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
Filed
by
the Registrant þ
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by
a Party other than the Registrant o
Check
the
appropriate box:
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Preliminary
Proxy
Statement
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Confidential,
for Use
of the Commission Only (as permitted by Rule 14a-6(e)(2))
o
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):
þ
No
fee
required.
o
Fee
computed on table
below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee paid:
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o
Fee
paid previously
with preliminary materials.
o
Check
box if any part
of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or schedule
and
the date of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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EMCORE
CORPORATION
10420
Research Road, SE
Albuquerque,
New Mexico 87123
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON MONDAY, MARCH 31, 2008
To
our Shareholders:
The
2008
Annual Meeting of Shareholders (the “Annual Meeting”) of EMCORE Corporation (the
“Company”) will be held at 10:00 A.M. local time on Monday, March 31, 2008, at
the offices of Jenner & Block LLP located at 919 Third Avenue, New York, New
York for the following purposes:
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(1)
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To
elect three (3) members to the Company’s Board of
Directors;
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(2)
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To
ratify the selection of Deloitte & Touche LLP as the Company’s
independent registered public accounting firm for the fiscal year
ending
September 30, 2008;
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(3)
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To
vote on an amendment to the Company’s Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock
from 100 million to 200 million shares;
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(4)
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To
approve an increase in the number of shares available under the Company’s
2000 Stock Option Plan; and
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(5)
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To
transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements
thereof.
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The
Board
of Directors has fixed the close of business on February 25, 2008 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
KEITH
J.
KOSCO
SECRETARY
March
[__], 2008
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.
EMCORE
CORPORATION
PROXY
STATEMENT
TABLE
OF CONTENTS
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Page
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Information
Concerning Proxy
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1
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Purposes
of the Meeting
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2
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Outstanding
Voting Securities and Voting Rights
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2
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Proposal
I: Election of Directors
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3
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Directors
and Executive Officers
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4
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Recommendation
of the Board of Directors
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6
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Governance
of the Company
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7
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Director
Compensation
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11
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Compensation
Discussion and Analysis
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13
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EXECUTIVE
COMPENSATION
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21
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Compensation
Committee Report
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28
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Compensation
Committee Interlocks and Insider Participation
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28
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Ownership
of Securities
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29
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Security
Ownership of Certain Beneficial Owners and Management
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29
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Equity
Compensation Plan Information
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31
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Section
16(a) Beneficial Ownership Reporting Compliance
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31
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Proposal
II: Appointment of Independent Registered Public Accounting
Firm
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32
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Fiscal
2007 & 2006 Auditor Fees and Services
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32
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Report
of the Audit Committee
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33
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Recommendation
of the Board of Directors
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34
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Proposal
III: To Amend Our Restated Certificate of Incorporation to Increase the
Number of Authorized Shares of Common Stock
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35
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Recommendation
of the Board of Directors
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36
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Proposal
IV: To Approve an Increase in the Number of Shares Available
Under
EMCORE’s 2000 Stock Option Plan
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37
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Description
of Material Features of the 2000 Plan
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39
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Terms
of Options
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41
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Recommendation
of the Board of Directors
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44
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General
Matters
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45
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EMCORE
CORPORATION
10420
Research Road, SE
Albuquerque,
New Mexico 87123
ANNUAL
MEETING OF SHAREHOLDERS
MARCH
31, 2008
This
Proxy Statement is being furnished to shareholders of record of EMCORE
Corporation (“EMCORE”, “Company”, “we”, or “us”) as of February 25, 2008, in
connection with the solicitation on behalf of the Board of Directors of EMCORE
of proxies for use at the 2008 Annual Meeting of Shareholders (the “Annual
Meeting”) to be held at 10:00 A.M. local time, on March 31, 2008, at the offices
of Jenner & Block LLP located at 919 Third Avenue, New York, New York, or at
any adjournments thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders. This Proxy Statement and the enclosed proxy
card are first being sent to shareholders beginning on or about March 4, 2008.
Shareholders should review the information provided herein in conjunction with
the Company’s 2007 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:
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(1)
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To
elect three (3) members to the Company’s Board of
Directors;
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(2)
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To
ratify the selection of Deloitte & Touche LLP as the Company’s
independent registered public accounting firm for the fiscal year
ending
September 30, 2008;
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(3)
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To
vote on an amendment to the Company’s Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock
from 100 million to 200 million shares;
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(4)
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To
approve an increase in the number of shares available under the Company’s
2000 Stock Option Plan; and
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(5)
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To
transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements
thereof.
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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 amendment to the Company’s Restated Certificate of
Incorporation to increase the number of authorized shares; (4) FOR the increase
in the number of shares available under the Company’s 2000 Stock Option Plan;
and (5) 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 February 25, 2008 (the “Record Date”), the Company had
[____] 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.
Each proposal in this proxy statement will be approved if it receives a majority
of the votes present, either in person or by proxy, and entitled to vote at
the
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
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 A directors, Messrs. Russell, Richards and Bogomolny, are being proposed
for a three-year term (expiring in 2011) at this Annual Meeting. Messrs.
Russell, Richards and Bogomolny were elected in 2005 for terms that expire
in
2008.
The
shares represented by proxies that have been executed and returned 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:
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Name
and Other Information
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Age
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Class
and
Year
in
Which
Term Will Expire
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Principal
Occupation
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Served
as
Director
Since
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NOMINEES
FOR ELECTION AT THE 2008 ANNUAL MEETING
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Thomas
J. Russell (2)
(4)
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76
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Class
A
2008
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Chairman
of the Board, EMCORE Corporation
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1995
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Reuben
F. Richards, Jr.
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52
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Class
A
2008
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Chief
Executive Officer, EMCORE Corporation
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1995
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Robert
Bogomolny (1)
(3)
(4)
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69
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Class
A
2008
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President,
University
of Baltimore
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2002
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DIRECTORS
WHOSE TERMS CONTINUE
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Charles
Scott (1)
(2) (3)
(4)
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58
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Class
B
2010
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Chairman
of William Hill plc
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1998
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Hong
Q. Hou
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43
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Class
B
2010
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President
and Chief Operating Officer, EMCORE Corporation
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2006
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Thomas
G. Werthan
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51
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Class
C
2009
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Chief
Financial Officer,
Energy
Photovoltaics, Inc.
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1992
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John
Gillen (1) (2)
(3)(4)
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66
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Class
C
2009
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Partner,
Gillen and Johnson, P.A., Certified Public Accountants
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2003
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(1)
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Member
of Audit Committee.
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(2)
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Member
of Nominating Committee.
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(3)
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Member
of Compensation Committee.
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(4)
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Determined
by the Board of Directors to be an independent
director.
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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., 76, 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., 52, 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. Mr. Richards currently serves as a Director
of WorldWater & Solar Technologies Corp.
HONG
Q.
HOU, Ph.D., 43, 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 Digital Fiber Optic Products
division. In 2005 and 2006, Dr. Hou was responsible for managing the Company’s
Broadband Fiber Optics division. 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. Dr. Hou currently
serves as a Director of WorldWater & Solar Technologies Corp. He
holds a Ph.D. in Electrical Engineering from the University of California at
San
Diego.
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, 66, 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, 69, 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, 51, 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 Fiber Optics 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 U.S.
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 in our Form 8-K filed with the SEC on December 20, 2006,
Mr.
Richards will continue to serve as the Company’s Chief Executive Officer until
the Company’s 2008 Annual Meeting, at which time he will become Executive
Chairman and Chairman of the Board of Directors and Dr. 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
GOVERNANCE
OF THE COMPANY
Board
of Directors
The
Board
of Directors oversees EMCORE’s business and affairs pursuant to the New Jersey
Business Corporation Act and the Company’s Restated Certificate of Incorporation
and Bylaws. The Board of Directors is the ultimate decision-making
body of the Company, except on matters reserved for the
shareholders.
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.
Related
Person Transaction Approval Policy
The
Board
of Directors has adopted a written policy on the review and approval of related
person transactions. Related persons covered by the policy are executive
officers, directors and director nominees, any person who is known to be a
beneficial owner of more than five percent of the voting securities of the
Company, any immediate family member of any of the foregoing persons or any
entity in which any of the foregoing persons has or will have a direct or
indirect material interest.
A
related
person transaction is defined by the policy as any financial or other
transaction, arrangement or relationship (including any indebtedness or
guarantee of indebtedness) or any series of similar transactions, arrangements
or relationships in which the Company (or a subsidiary) would be a participant
and the amount involved would exceed $120,000, and in which any related person
would have a direct or indirect material interest. A related person will not
be
deemed to have a direct or indirect material interest in a transaction if the
interest arises only from the position of the person as a director of another
corporation or organization that is a party to the transaction or the direct
or
indirect ownership by such person and all the related persons, in the aggregate,
of less than a 10 percent equity interest in another person (other than a
partnership) which is a party to the transaction. In addition, certain interests
and transactions, such as director compensation that has been approved by the
Board, transactions where the rates or charges are determined by competitive
bid
and compensatory arrangements solely related to employment with the Company
(or
a subsidiary) that have been approved by the Compensation Committee, are not
subject to the policy.
The
Compensation Committee is responsible for reviewing, approving and, where
applicable, ratifying related person transactions. If a member of the committee
has an interest in a related person transaction, then he or she will not be
part
of the review process.
In
considering the appropriate action to be taken regarding a related person
transaction, the committee or the Board (as the case may be) will consider
the
best interests of the Company, whether the transaction is comparable to what
would be obtainable in an arms-length transaction, is fair to the Company and
serves a compelling business reason, and any other factors
as it deems relevant. As a condition to approving or ratifying any
related person transaction, the committee may impose whatever conditions and
standards it deems appropriate, including periodic monitoring of ongoing
transactions.
7
In
connection with the shareholder derivative litigation and the internal review
of
the Company’s historical stock options granting practices disclosed in Item III,
Legal Proceedings, of the Company’s Annual Report on Form 10-K for the fiscal
year ended September 30, 2007, Thomas Werthan retained counsel from the law
firm
of Katten Muchin Rosenman LLP (“Katten Muchin”). Pursuant to the
Company’s Restated Certificate of Incorporation, the Company has indemnified Mr.
Werthan for all expenses incurred in connection with the derivative suit,
including legal expenses payable to Katten Muchin. Mr. Werthan’s
brother, Jeffrey M. Werthan, a partner at Katten Muchin, is the billing partner
responsible for Mr. Werthan’s representation, but has not performed any work
related to the matters. During fiscal 2007, the aggregate cost of
such representation paid to Katten Muchin was approximately
$370,000.
Director
Independence
The
Board
of Directors has determined that a majority of the directors are independent
as
required by the NASDAQ Rules. The Board has affirmatively determined that
Messrs. Russell, Bogomolny, Scott, Gillen and Louis-Dreyfus (who served as
a
director during fiscal 2007, but resigned his seat on the Board of Directors
on
October 30, 2007) are independent within the meaning of the NASDAQ
Rules. There were no specific transactions, relationships or
arrangements requiring consideration by the Board of Directors in making these
independence determinations. The Board of Directors has determined
that Messrs. Richards and Hou are not independent because they are both
employees of the Company and that Mr. Werthan is not independent because he
was
employed by the Company within the past three years.
Messrs.
Russell (Chairman), Scott and Gillen serve as members of our Nominating
Committee. The members of our Compensation Committee are Messrs. Gillen,
Bogomolny and Scott. Messrs. Scott, Bogomolny and Gillen serve as
members of our Audit Committee. All members of each of our Nominating
Committee, Compensation Committee and Audit Committee are “independent,” as
defined by the NASDAQ Rules.
Board
Meetings and Attendance
The
Board
of Directors held 10 regularly scheduled and special telephonic meetings during
fiscal 2007, and took other certain actions by unanimous written consent. During
fiscal 2007, 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.
Board
Committees
Audit
Committee
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.
8
Compensation
Committee
This
committee evaluates the performance of the chief executive officer and other
officers and reviews and approves their compensation. The processes and
procedures for the review and approval of executive compensation are described
in the Compensation Discussion and Analysis section of this Proxy Statement.
In
addition, this committee has responsibility for recommending to the Board the
level and form of compensation and benefits for directors. It also administers
the Company’s incentive compensation plans and reviews and monitors succession
plans for the chief executive officer and the other officers. This committee
met
9 times in fiscal 2007.
To
the
extent consistent with its obligations and responsibilities, the Compensation
Committee may form subcommittees of one or more members of the committee and
delegate its authority to the subcommittees as it deems appropriate. In
addition, the committee has the authority to retain and terminate external
advisors in connection with the discharge of its duties.
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 2007.
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.
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 2006 annual meeting and 2 of
7
directors attended the 2007 annual meeting.
9
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.
10
DIRECTOR
COMPENSATION
The
Company compensates each non-employee director for service on the Board of
Directors. Director compensation for fiscal 2007 included the
following:
|
Name
(1)
|
Fees
Earned or
Paid
in
Cash
($)
|
All
Other
Compensation
($)(3)
|
Total
($)
|
|
Thomas
J. Russell, Ph.D.
|
26,750
|
17,100
|
43,850
|
|
Charles
Scott
|
53,650
|
18,600
|
72,250
|
|
John
Gillen
|
31,300
|
15,400
|
46,700
|
|
Robert
Bogomolny
|
29,150
|
13,500
|
42,650
|
|
Robert
Louis-Dreyfus (2)
|
750
|
3,000
|
3,750
|
__________________
|
(1)
|
Reuben
F. Richards, Jr., the Company’s Chief Executive Officer, and Hong Q. Hou,
Ph.D., the Company’s Chief Operating Officer and President, are not
included in this table as they are employees of the Company and receive
no
compensation for their services as Directors. Their
compensation is disclosed in the Summary Compensation
Table. Thomas G. Werthan, the Company’s former Chief Financial
Officer, continues to serve as a Director. Mr. Werthan began to
receive compensation for his services as a Director only after he
left the
employment of the Company and the compensation he received for serving
as
a Director is disclosed in the “All Other Compensation” column of the
Summary Compensation Table.
|
|
(2)
|
Robert
Louis-Dreyfus resigned his seat on the Company’s Board of Directors on
October 30, 2007.
|
|
(3)
|
These
amounts include fees earned during fiscal 2007 payable in EMCORE
common
stock.
|
Pursuant
to the Company’s Directors’ Stock Award Plan adopted by the shareholders in
March 1997 (the “1997 Stock Award Plan”), the Company has paid 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). The Company also reimburses a non-employee
director's reasonable out-of-pocket expenses incurred in connection with such
Board or committee meetings. 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 1997 Stock Award
Plan
has historically been made in common stock of the Company at the closing price
on the NASDAQ National Market for the day prior to the meeting. In accordance
with the terms of the new Directors’ Stock Award Plan adopted by the
shareholders at the Company’s 2007 annual meeting (the “2007 Stock Award Plan”),
payment of fees will be made in common stock of the Company payable in one
issuance annually based on the closing price on the NASDAQ National Market
for
the date of issuance. The 1997 Stock Award Plan expired in March 2007
and the 2007 Stock Award Plan became effective as of January 1,
2008.
The
Company’s Outside Directors Cash Compensation Plan provides for the payment of
cash compensation to non-employee directors for their participation at Board
meetings, in amounts established by the Board and periodically reviewed. Each
non-employee director receives a meeting fee for each meeting that he 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 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
11
$750
for each meeting of the committee that he 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 the Outside Directors Cash Compensation Plan,
the
1997 Stock Award Plan or the 2007 Stock Award Plan.
12
COMPENSATION
DISCUSSION AND ANALYSIS
This
Compensation Discussion and Analysis describes EMCORE’s executive compensation
program and analyzes the compensation decisions made for the executive officers
included in the Summary Compensation Table (the “Named Executive Officers”) for
fiscal 2007. The analysis includes the disclosure of certain
performance targets that are used in connection with the Company’s executive
compensation program. These targets should not be understood to be statements
of
management’s expectations of the Company’s future results.
Objectives
and Components of the Company’s Compensation Program
EMCORE’s
executive compensation program is designed to motivate executives to achieve
strong financial and operational performance and recognizes individual
contributions to that performance. Through the compensation program,
the Company seeks to attract and retain talented executive officers by providing
total compensation that is competitive with that of other executives employed
by
companies of similar size, complexity and lines of business. The
Company’s executive compensation program is also designed to link executives’
interests with shareholders’ interests by providing a portion of total
compensation in the form of stock-based incentives.
The
Company’s Annual Compensation Decision-Making Process
The
Compensation Committee of the Board of Directors is responsible for setting
and
administering policies that govern EMCORE’s executive compensation
program. In October/November of each year, the Compensation Committee
reviews the Company’s performance and the performance of each of the Named
Executive Officers for the prior fiscal year and market surveys and/or proxy
statements of our peer group as well as companies that have our same Standard
Industrial Classification (SIC) code and annual revenues of $500 million or
less. Based on this review, the Compensation Committee discusses and
approves base salary increases related to the current fiscal year and awards
annual cash incentives and stock option grants in recognition of Company and
individual performance for the prior fiscal year. During fiscal 2007,
however, this compensation review and discussion was postponed due to the
Company’s then ongoing voluntary review of its historical stock option grant
procedures, and was performed in June 2007.
