UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒ | ||||||||
Filed by a party other than the Registrant ☐ | ||||||||
| Check the appropriate box: | ||||||||
| ☐ | Preliminary Proxy Statement | |||||||
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||||||
| ☒ | Definitive Proxy Statement | |||||||
| ☐ | Definitive Additional Materials | |||||||
| ☐ | Soliciting Material under §240.14a-12 | |||||||
| Micron Technology, Inc. | ||||||||
| (Name of Registrant as Specified in Its Charter) | ||||||||
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||||||
| Payment of Filing Fee (Check all boxes that apply): | ||||||||
| ☒ | No fee required | |||||||
| ☐ | Fee paid previously with preliminary materials. | |||||||
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 | |||||||
Notice of Fiscal 2022 Annual Meeting of Shareholders
January 12, 2023
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Fiscal 2022 Annual Meeting of Shareholders of Micron Technology, Inc., a Delaware corporation, will be held virtually on January 12, 2023, at 9:00 a.m., Pacific Standard Time, 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 eight directors to serve for the ensuing year and until their successors are elected and qualified;
2. To approve on a non-binding basis the compensation of our Named Executive Officers;
3. To approve our Amended and Restated 2007 Equity Incentive Plan to increase the shares reserved for issuance thereunder by 50 million;
4. To ratify the appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending August 31, 2023; and
5. 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 14, 2022 are entitled to receive 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, for the ten-day period immediately preceding the date of the meeting, at our headquarters at 8000 S. Federal Way, Boise, Idaho 83716.
The Securities and Exchange Commission permits proxy materials to be furnished over the Internet rather than in paper form. Accordingly, unless otherwise requested, we are sending our shareholders a notice regarding the availability of this Proxy Statement, our Annual Report on Form 10-K for fiscal 2022, 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.
We are pleased to provide shareholders with the opportunity to participate in the annual meeting online via the Internet in a virtual-only meeting format to facilitate shareholder attendance and provide a consistent experience to all shareholders regardless of location. We will provide a live webcast of the annual meeting at www.virtualshareholdermeeting.com/MU2022, where you will also be able to submit questions and vote online. You will not be able to attend the meeting at a physical location.
To ensure your representation at the meeting, you are urged to vote, whether or not you attend the meeting. 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 using the virtual meeting platform 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 2, 2022 | Rob Beard Senior Vice President, General Counsel and Corporate Secretary | |||||||
YOUR VOTE IS IMPORTANT. PLEASE SUBMIT YOUR PROXY PROMPTLY.
TABLE OF CONTENTS
| Proxy Section | Page | Frequently Requested Information | Page | |||||||||||
| Delinquent Section 16(a) Reports | ||||||||||||||
| Proposal 3 - Approval of Amended and Restated 2007 Equity Incentive Plan | ||||||||||||||
Approval of 50 Million Additional Shares of Common Stock for Issuance under the 2007 Plan | ||||||||||||||
| Important Provisions of the 2007 Plan | ||||||||||||||
| Summary of the 2007 Plan as Proposed to be Amended and Restated | ||||||||||||||
| Certain Federal Tax Effects | ||||||||||||||
| New Plan Benefits | ||||||||||||||
PROXY STATEMENT
FISCAL 2022 ANNUAL MEETING OF SHAREHOLDERS
January 12, 2023
9:00 a.m. Pacific Standard Time
____________________________
INFORMATION CONCERNING SOLICITATION AND VOTING
General
This proxy statement (the “Proxy Statement”) is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Micron Technology, Inc. (the “Board”), for use at the Fiscal 2022 Annual Meeting of Shareholders to be held on January 12, 2023, at 9:00 a.m., Pacific 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 2022 Annual Meeting of Shareholders. The Annual Meeting will be held via a live webcast, and there will not be a physical meeting location. You will be able to attend the annual meeting online and to vote your shares electronically on the virtual meeting platform by visiting www.virtualshareholdermeeting.com/MU2022 and entering the 16-digit control number included in our Notice, on your proxy card, or in the instructions that accompanied your proxy materials.
Shareholders will be able to submit questions before the Annual Meeting through www.proxyvote.com or during the Annual Meeting using the virtual meeting platform. Relevant questions submitted before or during the Annual Meeting will be addressed after the Annual Meeting in the Investor Relations section of our website at www.micron.com.
We encourage you to access the Annual Meeting before it begins. Online check-in will start approximately 15 minutes before the Annual Meeting. If you have difficulty accessing the meeting or other technical or logistical issues, please call the technical support number that will be posted on the virtual Annual Meeting login page. We will have technicians available to assist you.
This Proxy Statement and related proxy card are first being distributed on or about December 2, 2022, 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.proxyvote.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 the meeting and vote electronically on the virtual meeting platform.
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 11, 2023.
1Record Date
Shareholders of record at the close of business on November 14, 2022 (the “Record Date”) are entitled to receive 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 online or by delivering to us a written notice of revocation at Micron Technology, Inc., Attn.: Corporate Secretary, 8000 South Federal Way, Boise, Idaho 83716 or corporatesecretary@micron.com or another duly executed proxy bearing a date later than the earlier given proxy but prior to the date of the Annual Meeting.
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., a proxy solicitation firm, 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”). As of the Record Date, 1,090,892,865 shares of Common Stock were issued and outstanding and entitled to vote.
Voting Rights and Required Vote
Under the Delaware General Corporation Law, our Restated Certificate of Incorporation, and our Amended and Restated Bylaws (“Bylaws”), each shareholder will be entitled to one vote for each share of Common Stock held at the Record Date for all matters. The required quorum for the transaction of business at the Annual Meeting is a majority in voting power of shares of our Common Stock issued and outstanding on the Record Date and entitled to vote thereat, present in person or represented by proxy. Shares that are voted “FOR,” “AGAINST,” or “ABSTAIN” are treated as being present at the Annual Meeting for the purposes of establishing a quorum. Broker non-votes will also 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 will not be included in the tabulation of the voting results with respect to voting results for the election of directors and other non-routine matters.
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 or other non-routine matters 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 Proposals 1, 2, and 3 and such shares will be considered “broker non-votes” for such proposals. Brokers or nominees may vote a beneficial owner’s shares on Proposal 4.
Directors will be elected if the number of votes “FOR” a particular director exceeds the number of votes “AGAINST” that same director, with abstentions and broker-non votes not counted as a vote “FOR” or “AGAINST” that director’s election. With respect to all other items of business, the “FOR” vote of the holders of a majority of the voting power of the shares of Common Stock attending online in person or represented by proxy is required in order for such matter to be considered approved by the shareholders. For such non-routine matters, abstentions will have the same effect as voting against such items of business, but broker non-votes will not be counted in the tabulation of results. For routine matters, abstentions and broker non-votes will have the same effect as voting against such items of business.
2 | 2022 Proxy Statement
Voting of Proxies
The shares of Common Stock represented by all properly executed proxies received by 11:59 P.M. Eastern Standard Time, on January 11, 2023 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, (ii) FOR a non-binding resolution to approve the compensation of our Named Executive Officers as described in this Proxy Statement, (iii) FOR the approval of our Amended and Restated 2007 Equity Incentive Plan to increase the shares reserved for issuance thereunder by 50 million, (iv) FOR ratification of the appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending August 31, 2023, and (v) in the discretion of the proxy holders for such other business which may properly come before the Annual Meeting.
3| PROPOSAL 1 - ELECTION OF DIRECTORS | ||
•All directors elected annually by a simple majority of votes cast •Independent Board Chair •Seven of eight director nominees are independent | ||
| BOARD RECOMMENDATION | |||||
Our Board is presenting eight nominees for election as directors at the Annual Meeting. Each of the nominees is currently a member of our Board and was elected to our Board at the Fiscal 2021 Annual Meeting of Shareholders. Each director elected at the Annual Meeting will serve until our Fiscal 2023 Annual Meeting of Shareholders and until a successor is duly elected and qualified. Each of the nominees has consented to be named in this Proxy Statement and to serve as a director if elected. If any nominee is unable or unwilling for good cause to stand for election or serve as a director if elected, the persons named as proxies may vote for a substitute nominee designated by our existing Board, or our Board may choose to reduce its size.
| VOTE REQUIRED FOR APPROVAL | |||||
Each director nominee will be elected as a director if such nominee receives the affirmative vote of a majority of the votes cast with respect to his or her election (in other words, the number of shares voted “FOR” a director must exceed the number of votes cast “AGAINST” that director).
If a nominee who is serving as a director is not elected at the Annual Meeting by the requisite majority of votes cast, Delaware law provides that the director would continue to serve on our Board as a holdover director. However, under our Bylaws, any incumbent director who fails to be elected must offer to tender his or her resignation to our Board. The Governance and Sustainability Committee will then make a recommendation to our Board on whether to accept or reject the resignation or whether other action should be taken. Our Board will act on the Governance and Sustainability Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date the election results are certified. Any director who offers to tender his or her resignation will not participate in the Board’s or the Governance and Sustainability Committee’s decision.
4 | 2022 Proxy Statement
| SUMMARY OF SKILLS AND EXPERIENCE OF DIRECTOR NOMINEES | |||||
The following table highlights the specific skills, experience, qualifications and attributes that each of the director nominees brings to the Board. A particular director nominee may possess other skills, experience, qualifications or attributes even though they are not indicated below.
| Skills and Experience | Richard M. Beyer | Lynn A. Dugle | Steven J. Gomo | Linnie M. Haynesworth | Mary Pat McCarthy | Sanjay Mehrotra | Robert E. Switz | MaryAnn Wright | ||||||||||||||||||
| Independence | • | • | • | • | • | • | • | |||||||||||||||||||
| Multinational experience | • | • | • | • | • | • | • | • | ||||||||||||||||||
| Executive leadership (public or private) | • | • | • | • | • | • | • | • | ||||||||||||||||||
| Research and development | • | • | • | • | • | • | ||||||||||||||||||||
| Technology industry | • | • | • | • | • | • | • | • | ||||||||||||||||||
| Corporate strategy | • | • | • | • | • | • | • | • | ||||||||||||||||||
| Corporate development | • | • | • | • | ||||||||||||||||||||||
| Corporate governance | • | • | • | • | • | |||||||||||||||||||||
| Operations | • | • | • | • | • | • | ||||||||||||||||||||
| Marketing | • | |||||||||||||||||||||||||
| Cybersecurity | • | • | ||||||||||||||||||||||||
| Other public board service | • | • | • | • | • | • | • | • | ||||||||||||||||||
| Finance | • | • | • | • | • | • | • | |||||||||||||||||||
| Auditing / accounting | • | • | ||||||||||||||||||||||||
5Nominees For Election
| Board of Directors | ||
 Richard M. Beyer Independent | Professional Experience | |||||||
| - | Chairman and Chief Executive Officer of Freescale Semiconductor, Inc. from 2008 through June 2012; director from 2008 to 2013. | |||||||
| - | Prior to Freescale, Mr. Beyer was President, Chief Executive Officer and a director of Intersil Corporation from 2002 to 2008. | |||||||
| - | Mr. Beyer previously served in executive management roles at FVC.com, VLSI Technology, and National Semiconductor Corporation, and served three years as an officer in the United States Marine Corps. | |||||||
| - | Within the past five years, Mr. Beyer served on the Board of Directors of Dialog Semiconductor and Microsemi Corporation. | |||||||
| Other Current Public Company Directorships | ||||||||
| - | None | |||||||
| Board Skills, Qualifications, and Expertise | ||||||||
| Mr. Beyer’s experience as the Chief Executive Officer and a director at leading technology companies provides our Board expertise in the technology industry and also in corporate strategy, financial management, operations, marketing, and research and development, all of which are critical to achieving our strategic objectives. We believe these experiences, qualifications, attributes, and skills qualify Mr. Beyer to serve as a member of our Board. | ||||||||
Age 74 | Director Since 2013 | Committees Compensation (Chair), Governance and Sustainability, Security | ||||||||
 Lynn A. Dugle Independent | Professional Experience | |||||||
| - | Chairman, Chief Executive Officer, and President of Engility Holdings Inc., an NYSE-listed engineering services firm, from 2016 to 2019. | |||||||
| - | Prior to Engility, Ms. Dugle was Vice President, President of Intelligence and Information Systems of Raytheon Company from 2009 to 2015. | |||||||
| - | Within the past five years, Ms. Dugle served on the Board of Directors of State Street Corporation. | |||||||
| Other Current Public Company Directorships | ||||||||
| - | First Light Acquisition Group, Inc. (advisor partner) | |||||||
| - | TE Connectivity Ltd. | |||||||
| - | KBR, Inc. | |||||||
| Board Skills, Qualifications, and Expertise | ||||||||
| Ms. Dugle’s experience as chairman and chief executive officer of a public engineering services firm and senior officer of a leading public technology company provides our Board expertise in information, technology, cybersecurity, corporate strategy, operations, and research and development, all of which are critical to achieving our strategic objectives. We believe these experiences, qualifications, attributes, and skills qualify Ms. Dugle to serve as a member of our Board. | ||||||||
Age 63 | Director Since 2020 | Committees Audit, Security (Chair) | ||||||||
6 | 2022 Proxy Statement
| Board of Directors | ||
 Steven J. Gomo Independent | Professional Experience | |||||||
| - | Executive Vice President, Finance and Chief Financial Officer from October 2004 until his retirement in December 2011, and Senior Vice President, Finance and Chief Financial Officer from August 2002 to September 2004 at NetApp, Inc., a storage and data management company. | |||||||
| Other Current Public Company Directorships | ||||||||
| - | Nutanix, Inc. | |||||||
| - | Enphase Energy, Inc. | |||||||
| Board Skills, Qualifications, and Expertise | ||||||||
| Mr. Gomo’s experience as the chief financial officer of a public technology company provides our Board expertise in the technology industry, particularly in the areas of finance, accounting, treasury, investor relations, and securities, which contribute valuable insights and perspectives to our business and operations. We believe these experiences, qualifications, attributes, and skills qualify Mr. Gomo to serve as a member of our Board. | ||||||||
Age 70 | Director Since 2018 | Committees Audit (Chair), Finance | ||||||||
 Linnie M. Haynesworth Independent | Professional Experience | |||||||
| - | Sector Vice President, Cyber and Intelligence Mission Solutions Division from January 2016 to 2019, and Sector Vice President and General Manager from December 2013 to 2019 at Northrop Grumman, a defense and space company. | |||||||
| Other Current Public Company Directorships | ||||||||
| - | Truist Financial Corporation | |||||||
| - | Automatic Data Processing, Inc. | |||||||
| Board Skills, Qualifications, and Expertise | ||||||||
| Ms. Haynesworth’s experience as the sector vice president and general manager of a public defense and space company provides our Board expertise in technology integration, cybersecurity (including a Certificate in Cybersecurity Oversight), enterprise strategy, risk management, and large complex system development, delivery, and deployment, and contributes valuable insights and perspectives to our business and operations. Additionally, Ms. Haynesworth became a Member of the Defense Business Board of the United States Department of Defense in November 2021. We believe these experiences, qualifications, attributes, and skills qualify Ms. Haynesworth to serve as a member of our Board. | ||||||||
Age 65 | Director Since 2021 | Committees Governance and Sustainability, Security | ||||||||
7| Board of Directors | ||
 Mary Pat McCarthy Independent | Professional Experience | |||||||
| - | Vice Chair of KPMG LLP, the U.S. member firm of the global audit, tax, and advisory services firm, from July 1998 until her retirement in December 2011. Ms. McCarthy joined KMPG in 1977, became a partner in 1987, and held numerous senior leadership positions with the firm during her tenure. | |||||||
| - | Within the past five years, Ms. McCarthy served on the Board of Directors of Andeavor Corporation and Mutual of Omaha. | |||||||
| Other Current Public Company Directorships | ||||||||
| - | Palo Alto Networks, Inc. | |||||||
| Board Skills, Qualifications, and Expertise | ||||||||
| Ms. McCarthy’s experience advising numerous companies on financial and accounting matters as a Certified Public Accountant (ret.) provides our Board deep technical expertise in financial and accounting matters, and contributes valuable insights and perspectives to our business and operations. We believe these experiences, qualifications, attributes, and skills qualify Ms. McCarthy to serve as a member of our Board. | ||||||||
Age 67 | Director Since 2018 | Committees Audit, Finance (Chair) | ||||||||
 Sanjay Mehrotra Chief Executive Officer | Professional Experience | |||||||
| - | Mr. Mehrotra has served as Micron’s President, Chief Executive Officer, and Director since May 2017. | |||||||
| - | Prior to that, Mr. Mehrotra co-founded and led SanDisk Corporation as a start-up in 1988 until its eventual sale in May 2016, serving as its President and Chief Executive Officer from January 2011 to May 2016 and as a member of its Board of Directors from July 2010 to May 2016. | |||||||
| - | Within the past five years, Mr. Mehrotra served on the Board of Directors of Cavium, Inc. | |||||||
| Other Current Public Company Directorships | ||||||||
| - | CDW Corporation | |||||||
| Board Skills, Qualifications, and Expertise | ||||||||
| Mr. Mehrotra has 42 years of experience in the semiconductor memory industry, and as a co-founder of SanDisk, he offers a unique perspective on the industry and has significant senior leadership and technological expertise. In addition, Mr. Mehrotra’s experience provides our Board expertise in finance, corporate development, corporate governance, and business strategy, all of which are critical to achieving our strategic objectives. We believe these experiences, qualifications, attributes, and skills qualify Mr. Mehrotra to serve as a member of our Board. | ||||||||
Age 64 | Director Since 2017 | Committee Finance | ||||||||
8 | 2022 Proxy Statement
| Board of Directors | ||
 Robert E. Switz Independent, Chair of the Board | Professional Experience | |||||||
| - | President and Chief Executive Officer of ADC Telecommunications, Inc., a supplier of network infrastructure products and services, from August 2003 until December 2010 and Chairman from 2008 until December 2010, when Tyco Electronics Ltd. acquired ADC. Mr. Switz joined ADC in 1994 and throughout his career there held numerous leadership positions. | |||||||
| - | Within the past five years, Mr. Switz served on the Board of Directors of Gigamon, Inc. and Mandiant, Inc. | |||||||
| Other Current Public Company Directorships | ||||||||
| - | Marvell Technology Group Ltd. | |||||||
| Board Skills, Qualifications, and Expertise | ||||||||
| Appointed Chair of Micron’s Board of Directors in 2012, Mr. Switz’s experience as Chief Executive Officer and Chairman of a leading technology company and history and leadership on Micron’s Board provide the Board expertise in the technology industry as well as international business operations, finance, corporate development, corporate governance, and management, all of which are critical to achieving our strategic objectives. We believe these experiences, qualifications, attributes, and skills qualify Mr. Switz to serve as a member of our Board. | ||||||||
Age 76 | Director Since 2006 | Committees Compensation, Governance and Sustainability | ||||||||
9| Board of Directors | ||
 MaryAnn Wright Independent | Professional Experience | |||||||
| - | Group Vice President of Engineering and Product Development of Johnson Controls International (“JCI”) from 2013 to 2017. Ms. Wright also served as Vice President and General Manager for Johnson Controls’ Hybrid Systems business and as CEO of Johnson Controls-Saft from 2007 to 2009. | |||||||
| - | Prior to joining JCI, Ms. Wright served in the Office of the Chair and was EVP Engineering, Sales and Program Management at Collins & Aikman from 2006 to 2007. | |||||||
| - | Prior to that, Ms. Wright held several executive positions at Ford Motor Company, including Chief Engineer, from 2003 to 2005, and Director of Sustainable Mobility Technologies and Hybrid and Fuel Cell Vehicle Programs from 2004 to 2005. | |||||||
| - | Within the past five years, Ms. Wright served on the Board of Directors of Maxim Integrated Products, Inc. and Delphi Technologies. | |||||||
| Other Current Public Company Directorships | ||||||||
| - | Group 1 Automotive, Inc. | |||||||
| - | Brunswick Corporation | |||||||
| - | Solid Power, Inc. | |||||||
| Board Skills, Qualifications, and Expertise | ||||||||
| Ms. Wright’s extensive experience in, and knowledge of, the automotive industry (OEM and Tier 1 supplier), public board experience and her expertise in vehicle, advance powertrain, and energy storage system technologies, provide our Board expertise in the technology industry as well as business operations, finance, corporate development, corporate governance, and management, all of which are critical to achieving our strategic objectives. We believe these experiences, qualifications, attributes, and skills qualify Ms. Wright to serve as a member of our Board. | ||||||||
Age 60 | Director Since 2019 | Committees Compensation, Governance and Sustainability (Chair) | ||||||||
There are no family relationships between any of our directors or executive officers.
The Board recommends voting “FOR” approval of the nominees listed above.
