2014 Proxy


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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the Securities Exchange Act of 1934 (Amendment No.    )

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Micron Technology, Inc.
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Notice of Fiscal 2014 Annual Meeting of Shareholders
January 22, 2015
To the Shareholders:

NOTICE IS HEREBY GIVEN that the Fiscal 2014 Annual Meeting of Shareholders of Micron Technology, Inc., a Delaware corporation, will be held on January 22, 2015, at 9:00 a.m., Mountain Standard Time, at our headquarters located at 8000 South Federal Way, Boise, Idaho 83716-9632, for the purposes listed below. As used herein "we," "our," "us," "the Company" and similar terms refer to Micron Technology, Inc. unless the context indicates otherwise.

1.
To elect directors to serve for the ensuing year and until their successors are elected and qualified;
2.
To approve the Amended and Restated 2007 Equity Incentive Plan and increase the shares reserved for issuance thereunder by 30,000,000;
3.
To ratify the appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending September 3, 2015;
4.
To amend our Restated Certificate of Incorporation to eliminate cumulative voting;
5.
To approve the material terms of the performance goals under our Executive Officer Performance Incentive Plan;
6.
To approve a non-binding resolution to approve the compensation of our Named Executive Officers as described in the proxy statement; and
7.
To transact such other business as may properly come before the meeting or any adjournment thereof.

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.

Only shareholders of record at the close of business on November 21, 2014, are entitled to notice of and to vote at the meeting and any postponements or adjournments of the meeting. A complete list of shareholders entitled to vote at the meeting will be open to the examination of any shareholder, for any purpose germane to the business to be transacted at the meeting, during ordinary business hours for the ten-day period immediately preceding the date of the meeting, at our headquarters at 8000 South Federal Way, Boise, Idaho 83716-9632.

The Securities and Exchange Commission permits proxy materials to be furnished over the Internet rather than in paper form. Accordingly, we are sending most of our shareholders a notice regarding the availability of this proxy statement, our Annual Report on Form 10-K for fiscal 2014 and other proxy materials via the Internet (the "Notice"). This electronic process gives you fast, convenient access to the materials, reduces the impact on the environment and reduces our printing and mailing costs. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. The Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your vote over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice.

Attendance at the Annual Meeting will be limited to shareholders and our guests. Shareholders may be asked to furnish proof of ownership of our Common Stock before being admitted to the meeting. Directions to the meeting's location accompany the Proxy Statement.

To ensure your representation at the meeting, you are urged to vote. You may vote by telephone or electronically via the Internet. Alternatively, if you received a paper copy, you may sign, date and return the proxy card in the postage-prepaid envelope enclosed for that purpose. Please refer to the instructions included with the proxy card for additional details. Shareholders attending the meeting may vote in person even if they have already submitted their proxy, and any previous votes that were submitted by the shareholder, whether by Internet, telephone or mail, will be superseded by the vote that such shareholder casts at the meeting.
 
 
By Order of the Board of Directors
Boise, Idaho
December __, 2014
 
Joel L. Poppen
Vice President of Legal Affairs, General Counsel and Corporate Secretary
YOUR VOTE IS IMPORTANT. PLEASE SUBMIT YOUR PROXY PROMPTLY.




8000 South Federal Way
Boise, Idaho 83716-9632
____________________________

PROXY STATEMENT
FISCAL 2014 ANNUAL MEETING OF SHAREHOLDERS

January 22, 2015
9:00 a.m. Mountain Standard Time
____________________________

INFORMATION CONCERNING SOLICITATION AND VOTING

General

The proxy is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Micron Technology, Inc., for use at the Fiscal 2014 Annual Meeting of Shareholders to be held on January 22, 2015, at 9:00 a.m., Mountain Standard Time, or at any adjournment or postponement thereof (the "Annual Meeting"). The purpose of the Annual Meeting is set forth herein and in the accompanying Notice of Fiscal 2014 Annual Meeting of Shareholders. The Annual Meeting will be held at our headquarters located at 8000 South Federal Way, Boise, Idaho 83716-9632. Directions to the Annual Meeting accompany this Proxy Statement. Our telephone number is (208) 368-4000.

This Proxy Statement and related proxy card are first being distributed on or about December __, 2014, to all shareholders entitled to vote at the meeting.

Shareholders can vote their shares using one of the following methods:

Vote through the Internet at www.proxypush.com using the instructions included in the notice regarding the Internet availability of proxy materials, the proxy card or voting instruction card;

Vote by telephone using the instructions on the proxy card or voting instruction card if you received a paper copy of the proxy materials;

Complete and return a written proxy or voting instruction card using the proxy card or voting instruction card if you received a paper copy of the proxy materials; or

Attend and vote at the meeting.

Internet and telephone voting are available 24 hours a day, and if you use one of those methods, you do not need to return a paper proxy or voting instruction card. Unless you are planning to vote at the meeting, your vote must be received by 11:59 p.m., Eastern Standard Time, on January 21, 2015.

Record Date

Shareholders of record at the close of business on November 21, 2014 (the "Record Date"), are entitled to notice of and to vote at the meeting.

Revocability of Proxy

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by attending the Annual Meeting and voting in person or by delivering to us a written notice of revocation or another duly executed proxy bearing a date later than the earlier given proxy but prior to the date of the Annual Meeting.


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Solicitation

We will bear the cost of solicitation. In addition, we may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation materials to such beneficial owners. Proxies may be solicited by our directors, officers and employees, without additional compensation, personally or by telephone or Internet. We intend to use the services of D.F. King & Co. and Laurel Hill Advisory Group, LLC., proxy solicitation firms, in connection with the solicitation of proxies. Although the exact cost of the solicitation services is not known at this time, it is anticipated that the fees paid by us for these services will be approximately $12,500.

Outstanding Shares

We have one class of stock outstanding, common stock, $0.10 par value per share (the "Common Stock"). At November 21, 2014, the Record Date, _____________shares of Common Stock were issued and outstanding and entitled to vote.

Voting Rights and Required Vote

Under the Delaware General Corporation Law and our Restated Certificate of Incorporation and our Bylaws, each shareholder will be entitled to one vote for each share of Common Stock held at the Record Date for all matters, including the election of directors, unless cumulative voting for the election of directors is required (in the manner specified below). The required quorum for the transaction of business at the Annual Meeting is a majority of the votes eligible to be cast by holders of shares of our Common Stock issued and outstanding on the Record Date. Shares that are voted "FOR," "AGAINST" or "ABSTAIN" are treated as being present at the Annual Meeting for the purposes of establishing a quorum and are tallied to determine the shareholders' decision with respect to the matter voted upon (the "Votes Cast"). Abstentions will have the same effect as voting against a proposal. Broker non-votes will be considered present and entitled to vote for purposes of determining the presence or absence of a quorum for the transaction of business, but such non-votes are not deemed to be Votes Cast and, therefore, will not be included in the tabulation of the voting results with respect to voting results for the election of directors or issues requiring the approval of a majority of Votes Cast.

Shares held in a brokerage account or by another nominee are considered held in "street name" by the shareholder or "beneficial owner." A broker or nominee holding shares for a beneficial owner may not vote on matters relating to the election of directors, equity or compensation plans, the certificate of incorporation, or advisory votes unless the broker or nominee receives specific voting instructions from the beneficial owner of the shares. As a result, absent specific instructions, brokers or nominees may not vote a beneficial owner's shares on Items 1, 2, 4, 5 and 6 and such shares will be considered "broker non-votes" for such proposals.

Directors will be elected if the number of votes "FOR" a particular director exceeds the number of votes "AGAINST" that same director. The amendment to our Restated Certificate of Incorporation requires the affirmative vote of the holders of a majority of the shares of common stock outstanding on the Record Date. With respect to all other items of business, the "FOR" vote of a majority of the Votes Cast is required in order for such matter to be considered approved by the shareholders.

Cumulative voting for the election of directors shall not be required unless a shareholder has requested cumulative voting by written notice to our Corporate Secretary at least 15 days prior to the date of the meeting. If cumulative voting is required with respect to the election of directors, each voting shareholder may cumulate such shareholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder's shares are entitled, or distribute the shareholder's votes among as many candidates as the shareholder thinks fit, provided that votes cannot be cast for more than eight candidates. If cumulative voting is required, the persons authorized to vote shares represented by proxies shall have the authority and discretion to vote such shares cumulatively for any candidate or candidates for whom authority to vote has not been withheld.



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Voting of Proxies

The shares of Common Stock represented by all properly executed proxies received in time for the meeting will be voted in accordance with the directions given by the shareholders. If no instructions are given with respect to a properly executed Proxy timely received by us, the shares of Common Stock represented thereby will be voted (i) FOR each of the nominees named herein as directors, or their respective substitutes as may be appointed by the Board of Directors, (ii) FOR approval of the Amended and Restated 2007 Equity Incentive Plan, (iii) FOR ratification of the appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending September 3, 2015, (iv) FOR approval of the amendment to our Restated Certificate of Incorporation, (v) FOR approval of the material terms of the performance goals under the Executive Officer Performance Incentive Plan, (vi) FOR approval of a non-binding resolution to approve the compensation of our Named Executive Officers as described in the proxy statement; and (vii) in the discretion of the proxy holders for such business which may properly come before the Annual Meeting.


PROPOSAL 1 – ELECTION OF DIRECTORS

Nominees

A board of eight directors is to be elected at the Annual Meeting, all of whom have been recommended for nomination by a majority of the independent directors of the Board of Directors and all of whom are currently serving as directors. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the eight management nominees named below. Your proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement. If any management nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board of Directors to fill the vacancy. It is not expected that any nominee listed below will be unable or will decline to serve as a director. The term of office of each person elected as a director will continue until the next Annual Meeting of Shareholders or until such person's successor has been elected and qualified, except in the case of earlier resignation or removal. Executive officers are appointed annually by the Board of Directors and serve until their successors are duly appointed and qualified, except in the case of earlier resignation or removal. The names of the nominees and certain information about them are set forth below:

 
 
 
 
 
 
Served as a Director Since
Board Committees(1)
Name of Nominee
 
Age
 
Principal Occupation
 
 
A
 
C
 
G
Robert L. Bailey
 
57

 
Former Chairman of PMC-Sierra, Inc.
 
2007
 
X
 
 
 
X
Richard M. Beyer
 
66

 
Former Chairman and Chief Executive Officer of Freescale Semiconductor, Inc.
 
2013
 
 
 
X
 
X
Patrick J. Byrne
 
54

 
President of Tektronix
 
2011
 
 
 
X
 
X
D. Mark Durcan
 
53

 
Chief Executive Officer of Micron Technology, Inc.
 
2012
 
 
 
 
 
 
D. Warren East
 
53

 
Former Chief Executive Officer of ARM Holdings PLC
 
2013
 
 
 
X
 
X
Mercedes Johnson
 
60

 
Former Chief Financial Officer of Avago Technologies Limited
 
2005
 
X
 
 
 
X
Lawrence N. Mondry
 
54

 
Chief Executive Officer of Apollo Brands
 
2005
 
 
 
X
 
X
Robert E. Switz
 
68

 
Chairman of the Board of Micron Technology, Inc.
 
