CHARTER OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF FABRINET
Adopted by the Board of Directors of Fabrinet on January 25, 2010.
This Committee shall be comprised of three or more members of the Board. All members of this Committee shall meet the independence requirements of applicable law and the rules of the SEC and the New York Stock Exchange ("NYSE") in effect from time to time, including the items listed in NYSE Listed Company Manual Section 303A.02 and Rule 10A-3(b)(1) promulgated pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), subject to exceptions allowed by such rules and any waivers granted by such authorities. The members of this Committee shall be appointed by and serve at the discretion of the Board. The Board shall appoint the chairperson of this Committee (the " Chair"). From time to time, the Chair may establish such other rules as are necessary and proper for the conduct of the business of this Committee. Subject to any alternate nominating procedures set forth in this Company's Amended and Restated Memorandum and Articles of Association, as may be amended from time to time (the "Organizational Documents"), this Company's Nominating and Corporate Governance Committee may make recommendations to the Board regarding appointments to this Committee. As required by NYSE Listed Company Manual Section 303A.07, each member of this Committee must be financially literate, as such qualification is interpreted by the Board in its business judgment, or must become financially literate within a reasonable period of time after his or her appointment to this Committee. In addition, at least one member of the Committee must have accounting or related financial management expertise, as the
Board interprets such qualification in its business judgment. In addition, no member of this Committee may simultaneously serve on the audit committee of more than three public companies (including this Committee), unless the Board (i) shall have affirmatively determined that such simultaneous service would not impair the ability of that Committee member to effectively serve on the Committee and (ii) discloses such determination either on or through this Company's website or in its filings with the SEC as required by applicable law.
This Committee shall be comprised of two or more directors. All members of this Committee shall: (a) meet the independence requirements of applicable law and the rules of the New York Stock Exchange ("NYSE") in effect from time to time; (b) qualify as non-employee directors under Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and (c) qualify as outside directors under Section 162(m) of Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and other applicable law, subject in each case to any exceptions allowed by such rules and any waivers granted by the relevant authorities. The members of this Committee shall be appointed by and serve at the discretion of the Board. The Board shall appoint the chairperson of this Committee (the "Chair"). From time to time, the Chair may establish such other rules as are necessary and proper for the conduct of the business of the Committee. Subject to any alternate nominating procedures set forth in this Company's Amended and Restated Memorandum and Articles of Association, as may be amended from time to time (the "Organizational Documents"), this Company's Nominating and Corporate Governance Committee may make recommendations to the Board regarding appointments to this Committee.
This entire Committee or any individual director on this Committee may be removed from office with or without cause by the affirmative vote of the majority of the Board.
The Board delegates to this Committee the express authority to do the following, to the fullest extent permitted by applicable law and the Organizational Documents:
- Compensation Policies. Develop, review, evaluate and approve this Company's overall compensation policies, and establish performance-based incentives that support and reinforce this Company's long-term strategic goals, organizational objectives and shareholder interests.
- Chief Executive Officer Compensation and Goals. Review and approve corporate goals and objectives relevant to this Company's chief executive officer's (the "CEO") compensation, evaluate the CEO's performance in light of those goals and objectives, and either as a Committee or together with other independent directors (as directed by the Board), determine and approve the CEO's compensation level based on such evaluation, including, without limitation, salary, long- and short-term incentive plans, retirement plans, deferred compensation plans, equity award plans, change in control or other severance plans and any other benefits, compensation or arrangements, as this Committee deems appropriate, based on this evaluation. Factors to consider in this compensation review include, but are not limited to, the CEO's performance with respect to the aforementioned goals, market compensation data provided by third parties and this Company's performance and shareholder returns. This Committee shall discuss and determine the CEO's compensation in executive session. By invitation of this Committee, the CEO may participate in any discussions of this Committee and may be present during any other voting sessions of this Committee.
- Compensation of Other Executive Officers. Recommend to the Board compensation with respect to non-CEO executive officers. Establish, review and approve compensation plans and remunerations arrangements in which any executive officer is eligible to participate. Such compensation plans and remuneration arrangements may include, without limitation, salary, long- and short-term incentive plans, retirement plans, deferred compensation plans, equity award plans, change in control or other severance plans and any other benefits, compensation or arrangements, as this Committee deems appropriate. Review periodic reports from the CEO as to the performance and compensation of such senior officers.
