive Officers
in
connection with their departures from the Company, as described more fully
below.
·
|
On
December 19, 2006, the Company entered into an agreement and
release with
Mr. Scott Massie specifying his severance benefits and releasing
the
Company from certain claims. Pursuant to the terms of the agreement,
the
Company paid Mr. Massie $310,000 (equal to 62 weeks of his salary),
less
applicable withholdings and deductions, in a lump-sum payment
on August 6,
2007. Additionally, Mr. Massie elected to continue coverage under
the
Company’s health plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), and the Company paid
$6,029 in COBRA premiums.
|
·
|
On
February 8, 2007, the Company entered into a severance agreement
with Mr.
Thomas Werthan specifying his severance benefits. In accordance
with the
Company’s Severance Policy adopted in 2004 (the “Severance Policy”), under
the terms of the severance agreement the Company paid Mr. Werthan
$387,040
(equal to 82 weeks of his salary), less applicable tax withholdings
and
deductions, in a lump-sum payment on September 14, 2007. Additionally,
Mr.
Werthan elected COBRA continuation coverage under the Company’s health
plans and $7,235 was deducted from Mr. Werthan’s lump sum severance
payment, which represents the amount of Mr. Werthan’s portion of the COBRA
premiums. In connection with Mr. Werthan’s resignation in February 2007
and pursuant to the terms of the promissory note, the Board of
Directors
forgave his $82,000 loan with the Company. Mr. Werthan was responsible
for
the personal taxes related to the loan
forgiveness.
|
·
|
On
April 17, 2007, the Company entered into a severance agreement
with Mr.
Howard Brodie. In accordance with the Severance Policy, under
the terms of
the severance agreement, the Company paid Mr. Brodie $313,939
(equal to 68
weeks of his salary plus automobile expenses), less applicable
tax
withholdings and deductions, in a lump-sum payment on November
1, 2007.
Additionally, Mr. Brodie elected to continue coverage under the
Company’s
health plans pursuant to COBRA and $6,431 was deducted from Mr.
Brodie’s
lump sum severance payment, which represents the amount of Mr.
Brodie’s
portion of the COBRA premiums. The Company also paid Mr. Brodie
$55,341,
less applicable withholdings and deductions, representing the
amount
earned by Mr. Brodie under the Company’s 2006 Executive Bonus
Plan.
|
17
·
|
On
June 25, 2007, the Company entered into a severance agreement
with Dr.
Richard Stall. In accordance with the Company’s Severance Policy, under
the terms of the severance agreement, the Company will pay Dr.
Stall
$470,400 (equal to 98 weeks of his salary), less applicable tax
withholdings and deductions, in a lump-sum payment to be paid
on January
2, 2008. Additionally, Dr. Stall elected to continue coverage
under the
Company’s health plans pursuant to COBRA. Pursuant to Mr. Stall’s
severance agreement, the Company will pay the portion of Dr.
Stall’s COBRA
premiums, up to a maximum of 98 weeks, equal to the amount that
the
Company would have otherwise paid for health insurance coverage
if Mr.
Stall were an active employee of the Company during such time.
Also, until
the lump sum severance payment is made, the Company will pay
Mr. Stall’s
portion of the COBRA premiums, which total amount of premiums
will then be
deducted from Mr. Stall’s lump sum severance
payment.
|
Agreements
with Other Executive Officers
In
connection with Dr. Hong Hou’s appointment as President and Chief Operating
Officer of the Company in December 2006, Dr. Hou’s annual base salary was
increased from $227,000 to $400,000. He also became eligible for the Company’s
2007 Executive Bonus Plan providing him the opportunity to earn a bonus
equal to
80% of his base salary based on both Company-wide performance and individual
performance as determined by the Compensation Committee. Additionally,
the
Compensation Committee granted Dr. Hou options to purchase 245,000 shares
of
Common Stock under the Company’s 2000 Stock Option Plan (the “2000 Plan”) at an
exercise price of $5.76 per share, which was the fair market value (as
defined
in the 2000 Plan) of a share of Common Stock on December 14, 2006, the
date of
the option grant to Dr. Hou. The Compensation Committee also approved an
additional grant of options to purchase 255,000 shares Common Stock to
be made
in calendar year 2007 subject to compliance with the provisions of the
2000
Plan. The exercise price of the options to be granted in 2007 will be the
fair
market value of a share of Common Stock on the grant date in 2007. The
initial
option grant for 245,000 shares vested on the date of grant, December 14,
2006.
The options to be granted in 2007 will vest in four equal installments
over four
years with the first 25 percent vesting in 2008 on the one-year anniversary
of
the date of grant, and are subject to the terms and conditions of the 2000
Plan.