The
purpose of the Compensation Committee’s review of the market surveys and proxy
statements that list the compensation paid by companies within our peer group
as
well as a broader market group is to provide a reference point that will assist
the Compensation Committee in determining the competitiveness of our executive
compensation program and is not determinative of the amount of compensation
that
is paid or awarded to our executives. The Compensation Committee
reviews and selects the companies that are included in our peer group, which
is
comprised of companies of similar size, complexity and lines of
business. For fiscal 2007, the peer group consisted of the following
companies:
|
•
|
ANADIGICS,
Inc.
|
|
•
|
ATMI,
Inc.
|
|
•
|
TriQuint
Semiconductor, Inc.
|
|
•
|
Kopin
Corporation
|
|
•
|
Cree,
Inc.
|
|
•
|
Veeco
Instruments, Inc.
|
|
•
|
Vitesse
Semiconductor Corporation
|
13
In
addition to the use of market surveys and proxy statements, the Compensation
Committee intends to retain a compensation consultant in the future to assess
EMCORE’s competitive position with respect to each component of the Company’s
executive compensation program, which consists of: (i) base salary, (ii) annual
cash incentives, and (iii) long term stock based incentives.
Base
Salary
Base
salaries for executives are determined based upon job responsibilities, level
of
experience, individual performance, and comparisons to the salaries of
executives in similar positions obtained from market surveys and proxy
statements. The goal for the base salary component is to compensate
executives at a level that approximates the median salaries of individuals
in
comparable positions and markets. Mr. Richards, the Company’s Chief
Executive Officer, reviews the performance of the Chief Operating Officer and
the other executive officers and recommends salary increases for these
individuals to the Compensation Committee. In turn, the Compensation
Committee reviews, adjusts, where appropriate, and approves the salary increases
for these executive officers. In executive session, the Compensation
Committee reviews any salary increase for the Chief Executive
Officer.
On
June
11, 2007, the Compensation Committee approved a base salary increase of 4%,
to
$414,416, retroactively effective as of January 1, 2007, for Mr.
Richards. At this time, the Compensation Committee did not increase
the base salaries of any of the other Named Executive Officers because, in
the
case of Messrs. Werthan, Brodie and Stall, they had left or were about to leave
the employment of the Company and in the case of Messrs. Hou, Gushard, Kosco
and
Iannelli, they had received the following base salary increases when they were
promoted as executive officers:
|
•
|
Dr.
Hou’s base salary was increased from $227,000 to $400,000 effective as
of
December 14, 2006, in connection with his appointment as President
and
Chief Operating Officer;
|
|
•
|
Mr.
Gushard’s base salary was increased from $206,000 to $240,000 effective
February 19, 2007, in connection with his appointment as Interim
Chief
Financial Officer;
|
|
•
|
Mr.
Kosco’s base salary was increased from $180,000 to $200,000 effective
April 30, 2007, in connection with his appointment as Chief Legal
Officer;
and
|
|
•
|
Dr.
Iannelli’s base salary was increased from $197,465 to $225,000 effective
June 25, 2007, in connection with his appointment as Chief Technology
Officer.
|
Each
of
these base salary increases was based on market surveys and other data and
each
was intended to maintain the Company’s competitive position among similar
companies with which it competes for executive talent.
Annual
Cash Incentives
Each
fiscal year EMCORE establishes a cash incentive plan, which provides the
Company’s executive officers an opportunity to receive an annual cash payment in
addition to their base salaries. The cash incentive plan is designed
to place at risk a significant portion of an executive’s annual cash
compensation by linking the amount of compensation that an executive can achieve
under the plan with individual and Company performance. We believe
that providing annual cash incentive opportunities is a key component of
maintaining a competitive executive compensation program.
14
Pursuant
to EMCORE’s Fiscal 2007 Executive Bonus Plan (the “2007 Bonus Plan”), bonus
targets for each executive officer of the Company were established to promote
the achievement of individual and Company performance objectives for fiscal
2007. The bonus targets are a percentage of each executive’s base
salary and are established based on each executive’s job responsibilities and
experience as well as market surveys. The following bonus targets
were set under the 2007 Bonus Plan:
|
Name
and Title
|
Target
|
|
Mr.
Richards, Chief Executive Officer
Dr.
Hou, Chief Operating Officer
|
80%
of base salary
|
|
Mr.
Gushard, Interim Chief Financial Officer
|
50%
of base salary
|
|
Mr.
Kosco, Chief Legal Officer
Dr.
Iannelli, Chief Technology Officer
|
35%
of base salary
|
The
portion of the target to be paid is based on both Company and individual
performance. The Company performance metrics are weighted equally and
are measured on the attainment of revenue and adjusted EBITDA goals (earnings
before interest, taxes, depreciation, amortization and other non-cash and
non-recurring charges). A threshold level of 75% of the revenue goal
and 70% of the adjusted EBITDA goal is set. If the Company’s
performance is below both of these performance targets, no cash incentive
payments are awarded. Achievement of 100% of revenue and adjusted
EBITDA goals correlates to payment of 100% of the bonus targets, and attainment
of lesser percentages of the revenue and adjusted EBITDA goals correlates to
payment of lesser percentages of the bonus targets. Attainment of
110% of the revenue and adjusted 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 Compensation Committee reviews the Chief
Executive’s individual performance. The Chief Operating Officer’s and
other executive officers’ individual performance is reviewed by the Chief
Executive Officer and approved by the Compensation Committee.
The
Compensation Committee and the Chief Executive Officer retain the discretion
to
modify individual executive cash incentive awards based upon individual
performance and the successful completion of business objectives.
The
Compensation Committee establishes revenue and adjusted EBITDA goals because
it
believes these financial performance metrics are the best indicators of the
Company’s performance. The Company’s revenue and adjusted EBITDA
targets for fiscal 2007, as presented to the Compensation Committee, were
approximately $170 million and ($0.5) million, respectively, and revenue and
adjusted EBITDA for fiscal 2007, as presented to the
15
Compensation
Committee were approximately $170 million and ($2.4) million,
respectively. The Compensation Committee has the discretion to make
adjustments to these financial performance metrics to account for significant
events that occur during the year, such as acquisitions, divestitures, and
unusual items and, with respect to fiscal 2007, adjusted EBITDA was calculated
by adding back interest, taxes, depreciation and amortization to net loss while
also excluding non-cash stock-based compensation expense and one-time non
recurring charges related to the Company’s review of its historical stock option
granting practices and certain legal, bad debt, inventory, severance and
restructuring charges. The Compensation Committee reviewed and
approved the fiscal 2007 financial performance metrics calculations in November
2007. When making its compensation decisions, the Compensation
Committee also considered the fact that the Company had met its revenue target
and that two of its three divisions had also met or exceeded their adjusted
EBITDA thresholds. In addition to the Company’s financial
performance, the Compensation Committee also considered the efforts of the
Named
Executive Officers in assisting the Company in becoming current with its filing
requirements under the Securities Exchange Act, the development of corporate
growth for the fiber segment and the development of additional revenue for
the
solar segment. Based on these factors, the Compensation Committee
approved cash incentive awards for the following Named Executive Officers equal
to 98% of their respective targets.
These
awards are also set forth in the Summary Compensation Table under the heading
“Non-Equity Incentive Plan Compensation.”
|
Name
|
Target
Incentive Award
|
Actual
Incentive Award
|
Actual
Award as % of Target
|
|||||||||
|
Reuben
F. Richards, Jr.
|
$ |
333,200
|
$ |
326,536
|
98 | % | ||||||
|
Adam
Gushard
|
$ |
120,000
|
$ |
117,600
|
98 | % | ||||||
|
Hong
Q. Hou
|
$ |
320,000
|
$ |
313,600
|
98 | % | ||||||
|
Keith
Kosco*
|
$ |
70,000
|
$ |
45,733
|
98 | % | ||||||
|
John
Iannelli*
|
$ |
78,750
|
$ |
34,294
|
98 | % | ||||||
_____________________
|
*
|
Cash
incentive awards to Messrs. Kosco and Iannelli were pro-rated based
on the
length of time in their respective positions with the
Company.
|
Long-Term
Stock-Based Incentives
Long-term
equity awards consist of stock options, which are designed to give executive
officers an opportunity to acquire shares of common stock of the Company, to
provide an incentive for the executives to continue to promote the best
interests of the Company and enhance its long-term performance and to provide
an
incentive for executives to join and remain with the Company. Equity
awards are an effective tool for aligning the interests of our executives with
the interests of our shareholders.
16
Stock
options give an executive the right to buy a share of the Company’s common stock
in the future at a predetermined exercise price. The exercise price
is the fair market value of the common stock on the grant date. New
hire stock option awards vest over a five year period while annual stock option
awards vest over a four year period. Other supplemental stock option
awards grants generally vest over a four year period unless otherwise determined
by the Compensation Committee. All options expire ten years after the
grant date. In addition, no one recipient can be granted an award of
options to purchase more than 600,000 shares of common stock in any twelve
month
period. Executives who voluntarily resign or are terminated for cause
immediately forfeit all options that have not vested unless otherwise determined
by the Compensation Committee.
In
granting equity awards, the Compensation Committee does not issue a targeted
number of stock options, but rather reviews the executive’s performance and the
performance of the Company in the prior fiscal year as well as market surveys
to
determine the appropriate value of the award at the time it is
granted. The ultimate value of the award depends in large part on the
future performance of our common stock. For this reason we do not
consider the value of past equity awards when determining current
compensation. Due to the Company’s voluntary review of its historical
stock option grant procedures, no option grants were made in fiscal year 2007
other than grants in connection with new hires or the promotion of an
employee.
In
December 2006, in connection with his appointment as President and Chief
Operating Officer, the Compensation Committee approved for Dr. Hou a grant
of
options to purchase 245,000 shares of our common stock with all options vesting
on the grant date. In addition, the Compensation Committee approved
for Dr. Hou an additional grant of options to purchase 255,000 shares of our
common stock, which was made on September 25, 2007. This grant vests
in four equal installments over a four year period, with the first installment
of options vesting on the one-year anniversary of the grant date and equal
amounts vesting on each subsequent anniversary of the grant date.
In
February 2007, in connection with his appointment as Interim Chief Financial
Officer, the Compensation Committee approved for Mr. Gushard a grant of options
to purchase 100,000 shares of our common stock. Of this grant, 50,000
stock options vested on the grant date and the other 50,000 will vest in equal
installments over a four year period beginning on the first anniversary of
the
grant date.
In
April
2007, in connection with his appointment as Chief Legal Officer, the
Compensation Committee approved for Mr. Kosco a grant of options to purchase
50,000 shares of our common stock. Similarly, in June 2007, in
connection with his appointment as Chief Technology Officer, the Compensation
Committee approved for Dr. Iannelli a grant of options to purchase 75,000 shares
of our common stock. Each of these grants has a vesting schedule of
four years with the first installment of options vesting on the one-year
anniversary of the respective grant date and equal amounts vesting on each
subsequent anniversary of the respective grant date.
The
exercise price for each of the above-described grants of options was the fair
market value of the common stock on the grant date.
17
Company
Benefits
EMCORE’s
benefits are an important tool in our ability to attract and retain outstanding
employees throughout the Company. As a business matter, we weigh the
benefits we need to offer to attract and retain talented employees against
the
benefits we can afford to pay and still remain competitive. Benefit
levels are reviewed periodically to ensure they are cost-effective and
competitive and support the overall needs of Company employees.
This
section describes the benefits that EMCORE provides to key executives and notes
those instances when benefits for the named executive officers differ from
the
general plan. In some instances, we also describe the programs we offer across
the Company as context to specific discussions about executive
benefits.
Medical,
Dental and Vision Benefits
The
Company offers a standard benefits package to all of its employees, which
includes medical, dental and vision coverage. The Named Executive
Officers receive coverage at 100% whereas all other employees of the Company
receive coverage ranging from 50% - 100% depending on the service
performed.
Company-sponsored
Retirement Plans
The
EMCORE Corporation 401(k) Plan (the “401(k) Plan”) is a defined contribution
plan with a 401(k) arrangement and is designed to comply with ERISA, the
Internal Revenue Code, as well as federal and state legal
requirements. The 401(k) Plan is designed to provide retirement
benefits to eligible employees of EMCORE and is administered by Prudential
Financial. Participants in the plan may elect to reduce compensation
by a specific percentage, which is contributed to the participant’s 401(k)
account on a pre-tax basis as a salary deferral.
Employees
may elect to contribute to the 401(k) Plan through salary reduction up to the
yearly maximum tax-deductible deferral allowed pursuant to IRS
regulations. A participant may elect to defer between 1-15% of his or
her compensation per pay period. The deferral amount will not be
subject to income tax until distribution. Each participant is
able to direct his or her investment into any of the available investment
options. Participant’s contributions are vested at 100%.
EMCORE
may provide a discretionary match of 50% of the first 6% of base compensation
of
a participant’s contribution to the plan and this matching contribution vests
over an initial five year period. This matching contribution is in
the form of our common stock. Participants are
able to exchange out of our common stock to other investment options within
the
401(k) Plan. However, matching contributions continue to be directed
to our common stock. Exchanges from our common stock have the effect
of transferring both vested and non-vested contributions in our common stock
into other investments. Exchanges into our common stock are not
permitted under the 401(k) Plan.
An
employee becomes eligible to participate in the 401(k) Plan on the first day
of
the month following his or her date of hire and attaining the age of 20
years. An EMCORE re-hire is eligible to participate in the 401(k)
Plan immediately.
18
Perquisites
EMCORE
provides perquisites to key executive officers, including the Named Executive
Officers, as a recruiting and retention tool. We believe that our
perquisites are appropriate and we benchmark our perquisites against generally
accepted corporate practices.
The
perquisites provided to our Named Executive Officers in fiscal 2007 were
relocation and housing expenses. For more information regarding
perquisites provided to the Named Executive Officers in fiscal 2007 see the
footnotes to the “All Other Compensation” column of the Summary Compensation
Table.
EMCORE’s
Severance Policy and Severance Agreements
On
March
29, 2007, the Compensation Committee approved an Executive Severance Policy,
effective as of May 1, 2007 (the “Effective Date”). The Severance
Policy amended the fundamental terms of a severance policy adopted by the
Compensation Committee in 2004. Under the Severance Policy
participants in the policy at the Executive Vice President or higher level
will
receive (i) for those hired or promoted prior to the Effective Date, the
continuation of their base salary for a period equal to one year and two weeks
plus two additional weeks for each year the participant was employed by the
Company or (ii) for those hired or promoted on or after the Effective Date,
the
continuation of their base salary for a period equal to one year and one week
plus one additional week for each year the participant was employed by the
Company.
Participants
at the Vice President or lower level will receive (i) for those hired or
promoted prior to the Effective Date, the continuation of their base salary
for
a period equal to five months and two weeks plus two additional weeks for each
year the participant was employed by the Company or (ii) for those hired or
promoted on or after the Effective Date, the continuation of their base salary
for a period equal to five months and one week plus one additional week for
each
year the participant was employed by the Company.
If,
following a disposition, a participant’s employment is terminated after the end
of a fiscal year but before annual cash incentive awards or pay-for-performance
payments are distributed and the participant would otherwise be entitled to
a
cash incentive award, the participant will remain entitled to the annual cash
incentive award or pay-for-performance payment attributable to the immediately
preceding fiscal year. The Severance Policy also provides that
participants will be eligible for certain benefits, including continued payment
of certain health insurance premiums, outplacement services and other
perquisites.
Messrs.
Brodie, Stall and Werthan each entered into a severance agreement with the
Company in connection with their departure during fiscal
2007. Payments and benefits provided to these individuals pursuant to
their respective severance agreement are described in the “Potential Payments
Upon Termination or Change in Control” section.
Compensation
of the Chief Executive Officer
The
Compensation Committee annually reviews the compensation of Mr. Richards and
recommends any adjustments to the Board of Directors for
approval. Mr. Richards participates in the same compensation programs
and receives compensation based upon the same criteria as EMCORE’s other
executive officers. However, Mr. Richard’s compensation reflects
his
19
greater
policy- and decision-making authority and the higher level of responsibility
that he has with respect to the strategic direction of EMCORE and its financial
and operating results.
After
considering EMCORE’s overall performance in fiscal 2006 and competitive
practices, the Compensation Committee recommended, and the Board of Directors
approved, a 4% increase in Mr. Richards’ base salary, to $414,416, effective
January 1, 2007. Annual cash 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 our revenue target and the growth of our fiber segment
and
the development of additional revenue for our solar segment, the Compensation
Committee awarded Mr. Richards $326,536 in the form of a cash incentive
award.
Tax
and Accounting Considerations
Under
Section 162(m) of the Internal Revenue Code, EMCORE may not deduct annual
compensation in excess of $1 million paid to certain employees, generally its
Chief Executive Officer and its four other most highly compensated executive
officers, unless that compensation qualifies as performance-based compensation.
While the Compensation Committee intends to structure performance-related awards
in a way that will preserve the maximum deductibility of compensation awards,
the Compensation Committee may from time to time approve awards that would
vest
upon the passage of time or other compensation, which would not result in
qualification of those awards as performance-based compensation.
