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
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Preliminary Proxy
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Definitive Proxy
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Definitive Additional
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Soliciting Material Pursuant to §240.14a-12 |
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ALLIANCE FIBER OPTIC PRODUCTS, INC. |
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(Name of Registrant as
Specified In Its Charter) |
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ALLIANCE FIBER OPTIC PRODUCTS,
INC.
275 GIBRALTAR DRIVE
SUNNYVALE, CALIFORNIA 94089
(408)
736-6900
April 20, 2015
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of Alliance Fiber Optic Products, Inc. that will be held on Wednesday, May 20, 2015, at 2:00 p.m., Pacific Daylight Time, at the Companys principal executive office, 275 Gibraltar Drive, Sunnyvale, California 94089.
The formal notice of the Annual Meeting and the Proxy Statement has been made a part of this invitation.
After reading the Proxy Statement, please vote at your earliest convenience to ensure that your shares will be represented. Your shares cannot be voted unless you sign, date and return the enclosed proxy, vote by telephone or on the Internet, vote your shares as directed by your broker, or attend the Annual Meeting in person. Your vote is important, so please vote promptly.
A copy of our 2014 Annual Report to Stockholders is also enclosed.
We look forward to seeing you at the meeting.
Sincerely yours, |
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/s/ Peter C. Chang |
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Peter C. Chang |
Chairman, President and |
Chief Executive Officer |
ALLIANCE FIBER OPTIC PRODUCTS, INC.
__________________
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held May 20, 2015
__________________
To the Stockholders of Alliance Fiber
Optic Products, Inc.:
The Annual Meeting of Stockholders of
Alliance Fiber Optic Products, Inc., a Delaware corporation (the Company),
will be held at the Companys principal executive office, 275 Gibraltar Drive,
Sunnyvale, California 94089, on Wednesday, May 20, 2015, at 2:00 p.m., Pacific
Daylight Time, for the following purposes:
1. |
To elect Mr. Gwong-Yih Lee and Mr. James C. Yeh
as Class III directors to serve until the 2018 Annual Meeting of
Stockholders or until their successors are duly elected and
qualified; |
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To approve, on a non-binding advisory basis,
the compensation of the Companys named executive officers; |
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To vote on the frequency, on a non-binding
advisory basis, of an advisory stockholder vote on the compensation of the
Companys named executive officers; |
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4. |
To ratify the appointment of
Marcum LLP as the Companys independent registered public accountant for
2015; and |
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To transact such other business
as may properly come before the Annual Meeting and any adjournment or
postponement of the Annual Meeting. |
Stockholders of record as of the close
of business on March 25, 2015 are entitled to notice of and to vote at the
Annual Meeting and any adjournment or postponement thereof. A list of
stockholders entitled to vote at the Annual Meeting will be available at the
Secretarys office, 275 Gibraltar Drive, Sunnyvale, California 94089, for ten
days before the meeting.
It is important that your shares are
represented at the Annual Meeting. Even if you plan to attend the meeting, we
hope that you will promptly vote.
By Order of the Board of
Directors |
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/s/ Peter C. Chang |
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Peter C. Chang |
Secretary |
April 20, 2015
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting of
Stockholders to be
held on May 20, 2015.
The Proxy Statement and Annual Report
are available at http://www.tscviewer.com/afop/
ALLIANCE FIBER OPTIC PRODUCTS,
INC.
275 Gibraltar Drive
Sunnyvale, California 94089
(408) 736-6900
__________________
PROXY STATEMENT
__________________
This Proxy Statement is furnished in
connection with the solicitation by the Board of Directors of Alliance Fiber
Optic Products, Inc., a Delaware corporation (the Company), of proxies in the
accompanying form to be used at the Annual Meeting of Stockholders of the
Company to be held at the Companys principal executive office, 275 Gibraltar
Drive, Sunnyvale, California, 94089, on Wednesday, May 20, 2015, at 2:00 p.m.,
Pacific Daylight Time, and any postponement or adjournment thereof (the Annual
Meeting).
Questions and Answers About the
Proxy Materials and the Annual Meeting
What proposals will be voted on at
the Annual Meeting?
Four proposals will be voted on at the
Annual Meeting:
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The election of Mr. Gwong-Yih Lee and Mr. James
C. Yeh as Class III directors; |
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A non-binding advisory vote on the compensation
of our named executive officers; |
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A non-binding advisory vote on the frequency of
a non-binding advisory stockholder vote on the compensation of our named
executive officers; and |
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The ratification of the appointment of Marcum
LLP as our independent registered public accountant for
2015. |
What are the Board's recommendations?
Our Board recommends that you vote:
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"FOR" election of the nominated Class III
directors; |
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FOR approval, on a non-binding advisory
basis, of the compensation of our executive officers; |
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For the EVERY YEAR option, on a non-binding
advisory basis, as the frequency of a non-binding advisory stockholder
vote on the compensation of our named executive officers;
and |
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"FOR" ratification of the appointment of Marcum
LLP as our independent registered public accountant for
2015. |
Will there be any other items of
business on the agenda?
We do not expect any other items of
business because the deadline for stockholder proposals and nominations has
already passed. Nonetheless, in case there is an unforeseen need, the
accompanying proxy gives discretionary authority to the persons named on the
proxy with respect to any other matters that might be brought before the
meeting. Those persons intend to vote that proxy in accordance with their best
judgment.
1
Who is entitled to vote?
Stockholders of record at the close of
business on March 25, 2015 (the "Record Date") may vote at the Annual Meeting.
Each stockholder is entitled to one vote for each share of the Company's Common
Stock held as of the Record Date.
What is the difference between
holding shares as a stockholder of record and as a beneficial owner?
Stockholder of Record.
If your shares are registered directly in
your name with our transfer agent, American Stock Transfer & Trust Company,
LLC, you are considered, with respect to those shares, the stockholder of
record. The Proxy Statement and proxy card have been sent directly to you by the
Company.
Beneficial Owner. If your shares are held in a brokerage account or by a bank or
other nominee, you are considered the beneficial owner of shares held in street
name. The Proxy Statement and proxy card have been forwarded to you by your
broker, bank or nominee who is considered, with respect to those shares, the
stockholder of record. As the beneficial owner, you have the right to direct
your broker, bank or nominee how to vote your shares by using the voting
instruction form included in the mailing with your proxy materials. If you hold
shares beneficially in street name and do not provide your broker or nominee
with voting instructions, your shares may constitute "broker non-votes."
Generally, broker non-votes occur on a matter when a broker is not permitted to
vote on that matter without instructions from the beneficial owner and
instructions are not given. In tabulating the voting result for any particular
proposal, shares that constitute broker non-votes are not considered entitled to
vote on that proposal. Thus, broker non-votes will not affect the outcome of any
matter being voted on at the Annual Meeting, assuming that a quorum is
obtained.
How do I vote?
Stockholder of Record
If you are a stockholder of record, you
may vote in person at the Annual Meeting, vote by proxy using the enclosed proxy
card, vote by telephone or vote by the Internet. Whether or not you plan to
attend the Annual Meeting, we urge you to vote to ensure your vote is counted.
You may still attend the Annual Meeting and vote in person even if you have
already voted.