- Members of the Board. Recommend compensation for employee and non-employee members of the Board, including, without limitation, the following elements: retainer, meeting fees, committee fees, committee chair fees, equity or stock compensation, benefits and perquisites.
- Incentive Compensation Plan Recommendations. Make recommendations to the Board with respect to this Company's incentive compensation plans and equity-based compensation plans and approve for submission to this Company's shareholders all new stock option and equity compensation plans and any amendments thereto.
- Performance-Based Awards. Grant stock options, stock appreciation rights and performance-based awards designed to qualify as performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code, to the extent, if any, this Committee determines to be advisable.
- Compensation Plan Administration. Administer any equity-based, long-term incentive or other compensation plan adopted by the Board or this Company's shareholders for which no other administrator is named by the Board, this Company's shareholders or the terms of such plan. As administrator of any such plan, this Committee may, without limitation:
- grant options and other awards under any such plan, provided, however, that each grant shall satisfy all the applicable terms of the plan under which it is granted as in effect at the time of grant; and
- take any other action which, by the terms of the applicable plan, may be taken by the administrator of such plan.
- Non-Plan Awards. Grant special cash awards which are not pursuant to any compensation plan and set the terms of such awards. In addition, this Committee may grant special equity-based awards which are not pursuant to any existing equity-based compensation plan; provided that any such award satisfies any approval requirements of applicable law or the NYSE. For example, and without limitation, this Committee may authorize an award grant to a person not previously an employee or director of this Company, or following a bona fide period of non-employment, as an inducement material to the individual's entering into employment with this Company.
- Overall Review of Other Programs. Except as otherwise determined by the Board, review the other compensation programs of this Company in light of Company and program objectives, needs and current benefit levels.
- Annual Report. Review and discuss with management this Company's annual Compensation Discussion and Analysis as prepared in accordance with applicable rules and regulations for inclusion in this Company's annual proxy statement or annual report, as applicable, and issue a report (which will also be included in such proxy statement or annual report) as to whether, based on this Committee's review of that disclosure, this Committee recommends to the Board that the Compensation Discussion and Analysis disclosure be included in that proxy statement or annual report.
- Succession Planning. Monitor, make recommendations and periodically review matters related to succession planning for the CEO and other executive officers of this Company.
- Review and Publication of this Charter. Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. Publish this Charter as required by the rules and regulations of applicable law and as otherwise deemed advisable by this Committee, including making this Charter available on or through this Company's website. If any function of this Committee is delegated to another committee, the charter of that committee must also be made available on or through this Company's website.
- Annual Review. Annually evaluate the performance of this Committee. The criteria for the evaluation of the performance of this Committee shall be reviewed with the chairperson of the Board from time to time. The criteria and performance reviews shall be retained by the Chair (or legal counsel to this Company at the Chair's election) for so long as recommended by legal counsel to this Company.
- Recommendations and Reports. Make recommendations and report to the Board and other committees of the Board with respect to any of the foregoing matters.
- Other Actions. Take such other actions consistent with this Charter, the Organizational Documents and governing law as may be necessary or appropriate to fulfill this Committee's purpose (as stated above) and as may be requested or required by the Board from time to time.
This Committee shall meet with such frequency, and at such times, as the Chair or a majority of this Committee determines. This Committee shall also meet as and when necessary to act upon any other matters within its jurisdiction under this Charter. A special meeting of this Committee may be called by the Chair and shall be called promptly upon the request of any two members of this Committee. The agenda of each meeting shall be prepared by the Chair and circulated to each member of this Committee prior to the meeting date, if practicable. Unless this Committee or the Board adopts other procedures, the provisions of the Organizational Documents applicable to meetings of committees of the Board shall govern meetings of this Committee. If it is not practical, however, for the Committee to meet in a live or telephonic meeting, the Committee may meet and take actions pursuant to a unanimous written consent.
Minutes and other relevant records of each meeting of this Committee shall be kept with the regular corporate records of this Company. This Committee shall report to the Board regularly or whenever requested to do so by the Board.