20
EXECUTIVE
COMPENSATION
The
following table sets forth certain information concerning the annual and
long-term compensation earned for services in all capacities to the Company
for
the fiscal year ended September 30, 2007 of those persons who during such fiscal
year (i) served as the Company’s chief executive officer, (ii) served as the
Company’s chief financial officer, (ii) were the three most highly-compensated
officers (other than the chief executive officer and chief financial officer)
and (iv) two additional individuals for whom disclosure would have been provided
but for the fact that the individual was not serving as an executive officer
at
the end of the last completed fiscal year:
Summary
Compensation Table for Fiscal 2007
|
Name
and Principal Position
|
Year
|
Salary
($)(4)
|
Option
Awards
($)(5)
|
Non-Equity
Incentive Plan Compen-
sation
($)(9)
|
All
Other Compen-
sation
($)
|
Total
($)
|
||||
|
Reuben
F. Richards, Jr.
Chief
Executive Officer
|
2007
|
412,165
|
250,532
|
326,536
|
384
|
(10)
|
989,617
|
|||
|
Adam
Gushard
Interim
Chief Financial Officer
|
2007
|
236,835
|
261,280
|
117,600
|
7,338
|
(11)
|
623,053
|
|||
|
Hong
Q. Hou, Ph.D.
President
and Chief
Operating
Officer
|
2007
|
360,080
|
1,181,529
|
313,600
|
179,334
|
(12)
|
2,034,543
|
|||
|
John
Iannelli, Ph.D.
Chief
Technology Officer
|
2007
|
203,857
|
87,760
|
34,294
|
5,877
|
(13)
|
331,788
|
|||
|
Keith
J. Kosco, Esq.
Chief
Legal Officer
|
2007
|
132,308
|
25,874
|
45,733
|
25,174
|
(14)
|
229,089
|
|||
|
Thomas
G. Werthan (1)
Former
Executive Vice President and Chief Financial Officer
|
2007
|
107,284
|
39,024
|
(6)
|
-
|
479,736
|
(15)
|
626,044
|
||
|
Richard
A. Stall, Ph.D. (2)
Former
Executive Vice President and Chief Technology Officer
|
2007
|
197,800
|
54,745
|
(7)
|
-
|
477,757
|
(16)
|
730,302
|
||
|
Howard
W. Brodie, Esq. (3)
Former
Executive Vice President and Chief Legal Officer
|
2007
|
137,600
|
29,268
|
(8)
|
-
|
316,645
|
(17)
|
483,513
|
21
_________________
|
(1)
|
In
February 2007, Mr. Werthan resigned from the Company and continues
to
serve on the Company’s Board of Directors.
|
|
(2)
|
In
June 2007, Dr. Stall resigned from the Company.
|
|
(3)
|
In
April 2007, Mr. Brodie resigned from the Company.
|
|
(4)
|
Salary
represents amounts paid to the individual during the fiscal year
ended
September 30, 2007. It does not represent an employee’s current
annual base salary.
|
|
(5)
|
The
amounts in this column reflect the dollar amount recognized for financial
statement reporting purposes in fiscal 2007, in accordance with Statement
of Financial Accounting Standards No. 123(R), “Share-Based Payment”
(revised 2004) (without regard to estimated forfeitures related to
a
service based condition) and include amounts from awards granted
in and
prior to fiscal 2007. Assumptions used in the calculation of these
amounts
are included in footnote 4 to the Company’s audited financial statements
for the fiscal year ended September 30, 2007, included in the Company’s
Form 10-K filed with the SEC on December 31, 2007.
|
|
(6)
|
Mr.
Werthan forfeited 85,000 shares of unvested stock options when he
resigned
from the Company and voluntarily forfeited 187,500 vested stock options
that had been mispriced because he did not wish to retain any benefits
from such options.
|
|
(7)
|
Dr.
Stall forfeited 35,000 stock options when he resigned from the
Company.
|
|
(8)
|
Mr.
Brodie forfeited 63,750 shares of unvested stock options when he
resigned
from the Company and voluntarily forfeited 27,500 vested stock options
that had been mispriced because he did not wish to retain any benefits
from such options.
|
|
(9)
|
The
amounts in this column reflect the amounts earned in fiscal 2007,
pursuant
to the Fiscal 2007 Executive Bonus Plan, although not paid until
fiscal
2008.
|
|
(10)
|
Consists
of life insurance premiums of $384.
|
|
(11)
|
Consists
of life insurance premiums of $384 and EMCORE’s matching contributions
under its 401(k) plan of $6,954, which are made in EMCORE common
stock.
|
|
(12)
|
Consists
of life insurance premiums of $384, EMCORE’s matching contributions under
its 401(k) plan of $4,673, which are made in EMCORE common stock,
relocation and housing of $45,000, and $129,277 to cover the reimbursement
of 409(a) taxes that the Company paid on behalf of Dr. Hou relating
to
events prior to him being a Section 16 officer.
|
|
(13)
|
Consists
of life insurance premiums of $384 and EMCORE’s matching contributions
under its 401(k) plan of $5,493, which are made in EMCORE common
stock.
|
|
(14)
|
Consists
of life insurance premiums of $384 and relocation of
$24,790.
|
|
(15)
|
Consists
of life insurance premiums of $384, EMCORE’s matching contributions under
its 401(k) plan of $2,562, which are made in EMCORE common stock,
severance of $387,040, loan forgiveness of $82,000 and $7,750 (fees
earned
or paid in cash) for compensation as a non-employee
director.
|
|
(16)
|
Consists
of life insurance premiums of $384 and EMCORE’s matching contributions
under its 401(k) plan of $6,973, which are made in EMCORE common
stock,
and severance of $470,400.
|
|
(17)
|
Consists
of life insurance premiums of $384 and EMCORE’s matching contributions
under its 401(k) plan of $2,322, which are made in EMCORE common
stock,
and severance of $313,939.
|
22
Grants
of Plan-Based Awards in Fiscal 2007
|
Name
|
Grant
Date
|
Estimated
Future Payouts Under
Non-Equity
Incentive
Plan
Awards (1)
|
All
Other Option Awards: Number of Securities Underlying
Options
(#)
(2)
|
Exercise
or Base Price of Option Awards
($/Sh)
(3)
|
Closing
Price
on
Date
of Grant
($/Sh)
|
Grant
Date Fair Value
ofStock and
Option
Awards
($)
(4)
|
|||||||||||||||||||||||
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
|||||||||||||||||||||||||||
|
Reuben
F. Richards, Jr.
|
N/A
|
66,640
|
333,200
|
399,840
|
|||||||||||||||||||||||||
|
Adam
Gushard
|
2/20/07
N/A
|
15,000
|
120,000
|
144,000
|
100,000
|
4.06
|
4.12
|
312,032
|
|||||||||||||||||||||
|
Hong
Q. Hou, Ph.D.
|
12/14/06
9/25/07
N/A
|
64,000
|
320,000
|
384,000
|
245,000
255,000
|
5.76
8.78
|
5.66
8.78
|
1,049,651
1,811,802
|
|||||||||||||||||||||
|
John
Iannelli, Ph.D.
|
3/29/07
6/25/07
N/A
|
6,891
|
78,750
|
94,500
|
10,000
75,000
|
4.98
5.33
|
4.95
5.33
|
39,531
317,122
|
|||||||||||||||||||||
|
Keith
J. Kosco, Esq.
|
1/8/07
4/27/07
N/A
|
6,125
|
70,000
|
84,000
|
30,000
50,000
|
5.49
5.08
|
5.36
5.08
|
132,748
201,600
|
|||||||||||||||||||||
|
Thomas
G. Werthan
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Richard
A. Stall, Ph.D.
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Howard
W. Brodie, Esq.
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
_____________________
|
(1)
|
These
columns reflect the possible payment amounts under performance-based
cash
incentive awards granted for 2007 to the Named Executive Officers,
as
described above under “Compensation Discussion and Analysis”. The amounts
actually awarded to these executives for 2007 are reported above
in the
Summary Compensation Table as “Non-Equity Incentive Plan
Awards.”
|
|
(2)
|
This
column reflects the number of shares underlying options granted to
the
Named Executive Officers in fiscal 2007.
|
|
(3)
|
All
options were granted at an exercise price equal to the fair market
value
of our common stock on the option grant date. As previously disclosed
in our Current Report on Form 8-K filed with the SEC on April 19,
2007,
the fair market value for certain grants of options was determined
based
on the mean of the highest and lowest sale prices of the Company's
common
stock on the grant date, and on April 16, 2007 the definition of
“fair
market value” in the Company’s 2000 Stock Option Plan was amended so that
it would be equal to the closing price of the Company's common stock
on
the grant date.
|
|
(4)
|
This
column reflects the fair value of these awards on the grant date
as
determined under the accounting principles used to calculate the
value of
equity awards. For the assumptions and methodologies used to value
the
awards reported in this column, see footnote (5) to the Summary
Compensation
Table.
|
23
Outstanding
Equity Awards at September 30, 2007
|
Option
Awards
|
|||||||||||||||||||||
|
Name
|
Number
of
Securities
Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|||||||||||||||||
|
Reuben
F. Richards, Jr.
|
100,000
50,000
25,000
72,500
150,000
|
-
-
-
-
75,000
|
(3 | ) |
6.79
6.44
22.00
2.63
3.42
|
2/27/08
12/1/08
4/14/10
5/18/14
5/18/15
|
|||||||||||||||
|
Adam
Gushard
|
10,000
17,000
8,000
5,000
17,500
7,500
2,000
13,125
13,750
1,598
11,250
50,000
|
(1 | ) |
-
-
-
-
-
-
-
4,375
13,750
-
33,750
50,000
|
(3 | )(4)(5)(6) |
1.82
1.82
1.82
1.82
1.82
1.82
1.82
2.63
3.00
7.32
7.29
4.06
|
12/15/07
12/1/08
4/14/10
4/26/12
10/3/11
4/4/11
3/2/11
5/18/14
2/28/15
12/29/15
8/28/16
2/20/17
|
|||||||||||||
|
Hong
Q. Hou, Ph.D.
|
120,000
17,500
6,875
13,750
245,000
-
|
(1 | )(1) |
-
17,500
13,750
41,250
-
255,000
|
(3 | )(4)(5)(7) |
5.88
2.63
3.00
7.29
5.76
8.78
|
3/9/08
5/18/14
2/28/15
8/28/16
12/14/16
9/25/17
|
|||||||||||||
|
John
Iannelli, Ph.D.
|
32,000
4,500
5,500
881
4,500
3,000
500
-
-
|
8,000
1,500
5,500
-
13,500
9,000
1,500
10,000
75,000
|
(8 | )(3)(4)(9)(10)(11)(12)(13) |
1.87
2.63
3.00
7.32
5.18
7.95
9.75
4.98
5.33
|
1/22/13
5/18/14
2/28/15
12/29/15
10/12/15
3/10/16
4/5/16
3/29/17
6/25/17
|
|||||||||||||||
|
Keith
J. Kosco, Esq.
|
-
-
|
30,000
50,000
|
(14 | )(15) |
5.49
5.08
|
1/8/17
4/27/17
|
|||||||||||||||
|
Thomas
G. Werthan
|
15,000
50,000
|
(1 | )(2)(2) |
-
-
|
3.42
6.79
|
1/29/08
1/29/08
|
|||||||||||||||
|
Richard
A. Stall, Ph.D.
|
25,000
22,500
100,000
50,000
25,000
|
(1 | )(2)(1)(2)(1)(2)(1)(2)(2) |
-
-
-
-
-
|
2.63
3.42
7.90
8.50
22.00
|
1/29/08
1/29/08
1/29/08
1/29/08
1/29/08
|
|||||||||||||||
|
Howard
W. Brodie, Esq.
|
11,250
|
(1 | )(2) |
-
|
3.42
|
1/29/08
|
|||||||||||||||
24
__________________
|
(1)
|
These
awards have been exercised between September 30, 2007 and January
26,
2008, with the exception of the option to purchase 250 shares for
Messr.
Brodie.
|
|
(2)
|
Under
the terms of option agreements issued under the Company’s 2000 Stock
Option Plan, terminated employees who have vested and exercisable
stock
options have 90 days after the date of termination to exercise the
options. In November 2006, the Company announced suspension of reliance
on
previously issued financial statements which in turn caused the Form
S-8
registration statements for shares of common stock issuable under
the
option plans not to be available. Therefore, terminated employees
were
precluded from exercising their options during the remaining contractual
term. To address this issue with affected former employees under
the 2000
Stock Option Plan, EMCORE’s Board of Directors agreed in April 2007 to
approve an option grant “modification” for all these individuals by
extending the normal 90-day exercise period after termination date
to a
date after which EMCORE becomes compliant with its SEC filings and
the
registration of the option shares is once again effective, which
was
November 1, 2007. As a result, the expiration dates for the
vested stock options held by Messrs. Werthan, Stall and Brodie, at
the
time of their departures from the Company, were extended until January
29,
2008.
|
|
(3)
|
The
unvested portions of these awards are scheduled to vest in one installment
on May 18, 2008.
|
|
(4)
|
The
unvested portions of these awards are scheduled to vest in two
installments on February 29, 2008 and February 28,
2009.
|
|
(5)
|
The
unvested portions of these awards are scheduled to vest in three
installments on August 28, 2008, 2009, and 2010.
|
|
(6)
|
The
unvested portions of these awards are scheduled to vest in four
installments on February 20, 2008, 2009, 2010, and
2011.
|
|
(7)
|
The
unvested portions of these awards are scheduled to vest in four
installments on September 25, 2008, 2009, 2010 and
2011.
|
|
(8)
|
The
unvested portions of these awards are scheduled to vest in one installment
on January 22, 2008.
|
|
(9)
|
The
unvested portions of these awards are scheduled to vest in three
installments on October 12, 2007, 2008 and 2009.
|
|
(10)
|
The
unvested portions of these awards are scheduled to vest in three
installments on March 10, 2008, 2009 and 2010.
|
|
(11)
|
The
unvested portions of these awards are scheduled to vest in three
installments on April 5, 2008, 2009, and 2010.
|
|
(12)
|
The
unvested portions of these awards are scheduled to vest in four
installments on March 29, 2008, 2009, 2010 and 2011.
|
|
(13)
|
The
unvested portions of these awards are scheduled to vest in four
installments on June 25, 2008, 2009, 2010, and 2011.
|
|
(14)
|
The
unvested portions of these awards are scheduled to vest in five
installments on January 8, 2008, 2009, 2010, 2011 and
2012.
|
|
(15)
|
The
unvested portions of these awards are scheduled to vest in four
installments on April 27, 2008, 2009, 2010, and
2011.
|
Option
Exercises in Fiscal 2007
|
Option
Awards
|
||||||||
|
Name
|
Number
of
Shares
Acquired
on
Exercise
(#)
|
Value
Realized
on
Exercise
($)
|
||||||
|
Reuben
F. Richards, Jr.
|
-
|
-
|
||||||
|
Adam
Gushard
|
-
|
-
|
||||||
|
Hong
Q. Hou, Ph.D. (1)
|
14,375
|
27,788
|
||||||
|
John
Iannelli, Ph.D.
|
-
|
-
|
||||||
|
Keith
J. Kosco, Esq.
|
-
|
-
|
||||||
|
Thomas
G. Werthan
|
-
|
-
|
||||||
|
Richard
A. Stall, Ph.D.
|
-
|
-
|
||||||
|
Howard
W. Brodie, Esq.
|
-
|
-
|
||||||
__________
|
(1)
|
These
options were exercised on November 7,
2006.
|
Potential
Payments Upon Termination or Change-in-Control
Under
the
Company’s Executive Severance Policy, participants are eligible to receive
certain severance benefits if their employment with the Company is terminated
and the termination constitutes a “Separation of Service” within the meaning of
Section 409A of the Internal Revenue Code. However, participants are
not eligible to receive severance benefits if they are terminated with cause,
due to death or disability or if they voluntarily terminate their employment
other than for good reason. In addition, a participant that is
eligible to receive severance benefits under the Severance Policy must execute
an agreement (a “Separation Agreement”) prepared by the Company that includes,
among other things, a release by the participant of the
25
Company
from any liability or obligation to the participant. A participant
will not receive severance benefits if the participant does not enter into
a
Separation Agreement with the Company and all severance benefits will cease
if
the participant violates any provision of his or her Separation
Agreement.
Under
the
Severance Policy, participants in the policy at the Executive Vice President
or
higher level will receive (i) for those hired or promoted prior to May 1, 2007,
the continuation of their base salary for a period equal to one year and two
weeks plus two additional weeks for each year the participant was employed
by
the Company or (ii) for those hired or promoted on or after May 1, 2007, the
continuation of their base salary for a period equal to one year and one week
plus one additional week for each year the participant was employed by the
Company.
Participants
at the Vice President or lower level will receive (i) for those hired or
promoted prior to May 1, 2007, the continuation of their base salary for a
period equal to five months and two weeks plus two additional weeks for each
year the participant was employed by the Company or (ii) for those hired or
promoted on or after May 1, 2007, the continuation of their base salary for
a
period equal to five months and one week plus one additional week for each
year
the participant was employed by the Company.
If,
following the sale, transfer, spin-off or other disposition of the stock or
assets of any subsidiary, business unit or division of the Company, a
participant’s employment is terminated after the end of a fiscal year but before
annual cash incentive awards or pay-for-performance payments are distributed
and
the participant would otherwise be entitled to such awards or payments, the
participant will remain entitled to the annual cash incentive award or
pay-for-performance payment attributable to the immediately preceding fiscal
year. The Severance Policy also provides that participants will be
eligible for certain benefits, including continued payment of certain health
insurance premiums, outplacement services and other perquisites.