10 | 2022 Proxy Statement
Director Nominations and Board Refreshment and Diversity
Nomination Process
The Governance and Sustainability Committee regularly reviews the appropriate size and composition of the Board, including by anticipating vacancies and required expertise for the effective oversight of the Company. In evaluating the existing Board and any desired characteristics of potential nominees, the Governance and Sustainability Committee considers the knowledge, experience, integrity, and judgment of the candidates, their contribution to the diversity of backgrounds, experience and skills on the Board, and their ability to devote sufficient time and effort to their duties as directors. The Governance and Sustainability Committee considers the following experience particularly relevant: 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 the Nasdaq Stock Market LLC (“Nasdaq”) and relevant rules and regulations of the Securities and Exchange Commission (“SEC”). The Governance and Sustainability Committee then recommends the best candidates to the Board.
When the Board decides to add directors to the Board, the Governance and Sustainability Committee works with a third party executive search firm to assist them in identifying and evaluating potential candidates.
Although the Governance and Sustainability Committee has not established specific diversity guidelines, the Board seeks to maintain a balance of perspectives, qualities, and skills on the Board to obtain a diversity of viewpoints to better understand the technical, economic, political, and social environments in which we operate and to enhance Micron’s performance. Accordingly, the Governance and Sustainability Committee takes into account the personal characteristics, experience, and skills of current and prospective directors, including gender, race, and ethnicity, to ensure that our Board comprises a broad range of perspectives, and measures success by the range of viewpoints represented on the Board.
Shareholder Recommendations of Director Candidates
Our Bylaws permit shareholders to nominate directors at an annual meeting of shareholders or at a special meeting at which directors are to be elected. A shareholder may recommend a director candidate to the Governance and Sustainability Committee by delivering a written notice to our Corporate Secretary at our principal executive offices and including the following in the notice: the name and address of the shareholder as they appear on our books or other proof of share ownership; the number of shares of our Common Stock beneficially owned by the shareholder as of the date the shareholder gives written notice; a description of all arrangements or understandings between the shareholder and the director candidate and any other person(s) pursuant to which the recommendation or nomination is to be made by the shareholder; the name, age, business address, and residence address of the director candidate and a description of the director candidate’s business experience for at least the previous five years; the principal occupation or employment of the director candidate; the number of shares of our Common Stock beneficially owned by the director candidate; the consent of the director candidate to serve as a member of our Board if appointed or elected; and any other information required to be disclosed with respect to a director nominee in solicitations for proxies for the election of directors pursuant to our Bylaws and the applicable rules of the SEC.
The Governance and Sustainability Committee may require additional information as it deems reasonably required to determine the eligibility of the director candidate to serve as a member of our Board. Shareholders recommending candidates for consideration by our Board in connection with the next annual meeting of shareholders should submit their written recommendation no later than one hundred twenty (120) calendar days in advance of the date of our Proxy Statement released in connection with the previous year's annual meeting of shareholders. The Governance and Sustainability Committee will evaluate director candidates recommended by shareholders for election to our Board in the same manner and using the same criteria as it uses for any other director candidate. If the Governance and Sustainability Committee determines that a shareholder-recommended
11candidate is suitable for membership on our Board, it will include the candidate in the pool of candidates to be considered for nomination upon the occurrence of the next vacancy on our Board or in connection with the next annual meeting of shareholders.
Proxy Access
Our Bylaws permit up to 20 shareholders owning continuously for at least three years shares representing in the aggregate at least 3% of the total voting power of the Company’s outstanding common stock to nominate and include shareholder-nominated director candidates in our proxy materials for annual meetings of shareholders. A shareholder, or group of not more than 20 shareholders (collectively, an “eligible shareholder”), meeting specified eligibility requirements is generally permitted to nominate the greater of (i) two director nominees or (ii) 20% of the number of directors on our Board. Use of the proxy access process to submit shareholder nominees is subject to additional eligibility, procedural, and disclosure requirements set forth in Article II, Section 11 of our Bylaws. 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 without charge upon request to corporatesecretary@micron.com.
Other Director Nominations
Shareholders who wish to nominate a person for election as a director in connection with an annual meeting of shareholders (as opposed to making a recommendation to the Governance and Sustainability Committee as described above) and who do not intend for the nomination to be included in our proxy materials pursuant to the proxy access process described above must comply with the advance notice requirement set forth in Article II, Section 11 of our Bylaws.
Board Refreshment and Diversity
The Board believes that periodic Board refreshment can provide new experiences and fresh perspectives to our Board and is most effective if it is sufficiently balanced to maintain continuity among Board members that will allow for the sharing of historical perspectives and experiences relevant to the Company. Our Board seeks to achieve this balance through its director succession planning process, as well as in response to the annual Board and individual director assessment process discussed below. With the appointments of Ms. Haynesworth in 2021, Ms. Dugle in 2020, Ms. Wright in 2019, and Ms. McCarthy and Mr. Gomo in 2018, our Board refreshed its composition while maintaining institutional knowledge with directors of varying lengths of tenure.
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The Governance and Sustainability Committee is committed to continuing to identify and recruit highly qualified director candidates with diverse experiences, perspectives, and backgrounds to join our Board. The table below provides certain information regarding the composition of our Board. Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f) and related instructions.
| Board Diversity Matrix (as of September 2, 2021 and September 1, 2022) | ||||||||||||||
| Total Number of Directors | 8 | |||||||||||||
| Female | Male | Non-Binary | Did Not Disclose Gender | |||||||||||
| Part I: Gender Identity | ||||||||||||||
| Directors | 4 | 4 | - | - | ||||||||||
| Part II: Demographic Background | ||||||||||||||
| African American or Black | 1 | - | - | - | ||||||||||
| Alaskan Native or Native American | - | - | - | - | ||||||||||
| Asian | - | 1 | - | - | ||||||||||
| Hispanic or Latinx | - | - | - | - | ||||||||||
| Native Hawaiian or Pacific Islander | - | - | - | - | ||||||||||
| White | 3 | 3 | - | - | ||||||||||
| Two or More Races or Ethnicities | - | - | - | - | ||||||||||
| LGBTQ+ | - | - | - | - | ||||||||||
| Did Not Disclose Demographic Background | - | - | - | - | ||||||||||
In addition, one of our directors is a veteran of the U.S. military.
The Board’s Role and Responsibilities
Shareholder Engagement
We are committed to engaging with our shareholders and soliciting their views and input on important matters.
•Our directors occasionally participate in discussions with our shareholders.
•Members of our management team, together with our investor relations, sustainability and legal teams, maintain an active dialogue with shareholders throughout the year to obtain their input on key matters, and keep our management and Board informed about the issues that matter most to our shareholders.
•The Compensation Committee and Governance and Sustainability Committee routinely review our executive compensation design and governance practices and policies, with an eye towards continual improvement and enhancements. Our investor relations team updates the Board concerning shareholder input on these issues, allowing the Board and its committees to take shareholder input into account when setting pay and governance practices.
In fiscal 2022, our discussions with investors covered a variety of topics, including performance, executive compensation, board composition, governance, environmental sustainability, human capital management, and diversity, equality, and inclusion (“DEI”).
13Human Capital and Culture
We believe our people are our most important resource and a critical driver of our competitive advantage. We also believe that our best innovation springs from our team members’ diverse experiences, perspectives, and backgrounds. Our Board considers the creation and maintenance of a diverse and inclusive environment to be a crucial element of the Company’s business strategy, including effectively addressing customer, shareholder, and other stakeholder needs, and believes each Micron hire is an opportunity to enhance the competencies, skills, talent, experience, and perspectives in our Company with diverse perspectives, backgrounds, and viewpoints. The Board has tasked the Company’s management team with taking a proactive approach to DEI, and periodically reviews our programs and processes to ensure continual improvement. In addition to this proactive approach to improving our Company, the Board encouraged the Company to commit resources to the well-being of our communities across the globe. In fiscal 2022, we continued our progress increasing representation of underrepresented groups, maintained pay equity, and continued our work to strengthen our culture of inclusion. We also continued making progress on our six DEI commitments, which focus on internal opportunities and expand our impact outside of Micron into the communities where we work and live. In fiscal 2022, we achieved our goal of investing $500 million with minority-owned and led organizations that provide vital financial services to underserved communities.
Diversity
Our Board believes a diverse workforce is a competitive advantage and that diverse teams drive more innovation, delivering value to our customers and increased returns to shareholders. We believe diverse teams expand creativity and problem-solving, lead to better decision-making, and enhance team member engagement and retention. Encouraged by our Board, we actively pursue a diverse talent pool using advanced technologies and inclusive hiring practices, and we partner with universities around the world to help us grow a workforce that reflects our customers and our communities.
Equality
We believe our vision to enrich life for all includes how we compensate our employees. We analyze our global compensation and benefits to ensure opportunities for all employees because our People value makes it essential we pay everyone fairly. In fiscal 2022, we maintained comprehensive global pay equity for all employees in total compensation across base pay, bonuses, and stock rewards. We have a regular review cadence for pay globally—including base pay and stock awards. If we find gaps during the review, we fix them. We work with a third-party and use dynamic technology to help us analyze and understand our pay variances and adjust when needed. Historically, our pay equity study has focused on gender globally. Our study now focuses on all underrepresented groups: women and people with disabilities globally and veterans, Blacks, and Hispanics in the United States. In addition, in fiscal 2022 we expanded opportunities for pay equity and inclusive benefits by adding race/ethnicity information into our pay equity analysis outside of the United States, including Singapore Malay. We are committed to pay equity for all.
We integrate training on inclusion and allyship, inviting our global employees to learn from various underrepresented groups about their culture, lived experiences, and challenges they may face as a result of their differences. In addition, we provided global inclusive leadership training in fiscal 2022, with an emphasis on supporting team members with disabilities. These trainings help our employees and leaders understand, recognize, and overcome the unconscious biases we all have. We have also added an inclusion advocate in talent review meetings. The inclusion advocate listens carefully for unconscious bias, calls any to the attention of the team, and challenges unfair assumptions to ensure decisions regarding promotions, rotation assignments, access to training and other advancement opportunities are determined fairly.
We also provide grants to minority-owned businesses to help underrepresented businesses have equitable opportunities, which also creates a multiplying effect on the economies of those communities.
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Inclusion
We believe that creating an inclusive culture at Micron helps us unleash the human potential of our team members, so everyone feels seen, heard, valued, and respected. These values help us create an environment where team members know they can bring their whole selves to work developing the next solution for data storage, health care technology, self-driving cars, or whatever our applications need to do to drive technology forward. We continue to strengthen our culture of inclusion, with a continued increase in our Inclusion Index score in fiscal 2022 for the third year in a row. And employee resource group (“ERG”) membership continued to grow, increasing by 47% from fiscal 2021, with 39% of our workforce belonging to at least one ERG. In addition, in fiscal 2022 for the first time, we issued stock grants to team members for leadership of our ERGs.
Please see our DEI Annual Report 2021, available at micron.com/DEI, for more information about how we ensure DEI is part of our Company’s global DNA, expanding to a global focus, especially in Asia. Our DEI Annual Report 2021 and the information at or accessible through our website, are not part of or incorporated by reference into this Proxy Statement.
Sustainability
Our commitment to understanding and addressing environmental, social, and governance (“ESG”) issues along our value chain and in our communities is a critical part of our culture and our vision to transform how the world uses information to enrich life for all. Our Board considers ESG issues to be an integral part of its business oversight and our corporate strategy, and has encouraged a proactive approach toward mitigating our impact on the environment, supporting our team members and the communities in which they live, respecting human rights, driving transparency and accountability in our supply chain, and developing innovative products that support a sustainable future. We have developed and are executing on a sustainability strategy in response to these issues that leverages our leading products, responsible sourcing and operations, and engaged team members.
The Board, supported by the Governance and Sustainability Committee and other Board committees as needed, oversees and monitors the development and integration of this strategy, and regularly reviews sustainability performance. Board oversight includes, but is not limited to, material ESG trends and related long and short-term impacts of the Company’s operations, supply chains, and products, as well as the Company’s activities and annual public reporting on these topics directed by the Company’s Sustainability Council, sustainability staff, and various teams implementing the Company’s sustainability efforts.
The Governance and Sustainability Committee reviews and discusses ESG issues at each regularly-scheduled committee meeting. Discussions and reports to the Committee include information about significant ESG issues, such as observations from consultations with team members, customers, investors, and other stakeholders about their interests and expectations for us; our social and environmental impacts and benefits; and the impacts of these issues on our business. Over the past year, the Governance and Sustainability Committee reviewed the implementation of our long-term environmental goals and aspirations. We expect to allocate about $1 billion of capital expenditures to support these goals, though we cannot guarantee that our environmental goals and aspirations set forth below will be realized. These goals and initiatives have been developed based in part on feedback from investors, customers, and current and prospective team members, and are a critical component of our management of evolving physical, regulatory, market, supply chain, and other risks and opportunities related to climate change, water availability, and other ESG issues.
15| Our Environmental Goals and Aspirations | ||||||||
| Goals | Aspirations | |||||||
| Emissions: | 75% reduction in greenhouse gas emissions per unit in calendar year 2030 vs. calendar year 2018 42% absolute reduction in scope 1 emissions by calendar year 2030 vs. calendar year 2020 | Net zero scope 1 and 2 emissions by calendar year 2050 | ||||||
| Energy: | 100% renewable energy in U.S. operations in calendar year 2025 100% renewable energy in Malaysia in calendar year 2022 | 100% renewable energy worldwide, where available | ||||||
| Water: | 75% water conservation through reuse, recycling, and restoration in calendar year 2030 | 100% water conservation through reuse, recycling, and restoration | ||||||
| Waste: | 95% reuse, recycle, and recovery and zero hazardous waste to landfill in calendar year 2030* | Zero waste to landfill through waste minimization, reuse, recycling, and recovery | ||||||
* Subject to vendor availability
In fiscal 2022, the Board also reviewed:
•our annual sustainability report content and processes, which in fiscal 2022 included indexes and information aligning with the Sustainability Accounting Standards Board (“SASB”) semiconductor industry standard and Taskforce on Climate-related Financial Disclosures (“TCFD”), supporting investor requests to align with the SASB standard and TCFD recommendations;
•our responsible sourcing and human rights efforts, including our conflict minerals report outlining our response to human rights and other concerns related to mineral sourcing as well as our annual modern slavery and human trafficking statement;
•our human capital initiatives, including our talent acquisition, retention, and development policies and practices; and
•findings from team member, customer, investor and other stakeholder engagement exercises.
We strive to make a positive impact on our team members, the communities in which we operate, and the planet, as well as our customers’ sustainability performance. We plan to continue regular consultation with stakeholders regarding environmental and social issues and report annually on our progress in these efforts. Our 2022 Sustainability Report, available at micron.com/sustainability, includes more details about the ways we are committed to sustainable practices and supporting our global community. Our Sustainability Report, and the information at or accessible through our website, are not part of or incorporated by reference into this Proxy Statement.
Risk Assessment and Mitigation
We operate in a dynamic economic, social, and political landscape, making structured and conscientious risk management more important than ever. Our Board reviews and oversees our Enterprise Risk Management (“ERM”) program, which is a unified approach to risk management that helps us achieve a shared understanding of risks and make informed business decisions. This approach enhances our capability to address future events that create uncertainty and respond in an efficient and effective manner. It also facilitates prompt action to mitigate identified risks and embeds risk management into our culture.
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The Board has delegated primary oversight of our ERM process to the Audit Committee, which conducts reviews of our risk assessment and ERM policies as described below, including overseeing the management of risks related to financial reporting and compliance. Other Board committees provide additional insights into our ERM program in the areas of their core competencies, and report to the Board regularly on matters relating to the following specific areas of risk the committees oversee:
•The Compensation Committee oversees management of risks relating to our compensation plans and programs.
•The Finance Committee oversees the Company’s strategies for management of significant financial risks.
•The Governance and Sustainability Committee oversees risks associated with the Board’s governance, director independence, and the Company’s human capital programs and sustainability initiatives.
•The Security Committee oversees risks associated with physical security and cybersecurity.
ERM Process
We designed our ERM program to clearly identify risk management roles and responsibilities, bring together senior management to discuss risk, promote visibility and constructive dialogue, and facilitate risk response and mitigation strategies. The Audit Committee plays a key role in this process, and the full Board conducts periodic reviews.
•As an initial step, our Risk Advisory Services representative meets periodically with business unit and functional area heads to identify significant financial and nonfinancial risk exposures and to develop risk mitigation measures and contingency plans.
•After we collect data from stakeholders throughout the Company, our Risk Advisory Services representative summarizes the results of these meetings and creates a consolidated risk profile.
•Our Risk Advisory Services representative then reviews this risk profile with our senior management, seeking input and agreement on mitigation and response strategies. This process is iterative, and repeats as significant risks are added to, or are removed from, the ERM program.
•Our Risk Advisory Services representative attends quarterly Audit Committee meetings, where the Audit Committee reviews our risk profile and mitigation and response strategies, as well as our progress toward mitigating identified risks. This process repeats for the full Board periodically.
•After incorporating input from the Audit Committee and/or the full Board, Risk Advisory Services designs our internal audit strategies and plans to minimize the impact of relevant risks.
Compensation Risks
The Compensation Committee reviews our compensation programs annually and has concluded that our compensation policies and practices are not reasonably likely to create situations that would have a material adverse effect on us. In making this assessment, the Compensation Committee reviewed our compensation programs to determine if the programs’ provisions and operations create undesired or unintentional risk of a material nature. The Compensation Committee also reviewed the results of our findings with 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 the Compensation Committee reviewed all compensation programs, the Committee 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 across the Company. 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.
17Cybersecurity Risks
The Security Committee regularly reviews and oversees our policies and practices to identify and mitigate cybersecurity risks. Our management team updates the Security Committee at least quarterly on cybersecurity matters. Our cybersecurity policies and practices follow the cybersecurity framework of the National Institute of Standards and Technology (NIST). We engage third parties to perform assessments of our cybersecurity measures at least annually. The results of those assessments are reported to the Security Committee, and we make adjustments to our cybersecurity policies and practices as necessary in light of the assessments. While we have not experienced a material information security (cybersecurity) incident in the past three fiscal years, we maintain an information security (cybersecurity) risk insurance policy as a matter of good practice.
Board Processes and Policies
Code of Business Conduct and Ethics
Acting ethically is a critical part of our culture and our vision to transform how the world uses information to enrich life for all. The Board has adopted a Code of Business Conduct and Ethics that is applicable to all our directors, officers, and team members. The Code of Business Conduct and Ethics sets out our expectations regarding the treatment of our team members, customers, and the communities in which we operate, as well as our commitment to high product quality, ethical and legal sourcing of our materials, and acting with integrity for our investors. A copy of our Code of Business Conduct and Ethics is available at www.micron.com and is also available in print without charge 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 SEC and the Listing Rules of Nasdaq.
Board Self-Evaluation
The Governance and Sustainability Committee oversees the Board’s ongoing and annual assessments of its effectiveness, including the effectiveness of its committees and directors. All directors complete an evaluation form for the Board and for each committee on which they serve. These forms include ratings for certain key metrics, as well as the opportunity for written comments. The comments provide key insights into the areas directors believe the Board can improve or in which its performance is strong. Evaluation topics include number and length of meetings, topics covered and materials provided, committee structure and activities, Board composition and expertise, succession planning, director participation and interaction with management, and promotion of ethical behavior. Our Board considers the results when making decisions on the structure and responsibilities of our Board and its committees, agendas and meeting schedules for our Board and its committees, and changes in the performance or functioning of our Board.
Director Skills Evaluation
The Governance and Sustainability Committee oversees the Board’s ongoing and annual assessments of the Board’s composition and the skills each director possesses. The Governance and Sustainability Committee has identified and continually refines a list of skills, attributes, and experiences that it believes will result in an effective, dynamic, and diverse Board. The Governance and Sustainability Committee then reviews each director on a matrix in an effort to identify needed skills, experiences, or perspectives. The Governance and Sustainability Committee uses the insights this matrix provides to recommend committee assignments and inform searches for new director candidates or opportunities to refresh Board composition.
Board Structure
Director Independence
The Board has determined that directors Beyer, Dugle, Gomo, Haynesworth, McCarthy, Switz, and Wright qualify as independent directors. In determining the independence of our directors, the Board has adopted independence standards that mirror the criteria specified by applicable laws and regulations of the SEC and the Listing Rules of
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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.”
Board Leadership Structure
Mr. Switz has served as our independent Chair of the Board since February 2012. We do not have a fixed policy on whether the roles of Chair of the Board and CEO should be separate or combined. The Board’s determination to have an independent, non-employee director as our Chair is based on the Board’s consideration of our and our shareholders’ best interests under the current circumstances. In his role as Chair, Mr. Switz oversees meetings of the independent directors and acts as a liaison between the independent directors and CEO.