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● To vote in person, come to the Annual Meeting
and we will give you a ballot when you arrive. |
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● To vote using the proxy card, complete, sign
and date the enclosed proxy card and return it promptly in the
postage-prepaid envelope provided. If you return your signed proxy card to
us before the Annual Meeting, we will vote your shares as you
direct. |
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● To vote by telephone, follow the telephone
voting instructions on the enclosed proxy card. You will be asked to
provide the company number and control number from the proxy card. Your
vote must be received by 11:59 p.m., Eastern Time, on May 19, 2015 to be
counted. |
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● To vote by the Internet, go to
www.Proxyvote.com and follow the Internet voting instructions on the
enclosed proxy card. You will be asked to provide the company number and
control number from the proxy card. Your vote must be received by 11:59
p.m., Eastern Time, on May 19, 2015 to be counted. Please be aware that
you must bear any costs associated with your Internet access, such as
usage charges from Internet access providers and telephone
companies. |
2
Beneficial Owner
If you are a beneficial owner of shares
registered in the name of your broker, bank, or other nominee, you should have
received voting instructions with these proxy materials from that organization
rather than from us. To ensure that your vote is counted, complete and mail the
voting form to your broker. Alternatively, you may vote by telephone or over the
Internet as instructed by your broker, bank or other nominee. To vote in person
at the Annual Meeting, you must obtain a valid proxy from your broker, bank or
other nominee. Follow the instructions from your broker, bank or other nominee
included with these proxy materials, or contact your broker, bank or other
nominee to request a proxy.
Can I change my vote or revoke my
proxy?
You may change your vote or revoke your
proxy at any time prior to the vote at the Annual Meeting. If you submitted your
proxy by mail, you must file with the Secretary of the Company a written notice
of revocation or deliver, prior to the vote at the Annual Meeting, a valid,
later-dated proxy. If you voted by telephone or by the Internet, you may change
your vote or revoke your proxy with a later telephone or Internet proxy, as the
case may be. Attendance at the Annual Meeting will not have the effect of
revoking a proxy unless you give written notice of revocation to the Secretary
before the proxy is exercised or you vote by written ballot at the Annual
Meeting. If your shares are held in street name, to vote in person at the Annual
Meeting, you must obtain a valid proxy from your broker, bank or other nominee.
Follow the instructions from your broker, bank or other nominee included with
these proxy materials, or contact your broker, bank or other nominee to request
a proxy.
How are votes counted?
In the election of directors, you may
vote "FOR" all of the nominees or your vote may be "WITHHELD" with respect to
one or more of the nominees. For each of Proposals 2 and 4, you may vote "FOR"
or "AGAINST" or "ABSTAIN." If you "ABSTAIN" as to any of these Proposals, the
abstention has the same effect as a vote "AGAINST." For Proposal 3, you may vote for EVERY
YEAR, EVERY TWO YEARS, EVERY THREE YEARS, or ABSTAIN. If you provide
specific instructions, your shares will be voted as you instruct. If you sign
your proxy card or voting instruction form with no further instructions and you
are a stockholder of record, your shares will be voted in accordance with the
recommendations of the Board ("FOR" all of the nominees to the Board, FOR the
approval of the compensation of our named executive officers, for a frequency of
EVERY YEAR for an advisory stockholder vote on the compensation of our named
executive officers and "FOR" ratification of the appointment of our independent
registered public accountant) and in the discretion of the proxy holders on any
other matters that properly come before the meeting. If you hold your shares in
street name, please see the next section for important information regarding
voting of your shares.
What vote is required to approve
each item?
In the election of directors, the two
persons receiving the highest number of "FOR" votes at the Annual Meeting will
be elected. Proposals 2 and 4 require the affirmative "FOR" vote of a majority
of the shares present and voting at the Annual Meeting in person or by proxy.
Because your vote on Proposal 2 is advisory, it will not be binding on our board
of directors, the Executive Compensation Committee or the Company. For Proposal
3, the alternative that receives the greatest number of votes will be the
frequency of the stockholders advisory vote. Because your vote on Proposal 3 is
advisory, it will not be binding on our board of directors, the Executive
Compensation Committee or the Company. However, our board of directors will
review the voting results and take them into consideration when determining the
frequency of future non-binding advisory votes on compensation of our named
executive officers. If you hold shares beneficially in street name and do not
provide your broker or nominee with voting instructions, your shares may
constitute "broker non-votes." Generally, broker non-votes occur on a matter
when a broker is not permitted to vote on that matter without instructions from
the beneficial owner and instructions are not given. In the event you do not vote, your broker will not be able to
vote regarding the election of directors or with respect to Proposals 2 or 3,
and will only be able to vote on Proposal 4, ratification of the appointment of
our independent registered public accounting firm. In tabulating the voting result for any particular proposal, shares that
constitute broker non-votes are not considered entitled to vote on that
proposal. Thus, broker non-votes will not affect the outcome of any matter being
voted on at the Annual Meeting, assuming that a quorum is obtained. Abstentions
have the same effect as votes against the matter.
3
Is cumulative voting permitted for
the election of directors?
Stockholders may not cumulate votes in
the election of directors, which means that each stockholder may vote no more
than the number of shares he or she owns for a single director
candidate.
What constitutes a quorum?
The presence at the Annual Meeting, in
person or by proxy, of the holders of a majority of Common Stock outstanding on
the Record Date will constitute a quorum. As of the close of business on the
Record Date, there were 17,719,958 shares of our Common Stock outstanding. Both
abstentions and broker non-votes are counted for the purpose of determining the
presence of a quorum.
How are proxies solicited?
Our employees, officers and directors
may solicit proxies. We will bear the cost of soliciting proxies and will
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their reasonable out-of-pocket expenses for forwarding proxy and solicitation
material to the owners of our Common Stock.
IMPORTANT
Please promptly vote by signing,
dating and returning the enclosed proxy card or voting instructions in the
postage-prepaid return envelope provided, or by telephone or the Internet, so
that your shares can be voted.
This Proxy Statement and the
accompanying form of proxy are being mailed to stockholders on or about April
20, 2015.
PROPOSAL 1
ELECTION OF DIRECTORS
Directors and Nominees
Pursuant to Article VI of the Companys
Restated Certificate of Incorporation, the Board of Directors is divided into
three classes, with each class elected for a 3-year term. The number of
directors is currently set at five. Class I and Class III consist of two
directors each, and Class II consists of one director. Two Class III directors
will be elected at the Annual Meeting and will serve until the 2018 Annual
Meeting, or until their successors are duly elected and qualified. The Class I
directors will continue to serve until the 2016 Annual Meeting and the Class II
director will continue to serve until the 2017 Annual Meeting.
4
The Nominating and Corporate Governance
Committee of the Board of Directors has recommended, and the Board of Directors
has designated, Mr. Gwong-Yih Lee and Mr. James C. Yeh as the nominees to fill
the Class III director seats to serve until the 2018 Annual Meeting. If either
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, an event not now anticipated, proxies will be voted for any nominees
designated by the Board of Directors, taking into account any recommendations of
the Nominating and Corporate Governance Committee, to fill the vacancies.
Biographical information concerning the
nominees is set forth below.
CLASS III
Gwong-Yih Lee, 60, has served as a director since August 2000. Since June
2014, Mr. Lee has served as Managing Director of TransLink Capital, a venture
capital firm that leverages proprietary Asia insight to invest in U.S. start-up
companies. Since July 2006, Mr. Lee has served as Chairman of CyberTAN
Technology, Inc., a networking company listed on the Taiwan Stock Market. From
July 2006 to July 2013, Mr. Lee served as Chief Executive officer of CyberTan
Technology, Inc. From September 2005 to December 2012, Mr. Lee has served as the
Founder and President and Chief Executive Officer of ApaceWave Technologies,
Inc., a broadband wireless company. From September 1999 to January 2004, Mr. Lee
served as Senior Director and General Manager at Cisco Systems, Inc. In March
1998, Mr. Lee established TransMedia Communications, a communication equipment
company, and served as its President and Chief Executive Officer until September
1999, when TransMedia Communications was acquired by Cisco. Mr. Lee received a
B.S. in Control Engineering from National Chiao-Tung University in Taiwan and an
M.S. in Electrical Engineering from New York University. We believe Mr. Lees
qualifications to serve on our Board include his experience running private
technology companies and his managerial experience at Cisco and CyberTAN
Technology.
James C. Yeh, 58, has served as a director since our formation in December
1995. Since April 2005, Mr. Yeh has served as Managing Director of Blazee
International, an imaging processing applications company. In addition, since
January 1991, Mr. Yeh has served as President of Matics Computer Systems, Inc.,
a personal computer systems and peripherals company. Mr. Yeh holds a B.S. in
Mathematics from Tamkang University in Taiwan and an M.S. in Systems Science and
Mathematics from Washington University in Saint Louis, Missouri. We believe Mr.