The
following are estimated payments and benefits that would be provided to each
of
Messrs. Richards, Gushard, Hou, Iannelli and Kosco in the event the executive’s
employment is terminated under certain circumstances. We have
calculated these amounts based on the Company’s Executive Severance Policy (the
“Severance Policy”) and, in some cases, the terms of individual offer letters
that were entered into in connection with an executive’s promotion to his
current position. The calculations assume a termination date of September
28,
2007, the last business day of our fiscal year ended September 30,
2007. The actual amounts of the payments and costs of the benefits,
however, can only be determined at the time of an executive’s separation from
the Company.
|
Name
|
Severance
|
Cash
Incentive Award
|
COBRA
(Company
Portion)
|
Outplacement
Services
|
Perquisites
|
|||||||||||||||
|
Reuben
F. Richards, Jr.
|
$ |
608,731
|
$ |
326,536
|
$ |
18,190
|
$ |
30,000
|
-
|
|||||||||||
|
Adam
Gushard
|
$ |
332,308
|
$ |
192,600
|
$ |
18,190
|
$ |
30,000
|
$ | 59,000 | (1) | |||||||||
|
Hong
Q. Hou, Ph.D.
|
$ |
553,846
|
$ |
313,600
|
$ |
18,190
|
$ |
30,000
|
-
|
|||||||||||
|
John
Iannelli, Ph.D.
|
$ |
337,500
|
$ |
34,294
|
$ |
18,190
|
$ |
30,000
|
-
|
|||||||||||
|
Keith
J. Kosco, Esq.
|
$ |
207,692
|
$ |
45,733
|
$ |
13,137
|
$ |
30,000
|
-
|
|||||||||||
___________________
|
(1)
|
Include
$9,000 for a car allowance and an estimated cost of $50,000 for
relocation, which is payable if Mr. Gushard is terminated without
Cause.
|
26
Vesting
of Equity Awards in Connection with a Change in
Control
Upon
a
change in control of the Company, unvested stock options will vest and become
exercisable pursuant to the terms of the Company’s 2000 Stock Option Plan
applicable to all plan participants. The value of accelerating
unvested stock options, as measured by the difference between the closing price
of $9.60 on September 28, 2007, and the option grant price, would be $463,500
for Mr. Richards, $476,206 for Mr. Gushard, $517,113 for Dr. Hou,
$549,565 for Dr. Iannelli and $349,300 for Mr. Kosco.
Severance
Agreements with Messrs. Werthan, Brodie and Stall
On
February 8, 2007, the Company entered into a severance agreement with Mr.
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 to continue coverage
under the Company’s health plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), 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.
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.
On
June
25, 2007, the Company entered into a severance agreement with Dr.
Stall. In accordance with the Company’s Severance Policy, under the
terms of the severance agreement, the Company paid Dr. Stall $470,400
(equal to 98 weeks of his salary), less applicable tax withholdings and
deductions, in a lump-sum payment on January 2,
2008. Additionally, Dr. Stall elected to continue coverage under
the Company’s health plans pursuant to COBRA and $7,235 was deducted from Dr.
Stall’s lump sum severance payment, which represents the amount of Dr. Stall’s
portion of the COBRA premiums.
27
COMPENSATION
COMMITTEE REPORT
The
information contained under this “Compensation Committee Report,” shall not be
deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such
information be incorporated by reference into any filings under the Securities
Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or be subject to the liabilities of
Section 18 of the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference into any such
filing.
The
Compensation Committee is responsible for evaluating the performance of the
Chief Executive Officer and other EMCORE officers as well as reviewing and
approving their compensation. The Committee also establishes and monitors
overall compensation programs and policies for the Company, including
administering the incentive compensation plans. The Committee’s processes and
procedures for the consideration and determination of executive compensation
are
explained in greater detail in the Compensation Discussion and Analysis
section.
The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis. Based on this review and discussion,
the
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in the Company’s Annual Report on Form 10-K and its
Proxy Statement in accordance with Item 407(e) of Regulation
S-K.
This
report is submitted by the Compensation Committee.
January
28, 2008
|
COMPENSATION
COMMITTEE
John
Gillen, Chairman
Charles
Scott
Robert
Bogomolny
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The
Company’s Compensation Committee is comprised of Messrs. Gillen, Scott and
Bogomolny. No member of the Compensation Committee served as one of
the Company’s officers or employees during fiscal 2007 or was formerly an
officer of the Company at any time. None of the Company’s executive
officers served as a member of the compensation committee of any other company
that has an executive officer serving as a member of the Company’s Board of
Directors or Compensation Committee during fiscal 2007. None of the
Company’s executive officers served as a member of the board of directors of any
other company that has an executive officer serving as a member of the Company’s
Compensation Committee during fiscal 2007.
28
SECURITY
OWNERSHIP OF
CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth as of January 15, 2008 certain information regarding
the beneficial ownership of common stock of the Company 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 common stock
of
the Company, (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 of common stock
and warrants and options to acquire shares of common stock that are exercisable
within sixty (60) days of January 15, 2008. Unless otherwise indicated, the
address of each of the beneficial owners is c/o EMCORE Corporation, 10420
Research Road, SE, Albuquerque, New Mexico 87123.
|
Name
|
Shares
Beneficially
Owned
|
Percent
of
Common
Stock
|
||||||
|
Robert
Bogomolny
|
86,972
|
*
|
||||||
|
Howard
W. Brodie (1)
|
11,250
|
*
|
||||||
|
John
Gillen
|
29,242
|
*
|
||||||
|
Adam
Gushard (2)
|
184,746
|
*
|
||||||
|
Hong
Q. Hou (3)
|
387,500
|
*
|
||||||
|
John
Iannelli (4)
|
80,452
|
*
|
||||||
|
Keith
J. Kosco, Esq.(5)
|
6,000
|
*
|
||||||
|
Reuben
F. Richards, Jr. (6)
|
1,052,054
|
2.0 | % | |||||
|
Thomas
J. Russell (7)
|
5,023,791
|
9.6 | % | |||||
|
Charles
Scott (8)
|
42,409
|
*
|
||||||
|
Richard
A. Stall (9)
|
87,280
|
*
|
||||||
|
Thomas
G. Werthan (10)
|
81,266
|
*
|
||||||
|
All
directors and executive officers as a group
(10
persons) (11)
|
6,974,432
|
13.3 | % | |||||
|
Alexandra
Global Master Fund Ltd. (12)
|
3,222,503
|
6.2 | % | |||||
|
AMVESCAP
PLC (13)
|
4,000,005
|
7.7 | % | |||||
|
Kern
Capital Management, LLC (14)
|
2,691,300
|
5.2 | % | |||||
|
Kingdon
Capital Management, LLC (15)
|
2,625,000
|
5.0 | % | |||||
|
Kopp
Investment Advisors, LLC (16)
|
4,048,740
|
7.7 | % | |||||
|
The
Quercus Trust (17)
|
5,683,127
|
10.9 | % | |||||
|
Wachovia
Corporation (18)
|
5,162,966
|
9.9 | % | |||||
29
|
*
|
Less
than 1.0%
|
|
(1)
|
Includes
options to purchase 250 shares.
|
|
(2)
|
Includes
options to purchase 166,098 shares.
|
|
(3)
|
Includes
options to purchase 283,125 shares.
|
|
(4)
|
Includes
options to purchase 72,131 shares and 3,368 shares held in a 401(k)
Plan.
|
|
(5)
|
Includes
options to purchase 6,000 shares.
|
|
(6)
|
Includes
options to purchase 397,500 shares and 175,000 shares held by
spouse.
|
|
(7)
|
Includes
2,280,035 shares held by The AER Trust.
|
|
(8)
|
Includes
30,409 shares owned by Kircal, Ltd.
|
|
(9)
|
Includes
options to purchase 25,000 shares and 548 shares held in a 401(k)
Plan.
|
|
(10)
|
Includes
options to purchase 65,000 shares.
|
|
(11)
|
Includes
options to purchase 924,854 shares beneficially owned by Reuben Richards,
Jr., Chief Executive Officer; Hong Hou, President and Chief Operating
Officer; Adam Gushard, Interim Chief Financial Officer; John Iannelli,
Chief Technology Officer; and Keith Kosco, Chief Legal
Officer. No options to purchase shares were beneficially owned
by the five non-employee directors, except for options to purchase
65,000
shares owned by Thomas Werthan. Richard Stall and Howard Brodie
resigned from the Company prior to January 15, 2008 and are not included
in this total.
|
|
(12)
|
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.
|
|
(13)
|
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.
|
|
(14)
|
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.
|
|
(15)
|
This
information is based solely on information contained in a Schedule
13G
filed with the SEC on January 14, 2008, by Kingdon Capital Management,
LLC
(“Kingdon Capital”) and Mark Kingdon (“Kingdon”). Kingdon
Capital and Kingdon report beneficially owning a total of 2,625,000
shares
and sharing voting and dispositive power with respect to such
shares. The address of Kingdon Capital and Kingdon is 152 West
57th Street, 50th Floor, New York, New York 10019.
|
|
(16)
|
This
information is based solely on information contained in a Schedule
13D
filed with the SEC on January 4, 2008, by Kopp Investment Advisors,
LLC
(“KIA”), a wholly-owned subsidiary of Kopp Holding Company, LLC (“KHC”),
which is controlled by Mr. LeRoy C. Kopp (“Kopp”) (collectively, the “Kopp
Parties”). KIA reports beneficially owning a total of 4,048,740
shares including having sole voting power over 4,048,740 shares and
shared
dispositive power over 2,469,665 shares. KHC reports
beneficially owning a total of 4,048,740 shares. Kopp reports
beneficially owning a total of 4,219,665 shares, including having
sole
dispositive power over 1,750,000 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.
|
|
(17)
|
This
information is based solely on information contained in a Schedule
13D
filed with the SEC on October 5, 2007, by The Quercus Trust, David
Gelbaum
and Monica Chavez Gelbaum. The Quercus Trust reports
beneficially owning a total of 5,683,127 shares and sharing voting
and
dispositive power with respect to such shares. David Gelbaum,
Trustee, The Quercus Trust, reports beneficially owning a total of
5,683,127 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 5,683,127 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.
|
|
(18)
|
This
information is based solely on information contained in a Schedule
13G
filed with the SEC on November 9, 2007, by Wachovia
Corporation. Wachovia Corporation reports beneficially owning a
total of 5,162,966 shares including having sole voting power over
2,424,786 shares and sole dispositive power over 2,882,931
shares. Wachovia Corporation is a parent holding company and
the relevant subsidiaries are Wachovia Securities, LLC (IA) and Wachovia
Bank, N.A. (B.K.). Wachovia Securities, LLC is an investment
advisor for clients; the securities reported by this subsidiary are
beneficially owned by such clients. Wachovia Bank, N.A. (B.K.)
holds the securities reported in a fiduciary capacity for its respective
customers. The address of Wachovia Corporation is
One Wachovia Center, Charlotte, North
Carolina 28288.
|
30
EQUITY
COMPENSATION PLAN INFORMATION
The
following table sets forth, as of September 30, 2007, 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
|
5,695,846
|
$ |
5.46
|
1,677,413
|
||||||||
|
Equity
compensation plans not approved by security holders
|
1,920
|
$ |
0.23
|
-
|
||||||||
|
Total
|
5,697,766
|
$ |
5.46
|
1,677,413
|
||||||||
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, as well as anyone who is a beneficial owner
of more than 10 percent of a registered class of the Company’s stock, 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 2007, with the exception of
December 27, 2006 filings for Dr. Hou on Form 3 and Form 4 (reporting an
employee stock option grant), both of which were reported 13 days late and
one
filing on July 16, 2007 for Dr. Iannelli on Form 3, which was reported 21 days
late due to an administrative error.
31
PROPOSAL
II: APPOINTMENT OF INDEPENDENT
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, 2007. 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, 2008. 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
2007 & 2006 AUDITOR FEES AND SERVICES
Deloitte
& Touche LLP was the independent registered public accounting firm that
audited EMCORE’s financial statements for fiscal 2007 and 2006. 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
services rendered for fiscal 2007 and 2006 are as follows:
|
Fiscal
2007
|
Fiscal
2006
|
||||||
|
Audit
fees (1)
|
$
|
4,593,000
|
$
|
1,170,000
|
|||
|
Audit-related
fees (2)
|
49,000
|
34,000
|
|||||
|
Tax
fees (3)
|
--
|
--
|
|||||
|
All
other fees
(4)
|
--
|
--
|
|||||
|
Total
|
$
|
4,642,000
|
$
|
1,204,000
|
_____________________
|
(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 2007 included $885,000 and
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). The fees incurred during fiscal
2007 include fees related to our voluntary stock option review and
the
related restatement of our financial data for the fiscal years ended
September 30, 2006 and 2005 and 2004.
|
|
(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.
|
32
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 9 times in fiscal 2007. 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 2007 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 2007, which was filed on December 31,
2007.
|
AUDIT
COMMITTEE
Charles
Thomas Scott, Chairman
Robert
Bogomolny
John
Gillen
|
33
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 2007, 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.
34
The
Board
of Directors has determined that it is an appropriate time to propose amendments
to our Restated Certificate of Incorporation to increase the number of
authorized shares of capital stock from 105,882,352 to 205,882,352 and to
increase the number of authorized shares of common stock from 100 million to
200
million.
Under
our
Restated Certificate of Incorporation, the total number of shares of capital
stock which the Company has the authority to issue is 105,882,352. Of
these authorized shares, common stock comprises 100 million shares and preferred
stock comprises 5,882,352 shares. As of January [__], 2008, the
number of common shares outstanding was approximately [___]
million and [___] million shares of common stock were held in
treasury. There are no outstanding shares of preferred stock and the
proposed amendment would not increase the authorized number of preferred
shares. The Board of Directors believes that it is advisable and in
the best interests of the Company's stockholders to increase the number of
authorized shares of common stock to provide a sufficient reserve of shares
for
future business and financial needs of the Company. These additional
authorized shares would enhance capital and liquidity, possible future
acquisitions, and other corporate purposes. Existing holders of
shares of common stock would have no preemptive rights under our Restated
Certificate of Incorporation to purchase any additional shares of common stock
issued by the Company. It is possible that additional shares of
common stock may be issued at a time and under circumstances that may dilute
the
voting power of existing stockholders, decrease earnings per share and decrease
the book value per share of shares presently held.
The
Board
of Directors has unanimously adopted a resolution approving, subject to
stockholder approval, and declaring the advisability of an amendment to Article
Fourth of our Restated Certificate of Incorporation to increase the number
of
authorized shares of capital stock from 105,882,352 to 205,882,352 million
and
to increase the number of authorized shares of common stock from 100 million
to
200 million.
The
specific amendments to Article Fourth are proposed as follows:
The
total
number of shares of Capital Stock of the Corporation shall be 205,882,352 shares
of which:
A.
Of the
Capital Stock, 200,000,000 shares shall consist of Common Stock which shall
be
entitled to one vote per share of all matters which holders of the Common Stock
shall be entitled to vote on.
B.
Of the
Capital Stock, 5,882,352 shares shall consist of Preferred Stock which may
be
divided into such classes and such series as shall
be established from time to time
by resolutions of the Board
of Directors and filed as an amendment to this Certificate
of Incorporation, without any requirement of vote or class vote
of shareholders. The Board of Directors shall have the
right and power to establish and designate in any such
Class or Series Resolution such priorities, powers,
preferences and relative, participating, optional or other
special rights
and qualifications, limitations and restrictions as
it shall determine.
35
RECOMMENDATION
OF THE BOARD OF DIRECTORS
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENT OF THE
COMPANY’S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK UNDER PROPOSAL III.
36
PROPOSAL IV:
TO APPROVE AN INCREASE IN THE NUMBER OF SHARES AVAILABLE UNDER EMCORE’S
2000 STOCK OPTION PLAN
On
November 8, 1999, the Board of Directors adopted the EMCORE Corporation 2000
Stock Option Plan (the “2000 Plan”). The 2000 Plan became effective upon its
approval by the Company’s shareholders at the 2000 Annual Meeting. It was
amended by a vote of the shareholders at the Company’s 2001 Annual Meeting to
increase the number of shares of Common Stock on which options could be granted
by 3,300,000, to 4,750,000, amended a second time by a vote of the shareholders
at the Company’s 2004 Annual Meeting to increase the number of shares of Common
Stock on which options could be granted by 2,100,000 (for a maximum total of
6,850,000), and amended a third time by a vote of the shareholders at the
Company’s 2006 Annual Meeting to increase the number of shares of Common Stock
on which options could be granted by 2,500,000 (for a maximum total of
9,350,000).
At
the
2008 Annual Meeting, the shareholders will be requested to approve an additional
increase in the number of shares of Common Stock available for issuance under
the 2000 Plan. As of the date of the 2008 Annual Meeting, we expect to have
options for only approximately [_______] shares authorized and available for
issuance under the 2000 Plan. Furthermore, no shares are currently available
for
grant under the EMCORE Corporation 1995 Incentive and Non-Statutory Stock Option
Plan (as amended, the “1995 Plan”). The 1995 Plan had allowed the grant of a
total of 2,744,118 shares of Common Stock (on a post-split basis) pursuant
to
stock options and stock appreciation rights.
Our
Company’s philosophy on employee compensation is to provide employees and
management with equity participation linked to long-term stock price
performance, while at the same time remaining sensitive to the potential impact
on our other shareholders. We believe that offering broad-based equity
compensation through stock options is critical to attracting and retaining
the
highest caliber employees. Employees with a stake in the future success of
our
business are motivated to achieve long-term growth and thus maximize shareholder
value. Options have historically formed a significant portion of our employees’
overall compensation, and almost all of our current employees have received
options. The purpose of this proposal is to provide sufficient reserves of
shares, based on our current business plans, to ensure the Company’s ability to
continue to provide new hires, employees and management with an equity stake
in
the Company over the next year.