Board Meetings and Committees
Our Board held nine formal meetings during fiscal 2022. The Board met in Executive Session (meetings in which only non-employee directors are present) five times during fiscal 2022. In fiscal 2022, the Board had a standing Audit Committee, Compensation Committee, Finance Committee, Governance and Sustainability Committee, and Security Committee. During fiscal 2022, the Audit Committee met fifteen times, the Compensation Committee met five times, the Finance Committee met four times, the Governance and Sustainability Committee met four times, and the Security Committee met five times. In addition to formal committee meetings, the chair of each committee 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 during fiscal 2022. All incumbent directors who served on the Audit, Compensation, Finance, Governance and Sustainability, and Security Committees attended 75% or more of the total number of applicable committee meetings during fiscal 2022. We expect director attendance at the Annual Meeting of Shareholders, and all then-incumbent members of our Board were present at the Fiscal 2021 Annual Meeting of Shareholders.
The Audit, Compensation, Finance, Governance and Sustainability, and Security Committees 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 without charge upon request to corporatesecretary@micron.com. The Board has determined that all the members of the Audit, Compensation, Governance and Sustainability, and Security Committees satisfy the independence requirements of applicable SEC laws and the Listing Rules of Nasdaq for such committees.
Audit Committee
Mses. McCarthy and Dugle and Mr. Gomo currently serve, and during fiscal 2022 served, on the Audit Committee. Mr. Gomo has served as the Chair of the Audit Committee since January 2019. The Board has determined that all Audit Committee members qualify as an “audit committee financial expert” for purposes of the rules and regulations of the SEC and that each of these members is 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 adequacy of our internal controls and procedures;
•the performance of our internal audit function;
•the performance of our Independent Registered Public Accounting Firm;
•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 “Audit Committee Matters – Report of the Audit Committee of the Board of Directors.” The
19complete 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 without charge upon request to corporatesecretary@micron.com.
Compensation Committee
Ms. Wright and Messrs. Beyer and Switz currently serve, and during fiscal 2022 served, on the Compensation Committee. Mr. Beyer has served as the Chair of the Compensation Committee since April 2021. Previously, Mr. Switz had served as the Chair of the Compensation Committee since January 2019. The Board has determined that all Compensation Committee members qualify as “non-employee directors” as defined under Rule 16b-3, promulgated under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Compensation Committee is responsible for reviewing and approving the compensation of our executive officers. See “Executive Compensation and Related Information – Compensation Discussion and Analysis” and “– 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 without charge upon request to corporatesecretary@micron.com.
Finance Committee
Ms. McCarthy and Messrs. Gomo and Mehrotra currently serve, and during fiscal 2022 served, on the Finance Committee. Mr. Mehrotra joined the Finance Committee when he became our President and CEO in May 2017. Ms. McCarthy has served as the Chair of the Finance Committee since January 2019. The Finance Committee represents and assists the Board in discharging its responsibilities with respect to oversight of our financial policies, financial strategies, capital structure, debt and equity offerings, capital return program, cash management and investments, risk management related to hedge and derivative instruments, and insurance. The complete duties of the Finance Committee are set forth in its written charter, which is available at www.micron.com and is also available in print without charge upon request to corporatesecretary@micron.com.
Governance and Sustainability Committee
Mses. Haynesworth and Wright and Messrs. Beyer and Switz currently serve, and during fiscal 2022 served, on the Governance and Sustainability Committee. Ms. Wright has served as Chair of the Governance and Sustainability Committee since April 2021. The responsibilities of the Governance and Sustainability Committee include assisting the Board in discharging its duties with respect to the following:
•the identification and selection of nominees to our Board;
•director compensation;
•oversight and monitoring of the development and integration of material social and environmental strategies;
•oversight and monitoring of our human capital management efforts, including culture, talent development and retention, and DEI programs and initiatives;
•the development of our Corporate Governance Guidelines; and
•evaluation of the Board and management.
The complete duties and responsibilities of the Governance and Sustainability Committee are set forth in its written charter, which is available at www.micron.com and is also available in print without charge upon request to corporatesecretary@micron.com.
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Security Committee
Mses. Dugle and Haynesworth and Mr. Beyer currently serve, and during fiscal 2022 served, on the Security Committee. Ms. Dugle has served as Chair of the Security Committee since June 2021. The responsibilities of the Security Committee include assisting the Board in discharging its duties with respect to oversight of the following:
•physical security of our facilities and employees as well as enterprise cybersecurity and data protection risks associated with our security-related infrastructure and related operations including outside partners;
•cyber crisis preparedness and security breach and incident response plans;
•compliance with applicable information security and data protection laws and industry standards;
•our physical and cybersecurity strategy, crisis or incident management, and security-related information technology planning processes; and
•public disclosure relating to security of our employees, facilities, and information technology systems, including privacy, network security, and data security.
The complete duties and responsibilities of the Security Committee are set forth in its written charter, which is available at www.micron.com and is also available in print without charge upon request to corporatesecretary@micron.com.
Executive Sessions and Communications with the Board of Directors
Mr. Switz has been the independent Chair of our Board since February 2012. As part of his duties as Chair, Mr. Switz chairs Executive Session meetings of our Board. Shareholders and interested parties wishing to communicate with our Board may contact Mr. Switz at chair@micron.com.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related party transactions are reviewed by our Board in accordance with our related party transaction policy. Related parties include our directors and officers, their family members and affiliates, and certain beneficial owners. In cases where the related party is a director or an affiliate of a director, that director does not participate in the review of the proposed transaction. In reviewing a proposed related party transaction, the Board considers all the relevant facts and circumstances of the transaction, such as (i) the nature and terms of the transaction, (ii) the dollar value of the transaction, (iii) whether the terms of the transaction are at least as favorable as they would have been if a related party was not involved, (iv) the business reasons for the transaction, (v) whether the transaction would result in an improper conflict of interest, and (vi) the effects of the transaction on the ongoing relationship between us and the related party. There were no actual or proposed related party transactions in excess of $120,000 for fiscal 2022 and through November 14, 2022. Subsequent to November 14, 2022, Mr. Mehrotra reimbursed the Company in respect of his usage of Micron aircraft for personal travel in fiscal 2022. See “Executive Compensation and Related Information – Compensation Discussion and Analysis – CEO Compensation – Other Compensation” below.
21DIRECTOR COMPENSATION
The Governance and Sustainability Committee oversees the setting of compensation for our non-employee members of the Board. Each year, the Governance and Sustainability Committee works with the compensation consultant to review and evaluate director compensation for the ensuing fiscal year, in light of prevailing market conditions and to attract, retain, and reward qualified non-employee directors. The compensation consultant gathers and reviews market data for non-employee directors from the same Compensation Peer Group used to evaluate officer compensation. For a discussion concerning the companies that comprised our Compensation Peer Group, please see “Executive Compensation and Related Information – Compensation Discussion and Analysis” below. Upon completion of its review and evaluation, the Governance and Sustainability Committee did not recommend any changes to the Board in director compensation for fiscal 2023.
Elements of Director Compensation
Annual Retainer and Committee Chair Remuneration
Non-employee directors were entitled to receive an annual retainer of $125,000 in fiscal 2022. Pursuant to our 2008 Director’s Compensation Plan (the “DCP”), which operates as a sub-plan of the Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”), non-employee directors may elect to take some or all of their 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. The amounts earned by the non-employee directors in respect of their service during fiscal 2022 are set forth below under “Fiscal 2022 Director Compensation.”
Set forth below are the amounts directors are entitled to receive for their service as committee chair or Chair of the Board for fiscal 2022 and 2023:
| 2023 | 2022 | ||||||||||
| Audit Committee Chair | $ | 35,000 | $ | 35,000 | |||||||
| Compensation Committee Chair | 30,000 | 30,000 | |||||||||
| Finance Committee Chair | 20,000 | 20,000 | |||||||||
| Governance and Sustainability Committee Chair | 20,000 | 20,000 | |||||||||
| Security Committee Chair | 20,000 | 20,000 | |||||||||
| Chair of the Board | 150,000 | 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. We reimburse directors for travel and lodging expenses, if any, incurred in connection with attendance at Board meetings.
Equity Award
Non-employee directors receive an equity award each fiscal year. Since fiscal 2007, the equity award has been exclusively in the form of restricted stock. The restricted stock includes the right to receive dividend equivalents, which will accumulate and pay out in cash, if and when the underlying shares are released. The “targeted value” for the annual non-employee director equity award is established each year by the Board following discussions with the compensation consultant and has been set at $250,000 since fiscal 2015. 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 2022 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 reaches the mandatory retirement age, if any, 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 their retirement, or upon a director’s death or disability.
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Fiscal 2022 Director Compensation
The following table details the total compensation earned by our non-employee directors in fiscal 2022.
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | Total | ||||||||
| Richard M. Beyer | $ | 155,000 | $ | 250,000 | $ | 405,000 | |||||
| Lynn A. Dugle | 145,000 | 250,000 | 395,000 | ||||||||
| Steven J. Gomo | 160,000 | 250,000 | 410,000 | ||||||||
| Linnie M. Haynesworth | 125,000 | 250,000 | 375,000 | ||||||||
| Mary Pat McCarthy | 145,000 | 250,000 | 395,000 | ||||||||
| Robert E. Switz | 275,000 | 250,000 | 525,000 | ||||||||
| MaryAnn Wright | 145,000 | 250,000 | 395,000 | ||||||||
(1)On October 13, 2021, each of Messrs. Beyer, Gomo, and Switz, and Mses. Dugle, Haynesworth, McCarthy, and Wright was granted 3,747 shares of restricted stock with a grant date fair value of $250,000 ($66.72 per share). For information on the restrictions associated with these awards, see “Elements of Director Compensation – Equity Award” above.
As of September 1, 2022, each of Messrs. Beyer, Gomo, and Switz, and Mses. Dugle, Haynesworth, McCarthy, and Wright had outstanding a grant of 3,747 shares of restricted stock. For information regarding Mr. Mehrotra’s holding of stock as of September 1, 2022, see “Outstanding Equity Awards at Fiscal 2022 Year-End” below.
As of September 1, 2022, each of Messrs. Beyer, Gomo, and Switz, and Mses. Dugle, Haynesworth, McCarthy, and Wright had outstanding a grant of 3,747 shares of restricted stock. For information regarding Mr. Mehrotra’s holding of stock as of September 1, 2022, see “Outstanding Equity Awards at Fiscal 2022 Year-End” below.
Stock Ownership Guidelines
We have established stock ownership guidelines for our directors. The minimum ownership guideline for directors is to hold shares with a value equal to five times their annual retainer. The minimum ownership guideline for our CEO is to hold shares with a value equal to five times his base salary. Directors are given five years to meet the ownership guidelines. The Governance and Sustainability Committee reviews the Ownership Guidelines annually and monitors each person’s progress toward, and continued compliance with, the guidelines. Stock sales restrictions may be imposed upon directors if the stock ownership guidelines are not met. All our directors are either in compliance with the guidelines or are newer directors who have time remaining to meet the guidelines.
The following table shows non-employee director compliance with the guidelines as of the Record Date:
| Director | Guideline Multiplier | Guideline Amount | Compliance with Guideline | ||||||||
| Richard M. Beyer | 5 | $ | 625,000 | Yes | |||||||
| Lynn A. Dugle | 5 | 625,000 | Yes | ||||||||
| Steven J. Gomo | 5 | 625,000 | Yes | ||||||||
| Linnie M. Haynesworth | 5 | 625,000 | (1) | ||||||||
| Mary Pat McCarthy | 5 | 625,000 | Yes | ||||||||
| Robert E. Switz | 5 | 625,000 | Yes | ||||||||
| MaryAnn Wright | 5 | 625,000 | Yes | ||||||||
(1)Ms. Haynesworth has until February 15, 2026 to meet the guidelines because she first joined the Board in 2021.
Please refer to page 47 for information on the stock ownership guidelines for our Named Executive Officers.
23EXECUTIVE COMPENSATION AND RELATED INFORMATION
| PROPOSAL 2 – ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (“SAY-ON-PAY”) | ||
| PROPOSAL DETAILS | |||||
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 enables our shareholders to vote to approve, on an advisory (non-binding) basis, the compensation of our Named Executive Officers as described in this Proxy Statement in the “Compensation Discussion and Analysis” section and the related compensation tables beginning on page 26. We seek your advisory vote and ask that you indicate your support for the compensation of the Named Executive Officers as disclosed in this Proxy Statement.
This “say-on-pay” proposal gives our shareholders the opportunity to express their views on the compensation of our Named Executive Officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers as described in this Proxy Statement. At our Fiscal 2017 Annual Meeting of Shareholders, our shareholders voted to have an annual advisory vote on say-on-pay and in accordance with the results of this vote, the Board determined to implement an advisory vote on executive compensation every year until the next required vote on the frequency of shareholder votes on the compensation of executives, which is expected to occur at the Fiscal 2023 Annual Meeting of Shareholders.
At our annual meeting of shareholders held in January 2022, 86% of the votes cast on the say-on-pay proposal were voted in favor of the proposal. See “Consideration of the Fiscal 2021 Advisory Vote on Executive Compensation” on page 30.
Please read the “Compensation Discussion and Analysis” section and related compensation tables for information necessary to inform your vote on this proposal.
| BOARD RECOMMENDATION | |||||
The Board invites you to review carefully the Compensation Discussion and Analysis beginning on page 26 and the tabular and other disclosures on executive compensation beginning on page 49, and cast a vote “FOR” the following resolution:
“Resolved, that shareholders approve, on an advisory basis, the compensation of Micron’s Named Executive Officers, as discussed and disclosed in the Compensation Discussion and Analysis, the executive compensation tables, and any narrative executive compensation disclosure contained in this Proxy Statement.”
The say-on-pay vote is required by Section 14A of the Exchange Act (15 U.S.C. 78n-1) and is advisory and therefore not binding on us, the Compensation Committee, or the Board. Furthermore, because this non-binding, advisory resolution primarily relates to the compensation of our Named Executive Officers that has already been paid or contractually committed, there may not be an opportunity for us to revisit these decisions. However, the Board and Compensation Committee value the opinions of our shareholders and will consider the results of the say-on-pay vote and any other feedback from shareholders in their evaluation of our compensation program as they believe to be appropriate.
24 | 2022 Proxy Statement
| VOTE REQUIRED FOR APPROVAL | |||||
The affirmative vote of a majority of the voting power of our Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this Proposal 2 is required to approve the non-binding advisory vote on the compensation of our Named Executive Officers.
While this vote is non-binding on our Company and our Board, and will not be construed as overruling a decision by our Company or our Board or creating or implying any additional fiduciary duty for our Company or our Board, our Board and the Compensation Committee value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions for Named Executive Officers under our executive compensation program.
25COMPENSATION 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:
•Sanjay Mehrotra, our President and Chief Executive Officer (“CEO”);
•Mark J. Murphy, our Executive Vice President and Chief Financial Officer;
•Manish Bhatia, our Executive Vice President, Global Operations;
•Michael W. Bokan, our Senior Vice President, Worldwide Sales;
•Scott J. DeBoer, our Executive Vice President, Technology and Products;
•Sumit Sadana, our Executive Vice President and Chief Business Officer and our former interim Chief Financial Officer from January 10, 2022 to April 18, 2022; and
•David A. Zinsner, our former Executive Vice President and Chief Financial Officer.
Throughout this discussion and elsewhere in this Proxy Statement, the foregoing individuals are referred to as our “Named Executive Officers.”
Executive Summary
Fiscal 2022 Highlights
•We delivered record annual revenue in fiscal 2022 with solid profitability despite a challenging environment in the latter part of the year:
◦$30.8 billion in revenue (compared to $27.7 billion in fiscal 2021); and
◦$8.7 billion in GAAP net income, or $7.75 in earnings per diluted share (compared to $5.9 billion and $5.14, respectively, in fiscal 2021).
•We ended fiscal 2022 with $11.1 billion of cash, marketable investments, and restricted cash.
•Our industry-leading DRAM and NAND technology made strong progress in fiscal 2022:
◦DRAM:
▪We announced volume shipments of our new 1z 16Gb GDDR6X, which features twice the capacity and up to 15% higher performance than the previous 1y generation;
▪We continued the enablement of DDR5 across the industry, especially with key cloud customers; and
▪We received the first ISO 26262 Automotive Safety Integrity Level D certification of memory for our LPDDR5 DRAM.
◦NAND:
▪We achieved record revenue in SSDs and in our consolidated NAND business in fiscal 2022;
▪176-layer NAND comprised approximately 95% of our mobile NAND bit shipments in the fourth quarter of fiscal 2022; and
▪We led the industry again in entering volume production of the world’s first 232-layer NAND in the fourth quarter of fiscal 2022.
26 | 2022 Proxy Statement
▪We issued our inaugural $1.0 billion green bond to finance eligible projects focused on renewable energy, green buildings, energy efficiency, water management, pollution control, and a circular economy.
New Manufacturing Fabs
To support expected memory demand in the second half of the decade, in September 2022 and October 2022, we announced plans to invest in two leading-edge memory manufacturing fabs in Boise, Idaho, and Clay, New York, respectively. We plan to build these sites in stages with tool installation and production output ramped in line with industry demand growth, consistent with our goal to maintain stable bit supply share as well as supply discipline.
Total Shareholder Return (“TSR”)
The following chart shows our relative TSR data as compared to the S&P 500 Composite Index and the median of our Compensation Peer Group as identified in "Compensation-Setting Process and the Determination of Compensation Levels – “Market Data” Defined" below.
The information presented is based on closing prices on or nearest to September 1 and represents annualized rates of return reflecting price appreciation plus reinvestment of dividends and the compounding effect of dividends paid, if any, on reinvested dividends.
27Executive Compensation Highlights
•In October 2021, the Compensation Committee set compensation levels and performance goals for fiscal 2022 based on a review of financial results, projections, individual contributions, strategic objectives, Market Data (as defined below), and market conditions.
◦The following pay mix, based on target amounts, was established for our CEO and other Named Executive Officers (on average) for fiscal 2022 (other than Mr. Murphy, who joined in April 2022):
◦Our Named Executive Officers are eligible to earn short-term incentive awards pursuant to our Executive Officer Performance Incentive Plan (“EIP”). The Compensation Committee selected performance goals for our Named Executive Officers based on their correlation to the creation of shareholder value and their alignment with our strategic objectives.
▪For fiscal 2022, the Compensation Committee established goals tied to profitability and the achievement of certain technology, product, business, and cost milestones, and goals focusing on key stakeholders. Please see “Fiscal 2022 Executive Compensation – Fiscal 2022 Short-Term Incentive Awards” for additional detail concerning these goals.
◦We used a mix of 50% time-based restricted stock and 50% performance-based restricted stock units for our fiscal 2022 long-term equity incentives.
◦The metrics for our performance-based restricted stock units include percentage of bits shipped as high value solutions and for a certain market segment and TSR relative to the semiconductor sector. In addition, the high-value solutions and market segment goals together have two stretch milestones relating to development of next-generation products. The relative TSR, high-value solutions, and market segment goals have a three-year measurement period.