2006
 
X
 
 
 
X

(1)    A = Audit Committee, C = Compensation Committee, G = Governance Committee

Set forth below are the principal occupations of the nominees for at least the past five years:



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Robert L. Bailey was the Chairman of the Board of Directors of PMC-Sierra ("PMC") from 2005 until May 2011 and also served as PMC's Chairman from February 2000 until February 2003.  Mr. Bailey served as a director of PMC from October 1996 to May 2011.  He also served as the Chief Executive Officer of PMC from July 1997 until May 2008.  PMC is a leading provider of broadband communication and semiconductor storage solutions for the next-generation Internet.  Mr. Bailey currently serves on the Board of Directors of Entropic Communications.  Mr. Bailey holds a BS in Electrical Engineering from the University of Bridgeport and an MBA from the University of Dallas.  He has served on our Board of Directors since 2007.

Mr. Bailey's experience as CEO and Chairman of a leading technology company has given him expertise in the technology industry as well business operations, finance, corporate development, corporate governance and management.

Richard M. Beyer was Chairman and CEO of Freescale Semiconductor, Inc. ("Freescale") from 2008 through June 2012 and served as a director with Freescale until April 2013. Prior to Freescale, Mr. Beyer was President, Chief Executive Officer and a Director of Intersil Corporation from 2002 to 2008. He has also previously served in executive management roles at FVC.com, VLSI Technology and National Semiconductor Corporation. He currently serves on the Board of Directors of Dialog Semiconductor and Analog Devices, Inc. Mr. Beyer served three years as an officer in the United States Marine Corps. He holds a BA and an MA in Russian from Georgetown University and an MBA in Marketing and International Business from Columbia University Graduate School of Business. Mr. Beyer joined our Board of Directors in January 2013.

Mr. Beyer's experience as the CEO and a director at leading technology companies has given him expertise in the technology industry as well business operations, finance, corporate development, corporate governance and management.

Patrick J. Byrne has served as the President of Tektronix, a subsidiary of Danaher Corporation, since July 2014. Mr. Byrne was Vice President of Strategy and Business Development and Chief Technical Officer of Danaher Corporation from November 2012 to July 2014. Danaher Corporation designs, manufactures, and markets innovative products and services to professional, medical, industrial, and commercial customers. Prior to that, Mr. Byrne served as Director, President and Chief Executive Officer of Intermec, Inc. from 2007 to May 2012. Mr. Byrne was with Agilent Technologies, Inc. from 1999 to 2007 and served in various management positions. Mr. Byrne holds a BS in Electrical Engineering from the University of California, Berkeley, and an MS in Electrical Engineering from Stanford University.  Mr. Byrne joined our Board of Directors in April 2011.

Mr. Byrne's experience in executive management at public companies has given him expertise in the technology industry as well as business operations, finance, corporate development, corporate governance and management.

D. Mark Durcan joined us in June 1984 and has served in various positions since that time.  Mr. Durcan was appointed our Chief Operating Officer in February 2006, President in June 2007 and Director and Chief Executive Officer in February 2012. Mr. Durcan has been an officer since 1996.  Mr. Durcan is a member of the Board of Directors of MWI Veterinary Supply, Inc. and Freescale Semiconductor, Inc. Mr. Durcan holds a BS and MChE in Chemical Engineering from Rice University. Mr. Durcan has served on our Board of Directors since February 2012.

Mr. Durcan has been with us for over 30 years and his experiences have given him extensive expertise in our business and operations. He has developed expertise in the areas of finance, corporate development, corporate governance, business strategy and management.

D. Warren A. East was the CEO of ARM Holdings PLC from October 2001 to July 2013. He originally joined ARM in 1994, and served in various roles prior to being appointed CEO. He currently serves on the Board of BT Group plc, De La Rule PLC, Inc. and Rolls Royce plc. Mr. East is a chartered engineer, Distinguished Fellow of the British Computer Society, Fellow of the Institution of Engineering and Technology, Fellow of the Royal Academy of Engineering and a Companion of the Chartered Management Institute. Mr. East holds a BA BSc(Eng) and an MBA MEng in Engineering Science from Oxford University and an MBA and honorary doctorate from Cranfield University. Mr. East joined our Board of Directors in July 2013.

Mr. East's experience as CEO of a leading technology company has given him expertise in the technology industry as well as business operations, finance, corporate development, corporate governance and management.



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Mercedes Johnson was the Senior Vice President and Chief Financial Officer of Avago Technologies Limited, a supplier of analog interface components for communications, industrial and consumer applications, from December 2005 to August 2008.  She also served as the Senior Vice President, Finance, of Lam Research Corporation ("Lam") from June 2004 to January 2005 and as Lam's Chief Financial Officer from May 1997 to May 2004.  Ms. Johnson holds a degree in Accounting from the University of Buenos Aires and currently serves on the Board of Directors for Intersil Corporation, Juniper Networks, Inc. and Teradyne, Inc.  Ms. Johnson is the Chairman of the Board's Audit Committee and has served on our Board of Directors since 2005.

Ms. Johnson's experience as the CFO of several technology companies has given her expertise in finance, corporate development, corporate governance, management and operations.

Lawrence N. Mondry has been the Chief Executive Officer of Apollo Brands, a consumer products portfolio company, since February 2014. Mr. Mondry was the Chief Executive Officer of Flexi Compras Corporation, a rent-to-own retailer, from June 2013 to February 2014. Mr. Mondry was the President and Chief Executive Officer of CSK Auto Corporation ("CSK"), a specialty retailer of automotive aftermarket parts, from August 2007 to July 2008.  Prior to his appointment at CSK, Mr. Mondry served as the Chief Executive Officer of CompUSA Inc. from November 2003 to May 2006.  Mr. Mondry joined CompUSA in 1990.  Mr. Mondry is the Chairman of the Board's Compensation Committee and Governance Committee. He has served on our Board of Directors since 2005.

Mr. Mondry's experience as the CEO of various retailers has given him expertise in operations, management, finance and corporate development. Mr. Mondry's retail expertise is especially relevant to our Lexar and Crucial businesses.

Robert E. Switz was the Chairman, President and Chief Executive Officer of ADC Telecommunications, Inc., ("ADC"), a supplier of network infrastructure products and services from August 2003 until December 2010, when Tyco Electronics Ltd. acquired ADC.  Mr. Switz joined ADC in 1994 and throughout his career there held numerous leadership positions.  Mr. Switz holds an MBA from the University of Bridgeport and a BS in Business Administration from Quinnipiac University.  Mr. Switz also serves on the Board of Directors for Broadcom Corporation, Cyan Optics, Inc., GT Advanced Technologies and Pulse Electronics Corporation.  He has served on our Board of Directors since 2006 and was appointed Chairman of the Board in February 2012.

Mr. Switz's experience as CEO and Chairman of a leading technology company has given him expertise in the technology industry as well business operations, finance, corporate development, corporate governance and management.

There are no family relationships between any of our directors or executive officers.

The Board of Directors recommends voting "FOR" approval of the nominees listed above.


CORPORATE GOVERNANCE

Code of Business Conduct and Ethics

The Board of Directors has adopted a Code of Business Conduct and Ethics that is applicable to all our directors, officers and employees. A copy of the Micron Code of Business Conduct and Ethics is available at www.micron.com/about/our-commitment/governance/ethics and is also available in print upon request. Any amendments or waivers of the Code of Business Conduct and Ethics will also be posted on our website within four business days of the amendment or waiver as required by applicable rules and regulations of the Securities and Exchange Commission ("SEC") and the Listing Rules of NASDAQ.

Director Independence

The Board of Directors has determined that directors Bailey, Beyer, Byrne, East, Johnson, Mondry and Switz qualify as independent directors. In determining the independence of our directors, the Board of Directors has adopted independence standards that mirror the criteria specified by applicable laws and regulations of the SEC and the Listing Rules of NASDAQ. None of these directors have a relationship with us, other than any relationship that is categorically not material under the guidelines referenced above. See "Certain Relationships and Related Transactions."



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Board Leadership Structure

Mr. Switz has served as our Chairman of the Board since February 2012. We do not have a fixed policy on whether the roles of chairman and CEO should be separate or combined. The decision is based on our and our shareholders' best interests under the circumstances existing at the time. In his role as Chairman, Mr. Switz oversees meetings of the independent directors and acts as a liaison between the independent directors and CEO.

Risk Assessment Role

The Board of Directors is responsible for overseeing the major risks we face and reviewing management's proposals for their mitigation. In addition, the Board has delegated oversight of certain categories of risk to the Audit, Compensation and Governance Committees. The Audit Committee reviews and discusses with management significant financial and nonfinancial risk exposures and the steps management has taken to monitor, control, and report such exposures. The Compensation Committee oversees management of risks relating to our compensation plans and programs. The Governance Committee manages risks associated with board governance and director independence. The Audit, Compensation and Governance Committees report to the Board regularly on matters relating to the specific areas of risk the committees oversee.

Compensation Risks

We have assessed our compensation programs and have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. We assessed our compensation programs to determine if the programs' provisions and operations create undesired or unintentional risk of a material nature. We also reviewed the results of our findings with Mercer, our outside compensation consultant. This risk assessment process included a review of program policies and practices; program analysis to identify risk and risk control related to the programs; and determinations as to the sufficiency of risk identification, the balance of potential risk to potential reward and risk control. Although we reviewed all compensation programs, we focused on the programs with variability of payout, with the ability of a participant to directly affect payout and the controls on participant action and payout. In most cases, our compensation policies and practices are centrally designed and administered, and are substantially the same at each business unit. Certain internal groups have different or supplemental compensation programs tailored to their specific operations and goals, and programs may differ by country due to variations in local laws and customs.

Compensation Consultant

The Compensation Committee annually engages a compensation consultant, currently Mercer, to provide a comprehensive review of executive compensation matters. Mercer provides the Compensation Committee with information for all of our officers on cash and non-cash compensation elements and historical and trend payment data.

The Compensation Committee has established procedures that it considers adequate to ensure that Mercer's advice to the Compensation Committee remains objective and is not influenced by our management. These procedures include: a direct reporting relationship to the Compensation Committee; a provision in the Compensation Committee's engagement letter with Mercer specifying what information, data, and recommendations can be shared with management; and an annual update to the Compensation Committee on Mercer's relationship with us, including a summary of the work performed for us during the preceding 12 months. The specific activities that Mercer undertakes for us include:

review non-employee director compensation;

review the Compensation Peer Group (as defined in the Compensation Discussion and Analysis) and recommend any changes to its members;

benchmark total direct compensation and its components (salary, short-term incentives and long-term incentives) of our officers using several data sources;

evaluate our historical pay-for-performance relationship;

review the metrics and targets associated with the annual short-term incentives and long-term incentive plans;

review the proposed equity grants for executives, along with vesting recommendations;


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assist with a risk assessment of our compensation practices;

review a draft of the compensation discussion and analysis component of proxy disclosure; and

attend the Compensation Committee meetings in which executive compensation matters are discussed.

We paid Mercer a total of $513,235 in fiscal 2014 for services provided. Of this amount, $225,572 was paid as a result of the executive and non-employee director compensation consulting work Mercer performed for the Compensation Committee and Governance Committee and $287,663 was paid as a result of the work Mercer performed related to our 401 (k) Plan and other human resource functions. The decision to use Mercer for services other than those provided to the Compensation Committee and Governance Committee was made by our management and not the Compensation Committee.