18
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
From
time
to time, prior to July 2002, EMCORE loaned money to certain of its executive
officers and directors. Pursuant to due authorization from EMCORE's Board
of
Directors, EMCORE loaned $3.0 million to Mr. Reuben Richards, the Chief
Executive Officer in February 2001 (“The Note”). The Note matured on February
22, 2006 and bore interest compounded at a rate of (a) 5.18% per annum
through
May 23, 2002 and (b) 4.99% from May 24, 2002 through maturity. All interest
was
payable at maturity. On February 13, 2006, Mr. Richards tendered 139,485
shares
of Common Stock in partial payment of the Note. Principal plus accrued
interest
on the Note totaled approximately $3.83 million. The Compensation Committee
of
EMCORE’s Board of Directors specifically approved the tender of shares, as
permitted by the Note, at the price of $8.25 per share, which was the closing
price of Common Stock on February 13, 2006. On February 28, 2006, the
Compensation Committee resolved to forgive the remaining balance of the
Note
(approximately $2.7 million), effective as of March 10, 2006. Mr. Richards’
tender of Common Stock on February 13, 2006 was accepted as full payment
and
satisfaction of the Note, including principal and accrued interest.
Additionally, the Compensation Committee resolved to accelerate and vest
the
final tranche of each of the incentive stock option grants made in fiscal
2004
and 2005 to Mr. Richards, which constitute a combined accelerated vesting
of
111,250 shares. In considering this matter, the Compensation Committee
carefully
considered Mr. Richards’ past performance, including the recent appreciation in
the stock price and EMCORE’s improved financial performance, the facts and
circumstances surrounding the loan, Mr. Richards’ current compensation, Mr.
Richards’ willingness to repay a portion of the Note and all resulting taxes
totaling $1.3 million, and the desire to retain Mr. Richards’ continued service
to EMCORE. EMCORE recorded a one-time charge of approximately $2.7 million
in
March 2006 for the partial forgiveness of the Note, plus a charge of
approximately $0.3 million in stock-based compensation expense under SFAS
123(R)
relating to the accelerated ISO grants.
In
addition, pursuant to due authorization of EMCORE's Board of Directors,
EMCORE
also loaned $85,000 to Mr. Werthan, the former Chief Financial Officer,
in
December 1995. This loan did not bear interest and provided for offset
of the
loan via bonuses payable to Mr. Werthan over a period of up to 25 years.
In
connection with Mr. Werthan’s resignation in February 2007 and pursuant to the
terms of the promissory note, the Board of Directors forgave the remaining
portion of his outstanding loan that totaled $82,000. Mr. Werthan was
responsible for the personal taxes related to the loan forgiveness.
The
remaining related party receivable balance of approximately $121,000 as
of
September 30, 2006 relates to multiple interest bearing loans from EMCORE
to an
officer (who is not an executive officer) that were made during 1997 through
2000 and are payable on demand. These loans, including accrued interest,
were
paid back to the Company in December 2006.
During
the first quarter of fiscal 2005, pursuant to due authorization of the
Company’s
Compensation Committee, EMCORE wrote-off $34,000 of notes receivable that
were
issued in 1994 to certain EMCORE employees.
19
STOCK
PERFORMANCE GRAPH
The
following Stock Performance Graph does not constitute soliciting material,
and
should not be deemed filed or incorporated by reference into any other
Company
filing under the Securities Act or the Exchange Act, except to the extent
the
Company specifically incorporates this Stock Performance Graph by reference
therein.
The
following graph and table compares the cumulative total shareholders’ return on
the Company’s Common Stock for the five-year period from September 30, 2001
through September 30, 2006 with the cumulative total return on the NASDAQ
Stock
Market Index and the NASDAQ Electronic Components Stocks Index (SIC Code
3674).
The comparison assumes $100 was invested on September 30, 2001 in the Company’s
Common Stock. The Company did not declare, nor did it pay, any dividends
during
the comparison period.
COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among
EMCORE Corporation, The NASDAQ Composite Index
And
The
NASDAQ Electronic Components Index
9/01
|
9/02
|
9/03
|
9/04
|
9/05
|
9/06
|
|
EMCORE
Corporation
|
100.00
|
17.76
|
34.35
|
23.01
|
71.50
|
69.16
|
NASDAQ
Composite
|
100.00
|
81.95
|
123.82
|
132.99
|
152.97
|
164.09
|
NASDAQ
Electronic Components
|
100.00
|
66.58
|
105.38
|
106.99
|
127.83
|
126.75
|
20
OWNERSHIP
OF SECURITIES
SECURITY
OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth as of August 31, 2007 certain information
regarding
the beneficial ownership of voting Common Stock by (i) each person or
“group”
(as that term is defined in Section 13(d)(3) of the Exchange Act) known
by the
Company to be the beneficial owner of more than 5% of the voting Common
Stock,
(ii) each Named Executive Officer of the Company, (iii)
each director and nominee, and (iv) all directors and executive officers
as a
group (10 persons). Except as otherwise indicated, the Company believes,
based
on information furnished by such persons, that each person listed below
has the
sole voting and investment power over the shares of Common Stock shown
as
beneficially owned, subject to common property laws, where applicable.
Shares
beneficially owned include shares and underlying warrants and options
exercisable within sixty (60) days of August 31, 2007. Unless otherwise
indicated, the address of each of the beneficial owners is c/o EMCORE
Corporation, 10420 Research Road, SE,
Albuquerque, NM 87123.
Name
|
Shares
Beneficially
Owned
|
Percent
of
Common
Stock
|
Robert
Bogomolny
|
86,972
|
*
|
John
Gillen
|
29,242
|
*
|
Robert
Louis-Dreyfus(1)
|
3,303,259
|
6.5%
|
Thomas
J. Russell(2)
|
5,023,791
|
9.8%
|
Charles
Scott(3)
|
42,409
|
*
|
Reuben
F. Richards, Jr.(4)
|
1,052,054
|
2.0%
|
Richard
A. Stall(5)
|
284,780
|
*
|
Thomas
G. Werthan
|
16,266
|
*
|
Howard
W. Brodie, Esq.(6)
|
11,250
|
*
|
Scott
T. Massie(7)
|
302
|
*
|
All
directors and executive officers as a group (11 persons)(8)
|
10,300,187
|
19.8%
|
Alexandra
Global Master Fund Ltd.(9)
|
3,222,503
|
6.3%
|
AMVESCAP
PLC(10)
|
4,000,005
|
7.8%
|
Kern
Capital Management, LLC(11)
|
2,691,300
|
5.3%
|
Koop
Investment Advisors, LLC(12)
|
4,082,020
|
8.0%
|
The
Quercus Trust(13)
|
4,926,745
|
9.7%
|
*
|
Less
than 1.0%
|
|
(1)
|
All
3,303,259 shares held by Gallium Enterprises Inc. Mr. Robert
Louis-Dreyfus, after serving as a director of the Company since
March 1997
resigned his seat on the Company’s Board of Directors on October 30,
2007.
|
|
(2)
|
Includes 2,280,035 shares held by The AER Trust. | |
(3)
|
Includes
30,409 shares owned by Kircal, Ltd.
|
|
(4)
|
Includes
options to purchase 397,500 shares and 175,000 shares held
by
spouse.
|
|
(5)
|
Includes
options to purchase 222,500 shares and 548 shares held by 401(k)
plan.
|
|
(6)
|
Includes
options to purchase 11,250 shares.
|
|
(7)
|
Shares
held by 401(k) plan.
|
21
(8)
|
Includes
options to purchase 1,012,729 shares beneficially owned by
Reuben
Richards, Jr., Chief Executive Officer; Hong Hou, President
and Chief
Operating Officer; Adam Gushard, Interim Chief Financial Officer;
and John
Iannelli, Chief Technology Officer. No options to purchase
shares were beneficially owned by the six directors (including
Thomas
Werthan), or Keith Kosco, Chief Legal Officer. Richard Stall,
Howard Brodie, and Scott Massie resigned from the Company prior
to August
31, 2007 and are not included in this total.
|
|
(9)
|
This
information is based solely on information contained in a Schedule
13G
filed with the SEC on February 14, 2007, by Alexandra Global
Master Fund
Ltd. (“Alexandra Global”). Alexandra Investment Management, LLC
(“Alexandra Management,” which is investment advisor to Alexandra Global)
and Mikhail A. Filimonov (“Filimonov”), Chairman, Chief Executive Officer,
Managing Member, and Chief Investment Officer of Alexandra
Management may
be deemed to share voting and dispositive power with respect
to the shares
owned by Alexandra Global by reason of their respective relationships
with
Alexandra Global. Alexandra Management and Filimonov disclaim
beneficial ownership of all such shares. The address of
Alexandra Global is Citco Building, Wickams Cay, P.O. Box 662,
Road Town,
Tortola, British Virgin Islands. The address of Alexandra
Management and Filimonov is 767 Third Avenue, 39th Floor, New
York, New
York 10017.
