Business Context and Reporting Period
This Form 8-K Current Report was filed by Skyworks Solutions, Inc. on June 4, 2009. The filing addresses Item 5.02 regarding the departure of directors or certain officers, specifically focusing on the modification of compensatory arrangements for executive officers in response to significant changes in the economic environment and financial markets.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. The document is limited to a description of a corporate action regarding executive compensation.
Material Changes
On June 4, 2009, Skyworks Solutions, Inc. offered its executive officers, including Named Executive Officers, the opportunity to forfeit outstanding Performance Share Awards dated November 6, 2007 (the "2007 PSA"). This action was taken because certain awards were not exempt from deduction limitations under Section 162(m) of the Internal Revenue Code. All Named Executive Officers accepted the offer to replace the 2007 PSA with new "2009 Awards."
Guidance, Outlook, and Management Commentary
The new compensation structure consists of two components:
- 2009 Restricted Stock Award (RSA): Covers shares equal to the "Threshold/Nominal" tranche of the original award. These shares vest on November 6, 2010, contingent on continued employment.
- 2009 Performance Share Award (PSA): Covers shares equal to the "Target" and "Maximum/Stretch" tranches. This award is Section 162(m) compliant and subject to the following conditions:
- Relative Stock Price Performance:
- Target (50% of shares): Met if Skyworks' stock price percentage change exceeds the 60th percentile of a selected Peer Group.
- Stretch (50% of shares): Met if Skyworks' stock price percentage change exceeds the 70th percentile of the Peer Group.
- Measurement Period: November 6, 2007, to November 6, 2010. Performance is calculated by comparing the 90-day average stock price at the start and end of this period.
- Continued Employment: If performance conditions are met, 50% of the issuable shares are paid on November 6, 2010, and the remaining 50% on November 6, 2011, provided the executive remains employed.
The maximum number of shares issuable under the 2009 Awards equals the maximum number of shares that would have been issuable under the cancelled 2007 PSA.
Investor Verification Checklist
- Verify the specific composition of the "Peer Group" selected by the Compensation Committee for relative stock price calculations.
- Confirm the exact number of shares originally granted under the 2007 PSA for each Named Executive Officer to understand the total potential equity exposure.
- Review the company's stock price performance relative to the peer group over the 90-day periods ending November 6, 2007, and November 6, 2010, to assess vesting probability.
- Monitor executive retention rates through the vesting dates of November 6, 2010, and November 6, 2011.