In addition, the Compensation Committee considered the independence of Mercer in light of SEC rules and NASDAQ listing standards. The Compensation Committee received a letter from Mercer addressing its independence, including the following factors: (i) other services provided to us by Mercer; (ii) fees paid by us as a percentage of Mercer's total revenue; (iii) policies or procedures maintained by Mercer that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the individual consultants involved in the engagement and any member of the Compensation Committee; (v) any of our stock owned by the individual consultants involved in the engagement; and (vi) any business or personal relationships between our executive officers and Mercer or the individual consultants involved in the engagement. The Compensation Committee concluded that there were no conflicts of interest with Mercer.

Board Meetings and Committees

Our Board of Directors held six meetings during fiscal 2014. The Board of Directors met in Executive Session four times during fiscal 2014. In fiscal 2014, the Board of Directors had a standing Audit Committee, Governance Committee and Compensation Committee. During fiscal 2014, the Audit Committee met 11 times, the Governance Committee met three times and the Compensation Committee met 10 times. In addition to formal committee meetings, the chairmen of the committees engaged in regular discussions with management regarding various issues relevant to their respective committees. All incumbent directors attended 75% or more of the total number of meetings of the Board of Directors during fiscal 2014. All incumbent directors who served on the Audit, Governance and Compensation Committees attended 75% or more of the total number of committee meetings during fiscal 2014. All members of our Board were present at the fiscal 2013 Annual Meeting of Shareholders. We encourage director attendance at the Annual Meeting of Shareholders.

The Audit Committee, the Governance Committee and the Compensation Committee each have written charters that comply with SEC and NASDAQ rules relating to corporate governance matters. Copies of the committee charters as well as our Corporate Governance Guidelines are available at www.micron.com and are also available in print upon request to corporatesecretary@micron.com. The Board has determined that all the members of the Audit Committee, the Governance Committee, and the Compensation Committee satisfy the independence requirements of applicable SEC laws and the Listing Rules of NASDAQ for such committees.

Our Corporate Governance Guidelines specify a mandatory retirement age of 70 for members of our Board of Directors and provide that committee chairman serve for no more than five years but give the Board the discretion in each case to waive the requirement on an annual basis.

Audit Committee

Ms. Johnson and Messrs. Bailey and Switz currently serve on the Audit Committee. Ms. Johnson has served as the Chairman of the Audit Committee since October 2010. The Board has determined that Ms. Johnson and Messrs. Bailey and Switz each qualify as an "audit committee financial expert" for purposes of the rules and regulations of the SEC and that each of these members are sufficiently proficient in reading and understanding our financial statements to serve on the Audit Committee. The purpose of the Audit Committee is to assist the Board in overseeing and monitoring:

the integrity of our financial statements;

the performance of our internal audit function;

the performance of our Independent Registered Public Accounting Firm;


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the qualifications and independence of our Independent Registered Public Accounting Firm; and

our compliance with legal and regulatory requirements.

The Audit Committee is also responsible for preparing the Audit Committee report that is included in our annual Proxy Statement. See "Report of the Audit Committee of the Board of Directors." The complete duties and responsibilities of the Audit Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.

Governance Committee

Ms. Johnson and Messrs. Bailey, Beyer, Byrne, East, Mondry and Switz currently serve on the Governance Committee. Mr. Mondry has served as Chairman of the Governance Committee since October 2009. The responsibilities of the Governance Committee include assisting the Board in discharging its duties with respect to the following:

the identification and selection of nominees to our Board of Directors;

director compensation;

the development of our Corporate Governance Guidelines; and

the annual evaluations of the Board and its committees.

The complete duties and responsibilities of the Governance Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.

The Governance Committee is responsible for identifying nominees for our Board of Directors. While we do not have a list of minimum qualifications that nominees must possess or a specific policy regarding diversity, the following factors are strongly considered by the Governance Committee in making its recommendations: substantial experience in the semiconductor industry or related industries; strong business acumen and judgment; excellent interpersonal skills; business relationships with key individuals in industry, government and education that may be of significant assistance to us and our operations; familiarity with accounting rules and practices; and "independence" as defined and required by the Listing Rules of NASDAQ and relevant rules and regulations of the SEC. In the event the Board of Directors has determined that it would be advisable to add additional members to the Board, the Governance Committee works with a third party executive search firm to assist them in the identification and evaluation of potential candidates to our Board of Directors.

The Governance Committee will consider director nominee recommendations from shareholders. Shareholder recommendations for directors are subject to the same criteria used to evaluate other candidates. Shareholders wishing to recommend a prospective nominee should submit the candidate's name and qualifications to our Corporate Secretary at corporatesecretary@micron.com. Our Bylaws contain the provisions that address the process by which a shareholder may nominate an individual to stand for election to our Board of Directors. A copy of our Bylaws can be found on the Corporate Governance page of our website at www.micron.com and is available in print upon request to corporatesecretary@micron.com.

Compensation Committee

Messrs. Beyer, Byrne, East and Mondry currently serve on the Compensation Committee of the Board of Directors. Mr. Mondry has served as the Chairman of the Compensation Committee since January 2012. The Compensation Committee is responsible for reviewing and approving the compensation of our executive officers. See the "Compensation Discussion and Analysis" and the "Compensation Committee Report" for information regarding how the Compensation Committee sets executive compensation levels. The Compensation Committee has authority to delegate any of its responsibilities to a subcommittee as it may deem appropriate in its judgment. The complete duties of the Compensation Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.



8



Executive Sessions and Communications with the Board of Directors

Mr. Switz has been the Chairman of our Board of Directors since February 2012. As part of his duties as Chairman, Mr. Switz chairs executive session meetings of our Board (meetings in which only non-employee directors are present). Shareholders and interested parties wishing to communicate with our Board of Directors may contact Mr. Switz at chairman@micron.com.


COMPENSATION OF DIRECTORS

The Governance Committee of the Board of Directors oversees the setting of compensation for our non-employee members of the Board of Directors. At the end of fiscal 2013, the Governance Committee engaged Mercer to review and evaluate director compensation for the ensuing year, in light of prevailing market conditions. Mercer gathered and reviewed market data for non-employee directors from the same Compensation Peer Group used to evaluate officer compensation. For a discussion of peer group companies please see "Executive Compensation and Related Information - Compensation Discussion and Analysis." For fiscal 2014, upon completion of its review and evaluation, the Governance Committee recommended that the Board of Directors increase (i) the annual retainer paid to non-employee directors from $80,000 to $100,000 and (ii) the fees paid to the Chairman of the Audit Committee, Compensation Committee, and Governance Committee.

Elements of Director Compensation

Annual Retainer

Non-employee directors are entitled to receive an annual retainer of $100,000. Pursuant to our 2008 Director's Compensation Plan (the "DCP"), non-employee directors may elect to take some or their entire annual retainer in the form of cash, shares of Common Stock or deferred rights to receive Common Stock upon termination as a director. Employee directors receive no additional or special remuneration for their service as directors.

Set forth below are the amounts received by directors for their service as committee chair or Chairman of the Board in fiscal 2014:

 
 
2014
Audit Committee Chair
 
$
30,000

Compensation Committee Chair
 
20,000

Governance Committee Chair
 
15,000

Chairman of the Board
 
150,000


Except for the foregoing, directors do not receive any additional or special cash remuneration for their service on any of the committees established by the Board of Directors. We also reimburse directors for travel and lodging expenses, if any, incurred in connection with attendance at Board of Directors' meetings.

Equity Award

Non-employee directors receive an annual equity award. Since fiscal 2007, the equity award has been exclusively in the form of restricted stock. The "targeted value" for the annual non-employee director equity award is established each year by the Board following discussions with Mercer. Since October 2011 the targeted value has been $240,000. The Board did not change the targeted value for fiscal 2014 compensation. The number of restricted shares awarded to each non-employee director is determined by dividing the applicable targeted value by the Fair Market Value of a share of our Common Stock, as defined under our equity plans. For purposes of our equity plans, "Fair Market Value" is the closing price of our Common Stock on the last market-trading day prior to the date of grant. The restrictions on the shares awarded in fiscal 2014 lapse for 100% of such shares on the first anniversary of the date of grant (the "Vesting Period"). Notwithstanding the foregoing, the restrictions will lapse for 100% of such shares in the event a director either reaches the mandatory retirement age or retires from the Board during the Vesting Period having achieved a minimum of three years of service with the Board prior to the effective date of his or her retirement.



9



Fiscal 2014 Director Compensation

The following table details the total compensation earned by our non-employee directors in fiscal 2014.

Name
 
Fees Earned or Paid in Cash
 
Stock Awards(1)
 
Total
Robert L. Bailey
 
$
98,333

 
 
$
239,865

 
$
338,198

Richard M. Beyer
 
98,333

 
 
239,865

 
338,198

Patrick J. Byrne
 
98,345

(2)
 
239,865

 
338,210

D. Warren East
 
98,333

 
 
239,865

 
338,198

Mercedes Johnson
 
127,500

 
 
239,865

 
367,365

Lawrence N. Mondry
 
132,500

 
 
239,865

 
372,365

Robert E. Switz
 
248,333

 
 
239,865

 
488,198


(1)
On October 17, 2013, each director who was not an employee was granted 14,143 shares of restricted stock with a grant date fair value of $239,865 ($16.96 per share). Grant date fair values were determined in accordance with Financial Accounting Standards Board Accounting Statements Codification Topic 718 ("ASC 718"). For information on the restrictions associated with these awards, see "Elements of Director Compensation – Equity Award" above. Any dividends payable with respect to our Common Stock will be payable with respect to all awards of restricted stock. As of August 28, 2014, each non-employee director held 14,143 shares of restricted stock.

(2)
Mr. Byrne elected to take a portion of this annual retainer in the form of shares of Common Stock. Amount earned by Mr. Byrne in fiscal 2014 was comprised of $15,845 (approximately 777 shares) of stock and $82,500 of cash.





10



PRINCIPAL SHAREHOLDERS

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth security beneficial ownership information of our Common Stock as of the Record Date (November 21, 2014), based on the most current information provided to us by the beneficial owners, available to us from our own records or provided in SEC filings made by the beneficial owners, for (i) persons known by us to own beneficially more than 5% of our Common Stock, (ii) each director, (iii) each Named Executive Officer listed in the "Summary Compensation Table" set forth herein and (iv) all directors and executive officers as a group:
Name and Address of Beneficial Owner
 
Number of
Shares Owned(1)
 
Right to Acquire(2)
 
Total
Beneficial
Ownership
 
Percent of
Class(3)
Mark W. Adams
 
 
 
 
 

 
 
Robert L. Bailey
 
 
 
 
 

 
 
Richard M. Beyer
 
 
 
 
 

 
 
Patrick J. Byrne
 
 
 
 
 

 
 
D. Mark Durcan (4)
 
 
 
 
 

 
 
D. Warren East
 
 
 
 
 

 
 
Ronald C. Foster (5)
 
 
 
 
 

 
 
Mercedes Johnson
 
 
 
 
 

 
 
Lawrence N. Mondry
 
 
 
 
 

 
 
Brian M. Shirley
 
 
 
 
 

 
 
Robert E. Switz
 
 
 
 
 

 
 
Steven L. Thorsen, Jr.
 