|
|
(10)
|
This
information is based solely on information contained in a Schedule
13G
filed with the SEC on February 14, 2007, by AMVESCAP PLC, a
U.K. entity,
on behalf of itself and PowerShares Capital Management LLC,
a U.S. entity
(“PowerShares”). The shares reported for AMVESCAP PLC represent the total
shares held by AMVESCAP PLC through PowerShares. The address of
AMVESCAP PLC is 30 Finsbury Square, London EC2A 1AG,
England. The address of AMVESCAP PLC is 30 Finsbury Square,
London EC2A 1AG, England.
|
|
(11)
|
This
information is based solely on information contained in a Schedule
13G
filed with the SEC on February 14, 2007, by Kern Capital Management,
LLC
(“KCM”), Robert E. Kern, Jr. (“R. Kern,” controlling member of KCM), and
David G. Kern (“D. Kern,” controlling member of KCM). As
controlling members of KCM, R. Kern and D. Kern may be deemed
the
beneficial owners of the shares owned by KCM. R. Kern and D.
Kern expressly disclaim beneficial ownership of all such
shares. The address of KCM, R. Kern, and D. Kern is 114 West
47th
Street, Suite 1926, New York, New York 10036.
|
|
(12)
|
This
information is based solely on information contained in a Schedule
13D
filed with the SEC on July 17, 2007, by Kopp Investment Advisors,
LLC
(“KIA”), a wholly-owned subsidiary of Kopp Holding Company, LLC (“KH
LLC”), which is controlled by Mr. LeRoy C. Kopp (“L. Kopp”) through Kopp
Holding Company (collectively, the “Kopp Parties”). KIA reports
beneficially owning a total of 3,866,520 shares including
having sole voting power over 3,866,520 shares and shared
dispositive power over 2,641,020 shares. KH LLC reports
beneficially owning a total of 3,866,520 shares. Kopp Holding
Company reports beneficially owning a total of 3,866,520
shares. L. Kopp reports beneficially owning a total of
4,082,020 shares, including having sole dispositive power over
1,441,000
shares. The address of the Kopp Parties is 7701 France Avenue
South, Suite 500, Edina, Minnesota 55435. The address of Kopp
Investment
Advisors, LLC is 7701 France Avenue South, Suite 500, Edina,
Minnesota
55435.
|
|
(13)
|
This
information is based solely on information contained in a Schedule
13D
filed with the SEC on August 24, 2007, by The Quercus Trust,
David Gelbaum
and Monica Chavez Gelbaum. David Gelbaum, Trustee, The Quercus
Trust, reports beneficially owning a total of 4,926,745 shares
and sharing
voting and dispositive power with respect to such
shares. Monica Chavez Gelbaum, Trustee, The Quercus Trust,
reports beneficially owning a total of 4,926,745 shares and
sharing voting
and dispositive power with respect to such shares. The address
of David
Gelbaum, an individual, as co-trustee of the Quercus Trust
and Monica
Chavez Gelbaum, an individual, as co-trustee of the Quercus
Trust is 2309
Santiago Drive, Newport Beach, California
92660.
|
22
EQUITY
COMPENSATION PLAN INFORMATION
The
following table sets forth, as of September 30, 2006, the number of securities
outstanding under each of EMCORE’s stock option plans, the weighted average
exercise price of such options, and the number of options available for
grant
under such plans:
Plan
Category
|
Number
of
securities
to
be issued
upon
exercise
of
outstanding
options,
warrants
and
rights
|
Weighted
average
exercise
price
of
outstanding
options,
warrants
and
rights
|
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column
(a))
|
(a)
|
(b)
|
(c)
|
|
Equity
compensation plans approved by security holders
|
6,230,615
|
$5.49
|
1,229,128
|
Equity
compensation plans not approved by security holders
|
1,920
|
0.23
|
-
|
Total
|
6,232,535
|
$5.49
|
1,229,128
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based
on
the Company’s review of copies of all disclosure reports filed by directors and
executive officers of the Company pursuant to Section 16(a) of the Exchange
Act,
as amended, and written representations furnished to the Company, the Company
believes that there was compliance with all filing requirements of Section
16(a)
applicable to directors and executive officers of the Company during the
fiscal
year 2006, with the exception of November 8, 2005 filings for Messrs. Bogomolny,
Gillen, and Scott, and July 11, 2006 filings for Messrs. Bogomolny, Gillen,
and
Scott, which were reported one day late.