Yehs qualifications to serve on our Board include his operational and
management experience with technology companies.
Biographical information concerning the
remaining members of the Board of Directors is set forth below.
CLASS I
Peter C. Chang, 57, has served as our Chairman of the Board, Chief Executive
Officer and President since our formation in December 1995. From 1990 to 1995,
Mr. Chang was Division Manager at Hon Hai Holding, a fiber optics company, and
from 1988 to 1990 was a member of the technology staff at Lucent Bell Labs. Mr.
Chang received a B.S. in Mechanical Engineering from National Taiwan University
and an M.S. in Mechanical Engineering from Notre Dame University. We believe Mr.
Changs qualifications to serve on our Board include his extensive industry
expertise and his experience as our Chief Executive Officer and President.
Richard Black, 81, has served as a director since April 2003. Since March
2002, Mr. Black has served as the President, Chief Executive Officer, director
and majority owner of ECRM, Inc., a worldwide supplier of electronic laser
imaging devices for the publishing and graphic arts industries. From August 1983
to March 2002, Mr. Black served as the Chairman and director of ECRM, Inc. He
served as President of Oak Technology Inc., a semiconductor company, from
January 1998 to March 1999, as Vice Chairman from March 1999 to August 2003 and
as a director from 1988 to 2003. Until July 2010, Mr. Black served as the
Chairman of the Board of Directors of GSI Group Inc., a manufacturer of laser
systems and precision motion components, and he served on the GSI Board since
1999. Mr. Black also serves on the board of Applied Optoelectronics, Inc. (AAOI)
and boards of several private and non-profit companies. In addition, from 2002
to 2007, Mr. Black served on the board of directors of Altigen Communications,
Inc., a manufacturer of VoIP telephone systems and unified communications
systems. Mr. Black holds a B.S. in Engineering from Texas A&M University and
an M.B.A. from Harvard University. We believe Mr. Blacks qualifications to
serve on our Board include his operational and management expertise, his
experience as both a director and chairman of the board of other public
companies, and his finance skills.
5
CLASS II
Ray Sun, 63, has served as a director since November 2003. Mr. Sun served as
Managing Director, Business Development and Venture Investment (greater China)
of Applied Materials China, a semiconductor equipment company, from November
2001 to February 2009. He has been retired since February 2009. Mr. Sun served
as a representative of the Silicon Valley office for a Taiwanese venture firm,
Global Investment Management Co. LTD., from October 1999 to November 2001. Mr.
Sun has more than 20 years of executive management experience in the software,
hardware and telecommunications industries. Mr. Sun received a B.S. in
Industrial Engineering from Chung Yuan Christian University in Taiwan, and an
M.S. in Industrial Engineering from Kansas State University. We believe Mr.
Suns qualifications to serve on our Board include his business development and
investment expertise and his experience in executive management for a broad
array of technology-based businesses.
The Board of Directors recommends a
vote FOR the election of Mr. Gwong-Yih Lee and Mr. James C. Yeh as the Class
III Directors.
Board Structure, Independence,
Meetings and Committees
Our Board believes that having a
combined Chairman of the Board and Chief Executive Officer is the most effective
leadership structure for our company at this time. The Board believes that Mr.
Chang is the director best situated to identify strategic opportunities and
focus the activities of the Board due to his full-time commitment to our
business and his company-specific experience. The Board also believes that the
combined role of Chairman and Chief Executive Officer promotes effective
execution of strategic imperatives and facilitates information flow between
management and the Board.
The Board of Directors held four
meetings during 2014. All directors attended 100% of the aggregate number of
meetings of the Board of Directors and of the committees on which each such
director serves. The independent directors meet in regularly scheduled executive
sessions at meetings of the Board without the participation of the Chief
Executive Officer or the other members of management. In 2014, one director
attended the annual meeting. We do not have a policy requiring directors to
attend our annual meetings.
The Board of Directors has determined
that, except for Mr. Chang, all of the members of the Board are independent
directors within the meaning of Rule 5605 of The NASDAQ Stock Market and the
rules of the Securities and Exchange Commission, or SEC. Mr. Chang is not
considered independent because he is employed by the Company as its President
and Chief Executive Officer. All of the nominees are members of the Board
standing for reelection. For all of the non-employee directors, the Board
considered their relationship and transactions with the Company as directors and
as securityholders of the Company.
The Board is actively involved in the
oversight of risks that could affect our business and operations, while
management is responsible for day-to-day risk management. The Board administers
this oversight function directly through the Board as a whole, as well as
through the Audit and Nominating and Corporate Governance committees of the
Board.
The Board of Directors has appointed an
Executive Compensation Committee, an Audit
Committee and a Nominating and Corporate
Governance Committee. The Board has approved a charter for each of these
committees. Copies of the charters of the Audit Committee, Nominating and
Corporate Governance Committee and Executive Compensation
Committee are available through our website at www.afop.com. The Board has also
appointed a Non-Executive Compensation Committee.
6
Executive
Compensation |
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Committee |
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Number of
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Three |
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Members: |
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Mr. Sun (Chairman) |
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Mr. Black |
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Mr. Lee |
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Number of
Meetings: |
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Two |
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Functions: |
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The Executive Compensation
Committees primary functions are to assist the Board in meeting its
responsibilities with regard to oversight and determination of executive
compensation and to review and make recommendations to the Board with
respect to major compensation plans, policies and programs of the Company.
Other specific duties and responsibilities of the Executive Compensation
Committee are to review and approve the compensation for the Chief
Executive Officer and other executive officers of the Company, establish
and modify the terms and conditions of employment of the Chief Executive
Officer and other executive officers of the Company and administer the
Companys stock plans and other compensation plans. |
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Audit
Committee |
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Number of
Members: |
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Three |
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Members: |
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Mr. Black (Chairman) |
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Mr. Sun |
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Mr. Yeh |
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Number of
Meetings: |
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Four |
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Functions: |
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The Audit Committees primary functions are
to assist the Board of Directors in fulfilling its oversight
responsibilities relating to the Companys financial statements, system of
internal controls, and auditing, accounting and financial reporting
processes. Other specific duties and responsibilities of the Audit
Committee are to appoint, compensate, evaluate and, when appropriate,
replace the Companys independent auditors; review and pre-approve audit
and permissible non-audit services; review the scope of the annual audit;
monitor the independent auditors relationship with the Company; and meet
with the independent auditors and management to discuss and review the
Companys financial statements, internal controls, and auditing,
accounting and financial reporting processes. Mr. Black is the Audit
Committee financial expert. |
7
Nominating and Corporate |
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Governance Committee |
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Number of
Members: |
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Three |
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Members: |
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Mr. Black (Chairman) |
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Mr. Sun |
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Mr. Yeh |
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Number of
Meetings: |
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One |
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Functions: |
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The Nominating and Corporate
Governance Committees primary functions are to identify qualified
individuals to become members of the Board of Directors and determine the
composition of the Board and its committees. Other specific duties and
responsibilities are to recommend nominees to fill vacancies on the Board,
review suggestions for candidates for membership on the Board, and monitor
compliance with Board and Board committee membership
criteria. |
Non-Executive Compensation
Committee
Mr. Chang currently serves as the sole
member of the Non-Executive Compensation Committee. The Non-Executive
Compensation Committee is a secondary committee responsible for granting and
issuing awards under the 2000 Stock Incentive Plan, as amended and restated, to
eligible employees, other than to members of the Board of Directors, to
individuals designated by the Board of Directors as Section 16 officers, and
to employees who hold the title of Vice President or above.
Director
Nominations
The Board of Directors nominates a
class of directors for election at each annual meeting of stockholders and
elects new directors to fill vacancies when they arise. The Nominating and
Corporate Governance Committee has the responsibility to identify, evaluate,
recruit and recommend qualified candidates to the Board of Directors for
nomination or election.