28 | 2022 Proxy Statement
Components of our Executive Compensation Program
As illustrated in the table below, our executive compensation program is designed to focus on the longer-term and performance-based components of target total direct compensation.
| Compensation Component* | Characteristics | Purpose | Determining Factors | |||||||||||||||||||||||
| Base Salary | ||||||||||||||||||||||||||
 |  | – | Fixed Compensation | – | Compensates executives for performing day-to-day job responsibilities | – | Market Data median sets baseline | |||||||||||||||||||
– | Attracts, develops, and retains highly-qualified executive talent | – | Adjusted for executive’s contributions, experience, and performance | |||||||||||||||||||||||
– | Maintains stable management team | |||||||||||||||||||||||||
| Short Term Incentive Pay | ||||||||||||||||||||||||||
 |  | – | Variable, performance-based cash compensation | – | Provides performance-based, incentive cash awards for outstanding performance at the individual, business-unit, and/or company-wide level | – | Market Data median forms baseline | |||||||||||||||||||
– | Target payout is tied to a percentage of executive’s base salary | – | Encourages accountability by rewarding achievement of specific performance goals | – | Annual, pre-determined goals set by the Compensation Committee | |||||||||||||||||||||
– | Focuses executives on achievement of near-term financial and operational objectives | - Profitability targets - Achievement of certain technology, product, business, and cost aims - Other goals including customer, sustainability, and diversity, equality, and inclusion | ||||||||||||||||||||||||
– | Promotes long-term company success and drives shareholder value | |||||||||||||||||||||||||
| Long Term Incentive Pay | ||||||||||||||||||||||||||
| Performance RSUs | ||||||||||||||||||||||||||
 |  | – | Variable, performance-based equity compensation | – | Creates direct, specific alignment with shareholders’ interests by focusing executives on long-term value creation through the achievement of key operational milestones and stock price performance | – | Goals set by the Compensation Committee | |||||||||||||||||||
– | Three-year performance period | - Percentage of NAND bits shipped as high value solutions and for a certain market segment - TSR relative to the semiconductor sector - Additional earning opportunities for achievement of stretch goal milestones, subject to the aggregate 2x Limit described below | ||||||||||||||||||||||||
– | Earned at the end of the second and third year for the operational goals and each day beginning on the first day of the second year for the financial goal | |||||||||||||||||||||||||
– | 50% of total banked PRSU vests at end of second year, remaining and/or incremental vests at end of third year | |||||||||||||||||||||||||
| Time-Based RSAs | ||||||||||||||||||||||||||
 |  | – | Variable, performance-based equity compensation | – | Provides alignment with shareholders’ interests by focusing executives on long-term value creation | – | Value based on stock price | |||||||||||||||||||
– | Vests ratably over three years | – | Provides retention value | |||||||||||||||||||||||
| * The percentages shown for each of the compensation components in the table above are presented based on base salary, target annual STI award, and the annual LTI awards (at the target award values approved by the Compensation Committee) granted to our CEO (on the left) and averaged for all other Named Executive Officers, excluding our CEO (on the right). Percentages of total compensation may not total 100% due to rounding. | ||||||||||||||||||||||||||
29Consideration of the Fiscal 2021 Advisory Vote on Compensation of Named Executive Officers
At the Fiscal 2021 Annual Meeting of Shareholders on January 13, 2022, in our annual shareholder advisory vote on compensation of Named Executive Officers, 86% of the votes cast were voted in support of the compensation of our Named Executive Officers. The Compensation Committee appreciates and values the views of our shareholders. In considering the results of the fiscal 2021 advisory vote on compensation of Named Executive Officers, the Compensation Committee concluded that the compensation paid to our Named Executive Officers and our overall executive pay practices have shareholder support and have been effective in implementing our stated compensation philosophy and objectives. The Compensation Committee recognizes that executive pay practices and governance principles continue to evolve. Consequently, we discussed executive compensation and other matters with shareholders throughout fiscal 2022 and intend to continue our outreach to shareholders on executive compensation and other matters. The Compensation Committee also 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 Compensation Committee or the Board. Please refer to “Executive Sessions and Communications with the Board of Directors” on page 21 for information about communicating with the Board.
Oversight of the Executive Compensation Program
Each year, the Compensation Committee, advised by its independent compensation consultant, undertakes a rigorous process to review our executive compensation program and determine executive compensation in the context of our pay-for-performance philosophy. The Compensation Committee believes a substantial portion of our executive compensation should be incentive-based and focused on long-term performance to help ensure that the interests of our executive officers are aligned with those of our shareholders. Our primary long-term objective is to drive sustainable value creation for our shareholders by attracting, retaining, developing, and motivating a diverse group of top executive talent through a comprehensive and market-competitive executive compensation program. The Compensation Committee reviews and approves the goals and objectives used to determine executive compensation, evaluates performance in light of such goals and objectives, and determines and approves compensation levels based on that evaluation.
The Compensation Committee annually engages an external compensation consultant and meets with the compensation consultant at least quarterly. The Compensation Committee also works closely with our CEO with respect to the determination of compensation of other officers. A more complete description of the Compensation Committee’s responsibilities is provided in the Compensation Committee’s Charter approved by the Board, which can be found on our website, www.micron.com. A more complete description of the role of the Compensation Committee’s compensation consultant and our CEO in the compensation process is described later in this Compensation Discussion and Analysis. Additional information regarding the Compensation Committee’s compensation consultant, the specific activities it undertakes for us, and its fees can be found under “Compensation-Setting Process and the Determination of Compensation Levels” on page 33.
30 | 2022 Proxy Statement
| Our Compensation Principles | |||||||||||
| WHAT WE DO | WHAT WE DON’T DO | ||||||||||
ü Pay for performance by requiring that a substantial portion of our executive officers’ target total direct compensation be earned based on performance goals | û No special retirement benefits other than participation in our retirement plans on the same basis as other employees û No tax gross-ups for Change in Control pay û No repricing of options or stock appreciation rights without prior shareholder approval û No “single-trigger” vesting for equity awards upon Change in Control û No pledging or hedging activities involving our stock û No excessive perquisites | ||||||||||
ü Link our compensation program to our long-term corporate growth strategy and key drivers of sustainable shareholder value creation | |||||||||||
ü Use a mix of objective performance measures, cash- and equity-based components, and short- and long-term incentive opportunities that hold our executive officers accountable for executing on our long-term strategy | |||||||||||
ü Engage an independent compensation consultant to evaluate and advise the Compensation Committee on our executive compensation program design and pay decisions for our executive officers | |||||||||||
ü Cap maximum payout levels under our incentive plans | |||||||||||
ü Maintain a compensation recoupment (“clawback”) policy that provides for recoupment of incentive compensation paid to current and former executive officers in the event of an accounting restatement due to material noncompliance | |||||||||||
ü Maintain executive stock ownership guidelines | |||||||||||
Pay-for-Performance Philosophy
Our compensation philosophy for executive officers is based on the belief that the interests of our executives should be closely aligned with our long-term performance and sustainable value creation for our shareholders. To support this philosophy, a large portion of each executive officer’s target total direct compensation is “at risk” and linked to the accomplishment of specific financial and operational performance goals that we expect will lead to increased long-term value creation for our shareholders. The table below summarizes the key elements of the compensation that applied to our Named Executive Officers in fiscal 2022 relative to our pay-for-performance philosophy.
| Highlights of Our Pay-for-Performance Approach | |||||
| • | A substantial majority of the compensation available for executives is performance-based and delivered in the form of equity awards in order to more closely align management and shareholder interests. | ||||
| • | Market Data forms the basis of our compensation targets, with differentiation based on individual factors such as nature of the individual’s role, proficiency in the role, sustained performance over time, and importance to our leadership succession plans. | ||||
| • | Incentive awards require achievement of critical financial and operational goals and are primarily measured against objective metrics that we believe result in the creation of sustainable value for our shareholders. | ||||
| • | Actual, realized compensation is designed to fluctuate and be commensurate with changes in shareholder value over time. | ||||
| • | Performance-based equity awards, measured by internal and external metrics ultimately aimed at driving shareholder value, comprises a significant portion of our long-term incentive compensation opportunities. | ||||
| • | The Compensation Committee reviews our pay-for-performance compensation arrangements annually, with input from our CEO and advice from the Compensation Committee’s independent compensation consultant. | ||||
| • | Individual performance assessment is based on numerous factors, including among others: contribution to business results and company performance; completion of objectives; behavior consistent with the highest standard of integrity, ethics, and company values; and commitment to sustainability and DEI programs and initiatives. | ||||
31Targeting “Reasonable” and “Competitive” Pay
We believe that 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, enables us to attract, motivate, reward, and retain qualified individuals and to meet our overall objective of increasing shareholder value. 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. The Compensation Committee determines what would be “reasonable” and “competitive” compensation based upon an analysis of the Market Data, the recommendations of its compensation consultant, and our historical experience.
Reasonable
The Compensation Committee generally considers the Market Data median to be “reasonable,” but could also base individual executive compensation on additional 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;
•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 similarly situated officers within the Compensation Peer Group.
The semiconductor industry is highly volatile. Market Data, which is a compilation of data from many companies provided by the compensation consultant as further described below, may change dramatically from year to year and can evolve 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 compensation 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 and the factors noted above, even though the Compensation Committee generally uses the Market Data median as its starting point and guiding principle, officer compensation may vary, above or below the median, or a range from the median, year over year.
Competitive
The Compensation Committee believes, including based on advice from its compensation consultant, that a competitive compensation package will address 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 (time-based restricted stock and performance-based restricted stock units).
We do not require that a particular element comprises a set portion of the target total direct compensation mix. We do believe, however, that a significant portion of the compensation should be variable (such as performance-based incentives and incentives tied to the performance of the Company and its Common Stock) as compared to fixed (such as base salary), and that such variable compensation aligns executives’ interests with those of our
32 | 2022 Proxy Statement
shareholders. Additionally, although the Compensation Committee reviews total direct compensation (which is the sum of base salary, short-term incentive, and long-term incentive compensation) for each of our Named Executive Officers, it does not have a fixed objective with respect to such total direct compensation. The Compensation Committee’s philosophy is to use incentive pay opportunities rather than base salary as a way to ensure we are able to attract and retain top talent.
Compensation-Setting Process and the Determination of Compensation Levels
The Compensation 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 Compensation Committee reviews our financial results for the year just ended, projections for future periods, our strategic business plan, and the Market Data provided by its compensation consultant. The Compensation Committee also works with our CEO to establish performance goals that further our strategic objectives.
Engagement of Compensation Consultant
The Compensation Committee annually engages a compensation consultant to provide a comprehensive review of executive compensation matters and meets with the compensation consultant at least quarterly. This compensation consultant provided the Compensation Committee with information for our executive officers on cash and non-cash compensation elements and historical and trend payment data.
The Compensation Committee has established procedures intended to keep its compensation consultant’s advice objective and free of influence from our management. These procedures include: a direct reporting relationship to the Compensation Committee; a provision in the Compensation Committee’s engagement letter with the compensation consultant specifying what information, data, and recommendations can be shared with management; and an annual update to the Compensation Committee on the compensation consultant’s relationship with the Company, including a summary of the work performed during the preceding 12 months. For fiscal 2022, the specific activities undertaken by the compensation consultant for the Compensation Committee included:
•review the Compensation Peer Group (as defined in this Compensation Discussion and Analysis) and recommend any changes to its members;
•evaluate target total direct compensation and its components (base salary, target short-term incentives, and target long-term incentives) of our executive 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 compensation plans;
•review the proposed equity awards to be granted to our executive officers, along with vesting recommendations;
•assist with a risk assessment of our compensation policies and practices;
•review a draft of the Compensation Discussion and Analysis section of our definitive proxy statement; and
•attend the Compensation Committee meetings in which executive compensation matters are discussed.
Compensia, Inc. (“Compensia") was the Compensation Committee’s compensation consultant in fiscal 2022. We paid Compensia a total of $145,019 in fiscal 2022 for services provided. Compensia provided services related exclusively to the executive and non-employee director compensation consulting work performed for the Compensation Committee and for the Governance and Sustainability Committee.
The Compensation Committee considered Compensia’s independence in light of SEC rules and Nasdaq Listing Rules. The Compensation Committee received a letter from Compensia addressing its independence, including
33the following factors: (i) other services provided to us by them; (ii) fees paid by us as a percentage of their total annual revenue; (iii) policies or procedures maintained by them 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) whether the individual consultants involved in the engagement owned shares of our Common Stock; and (vi) any business or personal relationships between our executive officers and them or the individual consultants involved in the engagement. The Compensation Committee concluded that there were no conflicts of interest with Compensia.
“Market Data” Defined
Each year, our Compensation Committee, with assistance from the management team (including our CEO) and Compensia, identifies a group of peer companies to use as comparators when setting target pay levels (our “Compensation Peer Group”). With input and advice from its compensation consultant, the Compensation Committee reviews our Compensation Peer Group annually to ensure that it reflects industry or economic changes, such as changes in business strategies, operations, product lines, revenues, or availability of key talent. Historically, the Compensation Committee’s peer selection process focused primarily on the semiconductor industry and revenue size.
Our Compensation Peer Group for fiscal 2022 was comprised of the following 16 companies, which we believe are companies with which we are likely to compete for executive talent. In consultation with Compensia, the Compensation Committee did not make any changes to the Compensation Peer Group for fiscal 2022.
| Adobe Inc. | Advanced Micro Devices, Inc. | ||||
| Applied Materials, Inc. | Broadcom Inc. | ||||
| Cisco Systems, Inc. | Hewlett Packard Enterprise Company | ||||
| IBM | Intel Corporation | ||||
| Lam Research Corporation | NVIDIA Corporation | ||||
| QUALCOMM Corporation | Salesforce.com, Inc. | ||||
| Seagate Technology | Texas Instruments Incorporated | ||||
| VMware, Inc. | Western Digital Corporation | ||||
Compensation Peer Group Data
Compensia gathers data from the proxy statements publicly filed by our Compensation Peer Group and from published compensation surveys. The relevant survey and Compensation Peer Group data for fiscal 2022, each as discussed below, were weighted equally by the Compensation Committee and are collectively referred to throughout this Compensation Discussion and Analysis as the “Market Data.”
When collecting and assessing market compensation data, we collect data based on job descriptions first. This permits the Compensation Committee to match positions held by our executives with those of our Compensation Peer Group and, as described more fully below, deviate from the Market Data based on the factors described earlier. If the Compensation Committee is not able to match positions to a reasonable number of companies within the Compensation Peer Group, it looks to the rank of the person involved and matches ranks, e.g., our third-highest paid executive officer could be compared to the third-highest paid executive officer at each company within the Compensation Peer Group.
Compensation Survey Data
Compensation survey data may vary from year to year. For fiscal 2022, the compensation consultant used the Radford Global Technology Survey and information obtained from public filings by the Compensation Peer Group. We believe this survey is particularly relevant for technology companies given the high level of participation by such companies in the survey.
34 | 2022 Proxy Statement
Compensation-Setting Process
Compensia 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, then 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 Compensation Committee. The CEO works with Compensia 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. For all Named Executive Officers other than himself, 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. He makes no recommendations as to his own level of compensation. The Compensation Committee reviews the Market Data, discusses the Market Data with the CEO and with Compensia, discusses individual executive 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 Compensation 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 Compensation Committee believes it would be appropriate to deviate from the Market Data and competitive practices. Following these deliberations, the Compensation 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 fiscal year.
35Fiscal 2022 Executive Compensation
Fiscal 2022 Base Salaries
The Compensation Committee decided to increase the base salary for fiscal 2022 for Mr. Mehrotra to reflect our performance at that time and to achieve retention objectives and for each of our other Named Executive Officers to be more competitive with the base salaries offered to similarly-situated executives in the competitive market, as reflected by our Compensation Peer Group and the relevant survey data.
| Executive Officer | Fiscal 2022 Base Salary | Base Salary % Change From Fiscal 2021 | ||||||
| Sanjay Mehrotra | $ | 1,418,000 | 5.0 | % | ||||
| Mark J. Murphy(1) | 700,000 | N/A | ||||||
| Manish Bhatia | 729,750 | 5.0 | % | |||||
| Michael W. Bokan | 551,200 | 6.0 | % | |||||
| Scott J. DeBoer | 624,750 | 5.0 | % | |||||
| Sumit Sadana | 782,250 | 5.0 | % | |||||
| David A. Zinsner(1) | 714,960 | 8.0 | % | |||||
(1)Mr. Murphy was appointed as our Executive Vice President and Chief Financial Officer, effective as of April 18, 2022, and Mr. Zinsner resigned as our Executive Vice President and Chief Financial Officer, effective as of January 10, 2022.
Fiscal 2022 Short-Term Incentive Awards
We provided annual short-term incentive cash awards to our executive officers pursuant to the EIP. The EIP was last approved by our shareholders in January 2018. 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 and/or Company-wide level. In fiscal 2022, the Compensation Committee set the short-term incentive compensation “opportunity” (“Target Award”) for each Named Executive Officer in terms of a specified percentage of such officer’s base salary.
The Target Awards payable under the EIP for achievement of the fiscal 2022 goals are shown in the columns “Estimated Future Payouts under Non-Equity Incentive Plan Awards” of the “Grants of Plan-Based Awards in Fiscal 2022” table. All goals were established with threshold (50%), target (100%), exceptional (150%), and maximum (200%) payout levels, with intermediate payout levels for certain goals. All payout levels require significant execution and effort, and there is no assurance of goal achievement.
Target Awards established for fiscal 2022 for our Named Executive Officers, as a percentage of base salary, were measured against the Market Data median, as part of the Compensation Committee’s efforts to make such opportunities “Reasonable” as described above. Though the Market Data median is instructive, the Compensation Committee also considers the other factors described under the section entitled “Reasonable” above when determining Target Awards for our Named Executive Officers.
36 | 2022 Proxy Statement
For fiscal 2022, the following Target Awards were established, which represented an increase from fiscal 2021 for Messrs. Mehrotra, Bhatia, Sadana, and Zinsner:
| Executive Officer | % of Base Salary | ||||
| Sanjay Mehrotra | 215 | % | |||
| Mark J. Murphy(1) | 110 | % | |||
| Manish Bhatia | 110 | % | |||
| Michael W. Bokan | 90 | % | |||
| Scott J. DeBoer | 100 | % | |||
| Sumit Sadana | 120 | % | |||
| David A. Zinsner(1) | 110 | % | |||
(1)Mr. Murphy was appointed as our Executive Vice President and Chief Financial Officer, effective as of April 18, 2022, and Mr. Zinsner resigned as our Executive Vice President and Chief Financial Officer, effective as of January 10, 2022.
The Compensation Committee established a profitability goal and five operational metrics for evaluating performance in fiscal 2022, which includes performance on ESG issues including labor practices, greenhouse gas (“GHG”) emissions, and water and waste management:
•profitability (50% weighting);
•achievement of certain product milestones including sales of certain NAND and DRAM products as a percentage of total sales, growth of certain channel sales, and revenue from emerging technologies (10% weighting);
•execution to, and acceleration of, our technology roadmap objective criteria/milestones related to NAND and DRAM, with an additional stretch goal for exceptional performance (10% weighting, plus potential stretch goal);
•continued increases in our cost competitiveness (10% weighting);
•achievement of certain delivery, customer satisfaction, and customer quality metrics (10% weighting); and
•achievement of certain milestones focusing on ESG issues (10% weighting), including:
◦environmental sustainability (reduce GHG emissions; increase water reuse and recycling; and reduce waste to landfill); and
◦DEI (increase underrepresented groups at the new hire and senior leader levels; maintaining pay equity; increase retention of underrepresented groups; and increase supplier diversity).
The Compensation Committee chose these metrics and their linkage to our business and results of operations because they believe:
•performance against these metrics enhances shareholder value and rewards operational excellence that positions the Company for better long-term performance;
•a focus on sustainability benefits our team members, communities, and other stakeholders;
•a balanced weighting limits the likelihood of rewarding executives for taking excessive risk;
•including a profitability target encourages the pursuit of profitable revenue and strong margins; and
•using different measures avoids paying for the same performance twice.
Shortly after the fiscal year concluded, the Compensation Committee reviewed and determined the Company’s performance against these corporate metrics, applied the percentage of achievement to plan and weighted the results according to the weightings established at the beginning of the year. After applying this formula, the Compensation Committee considered each Named Executive Officer’s performance over fiscal 2022 and established a final EIP payout for fiscal 2022.
37Our Named Executive Officers received EIP bonuses in the following amounts for fiscal 2022:
| Executive Officer | Bonus Paid | ||||
| Sanjay Mehrotra | $ | 3,435,275 | |||
| Mark J. Murphy(1) | 326,555 | ||||
| Manish Bhatia | 904,511 | ||||
| Michael W. Bokan | 558,983 | ||||
| Scott J. DeBoer | 703,968 | ||||
| Sumit Sadana | 1,057,727 | ||||
| David A. Zinsner(2) | N/A | ||||
(1)The bonus for Mr. Murphy was prorated to reflect his length of service in fiscal 2022.
(2)Mr. Zinsner did not receive a bonus due to his resignation from the Company effective as of January 10, 2022.
Fiscal 2022 Long-Term Equity Incentives
We believe long-term incentive compensation should be tied to our success and promote increases in shareholder value. Accordingly, performance-based restricted stock unit awards are a significant component of our executive compensation program. We believe these awards are especially aligned with shareholders’ interests as their value is dependent upon the achievement of key operational milestones or stock price performance. To help retain executives, we also grant time-based restricted stock awards. The Compensation Committee reviews peer data related to the mix and types of long-term incentive compensation awards and works with its independent compensation consultant to determine the allocation and type of performance- and time-based awards to grant each fiscal year.
In fiscal 2022, the Compensation Committee set the long-term incentive mix at 50% performance-based restricted stock units (“PRSUs”) and 50% time-based restricted stock awards. The Compensation Committee believes that a high percentage of PRSUs emphasizes Micron’s strong “pay-for-performance” philosophy underlying our executive compensation program.
In determining the amount of the long-term equity incentive awards for our Named Executive Officers, the Compensation Committee reviewed Market Data and information provided by Mr. Mehrotra related to the other officers’ performance and his recommendation as to the amount of their awards. Though the Market Data is instructive, the Compensation Committee also considered the other factors described under the section entitled “Reasonable” above when determining long-term equity incentive awards for our Named Executive Officers. For information on Mr. Mehrotra’s long-term equity incentive award, please see the discussion below on CEO compensation.