The
Company’s three-year average “burn rate” (the average number of stock options
granted during fiscal 2004-2006 compared to the total shares outstanding in
each
fiscal year) is approximately 4.0%. This three-year average “burn
rate” is in line with the mean for the Company’s peer group, which is
approximately 4.0% and significantly lower than the peer group maximum which
is
7.85%. For purposes of the foregoing, the Company’s peer group
includes all companies listed in the Compensation Discussion and Analysis under
the heading “The Company’s Annual Compensation Decision-Making Process,” except
Vitesse Semiconductor and Kopin Corporation, which were not current with their
financials at the time these burn rates, were calculated.
Accordingly,
on February [__], 2008, the Board of Directors, acting on the recommendation
of
the Compensation Committee, unanimously adopted an amendment to the 2000 Plan,
subject to approval by the shareholders, to increase the total number of shares
of Common Stock on which options may be granted under the 2000 Plan by
3,500,000, to 12,850,000. The Board of Directors recommends approval of this
amendment to the 2000 Plan to permit the issuance of this increased number
of
shares of Common Stock thereunder. The Board of Directors believes
37
that
this
proposed increase is in the best interests of the Company and the shareholders.
In the event this proposal is not approved by our shareholders, and as a
consequence we are unable to continue to grant options at competitive levels,
the Board of Directors believes that it will negatively affect our ability
to
meet our need for highly qualified personnel and our ability to manage future
growth.
If
this
proposal is adopted, the third sentence of Section 4(a) of the 2000 Plan would
be amended to read, in its entirety, as follows:
“The
total number of shares of Stock that may be delivered pursuant to Options
granted under the Plan is 12,850,000, plus any shares of Stock subject to a
stock option granted under the Predecessor Plan which for any reason expires
or
is terminated or canceled without having been fully exercised by delivery of
shares of Stock; provided, however, that the number of shares of Stock that
may
be delivered pursuant to Incentive Stock Options under the Plan is 12,850,000,
without application of paragraph 4(d) of this Section 4.”
Other
key
features of the 2000 Plan and significant historical option grant information
are as follows:
|
•
|
The
2000 Plan and the 1995 Plan were both approved by the Company’s
shareholders;
|
|
•
|
The
2000 Plan is administered solely by the Compensation Committee, which
is
composed entirely of independent directors;
|
|
•
|
It
is the Company’s policy only to grant options under the 2000 Plan that
have an exercise price equal to or greater than the fair market value
(as
defined in the 2000 Plan, as amended) of our common stock at the
date of
grant;
|
|
•
|
It
is the Company’s policy to grant options with a five-year vesting schedule
for first-time grants;
|
|
•
|
The
2000 Plan authorizes only the grant of options; and
|
|
•
|
The
2000 Plan does not include any automatic share reserve increase provision
(i.e. any “evergreen” provision).
|
In
connection with our internal review of our historical stock option granting
practices, on November 13, 2006, the Board of Directors adopted a revised
Incentive Stock Option Grant Policy that provided that:
|
•
|
non-administrative
grant responsibilities other than with respect to new-hire options
are to
be set by the Compensation Committee;
|
|
•
|
all
new-hire options be issued the later of an employee’s first day of
employment, or where applicable, the date the Compensation Committee
approved the terms of the new-hire grant and have an exercise price
of not
less than 100% of the fair market value of the Company’s stock on that
date. The Board will conduct a review of all new-hire grants to
ensure compliance with the Company’s policies and
procedures;
|
|
•
|
the
grant date for all options awarded to employees other than new-hire
options is the date on which the Compensation Committee meets and
approves
the grants;
|
|
•
|
the
exercise price of options other than new hire-options should be set
at the
closing price of the common stock of the Company on the date on which
the
Compensation Committee approves the grants;
|
|
•
|
the
Company should, with respect to annual retention grants to employees,
maintain the practice of awarding retention grants to senior management
on
the same date and with the same exercise price as retention grants
awarded
to non-senior management employees;
|
|
•
|
no
additions or modifications to option grants should be permitted after
the
Compensation Committee has approved the option grants;
and
|
|
•
|
all
grants are to be communicated to employees as soon as reasonably
practicable after the grant date.
|
38
Effective
October 1, 2005, the first day of fiscal 2006, EMCORE adopted SFAS No. 123(R),
Share-Based Payment (Revised 2004), on a modified prospective basis. As a
result, EMCORE will now include stock-based compensation costs in its results
of
operations for the fiscal quarter ended December 31, 2005 and subsequent
reporting periods.
This
proposal summarizes the essential features of the 2000 Plan, as it would be
amended pursuant to this proposal. You should read the amended plan for a full
statement of its terms and conditions. A copy of the 2000 Plan may be obtained
upon written request to our Investor Relations Department at 10420 Research
Road, SE, Albuquerque, New Mexico 87123.
DESCRIPTION
OF MATERIAL FEATURES OF THE 2000 PLAN
The
purpose of the 2000 Plan is to enable us to grant stock options to eligible
officers, employees, non-employee directors and consultants at levels we believe
will motivate superior performance and help us attract and retain outstanding
personnel. We believe that providing our key personnel with stock option
incentives will enhance our long-term performance.
The
2000
Plan became effective at the 2000 Annual Meeting. As previously amended, the
2000 Plan currently provides for the grant of options to purchase a total of
up
to 9,350,000 shares of Common Stock (subject to adjustment for certain changes
in our capital, as described below under “Changes in Capital”).
Administration.
The Compensation Committee has the exclusive discretionary authority to operate,
manage and administer the 2000 Plan in accordance with its terms. The
Compensation Committee’s decisions and actions concerning the 2000 Plan are
final and conclusive. Within the limitations of the 2000 Plan and applicable
laws and rules, the Compensation Committee may allocate or delegate its
administrative responsibilities and powers under the 2000 Plan, and our Board
of
Directors is permitted to exercise all of the Compensation Committee’s powers
under the 2000 Plan.
In
addition to its other powers under the 2000 Plan described in this summary,
the
Compensation Committee has the following authorities and powers under the 2000
Plan in accordance with its terms:
39
|
•
|
to
determine which eligible employees, officers, directors and/or consultants
will receive options under the 2000 Plan and the number of shares
of
Common Stock covered by each such option;
|
|
•
|
to
establish, amend, waive and rescind rules, regulations and guidelines
for
carrying out the 2000 Plan;
|
|
•
|
to
establish, administer and waive terms, conditions, performance criteria,
restrictions, or forfeiture provisions, or additional terms, under
the
2000 Plan, or applicable to options granted under the 2000
Plan;
|
|
•
|
to
accelerate the vesting or exercisability of options granted under
the 2000
Plan;
|
|
•
|
to
offer to buy out outstanding options granted under the 2000
Plan;
|
|
•
|
to
determine the form and content of the option agreements which represent
options granted under the 2000 Plan;
|
|
•
|
to
interpret the 2000 Plan and option agreements;
|
|
•
|
to
correct any errors, supply any omissions and reconcile any inconsistencies
in the 2000 Plan and/or any option agreements; and
|
|
•
|
to
take any actions necessary or advisable to operate and administer
the 2000
Plan.
|
Currently,
the Compensation Committee consists of Messrs. Gillen, Scott, and Bogomolny,
each of whom is a director, but not an employee, of EMCORE.
Shares
Subject to the 2000 Plan; Limitations on Grants of Options. If
this proposal is approved by the shareholders, a total of 12,850,000 shares
of
Common Stock would be available for delivery upon exercise of options granted
under the 2000 Plan, subject to adjustment for certain changes in our capital
(described below under “Changes in Capital”). The shares of Common Stock that
may be delivered under the 2000 Plan consist of either authorized and unissued
shares (which will not be subject to preemptive rights) or previously issued
shares that we have reacquired and hold as treasury shares. In addition, shares
of Common Stock covered by options that terminate or are canceled before being
exercised under the 2000 Plan or the 1995 Plan would be available for future
options grants under the 2000 Plan. If any person exercises an option under
the
2000 Plan or the 1995 Plan by paying the exercise price with shares of Common
Stock which such person already owns, only the number of shares in excess of
the
shares so paid by such person will count against the total number of shares
that
may be delivered under the 2000 Plan. “Incentive Stock Options” (as described
below under “Terms of Options—Types of Options”) covering no more than a total
of 12,850,000 shares of Common Stock may be granted under the 2000
Plan.
No
more
than 600,000 shares of Common Stock (subject to adjustment for certain changes
in our capital (described below under “Changes in Capital”)) may be subject to
options granted under the 2000 Plan to a single recipient during a 12-month
period.
Participation.
The Compensation Committee may grant options under the 2000 Plan to our
officers, employees, directors (including non-employee directors) and
consultants, as well as those of our affiliates. Our affiliates, for purposes
of
the 2000 Plan, are generally entities in which we have, directly or indirectly,
greater than 50 percent ownership interest, or which have a more than 50 percent
direct or indirect ownership interest in us, or any other entity in which we
have a material equity interest that the Compensation Committee designates
as an
affiliate for
40
purposes
of the 2000 Plan. Only employees of EMCORE and its subsidiaries (as defined
in
the 2000 Plan) are eligible to receive “incentive stock options” under the 2000
Plan, however.
All
of
our employees (currently approximately 750 in number), including all of our
executive officers (5 in number, of whom 2 are also directors), are eligible
to
receive options under the 2000 Plan. The individuals to whom additional options
will be granted under the 2000 Plan, and the amounts of such individual grants,
have not been determined, but it is anticipated that, among others, all of
our
Named Executive Officers, will receive such additional options under the 2000
Plan. Options are granted on a discretionary basis as approved by the
Compensation Committee.
TERMS
OF OPTIONS.
Types
of Options. Additional options to be granted under the 2000 Plan
will be either “incentive stock options,” which are intended to receive special
tax treatment under the Internal Revenue Code of 1986, as amended (the “Internal
Revenue Code”), or options other than incentive stock options (referred to as
“non-qualified options”), as determined by the Compensation Committee and stated
in the applicable option agreement.
Option
Price. The Compensation Committee determines the option exercise
price of each option granted under the 2000 Plan at the time of grant. However,
the per-share exercise price of an “incentive stock option” granted under the
2000 Plan must be at least equal to 100 percent of the fair market value of
Common Stock (as defined in the 2000 Plan, as amended) on the date such
incentive stock option is granted. On February 7, 2008, the fair market value
of
a share of Common Stock was $13.70.
Payment.
The option exercise price of any options granted under the 2000 Plan may be
paid
in any legal manner prescribed by the Compensation Committee. The method of
payment includes a “cashless exercise” program if the Compensation Committee
elects to establish such a program, or use of shares of Common Stock already
owned for at least six months by the person exercising an option, subject in
any
case to whatever conditions or limitations the Compensation Committee may
prescribe. Any cash proceeds that we receive upon the exercise of options
granted under the 2000 Plan constitute general funds of EMCORE.
Exercise
of Options. The Compensation Committee determines, as set forth in
the applicable option agreements, the times or conditions upon which options
granted under the 2000 Plan may be exercised, and any events that will cause
such options to terminate. Each option granted under the 2000 Plan will expire
on or before ten years following the date such option was granted. In general,
options granted under the 2000 Plan also terminate when the recipient’s service
as a director, employee or consultant of EMCORE or its affiliates terminates;
however, the Compensation Committee may permit an option that has not otherwise
expired to be exercised after such a termination of service as to all or part
of
the shares covered by such option. A recipient may elect to defer until a later
date delivery of shares otherwise deliverable upon exercise of such recipient’s
option, if permitted by the Compensation Committee.
Transferability
of Options. Options granted under the 2000 Plan are, in general,
only exercisable during the lifetime of the recipient by him or her. A deceased
recipient’s options are, however, transferable by will or the laws of descent
and distribution or to a designated beneficiary of such recipient. The
Compensation Committee may permit the recipient of a non-qualified option under
the 2000 Plan to transfer such option during his or her lifetime, subject to
such terms and conditions as the Compensation Committee may
prescribe.
41
Changes
in Capital. In order to preserve the benefits or potential
benefits intended to be made available under the 2000 Plan or outstanding
options, or as otherwise necessary, the Compensation Committee may, in its
discretion, make appropriate adjustments in (a) the number, class and kind
of
shares available under the 2000 Plan, (b) the limit on the number of shares
of
Common Stock that can be subject to options granted to a single recipient during
a 12-month period, and (c) the number, class, kind and price of shares under
each outstanding option, in the event of changes in our outstanding common
stock
resulting from certain changes in our corporate structure or capitalization,
such as the payment of a stock dividend, a stock split, a recapitalization,
reorganization, merger or consolidation (whether or not EMCORE is the surviving
corporation), a spin-off, liquidation or other substantial distribution of
assets or the issuance of our stock for less than full consideration, or rights
or convertible securities with respect to our stock.
In
the
event of a “change in control” of EMCORE (as defined in the 2000 Plan), all
options then outstanding under the 2000 Plan will be accelerated and become
immediately exercisable in full. The 2000 Plan gives the Compensation Committee
discretion, in the event of such a change in control transaction, to substitute
for shares of Common Stock subject to options outstanding under the 2000 Plan
shares or other securities of the surviving or successor corporation, or another
corporate party to the transaction, with approximately the same value, or to
cash out outstanding options based upon the highest value of the consideration
received for Common Stock in such transaction, or, if higher, the highest fair
market value of Common Stock during the 30 business days immediately prior
to
the closing or expiration date of such transaction, reduced by the option
exercise price of the options cashed out. The Compensation Committee may also
provide that any options subject to any such acceleration, adjustment or
conversion cannot be exercised after such a change in control transaction.
If
such a change in control transaction disqualifies an employee’s incentive stock
options from favorable “incentive stock option” tax treatment under the Internal
Revenue Code or results in the imposition of certain additional taxes on such
an
employee, we may, in the Compensation Committee’s discretion, make a cash
payment that would leave such an employee in the same after-tax position that
he
or she would have been in had such disqualification not occurred, or to
otherwise equalize such employee for such taxes.
Tax
Withholding Obligations. Recipients who exercise their options
under the 2000 Plan are required to pay, or make other satisfactory arrangements
to pay, tax withholding obligations arising under applicable law with respect
to
such options. Such taxes must be paid in cash by a recipient, or, if the
Compensation Committee permits, a recipient may elect to satisfy all or a part
of such tax obligations by requesting that we withhold shares otherwise
deliverable upon the exercise of his or her option and/or by tendering shares
of
Common Stock already owned by such recipient for at least six months. We may
also, in accordance with applicable law, deduct any such taxes from amounts
that
are otherwise due to such a recipient.
Amendment
and Termination of the 2000 Plan. Our Board of Directors may
amend, alter, suspend or terminate the 2000 Plan. However, the Board of
Directors will be required to obtain approval of the shareholders, if such
approval is required by any applicable law (including requirements relating
to
incentive stock options) or rule, of any amendment of the 2000 Plan that
would:
42
|
•
|
except
in the event of certain changes in our capital (as described above
under
“Changes in Capital”), increase the number of shares of Common Stock that
may be delivered under the 2000 Plan, or that may be subject to options
granted to a single recipient in a 12-month period;
|
|
•
|
decrease
the minimum option exercise price required by the 2000
Plan;
|
|
•
|
change
the class of persons eligible to receive options under the 2000 Plan;
or
|
|
•
|
extend
the duration of the 2000 Plan or the exercise period of any options
granted under the 2000 Plan.
|
Accordingly,
a vote of the shareholders is required for the amendment to the 2000 Plan
contemplated by this proposal.
The
Compensation Committee may amend outstanding options. However, no such amendment
or termination of the 2000 Plan or amendment of outstanding options may
materially impair the previously accrued rights of any recipient of an option
under the 2000 Plan without his or her written consent.
The
2000
Plan will terminate on February 16, 2010, unless the 2000 Plan is terminated
earlier by our Board of Directors or due to delivery of all shares of Common
Stock available under the 2000 Plan; however, any options outstanding when
the
2000 Plan terminates will remain outstanding until such option terminates or
expires.
Certain
Federal Income Tax Consequences. The following is a brief summary
of certain significant United States Federal income tax consequences, under
the
Internal Revenue Code, as in effect on the date of this summary, applicable
to
EMCORE and recipients of options under the 2000 Plan (who are referred to in
this summary as “optionees”) in connection with the grant and exercise of
options under the 2000 Plan. This summary is not intended to be exhaustive,
and,
among other things, does not describe state, local or foreign tax consequences,
or the effect of gift, estate or inheritance taxes. References to “EMCORE” and
“us” in this summary of tax consequences mean EMCORE Corporation or any
affiliate of EMCORE Corporation that employs an optionee, as the case may
be.
The
grant
of stock options under the 2000 Plan will not result in taxable income to
optionees or an income tax deduction for us. However, the transfer of Common
Stock to optionees upon exercise of their options may or may not give rise
to
taxable income to the optionees and tax deductions for us, depending upon
whether the options are “incentive stock options” or non-qualified
options.
The
exercise of a non-qualified option generally results in immediate recognition
of
ordinary income by the optionee and a corresponding tax deduction for us in
the
amount by which the fair market value of the shares of Common Stock purchased,
on the date of such exercise, exceeds the aggregate option price. Any
appreciation or depreciation in the fair market value of such shares after
the
date of such exercise will generally result in a capital gain or loss to the
optionee at the time he or she disposes of such shares.