The Board of Directors has an objective
that its membership is composed of experienced and dedicated individuals with
diversity of backgrounds, perspectives and skills. The Nominating and Corporate
Governance Committee will select candidates for director based on their
character, judgment, and diversity of experience, business acumen, and ability
to act on behalf of all stockholders. The Nominating and Corporate Governance
Committee believes that nominees for director should have experience, such as
experience in management or accounting and finance, or industry and technology
knowledge, that may be useful to the Company and the Board, high personal and
professional ethics, and the willingness and ability to devote sufficient time
to effectively carry out his or her duties as a director. While diversity is
among the qualifications that may be considered, the Committee does not have a
formal diversity policy. The Nominating and Corporate Governance Committee
believes it is appropriate for at least one, and, preferably, multiple, members
of the Board to meet the criteria for an audit committee financial expert as
defined by SEC rules, and for a majority of the members of the Board to meet the
definition of independent director under the rules of The NASDAQ Stock Market.
The Nominating and Corporate Governance Committee also believes it is
appropriate for certain key members of the Companys management to participate
as members of the Board.
8
Prior to each annual meeting of
stockholders, the Nominating and Corporate Governance Committee identifies
nominees first by evaluating the current directors whose term will expire at the
annual meeting and who are willing to continue in service. These candidates are
evaluated based on the criteria described above, including as demonstrated by
the candidates prior service as a director, and the needs of the Board with
respect to the particular talents and experience of its directors. In the event
that a director does not wish to continue in service, the Nominating and
Corporate Governance Committee determines not to re-nominate the director, or a
vacancy is created on the Board as a result of a resignation, an increase in the
size of the Board or other event, the Committee will consider various candidates
for Board membership, including those suggested by the Committee members, by
other Board members, by any executive search firm engaged by the Committee and
by stockholders. A stockholder who wishes to suggest a prospective nominee for
the Board should notify the Secretary of the Company or any member of the
Committee in writing with any supporting material the stockholder considers
appropriate.
In addition, the Companys Bylaws
contain provisions that address the process by which a stockholder may nominate
an individual to stand for election to the Board of Directors at the Companys
Annual Meeting of Stockholders. In order to nominate a candidate for director, a
stockholder must give timely notice in writing to the Secretary of the Company
and otherwise comply with the provisions of the Companys Bylaws. To be timely,
the Companys Bylaws provide that the Company must have received the
stockholders notice no less than 60 days nor more than 90 days prior to the
scheduled date of the meeting. However, if notice or prior public disclosure of
the date of the annual meeting is given or made to stockholders less than 75
days prior to the meeting date, the Company must receive the stockholders
notice by the earlier of (i) the close of business on the 15th day after the
earlier of the day the Company mailed notice of the annual meeting date or
provided public disclosure of the meeting date and (ii) two days prior to the
scheduled date of the annual meeting. Information required by the Bylaws to be
in the notice include the name and contact information for the candidate and the
person making the nomination and other information about the nominee that must
be disclosed in proxy solicitations under Section 14 of the Securities Exchange
Act of 1934 and the related rules and regulations under that Section.
Stockholder nominations must be made in
accordance with the procedures outlined in, and include the information required
by, the Companys Bylaws and must be addressed to: Secretary, Alliance Fiber
Optic Products, Inc., 275 Gibraltar Drive, Sunnyvale, California 94089. You can
obtain a copy of the Companys Bylaws by writing to the Secretary at this
address.
Stockholder Communications with the
Board of Directors
If you wish to communicate with the
Board of Directors, you may send your communication in writing to: Secretary,
Alliance Fiber Optic Products, Inc., 275 Gibraltar Drive, Sunnyvale, California
94089. You must include your name and address in the written communication and
indicate whether you are a stockholder of the Company. The Secretary will review
any communication received from a stockholder, and all material communications
from stockholders will be forwarded to the appropriate director or directors or
committee of the Board based on the subject matter.
2014 Director
Compensation
The following table set forth cash
amounts and the value of other compensation earned by the Companys non-employee
directors during 2014:
|
|
Fees Earned or |
|
Option Awards |
|
|
Name |
|
Paid in Cash ($) |
|
($)(1)(2) |
|
Total ($) |
Richard Black |
|
16,000 |
|
- |
|
16,000 |
Gwong-Yih Lee |
|
8,000 |
|
- |
|
8,000 |
Ray Sun |
|
13,200 |
|
- |
|
13,200 |
James Yeh |
|
13,200 |
|
- |
|
13,200 |
9
(1) |
Amount represents grant date fair value
computed in accordance with Financial Accounting Standards Board
Accounting Standards Codification No. 718, Compensation Stock
Compensation (ASC 718). The actual value recognized by the individual is
based on the market price of our Common Stock on the vesting dates and may
be higher or lower. See the notes to our consolidated financial statements
for a discussion of the assumptions made in determining these values. No
options were granted to our outside directors in 2014. |
|
|
(2) |
The following table sets forth the aggregate
number of shares of Common Stock underlying option awards outstanding at
December 31, 2014: |
Name |
|
Number of Shares |
Richard Black |
|
24,000 |
Gwong-Yih Lee |
|
12,000 |
Ray Sun |
|
18,000 |
James Yeh |
|
9,000 |
The Companys non-employee directors
receive $4,000 for each Board meeting attended (or $2,000 for attending
telephonically), $2,600 for each Audit Committee meeting attended (or $1,300 for
attending telephonically), $4,000 for the Chairman of Audit Committee for each
Audit Committee meeting attended (or $2,000 for attending telephonically), and
are reimbursed for reasonable expenses in connection with attendance at meetings
of the Board of Directors and committee meetings. Directors who are our
employees do not receive any fees for their service on our Board.
Effective January 1, 2015, the
Companys non-employee directors receive an annual cash retainer of $16,000 for
service on the board of directors and any committees other than the Audit
Committee. The Chairman of the Audit Committee also receives an annual cash
retainer of $16,000 and each member of the Audit Committee other than the
Chairman also receives an annual cash retainer of $8,000 for service on the
Audit Committee. All retainers are payable quarterly.
Directors who are not employees receive
an initial grant of an option to purchase 12,000 shares of Common Stock at the
fair market value of the Common Stock on the date of grant, which vests ratably
over 36 months. This initial grant is made on the first business day following
election to the Board. On the first business day following the third anniversary
of a directors election to the Board, each non-employee director is entitled to
receive an option to purchase 12,000 shares of Common Stock at the fair market
value of the Common Stock on the date of grant, which option vests ratably over
36 months. The options granted to our outside directors have a per share
exercise price equal to 100% of the fair market value of the underlying shares
on the date of grant, have a term of 10 years and automatically become fully
vested in the event of a change in control.
Certain Relationships and Related
Transactions
It is our policy that all employees,
officers and directors must avoid any activity that is or has the appearance of
conflicting with the interests of the Company. This policy is included in our
Code of Conduct and Business Ethics. We monitor related party transactions for
potential conflict of interest situations on an ongoing basis and all such
transactions relating to executive officers and directors must be approved by
the independent and disinterested members of our Board of Directors or an
independent and disinterested committee of the Board.
According to share ownership numbers
contained in a Schedule 13G filed with the SEC in 2002 and not subsequently
amended, Foxconn Holding Limited (Foxconn) and Hon Hai Precision Industry Co.,
Ltd. (Hon Hai) held 17.83% of our Common Stock based on the number of shares
outstanding on the Record Date. In the normal course of business, we sell
products to and purchase raw materials from Hon Hai, who is the parent company
of Foxconn. These transactions were made at prices and terms consistent with
transactions with unrelated third parties. For fiscal 2014, sales of products to
Hon Hai were $0.07 million, purchases of raw materials from Hon Hai were $1.8
million and $0.05 million were due from Hon Hai. As of December 31, 2014,
amounts due to Hon Hai were $0.4 million.