The following table shows the value of our Named Executive Officers’ fiscal 2022 long-term equity incentive awards:
| Named Executive Officer | Fiscal 2022 Long-Term Equity Incentives(1) | ||||
| Sanjay Mehrotra | $ | 23,500,000 | |||
| Mark J. Murphy(2) | 2,632,000 | ||||
| Manish Bhatia | 8,000,000 | ||||
| Michael W. Bokan | 4,500,000 | ||||
| Scott J. DeBoer | 6,250,000 | ||||
| Sumit Sadana | 8,250,000 | ||||
| David A. Zinsner(3) | 7,000,000 | ||||
(1)Reflects target grant-date fair value.
38 | 2022 Proxy Statement
(2)Mr. Murphy’s target long-term equity incentive for fiscal 2022 was $7,000,000, which was prorated to reflect his length of service in fiscal 2022. Mr. Murphy also received a new hire award with a grant-date fair value of $9,999,999 in connection with his appointment as Executive Vice President and Chief Financial Officer effective as of April 18, 2022.
(3)Mr. Zinsner’s award was forfeited due to his resignation from the Company effective as of January 10, 2022.
We have not, and do not plan to time the grant of long-term incentive awards (or the award or 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 approval of the Compensation Committee. The Compensation Committee generally approves long-term incentive awards granted to the Named Executive Officers on the same day as the grants to other executive officers. For purposes of our equity plans, fair market value is defined as the closing price of our Common Stock as quoted on Nasdaq for the last market-trading day prior to the date of grant.
Performance-based RSUs Granted in Fiscal 2022
PRSUs support the Compensation Committee’s desire to link realized value to the Company’s long-term success and help align executive compensation with shareholder interests. For fiscal 2022, the Compensation Committee awarded PRSUs subject to performance metrics that measure the percentage of NAND bits shipped as part of certain high-value solutions (the “2022 High-Value Solutions PRSU Award”), the percentage of NAND bits shipped for a certain market segment (the “2022 Market Segment PRSU Award” and, together with the 2022 High-Value Solutions PRSU Award, the “2022 NAND PRSU Awards”), and relative TSR growth (the “2022 TSR PRSU Award”). The achievement of the pre-determined goals for these awards requires a significant level of execution and effort and there is no assurance of goal achievement.
PRSU awards are eligible to be earned (or “banked”) during the second and third years of the three-year period covering fiscal 2022, 2023, and 2024 (the “Performance Period”) based upon results against performance metrics set at the beginning of the Performance Period. The actual number of PRSUs that will be banked and become eligible to vest under the 2022 High-Value Solutions PRSU Awards, the 2022 Market Segment PRSU Awards, and the 2022 TSR PRSU Awards (together the “2022 PRSU Awards”) is determined by reference to each Named Executive Officer’s target number of PRSUs and the payout factor that results from actual performance versus pre-established performance metrics (the “Payout Factor”), and is subject to the caps discussed below.
The number of PRSUs that each Named Executive Officer may earn under all 2022 PRSU Awards (taken together) during the Performance Period will not exceed two times the aggregate target number of PRSUs covered by all of a Named Executive Officers’ 2022 PRSU Awards (the “2x Limit”). As a result, our Named Executive Officers’ ability to earn and vest in any PRSUs is capped at the 2x Limit. Additionally, the maximum award of PRSUs may not exceed 5,000,000 shares of our Common Stock in any one calendar year to any one participant, as provided in the applicable equity incentive plan.
2022 NAND PRSU Awards
The 2022 NAND PRSU Awards are comprised of the 2022 High-Value Solutions PRSU Awards and the 2022 Market Segment PRSU Awards. The 2022 High-Value Solutions PRSU Awards tie 25% of each Named Executive Officer’s target performance-based long-term incentive compensation opportunity to the achievement of certain percentages of NAND bits shipped as part of certain high-value solutions. The 2022 Market Segment PRSU Awards tie 25% of each Named Executive Officer’s target performance-based long-term incentive compensation opportunity to the achievement of certain percentages of NAND bits shipped for a certain market segment. The 2022 NAND PRSU Awards also have two additional earnings opportunities for stretch goals based on product development milestones.
Performance is measured by exceeding a threshold, then meeting certain prescribed targets, subject to a maximum payout. The maximum payout for achieving such targets is 200% of the target number of PRSUs under each award, subject to any increases for achieving the stretch milestones described below but capped by the 2x Limit described further above. 2022 NAND PRSU Awards do not bank unless performance meets or exceeds the
39established thresholds. When performance results in achievement above the threshold and between performance levels, the applicable Payout Factor will be determined based on interpolation between performance levels.
In addition, the 2022 Payout Factors with respect to the 2022 NAND PRSU Awards may be increased upon achievement of two stretch milestones relating to development of next-generation products that the Compensation Committee believes represent significant progress that will enhance long-term shareholder value.
Determination of Payout
Achievement levels with respect to the Payout Factor applicable to the 2022 NAND PRSU Awards are measured at the end of the second and third fiscal years of the Performance Period. No later than 60 days after the end of the second and third fiscal years in the Performance Period (each, a “Certification Date”), the Compensation Committee determines and certifies the resulting Payout Factors for the applicable fiscal year as set forth above. PRSUs that have achieved the requisite performance become banked.
Vesting
PRSUs do not vest under the 2022 NAND PRSU Awards until the Certification Date that immediately follows the end of fiscal 2023, when 50% of the then-unvested banked PRSUs (for the avoidance of doubt, inclusive of any PRSUs becoming banked PRSUs as of such Certification Date) will vest. Remaining banked PRSUs and/or incremental PRSUs that become banked PRSUs will vest as of the Certification Date that immediately follows the end of fiscal 2024. If a Named Executive Officer terminates employment with the Company for any reason other than a termination by the Company for cause, any banked shares will continue to vest on the vesting schedule described above. No further PRSUs under the 2022 NAND PRSU Awards will vest following a Named Executive Officer’s termination for cause. For purposes of the 2022 NAND PRSU Awards, “cause” is as defined in the agreement between a Named Executive Officer and the Company governing the terms of such Named Executive Officer’s employment or termination thereof, or if not so defined, as defined in the equity incentive plan under which the award was granted.
2022 TSR PRSU Awards
The 2022 TSR PRSU Awards tie 50% of each Named Executive Officer’s target performance-based long-term incentive compensation opportunity to the Company’s share price growth as compared to the median TSR of the companies in the PHLX Semiconductor Sector Index (SOX) over the three-year Performance Period. For fiscal 2022, the Compensation Committee set the target goal at the median of the SOX index, which is composed of companies primarily involved in the design, distribution, manufacture, and sale of semiconductors, calculated based on the difference between the Company’s and the median SOX index company’s 60-day average three-year TSR compounded annual growth rate performance.
Payout Factor
The Payout Factor for the 2022 TSR PRSU Awards is based on the average of the Company’s three-year TSR for each of the 60 days trailing the applicable measurement date (inclusive of the measurement date), expressed as a compounded annual growth rate (the “TSR CAGR”), relative to the TSR CAGR of the median company in the PHLX Semiconductor Sector Index (SOX) (the “Median SOX Company”). The relative TSR (“rTSR”) CAGRs of the Company versus the Median SOX Company (the “rTSR CAGR”) will be measured on each day starting on the first day of fiscal 2023 through the last day of the Performance Period (each, a “measurement date”).
40 | 2022 Proxy Statement
The following table sets forth the levels of rTSR CAGR required to be achieved under a 2022 TSR PRSU Award to result in the Payout Factors specified below:
rTSR CAGR Achieved on a Measurement Date | Payout Factor for the rTSR CAGR | ||||
| Less than -50 percentage points (“pp”) | 0.0x | ||||
| -50pp (“rTSR Threshold”) | 0.5x | ||||
| 0pp (“rTSR Target”) | 1.0x | ||||
| +25pp (“rTSR Maximum”) | 1.5x | ||||
| Greater than +25pp | 1.5x | ||||
If the rTSR CAGR achieved is between the rTSR Threshold and rTSR Target levels or the rTSR Target and rTSR Maximum levels, the Payout Factor will be determined using interpolation between the applicable levels.
Cap on PRSU Earning and Vesting
The maximum number of PRSUs that may vest is equal to 150% of the target number of PRSUs granted under the 2022 TSR PRSU Award (subject to the total 2x Limit cap discussed under “Performance-based RSUs Granted in Fiscal 2022” above).
Determination of Payout
As of any measurement date, the number of PRSUs under a 2022 TSR PRSU Award that are considered banked through such date will equal the product of the Payout Factor determined based on the greatest rTSR CAGR achieved during the Performance Period through such date, and the target number of PRSUs subject to the 2022 TSR PRSU Award. Accordingly, once PRSUs under a 2022 TSR PRSU Award become banked on a measurement date (due to achievement of a particular rTSR CAGR level), additional PRSUs can become banked only if a greater rTSR CAGR level is achieved on a later measurement date. Such additional PRSUs banked, if any, will be equal to the excess of the Payout Factor determined using the new, greater rTSR CAGR achieved, over the Payout Factor determined using the next greatest rTSR CAGR previously achieved, multiplied by the target PRSUs subject to the 2022 TSR PRSU Award. Following completion of each of fiscal 2023 and 2024, the Compensation Committee will certify the extent of achievement of the Payout Factors as set forth above during fiscal 2023 and 2024, respectively (an “rTSR Certification”).
Vesting
On the date of the first rTSR Certification (following fiscal 2023), 50% of any PRSUs that have been certified as banked through the date of such rTSR Certification will vest. On the date of the second rTSR Certification (following fiscal 2024), the remaining 50% of PRSUs that were certified as banked upon the first rTSR Certification, and 100% of any additional PRSUs that are certified as banked for achievement of a greater Payout Factor during the remainder of the Performance Period after the first rTSR Certification, will vest. If a Named Executive Officer terminates employment with the Company for any reason other than a termination by the Company for cause, any banked shares also will continue to vest on the vesting schedule described above. No further PRSUs under the 2022 TSR PRSU Award will vest following a Named Executive Officer’s termination for cause. For purposes of the 2022 TSR PRSU Award, cause is as defined in the agreement between a Named Executive Officer and the Company governing the terms of such Named Executive Officer’s employment or termination thereof, or if not so defined, as defined in the equity incentive plan under which the award was granted.
Fiscal 2022 PRSUs Achievement
The measurement periods for the 2022 NAND PRSU Awards and the 2022 TSR PRSU Award do not begin until fiscal 2023. Accordingly, no shares were banked during fiscal 2022 under the 2022 PRSU Awards.
41Fiscal 2021 PRSUs Achievement
For fiscal 2021, the Compensation Committee awarded PRSUs under performance metrics that measure relative TSR growth (the “2021 TSR PRSU Award”) and the percentage of bits shipped as part of certain high value solutions (the “2021 High-Value Solutions PRSU Award” and, together with the 2021 TSR PRSU Award, the “2021 PRSU Awards”), with the 2021 TSR PRSU Award and the 2021 High-Value Solutions PRSU Award each representing 50% of the total target PRSU opportunity for each Named Executive Officer. Mr. Murphy joined the Company in April 2022 and, as a result, did not receive any 2021 PRSU Awards. In October 2022, the Compensation Committee reviewed the Company’s performance relative to the 2021 PRSU Award metrics, applied the applicable 2021 Payout Factors, and certified that the following shares had been banked by our Named Executive Officers (other than Mr. Murphy) under the 2021 PRSU Awards:
Total Shares Banked for Fiscal 2022 Performance under 2021 TSR PRSU Award | |||||
| 2021 TSR PRSU Award | 164,674 | ||||
| Named Executive Officer | Shares Banked for Fiscal 2022 Performance under 2021 TSR PRSU Award | Shares Vested under 2021 TSR PRSU Award | ||||||
| Sanjay Mehrotra | 69,221 | 34,610 | ||||||
| Manish Bhatia | 22,450 | 11,225 | ||||||
| Michael W. Bokan | 13,096 | 6,548 | ||||||
| Scott J. DeBoer | 18,708 | 9,354 | ||||||
| Sumit Sadana | 24,321 | 12,160 | ||||||
| David A. Zinsner(1) | 16,878 | 8,439 | ||||||
(1)Mr. Zinsner’s banked shares under the 2021 TSR PRSU Award for fiscal 2022 performance prior to his resignation from the Company effective as of January 10, 2022.
Total Shares Banked for Fiscal 2022 Performance under 2021 High-Value Solutions Award | |||||
| 2021 High-Value Solutions Award | 380,244 | ||||
| Named Executive Officer | Shares Banked for Fiscal 2022 Performance under 2021 High-Value Solutions PRSU Award | Shares Vested under 2021 High-Value Solutions PRSU Award | ||||||
| Sanjay Mehrotra | 178,090 | 89,045 | ||||||
| Manish Bhatia | 57,758 | 28,879 | ||||||
| Michael W. Bokan | 33,692 | 16,846 | ||||||
| Scott J. DeBoer | 48,132 | 24,066 | ||||||
| Sumit Sadana | 62,572 | 31,286 | ||||||
| David A. Zinsner(1) | N/A | N/A | ||||||
(1)Mr. Zinsner’s award was forfeited due to his resignation from the Company effective as of January 10, 2022.
42 | 2022 Proxy Statement
Fiscal 2020 PRSUs Achievement
For fiscal 2020, the Compensation Committee awarded PRSUs under performance metrics that measure relative TSR growth (the “2020 TSR PRSU Award”) and the percentage of bits shipped as part of certain high value solutions (the “2020 High-Value Solutions PRSU Award” and, together with the 2020 TSR PRSU Award, the “2020 PRSU Awards”), with the 2020 TSR PRSU Award and the 2020 High-Value Solutions PRSU Award each representing 50% of the total target PRSU opportunity for each Named Executive Officer. Mr. Murphy joined the Company in April 2022 and, as a result, did not receive any 2020 PRSU Awards. In October 2022, the Compensation Committee reviewed the Company’s performance relative to the 2020 PRSU Award metrics, applied the applicable 2020 Payout Factors, and certified that the following shares had been banked by our Named Executive Officers (other than Mr. Murphy) under the 2020 PRSU Awards:
Total Shares Banked for Fiscal 2022 Performance under 2020 TSR PRSU Award | |||||
| 2020 TSR PRSU Award | — | ||||
| Named Executive Officer | Shares Banked for Fiscal 2022 Performance under 2020 TSR PRSU Award | Shares Vested under 2020 TSR PRSU Award | ||||||
| Sanjay Mehrotra | — | 3,742 | ||||||
| Manish Bhatia | — | 1,247 | ||||||
| Michael W. Bokan | — | 499 | ||||||
| Scott J. DeBoer | — | 936 | ||||||
| Sumit Sadana | — | 1,373 | ||||||
| David A. Zinsner | — | 998 | ||||||
Total Shares Banked for Fiscal 2022 Performance under 2020 High-Value Solutions Award | |||||
| 2020 High-Value Solutions Award | — | ||||
| Named Executive Officer | Shares Banked for Fiscal 2022 Performance under 2020 High-Value Solutions PRSU Award | Shares Vested under 2020 High-Value Solutions PRSU Award | ||||||
| Sanjay Mehrotra | — | 141,252 | ||||||
| Manish Bhatia | — | 47,084 | ||||||
| Michael W. Bokan | — | 18,834 | ||||||
| Scott J. DeBoer | — | 35,314 | ||||||
| Sumit Sadana | — | 51,792 | ||||||
| David A. Zinsner | — | 37,667 | ||||||
43Time-Based RSAs
Time-based restricted stock awards (“RSAs”) support retention and are linked to shareholder value and ownership. Annual RSAs granted in fiscal 2022 vest ratably over three years from the date of grant, subject to continued employment. In fiscal 2022, RSAs comprised 50% of the target value of the long-term incentive awards granted.
Other Fiscal 2022 Employee Benefits
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. Executive perquisites are not considered to be material elements of compensation.
CEO Compensation
The Compensation Committee considered peer compensation data presented to it in October 2021 and Market Data in setting Mr. Mehrotra’s target total direct compensation (i.e., the sum of base salary, target short-term incentive compensation, and target long-term incentive compensation) for fiscal 2022.
Mr. Mehrotra’s compensation is comprised of the following elements:
Base Salary
Mr. Mehrotra’s annual base salary for fiscal 2022 was $1,418,000.
Short-Term Incentive
Mr. Mehrotra’s short-term incentive target was 215% of his base salary for fiscal 2022.
Long-Term Equity Incentive
Mr. Mehrotra’s long-term equity incentive compensation opportunity for fiscal 2022 was $23,500,000. Mr. Mehrotra’s equity awards were comprised of 50% time-based restricted stock and 50% performance-based restricted stock units.
The following table sets forth the elements and amounts of Mr. Mehrotra’s long-term incentive awards:
| Fiscal 2022 Awards | Number of Shares / Units(1) | Grant Date Fair Value(1) | ||||||
| Time-based Restricted Stock | 176,109 | $ | 11,749,992 | |||||
| Performance-based Restricted Stock Units | 162,000 | 11,749,973 | ||||||
| 338,109 | $ | 23,499,965 | ||||||
(1)Information related to Mr. Mehrotra’s long-term incentive award is also included in the “Grants of Plan-Based Awards in Fiscal 2022” table. The time-based share amounts are listed in the column “All Other 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.” The values included in those tables reflect the grant-date fair value under U.S. GAAP.
Other Compensation
The Compensation Committee agreed to reimburse Mr. Mehrotra for commuting expenses, and federal, state, and other income taxes resulting from imputed income related to his commuting expenses.
44 | 2022 Proxy Statement
In addition, we also pay for personal security arrangements for Mr. Mehrotra. We do not consider personal security measures to be a personal benefit to Mr. Mehrotra, but instead appropriate expenses for the benefit of the Company that arise out of his employment responsibilities and that are necessary to his job performance and to ensure the safety of Mr. Mehrotra and his family. In determining to authorize these security arrangements, the Compensation Committee evaluated the need to respond to specific incidents and threats, and reviewed recommendations from a leading security firm. In addition, the Compensation Committee has established a policy to review personal security costs quarterly. The Security Committee also has an annual process for oversight of the nature of security measures and will discontinue, adjust, or enhance security as appropriate.
In the interests of safety, security, and efficiency and in light of the global COVID-19 pandemic and resurgence in many locations, the Compensation Committee has authorized Mr. Mehrotra to use the Company's aircraft for personal travel. The Compensation Committee also has established a policy to review costs for use of Company aircraft for personal travel on a quarterly basis. Mr. Mehrotra reimbursed the Company for the cost per flight hour of the aircraft in respect of all of his usage of the Company’s aircraft for personal travel during fiscal 2022.
See footnote 7 to the Fiscal 2022 Summary Compensation Table for additional information.
Severance and Change in Control Arrangements
Severance Agreements
President and Chief Executive Officer
At the time of his hire, we entered into an executive agreement with Mr. Mehrotra (the “Executive Agreement”) providing for severance benefits in certain circumstances. The Executive Agreement provides that if Mr. Mehrotra’s employment is terminated (i) as result of his death or “disability,” (ii) by us without “cause” or (iii) as a result of Mr. Mehrotra’s resignation for “good reason,” then in addition to receiving his accrued base salary, accrued vacation pay, and other earned and vested employee benefits, Mr. Mehrotra will receive the following severance benefits:
•salary continuation equal to two times Mr. Mehrotra’s salary in effect upon the date of termination paid in installments during the one-year period following termination (or paid in a lump sum if Mr. Mehrotra’s termination of employment occurs on, or within 12 months after, a “Change in Control”);
•a pro-rated annual bonus under the EIP for the year of termination, subject to achievement of applicable performance criteria, paid in accordance with the terms of the EIP;
•an additional bonus of two times Mr. Mehrotra’s target annual bonus under the EIP for the year of termination paid on the one-year anniversary of Mr. Mehrotra’s termination;
•continued vesting (and exercisability) of any options, restricted stock or other time-based, and, subject to achievement of applicable performance criteria, performance-based equity awards for the one-year period following Mr. Mehrotra’s termination of employment; and
•a cash payment equal to the medical benefits and employer qualified plan matching contributions Mr. Mehrotra would have received had Mr. Mehrotra remained employed for an additional two years, paid in a lump sum following termination.
If Mr. Mehrotra’s severance benefits become payable on account of his “good reason” resignation prior to a “Change in Control” and Mr. Mehrotra becomes employed within one year of his termination of employment, the unpaid portion of his salary continuation benefit will be forfeited. The Executive Agreement also includes a “cut-back” provision, which provides that Mr. Mehrotra’s benefits under the Executive Agreement will be reduced so that no excise tax will apply under Section 280G of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), if such reduction will result in a higher net after-tax benefit to Mr. Mehrotra. The Executive Agreement does not provide a tax gross-up for any such tax. Mr. Mehrotra’s entitlement to the benefits provided under the Executive Agreement are conditioned on Mr. Mehrotra signing a release of claims in favor of Micron and on Mr. Mehrotra’s compliance with terms of our non-competition, non-solicitation, and non-disclosure agreement.