In
general, the exercise of an incentive stock option is exempt from income tax
(although not from the alternative minimum tax) and does not result in a tax
deduction for us at any time unless the optionee disposes of the common stock
purchased thereby within two years of the date such incentive stock option
was
granted or one year of the date of such exercise (known as a “disqualifying
disposition”). If these holding period requirements under the
Internal
43
Revenue
Code are satisfied, and if the optionee has been an employee of us at all times
from the date of grant of the incentive stock option to the day three months
before such exercise (or twelve months in the case of termination of employment
due to disability), then such optionee will recognize any gain or loss upon
disposition of such shares as capital gain or loss. However, if the optionee
makes a disqualifying disposition of any such shares, he or she will generally
be obligated to report as ordinary income for the year in which such disposition
occurs the excess, with certain adjustments, of the fair market value of the
shares disposed of, on the date the incentive stock option was exercised, over
the option price paid for such shares. We would be entitled to a tax deduction
in the same amount so reported by such optionee. Any additional gain realized
by
such optionee on such a disqualifying disposition of such shares would be
capital gain. If the total amount realized in a disqualifying disposition is
less than the exercise price of the incentive stock option, the difference
would
be a capital loss for the optionee.
Under
Section 162(m) of the Internal Revenue Code, we may be limited as to Federal
income tax deductions to the extent that total annual compensation in excess
of
$1 million is paid to our Chief Executive Officer or any one of our other four
highest paid executive officers who are employed by us on the last day of our
taxable year. However, certain “performance-based compensation” the material
terms of which are disclosed to and approved by our shareholders is not subject
to this deduction limitation. We have structured the 2000 Plan with the
intention that compensation resulting from options granted under the 2000 Plan
will be qualified performance-based compensation and, assuming shareholder
approval of the 2000 Plan, deductible without regard to the limitations
otherwise imposed by Section 162(m) of the Internal Revenue Code.
Under
certain circumstances, accelerated vesting or exercise of options under the
2000
Plan in connection with a “change in control” of EMCORE might be deemed an
“excess parachute payment” for purposes of the golden parachute payment
provisions of Section 280G of the Internal Revenue Code. To the extent it is
so
considered, the optionee would be subject to an excise tax equal to 20 percent
of the amount of the excess parachute payment, and we would be denied a tax
deduction for the excess parachute payment.
RECOMMENDATION
OF THE BOARD OF DIRECTORS
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
INCREASE IN SHARES AVAILABLE UNDER THE 2000 STOCK OPTION PLAN IN ACCORDANCE
WITH
PROPOSAL IV.
44
GENERAL
MATTERS
Annual
Report on Form 10-K and Financial Statements
The
Company’s 2007 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 2007 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 2009 Annual Meeting of Shareholders,
including nominations for the Company’s Board of Directors, must be received by
the Company by [________], 2008. 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.
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.
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
KEITH
J. KOSCO
SECRETARY
|
45
APPENDIX
A
PROPOSED
AMENDMENT TO THE RESTATED CERTFICATE OF INCORPORATION OF EMCORE
CORPORATION
FOURTH: The
total number of
shares of Capital Stock of the Corporation shall be 205,882,352 shares of
which:
A.
Of the Capital Stock, 200,000,000
shares shall consist of Common Stock which shall be entitled to one vote per
share of all matters which holders of the Common Stock shall be entitled to
vote
on.
B.
Of the Capital Stock, 5,882,352
shares shall consist of Preferred Stock which may be divided into
such classes and such series as shall be established
from time to time by resolutions of
the Board of Directors and filed as an
amendment to this Certificate of Incorporation, without any
requirement of vote or class vote of shareholders. The
Board of Directors shall have the right and power to
establish and designate in any such Class or
Series Resolution such priorities, powers, preferences and
relative, participating, optional or other special rights
and qualifications, limitations and restrictions as
it shall determine.
46
47
APPENDIX
B
EMCORE
CORPORATION’S 2000 STOCK OPTION PLAN
AMENDED
AND RESTATED 2000 STOCK OPTION PLAN
Revised
February 13, 2006
1. Purposes.
The purposes of the EMCORE Corporation 2000 Stock Option Plan are to give
officers and other employees, consultants and non-employee directors of the
Company and its Affiliates an opportunity to acquire shares of Stock, to provide
an incentive for such employees, consultants and directors to continue to
promote the best interests of the Company and its Affiliates and enhance its
long-term performance and to provide an incentive for such employees,
consultants and directors to join or remain with the Company and its Affiliates.
Toward these objectives, the Committee may grant Options to such employees,
directors and consultants, all pursuant to the terms and conditions of the
Plan.
2. Definitions.
As used in the Plan, the following capitalized terms shall have the meanings
set
forth below:
(a) “Affiliate”
- other than the Company, (i) any corporation or limited liability company
in an
unbroken chain of corporations or limited liability companies ending with the
Company if each corporation or limited liability company owns stock or
membership interests (as applicable) possessing more than fifty percent (50%)
of
the total combined voting power of all classes of stock in one of the other
corporations or limited liability companies in such chain; (ii) any corporation,
trade or business (including, without limitation, a partnership or limited
liability company) which is more than fifty percent (50%) controlled (whether
by
ownership of stock, assets or an equivalent ownership interest or voting
interest) by the Company or one of its Affiliates; or (iii) any other entity,
approved by the Committee as an Affiliate under the Plan, in which the Company
or any of its Affiliates has a material equity interest.
(b) “Agreement”
- a written stock option award agreement evidencing an Option, as described
in
Section 3(e).
(c) “Award
Limit” - 300,000 shares of Stock (as adjusted in accordance with
Section 10).
(d) “Beneficial
Ownership” - (including correlative terms) shall have the same meaning
given such term in Rule 13d-3 promulgated under the Exchange Act.
(e) “Board”
- the Board of Directors of the Company.
(f) “Change
in Control” - the occurrence of any of the following:
(i)
an
acquisition in one transaction or a series of related transactions (other than
directly from the Company or pursuant to Options granted under the Plan or
other
similar awards granted by the Company) of any Voting Securities by any Person,
immediately after which such
48
Person has Beneficial Ownership of fifty percent (50%) or more of the combined voting power of the Company’s then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred pursuant to this Section 2(f), Voting Securities which are acquired in a Non-Control Acquisition shall not constitute an acquisition that would cause a Change in Control;
(ii)
the
individuals who, immediately prior to the Effective Date, 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 election, or nomination for election, by
the
Company’s common stockholders, of any new director was approved by a vote of at
least a majority of the Incumbent Board, such new director shall, for purposes
of the Plan, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member
of the Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened “Election Contest” (as described in Rule
14a-11 promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the
Board (a “Proxy Contest”) including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest;
or
(iii)
the
consummation of:
(A)
a
merger, consolidation or reorganization involving the Company
unless:
(1)
the
stockholders of the Company, immediately before such merger, consolidation
or
reorganization, own, directly or indirectly, immediately following such merger,
consolidation or reorganization, more than fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation or reorganization (the “Surviving
Corporation”) in substantially the same proportion as their ownership
of the Voting Securities immediately before such merger, consolidation or
reorganization,
(2)
the
individuals who were members of the Incumbent Board immediately prior to the
execution of the agreement providing for such merger, consolidation or
reorganization constitute at least a majority of the members of the board of
directors of the Surviving Corporation, or a corporation Beneficially Owning,
directly or indirectly, a majority of the voting securities of the Surviving
Corporation, and
(3)
no
Person, other than (i) the Company, (ii) any Related Entity (as defined
in Section 2(p)), (iii) any employee benefit plan (or any trust forming a part
thereof) that, immediately prior to such merger, consolidation or
reorganization, was maintained by the Company, the Surviving Corporation, or
any
Related Entity or (iv) any Person who, together with its Affiliates, immediately
prior to such merger, consolidation or reorganization had Beneficial Ownership
of fifty percent (50%) or more of the then outstanding Voting Securities, owns,
together with its Affiliates, Beneficial Ownership of fifty percent (50%) or
more of the combined voting power of the Surviving Corporation’s then
outstanding voting securities (a transaction described in clauses (1)
through (3) above is referred to herein as a “Non-Control
Transaction”);
(B)
a
complete liquidation or dissolution of the Company; or
49
(C)
an
agreement for the sale or other disposition of all or substantially all of
the
assets or business of the Company to any Person (other than a transfer to a
Related Entity or the distribution to the Company’s stockholders of the stock of
a Related Entity or any other assets).
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because
any Person (the “Subject Person”) acquired Beneficial Ownership
of fifty percent (50%) or more of the combined voting power of the then
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting Securities
then outstanding, increases the proportional number of shares Beneficially
Owned
by the Subject Persons, 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 (1) before such share acquisition by
the
Company the Subject Person becomes the Beneficial Owner of any new or additional
Voting Securities in a related transaction or (2) after such share acquisition
by the Company the Subject Person becomes the Beneficial Owner of any new or
additional Voting Securities which in either case increases the percentage
of
the then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall be deemed to occur. Solely for purposes of this
Section 2(f), (x) “Affiliate” shall mean, with respect to any Person, any other
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such Person; (y) any “Relative” (for this purpose,
“Relative” means a spouse, child, parent, parent of spouse, sibling or
grandchild) of an individual shall be deemed to be an Affiliate of such
individual for this purpose; and (z) neither the Company nor any Person
controlled by the Company shall be deemed to be an Affiliate of any holder
of
Common Stock.
(g) “Code”
- the Internal Revenue Code of 1986, as it may be amended from time to time,
including regulations and rules thereunder and successor provisions and
regulations and rules thereto.
(h) “Committee”
- the Compensation Committee of the Board, or such other Board committee as
may
be designated by the Board to administer the Plan.
(i) “Company”
- EMCORE Corporation, a New Jersey corporation, or any successor
entity.
(j) “Disqualified
Option” - the meaning given such term in Section 10(d).
(k) “Disqualifying
Disposition” - the meaning given such term in Section
10(d).
(l) “Effective
Date” - the date on which the Plan is effective, as determined pursuant
to Section 15.
(m) “Exchange
Act” - the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
50
(n) “Fair
Market Value” - of a share of Stock as of a given date shall be: (i) if
the Stock is listed or admitted to trading on an established stock exchange
(including, for this purpose, the Nasdaq National Market), the mean of the
highest and lowest sale prices for a share of Stock on the composite tape or
in
Nasdaq National Market trading as reported in The Wall Street Journal
(or, if not so reported, such other nationally recognized reporting source
as
the Committee shall select) for such date, or, if no such prices are reported
for such date, the most recent day for which such prices are available shall
be
used; (ii) if the Stock is not then listed or admitted to trading on such a
stock exchange, the mean of the closing representative bid and asked prices
for
the Stock on such date as reported by the Nasdaq Small Cap Market or, if not
so
reported, by the OTC Bulletin Board (or any successor or similar quotation
system regularly reporting the market value of the Stock in the over-the-counter
market), or, if no such prices are reported for such date, the most recent
day
for which such prices are available shall be used; or (iii) in the event neither
of the valuation methods provided for in clauses (i) and (ii) above are
practicable, the fair market value of a share of Stock determined by such other
reasonable valuation method as the Committee shall, in its discretion, select
and apply in good faith as of the given date; provided,
however, that for purposes of paragraphs (a) and (h) of Section
6, such
fair market value shall be determined subject to Section 422(c)(7) of the
Code.
(o) “ISO”
or “Incentive Stock Option” - a right to purchase Stock granted
to an Optionee under the Plan in accordance with the terms and conditions set
forth in Section 6 and which conforms to the applicable provisions of Section
422 of the Code.
(p) “Non-Control
Acquisition” - an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly,
by
the Company (a “Related Entity”), (ii) the Company or any
Related Entity, (iii) any of Thomas Russell, The AER Trust 1997, Robert
Louis-Dreyfus, Gallium Enterprises, Inc. and Reuben Richards or (iv) any Person
in connection with a Non-Control Transaction.
(q) “Notice”
- written notice actually received by the Company at its executive offices
on
the day of such receipt, if received on or before 1:30 p.m., on a day when
the
Company’s executive offices are open for business, or, if received after such
time, such notice shall be deemed received on the next such day, which notice
may be delivered in person to the Company’s Secretary or sent by facsimile to
the Company at (732) 271-9686, or sent by certified or registered mail or
overnight courier, prepaid, addressed to the Company at 394 Elizabeth Avenue,
Somerset, New Jersey 08873, Attention: Secretary.
(r) “Option”
- a right to purchase Stock granted to an Optionee under the Plan in accordance
with the terms and conditions set forth in Section 6. Options may be either
ISOs
or stock options other than ISOs.
(s) “Optionee”
- an individual who is eligible, pursuant to Section 5, and who has been
selected, pursuant to Section 3(c), to participate in the Plan, and who holds
an
outstanding Option granted to such individual under the Plan in accordance
with
the terms and conditions set forth in Section 6.
51
(t) “Person”
- “person” as such term is used for purposes of Section 13(d) or 14(d) of the
Exchange Act, including, without limitation, any individual, corporation,
limited liability company, partnership, trust, unincorporated organization,
government or any agency or political subdivision thereof, or any other entity
or any group of Persons.
(u) “Plan”
- this EMCORE Corporation 2000 Stock Option Plan.
(v) “Predecessor
Plan” - the Company’s 1995 Incentive and Non-Statutory Stock Option
Plan.
(w) “Securities
Act” - the Securities Act of 1933, as it may be amended from time to
time, including the regulations and rules promulgated thereunder and successor
provisions and regulations and rules thereto.
(x) “Stock”
- the common stock of the Company, without par value.
(y) “Subsidiary”
- any present or future corporation which is or would be a “subsidiary
corporation” of the Company as the term is defined in Section 424(f) of the
Code.
(z) “Voting
Securities” - all the outstanding voting securities of the Company
entitled to vote generally in the election of the Board.
3. Administration
of the Plan. (a) The Committee shall have exclusive authority to
operate, manage and administer the Plan in accordance with its terms and
conditions. Notwithstanding the foregoing, in its absolute discretion, the
Board
may at any time and from time to time exercise any and all rights, duties and
responsibilities of the Committee under the Plan, including, but not limited
to,
establishing procedures to be followed by the Committee, but excluding matters
which under any applicable law, regulation or rule, including, without
limitation, any exemptive rule under Section 16 of the Exchange Act (including
Rule 16b-3, or any successor rule, as the same may be amended from time to
time)
or Section 162(m) of the Code, are required to be determined in the sole
discretion of the Committee. If and to the extent that no Committee exists
which
has the authority to administer the Plan, the functions of the Committee shall
be exercised by the Board.
(b) The
Committee shall be appointed from time to time by the Board, and the Committee
shall consist of not less than three members of the Board. Appointment of
Committee members shall be effective upon their acceptance of such appointment.
Committee members may be removed by the Board at any time either with or without
cause, and such members may resign at any time by delivering notice thereof
to
the Board. Any vacancy on the Committee, whether due to action of the Board
or
any other reason, shall be filled by the Board.
(c) The
Committee shall have full authority to grant, pursuant to the terms of the
Plan,
Options to those individuals who are eligible to receive Options under the
Plan.
In particular, the Committee shall have discretionary authority, in accordance
with the terms of the Plan, to: determine eligibility for participation in
the
Plan; select, from time to time, from among
52
those eligible, the employees, directors and consultants to whom Options shall be granted under the Plan, which selection may be based upon information furnished to the Committee by the Company’s or an Affiliate’s management; determine whether an Option shall take the form of an ISO or an Option other than an ISO; determine the number of shares of Stock to be included in any Option and the periods for which Options will be outstanding; establish and administer any terms, conditions, performance criteria, restrictions, limitations, forfeiture, vesting or exercise schedule, and other provisions of or relating to any Option; grant waivers of terms, conditions, restrictions and limitations under the Plan or applicable to any Option, or accelerate the vesting or exercisability of any Option; amend or adjust the terms and conditions of any outstanding Option and/or adjust the number and/or class of shares of Stock subject to any outstanding Option; at any time and from time to time after the granting of an Option, specify such additional terms, conditions and restrictions with respect to any such Option as may be deemed necessary or appropriate to ensure compliance with any and all applicable laws or rules, including, but not limited to, terms, restrictions and conditions for compliance with applicable securities laws, regarding an Optionee’s exercise of Options by tendering shares of Stock or under any “cashless exercise” program established by the Committee, and methods of withholding or providing for the payment of required taxes; and, to the extent permitted under the applicable Agreement, permit the transfer of an Option or the exercise of an Option by one other than the Optionee who received the grant of such Option (other than any such a transfer or exercise which would cause any ISO to fail to qualify as an “incentive stock option” under Section 422 of the Code).
(d) The
Committee shall have all authority that may be necessary or helpful to enable
it
to discharge its responsibilities with respect to the Plan. Without limiting
the
generality of the foregoing sentence or Section 3(a), and in addition to the
powers otherwise expressly designated to the Committee in the Plan, the
Committee shall have the exclusive right and discretionary authority to
interpret the Plan and the Agreements; construe any ambiguous provision of
the
Plan and/or the Agreements and decide all questions concerning eligibility
for
and the amount of Options granted under the Plan. The Committee may establish,
amend, waive and/or rescind rules and regulations and administrative guidelines
for carrying out the Plan and may correct any errors, supply any omissions
or
reconcile any inconsistencies in the Plan and/or any Agreement or any other
instrument relating to any Options. The Committee shall have the authority
to
adopt such procedures and subplans and grant Options on such terms and
conditions as the Committee determines necessary or appropriate to permit
participation in the Plan by individuals otherwise eligible to so participate
who are foreign nationals or employed outside of the United States, or otherwise
to conform to applicable requirements or practices of jurisdictions outside
of
the United States; and take any and all such other actions it deems necessary
or
advisable for the proper operation and/or administration of the Plan. The
Committee shall have full discretionary authority in all matters related to
the
discharge of its responsibilities and the exercise of its authority under the
Plan. Decisions and actions by the Committee with respect to the Plan and any
Agreement shall be final, conclusive and binding on all persons having or
claiming to have any right or interest in or under the Plan and/or any
Agreement.