10
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain
information as of March 25, 2015, as to shares of our Common Stock beneficially
owned by: (1) each person who is known by the Company to own beneficially more
than 5% of its Common Stock, (2) each of our directors, (3) each of our
executive officers named in the Summary Compensation Table, and (4) all of our
directors and executive officers as a group. Ownership information is based upon
information furnished by the respective individuals or entities, as the case may
be. Unless otherwise noted below, the address of each beneficial owner is c/o
Alliance Fiber Optic Products, Inc., 275 Gibraltar Drive, Sunnyvale, California
94089. The percentage of Common Stock beneficially owned is based on 17,719,958
shares of Common Stock outstanding as of March 25, 2015. In addition, shares
issuable pursuant to options which may be exercised and restricted stock units,
or RSUs, which vest within 60 days of March 25, 2015 are deemed to be issued and
outstanding and have been treated as outstanding in calculating the percentage
ownership of those individuals possessing such interest, but not for any other
individuals. Thus, the number of shares considered to be outstanding for
purposes of this table may vary depending on the individuals particular
circumstances.
|
|
|
|
Number of
Shares |
|
Percentage
of |
|
|
|
|
|
of Common
Stock |
|
Common
Stock |
|
Name and
Address of Beneficial Owner |
|
Beneficially Owned (1) |
|
Beneficially Owned |
|
Directors and Named Executive Officers: |
|
|
|
|
|
|
|
Peter C. Chang
(2) |
|
1,354,640 |
|
7.59 |
% |
|
|
Richard Black
(3) |
|
48,000 |
|
* |
|
|
|
Gwong-Yih Lee
(4) |
|
20,333 |
|
* |
|
|
|
Ray Sun (5) |
|
19,833 |
|
* |
|
|
|
James C. Yeh (6) |
|
267,333 |
|
1.51 |
|
|
|
David A. Hubbard
(7) |
|
45,954 |
|
* |
|
|
|
Anita K. Ho (8) |
|
3,876 |
|
* |
|
5 |
% |
Stockholder: |
|
|
|
|
|
|
|
Foxconn Holding Limited
(9) |
|
3,200,000 |
|
18.06 |
|
All
Directors and Executive Officers as a group (7 persons) (10) |
|
1,759,969 |
|
9.81 |
|
* Represents less than
1%. |
|
(1) |
To the Companys knowledge, except as otherwise
disclosed, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them, subject to community property laws where applicable and
the information contained in the notes to this table. |
|
|
(2) |
Includes 16,000 shares held in the name of Mr. Changs minor children, 1,158,640 shares held in
the name of the Chang Family LLC and 60,000 shares held in the name of the Peter and Mary
Chang Foundation, of which Mr. Chang and his wife, Mary C. Chen, are the Managing Members.
Also includes 120,000 shares underlying restricted stock units (RSUs) that vest within 60 days of
March 25, 2015. |
|
|
(3) |
Includes options to purchase
24,000 shares of Common Stock exercisable within 60 days of March 25,
2015. |
|
|
(4) |
Includes 10,000 shares held in
the name of the Lee Trust. Mr. Lee and his wife, Angela Lee, as trustees,
have dispositive and voting power for the shares held by the Lee Trust.
Also includes options to purchase 10,333 shares of Common Stock that are
exercisable within 60 days of March 25, 2015. |
11
(5) |
Includes options to purchase 16,333 shares of Common
Stock that are exercisable within 60 days of March 25, 2015. |
|
|
(6) |
Includes 260,000 shares held in the name of Matics
Computer Systems, Inc., over which Mr. Yeh has voting and dispositive
power. Also includes options to purchase 7,333 shares of Common Stock that
are exercisable within 60 days of March 25, 2015. |
|
|
(7) |
Includes 33,000 shares underlying RSUs that vest within
60 days of March 25, 2015. |
|
|
(8) |
Includes 3,000 shares underlying RSUs that vest within 60
days of March 25, 2015. |
|
|
(9) |
According to a Schedule 13G filed jointly on January 4,
2002 for the year ended December 31, 2000 by Hon Hai and Foxconn, each
entity has shared voting and dispositive power over the shares. Foxconn is
a subsidiary of Hon Hai. Hon Hai disclaims beneficial ownership of these
shares. The principal business address for Hon Hai and Foxconn is 2 Tsu Yu
Street, Tu Cheng City, Taipei Hsien, Taiwan, R.O.C. According to
information provided by Hon Hai, the board of directors of Foxconn has
dispositive power for the shares and has delegated voting power to Ms.
Chiu-Lian Huang. As of the Record Date, no amendment to the Schedule 13G
has been filed, and the information concerning the number of shares held
and the ownership of the shares is as disclosed in the Schedule 13G. |
|
|
(10) |
Includes options to purchase 57,999 shares of Common
Stock that are exercisable within 60 days of March 25, 2015 and 156,000
shares underlying RSUs that vest on May 1, 2015. |
PERFORMANCE GRAPH
The following information is not deemed
to be soliciting material or to be filed with the Securities and
Exchange Commission or subject to Regulation 14A or 14C under the Securities
Exchange Act of 1934 or to the liabilities of Section 18 of the Securities
Exchange Act of 1934, and will not be deemed to be incorporated by reference
into any filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent the Company specifically incorporates it by
reference into such a filing.
The following graph shows the five-year
cumulative total stockholder return (change in stock price plus reinvested
dividends) assuming the investment of $100 on December 31, 2009 in each of the
Companys Common Stock, the Nasdaq Telecommunications Index, and the Nasdaq
Composite Index. The comparisons in the table are required by the Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Companys Common Stock.
12
|
|
|
12/31/10 |
|
|
12/31/11 |
|
|
12/31/12 |
|
|
12/31/13 |
|
|
12/31/14 |
Alliance Fiber Optic
Products |
|
$ |
100.00 |
|
$ |
48.92 |
|
$ |
85.61 |
|
$ |
216.55 |
|
$ |
208.78 |
Nasdaq Telecommunications |
|
|
100.00 |
|
|
87.38 |
|
|
89.13 |
|
|
110.54 |
|
|
120.38 |
Nasdaq Composite |
|
|
100.00 |
|
|
98.20 |
|
|
113.82 |
|
|
157.44 |
|
|
178.53 |
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy
Our philosophy to provide compensation
that attracts and retains our named executive officers, and motivates our
executive officers to pursue our corporate objectives while encouraging the
creation of long-term value for our stockholders. Our goal is to provide
compensation to our executive officers that is competitive, rewards achievement
of our business objectives, and aligns executive and stockholder interests
through equity ownership. Compensation decisions for executive officers other
than our Chief Executive Officer take into account the recommendations of our
Chief Executive Officer because of his understanding of the performance of those
executive officers. The components of executive officer compensation, base
salary, bonus and equity-based compensation, are discussed below. We do not
enter into employment or severance agreements with our executive officers as we
do not believe these types of arrangements facilitate our compensation goals and
objectives.
13
Elements of Executive Compensation
Base
Salary. Base salaries provide our named executive officers with a fixed amount of
consistent compensation and are an important motivating factor in attracting and
retaining these individuals. Base salaries are reviewed and adjusted on a
periodic basis. We do not apply specific formulas to determine adjustments to
base salary. Decisions on base salary adjustments for executive officers other
than the Chief Executive Officer are made with the Chief Executive Officers
involvement. When reviewing base salaries, the scope of the named executive
officers performance, individual contributions, responsibilities, experience
and prior base salary level are considered. Other considerations include market
information and the base salaries and other incentives paid to executive
officers of other companies within the industry.
Effective January 1, 2015, Mr.
Hubbards salary was increased from $199,800 to $210,800. In making this
adjustment, the factors described above were considered.
Bonus. Our philosophy is that a
certain portion of executive officer compensation should be contingent upon the
Companys performance and an individuals contribution to our success in meeting
business objectives. The bonus potential of each executive officer is considered
on a case-by-case basis, and takes into account recommendations the Chief
Executive Officer for executive officers other than the Chief Executive Officer.