45Other Named Executive Officers
Each of our other Named Executive Officers have severance agreements (together, the “NEO Severance Agreements”). The NEO Severance Agreements provide for severance benefits upon certain terminations of employment. These benefits begin 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 one year (or 18 months if termination occurs within 12 months of a Change in Control). We believe severance agreements for certain of our officers are in the best interests of us and our shareholders, in that they 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.
Provided a Named Executive Officer complies with post-employment obligations and restrictions described below and all other terms of the NEO Severance Agreement, the Named Executive Officer is entitled to receive compensation during the 12- or 18-month period following termination of employment equivalent to the compensation and benefits customarily provided to such Named Executive Officer while employed including, but not limited to, salary, executive bonus, and in certain cases, continued vesting of outstanding stock options and restricted equity awards. With respect to cash and equity awards that are performance-based, the Named Executive Officer is entitled to receive such awards only if the goals are achieved before or during the 12- or 18-month period following termination of employment. Terminated Named Executive 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 12- or 18-month period following termination of employment due to payment criteria of an incentive program, as those criteria exist as of the date of termination. Notwithstanding the discussion above, the NEO Severance Agreements for Messrs. DeBoer and Bokan do not provide for enhanced benefits upon separation in connection with a Change in Control and provide for immediate vesting of their outstanding equity awards at the time of termination of their employment, subject to proration for time-based and performance-based awards, with no credit for service beyond the time of termination of employment. Mr. Murphy’s NEO Severance Agreement also provides that in connection with certain terminations of employment any unvested shares granted as part of his new hire equity award will continue to vest at the same time and in the same amounts as if he had remained an employee through the applicable vesting date.
Terminated Named Executive Officers are subject to the following post-termination obligations and restrictions:
•a one-year non-competition obligation;
•confidentiality obligations related to our proprietary and confidential information that last indefinitely;
•a non-disparagement and confidentiality obligation surrounding the reasons for, and circumstances of, the Named Executive 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 NEO Severance Agreement, we and the Named Executive 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 12- or 18-month period following termination of employment.
46 | 2022 Proxy Statement
Estimated Severance Payments
See “Potential Payments Upon Termination or Change in Control” on page 58 for a description of the estimated severance amounts as of the end of fiscal 2022 for Messrs. Mehrotra, Murphy, Bhatia, Bokan, DeBoer, and Sadana. Mr. Zinsner resigned from the Company effective as of January 10, 2022 and did not receive any payments or other benefits under his NEO Severance Agreement.
Change in Control Arrangements
We do not have separate Change in Control agreements for our Named Executive Officers and directors. The Executive Agreement and the NEO 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. Our equity plans provide for “double-trigger” vesting provisions in the event of a Change in Control. As a result, if awards are assumed by a successor in connection with a Change in Control, such awards will not automatically vest and pay out solely as a result of the Change in Control. Instead, such awards will only vest if within one year after the effective date of the Change in Control, the participant’s employment is terminated without cause or, in the case of certain participants including our Named Executive Officers, if the participant resigns for good reason. In the case of Messrs. DeBoer and Bokan, their NEO Severance Agreements provide for immediate vesting of their unvested equity awards upon termination of employment, subject to proration as described above. The compensation that Named Executive Officers could receive if a Change in Control occurs is intended to enable them to objectively evaluate whether a potential Change in Control is in the best interest of us and our shareholders. The estimated value that the Named Executive Officers could receive from our Change in Control provisions can be found in “Potential Payments Upon Termination or Change in Control” on page 58.
Consideration of Tax Consequences when Making Compensation Decisions
Code Section 162(m) generally disallows a tax deduction to public companies such as Micron for annual compensation over $1,000,000 per person paid to our Named Executive Officers and certain other current or former executive officers. Although the Compensation Committee considers the deductibility of compensation under Section 162(m), 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.
Stock Ownership Guidelines
We have established stock ownership guidelines for our executive officers. The Compensation Committee believes that our executive officers will more effectively manage the Company in the best interests of the shareholders if they are also shareholders. The minimum ownership guideline for our CEO is to hold shares with a value equal to five times his base salary. Messrs. Murphy, Bhatia, Bokan, DeBoer, and Sadana are required to hold shares with a value equal to three times their base salary. Executive officers are given five years to meet the ownership guidelines. The Governance and Sustainability Committee reviews the stock ownership guidelines annually and monitors each covered executive’s progress toward, and continued compliance with, the guidelines. Stock sales restrictions may be imposed upon executive officers if the stock ownership guidelines are not met. All our executive officers are in compliance with the guidelines.
47The following table shows compliance with the guidelines as of the Record Date:
| Executive Officer | Guideline Multiplier | Guideline Amount(1) | Compliance with Guideline | ||||||||
| Sanjay Mehrotra | 5 | $ | 7,090,000 | Yes | |||||||
| Mark J. Murphy | 3 | 2,100,000 | Yes | ||||||||
| Manish Bhatia | 3 | 2,189,250 | Yes | ||||||||
| Michael W. Bokan | 3 | 1,653,600 | Yes | ||||||||
| Scott J. DeBoer | 3 | 1,874,250 | Yes | ||||||||
| Sumit Sadana | 3 | 2,346,750 | Yes | ||||||||
(1)Based on base salary amounts as of the Record Date.
Please see page 23 for information on stock ownership guidelines for our directors.
Compensation Recoupment (Clawback) Policy
We have established a compensation recoupment (clawback) policy. In the event that the Company is required to prepare an accounting restatement due to its material noncompliance with any financial reporting requirement under U.S. securities law, the Company will, to the extent permitted by applicable law, recoup compensation from each current or former executive officer who, during the three-year period preceding the date on which a restatement is required, received compensation from incentive awards based on the erroneous financial data, provided that the executive officer engaged in misconduct or otherwise caused or contributed to the requirement for the restatement. The Compensation Committee has sole discretion to determination when and how to seek any recovery and may forgo recovery if it determines that the cost of recovery would exceed the amount sought to be recovered.
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 that the Compensation Discussion and Analysis be included in this Proxy Statement.
| The Compensation Committee Richard M. Beyer Robert E. Switz MaryAnn Wright | |||||
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is or has been one of our officers or employees or an officer or employee of any of our subsidiaries during fiscal 2022. During fiscal 2022, 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.
48 | 2022 Proxy Statement
FISCAL 2022 SUMMARY COMPENSATION TABLE
The following table details the total compensation earned by our Named Executive Officers in fiscal 2022, 2021, and 2020.
| Name and Principal Position | Year | Salary(1)(2) | Bonus (3) | Stock Awards(4)(5) | Non-Equity Incentive Plan Compensation(6) | All Other Compensation(7) | Total | ||||||||||||||||
| Sanjay Mehrotra | 2022 | $ | 1,409,893 | $ | — | $ | 23,499,965 | $ | 3,435,275 | $ | 495,676 | $ | 28,840,809 | ||||||||||
| President and Chief | 2021 | 1,350,000 | — | 18,499,995 | 4,800,600 | 666,114 | 25,316,709 | ||||||||||||||||
| Executive Officer | 2020 | 1,369,039 | — | 14,999,989 | 3,591,001 | 35,459 | 19,995,488 | ||||||||||||||||
| Mark J. Murphy | 2022 | 266,538 | 250,000 | 12,631,963 | 326,555 | 99,986 | 13,575,042 | ||||||||||||||||
| Executive Vice President and | |||||||||||||||||||||||
| Chief Financial Officer | |||||||||||||||||||||||
| Manish Bhatia | 2022 | 725,607 | — | 7,999,991 | 904,511 | 8,887,720 | 18,517,829 | ||||||||||||||||
| Executive Vice President, | 2021 | 695,000 | — | 5,999,969 | 1,235,710 | 622,194 | 8,552,873 | ||||||||||||||||
| Global Operations | 2020 | 704,211 | — | 5,000,012 | 924,351 | 583,785 | 7,212,359 | ||||||||||||||||
| Michael W. Bokan | 2022 | 547,480 | — | 4,500,043 | 558,983 | 18,088 | 5,624,594 | ||||||||||||||||
| Senior Vice President, | |||||||||||||||||||||||
| Worldwide Sales(8) | |||||||||||||||||||||||
| Scott J. DeBoer | 2022 | 621,203 | — | 6,249,944 | 703,968 | 17,450 | 7,592,565 | ||||||||||||||||
| Executive Vice President, | 2021 | 595,000 | — | 4,999,957 | 1,057,910 | 15,700 | 6,668,567 | ||||||||||||||||
| Technology and Products | 2020 | 601,596 | — | 3,750,026 | 791,351 | 16,887 | 5,159,860 | ||||||||||||||||
| Sumit Sadana | 2022 | 777,809 | — | 8,250,001 | 1,057,727 | 15,893 | 10,101,430 | ||||||||||||||||
| Executive Vice President | 2021 | 745,000 | — | 6,500,005 | 1,457,071 | 14,500 | 8,716,576 | ||||||||||||||||
| and Chief Business Officer(9) | 2020 | 755,173 | — | 5,500,013 | 1,089,936 | 14,250 | 7,359,372 | ||||||||||||||||
| David A. Zinsner | 2022 | 257,671 | — | 7,000,029 | — | 9,480 | 7,267,180 | ||||||||||||||||
| Former Executive Vice President & | 2021 | 662,000 | — | 4,999,957 | 1,177,036 | 14,500 | 6,853,493 | ||||||||||||||||
| Chief Financial Officer | 2020 | 670,992 | — | 4,000,021 | 880,461 | 17,531 | 5,569,005 | ||||||||||||||||
(1)Mr. Murphy was appointed as our Executive Vice President and Chief Financial Officer, effective as of April 18, 2022, and his annual base salary for fiscal 2022 was $700,000. Fiscal 2022 amount for Mr. Zinsner represents salary earned up to his resignation from the Company effective as of January 10, 2022.
(2)Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal 2022 and 2021 each contained 52 weeks and fiscal 2020 contained 53 weeks. The amounts shown for salary for 2020 include an additional week as compared to 2022 and 2021 in accordance with our fiscal calendar.
(3)Mr. Murphy received a cash signing bonus upon joining the Company.
(4)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 awards granted in fiscal 2022, 2021, and 2020 was computed by multiplying (i) the target number of restricted shares or units awarded to each Named Executive Officer, which was the assumed probable outcome as of the grant date, by (ii) either (a) the closing price of our Common Stock on the last market trading day prior to the date of grant; or (b) the fair value per share as calculated by the use of a Monte Carlo simulation, which represents the most likely value if the award had a market condition performance goal. Although the assumed probable outcome as of the grant date was achievement at the target level, the terms of the awards for performance-based restricted stock unit awards granted in fiscal 2022, 2021, and 2020 also provide for achievement of up to 200% of the target amount (“maximum”).
49The table below presents the aggregate grant date fair value of stock awards for the periods presented assuming achievement at the maximum level for such performance-based awards. Grant date fair values for both the target and maximum levels are consistent with the amounts used to determine compensation cost under Accounting Standards Codification 718.
| 2022 | 2021 | 2020 | |||||||||||||||||||||||||||
| Executive Officer | Time-based Stock Award | Performance-based Stock Award at Maximum Level | Total Stock Awards | Time-based Stock Award | Performance-based Stock Award at Maximum Level | Total Stock Awards | Time-based Stock Award | Performance-based Stock Award at Maximum Level | Total Stock Awards | ||||||||||||||||||||
| Sanjay Mehrotra | $ | 11,749,992 | $ | 21,502,435 | $ | 33,252,427 | $ | 9,249,995 | $ | 16,927,511 | $ | 26,177,506 | $ | 7,499,991 | $ | 13,561,648 | $ | 21,061,639 | |||||||||||
| Mark J. Murphy | 6,315,978 | 11,558,203 | 17,874,181 | ||||||||||||||||||||||||||
| Manish Bhatia | 3,999,997 | 7,319,981 | 11,319,978 | 3,000,002 | 5,489,918 | 8,489,920 | 2,500,013 | 4,520,545 | 7,020,558 | ||||||||||||||||||||
| Michael W. Bokan | 2,249,999 | 4,117,537 | 6,367,536 | ||||||||||||||||||||||||||
| Scott J. DeBoer | 3,125,031 | 5,718,586 | 8,843,617 | 2,499,976 | 4,574,983 | 7,074,959 | 1,874,986 | 3,390,485 | 5,265,471 | ||||||||||||||||||||
| Sumit Sadana | 4,125,031 | 7,548,641 | 11,673,672 | 3,249,990 | 5,947,520 | 9,197,510 | 2,750,014 | 4,972,609 | 7,722,623 | ||||||||||||||||||||
| David A. Zinsner | 3,499,998 | 6,405,154 | 9,905,152 | 2,499,976 | 4,574,983 | 7,074,959 | 2,000,010 | 3,616,464 | 5,616,474 | ||||||||||||||||||||
(5)Amount shown for Mr. Murphy includes $9,999,999 in respect of his new hire equity awards, in the form of both time-based restricted stock and performance-based restricted units. Mr. Zinsner’s awards for fiscal 2022 were forfeited due to his resignation from the Company effective as of January 10, 2022.
(6)Amounts shown for each of the Named Executive Officers were paid pursuant to the EIP and relate to the achievement of certain performance milestones.
(7)Includes matching contributions paid by us pursuant to our 401(k) plan. For fiscal 2022, $15,250 was contributed for each of Messrs. Mehrotra, Bhatia, Bokan, DeBoer, and Sadana, $12,115 for Mr. Murphy, and $2,399 for Mr. Zinsner. Includes matching contributions paid by us for health savings accounts in fiscal 2022 for Messrs. Murphy, Bokan, and DeBoer and award points and tax gross-ups for the award points paid by us to each of the Named Executive Officers in fiscal 2022. Includes personal security arrangements paid by us for Mr. Mehrotra in the amount of $478,993. While we do not consider personal security measures to be a personal benefit, but instead appropriate expenses for the benefit of the Company that arise out of our executive’s employment responsibilities and that are necessary to his or her job performance and to ensure the safety of our executives and their family, amounts represent payments for personal security arrangements. In determining to authorize these security arrangements, the Compensation Committee evaluated the need to respond to specific incidents and threats, and reviewed recommendations from a leading security firm. In addition, the Compensation Committee has established a policy to review personal security costs quarterly. The Security Committee also has an annual process for oversight of the nature of security measures and will discontinue, adjust, or enhance security as appropriate.
All Other Compensation for fiscal 2022 also includes the following for the Named Executive Officers mentioned below:
•Amount for Mr. Murphy includes $47,665 in relocation expense and $39,554 for a reimbursement of federal, state, and other income taxes resulting from imputed income.
•Amount for Mr. Bhatia include estimated tax equalization payments of $8,388,304 related to his overseas assignment in Singapore.
Employees who participate in our expatriate programs are responsible for substantially the same income tax liability as they would have been had they worked exclusively in the United States. Each expatriate employee is responsible for a hypothetical U.S. income tax liability based on an estimate of their anticipated U.S. income tax liability on their stay-at-home income, and we are responsible for income tax liabilities associated with the assignment or host country taxes, as applicable, and any additional taxes attributed to the international assignment. To the extent that tax years differ from the fiscal year in which the compensation was earned that gave rise to the expatriates’ income tax liability, or in the case that we have
50 | 2022 Proxy Statement
not reached the end of the tax year, the amount of tax equalization has been estimated. Mr. Bhatia received no net benefit from tax equalization in fiscal 2021 and 2020 because his hypothetical U.S. tax exceeded his actual and/or estimated global (U.S. and international) taxes in each year.
Mr. Bhatia completed his expatriate assignment in Singapore in fiscal 2022. As a result, he is subject to the deemed exercise rule upon exit with respect to his unvested restricted equity awards granted during his Singapore expatriate assignment and is required to pay Singapore taxes as if gains were realized. We estimate tax equalization of $8,388,304 to be paid by us for Mr. Bhatia for fiscal 2022 and expect that all or a portion of the payment will be recovered by us over the next few years with foreign tax credits or Singapore tax refunds when those restricted equity awards granted during his Singapore expatriate assignment vest or forfeit.
Additionally, the amount for Mr. Bhatia includes $23,528 for cash-payment allowances to Mr. Bhatia associated with his expatriate assignment, $330,251 in housing expenses, $68,088 in automobile expenses, and $56,035 in miscellaneous expenses related to his expatriate assignment.
•Amount for Mr. Zinsner includes $6,741 for unused time-off at the time of his resignation.
(8)Mr. Bokan’s compensation for fiscal 2021 and 2020 is not presented because he was not a Named Executive Officer for those fiscal years.
(9)Mr. Sadana served as our interim Chief Financial Officer from January 10, 2022 to April 18, 2022.
51GRANTS OF PLAN-BASED AWARDS IN FISCAL 2022
The table below sets forth the plan-based award grants to our Named Executive Officers in fiscal 2022.
| Name | Grant Date | Estimated Future Payouts under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3) | Grant Date Fair Value of Stock (or Units)(4) | ||||||||||||||||||||||||
| Threshold | Target | Max | Threshold | Target | Max | ||||||||||||||||||||||||
| Sanjay Mehrotra | NA | $ | 1,524,350 | $ | 3,048,700 | $ | 6,097,400 | ||||||||||||||||||||||
| 10/13/21 | 36,973 | 162,000 | 324,000 | $ | 11,749,973 | ||||||||||||||||||||||||
| 10/13/21 | 176,109 | 11,749,992 | |||||||||||||||||||||||||||
| Mark J. Murphy(5) | NA | 144,904 | 289,808 | 579,615 | |||||||||||||||||||||||||
| 04/18/22 | 18,692 | 82,412 | 164,824 | 6,315,985 | |||||||||||||||||||||||||
| 04/18/22 | 90,061 | 6,315,978 | |||||||||||||||||||||||||||
| Manish Bhatia | NA | 401,363 | 802,725 | 1,605,450 | |||||||||||||||||||||||||
| 10/13/21 | 12,587 | 55,149 | 110,298 | 3,999,994 | |||||||||||||||||||||||||
| 10/13/21 | 59,952 | 3,999,997 | |||||||||||||||||||||||||||
| Michael W. Bokan | NA | 248,040 | 496,080 | 992,160 | |||||||||||||||||||||||||
| 10/13/21 | 7,080 | 31,022 | 62,044 | 2,250,045 | |||||||||||||||||||||||||
| 10/13/21 | 33,723 | 2,249,999 | |||||||||||||||||||||||||||
| Scott J. DeBoer | NA | 312,375 | 624,750 | 1,249,500 | |||||||||||||||||||||||||
| 10/13/21 | 9,833 | 43,084 | 86,168 | 3,124,913 | |||||||||||||||||||||||||
| 10/13/21 | 46,838 | 3,125,031 | |||||||||||||||||||||||||||
| Sumit Sadana | NA | 469,350 | 938,700 | 1,877,400 | |||||||||||||||||||||||||
| 10/13/21 | 12,980 | 56,872 | 113,744 | 4,124,971 | |||||||||||||||||||||||||
| 10/13/21 | 61,826 | 4,125,031 | |||||||||||||||||||||||||||
| David A. Zinsner(5) | NA | 393,223 | 786,445 | 1,572,890 | |||||||||||||||||||||||||
| 10/13/21 | 11,013 | 48,256 | 96,512 | 3,500,031 | |||||||||||||||||||||||||
| 10/13/21 | 52,458 | 3,499,998 | |||||||||||||||||||||||||||
(1)Represents estimated possible payouts for fiscal 2022 under the EIP. Payment of bonuses under the EIP is dependent upon meeting specified performance goals. A description of the performance milestones associated with such bonuses is included in the “Compensation Discussion and Analysis.” Actual payouts received by the Named Executive Officers for fiscal 2022 under the EIP are reported in the Fiscal 2022 Summary Compensation Table under the column titled “Non-Equity Incentive Plan Compensation.”
(2)Represents restricted stock units awarded in fiscal 2022 under the 2007 Plan with performance-based and market-based restrictions. The threshold amounts shown relate solely to the 2022 TSR PRSU Awards. For the 2022 High-Value Solutions PRSU Awards and the 2022 Market Segment PRSU Awards, achievement at the relevant threshold level results in no payout. For all PRSU awards, achievement between the threshold level and the maximum level is paid out based on interpolation between performance levels. Information related to the performance-based and market-based restrictions associated with these shares is contained in “Compensation Discussion and Analysis.”
(3)Represents restricted stock awarded in fiscal 2022 under the 2007 Plan with time-based restrictions. Time-based restrictions on these awards lapse in three equal installments over a three-year period from the date of the award.