 
 
 
 

 
 
Roderic W. Lewis
 
 
 
 
 

 
 
Brian J. Shields
 
 
 
 
 

 
 
All directors and executive officers as a group (17 persons)
 
 
 
 
 

 
%

*
Represents less than 1% of shares outstanding

(1)
Excludes shares that may be acquired through the exercise of outstanding stock options.

(2)
Represents shares that an individual has a right to acquire within 60 days of the Record Date.

(3)
For purposes of calculating the Percent of Class, shares that the person or entity had a Right to Acquire are deemed to be outstanding when calculating the Percent of Class of such person or entity.

(4)
Includes ___,___ shares beneficially owned by C&E Partners L.P. and _,___ shares beneficially owned by Mr. Durcan's spouse.

(5)
Includes _,___ shares held jointly with Mr. Foster's spouse.





11



EXECUTIVE COMPENSATION AND RELATED INFORMATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis presents material information helpful or necessary to understand the objectives and policies of our compensation program for executive officers and the compensation reported in the tables that follow. This discussion focuses on the compensation awarded to, earned by, and paid to the following individuals:

Mark W. Adams, our President;

D. Mark Durcan, our Chief Executive Officer;

Ronald C. Foster, our Chief Financial Officer;

Brian M. Shirley, our Vice President, Memory Technology and Solutions; and

Steven L. Thorsen, Jr., our Vice President of Worldwide Sales.

In addition, we have included information related to two individuals who served as executive officers for a portion of fiscal 2014. Brian J. Shields served as our Vice President of Worldwide Operations from June 2010 to March 2014 and currently serves as our Vice President of Business Process Management. Roderic W. Lewis served as our Vice President of Legal Affairs, General Counsel and Corporate Secretary until his resignation in December 2013.

Throughout this discussion, the foregoing individuals, who are also named in the "Fiscal 2014 Summary Compensation Table," are referred to as our "Named Executive Officers" and the Compensation Committee of the Board of Directors is referred to as the "Committee."

Executive Summary

Financial Highlights

For the fiscal year ended
 
August 28,
2014
 
August 29,
2013
 
August 30,
2012
 
 
 
 
 
 
 
 
 
(in millions, except per share amounts)
Net sales
 
$
16,358

 
$
9,073

 
$
8,234

Operating income (loss)
 
3,087

 
236

 
(612
)
Net income (loss) attributable to Micron
 
3,045

 
1,190

 
(1,032
)
Earnings (loss) per share - Diluted
 
2.54

 
1.13

 
(1.04
)
Cash flows from operations
 
5,699

 
1,811

 
2,114


Highest net sales in our history

Highest net income in our history

Highest diluted earnings per share since fiscal 2000

Highest operating cash flows in our history

Reduced the dilutive effect by 118 million equivalent shares by exchanging, converting or repurchasing portions of our convertible notes

On October 27, 2014, we announced that our Board of Directors authorized the discretionary repurchase of up to $1.0 billion of our outstanding Common Stock.



12



Operational Highlights

 
 
DRAM
 
Trade NAND Flash(1)
 
 
 
 
 
 
 
(percentage change from fiscal 2013)
Net sales
 
156
 %
 
27
 %
Average selling prices per gigabit
 
6
 %
 
(23
)%
Gigabits sold
 
142
 %
 
65
 %
Cost per gigabit
 
(20
)%
 
(23
)%

(1)
Trade NAND Flash excludes sales to Intel from our NAND Flash joint venture with Intel.

Integrated the operations of Elpida Memory, Inc., which produced 54% of our DRAM in 2014

Transitioned one of our wafer fabrication facilities in Singapore from DRAM to NAND Flash production

Total Shareholder Return ("TSR")

The following chart shows our TSR data as compared to the median of our Compensation Peer Group.


The information presented is based on closing prices on the last trading day of August for each period presented above and represents annualized rates of return reflecting price appreciation plus reinvestment of dividends and the compounding effect of dividends paid on reinvested dividends.

Objective of our Executive Compensation Program

Our primary long-term corporate objective is to create superior value for our shareholders. The objective of the executive compensation program is to attract, motivate, reward, and retain highly qualified executive officers who are able to achieve the corporate objective of superior value for our shareholders. The executive compensation program is designed to provide a foundation of fixed compensation (base salary and time-based restricted shares) and a significant portion of performance-based compensation (short-term and long-term incentive opportunities, such as cash bonuses and performance-based restricted stock), that align the interests of executives with those of our shareholders. We also use time-based stock options, the value of which is directly tied to stock price performance.

Compensation Highlights

In October 2013, the Committee set compensation levels and performance goals for fiscal 2014 based on a review of financial results, projections, individual contributions, strategic objectives, Market Data (as defined below), and market conditions.

As a result of this review, all of the Named Executive Officers received an increase in base salary and long-term incentive opportunity. Mr. Adams also received an increase in his targeted short-term incentive opportunity as a percentage of base pay.


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The Committee set performance goals for our executive officers under its Executive Officer Performance Incentive Plan ("EIP"). The performance goals were selected due to their correlation to the creation of shareholder value and their alignment with our strategic objectives. For fiscal 2014, our corporate goals were tied to profitability, reductions in corporate spending, and customer review metrics.

The following pay mix, based on target amounts, was established for our Named Executive Officers for fiscal 2014:

Named Executive Officer
 
Base Salary
 
Short-term
Incentive
 
Long-term
Incentive
Mark W. Adams
 
13
%
 
16
%
 
71
%
D. Mark Durcan
 
10
%
 
15
%
 
75
%
Ronald C. Foster
 
15
%
 
15
%
 
70
%
Brian M. Shirley
 
13
%
 
13
%
 
74
%
Steven L. Thorsen, Jr.
 
18
%
 
16
%
 
66
%
Roderic W. Lewis
 
17
%
 
14
%
 
69
%
Brian J. Shields
 
20
%
 
16
%
 
64
%

For our long-term equity incentives, we use stock options, time-based restricted stock and performance-based restricted stock. For the performance-based restricted stock, we use a performance goal tied to Return on Assets ("ROA"). ROA is an indicator of how profitable a company is relative to its total assets and is tied to annual earnings and total assets.

For fiscal 2014, the Committee changed the mix of long-term equity incentives for our Named Executive Officers from 37.5% stock options, 37.5% time-based restricted stock and 25% performance-based restricted stock to 25% stock options, 45% time-based restricted stock and 30% performance-based restricted stock. This change was made to increase the performance-based portion of the Named Executive Officers' awards.

CEO Compensation

For fiscal 2014, the Committee increased Mr. Durcan's base salary to $1,025,000 and his long-term equity incentive opportunity to $8,000,000. His short-term incentive target did not change.

For fiscal 2014, Mr. Durcan's base salary, short-term incentive target, and long-term incentive opportunity were at or below the market median.

In October 2014, the Committee reviewed performance goals and results for fiscal 2014 and determined that the Named Executive Officers had met their performance goals. The long-term equity incentive ROA goal for fiscal 2014 was achieved at 100% of target. The EIP profitability goal was achieved at 200% of target, the reduction in corporate spending goal was achieved at 118% of target and the customer review goal was achieved at 98% of target.

Corporate Governance and Compensation Practices Highlights

The EIP is performance-based and we have no history of changing performance metrics mid-cycle.

We offer limited perquisites to our Named Executive Officers and we do not offer any special retirement benefits for our Named Executive Officers other than participation in our retirement plans on the same basis as other employees.

We do not have agreements with our officers that provide tax gross-up protection for change in control excise taxes.

Our equity incentive plans prohibit repricing of options or stock appreciation rights ("SARs") (directly or indirectly) without prior shareholder approval.



14



Our insider trading policy prohibits our officers and directors from engaging in pledging or hedging activities involving our stock.

We have an independent Chairman of the Board.

Our executive officers and directors were in compliance with our stock ownership guidelines for fiscal 2014.

Consideration of the 2013 Advisory Vote on Executive Compensation

At the Fiscal 2013 Annual Meeting of Shareholders on January 23, 2014, in our annual advisory vote on executive compensation, over 95% of the shares voted were voted in support of the compensation of our named executive officers. The Committee appreciates and values the views of our shareholders. In considering the results of the fiscal 2013 advisory vote on executive compensation, the Committee concluded that the compensation paid to our executive officers and our overall executive pay practices have strong shareholder support and have been effective in implementing our stated compensation philosophy and objectives. The Committee recognizes that executive pay practices and notions of sound governance principles continue to evolve. Consequently, the Committee intends to continue to seek the advice and counsel of its compensation advisors. Our shareholders may communicate any concerns or opinions on executive pay directly to the Committee or the Board. Please refer to "Executive Sessions and Communications with the Board of Directors" on page 9 for information about communicating with the Board.

Oversight of the Executive Compensation Program

Our executive compensation program is administered by the Committee, which is comprised of Messrs. Beyer, Byrne, East and Mondry. The Committee assists the Board of Directors in discharging its responsibilities with respect to the compensation of our officers. The Committee has direct responsibility to review and approve corporate goals and objectives used to determine the CEO's compensation, evaluate his performance in light of such goals and objectives, and determine and approve his compensation level based on this evaluation. The Committee also reviews the evaluation process and compensation structure for our other officers, including the other Named Executive Officers, and approves their compensation.

The Committee annually engages an outside compensation consultant, currently Mercer. The Committee also works closely with our CEO with respect to the determination of compensation of other officers. A more complete description of the Committee's responsibilities is provided in the Committee's Charter approved by the Board of Directors, which can be found on our website (www.micron.com) in the "Our Commitment" section. A more complete description of the role of the CEO and Mercer in the compensation process is described later in this Compensation Discussion and Analysis. Additional information regarding Mercer, the specific activities that Mercer undertakes for us and related fees can be found under "Corporate Governance – Compensation Consultant" on page 6.

Guiding Principles

We believe we have the best opportunity to attract, motivate, reward and retain qualified individuals, and, thus, to meet our overall objective of increasing shareholder value, by offering a compensation package that is "reasonable" and "competitive" with what our executives could otherwise obtain in the market, and especially from companies within our Compensation Peer Group. Our Compensation Peer Group consists of companies that we believe are especially likely to be our competitors for executive talent and is discussed further in "Market Data Defined" below. What is "reasonable" and "competitive" is gauged against the Market Data and reviewed by the Committee for each of the primary elements of compensation.

Reasonable

As an indication of reasonableness, the Committee typically targets the Market Data median. We believe it is important to retain flexibility in determining the compensation of our officers and, when appropriate, to deviate from the Market Data median due to factors such as:

differences in position and level of responsibility among officers, both in absolute terms and relative to our other officers and as compared to similarly situated officers within the Compensation Peer Group,

past and anticipated contributions by an officer,



15



technical expertise,

Company performance,

applicable business unit performance, and

length of service and/or experience both in absolute terms and relative to our other officers and as compared to officers within the Compensation Peer Group.