Bonuses for 2014 were based on overall corporate performance and individual
performance. Other considerations include market information and the
compensation paid to executive officers of other companies within the industry.
Final decisions on bonuses for executive officers other than the Chief Executive
Officer are made with the Chief Executive Officers involvement.
In January 2014, Mr. Hubbard and Ms. Ho
were awarded bonuses of $70,000 and $10,000, respectively. In July 2014, Mr.
Hubbard and Ms. Ho were awarded bonuses of $32,000 and $2,000, respectively. In
January 2015, Mr. Hubbard and Ms. Ho were awarded bonuses of $110,000 and
$8,000, respectively. In making these awards, the factors described above were
considered.
Equity-based
Compensation. We provide equity-based
incentive compensation to our executive officers through the grant of stock
options and RSUs under our 2000 Stock Incentive Plan, which plan is administered
by the Executive Compensation Committee. We believe that stock ownership by our
executive officers aligns their interests with those of our stockholders and
provides the executive officers with substantial motivation to manage our
business in accordance with those interests. Accordingly, a considerable portion
of an executive officers compensation in any year may consist of stock options
and/or RSUs. Historically, we have not applied a formula to determine the size
of individual equity-based awards granted to our named executive officers. When
determining the size of an equity award to an executive officer, the executive
officers and the Companys performance, the executive officers role and
responsibilities within the Company, the executive officers base salary and the
size value, and vesting status of his or her existing equity awards, as well as
equity awards to executive officers in similar positions throughout the industry
are considered. For executive officers other than the Chief Executive Officer,
equity awards take into account the recommendations of the Chief Executive
Officer. Based
upon these factors, the size of each equity award is set at a level we consider
appropriate to create a meaningful incentive.
In April 2013, Mr. Hubbard and Ms. Ho
were awarded 66,000 and 6,000 RSUs, respectively. The RSUs vest as to one-half
on each of May 1, 2014 and 2015. In making these awards, the factors described
above were considered.
Chief Executive Officer Compensation
The compensation of the Chief Executive
Officer is determined using the same criteria as for the other executive
officers as discussed above. For 2014, Mr. Changs salary was set at $293,000,
and he was awarded a $200,000 bonus in January 2014 and a $50,000 bonus in July
2014. Mr. Changs salary was increased to $303,000 effective January 1, 2015,
and he was awarded a $200,000 bonus in January 2015.
14
In April 2013, Mr. Chang was awarded
120,000 RSUs. The RSUs vest in three annual installments on each of May 1, 2014,
2015 and 2016. All Mr. Changs RSUs vest in full in the event of a change of
control or termination due to death or involuntary discharge.
Other Compensation
Our executive officers are eligible to
participate in our 2000 Employee Stock Purchase Plan. Under the plan,
participants may purchase shares of our Common Stock at a discount to the market
price. The number of shares that may be purchased by each participant is limited
by the terms of the plan and applicable tax laws. In addition, our executive
officers may participate in our health programs, such as medical, dental and
vision care coverage, and our 401(k) and life and disability insurance
programs.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue
Code of 1986 places a limit of $1,000,000 on the amount of compensation that we
may deduct in any one year with respect to our Chief Executive Officer and each
of the next three most highly compensated executive officers (excluding the
chief financial officer). To maintain flexibility in compensating our executive
officers in a manner designed to promote varying corporate goals, the Executive
Compensation Committee has not adopted a policy requiring all executive
compensation to be deductible.
Executive Compensation Committee
Report
The following report of the
Executive Compensation Committee shall not be deemed to be soliciting material
or filed with the SEC or to be incorporated by reference into any other filing
by Alliance Fiber Optic Products, Inc. under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that we specifically
incorporate it by reference into a document filed under those
Acts.
The Executive Compensation Committee
has reviewed and discussed the Compensation Discussion and Analysis set forth
above with our management. Based on its review and those discussions, the
Executive Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy Statement and
incorporated by reference into our Annual Report on Form 10-K for the year ended
December 31, 2014.
Executive Compensation
Committee |
|
Ray Sun, Chairman |
Richard Black |
Gwong-Yih
Lee |
15
Summary Compensation
Table
The following table sets forth
compensation information for the cash amounts and the value of other
compensation paid to our Chief Executive Officer and our two other most highly
compensated executive officers for the years indicated.
|
|
|
|
|
|
|
|
Stock |
|
All Other |
|
|
|
|
|
|
|
|
Bonus |
|
Awards |
|
Compensation |
|
|
Name and Principal Position |
|
Year |
|
Salary ($) |
|
($)(1) |
|
($)(2) |
|
($)(3) |
|
Total ($) |
Peter C. Chang |
|
2014 |
|
292,650 |
|
250,000 |
|
|
|
2,290 |
|
544,940 |
President and Chief
Executive Officer |
|
2013 |
|
279,538 |
|
250,000 |
|
1,130,400 |
|
2,290 |
|
1,662,228 |
|
|
2012 |
|
260,000 |
|
130,000 |
|
|
|
1,690 |
|
391,690 |
|
David A. Hubbard |
|
2014 |
|
199,531 |
|
92,000 |
|
|
|
8,890 |
|
300,421 |
Executive Vice President, |
|
2013 |
|
189,458 |
|
100,000 |
|
548,670 |
|
8,890 |
|
847,018 |
Sales and Marketing |
|
2012 |
|
175,000 |
|
40,000 |
|
|
|
8,890 |
|
223,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Anita K. Ho |
|
2014 |
|
95,980 |
|
12,000 |
|
|
|
4,505 |
|
112,485 |
Acting Chief Financial
Officer |
|
2013 |
|
123,644 |
|
12,000 |
|
71,130 |
|
4,505 |
|
211,279 |
|
|
2012 |
|
140,000 |
|
10,000 |
|
|
|
4,505 |
|
154,505 |
(1) |
Consists of amounts earned in the fiscal
year. |
|
|
(2) |
Amount represents grant date fair value
computed in accordance with ASC 718. The actual value recognized by the
individual is based on the market price of our Common Stock on the vesting
dates and may be higher or lower. |
|
|
(3) |
Consisted of Company
contributions to the 401(k) of each individual, a monthly automobile
allowance for Mr. Hubbard, and the value of insurance premiums paid by the
Company. |
Grants of Plan-based Awards 2014
No awards were granted in 2014.
Outstanding Equity Awards at Fiscal
Year-End
|
|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
Number of |
|
|
|
|
|
Number of |
|
|
|
Market Value |
|
|
Securities |
|
Securities |
|
|
|
|
|
Shares or |
|
|
|
of Shares or |
|
|
Underlying |
|
Underlying |
|
|
|
|
|
Units of |
|
|
|
Units of |
|
|
Unexercised |
|
Unexercised |
|
Option |
|
Option |
|
Stock that |
|
|
|
Stock that |
|
|
Options (#) |
|
Options (#) |
|
Exercise |
|
Expiration |
|
have not |
|
|
|
have not |
Name |
|
Exercisable |
|
Unexercisable |
|
Price ($) |
|
Date |
|
Vested (#) |
|
|
|
Vested ($)(1) |
Peter C. Chang |
|
|
|
|
|
|
|
|
|
160,000 |
(2 |
) |
|
2,321,600 |
|
|
|
|
|
|
|
|
|
|
80,000 |
(3 |
) |
|
1,160,800 |
|
David A.