(e) Each
Option shall be evidenced by an Agreement, which shall be executed by the
Company and the Optionee to whom such Option has been granted, unless the
Agreement provides otherwise; two or more Options granted to a single Optionee
may, however, be combined in a single Agreement. An Agreement shall not be
a
precondition to the granting of
53
an Option; no person shall have any rights under any Option, however, unless and until the Optionee to whom the Option shall have been granted (i) shall have executed and delivered to the Company an Agreement or other instrument evidencing the Option, unless such Agreement provides otherwise, and (ii) has otherwise complied with the applicable terms and conditions of the Option. The Committee shall prescribe the form of all Agreements, and, subject to the terms and conditions of the Plan, shall determine the content of all Agreements. Any Agreement may be supplemented or amended in writing from time to time as approved by the Committee; provided that the terms and conditions of any such Agreement as supplemented or amended are not inconsistent with the provisions of the Plan.
(f) A
majority of the members of the entire Committee shall constitute a quorum and
the actions of a majority of the members of the Committee in attendance at
a
meeting at which a quorum is present, or actions by a written instrument signed
by all members of the Committee, shall be the actions of the
Committee.
(g) The
Committee may consult with counsel who may be counsel to the Company. The
Committee may, with the approval of the Board, employ such other attorneys
and/or consultants, accountants, appraisers, brokers and other persons as it
deems necessary or appropriate. In accordance with Section 12, the Committee
shall not incur any liability for any action taken in good faith in reliance
upon the advice of such counsel or other persons.
(h) In
serving on the Committee, the members thereof shall be entitled to
indemnification as directors of the Company, and to any limitation of liability
and reimbursement as directors with respect to their services as members of
the
Committee.
(i) Except
to the extent prohibited by applicable law, including, without limitation,
the
requirements applicable under Section 162(m) of the Code to any Option intended
to be “qualified performance-based compensation,” or the requirements for any
Option granted to an officer or director to be covered by any exemptive rule
under Section 16 of the Exchange Act (including Rule 16b-3, or any successor
rule, as the same may be amended from time to time), or the applicable rules
of
a stock exchange, the Committee may, in its discretion, allocate all or any
portion of its responsibilities and powers under this Section 3 to any one
or
more of its members and/or delegate all or any part of its responsibilities
and
powers under this Section 3 to any person or persons selected by it;
provided, however, that the Committee may not delegate its
authority to correct errors, omissions or inconsistencies in the Plan. Any
such
authority delegated or allocated by the Committee under this paragraph (i)
of
Section 3 shall be exercised in accordance with the terms and conditions of
the
Plan and any rules, regulations or administrative guidelines that may from
time
to time be established by the Committee, and any such allocation or delegation
may be revoked by the Committee at any time.
4. Shares
of Stock Subject to the Plan. (a) The shares of stock subject to
Options granted under the Plan shall be shares of Stock. Such shares of Stock
subject to the Plan may be either authorized and unissued shares (which will
not
be subject to preemptive rights) or previously issued shares acquired by the
Company or any Subsidiary. The total number of shares of Stock that may be
delivered pursuant to Options granted under the Plan is 9,350,000, plus any
shares of Stock subject to a stock option granted under the Predecessor Plan
which for any
54
reason expires or is terminated or canceled without having been fully exercised by delivery of shares of Stock; provided, however, that the total number of shares of Stock that may be delivered pursuant to Incentive Stock Options under the Plan is 9,350,000, without application of paragraph (d) of this Section 4.
(b) Notwithstanding
any of the foregoing limitations set forth in this Section 4, the numbers of
shares of Stock specified in this Section 4 shall be adjusted as provided in
Section 10.
(c) Any
shares of Stock subject to an Option which for any reason expires or is
terminated or canceled without having been fully exercised by delivery of shares
of Stock may again be granted pursuant to an Option under the Plan, subject
to
the limitations of this Section 4.
(d) If
the option exercise price of an Option granted under the Plan or a stock option
granted under the Predecessor Plan is paid by tendering to the Company shares
of
Stock already owned by the holder of such option (or such holder and his or
her
spouse jointly), only the number of shares of Stock issued net of the shares
of
Stock so tendered shall be deemed delivered for purposes of determining the
total number of shares of Stock that may be delivered under the
Plan.
(e) Any
shares of Stock delivered under the Plan in assumption or substitution of
outstanding stock options, or obligations to grant future stock options, under
plans or arrangements of an entity other than the Company or an Affiliate in
connection with the Company or an Affiliate acquiring such another entity,
or an
interest in such an entity, or a transaction otherwise described in Section
6(j), shall not reduce the maximum number of shares of Stock available for
delivery under the Plan.
5. Eligibility.
Executive employees and other employees, including officers, of the Company
and
the Affiliates, directors (whether or not also employees), and consultants
of
the Company and the Affiliates, shall be eligible to become Optionees and
receive Options in accordance with the terms and conditions of the Plan, subject
to the limitations on the granting of ISOs set forth in Section
6(h).
6. Terms
and Conditions of Stock Options. All Options to purchase Stock granted
under the Plan shall be either ISOs or Options other than ISOs. To the extent
that any Option does not qualify as an Incentive Stock Option (whether because
of its provisions or the time or manner of its exercise or otherwise), such
Option, or the portion thereof which does not so qualify, shall constitute
a
separate Option other than an Incentive Stock Option. Each Option shall be
subject to all the applicable provisions of the Plan, including the following
terms and conditions, and to such other terms and conditions not inconsistent
therewith as the Committee shall determine and which are set forth in the
applicable Agreement. Options need not be uniform as to all grants and
recipients thereof.
(a) The
option exercise price per share of shares of Stock subject to each Option shall
be determined by the Committee and stated in the Agreement; provided,
however, that, subject to paragraph (h)(iii) and/or (j) of this
Section
6, if applicable, such price applicable to any ISO shall not be less than one
hundred percent (100%) of the Fair Market Value of a share of Stock at the
time
that the Option is granted.
55
(b) Each
Option shall be exercisable in whole or in such installments, at such times
and
under such conditions as may be determined by the Committee, in its discretion
in accordance with the Plan, and stated in the Agreement, and, in any event,
over a period of time ending not later than ten (10) years from the date such
Option was granted, subject to paragraph (h)(iii) of this Section
6.
(c) An
Option shall not be exercisable with respect to a fractional share of Stock
or
the lesser of one hundred (100) shares and the full number of shares of Stock
then subject to the Option. No fractional shares of Stock shall be issued upon
the exercise of an Option.
(d) Each
Option may be exercised by giving Notice to the Company specifying the number
of
shares of Stock to be purchased, which shall be accompanied by payment in full
including applicable taxes, if any, in accordance with Section 9. Payment shall
be in any manner permitted by applicable law and prescribed by the Committee,
in
its discretion, and set forth in the Agreement, including, in the Committee’s
discretion, and subject to such terms, conditions and limitations as the
Committee may prescribe, payment in accordance with a “cashless exercise”
arrangement established by the Committee and/or in Stock owned by the Optionee
or by the Optionee and his or her spouse jointly and acquired more than six
(6)
months prior to such tender.
(e) No
Optionee or other person shall become the beneficial owner of any shares of
Stock subject to an Option, nor have any rights to dividends or other rights
of
a shareholder with respect to any such shares until he or she has exercised
his
or her Option in accordance with the provisions of the Plan and the applicable
Agreement.
(f) An
Option may be exercised only if at all times during the period beginning with
the date of the granting of the Option and ending on the date of such exercise,
the Optionee was an employee, director or consultant of the Company or an
Affiliate, as applicable. Notwithstanding the preceding sentence, the Committee
may determine in its discretion that an Option may be exercised prior to
expiration of such Option following termination of such continuous employment,
directorship or consultancy, whether or not exercisable at the time of such
termination, to the extent provided in the applicable Agreement.
(g) Subject
to the terms and conditions and within the limitations of the Plan, the
Committee may modify, extend or renew outstanding Options granted under the
Plan, or accept the surrender of outstanding Options (up to the extent not
theretofore exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised).
(h)
(i)
Each Agreement relating to an Option shall state whether such Option will or
will not be treated as an ISO. No ISO shall be granted unless such Option,
when
granted, qualifies as an “incentive stock option” under Section 422 of the Code.
No ISO shall be granted to any individual otherwise eligible to participate
in
the Plan who is not an employee of the Company or a Subsidiary on the date
of
granting of such Option. Any ISO granted under the Plan shall contain such
terms
and conditions, consistent with the Plan, as the Committee may determine to
be
necessary to qualify such Option as an “incentive stock option” under Section
422 of the Code. Any ISO granted under the Plan may be modified by the Committee
to disqualify such Option from treatment as an “incentive stock option” under
Section 422 of the Code.
56
(ii)
Notwithstanding any intent to grant ISOs, an Option granted under the Plan
will
not be considered an ISO to the extent that it, together with any other
“incentive stock options” (within the meaning of Section 422 of the Code, but
without regard to subsection (d) of such Section) under the Plan and any other
“incentive stock option” plans of the Company, any Subsidiary and any “parent
corporation” of the Company within the meaning of Section 424(e) of the Code,
are exercisable for the first time by any Optionee during any calendar year
with
respect to Stock having an aggregate Fair Market Value in excess of $100,000
(or
such other limit as may be required by the Code) as of the time the Option
with
respect to such Stock is granted. The rule set forth in the preceding sentence
shall be applied by taking Options into account in the order in which they
were
granted.
(iii)
No
ISO shall be granted to an individual otherwise eligible to participate in
the
Plan who owns (within the meaning of Section 424(d) of the Code), at the time
the Option is granted, more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or a Subsidiary or any “parent
corporation” of the Company within the meaning of Section 424(e) of the Code.
This restriction does not apply if at the time such ISO is granted the Option
exercise price per share of Stock subject to the Option is at least 110% of
the
Fair Market Value of a share of Stock on the date such ISO is granted, and
the
ISO by its terms is not exercisable after the expiration of five years from
such
date of grant.
(i) An
Option and any shares of Stock received upon the exercise of an Option shall
be
subject to such other transfer and/or ownership restrictions and/or legending
requirements as the Committee may establish in its discretion and which are
specified in the Agreement and may be referred to on the certificates evidencing
such shares of Stock. The Committee may require an Optionee to give prompt
Notice to the Company concerning any disposition of shares of Stock received
upon the exercise of an ISO within: (i) two (2) years from the date of granting
such ISO to such Optionee or (ii) one (1) year from the transfer of such shares
of Stock to such Optionee or (iii) such other period as the Committee may from
time to time determine. The Committee may direct that an Optionee with respect
to an ISO undertake in the applicable Agreement to give such Notice described
in
the preceding sentence, at such time and containing such information as the
Committee may prescribe, and/or that the certificates evidencing shares of
Stock
acquired by exercise of an ISO refer to such requirement to give such
Notice.
(j) In
the event that a transaction described in Section 424(a) of the Code involving
the Company or a Subsidiary is consummated, such as the acquisition of property
or stock from an unrelated corporation, individuals who become eligible to
participate in the Plan in connection with such transaction, as determined
by
the Committee, may be granted Options in substitution for stock options granted
by another corporation that is a party to such transaction. If such substitute
Options are granted, the Committee, in its discretion and consistent with
Section 424(a) of the Code, if applicable, and the terms of the Plan, though
notwithstanding paragraph (a) of this Section 6, shall determine the option
exercise price and other terms and conditions of such substitute
Options.
57
(k) Notwithstanding
any other provision contained in the Plan to the contrary, the maximum number
of
shares of Stock which may be subject to Options granted under the Plan to any
Optionee in any twelve (12) month period shall not exceed the Award Limit.
To
the extent required by Section 162(m) of the Code, shares of Stock subject
to
Options which are canceled shall continue to be counted against the Award Limit
and if, after the grant of an Option, the price of shares subject to such Option
is reduced and the transaction is treated as a cancellation of the Option and
a
grant of a new Option, both the Option deemed to be canceled and the Option
deemed to be granted shall be counted against the Award Limit.
7. Transfer,
Leave of Absence. A transfer of an employee from the Company to an
Affiliate (or, for purposes of any ISO granted under the Plan, a Subsidiary),
or
vice versa, or from one Affiliate to another (or in the case of an ISO, from
one
Subsidiary to another), and a leave of absence, duly authorized in writing
by
the Company or a Subsidiary or Affiliate, shall not be deemed a termination
of
employment of the employee for purposes of the Plan or with respect to any
Option (in the case of ISOs, to the extent permitted by the Code).
8. Rights
of Employees and Other Persons. (a) No person shall have any rights or
claims under the Plan except in accordance with the provisions of the Plan
and
the applicable Agreement.
(b) Nothing
contained in the Plan or in any Agreement shall be deemed to (i) give any
employee or director the right to be retained in the service of the Company
or
any Affiliate nor restrict in any way the right of the Company or any Affiliate
to terminate any employee’s employment or any director’s directorship at any
time with or without cause or (ii) confer on any consultant any right of
continued relationship with the Company or any Affiliate, or alter any
relationship between them, including any right of the Company or an Affiliate
to
terminate its relationship with such consultant.
(c) The
adoption of the Plan shall not be deemed to give any employee of the Company
or
any Affiliate or any other person any right to be selected to participate in
the
Plan or to be granted an Option.
(d) Nothing
contained in the Plan or in any Agreement shall be deemed to give any employee
the right to receive any bonus, whether payable in cash or in Stock, or in
any
combination thereof, from the Company or any Affiliate, nor be construed as
limiting in any way the right of the Company or any Affiliate to determine,
in
its sole discretion, whether or not it shall pay any employee bonuses, and,
if
so paid, the amount thereof and the manner of such payment.
9. Tax
Withholding Obligations. (a) The Company and/or any Affiliate are
authorized to take whatever actions are necessary and proper to satisfy all
obligations of Optionees (including, for purposes of this Section 9, any other
person entitled to exercise an Option pursuant to the Plan or an Agreement)
for
the payment of all Federal, state, local and foreign taxes in connection with
any Options (including, but not limited to, actions pursuant to the following
paragraph (b) of this Section 9).
58
(b) Each
Optionee shall (and in no event shall Stock be delivered to such Optionee with
respect to an Option until), no later than the date as of which the value of
the
Option first becomes includible in the gross income of the Optionee for income
tax purposes, pay to the Company in cash, or make arrangements satisfactory
to
the Company, as determined in the Committee’s discretion, regarding payment to
the Company of, any taxes of any kind required by law to be withheld with
respect to the Stock or other property subject to such Option, and the Company
and any Affiliate shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to such
Optionee. Notwithstanding the above, the Committee may, in its discretion and
pursuant to procedures approved by the Committee, permit the Optionee to (i)
elect withholding by the Company of Stock otherwise deliverable to such Optionee
pursuant to his or her Option (provided, however, that the
amount of any Stock so withheld shall not exceed the amount necessary to satisfy
required Federal, state, local and foreign withholding obligations using the
minimum statutory rate) and/or (ii) tender to the Company Stock owned by such
Optionee (or by such Optionee and his or her spouse jointly) and acquired more
than six (6) months prior to such tender in full or partial satisfaction of
such
tax obligations, based, in each case, on the Fair Market Value of the Stock
on
the payment date as determined by the Committee.
10. Changes
in Capital. (a) The existence of the Plan and any Options granted
hereunder shall not affect in any way the right or power of the Board or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company or an
Affiliate, any issue of debt, preferred or prior preference stock ahead of
or
affecting Stock, the authorization or issuance of additional shares of Stock,
the dissolution or liquidation of the Company or its Affiliates, any sale or
transfer of all or part of its assets or business or any other corporate act
or
proceeding.
(b)(i)
Upon changes in the outstanding Stock by reason of a stock dividend, stock
split, reverse stock split, subdivision, recapitalization, reclassification,
merger, consolidation (whether or not the Company is a surviving corporation),
combination or exchange of shares of Stock, separation, or reorganization,
or in
the event of an extraordinary dividend, “spin-off,” liquidation, other
substantial distribution of assets of the Company or acquisition of property
or
stock or other change in capital of the Company, or the issuance by the Company
of shares of its capital stock without receipt of full consideration therefor,
or rights or securities exercisable, convertible or exchangeable for shares
of
such capital stock, or any similar change affecting the Company’s capital
structure, the aggregate number, class and kind of shares of stock available
under the Plan as to which Options may be granted, the Award Limit, and the
number, class and kind of shares under each outstanding Option and the exercise
price per share applicable to any such Options shall be appropriately adjusted
by the Committee in its discretion to preserve the benefits or potential
benefits intended to be made available under the Plan or with respect to any
outstanding Options or otherwise necessary to reflect any such
change.
59
(ii) Fractional
shares of Stock resulting from any adjustment in Options pursuant to Section
10(b)(i) shall be aggregated until, and eliminated at, the time of exercise
of
the affected Options. Notice of any adjustment shall be given by the Committee
to each Optionee whose Option has been adjusted and such adjustment (whether
or
not such Notice is given) shall be effective and binding for all purposes of
the
Plan.
(c) In
the event of a Change in Control:
(i) Immediately
prior thereto, all outstanding Options shall be accelerated and become
immediately exercisable as to all of the shares of Stock covered thereby,
notwithstanding anything to the contrary in the Plan or the
Agreement.