(4)The value shown is based on the fair value as of the date of grant and was computed by multiplying (i) the target number of restricted shares or units awarded to each Named Executive Officer by (ii) either (a) the closing price of our Common Stock on the last market-trading day prior to the date of grant; or (b) the fair value
52 | 2022 Proxy Statement
per share as calculated by the use of a Monte-Carlo simulation, which represents the most likely value if the award had a market condition performance goal.
(5)Mr. Murphy was appointed as our Executive Vice President and Chief Financial Officer, effective as of April 18, 2022. The amounts shown for Mr. Murphy for non-equity incentive plan awards represent his estimated possible payouts for fiscal 2022 and were prorated to reflect his length of service in fiscal 2022.
Mr. Zinsner resigned as our Executive Vice President and Chief Financial Officer effective as of January 10, 2022. Mr. Zinsner’s awards for fiscal 2022 were forfeited due to his resignation.
Plan Information
The purpose of the 2007 Plan is to promote our success by linking the personal interests of our employees and officers to those of our shareholders, and by providing participants with an incentive for outstanding performance. Permissible awards under the 2007 Plan include: options, restricted stock, restricted stock units, stock appreciation rights, deferred stock units, and dividend equivalent rights. We have issued options, restricted stock, restricted stock units, and dividend equivalent rights under the 2007 Plan. Options granted under the 2007 Plan have an exercise price equal to the fair market value (as defined by the 2007 Plan) on the date of grant and, since March 2014, a term of eight years. For purposes of share counting, each restricted stock unit or share of restricted stock issued under the 2007 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 2022, the Compensation Committee reviewed the goals established under the EIP for fiscal 2022 and certified achievement of results.
Lapsing of Restrictions Associated with Restricted Stock and Restricted Stock Unit Awards
The restrictions associated with the restricted stock and restricted stock units granted to the Named Executive Officers include both time-based restrictions and performance-based restrictions. Time-based restrictions lapse in three equal installments over a three-year period. The restrictions associated with performance-based awards are described below.
Issuance and Vesting of Performance-based Awards
Restricted Stock Units
Our executive officers received awards related to three performance goals: a NAND high value solutions metric, a NAND market segment metric and a company valuation metric. Please see “Fiscal 2022 Executive Compensation – Fiscal 2022 Long-Term Equity Incentives” section of the “Compensation Discussion and Analysis.” The number of shares that will be received at the end of the three years varies between 0% and 200% of the targeted share amount and is dependent upon the level of achievement. All threshold, target, and maximum amounts require significant execution and effort with no assurance of achievement guaranteed. In the absence of at least the threshold targets being achieved, the restrictions will not lapse and the shares will be forfeited.
Cash Awards
Bonuses were paid to the Named Executive Officers for fiscal 2022 as a result of achievement of certain goals. Please see the “Fiscal 2022 Executive Compensation – Fiscal 2022 Short-Term Incentive Awards” section of the “Compensation Discussion and Analysis.”
53OUTSTANDING EQUITY AWARDS
AT FISCAL 2022 YEAR-END
The following table provides information with respect to outstanding stock options, restricted stock, and restricted stock units held as of September 1, 2022, by our Named Executive Officers.
| 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) | ||||||||||||||||||||||||||||||||||
| Sanjay Mehrotra | 471,976 | $ | 28.20 | 5/8/2025 | 53,810 | (2) | $ | 3,083,851 | 3,579 | (3) | $ | 205,112 | ||||||||||||||||||||||||||
| 140,308 | 41.56 | 10/24/2025 | 118,727 | (4) | 6,804,244 | 135,115 | (5) | 7,743,441 | ||||||||||||||||||||||||||||||
| 176,109 | (6) | 10,092,807 | 75,240 | (7) | 4,312,004 | |||||||||||||||||||||||||||||||||
| 89,045 | (8) | 5,103,169 | ||||||||||||||||||||||||||||||||||||
| 44,027 | (9) | 2,523,187 | ||||||||||||||||||||||||||||||||||||
| 44,027 | (10) | 2,523,187 | ||||||||||||||||||||||||||||||||||||
| 73,946 | (11) | 4,237,845 | ||||||||||||||||||||||||||||||||||||
| Mark J. Murphy | 90,061 | (12) | 5,161,396 | 22,515 | (9) | 1,290,335 | ||||||||||||||||||||||||||||||||
| 22,515 | (10) | 1,290,335 | ||||||||||||||||||||||||||||||||||||
| 37,382 | (11) | 2,142,362 | ||||||||||||||||||||||||||||||||||||
| Manish Bhatia | 53,317 | 41.56 | 10/24/2025 | 17,937 | (2) | 1,027,969 | 1,200 | (3) | 68,772 | |||||||||||||||||||||||||||||
| 38,506 | (4) | 2,206,779 | 45,328 | (5) | 2,597,748 | |||||||||||||||||||||||||||||||||
| 59,952 | (6) | 3,435,849 | 24,402 | (7) | 1,398,479 | |||||||||||||||||||||||||||||||||
| 28,879 | (8) | 1,655,055 | ||||||||||||||||||||||||||||||||||||
| 14,988 | (9) | 858,962 | ||||||||||||||||||||||||||||||||||||
| 14,988 | (10) | 858,962 | ||||||||||||||||||||||||||||||||||||
| 25,173 | (11) | 1,442,665 | ||||||||||||||||||||||||||||||||||||
| Michael W. Bokan | 5,590 | 18.18 | 10/14/2023 | 7,175 | (2) | 411,199 | 480 | (3) | 27,509 | |||||||||||||||||||||||||||||
| 23,501 | 17.41 | 10/19/2024 | 22,462 | (4) | 1,287,297 | 18,124 | (5) | 1,038,686 | ||||||||||||||||||||||||||||||
| 11,365 | 41.56 | 10/24/2025 | 33,723 | (6) | 1,932,665 | 14,235 | (7) | 815,808 | ||||||||||||||||||||||||||||||
| 16,846 | (8) | 965,444 | ||||||||||||||||||||||||||||||||||||
| 8,431 | (9) | 483,181 | ||||||||||||||||||||||||||||||||||||
| 8,431 | (10) | 483,181 | ||||||||||||||||||||||||||||||||||||
| 14,160 | (11) | 811,510 | ||||||||||||||||||||||||||||||||||||
| Scott J. DeBoer | 8,770 | 41.56 | 10/24/2025 | 13,452 | (2) | 770,934 | 896 | (3) | 51,350 | |||||||||||||||||||||||||||||
| 32,088 | (4) | 1,838,963 | 33,834 | (5) | 1,939,027 | |||||||||||||||||||||||||||||||||
| 46,838 | (6) | 2,684,286 | 20,335 | (7) | 1,165,399 | |||||||||||||||||||||||||||||||||
| 24,066 | (8) | 1,379,222 | ||||||||||||||||||||||||||||||||||||
| 11,709 | (9) | 671,043 | ||||||||||||||||||||||||||||||||||||
| 11,709 | (10) | 671,043 | ||||||||||||||||||||||||||||||||||||
| 19,666 | (11) | 1,127,058 | ||||||||||||||||||||||||||||||||||||
54 | 2022 Proxy Statement
| 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) | ||||||||||||||||||||||||||||||||||
| Sumit Sadana | 14,031 | 41.56 | 10/24/2025 | 19,730 | (2) | 1,130,726 | 1,311 | (3) | 75,133 | |||||||||||||||||||||||||||||
| 41,715 | (4) | 2,390,687 | 49,485 | (5) | 2,835,985 | |||||||||||||||||||||||||||||||||
| 61,826 | (6) | 3,543,248 | 26,436 | (7) | 1,515,047 | |||||||||||||||||||||||||||||||||
| 31,286 | (8) | 1,793,001 | ||||||||||||||||||||||||||||||||||||
| 15,456 | (9) | 885,783 | ||||||||||||||||||||||||||||||||||||
| 15,456 | (10) | 885,783 | ||||||||||||||||||||||||||||||||||||
| 25,960 | (11) | 1,487,768 | ||||||||||||||||||||||||||||||||||||
| David A. Zinsner | 956 | (3) | 54,788 | |||||||||||||||||||||||||||||||||||
| 36,088 | (5) | 2,068,203 | ||||||||||||||||||||||||||||||||||||
| 20,335 | (7) | 1,165,399 | ||||||||||||||||||||||||||||||||||||
(1)Calculated by multiplying the number of shares of restricted stock or restricted stock units by $57.31, the closing price of our Common Stock on September 1, 2022.
(2)Restrictions on shares will lapse on October 16, 2022.
(3)Represents the banked number of restricted stock units. Performance-based restrictions on stock units lapsed in October 2022 based on the achievement of an rTSR goal through fiscal 2021.
(4)Restrictions on shares lapsed or will lapse, as applicable, in equal installments on October 16, 2022 and October 16, 2023.
(5)Represents the banked number of restricted stock units. Performance-based restrictions on stock units lapsed in October 2022 based on the achievement of a high value solutions sales goal through fiscal 2020.
(6)Restrictions on shares lapsed or will lapse, as applicable, in equal installments on October 13, 2022, October 13, 2023, and October 13, 2024.
(7)Represents the target number of restricted stock units. Performance-based restrictions on stock units lapse in October 2022 and October 2023 based on the achievement of an rTSR goal through fiscal 2022 and 2023.
(8)Represents the target number of restricted stock units. Performance-based restrictions on stock units lapse in October 2022 and October 2023 based on the achievement of a high value solutions sales goal through fiscal 2022.
(9)Represents the target number of restricted stock units. Performance-based restrictions on stock units lapse in October 2023 and October 2024 based on the achievement of a NAND high value solutions sales goal through fiscal 2023 and 2024.
(10)Represents the target number of restricted stock units. Performance-based restrictions on stock units lapse in October 2023 and October 2024 based on the achievement of a NAND market segment goal through fiscal 2023 and 2024.
(11)Represents the target number of restricted stock units. Performance-based restrictions on stock units lapse in October 2023 and October 2024 based on the achievement of an rTSR goal through fiscal 2023 and 2024.
(12)Restrictions on shares lapsed or will lapse, as applicable, in equal installments on April 18, 2023, April 18, 2024, and April 18, 2025.
55OPTION EXERCISES AND STOCK VESTED IN FISCAL 2022
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 2022 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) | |||||||||||||
| Sanjay Mehrotra | 100,000 | $ | 6,742,000 | 422,758 | $ | 24,695,391 | |||||||||||
| Mark J. Murphy | — | — | — | — | |||||||||||||
| Manish Bhatia | — | — | 154,250 | 9,146,224 | |||||||||||||
| Michael W. Bokan | 16,600 | 566,596 | 68,363 | 3,999,294 | |||||||||||||
| Scott J. DeBoer | — | — | 109,456 | 6,390,503 | |||||||||||||
| Sumit Sadana | — | — | 152,150 | 8,890,479 | |||||||||||||
| David A. Zinsner | 8,050 | 233,813 | 87,686 | 5,255,527 | |||||||||||||
(1)Calculated as the aggregate value of the number of options exercised multiplied by the difference between the fair market value per share at the time of the exercise and the exercise price of the option.
(2)Includes performance-based restricted units vested in October 2022 based on performance completed by the end of fiscal 2022 and performance-based restricted units for which time-based restrictions lapsed in fiscal 2022 but for which the performance condition had been met in prior years. Excludes performance-based restricted units vested in October 2021 based on performance completed by the end of fiscal 2021 and performance-based restricted units with time-based restrictions that had met the performance-based condition but for which the time-based restriction had not lapsed by the end of fiscal 2022.
(3)Value calculated by multiplying number of shares by the market value per share on the vesting date.
2022 NONQUALIFIED DEFERRED COMPENSATION
Messrs. Mehrotra and Bokan are the only Named Executive Officers who have participated in the Micron Technology, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) through the end of fiscal 2022.
| Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings (Losses) in Last Fiscal Year ($) | Aggregate Withdrawals/Distributions ($) | Aggregate Balance at Last Fiscal Year-End ($) | ||||||||||||||||||
| $ | 6,234,092 | ||||||||||||||||||||||
| Sanjay Mehrotra | $ | 2,411,545 | (1) | $ | — | $ | (1,452,106) | $ | — | $ | 7,193,531 | (2) | |||||||||||
| Michael W. Bokan | 591,112 | (3) | — | (329,314) | (433,193) | 1,349,644 | (4) | ||||||||||||||||
(1)$697,045 included in the Summary Compensation table in the “Salary” column for fiscal 2022 and $1,714,500 included in the “Non-Equity Incentive Plan Compensation” column for fiscal 2021.
(2)Balance as of the beginning of fiscal 2022 was $6,234,092.
(3)$293,932 included in the Summary Compensation table in the “Salary” column for fiscal 2022 and $297,180 is non-equity incentive plan compensation earned for fiscal 2021.
(4)Balance as of the beginning of fiscal 2022 was $1,521,039.
56 | 2022 Proxy Statement
Summary of Material Terms of Deferred Compensation Plan
The Deferred Compensation Plan is a nonqualified deferred compensation plan under which designated eligible participants may elect to defer compensation. Eligible participants include a select group of management and other employees of the Company that meet certain compensation requirements, including each of the Company’s Named Executive Officers. Pursuant to the Deferred Compensation Plan and subject to applicable tax laws, participants may elect to defer up to 75% of their base salary and up to 100% of their bonus compensation. The Company may, in its sole discretion, provide matching and/or discretionary contributions to the Deferred Compensation Plan. Participants will be 100% vested at all times in their deferral accounts; provided, however, that matching and/or discretionary contributions by the Company, if any, may be subject to a vesting schedule as provided by the Company. Participants may elect to receive payment of their account balances upon a fixed date, or their separation from service with the Company, or the earlier of a fixed date or their separation from service. Participants may elect to receive payment of their account balances in a single sum cash payment or in substantially equal annual cash installments over not less than two years and not more than ten years. Account balances will become payable immediately in a single sum cash payment upon a participant’s death or disability, or upon a Change in Control. Account balances under the Deferred Compensation Plan earn or lose value based on the investment performance of one or more of the various investment funds offered under the Deferred Compensation Plan and selected by the participants. Compensation deferred under the Deferred Compensation Plan represents an unsecured obligation of the Company. Amounts deferred under the Deferred Compensation Plan are held in a separate rabbi trust established to pay Plan benefits.
CHIEF EXECUTIVE OFFICER PAY RATIO
In accordance with Item 402(u) of Regulation S-K, we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median compensated employee.
•The annual total compensation of our median compensated employee for fiscal 2022 was $48,310.
•The annual total compensation of our CEO for fiscal 2022 was $28,840,809.
•The ratio of the annual total compensation of our CEO to that of our median employee for fiscal 2022 was estimated to be 597 to 1.
The median compensated employee generally is the employee whose annual total compensation is at the midpoint of our employees (excluding our CEO), ranked in order of their compensation amounts. As permitted by the SEC rules, we used base salary, bonuses, and grant date fair value of equity awards granted to employees in fiscal 2022, as reported in our payroll data, to identify our median employee. When calculating our median compensation for fiscal 2022, we utilized our global employee population and exchange rates as of September 1, 2022. As of September 1, 2022, our employee population was approximately 48,000. This includes all regular, part-time, and temporary employees. No exclusions were made for countries, employee types, or acquisitions.
The median compensated employee for fiscal 2022 was a Fab Engineer in Singapore. We determined actual annual total compensation in accordance with Item 402(c)(2)(x) of Regulation S-K and in the same manner as our CEO in the Summary Compensation Table using the daily average Singapore dollar exchange rates for compensation paid to the median compensated employee during fiscal 2022. We compared this value to the annual total compensation of our CEO for purposes of the ratio set forth above. We did not make any cost of living adjustments.
The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. Based on the above, the ratio shown above of the annual total compensation of our CEO to the annual total compensation of the median compensated employee for fiscal 2022 is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
57POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following tables quantify the estimated payments and benefits for each of the continuing Named Executive Officers pursuant to the Executive Agreement and NEO Severance Agreements and in the event of a Change in Control as described in the “Severance and Change in Control Arrangements” section of the “Compensation Discussion and Analysis.” The amounts listed for the continuing Named Executive Officers are estimated amounts that were calculated as if a Change in Control occurred on September 1, 2022, or the Named Executive Officers separated from service on September 1, 2022, the last day of fiscal 2022.
Potential Payment upon Termination without Change in Control
All the continuing Named Executive Officers have severance agreements. Payments and benefits upon termination for Messrs. Mehrotra, Murphy, Bhatia and Sadana are payable only if their employment with the Company terminates as a result of death or disability, the Company terminates their employment without cause, or they resign for good reason. Mr. Zinsner resigned from Micron effective as of January 10, 2022 and did not receive any payments or other benefits under his severance agreement.
The “Salary” portion of severance payments is paid on our regular bi-weekly payroll schedule during the officer’s one-year Transition Period subject to the possibility of a six-month delay that may be required by Section 409A of the Code (“Section 409A”). If Section 409A imposes a six-month delay, payments during the delay would be accumulated and paid to the officer on the first day of the seventh month following the Named Executive Officer’s separation from service. The remaining payments would then be paid according to our regular payroll schedule.
The “Bonus” portion of the severance payments is paid only if the applicable performance goals are achieved before or during the applicable Transition Period. Such payments are made at the same time that the other officers participating in the applicable bonus plan receive their payments, if any, and typically would occur during our first fiscal quarter. Mr. Mehrotra also would receive a bonus of two times his target annual bonus under the EIP for the year of termination paid on the anniversary of his termination.
The “Cash in Lieu of Benefits” portion of the severance payments is calculated based on the difference between the amount of premiums the Named Executive Officer paid each month for benefits coverage as our employee and the estimated premiums the Named Executive Officer would need to pay each month for the same or similar coverage as a former employee. This monthly amount is multiplied by the number of months in the Named Executive Officer’s Transition Period and is grossed-up for taxes, with the exception of Mr. Mehrotra, who would receive two times the monthly amount. All gross-up calculations and payments are based on the standard supplemental withholding rates provided by federal and state guidelines. We do not use the Named Executive Officer’s actual tax rate for these calculations. The “Cash in Lieu of Benefits” payment is made within 30 days after the Named Executive Officer’s separation from service, subject to the possibility of a six-month delay that may be required by Section 409A. If Section 409A imposes a six-month delay, the payment would be made to the Named Executive Officer on the first day of the seventh month following the officer’s separation from service.
| Name | Salary(1) | Bonus(2) | Cash in Lieu of Benefits Payment(3) | Value of Extended Option Exercise Term (4) | Value of Extended Restricted Stock Vesting(5) | Value of Unearned Performance -Based Stock Awards(6) | Total | ||||||||||||||||
| Sanjay Mehrotra | $ | 2,836,000 | $ | 9,532,675 | $ | 401,301 | $ | 1,608,102 | $ | 9,850,214 | $ | 15,035,221 | $ | 39,263,513 | |||||||||
| Mark J. Murphy | 700,000 | 326,555 | 92,053 | — | 1,720,446 | — | 2,839,054 | ||||||||||||||||
| Manish Bhatia | 729,750 | 904,511 | 91,064 | 247,242 | 3,276,642 | 4,964,880 | 10,214,089 | ||||||||||||||||
| Michael W. Bokan | 551,200 | 558,983 | 110,833 | 64,798 | 1,699,070 | 2,406,905 | 5,391,789 | ||||||||||||||||
| Scott J. DeBoer | 624,750 | 703,968 | 124,061 | 40,668 | 2,585,139 | 3,905,677 | 7,984,263 | ||||||||||||||||
| Sumit Sadana | 782,250 | 1,057,727 | 93,211 | 65,065 | 3,507,085 | 5,401,009 | 10,906,347 | ||||||||||||||||
58 | 2022 Proxy Statement
(1)Represents one year of the Named Executive Officer’s salary as of September 1, 2022, except for Mr. Mehrotra, which represents two years of salary as of September 1, 2022.
(2)Represents the actual EIP bonus paid for fiscal 2022, except for Mr. Mehrotra, which also includes two times his target annual bonus, subject to the maximum award limit imposed by the EIP.
(3)Represents a cash payment in an amount estimated to allow the Named Executive Officer to purchase during the Transition Period benefits similar to those received while an employee, except for Mr. Mehrotra, which represents twice the amount. The amount listed includes a gross-up calculation for the tax impact of the payment.
(4)Represents the value resulting from an extension of the exercise period for stock options through the Transition Period plus thirty days, or the remaining life of the options, for options that were outstanding as of September 1, 2022. The incremental fair value of each option award is estimated as of September 1, 2022 using the Black-Scholes option valuation model. The expected volatilities utilized are based on implied volatility from traded options on our stock. The expected lives are based on the shorter of the length of the Transition Period plus thirty days or the remaining life of the option. The risk-free interest rates utilized are based on the U.S. Treasury yield as of September 1, 2022.