- This Committee shall have the power to appoint subcommittees.
- Except for grants and awards to executive officers and directors of this Company, this Committee may delegate to one or more executive officers of this Company its authority to make grants and awards under this Company's incentive compensation or other equity-based plans as this Committee deems appropriate and in accordance with the terms of such plans and applicable law.
This Committee shall have the power, in its sole discretion, to obtain advice and assistance from, and to retain at this Company's expense, such independent legal counsel, accounting or other advisors and experts as it determines necessary or appropriate to carry out its duties, and in connection therewith to receive appropriate funding, determined by it, from this Company.
The Board delegates to this Committee the express authority to decide whether to retain a compensation consultant or consultancy firm to assist in the evaluation of compensation pursuant to this Charter. If this Committee decides in its sole discretion to retain such a consultant or firm, the Board delegates to this Committee the authority to retain and terminate any such consultant or firm and to approve the fees and other terms related to such retention.
This Committee may determine the level and cost of ordinary administrative expenses necessary or appropriate in carrying out its duties, with such costs to be borne by this Company.
In carrying out its duties, this Committee shall act in reliance on management, independent public accountants, internal auditors, and outside advisors and experts, as it deems necessary or appropriate to enable it to carry out its duties.
This Committee has the authority to conduct any investigation it deems necessary or appropriate to enable it to carry out its duties.
This Committee shall have unrestricted access to this Company's employees, independent public accountants, internal auditors, compensation consultants, and inside and outside counsel and may require any of this Company's employees, independent public accountants, internal auditors, compensation consultants, and inside and outside counsel to attend a meeting of this Committee or to meet with any members of this Committee or representatives of this Committee's counsel, advisors or experts.
Except as expressly set forth in this Charter, the Organizational Documents or as otherwise provided by law or the rules of the NYSE, this Committee shall establish its own rules and procedures.
Dr. Frank H. Levinson has served on our board of directors since 2001. Since 2006, Dr. Levinson has served as the managing director of Small World Group, LLC, a group primarily involved in investing in and growing small companies. From August 1999 to January 2006, Dr. Levinson served as the chairman of the board of directors and chief technical officer of Finisar Corporation, a provider of fiber optic components and network performance test and monitoring systems. From 1988 to 1999, Dr. Levinson served as the chief executive officer of Finisar. From January 1986 to February 1988, Dr. Levinson served as the optical department manager at Raynet, Inc., a fiber optic systems company and, from April 1985 to December 1985, as the chief optical scientist at Raychem Corporation. From January 1984 to July 1984, Dr. Levinson was a member of the technical staff at Bellcore, a provider of services and products to the communications industry. From 1980 to 1983, Dr. Levinson served as a member of the technical staff at AT&T Bell Laboratories. Dr. Levinson earned a bachelor of science degree in mathematics and physics from Butler University and a master's degree in astronomy and a doctor of philosophy degree in astronomy from the University of Virginia.
Since January 2010, Mr. Kelly has served as chief executive officer and president of Moxie Software, a provider of collaborative social software. From June 2006 to February 2009, he was chairman of the board of MontaVista Software, a provider of Linux-based development software, where he was also chairman, president and chief executive officer from June 2006 to February 2008. From February 2008 to January 2009, he was president and chief executive officer of Epicor Software, an enterprise resource planning software company, where he also served on the board of directors from 2000 to 2009. In 2004 and 2005, he was with Trident Capital, a venture capital company. From 2001 to 2004, he was chairman, president and chief executive officer of BlueStar Solutions, an enterprise resource planning software hosting company. From 1998 to 2001, he was chairman and chief executive officer of Blaze Software, Inc. Prior to that, he served as chief financial officer or chief operating officer at several software and semiconductor companies, including Cirrus Logic, Inc., Frame Technology, Cadence Design Systems, Valid Logic Corporation and Analog Design Tools. Earlier in his career he was with Arthur Anderson & Company. Since September 2003, Mr. Kelly has served on the board of directors of FEI Company. He is also on the Board of Regents of Santa Clara University. Mr. Kelly holds a B.S. degree in Economics from Santa Clara University.