The semiconductor industry is highly volatile and changes in Market Data, which is a compilation of data from many companies, may be dramatic from year to year. Market Data can change as compensation practices change, executives retire or are replaced with less experienced and lower-paid executives, goals are achieved or not achieved resulting in varying payouts, participants in proprietary surveys change, and the completeness or accuracy of compensation data improves or deteriorates. Accordingly, what may have been the "median" or within a reasonable range of competitiveness in one year, may be higher or lower for the next. For this reason, even though the Committee manages compensation in accordance with such guiding principles, officer compensation may vary, above or below the median, or a range from the median, year over year.

Competitive

Given our experience, as well as advice we have received from Mercer, we believe a competitive compensation package will consider and measure compensation practices for executive positions with respect to three primary elements of compensation:

base compensation (salary),

short-term incentive compensation (cash bonus programs), and

long-term incentive compensation (stock options and time and performance-based restricted stock).

We do not require that a particular element comprise a set portion of the total compensation mix. We do believe, however, that a significant portion of the compensation should be variable (such as performance-based incentives) as compared to fixed (such as base salary and time-based restricted shares) and that such variable compensation aligns executives' interests with those of our shareholders. Additionally, although the Committee reviews total direct compensation (which is the sum of base salary, short-term incentive and long-term incentive compensation) for the Named Executive Officers, it does not have a fixed objective with respect to such total direct compensation. For fiscal 2014, the total direct compensation approved by the Committee was below the 75th percentile of Market Data values for Messrs. Adams, Foster, Shirley, Thorsen and Lewis and below the 50th percentile of Market Data values for Messrs. Durcan and Shields.

Compensation-setting Process and the Determination of Compensation Levels

The Committee reviews the compensation of our executive officers on an annual basis and sets compensation levels at the beginning of each fiscal year. As part of this process, the Committee reviews our financial results for the year just ended, projections for future periods, our strategic business plan and the Market Data provided by Mercer. The Committee also works with our CEO to establish performance goals that further our strategic objectives.

Mercer reviews the most recent available data and identifies the Market Data values for the 25th, 50th (i.e. median) and 75th percentile with respect to each position or rank. Mercer compares our compensation data, both as to elements and amounts to be paid or potential value to be delivered, with that of the Market Data and reports its findings to the CEO and the Committee. Our CEO works with Mercer by providing our financial data with respect to the most-recently completed fiscal year. The CEO also reviews projected financial results for the current fiscal year and our strategic business plan. The CEO makes suggestions as to base salary, recommends a potential set of company-wide and/or business unit metrics and targets for the current fiscal year with respect to short-term incentives and offers suggestions as to long-term incentive compensation for the executive officers other than himself. He makes no recommendations as to his own level of compensation.



16



The Committee reviews the Market Data, discusses the Market Data with the CEO and with Mercer, discusses individual officer performance based on input from the CEO and, without the CEO present, discusses the CEO's own performance for the most-recently completed fiscal year and anticipated performance for the current year. The Committee uses the Market Data and the deliberations to determine whether our compensation is competitive and reasonable as described above and whether, and to what extent, the Committee believes it would be appropriate to deviate from the Market Data and competitive practices. Following this deliberation, the Committee exercises its business judgment to certify the payment of compensation based on the financial results for the most-recently completed fiscal year, and approves the compensation for the current fiscal year, including the metrics and targets for the current year.

Components of the Executive Compensation Program

Fiscal 2014 base salaries

The purpose of a competitive base salary is to compensate executives for performing their day-to-day job responsibilities. Base salaries are generally targeted to approximate the Market Data median but may be above or below depending upon an executive's contributions, experience, performance and length of service. At the completion of fiscal 2013, the Market Data showed that the base salaries of all of the Named Executive Officers were below the 50th percentile for their positions or ranks. As a result, the Committee increased the base salaries of the Named Executive Officers for fiscal 2014. None of the Named Executive Officers received salary increases in fiscal 2013. The following table shows their fiscal 2014 salaries as compared to the 50th percentile of the Market Data.
Named Executive Officer
 
Fiscal 2014 Base Salary
 
Above (Below) 50th Percentile
Mark W. Adams
 
$
750,000

 
(3
)%
D. Mark Durcan
 
1,025,000

 
(4
)%
Ronald C. Foster
 
600,000

 
 %
Brian M. Shirley
 
600,000

 
1
 %
Steven L. Thorsen, Jr.
 
485,000

 
(5
)%
Roderic W. Lewis
 
525,000

 
2
 %
Brian J. Shields
 
425,000

 
1
 %

Fiscal 2014 short-term incentive awards

With respect to short-term incentive compensation, we pay for achievement of financial, operational and strategic objectives approved by the Committee at the beginning of each fiscal year. The short-term incentive opportunities are set to be competitive with market practices but actual incentive payouts are commensurate with achievement. Thus, we have adopted a "pay for performance" approach as it relates to short-term incentives.

Historically, we provided annual short-term incentive cash awards to our executive officers pursuant to the Executive Officer Performance Incentive Plan ("EIP"). The EIP was last approved by our shareholders in 2009 and is being submitted to the shareholders for approval at the Fiscal 2014 Annual Meeting. The purpose of the EIP is to attract, retain and reward qualified executives who are important to our success by providing performance-based, incentive cash awards for outstanding performance at the individual, business-unit and/or company-wide level.

The short-term incentive "opportunity" ("Target Award") for each officer is stated in terms of a specified percentage of such officer's base salary and is designed to reward participants for the achievement of specified short-term company-wide and/or business unit financial, operational or strategic goals. The Committee believes the pre-determined goals, regardless of whether tied to company-wide or business unit performance, promote our long-term success and shareholder value.

The Committee established the following goals for fiscal 2014:

Profitability – achieving targeted levels of net income,

Reduced Corporate Spending – achieving targeted reductions in corporate spending, and

Customer Review – achieving customer feedback targets


17



The target incentive amounts payable under the EIP for achievement of the fiscal 2014 goals are shown in the columns "Estimated Future Payouts under Non-Equity Incentive Plan Awards" of the "Grants of Plan-Based Awards in Fiscal 2014" table. All goals were established with threshold (50%), target (100%) and maximum (200%) payout levels, with the target payout requiring a significant level of execution and effort and no assurance of goal achievement.

The Target Awards established for fiscal 2014 for the Named Executive Officers were measured against the Market Data median. However, opportunities are not necessarily limited to the Market Data median, but considered within the factors described under the section labeled "Reasonable" above. For fiscal 2014, the following Target Awards were established:

Named Executive Officer
 
% of Base Salary
Mark W. Adams
 
130
%
D. Mark Durcan
 
150
%
Ronald C. Foster
 
100
%
Brian M. Shirley
 
100
%
Steven L. Thorsen, Jr.
 
90
%
Roderic W. Lewis
 
80
%
Brian J. Shields
 
80
%

The following table shows the Target Award weightings and levels of achievement of the EIP goals for each of our Named Executive Officers. The weightings reflect each of the officer's responsibilities and ability to affect the attainment of the goal.

EIP Weightings (as Percentage of Target Incentive)

 
 
Weighting
 
% of Target Achieved
Profitability
 
55
%
 
200
%
Reduced corporate spending
 
25
%
 
118
%
Customer review
 
20
%
 
98
%
Overall weighted-average achievement
 
 
 
159
%

The levels of achievement were reviewed and certified by the Committee based on fiscal 2014 results and the Named Executive Officers received bonuses in the following amounts:

Named Executive Officer
 
% of Target Achieved
 
Bonus Earned
Mark W. Adams
 
159
%
 
$
1,552,171

D. Mark Durcan
 
159
%
 
2,447,654

Ronald C. Foster
 
159
%
 
955,182

Brian M. Shirley
 
159
%
 
955,182

Steven L. Thorsen, Jr.
 
159
%
 
694,895

Roderic W. Lewis
 
159
%
 
668,627

Brian J. Shields
 
159
%
 
541,270


The EIP calls for certain performance goals to be modified with respect to major corporate transactions if permitted by Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"). These events are more fully described in the EIP. Additionally, the Committee has the discretion to modify performance goals with respect to Target Awards that are not intended to satisfy Section 162(m) if the Committee determines that due to changes in our business, operations, corporate or capital structure, the existing performance goals are rendered unsuitable for a given performance period. Upon the occurrence of a "change in control" (as defined in the EIP), performance periods are deemed to have ended and the Committee will determine whether performance goals were achieved. Finally, the Committee always retains the ability to exercise "negative discretion" and reduce an amount otherwise earned pursuant to the EIP.



18



Fiscal 2014 long-term equity incentives

We believe long-term incentive compensation should be tied to our success and increases in shareholder value. Accordingly, stock options and performance-based restricted stock awards are significant components of our executive compensation program. We believe these types of awards are especially aligned with shareholders' interests as their value is contingent upon an increase in stock price or the achievement of certain milestones. To ensure our long-term incentive program helps retain executives, we also grant time-based restricted stock awards. The Committee works with Mercer to determine the allocation and type of performance- and time-based awards to grant each fiscal year. In connection therewith, the Committee reviewed the Market Data, and found that 44% of the companies in the Compensation Peer Group used stock options, 63% of the companies used time-based restricted shares and 94% also used performance-based restricted shares as compensation vehicles for their executives. In setting fiscal 2014 compensation, the Committee changed the mix of long-term equity incentives for our Named Executive Officers from 37.5% stock options, 37.5% time-based restricted stock and 25% performance-based restricted stock to 25% stock options, 45% time-based restricted stock and 30% performance-based restricted stock. This change was made to increase the performance-based portion of the Named Executive Officers' awards.

With respect to the time-based restricted stock awards for fiscal 2014, the restrictions lapse as to one-fourth of the shares on each anniversary of the date of grant. With respect to the stock option awards for fiscal 2014, the options vest as to one-fourth of the shares on each anniversary of the date of grant. With respect to the performance-based restricted stock awards granted in fiscal 2014, the restrictions will lapse if we achieve a certain percentage ROA over a consecutive rolling four-quarter period between the beginning of fiscal 2014 and the end of fiscal 2017 (the "Share Performance Period"). The achievement during the Share Performance Period of a lower threshold ROA percentage would result in the restrictions lapsing as to one-half of the fiscal 2014 performance-based shares. The achievement during the Share Performance Period of the target ROA percentage would result in the restrictions lapsing as to all of the fiscal 2014 performance-based shares. Both the threshold and target ROA percentages require significant execution and effort with the achievement of neither ROA percentage being assured. The ROA goal associated with the performance-based stock granted in fiscal 2014 was achieved at the end of fiscal 2014 and restrictions on those shares lapsed in October 2014 upon the Committee's certification of performance.

In determining the amount of the long-term equity incentive awards for the Named Executive Officers, the Committee reviewed the Market Data and information provided by Mr. Durcan related to the other Named Executive Officer's performance and his recommendation as to the amount of their awards. For fiscal 2014, the long-term equity incentive awards approved by the Committee for each of Messrs. Durcan and Shields were below the 50th percentile of the Market Data for their position or rank. Messrs. Adams, Foster, Shirley and Thorsen were between the 50th and 75th percentile. Mr. Lewis was over the 75th percentile. For information on Mr. Durcan's long-term equity incentive, please see the discussion below on CEO compensation.