(5)Represents the value resulting from the additional vesting of restricted shares during the Named Executive Officer’s Transition Period. The amount shown is calculated as the number of additional shares that would vest during the Transition Period multiplied by $57.31, our closing stock price on September 1, 2022.
(6)Represents the value resulting from the vesting of performance based restricted awards during the Named Executive Officer’s Transition Period. The amount shown is calculated as the number of additional shares that would vest during the Transition Period multiplied by $57.31, our closing stock price on September 1, 2022.
Potential Payment under Termination with Change in Control
A Change in Control is generally defined as a change in the majority of the members of the Board within a specified time period or the acquisition of 35% or more of our outstanding Common Stock.
Our equity plans, grant agreements, and EIP have Change in Control provisions, including “double-trigger” vesting provisions in the event of a Change in Control. As a result, if awards are assumed by a successor in connection with a Change in Control, such awards will not automatically vest and pay out solely as a result of the Change in Control. Instead, such awards will only vest if within one year after the effective date of the Change in Control, the participant’s employment is terminated without cause or, in the case of certain participants including our Named Executive Officers, if the participant resigns for good reason. For equity awards, the impact of a Change in Control differs for outstanding time-based and performance-based awards. Outstanding time-based awards would automatically become fully vested or the applicable restrictions would lapse upon occurrence of the double-trigger event. For our Named Executive Officers, upon the occurrence of a double-trigger event, outstanding performance-based awards are treated as if all required performance goals were satisfied at the target level, and the awards vested, on the date of the double-trigger event, except that if applicable performance goals have been exceeded, or the applicable performance period has been completed, at the time of a double-trigger event, performance-based awards will be treated as if relevant performance goals were satisfied at the actual level instead of the target level, subject to any applicable caps.
Under the EIP, a Change in Control results in an early payout of awards, to the extent earned. Upon a Change in Control, performance achievement is measured as of the last day of the month preceding the Change in Control.
We do not have separate Change in Control agreements for our Named Executive Officers. The Severance Agreements for Messrs. Mehrotra, Murphy, Bhatia, and Sadana provide for transitional benefits for Change in Control separation. Change in Control separation means a qualifying separation from service that occurs on or within 12 months following a Change in Control. In the event of a Change in Control separation, the payments for “Salary,” “Bonus,” and “Cash in Lieu of Benefit” are paid in a lump sum within 60 days from the date of separation, subject to the possibility of a six-month delay that may be required by Section 409A. All outstanding time-based and performance-based awards would become fully vested.
59The compensation that executive officers could receive if a Change in Control occurs is intended to enable them to objectively evaluate whether a potential Change in Control is in the best interest of us and our shareholders.
The following table sets forth the estimated benefits payable to the Named Executive Officers pursuant to Change in Control agreements or provisions, assuming a Change in Control separation occurred on September 1, 2022.
| Name | Salary(1) | Bonus(2) | Cash in Lieu of Benefits Payment(3) | Value of Options(4) | Value of Stock Awards(5) | Total | ||||||||||||||
| Sanjay Mehrotra | $ | 2,836,000 | $ | 9,532,675 | $ | 401,301 | $ | — | $ | 51,732,018 | $ | 64,501,994 | ||||||||
| Mark J. Murphy | 1,050,000 | 770,000 | 138,079 | — | 9,884,428 | $ | 11,842,507 | |||||||||||||
| Manish Bhatia | 1,094,625 | 904,511 | 136,597 | — | 17,206,296 | 19,342,029 | ||||||||||||||
| Michael W. Bokan | 551,200 | 558,983 | 110,833 | — | 7,121,111 | 8,342,127 | ||||||||||||||
| Scott J. DeBoer | 624,750 | 703,968 | 124,061 | — | 10,723,503 | 12,176,282 | ||||||||||||||
| Sumit Sadana | 1,173,375 | 1,057,727 | 139,817 | — | 18,336,163 | 20,707,082 | ||||||||||||||
(1)Represents one-and-a-half years of the Named Executive Officer’s salary as of September 1, 2022, except for Mr. Mehrotra, which represents two years of his salary as of September 1, 2022, and for Messrs. DeBoer and Bokan, which represents one year of their salary. The severance agreements for Messrs. DeBoer and Bokan do not provide for enhanced benefits upon separation in connection with a Change in Control.
(2)Represents the actual EIP bonus paid for fiscal 2022, except for Mr. Mehrotra, which also includes two times his target annual bonus, subject to the maximum award limit imposed by the EIP, and for Mr. Murphy, which is his target annual bonus.
(3)Represents a cash payment in an amount estimated to allow the Named Executive Officer to purchase 18 months of benefits similar to those received while an employee, except for Mr. Mehrotra, which represents 24 months of such benefits, and for Messrs. DeBoer and Bokan, which represents 12 months of such benefits. The severance agreements for Messrs. DeBoer and Bokan do not provide for enhanced benefits upon separation in connection with a Change in Control. The amount listed includes a gross-up calculation for the tax impact of the payment.
(4)All outstanding options are exercisable on September 1, 2022 and no options are subject to accelerated vesting due to a Change in Control.
(5)All outstanding time-based and performance-based restricted stock awards would have fully vested at target or actual achievement level on September 1, 2022, except for Messrs. DeBoer and Bokan, whose separation agreements do not include a Change in Control provision. Fiscal 2021 and 2022 performance-based restricted stock awards for Messrs. DeBoer and Bokan each have a performance period of three years, and two-thirds of their respective fiscal 2021 and one-third of their respective fiscal 2022 performance-based awards would have vested on September 1, 2022. The amount shown is calculated as the number of shares upon which restrictions would lapse, multiplied by $57.31, the closing price of our Common Stock on September 1, 2022.
60 | 2022 Proxy Statement
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of September 1, 2022 and, in certain cases, the Record Date, November 14, 2022, regarding shares of Common Stock that may be issued pursuant to our equity compensation plans:
| (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(1) | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | ||||||||||||
| Equity Compensation Plans Approved by Shareholders(2) | 27,155,782 | $ | 28.44 | 74,520,468 | (3) | |||||||||
| Equity Compensation Plans Not Approved by Shareholders(4) | 876,992 | 25.97 | 3,252,710 | (5) | ||||||||||
| Totals(6) | 28,032,774 | 27.60 | 77,773,178 | |||||||||||
(1)Excludes restricted stock that converts to shares of Common Stock for no consideration and excludes ESPP shares for which the exercise price will not be fixed until the purchase date.
(2)Includes shares issuable or available pursuant to our 2004 Equity Incentive Plan (the “2004 Plan”), 2007 Plan, and Employee Stock Purchase Plan (the “ESPP”). The 2004 Plan and the 2007 Plan provide for a maximum term for options and Stock Appreciation Rights (“SARs”) of eight years. The 2004 Plan and 2007 Plan are our only plans that permit granting of awards other than stock options. The 2004 Plan and the 2007 Plan provide that awards other than stock options or SARs reduce the number of available shares under the plan by two shares for each one share covered by the award. In addition, none of our equity plans contain provisions that are commonly known as “liberal share counting provisions” or permit the grant of discounted options or SARs.
(3)If issuing full-value awards, the number of available shares is 46,162,239. The 2004 Plan and 2007 Plan permit granting options and full-value awards.
(4)Includes shares issuable or available pursuant to our Nonstatutory Stock Option Plan (the “NSOP”). Options granted under the NSOP have terms ranging from six to ten years. The exercise price and the vesting schedule of the options granted under this plan are determined by the administrators of the plan or our Board. Executive officers and directors do not participate in the NSOP.
(5)None of these shares are available to grant as full-value awards.
(6)The following table contains further information as to awards outstanding and available for issuance under each of our equity plans as of September 1, 2022:
| Equity Plan | (a) Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (b) Number of Securities Available for Issuance (Excluding Securities Reflected in Column (a)) | |||||||||
| Plans Approved by Shareholders | |||||||||||
| 2004 Plan | 3,088,996 | (1) | 2,285,847 | ||||||||
| 2007 Plan | 21,119,001 | (2) | 54,430,611 | ||||||||
| ESPP | 2,947,785 | 17,804,010 | |||||||||
| Approved Plan Total | 27,155,782 | 74,520,468 | |||||||||
| Plans Not Approved by Shareholders | |||||||||||
| NSOP | 876,992 | 3,252,710 | |||||||||
| Not Approved Plan Total | 876,992 | 3,252,710 | |||||||||
| Grand Total | 28,032,774 | 77,773,178 | |||||||||
(1)Includes 2,198,239 restricted stock units and excludes 125,018 shares of restricted stock.
(2)Includes 20,303,638 restricted stock units and excludes 840,742 shares of restricted stock.
61The following table contains further information as to awards outstanding and available for issuance under each of our equity plans as of the Record Date, November 14, 2022:
| Equity Plan | (a) Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (b) Number of Securities Available for Issuance (Excluding Securities Reflected in Column (a)) | |||||||||
| Plans Approved by Shareholders | |||||||||||
| 2004 Plan | 2,627,654 | (1) | 21 | ||||||||
| 2007 Plan | 27,709,833 | (2) | 29,756,034 | ||||||||
| ESPP | 2,947,785 | 17,804,010 | |||||||||
| Approved Plan Total | 33,285,272 | 47,560,065 | |||||||||
| Plans Not Approved by Shareholders | |||||||||||
| NSOP | 826,540 | (3) | 3,252,710 | ||||||||
| Not Approved Plan Total | 826,540 | 3,252,710 | |||||||||
| Grand Total | 34,111,812 | 50,812,775 | |||||||||
(1)Includes 1,736,897 restricted stock units and 890,757 stock options with a $33.13 weighted average exercise price and an average remaining contractual life of 2.5 years.
(2)Includes 27,019,123 restricted stock units and excludes 1,223,834 shares of restricted stock. Also includes 690,710 stock options with a $21.53 weighted average exercise price and an average remaining contractual life of 1.17 years.
(3)The stock options granted under the NSOP have a $25.62 weighted average exercise price and an average remaining contractual life of 2.1 years.
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own beneficially more than 10% of our Common Stock to file reports of ownership and changes of ownership with the SEC. As a matter of practice, we assist our executive officers and directors in preparing initial reports of ownership and reports of changes in ownership and file those reports on their behalf. To our knowledge, based solely on the reports received and written representations from reporting persons, we believe that all required reports were timely filed during the fiscal year ended September 1, 2022, except for four reports on Form 4 for Mr. DeBoer to report small acquisitions of shares acquired in a dividend reinvestment plan administered by his broker, which were not filed due to an inadvertent error by his broker in setting up his account. A Form 5 reflecting these shares was filed on October 14, 2022.
62 | 2022 Proxy Statement
PROPOSAL 3 – APPROVAL OF AMENDED AND RESTATED 2007 EQUITY INCENTIVE PLAN TO INCREASE THE SHARES RESERVED FOR ISSUANCE THEREUNDER BY 50 MILLION | ||
| PROPOSAL DETAILS | |||||
We currently maintain the Micron Technology, Inc. Amended and Restated 2007 Equity Incentive Plan, or 2007 Plan. We believe that the 2007 Plan has been effective in attracting and retaining highly-qualified employees and non-employee directors and has provided incentives that align the economic interests of plan participants with those of our shareholders. The 2007 Plan was last approved by shareholders at our Fiscal 2020 Annual Meeting.
The Board is requesting that you approve an amended and restated version of the 2007 Plan. The amended and restated version of the Plan is referred to in this Proposal 3 as the “Amended 2007 Plan.” The Amended 2007 Plan includes the following material change as compared to the version of the Plan that was approved at the Fiscal 2020 Annual Meeting:
•an additional 50 million shares of our Common Stock will be made available for issuance under the Amended 2007 Plan.
Other than as described above, the Amended 2007 Plan does not contain any changes as compared to the 2007 Plan other than certain technical changes and changes for administrative convenience.
APPROVAL OF 50 MILLION ADDITIONAL SHARES OF COMMON STOCK FOR ISSUANCE UNDER THE AMENDED 2007 PLAN
Under the 2007 Plan, as of the Record Date, November 14, 2022, equity awards covering 101,965,765 shares had been granted, net of cancellations. Due to the fungible share pool provision of the 2007 Plan (see “Important Provisions of the 2007 Plan - Fungible Share Pool” below), the equity awards granted as of the Record Date counted as 170,243,966 shares against the 2007 Plan share reserve. As of the Record Date, approximately 29,756,034 shares remained available for future grants, subject to the fungible share pool provision. We expect to exhaust the existing share reserve in less than two years. Our calculations suggest that it is prudent to replenish the share reserve at this time. Without the additional shares, we would need to make changes to our long-term incentives program in order to conserve the remaining share reserve. To enable us to continue offering meaningful equity-based incentives to key employees and non-employee directors, the Board believes that it is both necessary and appropriate to increase the number of shares of Common Stock available for these purposes. Accordingly, we are asking our shareholders to approve an amendment and restatement of the 2007 Plan that would increase the total number of shares of Common Stock available for grant under the 2007 Plan by 50 million, which would make available for grant under the Amended 2007 Plan a total of approximately 250 million shares of Common Stock. If shareholders approve the Amended 2007 Plan, we expect that the shares available under the Amended 2007 Plan will meet our anticipated needs for approximately two years, subject to changes in business conditions or other trends.
63Background for the Current Request to Increase the Share Reserve for Equity Incentive Awards
Significant Historical Award Information
Common measures of a stock plan’s cost include burn rate, dilution, and overhang. The burn rate, or run rate, refers to how fast a company uses the supply of shares authorized for issuance under its stock plan. Over the last three years, we have maintained an average equity run rate of only 1.3% of shares of Common Stock outstanding per year. Dilution measures the degree to which our shareholders’ ownership has been diluted by stock-based compensation awarded under our various equity plans and also includes shares that may be awarded under our various equity plans in the future (“overhang”).
The following table shows how our key equity metrics have changed over the past three fiscal years:
| Key Equity Metrics | 2022 | 2021 | 2020 | ||||||||
| Equity Run Rate(1) | 1.6% | 1.2% | 1.0% | ||||||||
| Overhang(2) | 9.7% | 11.5% | 10.2% | ||||||||
| Dilution(3) | 2.6% | 2.2% | 2.1% | ||||||||
(1)Equity run rate is calculated by dividing the number of shares subject to equity awards granted during the fiscal year by the weighted-average number of shares outstanding during the fiscal year.
(2)Overhang is calculated by dividing (a) the sum of (x) the number of shares subject to equity awards outstanding at the end of the fiscal year and (y) the number of shares available for future grants at the end of the fiscal year, by (b) the number of shares outstanding at the end of the fiscal year.
(3)Dilution is calculated by dividing the number of shares subject to equity awards outstanding at the end of the fiscal year by the number of shares outstanding at the end of the fiscal year.
Number of Shares Requested
We considered several factors in determining to request 50 million additional shares for the Amended 2007 Plan:
•Assuming shareholder approval of the Amended 2007 Plan, 79,756,034 shares will be available for future grants (which is the sum of the 50 million additional shares and the 29,756,034 shares available as of the Record Date). We expect this amount to last for approximately two years of awards. Such shares would represent approximately 7.3% of our total outstanding shares of Common Stock as of the Record Date. This estimate assumes that we continue our current practices of issuing grants. While we believe this modeling provides a reasonable estimate of how long such a share reserve would last, there are a number of factors that could impact our future actual equity share usage and the shares available under the Amended 2007 Plan may last longer or shorter than two years.
•The total overhang resulting from the share request, including awards outstanding under all of our equity plans, represents approximately 11.7% of the shares of Common Stock outstanding as of the Record Date.
•Given the significant institutional share ownership of Micron, we considered the stated policies of those institutions and of certain proxy advisory services.
64 | 2022 Proxy Statement
Effect of Shareholder Approval of Amended 2007 Plan
If shareholders approve the Amended 2007 Plan, it will replace, effective as of the date of such shareholder approval, the version of the 2007 Plan that was approved by shareholders at the Fiscal 2020 Annual Meeting. If shareholders do not approve the Amended 2007 Plan as described herein, we will continue to use the 2007 Plan as last approved by shareholders. However, as described above, without the share increase proposed above, the shares that remain available for issuance under the 2007 Plan may not be sufficient for us to be able to achieve our goals of attracting, motivating, and retaining our employees through grants of equity awards.
Limitations on Individual Awards
The maximum aggregate number of shares of our Common Stock subject to stock-based awards that may be granted under the Amended 2007 Plan during any one calendar year to any one participant is as follows:
| Options and/or Stock Appreciation Rights (SARs) | 5,000,000 | ||||
| Other Stock-Based Awards (other than Options or SARs) | 5,000,000 | ||||
These limits are unchanged as compared to the 2007 Plan and are subject to anti-dilution adjustments in the
event of corporate events such as stock splits, mergers, consolidations, stock dividends, recapitalizations and similar transactions.
IMPORTANT PROVISIONS OF THE AMENDED 2007 PLAN
The Amended 2007 Plan contains a number of provisions that we believe are consistent with the interests of shareholders and sound corporate governance practices, including:
•Fungible Share Pool. The Amended 2007 Plan uses a fungible share pool under which each stock option and SAR counts as one share against the Amended 2007 Plan share reserve and each stock-based full-value award (which includes any stock-based or stock-settled award other than options or SARs) counts as two shares against the Amended 2007 Plan share reserve.
•No Liberal Share Counting for Stock Options or SARs. The Amended 2007 Plan prohibits the reuse of shares withheld, repurchased, or delivered to satisfy the exercise price or tax withholding requirements relating to a stock option or SAR. Accordingly, the Amended 2007 Plan prohibits “net share counting” upon the exercise of options or SARs.
•No Repricing of Stock Options or SARs. The Amended 2007 Plan generally prohibits the repricing of stock options or SARs without shareholder approval. As provided in the Amended 2007 Plan, the following actions are generally prohibited: (i) reducing the exercise price or base price of an option or SAR after the date of grant, (ii) canceling an option or SAR in exchange for cash, other awards, or options or SARS with an exercise price or base price that is less than the exercise price or base price of the original option or SAR, or otherwise, and (iii) any repurchasing of an option or SAR for value (in cash or otherwise) if the current fair market value of the shares of Common Stock underlying the option or SAR is lower than the exercise price or base price per share of the option or SAR.
•No Discounted Stock Options or SARs. All stock options and SARs must have an exercise price or base price equal to or greater than the fair market value of the underlying Common Stock on the date of grant (except when being granted in substitution for awards held by employees of companies acquired by us).
•“Double-trigger” Change in Control Vesting. If awards granted under the Amended 2007 Plan are assumed by a successor in connection with a Change in Control (as defined in the Amended 2007 Plan), such awards will not automatically vest and pay out solely as a result of the Change in Control. Instead, such awards will only vest in accordance with their existing vesting schedule, except that they will vest upon termination or resignation if within one year after the effective date of the Change in Control, the
65participant’s employment is terminated without cause or, in the case of certain participants, if the participant resigns for good reason.
•No Award may be Transferred for Value. The Amended 2007 Plan prohibits the transfer of unexercised, unvested, or restricted awards to third parties for value.
•No Liberal Definition of “Change in Control.” The Change in Control definition contained in the Amended 2007 Plan is not a “liberal” definition that would be activated on mere shareholder approval of a transaction.
•Minimum Vesting Requirements. Subject to certain limited exceptions, full-value awards granted under the Amended 2007 Plan (other than awards granted to non-employee directors) will either (i) be subject to a minimum vesting period of three years (which may include graduated vesting within such three-year period), or one year if the vesting is based on performance criteria other than continued service, or (ii) be granted solely in exchange for forgone cash compensation.
•Limitation on Amendments. No material amendments to the Amended 2007 Plan can be made without shareholder approval. For example, an amendment that would materially increase the number of shares reserved under the Amended 2007 Plan, or that would diminish the prohibitions on repricing stock options or SARs, would require shareholder approval. The types of amendments that require shareholder approval are described in the Amended 2007 Plan.
SUMMARY OF THE AMENDED 2007 PLAN AS PROPOSED
TO BE AMENDED AND RESTATED
TO BE AMENDED AND RESTATED
The following summary is qualified in its entirety by reference to the complete text of the Amended 2007 Plan, which is provided with this Proxy Statement as Appendix A.
Purpose
The purpose of the Amended 2007 Plan is to promote our success and enhance our value 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
The Amended 2007 Plan authorizes the grant of awards in any of the following forms:
•Options to purchase shares of Common Stock, which may be nonstatutory stock options or incentive stock options under the Code. The exercise price of an option granted under the Amended 2007 Plan may not be less than the fair market value of our Common Stock on the date of grant (except to the limited extent permitted by the Code when we issue options in substitution for options held by employees of companies acquired by us). Stock options granted under the Amended 2007 Plan may have a term of up to eight years.