23
PROPOSAL
II: APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte
& Touche LLP, an independent registered public accounting firm, audited the
financial statements of EMCORE Corporation for the fiscal year ending September
30, 2006. The Audit Committee and the Board of Directors have selected
Deloitte
& Touche LLP as the Company’s independent registered public accounting firm
for the fiscal year ending September 30, 2007. The ratification of the
appointment of Deloitte & Touche LLP will be determined by the vote of the
holders of a majority of the shares present in person or represented by
proxy at
the Annual Meeting. If this appointment of Deloitte & Touche LLP is not
ratified by shareholders, the Board of Directors will appoint another
independent registered public accounting firm whose appointment for any
period
subsequent to the Annual Meeting will be subject to the approval of shareholders
at that meeting.
Representatives
of Deloitte & Touche LLP are expected to attend the Annual Meeting. They
will have the opportunity to make a statement if they desire to do so,
and are
expected to be available to answer appropriate questions.
FISCAL
2006 & 2005 AUDITOR FEES AND SERVICES
Deloitte
& Touche LLP was the independent registered public accounting firm that
audited EMCORE’s financial statements for fiscal 2006 and 2005. In addition to
performing the audit services for fiscal 2006 and 2005, the Company also
retained Deloitte & Touche LLP to perform other audit related services
during these periods. There were no non-audit services performed by Deloitte & Touche LLP
during these periods.
The
aggregate fees billed by Deloitte & Touche LLP in connection with audit and
non-audit services rendered for fiscal 2006 and 2005 are as
follows:
Fiscal
2006
|
Fiscal
2005
|
|||
Audit
fees(1)
|
$1,170,000
|
$638,000
|
||
Audit-related
fees(2)
|
34,000
|
28,000
|
||
Tax
fees(3)
|
-
|
-
|
||
All
other fees(4)
|
-
|
-
|
||
Total
|
$1,204,000
|
$666,000
|
(1)
|
Represents
fees for professional services rendered in connection with
the audit of
our annual financial statements, reviews of our quarterly financial
statements, and advice provided on accounting matters that
arose in
connection with audit services. Fiscal 2006 included $488,000
of audit
fees for professional services rendered in connection with
the audit of
our internal controls over financial reporting (SOX 404
compliance).
|
(2)
|
Represents
fees for professional services related to the audits of our
employee
benefit plan and other statutory or regulatory filings.
|
(3)
|
Not
applicable.
|
(4)
|
Not
applicable.
|
24
REPORT OF THE AUDIT COMMITTEE
The
following Report of the Audit Committee does not constitute soliciting
material,
and should not be deemed filed or incorporated by reference into any other
Company filing under the Securities Act or the Exchange Act, except to
the
extent the Company specifically incorporates this Report of the Audit Committee
by reference therein.
The
Company has a separately-designated standing audit committee (the “Audit
Committee”) established in accordance with Section 3(a)(58)(A) of the Exchange
Act. The Audit Committee currently consists of Messrs. Scott, Gillen,
and
Bogomolny. Each member of the audit committee is currently an independent
director within the meaning of NASD Rule 4200(a)(15). The Board of Directors
has
determined that Messrs. Scott and Gillen are each audit committee financial
experts. The Audit Committee met 8 times in fiscal 2006. The Audit Committee
performs the functions set forth in the EMCORE Corporation Audit Committee
Charter, which has been adopted by the Board of Directors. The Audit
Committee
Charter is available on our website at www.emcore.com.
The
Audit
Committee has reviewed and discussed the Company’s audited financial statements
for fiscal 2006 with management of the Company. The Audit Committee has
discussed with the Company’s independent registered public accounting firm the
matters required to be discussed by SAS 61 (Codification of Statements
of
Auditing Standards). Furthermore, the Audit Committee has reviewed management’s
assessment of the effectiveness of the Company’s internal controls over
financial reporting, and has reviewed the opinion of the Company’s independent
registered public accounting firm regarding such assessment and the
effectiveness of the Company’s internal controls over financial
reporting.
The
Audit
Committee has received the written disclosures and letter from the Company’s
independent registered public accounting firm required by Independence
Standards
Board Standard No. 1, and has discussed with such accounting firm the
independence of such accounting firm. Based on the foregoing review and
discussions, the Audit Committee recommended to the Board of Directors
that the
Company’s audited financial statements be included in the Company’s Annual
Report on Form 10-K for fiscal 2006, which was filed on November 1,
2007.