(ii) In
its discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide, either by the terms of the Agreement applicable to any
Option or by resolution adopted prior to the occurrence of the Change in
Control, that any outstanding Option shall be adjusted by substituting for
Stock
subject to such Option stock or other securities of the surviving corporation
or
any successor corporation to the Company, or a parent or subsidiary thereof,
or
that may be issuable by another corporation that is a party to the transaction
resulting in the Change in Control, whether or not such stock or other
securities are publicly traded, in which event the aggregate exercise price
shall remain the same and the amount of shares or other securities subject
to
the Option shall be the amount of shares or other securities which could have
been purchased on the closing date or expiration date of such transaction with
the proceeds which would have been received by the Optionee if the Option had
been exercised in full (or with respect to a portion of such Option, as
determined by the Committee, in its discretion) prior to such transaction or
expiration date and the Optionee exchanged all of such shares in the
transaction.
(iii) In
its discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide, either by the terms of the Agreement applicable to any
Option or by resolution adopted prior to the occurrence of the Change in
Control, that any outstanding Option shall be converted into a right to receive
cash on or following the closing date or expiration date of the transaction
resulting in the Change in Control in an amount equal to the highest value
of
the consideration to be received in connection with such transaction for one
share of Stock, or, if higher, the highest Fair Market Value of the Stock during
the thirty (30) consecutive business days immediately prior to the closing
date
or expiration date of such transaction, less the per share exercise price of
such Option, multiplied by the number of shares of Stock subject to such Option,
or a portion thereof.
(iv) The
Committee may, in its discretion, provide that an Option cannot be exercised
after such a Change in Control, to the extent that such Option is or becomes
fully exercisable on or before such Change in Control or is subject to any
acceleration, adjustment or conversion in accordance with the foregoing
paragraphs (i), (ii) or (iii) of this Section 10.
No
Optionee shall have any right to prevent the consummation of any of the
foregoing acts affecting the number of shares of Stock available to such
Optionee. Any actions or determinations of the Committee under this subsection
10(c) need not be uniform as to all outstanding Options, nor treat all Optionees
identically. Notwithstanding the foregoing adjustments, in no event may any
Option be exercised after ten (10) years from the date it was originally
granted, and any changes to ISOs pursuant to this Section 10 shall, unless
the
Committee determines otherwise, only be effective to the extent such adjustments
or changes do not cause a “modification” (within the meaning of Section
424(h)(3) of the Code) of such ISOs or adversely affect the tax status of such
ISOs.
60
(d) If,
as a result of a Change in Control transaction, an ISO fails to qualify as
an
“incentive stock option,” within the meaning of Section 422 of the Code, either
because of the failure of the Optionee to meet the holding period requirements
of Code Section 422(a)(1) (a “Disqualifying Disposition”) or the exercisability
of such Option is accelerated pursuant to Section 10(c)(i), or any similar
provision of the applicable Agreement, in connection with such Change in Control
and such acceleration causes the aggregate Fair Market Value (determined at
the
time the Option is granted) of the shares of Stock with respect to which such
Option, together with any other “incentive stock options,” as provided in
Section 6(h)(ii), are exercisable for the first time by such Optionee during
the
calendar year in which such accelerated exercisability occurs to exceed the
limitations set forth in Section 6(h)(ii) (a “Disqualified Option”); or any
other exercise, payment, acceleration, adjustment or conversion of an Option
in
connection with a Change in Control transaction results in any additional taxes
imposed on an Optionee, then the Company may, in the discretion of the
Committee, make a cash payment to or on behalf of the Optionee who holds any
such Option equal to the amount that will, after taking into account all taxes
imposed on the Disqualifying Disposition or other exercise, payment,
acceleration, adjustment or conversion of the Option, as the case may be, and
the receipt of such payment, leave such Optionee in the same after-tax position
the Optionee would have been in had the Code Section 422(a)(1) holding period
requirements been met at the time of the Disqualifying Disposition or had the
Disqualified Option continued to qualify as an “incentive stock option,” within
the meaning of Code Section 422 on the date of such exercise or otherwise
equalize the Optionee for any such taxes; provided, however,
that the amount, timing and recipients of any such payment or payments shall
be
subject to such terms, conditions and limitations as the Committee shall, in
its
discretion, determine. Without limiting the generality of the proviso
contained in the immediately preceding sentence, in determining the amount
of
any such payment or payments referred to therein, the Committee may adopt such
methods and assumptions as it considers appropriate, and the Committee shall
not
be required to examine or take into account the individual tax liability of
any
Optionee.
11. Prohibition
on Repricing and Reload Grants. Other than in connection with
a change in the Company’s capitalization (e.g., stock splits, recapitalizations,
etc., as described in Section 10 of the Plan), without stockholder approval
(i)
the exercise price of an Option may not be reduced, (ii) no Option may be
amended or cancelled for the purpose of repricing, replacing or regranting
such
Option with an exercise price that is less than the original exercise price
of
such Option, and (iii) the Committee shall not offer to buy out an Option
previously granted for cash or other consideration.
12. Miscellaneous
Provisions. (a) The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the issuance of shares of Stock or the payment
of cash upon exercise or payment of any Option. Proceeds from the sale of shares
of Stock pursuant to Options granted under the Plan shall constitute general
funds of the Company.
61
(b) Except
as otherwise provided in this paragraph (b) of Section 12 or by the Committee,
an Option by its terms shall be personal and may not be sold, transferred,
pledged, assigned, encumbered or otherwise alienated or hypothecated otherwise
than by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of an Optionee only by him or her. An Agreement may permit
the exercise or payment of an Optionee’s Option (or any portion thereof) after
his or her death by or to the beneficiary most recently named by such Optionee
in a written designation thereof filed with the Company, or, in lieu of any
such
surviving beneficiary, as designated by the Optionee by will or by the laws
of
descent and distribution. In the event any Option is exercised by the executors,
administrators, heirs or distributees of the estate of a deceased Optionee,
or
such an Optionee’s beneficiary, or the transferee of an Option, in any such case
pursuant to the terms and conditions of the Plan and the applicable Agreement
and in accordance with such terms and conditions as may be specified from time
to time by the Committee, the Company shall be under no obligation to issue
Stock thereunder unless and until the Committee is satisfied that the person
or
persons exercising such Option is the duly appointed legal representative of
the
deceased Optionee’s estate or the proper legatee or distributee thereof or the
named beneficiary of such Optionee, or the valid transferee of such Option,
as
applicable.
(c) (i)
If at any time the Committee shall determine, in its discretion, that the
listing, registration and/or qualification of shares of Stock upon any
securities exchange or under any state, Federal or foreign law, or the consent
or approval of any governmental regulatory body, is necessary or desirable
as a
condition of, or in connection with, the sale or purchase of shares of Stock
hereunder, no Option may be granted, exercised or paid in whole or in part
unless and until such listing, registration, qualification, consent and/or
approval shall have been effected or obtained, or otherwise provided for, free
of any conditions not acceptable to the Committee.
(ii) If
at any time counsel to the Company shall be of the opinion that any sale or
delivery of shares of Stock pursuant to an Option is or may be in the
circumstances unlawful or result in the imposition of excise taxes on the
Company or any Affiliate under the statutes, rules or regulations of any
applicable jurisdiction, the Company shall have no obligation to make such
sale
or delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act, or otherwise with
respect to shares of Stock or Options and the right to exercise any Option
shall
be suspended until, in the opinion of such counsel, such sale or delivery shall
be lawful or will not result in the imposition of excise taxes on the Company
or
any Affiliate.
(iii) Upon
termination of any period of suspension under this Section 12(c), any Option
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such suspension and as
to
the shares which would otherwise have become available during the period of
such
suspension, but no suspension shall extend the term of any Option.
62
(d) The
Committee may require each person receiving Stock in connection with any Option
under the Plan to represent and agree with the Company in writing that such
person is acquiring the shares of Stock for investment without a view to the
distribution thereof. The Committee, in its absolute discretion, may impose
such
restrictions on the ownership and transferability of the shares of Stock
purchasable or otherwise receivable by any person under any Option as it deems
appropriate. Any such restrictions shall be set forth in the applicable
Agreement, and the certificates evidencing such shares may include any legend
that the Committee deems appropriate to reflect any such
restrictions.
(e) By
accepting any benefit under the Plan, each Optionee and each person claiming
under or through such Optionee shall be conclusively deemed to have indicated
their acceptance and ratification of, and consent to, all of the terms and
conditions of the Plan and any action taken under the Plan by the Committee,
the
Company or the Board, in any case in accordance with the terms and conditions
of
the Plan.
(f) In
the discretion of the Committee, an Optionee may elect irrevocably (at a time
and in a manner determined by the Committee) prior to exercising an Option
that
delivery of shares of Stock upon such exercise shall be deferred until a future
date and/or the occurrence of a future event or events, specified in such
election. Upon the exercise of any such Option and until the delivery of any
deferred shares, the number of shares otherwise issuable to the Optionee shall
be credited to a memorandum account in the records of the Company or its
designee and any dividends or other distributions payable on such shares shall
be deemed reinvested in additional shares of Stock, in a manner determined
by
the Committee, until all shares of Stock credited to such Optionee’s memorandum
account shall become issuable pursuant to the Optionee’s election.
(g) The
Committee may, in its discretion, extend one or more loans to Optionees who
are
directors, key employees or consultants of the Company or an Affiliate in
connection with the exercise or receipt of an Option granted to any such
individual. The terms and conditions of any such loan shall be established
by
the Committee.
(h) Except
with respect to Incentive Stock Options granted under the Predecessor Plan
(within the meaning of the Predecessor Plan) and outstanding on the Effective
Date, subject to approval of the Plan by the Company’s shareholders, in
accordance with Section 15, the provisions of the Plan shall apply to and govern
all stock options granted under the Predecessor Plan and, unless otherwise
determined by the Committee, such stock options granted under the Predecessor
Plan shall be deemed to be amended to provide any additional rights applicable
to Options hereunder, subject to the right of any affected participant in the
Predecessor Plan to refuse to consent to such amendment pursuant to the terms
and conditions of the Predecessor Plan and the applicable option or award
agreement between the Company and such participant.
(i) Neither
the adoption of the Plan nor anything contained herein shall affect any other
compensation or incentive plans or arrangements of the Company or any Affiliate
(other than the Predecessor Plan, as provided in paragraph (h) of this Section
12), or prevent or limit the right of the Company or any Affiliate to establish
any other forms of incentives or compensation for their directors, employees
or
consultants or grant or assume options or other rights otherwise than under
the
Plan.
63
(j) The
Plan shall be governed by and construed in accordance with the laws of the
State
of New Jersey, without regard to such state’s conflict of law provisions, and,
in any event, except as superseded by applicable Federal law.
(k) The
words “Section,” “subsection” and “paragraph” herein shall refer to provisions
of the Plan, unless expressly indicated otherwise. Wherever any words are used
in the Plan or any Agreement in the masculine gender they shall be construed
as
though they were also used in the feminine gender in all cases where they would
so apply, and wherever any words are used herein in the singular form they
shall
be construed as though they were also used in the plural form in all cases
where
they would so apply.
(l) The
Company shall bear all costs and expenses incurred in administering the Plan,
including expenses of issuing Stock pursuant to any Options granted
hereunder.
13. Limits
of Liability. (a) Any liability of the Company or an Affiliate to any
Optionee with respect to any Option shall be based solely upon contractual
obligations created by the Plan and the Agreement.
(b) None
of the Company, any Affiliate, any member of the Committee or the Board or
any
other person participating in any determination of any question under the Plan,
or in the interpretation, administration or application of the Plan, shall
have
any liability, in the absence of bad faith, to any party for any action taken
or
not taken in connection with the Plan, except as may expressly be provided
by
statute.
14. Limitations
Applicable to Certain Options Subject to Exchange Act Section 16 and Code
Section 162(m). Unless stated otherwise in the Agreement,
notwithstanding any other provision of the Plan, any Option granted to an
officer or director of the Company who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including Rule
16b-3, or any successor rule, as the same may be amended from time to time)
that
are requirements for the application of such exemptive rule, and the Plan and
applicable Agreement shall be deemed amended to the extent necessary to conform
to such limitations. Furthermore, unless stated otherwise in the Agreement,
notwithstanding any other provision of the Plan, any Option granted to an
employee of the Company or an Affiliate intended to qualify as “other
performance-based compensation” as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m)
of
the Code or any regulations or rulings issued thereunder (including any
amendment to any of the foregoing) that are requirements for qualification
as
“other performance-based compensation” as described in Section 162(m)(4)(C) of
the Code, and the Plan and applicable Agreement shall be deemed amended to
the
extent necessary to conform to such requirements.
64
15. Amendments
and Termination. The Board may, at any time and with or without prior
notice, amend, alter, suspend or terminate the Plan, retroactively or otherwise;
provided, however, unless otherwise required by law or
specifically provided herein, no such amendment, alteration, suspension or
termination shall be made which would impair the previously accrued rights
of
any holder of an Option theretofore granted without his or her written consent,
or which, without first obtaining approval of the stockholders of the Company
(where such approval is necessary to satisfy (i) any applicable requirements
under the Code relating to ISOs or for exemption from Section 162(m) of the
Code; (ii) the then-applicable requirements of Rule 16b-3 promulgated under
the
Exchange Act, or any successor rule, as the same may be amended from time to
time; or (iii) any other applicable law, regulation or rule),
would:
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(a)
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except
as is provided in Section 10, increase the maximum number of shares
of
Stock which may be sold or awarded under the Plan or increase the
limitations set forth in Section 6(k) on the maximum of shares of
Stock
that may be subject to Options granted to an
Optionee;
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(b)
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except
as is provided in Section 10, decrease the minimum option exercise
price
requirements of Section 6(a);
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(c)
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change
the class of persons eligible to receive Options under the
Plan;
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(d)
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extend
the duration of the Plan or the period during which Options may be
exercised under Section 6(b); or
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(e)
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other
than in connection with a change in the Company’s capitalization (e.g.,
stock splits, recapitalizations, etc., as described in Section 10
of the
Plan), (i) reduce the exercise price of an Option, (ii) amend or
cancel
any Option for the purpose of repricing, replacing or regranting
such
Option with an exercise price that is less than the original exercise
price of such Option or (iii) permit the Committee to buy out an
Option
previously granted for cash or other
consideration.
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The
Committee may amend the terms of any Option theretofore granted, including
any
Agreement, retroactively or prospectively, but no such amendment shall
materially impair the previously accrued rights of any Optionee without his
or
her written consent.
16. Duration.
Following the adoption of the Plan by the Board, the Plan shall become effective
as of the date on which it is approved by the holders of a majority of the
Company's outstanding Stock which is present and voted at a meeting, or by
written consent in lieu of a meeting (the “Effective Date”), which approval must
occur within the period ending twelve (12) months after the date the Plan is
adopted by the Board. The Plan shall terminate upon the earliest to occur
of:
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(a)
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the
effective date of a resolution adopted by the Board terminating the
Plan;
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65
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(b)
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the
date all shares of Stock subject to the Plan are delivered pursuant
to the
Plan's provisions; or
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(c)
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ten
(10) years from the Effective Date.
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No
Option
may be granted under the Plan after the earliest to occur of the events or
dates
described in the foregoing paragraphs (a) through (c) of this Section 15;
however, Options theretofore granted may extend beyond such
date.
No
such
termination of the Plan shall affect the previously accrued rights of any
Optionee hereunder and all Options previously granted hereunder shall continue
in force and in operation after the termination of the Plan, except as they
may
be otherwise terminated in accordance with the terms of the Plan or the
Agreement.
ANNUAL
MEETING OF SHAREHOLDERS OF
EMCORE
CORPORATION
March
31, 2008
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.
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■20330303000000000000
7
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033108
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THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” PROPOSALS 1 THROUGH
4.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE
IN BLUE OR BLACK INK AS SHOWN HERE x
| FOR | AGAINST | 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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| ○ Thomas J. Russell | |||||||
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o
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FOR
ALL NOMINEES
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○
Reuben
F. Richards Jr.
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3.
TO APPROVE AN AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
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o
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o
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o
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| o | WITHHOLD
AUTHORITY FOR ALL NOMINEES |
○ Robert Bogomolny |
4.
TO APPROVE AN INCREASE IN THE NUMBER OF SHARES RESERVED FOR ISSUANCE
UNDER
THE COMPANY'S 2000 STOCK OPTION PLAN.
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o
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o
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o
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o
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FOR
ALL EXCEPT
(See
Instructions below)
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.
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5.
Upon such other business as may properly come before the Annual
Meeting or
any adjournment thereof.
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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 PROXY CARD AND PROMPTLY RETURN IT IN THE
ENVELOPE
PROVIDED. NO POSTAGE NECESSARY IF MAILED WITHIN THE UNITED
STATES.
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The
undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement, and (iii) the Company’s 2007 Annual
Report to Shareholders.
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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
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| Signature of Shareholder |
Date
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Signature
of Shareholder
|
Date
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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.
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■
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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
2008 Annual Meeting of Shareholders of the Company, to be held on March 31,
2008
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), "FOR" AN AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK IN ACCORDANCE WITH PROPOSAL (3), AND "FOR" AN INCREASE
IN
THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE COMPANY'S 2000 STOCK OPTION
PLAN IN ACCORDANCE WITH PROPOSAL (4).
(Continued
and to be signed on the reverse side)
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14475
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