We have not and do not plan to time the granting of long-term incentive awards (or the payment of any other compensation) with the release of material, non-public information. Historically, long-term incentive awards have been made in the first quarter of the fiscal year with the exact grant date corresponding with the date of the meeting of the Committee. Historically, long-term incentive grants to the Named Executive Officers are approved by the Committee on the same day as the grants to other executive officers and the exercise price of stock options is equal to the fair market value of our Common Stock as defined by the equity plan pursuant to which the award is granted. For purposes of our equity plans, fair market value is defined as the closing price as quoted on NASDAQ for the last market-trading day prior to the date of grant.

Other fiscal 2014 employee benefits

Executive perquisites, which for us are minor in scope and amount, are not considered to be material elements of compensation. We provide a competitive level of time off, health, life, disability, and retirement benefits to substantially all employees. The Named Executive Officers participate in the same plans as our other employees.



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CEO Compensation

The following charts show 1-year TSR data and CEO compensation for us and our Compensation Peer Group.

The information presented in the graph above is based on closing prices on the last trading day of August 2014 and 2013 and represents the rates of return reflecting price appreciation plus reinvestment of dividends and the compounding effect of dividends paid on reinvested dividends.


CEO pay information presented represents peer compensation data via proxies presented to the Committee in October 2013. The 25th, 50th and 75th percentiles presented in the chart represent total target direct compensation (the sum of base salary, short-term incentive and long-term incentive compensation) and aged 3%. This data was used to inform the decision to increase Mr. Durcan’s total target direct compensation for fiscal 2014.

Mr. Durcan's compensation is comprised of the following elements:

Base Salary

Mr. Durcan's base salary was increased from $900,000 (which was set when he became our CEO in February 2012) to $1,025,000. Market Data showed that Mr. Durcan's base salary as CEO was approximately 4% below the median.

Short-Term Incentive

Mr. Durcan's short-term incentive target remained at 150% of his base salary for fiscal 2014. Market Data showed that a short-term incentive of 150% of base salary was the median for CEOs. Based on his salary, the dollar amount of Mr. Durcan's short-term incentive Target Award as CEO was approximately 4% below the median. Mr. Durcan's bonus for fiscal 2014 was $2,447,654.



20



Long-Term Equity Incentive

Mr. Durcan's long-term equity incentive opportunity based on value was increased in fiscal 2014 from $6,000,000 to $8,000,000. In May 2014, the Committee was informed that the value of the long-term incentive award granted to Mr. Durcan in October 2013 was $7,291,039; as a result, in June 2014, Mr. Durcan received an additional award valued at $709,689. Mr. Durcan's long-term equity incentive opportunity, based on value, was approximately 14% below the market median in fiscal 2014.

Mr. Durcan's long-term incentive was comprised of 25% options, 45% time-based restricted shares and 30% performance-based restricted shares. The following table sets forth the elements and aggregate amounts of Mr. Durcan's long-term incentive award for fiscal 2014:

Award Type
 
Number of Options/Shares(1)
 
Grant Date Fair Value(1)
Options
 
235,300

 
$
1,833,340

Time-based Restricted Stock
 
210,300

 
3,703,197

Performance-based Restricted Stock
 
139,900

 
2,464,191

 
 
585,500

 
$
8,000,728


(1)
Information related to Mr. Durcan's long-term incentive award is also included in the "Grants of Plan-Based Awards in Fiscal 2014" table. The stock options are listed in the column "Option Awards: Number of Securities Underlying Options," the time-based share amounts are listed in the column "Stock Awards: Number of Shares of Stock or Units," and the performance-based share amounts are listed in the column "Estimated Future Payouts under Equity Incentive Plan Awards Target." The values included in those tables reflect the grant-date fair value under ASC Topic 718.

Severance and Change in Control Arrangements

Severance Agreements

Each of our Named Executive Officers has a similar severance agreement in place (the "Severance Agreements"). We believe severance agreements for certain of our officers are in the best interests of us and our shareholders. The Severance Agreements help us attract and retain qualified executive talent, promote candid discussion among our officers, help provide for a smooth transition when there is a change in management, provide the officer with benefits in consideration of a promise not to compete with us after termination of employment, and release us, and our officers, directors, employees and agents from any and all claims.

The Severance Agreements provide for severance payments upon termination of employment for any reason, including death and voluntary or involuntary termination. The Severance Agreements provide for a "Transition Period," which begins upon a "separation of service" as defined in Section 409A of the Code, regardless of when a termination of employment or loss of officer status occurs, and ends after a period of one year.

Provided an officer complies with post-employment obligations and restrictions described below and all other terms of the Severance Agreement, the officer is entitled to receive compensation during the Transition Period equivalent to the compensation and benefits customarily provided to such officer while employed including, but not limited to, salary, executive bonus, and continued vesting of any granted stock options and restricted shares. With respect to cash and equity awards that are performance-based, the officer is entitled to receive such awards only if the goals are achieved before or during the applicable Transition Period. Such terminated officers are not entitled to receive any new awards under our equity plans or the EIP or to the payment of any compensation that would be deferred past the Transition Period due to payment criteria of an incentive program, as those criteria exist as of the Termination Date.

Terminated officers are subject to the following obligations and restrictions:

a one-year non-competition obligation,

confidentiality obligations related to our proprietary and confidential information that last indefinitely,



21



a non-disparagement and confidentiality obligation surrounding the reasons for, and circumstances of, the officer's termination of employment or change in officer status that lasts indefinitely. However, we may disclose such information if we determine, in our sole discretion, it is either required by law to be disclosed or necessary to be disclosed to serve a valid business purpose, and

non-solicitation and non-interference provisions relating to our employees and business partners that last at least one year.

Upon receipt of all benefits under the Severance Agreement, we and the officer are considered to have settled, waived, and voluntarily released any and all claims each has or may have against the other, inclusive of any of our affiliates, officers, directors, employees or agents, both individually and in their official capacities, which claims are accruing prior to the end of the Transition Period.

Estimated Severance Payments

See "Severance Agreements" on page 32 for a description of the (1) estimated severance amounts as of the end of fiscal 2014 for our continuing Named Executive Officers and (2) estimated severance amounts for Mr. Lewis based on his resignation on December 13, 2013.

Change in Control Arrangements

We do not have separate change in control agreements for our executive officers and directors. The Severance Agreements referenced above provide for transitional benefits in the event of termination of employment, including following a change in control. In addition, under the terms of our EIP and our equity compensation plans, awards may be substituted, assumed or accelerated upon a change in control, depending upon the circumstances. The compensation that executive officers and directors could receive if a change of control occurs is intended to allow them to evaluate objectively whether a potential change in control is in the best interest of us and our shareholders. Estimated value that the Named Executive Officers could receive from our change in control provisions can be found in "Change in Control" on page 33.

Consideration of Tax Consequences when Making Compensation Decisions

Section 162(m) of the Code generally disallows a tax deduction to public companies for compensation over $1,000,000 paid to certain of our Named Executive Officers. Qualifying performance-based compensation is not subject to the deduction limit if certain requirements are met. The key components of our long-term incentives in the form of stock option grants and performance-based restricted stock awards are designed to comply with the statute. Awards under the EIP also are generally designed to comply with the statute. A number of requirements must be met for particular compensation to so qualify, however, so there can be no assurance that such compensation will be fully deductible under all circumstances. Although the Committee believes it is important to preserve the deductibility of compensation under Section 162(m) whenever practicable, it reserves the right to grant or approve compensation or awards that may be non-deductible when it believes such compensation or awards are in our and our shareholders' best interests.

"Market Data" Defined

Compensation data is gathered by Mercer from proxy statements of the Compensation Peer Group and from published compensation surveys. The relevant survey and Compensation Peer Group data for fiscal 2014, each as discussed below, were weighted equally by the Committee and are collectively referred to throughout this discussion as the "Market Data."



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Compensation Peer Group Data

Data is gathered from proxy statements and other documents that are filed with the SEC to develop the Compensation Peer Group data.

Mercer works with the Committee and our management team, including our CEO, to identify peer companies for compensation comparison purposes. The peer companies are primarily selected based on their industry, degree of business match (i.e., semiconductor or electronics manufacturing), and comparability of revenue size. All the peer companies have a Global Industry Classification Standard economic sector classification of Information Technology and an industry classification related to semiconductor or other electronic equipment. The companies selected generally fall within a revenue range of approximately 50% to 200% of the size of Micron and have a high degree of business match. We believe our custom peer group is comprised of companies that are likely to be our competitors for executive talent.

Each year the Committee reevaluates the composition of our Compensation Peer Group to ensure that it reflects industry or economic changes that may have occurred during the fiscal year, such as changes in business strategies, operations, revenues, product lines or availability of information. For fiscal 2014, the composition of the Compensation Peer Group changed with the addition of three new peers and the removal of three peers, Advanced Micro Devices, Inc., NetApp, Inc., and SanDisk Corporation. As a result of these changes, our Compensation Peer Group for fiscal 2014 consisted of: Agilent Technologies, Inc., Applied Materials, Inc., Broadcom Corporation, Corning Incorporated, EMC Corporation, Emerson Electric Co., Flextronics International, Jabil Circuit, Inc., Medtronic Inc., Motorola Solutions, Inc., QUALCOMM Incorporated, Seagate Technology Plc., Symantec Corporation, Texas Instruments Incorporated, Thermo Fisher Scientific Inc. and Western Digital Corp. These companies are referred to in the compensation discussion and analysis as the "Compensation Peer Group."

When collecting and assessing market compensation data we collect data based on job descriptions first. This permits the Committee to "match" positions held by our executives with those of other companies and, as described more fully below, deviate from benchmarked data based on the factors described earlier. If we are not able to match positions to a reasonable number of companies within the Compensation Peer Group, we look to the rank of the person involved and match ranks, e.g., our highest paid officer is ranked to the highest paid officer at each company within the Compensation Peer Group.

Survey Data

Survey data may vary from year to year. For fiscal 2014, Mercer used the Radford Global Technology Survey and Towers Watson CDB High-Tech Executive Compensation Survey. We believe these surveys are particularly relevant for high technology companies given the high level of participation by such companies in the survey.

Stock Ownership Guidelines

We have established stock ownership guidelines for our executive officers and directors. The Committee believes that officers will more effectively manage a company in the best interests of the shareholders if they are also shareholders. The minimum ownership guideline for directors is to hold shares with a value equal to four times their $100,000 annual retainer. The minimum ownership guideline for our CEO is to hold shares with a value equal to five times his base salary. The other Named Executive Officers are required to hold shares with a value equal to three times their base salary. Directors and executive officers are given five years to meet the ownership guidelines. The Governance Committee reviews the Ownership Guidelines and monitors each covered executive's progress toward, and continued compliance with, the guidelines. Stock sales restrictions may be imposed upon executive officers and directors if the stock ownership guidelines are not met. All our executive officers and directors are in compliance with the guidelines.



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The following table shows the guidelines for the continuing Named Executive Officers as of the Record Date (November 21, 2014):
Named Executive Officer(1)
 
Guideline Amount(2)
 
Compliance with Guideline
Mark W. Adams
 
$
2,325,000

 
 
D. Mark Durcan
 
5,250,000

 
 
Ronald C. Foster
 
1,860,000

 
 
Brian M. Shirley
 
1,890,000

 
 
Steven L. Thorsen, Jr.
 