AUDIT
COMMITTEE
Charles Thomas Scott, Chairman Robert Bogomolny John Gillen |
25
Audit
Committee Pre-Approval and Procedures
The
Audit
Committee has determined that the provision of non-audit services by
Deloitte
& Touche LLP is compatible with maintaining the independence of Deloitte
& Touche LLP. In accordance with its charter, the Audit Committee approves
in advance all audit and non-audit services to be rendered by Deloitte
&
Touche LLP. In considering whether to approve such services, the Audit
Committee
will consider the following:
·
|
Whether
the services are performed principally for the Audit
Committee
|
·
|
The
effect of the service, if any, on audit effectiveness or on
the quality
and timeliness of the Company’s financial reporting
process
|
·
|
Whether
the service would be performed by a specialist (e.g. technology
specialist) and who also provide audit support and whether
that would
hinder independence
|
·
|
Whether
the service would be performed by audit personnel and, if so,
whether it
will enhance the knowledge of the Company’s
business
|
·
|
Whether
the role of those performing the service would be inconsistent
with the
auditor’s role (e.g., a role where neutrality, impartiality and auditor
skepticism are likely to be
subverted)
|
·
|
Whether
the audit firm’s personnel would be assuming a management role or creating
a mutuality of interest with
management
|
·
|
Whether
the auditors would be in effect auditing their own
numbers
|
·
|
Whether
the project must be started and completed very
quickly
|
·
|
Whether
the audit firm has unique expertise in the service,
and
|
·
|
The
size of the fee(s) for the non-audit
service(s).
|
During
fiscal 2006, all professional services provided Deloitte & Touche LLP were
pre-approved by the Audit Committee in accordance with this policy.
RECOMMENDATION
OF THE BOARD OF DIRECTORS
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM UNDER PROPOSAL II.
26
PROPOSAL
III: TO APPROVE EMCORE’S
2007
DIRECTORS’ STOCK AWARD PLAN
We
are
asking shareholders to approve the Company’s 2007 Directors’ Stock Award Plan
(the “2007 Plan”). The 2007 Plan has been approved by the Company’s Board of
Directors, but will not become effective unless also approved by the
shareholders.
The
purposes of the 2007 Plan are (a) to attract and retain highly qualified
individuals to serve as directors of the Company, (b) to increase non-employee
directors’ stock ownership in the Company and (c) to relate non-employee
directors’ compensation more closely to the Company’s performance and its
shareholders’ interests.
The
2007
Plan will replace the Company’s Directors’ Stock Award Plan that was approved by
shareholders on March 6, 1997 (the “1997 Plan”). No new awards may be granted
under the 1997 Plan.
The
following is brief summary of the 2007 Plan. The full text of the 2007
Plan is
included as Appendix A to this Proxy Statement.
Under
the
2007 Plan, the Company will pay each non-employee director an annual
stock award
amount equal to the sum of (a) $3,500 for each meeting of the Board of
Directors
attended by such non-employee director during the year, (b) $500 for
each
meeting of a committee of the Board of Directors attended by such non-employee
director during the year and (c) an additional $500 for each meeting
of a
committee of the Board of Directors at which such non-employee director
served
as chairman.
Each
non-employee director will receive, one month after the beginning of
each year,
the number of shares of Common Stock determined by dividing his or her
annual
stock award amount by the closing price of the Common Stock on such date.
The
number of shares distributed to each non-employee director will be rounded
down
to the nearest whole number and any fractional shares that would otherwise
have
been paid in Common Stock will be paid in cash based upon the closing
price of
the Common Stock on the grant date. A non-employee director may forego
the
portion of his or her annual stock award amount that relates to any one
or more
meetings of the Board of Directors or committee thereof by giving irrevocable
written notice to such effect to the Secretary of the Company 30 days
prior to
the date of such meeting.
The
2007
Plan may be amended or terminated at any time by action of the Board
of
Directors. However, the Company will seek shareholder approval for any
change to
the extent required by applicable law. NASDAQ Marketplace Rule 4350(i)
requires
the Board of Directors to obtain shareholder approval when, among other
things,
a stock purchase plan is to be materially amended.
No
director who is an employee of the Company receives compensation for
services
rendered as a director, and only the Company’s five non-employee directors will
be eligible to participate in the 2007 Plan. The amount of Common Stock
payable
under the 2007 Plan has not yet been determined, but it is anticipated
that all
of our non-employee directors will receive Common Stock under the 2007
Plan.
27
RECOMMENDATION
OF THE BOARD OF DIRECTORS
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
APPROVAL OF THE 2007 DIRECTORS’ STOCK AWARD PLAN IN ACCORDANCE WITH PROPOSAL
III.