Hubbard |
|
|
|
|
|
|
|
|
|
33,000 |
(4 |
) |
|
478,830 |
|
Anita K. Ho |
|
|
|
|
|
|
|
|
|
3,000 |
(4 |
) |
|
43,530 |
16
(1) |
Market value is based on the closing price of
our Common Stock on December 31, 2014. |
|
|
(2) |
The RSUs were granted on May 6, 2011 and vest
over five years at a rate of 20 percent per year on each of May 1, 2012,
2013, 2014, 2015 and 2016. The RSUs vest in full in the event of a change
of control or termination due to death or involuntary discharge. |
|
|
(3) |
The RSUs were granted on April
19, 2013 and vest over three years at a rate of one-third per year on each
of May 1, 2014, 2015 and 2016. The RSUs vest in full in the event of a
change of control or termination due to death or involuntary
discharge. |
|
|
(4) |
The RSUs were granted on April
19, 2013 and vest over two years at a rate of 50 percent per year on each
of May 1, 2014 and 2015. |
Option Exercises and Stock Vested -
2014
|
|
Option Awards |
|
Stock Awards |
|
|
Number of Shares |
|
Value Realized |
|
Number of Shares |
|
Value Realized |
|
|
Acquired on |
|
on |
|
Acquired on |
|
on |
Name |
|
Exercise (#) |
|
Exercise ($)(1) |
|
Vesting (#) |
|
Vesting ($)(2) |
Peter C. Chang |
|
|
|
|
|
120,000 |
|
2,370,000 |
David A. Hubbard |
|
12,000 |
|
159,900 |
|
33,000 |
|
651,750 |
Anita K. Ho |
|
23,640 |
|
388,405 |
|
3,000 |
|
59,250 |
(1) |
Value realized is based on the fair market
value of our Common Stock on the date of exercise minus the exercise price
and does not necessarily reflect proceeds actually received by the
individual. |
|
|
(2) |
Value realized is based on the fair market
value of our Common Stock on the date of vesting. |
Compensation Risk Assessment
In connection with its review of employee compensation and the
compensation process, the Company has concluded that risks arising from its
compensation policies and practices are not reasonably likely to have a material
adverse effect on the Company.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee operates under a
written charter adopted by the Board of Directors in September 2000, and amended
by the Board of Directors in October 2005. All members of the Audit Committee
meet the independence standards established by The NASDAQ Stock
Market.
The Audit Committee oversees the
Companys financial reporting process on behalf of the Board of Directors and is
responsible for providing independent, objective oversight of the Companys
accounting functions and internal control over financial reporting. The Audit
Committee reviewed and discussed the audited financial statements contained in
the 2014 Annual Report on Form 10-K with the Companys management and its
independent registered public accountants. Management is responsible for the
financial statements and the reporting process, including the system of internal
control over financial reporting. The independent registered public accountants
are responsible for expressing an opinion on the conformity of those financial
statements with accounting principles generally accepted in the United States.
17
The Audit Committee met privately with
the independent registered public accountants, and has discussed issues deemed
significant by them, including those required by AICPA, Professional Standards,
Vol. 1. AU Section 380, as adopted by the Public Accounting Oversight Board in
Rule 3200T. In addition, the Audit Committee has received the written disclosure
and the letter from the independent registered public accountants required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accounting firms communications
with the Audit Committee concerning independence, and has discussed with the
independent registered public accounting firm such firms independence.
In reliance on the reviews and
discussions outlined above, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2014 for filing with
the Securities and Exchange Commission. The Audit Committee has appointed Marcum
LLP to serve as the Companys independent registered public accountant for the
2014 fiscal year.
Audit
Committee |
|
Richard Black, Chairman |
Ray Sun |
James C.
Yeh |
PROPOSAL 2
NON-BINDING ADVISORY VOTE ON
EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010, or the Dodd-Frank Act, requires that we provide
our stockholders with the opportunity to vote to approve, on a nonbinding,
advisory basis, the compensation of our named executive officers as disclosed in
this Proxy Statement in accordance with the compensation disclosure rules of the
Securities and Exchange Commission.
As described under the heading
Executive Compensation Compensation Discussion and Analysis, our executive
compensation programs are designed to attract and retain our named executive
officers, who are critical to our success. Under these programs, our named
executive officers are rewarded for the achievement of near- and long-term
corporate objectives, and the creation of increased stockholder value. Please
read the Compensation Discussion and Analysis for additional details about our
executive compensation programs, including information about the 2014
compensation of our named executive officers.
We are asking our stockholders to
indicate their support for our named executive officer compensation as described
in this Proxy Statement. This proposal, commonly known as a say-on-pay
proposal, gives our stockholders the opportunity to express their views on our
named executive officers compensation. This vote is advisory, which means that
the vote on executive compensation is not binding on us, our Board of Directors
or the Executive Compensation Committee of the Board of Directors. This vote is
not intended to address any specific item of compensation, but rather the vote
relates to the compensation of our named executive officers as a whole, as
described in this Proxy Statement in accordance with the compensation disclosure
rules of the Securities and Exchange Commission. Accordingly, we will ask our
stockholders to vote for the following resolution at the Annual
Meeting:
RESOLVED, that the Companys
stockholders approve, on a non-binding advisory basis, the compensation of the
named executive officers, as disclosed in the Companys Proxy Statement for the
2015 Annual Meeting of Stockholders pursuant to the compensation disclosure
rules of the Securities and Exchange Commission, including the Compensation
Discussion and Analysis, the Summary Compensation Table and the other related
tables and disclosure.
18
The Board of Directors recommends a
vote FOR approval, on a non-binding advisory basis, of the compensation of the
Companys named executive officers.
PROPOSAL 3
NON-BINDING ADVISORY VOTE ON THE
FREQUENCY OF A NON-BINDING ADVISORY
VOTE ON EXECUTIVE
COMPENSATION
The Dodd-Frank Act requires that we
provide our stockholders with the opportunity to vote, on a nonbinding, advisory
basis, for their preference as to how frequently to vote on future advisory
votes on the compensation of our named executive officers as disclosed in
accordance with the compensation disclosure rules of the Securities and Exchange
Commission.
Stockholders may indicate whether they
would prefer that we conduct future advisory votes on executive compensation
every year, every two years or every three years. Stockholders also may abstain
from casting a vote on this proposal.
The Board of Directors has determined
that a non-binding advisory vote on executive compensation that occurs annually
is the most appropriate alternative for us and, therefore, the Board of
Directors recommends that you vote for the option of every year for the advisory
vote on executive compensation. In determining to recommend that stockholders
vote for a frequency of every year, the Board of Directors was influenced by the
fact that the compensation of the Companys named executive officers is
evaluated, adjusted and approved on an annual basis. By providing an advisory
vote on executive compensation on an annual basis, our stockholders will be able
to indicate their approval of or dissatisfaction with respect to the Companys
compensation philosophy, policies and practices as disclosed in the Proxy
Statement every year.
This vote is advisory, which means that
it is not binding on the Company, the Board of Directors or the Executive
Compensation Committee of the Board of Directors. The Board of Directors and the
Executive Compensation Committee will take into account the outcome of the vote;
however, when considering the frequency of future advisory votes on executive
compensation, the Board of Directors may decide that it is in the best interests
of the stockholders and the Company to hold an advisory vote on executive
compensation more or less frequently than the frequency receiving the most votes
cast by our stockholders.
Stockholders have the opportunity to
choose among four options (holding the vote every year, every two years, every
three years, or abstaining from voting) and, therefore, stockholders will not be
voting to approve or disapprove the recommendation of the Board of Directors.
The Board of Directors recommends a
vote for the option of EVERY YEAR as the frequency for advisory votes on
executive compensation.
19
PROPOSAL 4
RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTANT
The Audit Committee has appointed the
firm of Marcum LLP as the Companys independent registered public accountant for
the fiscal year ending December 31, 2015. Representatives of Marcum LLP are
expected to be present at the Annual Meeting. They will have an opportunity to
make a statement, if they desire to do so, and will be available to respond to
appropriate questions. Although stockholder ratification of the Companys
independent registered public accountants is not required by the Companys
Bylaws or otherwise, the Company is submitting the selection of Marcum LLP to
its stockholders for ratification to permit stockholders to participate in this
important corporate decision.