1,455,000

 
 

(1)    These guidelines no longer apply to Messrs. Lewis and Shields.

(2)    Based on current salary amounts.


COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis section of this Proxy Statement. Based upon this review and our discussions, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

 
The Compensation Committee
 
Richard M. Beyer
 
Patrick J. Byrne
 
D. Warren East
 
Lawrence N. Mondry

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee (Messrs. Beyer, Byrne, East and Mondry) is or has been one of our officers or employees or an officer or employee of any of our subsidiaries. During fiscal 2014, none of our executive officers served on the Compensation Committee (or equivalent) or the board of directors of another entity whose executive officer(s) served on our Compensation Committee or Board of Directors.




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FISCAL 2014 SUMMARY COMPENSATION TABLE

The following table details the total compensation earned by our Named Executive Officers in fiscal 2014, 2013 and 2012.

Name and Principal Position
 
Year
Salary
(1)
Bonus
(2)
Stock Awards
(3)
Option Awards
(3)
Non-Equity Incentive Plan Compensation
(4)
All Other Compensation
(5)
Total
Mark W. Adams
 
2014
 
$
726,346

 
$

 
$
3,180,960

 
$
1,059,677

 
$
1,552,171

 
$
13,873

 
$
6,533,027

President
 
2013
 
600,000

 

 
2,185,040

 
1,311,303

 

 
13,379

 
4,109,722

 
 
2012
 
535,961

 

 
846,240

 
749,612

 
48,148

 
13,130

 
2,193,091

D. Mark Durcan
 
2014
 
1,005,289

 

 
6,167,388

 
1,833,340

 
2,447,654

 
25,437

 
11,479,108

CEO (Principal Executive
 
2013
 
900,000

 

 
3,746,600

 
2,250,077

 

 
13,641

 
6,910,318

Officer)
 
2012
 
791,135

 
500,000

 
2,533,560

 
2,248,837

 
76,403

 
14,018

 
6,163,953

Ronald C. Foster
 
2014
 
582,654

 

 
2,064,240

 
686,552

 
955,182

 
13,698

 
4,302,326

CFO (Principal Financial
 
2013
 
490,000

 

 
1,372,800

 
825,525

 

 
13,264

 
2,701,589

Officer)
 
2012
 
490,000

 

 
1,238,400

 
1,099,817

 
36,750

 
15,661

 
2,880,628

Brian M. Shirley
 
2014
 
581,708

 

 
2,436,480

 
813,414

 
955,182

 
13,698

 
4,800,482

Vice President of Memory
2013
 
484,000

 

 
1,246,960

 
751,019

 

 
13,257

 
2,495,236

Technology and Solutions
 
2012
 
484,000

 
75,000

 
846,240

 
749,612

 
136,246

 
13,021

 
2,304,119

Steven L. Thorsen, Jr.
 
2014
 
471,596

 

 
1,319,760

 
440,288

 
694,895

 
565

 
2,927,104

Vice President of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Roderic W. Lewis(6)
 
2014
 
136,904

 

 
1,607,400

 
537,301

 
668,627

 
570,842

 
3,521,074

Former Vice President
 
2013
 
420,000

 

 
938,080

 
563,264

 

 
13,190

 
1,934,534

of Legal Affairs, General
 
2012
 
420,000

 
900,000

 
846,240

 
749,612

 
25,200

 
14,409

 
2,955,461

Counsel and Corporate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secretary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brian J. Shields(6)
 
2014
 
417,116

 

 
1,049,040

 
350,738

 
541,270

 
2,598,658

 
4,956,822

Vice President of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Process
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Fiscal 2014 amount for Mr. Lewis represents salary earned up to his resignation on December 13, 2013. The total amount of salary-based severance to be paid per the terms of Mr. Lewis' Severance Agreement is noted in the "Potential Payments Upon Termination or Change in Control" table.

(2)
Fiscal 2012 amounts received pursuant to a supplemental achievement bonus related to successful litigation outcomes.

(3)
Assumptions used in determining the grant-date fair values of option awards are set forth in the "Equity Plans" note to the financial statements included in our annual reports on Form 10-K for fiscal years 2014, 2013 and 2012, which note is incorporated herein by reference. The grant-date fair values for the stock awards are based on the closing price on the last market-trading day prior to the date of grant. The grant date fair value of the performance-based restricted stock awards granted in fiscal 2014, 2013 and 2012 was computed by multiplying (i) the maximum number of restricted shares awarded to each named executive officer, which was the assumed probable outcome as of the grant date, by (ii) the closing price on the last market-trading day prior to the date of grant.

(4)
All amounts shown were paid pursuant to the Executive Officer Incentive Plan (the "EIP") and relate to the achievement of certain performance milestones. The EIP was suspended for fiscal 2013 and despite performance milestones being met, no bonuses were paid.



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(5)
Amounts shown for 2014 included matching contributions under our 401(k) plan of $13,000 for each of Messrs. Adams, Durcan, Foster and Shirley, and $13,490 for Mr. Shields. For fiscal 2013 and fiscal 2012, 401(k) matching contributions were $12,750 and $12,500, respectively, for each of Messrs. Adams, Durcan, Foster, Shirley and Lewis. All Other Compensation in fiscal 2014 also included the following for each of the Named Executive Officers:

Amount for Mr. Durcan includes $11,050 related to the use of our football stadium skybox at Boise State University.

Amount for Mr. Lewis includes $447,907 in severance benefits pursuant to Mr. Lewis' Severance Agreement (see the "Potential Payments Upon Termination or Change in Control" table.) At the time of his resignation Mr. Lewis also received $122,731 for accumulated unused time-off.

During fiscal 2014 Mr. Shields was on an oversees assignment in Singapore.  Amount shown relates to his oversees assignment and includes $2,402,644 in tax gross-up payments, $117,700 in housing expenses, $35,812 in relocation expenses, $14,187 in tax preparation expense, $11,932 in vehicle expenses and $2,398 in miscellaneous expenses.

(6)
Information is included for Messrs. Lewis and Shields because they served as executive officers for a portion of fiscal 2014. Mr. Shields served as our Vice President of Worldwide Operations from June 2010 to March 2014 and currently serves as our Vice President of Business Process Management. Mr. Lewis served as our Vice President of Legal Affairs, General Counsel and Corporate Secretary until his resignation in December 2013.




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GRANTS OF PLAN-BASED AWARDS IN FISCAL 2014

The table below sets forth the plan-based award grants to our Named Executive Officers in fiscal 2014.

Name
 
Plan Name
 
Grant Date
 
Estimated Future Payouts under Non-Equity Incentive Plan Awards(1)
 
Estimated Future Payouts under Equity Incentive Plan Awards(2)
 
Stock Awards: Number of Shares of Stock or Units(3)
Option Awards: Number of Securities Underlying Options(4)
Exercise Price of Options(5)
Close Price on
Grant Date
Grant Date Fair Value of Stock (or units) and Options(6)
 
 
 
Threshold
Target
Max
Threshold
Target
 
Mark W. Adams
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
37,500

 
75,000

 
 
 
 
 
 
 
 
 
$
1,269,000

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
113,000

 
 
 
 
 
 
 
1,911,960

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
 
 
142,000

 
$
16.92

 
$
16.96

 
1,059,677

 
 
EIP
 
 
 
$
487,500

 
$
975,000

 
$
1,950,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
D. Mark Durcan
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
66,500

 
133,000

 
 
 
 
 
 
 
 
 
2,250,360

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
200,000

 
 
 
 
 
 
 
3,384,000

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
 
 
222,000

 
16.92

 
16.96

 
1,656,679

 
 
2004 Plan
 
6/12/14
 
 
 
 
 
 
 
3,450

 
6,900

 
 
 
 
 
 
 
 
 
213,831

 
 
2004 Plan
 
6/12/14
 
 
 
 
 
 
 
 
 
 
 
10,300
 
 
 
 
 
 
 
319,197

 
 
2004 Plan
 
6/12/14
 
 
 
 
 
 
 
 
 
 
 
 
 
13,300

 
30.99

 
30.86

 
176,661

 
 
EIP
 
 
 
768,750

 
1,537,500

 
3,075,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ronald C. Foster
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
24,500

 
49,000

 
 
 
 
 
 
 
 
 
829,080

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
73,000

 
 
 
 
 
 
 
1,235,160

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
 
 
92,000

 
16.92

 
16.96

 
686,552

 
 
EIP
 
 
 
300,000

 
600,000

 
1,200,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brian M. Shirley
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
29,000

 
58,000

 
 
 
 
 
 
 
 
 
981,360

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
86,000

 
 
 
 
 
 
 
1,455,120

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
 
 
109,000

 
16.92

 
16.96

 
813,414

 
 
EIP
 
 
 
300,000

 
600,000

 
1,200,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Steven L. Thorsen,
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
15,500

 
31,000

 
 
 
 
 
 
 
 
 
524,520

Jr.
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
47,000

 
 
 
 
 
 
 
795,240

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
 
 
59,000

 
16.92

 
16.96

 
440,288

 
 
EIP
 
 
 
218,250

 
436,500

 
873,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Roderic W. Lewis
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
19,000

 
38,000

 
 
 
 
 
 
 
 
 
642,960

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
57,000
 
 
 
 
 
 
 
964,440

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
 
 
72,000

 
16.92

 
16.96

 
537,301

 
 
EIP
 
 
 
210,000

 
420,000

 
840,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brian J. Shields
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
12,500

 
25,000

 
 
 
 
 
 
 
 
 
423,000

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
37,000

 
 
 
 
 
 
 
626,040

 
 
2004 Plan
 
10/16/13
 
 
 
 
 
 
 
 
 
 
 
 
 
47,000

 
16.92

 
16.96

 
350,738

 
 
EIP
 
 
 
170,000

 
340,000

 
680,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Represents estimated EIP payouts for fiscal 2014. Payment of bonuses under the EIP is dependent upon meeting specified performance goals. Actual amounts are included in the "Fiscal 2014 Summary Compensation Table" and a description of the performance milestones associated with such bonuses in included in the "Compensation Discussion and Analysis."

(2)
Represents restricted stock awarded in fiscal 2014 with performance-based restrictions. Information related to the performance-based restrictions associated with these shares is contained in Compensation Discussion and Analysis. Target amounts represent the maximum number of shares that may be awarded.

(3)
Represents restricted stock awarded in fiscal 2014 with time-based restrictions. Time-based restrictions lapse in four equal installments over a four-year period from the date of the award.



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(4)
Represents options awarded in fiscal 2014. Options granted on 10/16/13 have a term of six years and options granted on 6/12/14 have a term of eight years. All options vest in equal installments over a four-year period.

(5)
Under the 2004 Plan, options are required to have an exercise price equal to the fair market value. Fair market value is defined as the closing price on the last market-trading day prior to the date of grant.

(6)
The value shown is based on the fair value as of the date of grant. Assumptions used in determining the fair values of these option awards are set forth in the "Equity Plans" note to our financial statements included in our annual report on Form 10-K for fiscal 2014. The value shown for performance-based awards is determined based on payout at the target level.