28
GENERAL
MATTERS
Annual
Report on Form 10-K and Financial Statements
The
Company’s 2006 Annual Report on Form 10-K is being mailed to the Company’s
shareholders together with this Proxy Statement. Additional exhibits
to the Form
10-K not included in this mailing will be furnished upon written request
directed to the Company at 10420 Research Road, SE, Albuquerque, New
Mexico
87123, Attention: Investor Relations. The Company’s 2006 Annual Report on Form
10-K (including exhibits thereto) and this Proxy Statement are also available
on
the Company’s website (www.emcore.com).
Shareholder
Proposals
Shareholder
proposals intended to be presented at the 2008 Annual Meeting of Shareholders,
including nominations for the Company’s Board of Directors, must be received by
the Company a reasonable time before the Company begins to print and
send its
proxy materials for the 2008 Annual Meeting of Shareholders. Proposals
may be
mailed to the Company, to the attention of Keith J. Kosco, Secretary,
10420
Research Road, SE, Albuquerque, New Mexico 87123. Proposals must comply
with all
applicable SEC rules.
Shareholder
Communications with the Board
Shareholders
may communicate with the Company’s Board of Directors through its Secretary by
writing to the following address: Board of Directors, c/o Keith J. Kosco,
Secretary, EMCORE Corporation, 10420 Research Road, SE, Albuquerque,
New Mexico
87123. The Company’s Secretary will forward all correspondence to the Board of
Directors, except for junk mail, mass mailings, product complaints or
inquiries,
job inquiries, surveys, business solicitations or advertisements, or
patently
offensive or otherwise inappropriate material. The Company’s Secretary may
forward certain correspondence, such as product-related inquiries, elsewhere
within the Company for review and possible response.
Board
Attendance at Annual Meetings
The
Company strongly encourages members of the Board of Directors to attend
the
Company’s annual meeting of shareholders, and historically a majority have done
so. For example, 7 of 8 directors attended the 2005 annual meeting, and
7 of 8
directors attended the 2006 annual meeting.
Delivery
of Documents to Shareholders Sharing an Address
The
Company will deliver only one Annual Report and Proxy Statement to shareholders
who share a single address unless we have received contrary instructions
from
any shareholder at the address. In that case, we will deliver promptly
a
separate copy of the Annual Report and/or Proxy Statement. For future
deliveries, shareholders who share a single address can request a separate
copy
of the Company’s annual report and/or proxy statement. Similarly, if multiple
copies of the annual report and proxy statement are being delivered to
a single
address, shareholders can request a single copy of the annual report
and proxy
statement for future deliveries. To make a request, please write to Keith
J.
Kosco, Secretary, EMCORE Corporation, 10420 Research Road, SE, Albuquerque,
New
Mexico 87123.
29
Code
of Ethics
The
Company has adopted a code of ethics entitled “EMCORE Corporation Code of
Business Conduct and Ethics,” which is applicable to all employees, officers,
and directors of EMCORE. The full text of the Code of Business Conduct
and
Ethics is included with the Corporate Governance information available
on the
Company’s website (www.emcore.com). The Company intends to disclose any changes
in or waivers from its code of ethics by posting such information on
its website
or by filing a Form 8-K.
Other
Matters
The
Board
of Directors knows of no other business which will be presented at the
meeting.
If, however, other matters are properly presented, the persons named
in the
enclosed proxy will vote the shares represented thereby in accordance
with their
judgment on such matters.
By
Order
of the Board of Directors,
/s/ Keith J. Kosco
/s/ Keith J. Kosco
KEITH
J.
KOSCO
SECRETARY
SECRETARY
30
APPENDIX
A:
EMCORE
CORPORATION 2007 DIRECTORS’ STOCK AWARD PLAN
1.
The
purposes of the 2007 Directors' Stock Award Plan (the “Plan”) are (a) to attract
and retain highly qualified individuals to serve as Directors of EMCORE
Corporation (the “Corporation”), (b) to increase non-employee Directors' stock
ownership in the Corporation and (c)
to
relate non-employee Directors' compensation more closely to the Corporation's
performance and its shareholders' interest.
2.
The
Plan shall become effective upon its approval by the shareholders of
the
Corporation. It shall continue in effect for a term of ten (10) years
unless
sooner terminated under Section 7 of the Plan.
3.
“Plan
Year” shall mean each 12-month period beginning on January 1 and ending on
December 31.
4.
“Annual
Stock Award Amount” shall mean the amount of fees a non-employee Director will
be entitled to receive pursuant to the Plan for serving as a Director
in a
relevant Plan Year. The amount of each non-employee Director’s Annual Stock
Award Amount shall be determined by adding (A) $3,500 for each meeting
of the
Board of Directors attended by such non-employee Director during the
relevant
Plan Year, (B) $500 for each meeting of a committee of the Board of
Directors
attended by such non-employee Director during the relevant Plan Year
and (C) an
additional $500 for each meeting of a committee of the Board of Directors
at
which such non-employee Director served as Chairman.