Principal Accountant Fees and
Services
The following table presents fees for
professional audit services rendered by Marcum LLP for the audit of our
financial statements for 2014 and 2013. No fees were billed for other
services.
|
|
Year Ended December
31, |
|
|
|
2014 |
|
|
2013 |
Audit Fees |
|
$ |
365,932 |
|
$ |
374,543 |
Audit-Related
Fees |
|
|
|
|
|
|
Tax Fees |
|
|
|
|
|
|
All Other
Fees |
|
|
|
|
|
|
Total |
|
$ |
365,932 |
|
$ |
374,543 |
Pre-Approval Policies and Procedures
It is the Companys policy that all
audit and non-audit services to be performed by the Companys registered public
accountants be approved in advance by the Audit Committee. The Audit Committee
pre-approved all audit fees incurred in the year ended December 31, 2014.
Required Vote
Ratification will require the
affirmative vote of a majority of the shares present and voting at the Annual
Meeting in person or by proxy. In the event ratification is not obtained, the
Audit Committee will review its future selection of the Companys independent
registered public accountant but will not be required to select different
independent registered public accountants for the Company. Even if the selection
is ratified, the Audit Committee in its discretion may appoint a different
independent registered public accounting firm at any time during the year if the
Audit Committee determines that such a change would be in the best interests of
our Company and our stockholders.
The Board of Directors recommends a
vote FOR ratification of Marcum LLP as the Companys independent registered
public accountants.
STOCKHOLDER PROPOSALS FOR THE 2016
ANNUAL MEETING
Proposals of stockholders of the
Company that are intended to be presented at the Companys 2016 Annual Meeting
must be received by the Secretary of the Company no later than December 22, 2015
in order that they may be included in the Companys proxy statement and form of
proxy relating to that meeting.
20
A stockholder proposal not included in
the Companys proxy statement for the 2016 Annual Meeting will be ineligible for
presentation at the meeting unless the stockholder gives timely notice of the
proposal in writing to the Secretary of the Company at the principal executive
offices of the Company and otherwise complies with the provisions of the
Companys Bylaws. To be timely, the Bylaws provide that the Company must have
received the stockholders notice not less than 60 days nor more than 90 days
prior to the scheduled date of the meeting. However, if notice or prior public
disclosure of the date of the annual meeting is given or made to stockholders
less than 75 days prior to the meeting date, the Company must receive the
stockholders notice by the earlier of (i) the close of business on the 15th day
after the earlier of the day the Company mailed notice of the annual meeting
date or provided public disclosure of the meeting date and (ii) two days prior
to the scheduled date of the annual meeting.
PAYMENT OF COSTS
The expense of printing, mailing proxy
materials and solicitation of proxies will be borne by the Company. In addition
to the solicitation of proxies by mail, solicitation may be made by directors,
officers and other employees of the Company by personal interview, telephone or
facsimile. No additional compensation will be paid to such persons for such
solicitation. The Company will reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation materials to beneficial owners of
the Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Under the securities laws of the United
States, the Companys directors, executive officers and any persons holding more
than 10% of the Companys Common Stock are required to report their initial
ownership of the Companys Common Stock and any subsequent changes in that
ownership to the SEC. Specific due dates for these reports have been established
and the Company is required to identify in this Proxy Statement those persons
who failed to timely file these reports. To the Companys knowledge, based
solely on a review of such reports furnished to the Company and written
representations that no other reports were required during the fiscal year ended
December 31, 2014, all Section 16(a) filing requirements applicable to its
executive officers and directors were made in a timely manner during fiscal year
2014 except that Mr. Sun filed a Form 4 on May 15, 2014 to report selling shares
of common stock on April 30 and May 1, 2014 and Mr. Yeh filed a Form 4 on May
29, 2014 to report selling shares of common stock for which he has voting and
dispositive power on May 15,19 and 22, 2014. The Company has no information with
respect Section 16(a) compliance by Foxconn and Han Hai.
OTHER MATTERS
The Company knows of no other business
that will be presented at the Annual Meeting. If any other business is properly
brought before the Annual Meeting, the proxy holders will vote in accordance
with their judgment unless you instruct them otherwise.
Whether you intend to be present at the
Annual Meeting or not, we urge you to vote.
By Order of the Board of
Directors |
|
/s/ Peter C. Chang |
|
Peter C. Chang |
Secretary |
21
April 20, 2015
The Companys 2014 Annual Report on
Form 10-K has been mailed with this Proxy Statement. The Company will provide
copies of exhibits to the Annual Report on Form 10-K to any requesting
stockholder but will charge a reasonable fee per page. Any such request should
be addressed to the Company at 275 Gibraltar Drive, Sunnyvale, California 94089,
Attention: Investor Relations. The request must include a representation by the
stockholder that as of March 25, 2015, the stockholder was entitled to vote at
the Annual Meeting.
22
PROXY
ALLIANCE FIBER OPTIC PRODUCTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby authorizes PETER
C. CHANG and ANITA K. HO, as Proxies with full power in each to act without the
other and with the power of substitution in each, to represent and to vote all
the shares of Common Stock the undersigned is entitled to vote at the Annual
Meeting of Stockholders of Alliance Fiber Optic Products, Inc. (the Company)
to be held at the office of the Company, 275 Gibraltar Drive, Sunnyvale,
California, 94089 on May 20, 2015 at 2:00 p.m., and at any postponement or
adjournment thereof, and instructs said Proxies to vote as follows:
Shares represented by this proxy will
be voted as directed by the stockholder. If no
such directions are indicated, the Proxies will be voted FOR the election of the
Class III directors, FOR Proposals 2 and 4, for the EVERY YEAR option for
Proposal 3, and in accordance with the discretion of the Proxies on any other
matters as may properly come before the Annual Meeting or any postponement or
adjournment thereof.
SEE
REVERSE SIDE |
CONTINUED AND TO BE
SIGNED ON REVERSE SIDE |
SEE
REVERSE SIDE |
DETACH
HERE |
|
|
X |
|
Please mark votes as
in this example. |
The Board of Directors recommends a vote FOR the election of the
Class III directors, FOR Proposals 2 and 4 and FOR the Every Year (1Yr)
option on Proposal 3. |
1. To elect Mr. Gwong-Yih Lee and Mr.
James C. Yeh as Class III directors to serve
until the 2018 Annual Meeting of Stockholders or until their successors are duly
elected and qualified.
|
|
|
|
|
|
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|
|
FOR ALL
NOMINEES |
|
☐ |
|
WITHHOLD
AUTHORITY to vote for all nominees |
|
☐ |
|
WITHHOLD AUTHORITY to vote for a nominee |
|
☐ |
Instruction: To withhold authority to
vote for any individual nominee, write that nominees name in the space provided
below:
For all nominees excepted as
noted above |
2. To
approve, on a non-binding advisory basis, the compensation of the
Companys named executive officers |
|
FOR ☐ |
|
AGAINST ☐ |
|
ABSTAIN ☐ |
|
|
|
|
|
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|
3. To
vote the frequency, on a on-binding advisory basis, of an advisory
stockholder vote on the compensation of the Companys named executive
officers. |
|
1
Yr ☐ |
|
2
Yrs ☐ |
|
3
Yrs ☐ |
|
ABSTAIN ☐ |
|
|
|
|
|
|
|
|
|
4. To ratify the appointment of Marcum LLP as the Company’s independent registered public accountant for 2015. |
|
FOR ☐ |
|
AGAINST ☐ |
|
ABSTAIN ☐ |
|
|
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|
5. In their discretion, the Proxies are
authorized to vote upon such other business as may properly come before the
meeting or any postponement or adjournment thereof.
PLEASE MARK, SIGN, DATE, AND RETURN
THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
|
|
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|
MARK
HERE FOR ADDRESS CHANGE AND NOTE BELOW |
☐ |
|
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|
Please sign where indicated below. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by an authorized officer. If a
partnership, please sign in full partnership name by an authorized person.
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Signature: |
|
Date: |
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(Signature if held jointly)
|
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