Plan Information

Fiscal 2014 compensatory awards to the Named Executive Officers were made pursuant to the 2004 Equity Incentive Plan (the "2004 Plan"). The purpose of the 2004 Plan is to promote our success by linking the personal interests of our employees, officers, directors and consultants to those of our shareholders, and by providing participants with an incentive for outstanding performance. Permissible awards under the 2004 Plan include: options, restricted stock, restricted stock units, stock appreciation rights, deferred stock units and dividend equivalent rights. We have issued options, restricted stock and restricted stock units under the 2004 Plan. Options granted under the 2004 Plan have an exercise price equal to the fair market value (as defined by the 2004 Plan) on the date of grant and a term of six years if granted prior to January 23, 2014 or eight years if granted following January 23, 2014. For purposes of share counting, each share of restricted stock issued under the 2004 Plan reduces the number of shares available for issuance by two.

Historically, we have provided annual bonuses to our executive officers pursuant to the EIP. As discussed above, in October 2014, the Compensation Committee reviewed the goals established under the EIP for fiscal year 2014 and certified achievement of results.

Lapsing of Restrictions Associated with Restricted Stock Awards

The restrictions associated with the restricted stock granted to the Named Executive Officers include both time-based restrictions and performance-based restrictions. Time-based restrictions lapse in four equal installments over a four-year period. The restrictions associated with performance-based awards are described below.

Issuance and Vesting of Performance-based Awards

Restricted Stock

Our executive officers have been granted restricted stock with performance-based restrictions related to the achievement of a minimum specified ROA goal over a consecutive rolling four-quarter period within a certain time period (the "Share Performance Period"). The achievement during the Share Performance Period of the threshold ROA percentage would result in the restrictions lapsing as to one-half of the performance-based shares. The achievement during the Share Performance Period of the target ROA percentage would result in the restrictions lapsing as to all the performance-based shares. Both the threshold and target ROA percentages require significant execution and effort with the achievement of neither ROA percentage being assured. In the absence of at least the threshold ROA percentage being achieved during the Share Performance Period, the restrictions would not lapse and the shares would be forfeited. The ROA goal associated with the performance-based stock granted in fiscal 2014 was achieved at the end of fiscal 2014 and restrictions on those shares lapsed in October 2014 upon the Committee's certification of performance.

Cash Awards

Bonuses were paid to the Named Executive Officers in fiscal 2014 as a result of achievement of certain goals. See the "Components of the Executive Compensation Program" section of the "Compensation Discussion and Analysis."



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Stock Option Vesting

Since September 2004, options granted generally vest in four equal installments over a four-year period from the date of grant and have a term of six years. In January 2014, we received shareholder approval of an amendment to the 2004 Plan to provide for option terms of eight years.

Determination of Stock-based Compensation

The fair values of option awards were estimated as of the dates of grant using the Black-Scholes option valuation model in accordance with ASC Topic 718. The Black-Scholes model requires the input of assumptions, including the expected stock-price volatility and estimated option life. The expected volatilities utilized were based on implied volatilities from traded options on our stock and on historical volatility. The expected lives of options granted were based, in part, on historical experience and on the terms and conditions of the options. The risk-free interest rates utilized were based on the U.S. Treasury yield in effect at each grant date. No dividends were assumed in estimated option values.




29



OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END

The following table provides information with respect to outstanding stock options and restricted stock held by our Named Executive Officers as of August 28, 2014.

 
 
Option Awards
 
Stock Awards
 
 
Number of Securities Underlying Unexercised Options
Option Exercise Price
($)
Option Expiration Date
Shares or Units of Stock That Have Not Vested
 
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#)
 
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1)($)
Name
 
Exercisable
(#)
Unexercisable
(#)
Number
(#)
 
Market Value(1)($)
 
 
Mark W. Adams
 
46,250

 
48,750

(2)
 
$
7.59

 
10/11/2016
 
12,250

(3)
 
$
401,923

 
75,000

(4)
 
$
2,460,750

 
 
129,500

 
129,500

(5)
 
5.16

 
10/11/2017
 
36,500

(6)
 
1,197,565

 
 
 
 
 
 
 
110,000

 
330,000

(7)
 
5.72

 
10/16/2018
 
171,750

(8)
 
5,635,118

 
 
 
 
 
 
 
 
 
142,000

(9)
 
16.92

 
10/16/2019
 
113,000

(10)
 
3,707,530

 
 
 
 
 
D. Mark Durcan
 
293,250

 
97,750

(2)
 
7.59

 
10/11/2016
 
24,750

(3)
 
812,048

 
133,000

(4)
 
4,363,730

 
 
388,500

 
388,500

(5)
 
5.16

 
10/11/2017
 
109,000

(6)
 
3,576,290

 
6,900

(4)
 
226,389

 
 
188,750

 
566,250

(7)
 
5.72

 
10/16/2018
 
294,750

(8)
 
9,670,748

 
 
 
 
 
 
 
 
 
222,000

(9)
 
16.92

 
10/16/2019
 
200,000

(10)
 
6,562,000

 
 
 
 
 
 
 
 
 
13,300

(9)
 
30.99

 
6/12/2022
 
10,300

(10)
 
337,943

 
 
 
 
 
Ronald C. Foster
 
93,000

 
 
 
 
7.46

 
10/5/2015
 
16,500

(3)
 
541,365

 
49,000

(4)
 
1,607,690

 
 
 
 
65,000

(2)
 
7.59

 
10/11/2016
 
53,500

(6)
 
1,755,335

 
 
 
 
 
 
 
190,000

 
190,000

(5)
 
5.16

 
10/11/2017
 
108,000

(8)
 
3,543,480

 
 
 
 
 
 
 
69,250

 
207,750

(7)
 
5.72

 
10/16/2018
 
73,000

(10)
 
2,395,130

 
 
 
 
 
 
 
 
 
92,000

(9)
 
16.92

 
10/16/2019
 
 
 
 
 
 
 
 
 
 
Brian M. Shirley
 
48,750

 
48,750

(2)
 
7.59

 
10/11/2016
 
12,250

(3)
 
401,923

 
58,000

(4)
 
1,902,980

 
 
64,750

 
129,500

(5)
 
5.16

 
10/11/2017
 
36,500

(6)
 
1,197,565

 
 
 
 
 
 
 
63,000

 
189,000

(7)
 
5.72

 
10/16/2018
 
98,250

(8)
 
3,223,583

 
 
 
 
 
 
 
 
 
109,000

(9)
 
16.92

 
10/16/2019
 
86,000

(10)
 
2,821,660

 
 
 
 
 
Steven L. Thorsen, Jr.
 
 
 
16,250

(2)
 
7.59

 
10/11/2016
 
4,000

(3)
 
131,240

 
31,000

(4)
 
1,017,110

 
 
69,000

 
69,000

(5)
 
5.16

 
10/11/2017
 
19,500

(6)
 
639,795

 
 
 
 
 
 
 
31,500

 
94,500

(7)
 
5.72

 
10/16/2018
 
49,500

(8)
 
1,624,095

 
 
 
 
 
 
 
 
 
59,000

(9)
 
16.92

 
10/16/2019
 
47,000

(10)
 
1,542,070

 
 
 
 
 
Roderic W. Lewis (11)
 
 
 
48,750

(2)
 
7.59

 
1/12/2015
 
12,250

(3)
 
401,923

 
38,000

(4)
 
1,246,780

 
 
79,500

 
129,500

(5)
 
5.16

 
1/12/2015
 
36,500

(6)
 
1,197,565

 
 
 
 
 
 
 
 
 
141,750

(7)
 
5.72

 
1/12/2015
 
73,500

(8)
 
2,411,535

 
 
 
 
 
 
 
 
 
72,000

(9)
 
16.92

 
1/12/2015
 
57,000

(10)
 
1,870,170

 
 
 
 
 
Brian J. Shields
 
 
 
35,750

(2)
 
7.59

 
10/11/2016
 
9,000

(3)
 
295,290

 
25,000

(4)
 
820,250

 
 
 
 
95,000

(5)
 
5.16

 
10/11/2017
 
26,500

(6)
 
869,465

 
 
 
 
 
 
 
 
 
103,500

(7)
 
5.72

 
10/16/2018
 
54,000

(8)
 
1,771,740

 
 
 
 
 
 
 
 
 
47,000

(9)
 
16.92

 
10/16/2019
 
37,000

(10)
 
1,213,970

 
 
 
 
 

(1)
Calculated by multiplying the number of shares of restricted stock by $32.81, the closing price of our Common Stock on August 28, 2014.

(2)
Options vest on October 11, 2014.

(3)
Restrictions on shares lapse on October 11, 2014.

(4)
Performance-based restrictions on shares lapse upon the achievement of a simple average ROA goal through the fourth fiscal quarter of 2017. The metric was met in the fourth quarter of 2014 and the shares were released on October 20, 2014.

(5)
Options vest in equal installments on October 11, 2014 and October 11, 2015.

(6)
Restrictions on shares lapse in equal installments on October 11, 2014 and October 11, 2015.


30




(7)
Options vest in equal installments on October 16, 2014, October 16, 2015 and October 16, 2016.

(8)
Restrictions on shares lapse in equal installments on October 16, 2014, October 16, 2015 and October 16, 2016.

(9)
Options vest in equal installments on October 16, 2014, October 16, 2015, October 16, 2016 and October 16, 2017.

(10)
Restrictions on shares lapse in equal installments on October 16, 2014, October 16, 2015, October 16, 2016 and October 16, 2017.

(11)
Unexercisable option and unvested share numbers reported include awards that were outstanding on August 28, 2014 but will not vest prior to December 13, 2014, the end of Mr. Lewis' severance period. All of his unvested option and restricted stock awards as of December 13, 2014 will be forfeited. Vested stock options for Mr. Lewis which do not expire earlier pursuant to their terms, will expire if not exercised on or before January 12, 2015, which is 30 days following the end of his severance agreement. For more information regarding severance agreements see "Potential Payments Upon Termination or Change in Control."


OPTION EXERCISES AND STOCK VESTED IN FISCAL 2014

The following table sets forth information related to the number of options and restricted awards held by each of the Named Executive Officers that were exercised or vested in fiscal 2014 and the value realized.

 
 
Option Awards
 
Stock Awards
Name
 
Number of Shares Acquired on Exercise
 
Value Realized on Exercise(1)
 
Number of Shares Acquired on Vesting(2)
 
Value Realized on Vesting(3)
Mark W. Adams
 
466,748

 
$
6,859,207

 
175,250

 
$
3,919,340

D. Mark Durcan
 
1,387,000

 
23,332,090

 
342,650

 
7,614,351

Ronald C. Foster
 
630,000

 
9,576,055

 
145,000

 
3,125,508

Brian M. Shirley
 
426,250

 
6,066,993

 
133,750

 
3,015,795

Steven L. Thorsen, Jr.
 
189,250

 
2,261,515

 
65,500

 
1,502,943

Roderic W. Lewis
 
1,011,500

 
15,761,438

 
105,500

 
2,300,905

Brian J. Shields
 
327,500

 
3,508,131

 
74,500

 
1,604,823


(1)
Value calculated by subtracting the exercise price from the fair market value of the shares at the time of exercise multiplied by the number of options exercised.

(2)
Includes performance-based restricted stock, which vested in October 2014 based on fiscal 2014 performance.