5.
A
non-employee Director may forego the portion of his or her Annual Stock
Award
Amount that relates to any one or more meeting(s) of the Board of Directors
or
committee thereof by giving irrevocable written notice to such effect
to the
Secretary of the Corporation 30 days prior to the date of such
meeting.
6.
Each
non-employee Director shall receive, one month after the beginning
of each Plan
Year (or, if such date is not a business day, on the next succeeding
business
day) (the “Grant Date”), the number of shares of the Company’s common stock, no
par value per share (“Common Stock”) determined by dividing his or her Annual
Stock Award Amount by the closing price of the Common Stock as published
in the
Wall Street Journal (the “Fair Market Value”) on the Grant Date. The number of
shares distributed to each non-employee Director shall be rounded down
to the
nearest whole number, and any fractional shares that would otherwise
have been
paid in Common Stock shall be paid in cash based upon the Fair Market
Value of
the Common Stock on the Grant Date.
7.
This
Plan shall be construed in accordance with the laws of the State
of New Jersey
and may be amended or terminated at any time by action of the Board
of Directors
of the Corporation; provided, however, that the Corporation will seek
shareholder approval for any change to the extent required by applicable
law.
* * *
A-1
ANNUAL
MEETING OF SHAREHOLDERS OF
EMCORE
CORPORATION
December
3, 2007
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
Please
detach along perforated line and mail in the envelope provided.
■20230300000000000000
4
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120307
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THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” PROPOSALS 1 THROUGH
3.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE
IN BLUE OR BLACK INK AS SHOWN HERE
FOR | AGAINTS | ABSTAIN | ||||||
1.Election of Directors: | NOMINEES | 2. RATIFICATION OF DELOITTE & TOUCHE, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. | o |
o
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o
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o
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FOR
ALL NOMINEES
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○
Charles
Scott
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3.
TO APPROVE THE COMPANY'S 2007 DIRECTORS' STOCK
AWARD PLAN
|
o
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o
|
o
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||
o
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WITHHOLD
AUTHORITY FOR ALL NOMINEES
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○
Hong Q. Hou
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4.
Upon such other business as may properly come before the
Annual Meeting or
any adjournment thereof. In their discretion, the proxies
are authorized
to vote upon such other business as may properly come before
the Annual
Meeting, and any adjournments or postponements thereof.
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o
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FOR
ALL EXCEPT
(See
Instructions
|
|||||||
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||||||||
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here:● |
PLEASE
MARK, SIGN AND DATE THIS PROXYCARD AND PROMPTLY RETURN IT IN
THE ENVELOPE
PROVIDED. NO POSTAGE NECESSARY IF MAILED WITHIN THE UNITED
STATES.
|
|||||||
The
undersigned hereby acknowledges receipt of (i) the Notice of
Annual
Meeting, (ii) the Proxy Statement, and (iii) the Company’s 2006 Annual
Report to Shareholders.
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||||||||
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||||||||
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. |
o
|
Signature of Shareholder |
Date
|
Signature
of Shareholder
|
Date
|
||||
Note: Please
sign exactly as your name
or names appear on this Proxy. When shares are held jointly, each holder
should
sign. When signing as executor, administrator, attorney,
trustee or guardian, please give full title as such. If the signer is
a
corporation, please sign full corporate name by duly authorized officer,
giving
full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
■ |
■
|
EMCORE
CORPORATION
10420
Research Road, SE
Albuquerque,
New Mexico 87123
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints Reuben F. Richards, Jr., Adam W. Gushard
and Hong Q.
Hou, and each of them, as proxies for the undersigned, each with full
power of
substitution, for and in the name of the undersigned to act for the undersigned
and to vote, as designated on the reverse side of this proxy card, all
of the
shares of stock of the Company that the undersigned is entitled to vote
at the
2007 Annual Meeting of Shareholders of the Company, to be held on December
3,
2007 or at any adjournments or postponements thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED
“FOR” THE ELECTION OF ALL DIRECTOR NOMINEES LISTED IN PROPOSAL (1), “FOR” THE
RATIFICATION OF THE AUDITORS IN PROPOSAL (2), AND "FOR" THE APPROVAL
OF THE
COMPANY'S 2007 DIRECTORS' STOCK AWARD PLAN IN ACCORDANCE WITH PROPOSAL
(3).
(Continued
and to be signed on the reverse side)
■ |
14475
■
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