Electro Scientific Industries, Inc.
ELECTRO SCIENTIFIC INDUSTRIES INC (Form: DEF 14A, Received: 07/10/2015 14:35:42)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
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Electro Scientific Industries, Inc.

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Notice of Annual Meeting of Shareholders
 
 
To the Shareholders of Electro Scientific Industries, Inc.:
The Annual Meeting of Shareholders of Electro Scientific Industries, Inc. (ESI) will be held at ESI’s offices, 13900 NW Science Park Drive, Portland, Oregon, on Tuesday, August 18, 2015 at 2:30 p.m. Pacific Daylight Time, for the following purposes:
1.
To elect the five directors named in the proxy statement for a term of one year. John Medica, Raymond A. Link, Laurence E. Cramer, David Nierenberg and Richard H. Wills are nominees for election for a one year term.
2.
To approve an amendment to the 2004 Stock Incentive Plan to increase the annual per-employee share limitation for restricted stock and restricted stock units to 400,000 shares and increase the annual maximum number of shares that qualify as performance-based awards under Section 162(m) of the Internal Revenue Code to 400,000 shares. 
3.
To approve, on an advisory basis, the compensation of our named executive officers.
4.
To transact any other business that properly comes before the meeting.
Only shareholders of record at the close of business on June 15, 2015 will be entitled to vote at the annual meeting.
Your vote is very important. Whether or not you expect to attend in person, we urge you to vote your shares at your earliest convenience. Promptly voting your shares by phone, via the internet, or by signing, dating, and returning the enclosed proxy card will ensure the presence of a quorum at the meeting. An addressed envelope for which no postage is required if mailed in the United States is enclosed if you wish to vote by mail. Submitting your proxy now will not prevent you from voting your shares at the meeting if you desire to do so, as your proxy is revocable at your option. Retention of the proxy is not necessary for admission to or identification at the meeting.
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON TUESDAY, AUGUST 18, 2015 : This proxy statement and the Company’s 2015 Annual Report to Shareholders are also available at http://investors.esi.com/proxy.cfm.
By Order of the Board of Directors

Paul Oldham
Vice President of Administration, Chief
Financial Officer and Corporate Secretary
Portland, Oregon
July 10, 2015






ELECTRO SCIENTIFIC INDUSTRIES, INC.
PROXY STATEMENT
The mailing address of the principal executive offices of the Company is 13900 NW Science Park Drive, Portland, Oregon 97229-5497. The approximate date this proxy statement and the accompanying proxy forms are first being mailed to shareholders is July 10, 2015 .
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of Electro Scientific Industries, Inc., an Oregon corporation, for use at the Annual Meeting of Shareholders to be held on August 18, 2015 . The Company will bear the cost of preparing and mailing the proxy, proxy statement and any other material furnished to the shareholders by the Company in connection with the annual meeting. Proxies will be solicited by use of the mail and the internet, and officers and employees of the Company may, without additional compensation, also solicit proxies by telephone, fax or personal contact. Copies of solicitation materials will be furnished to fiduciaries, custodians and brokerage houses for forwarding to beneficial owners of the stock held in their names.
Any person giving a proxy in the form accompanying this proxy statement has the power to revoke it at any time before its exercise. The proxy may be revoked by filing an instrument of revocation or a duly executed proxy bearing a later date with the Corporate Secretary of the Company. The proxy may also be revoked by affirmatively electing to vote in person while in attendance at the meeting. However, a shareholder who attends the meeting need not revoke the proxy and vote in person unless he or she wishes to do so. All valid, un-revoked proxies will be voted at the Annual Meeting in accordance with the instructions given.
Common Stock is the only outstanding authorized voting security of the Company. The record date for determining holders of Common Stock entitled to vote at the Annual Meeting is June 15, 2015 . On that date there were 30,737,322 shares of Common Stock outstanding, entitled to one vote per share. The Common Stock does not have cumulative voting rights.
MULTIPLE SHAREHOLDERS SHARING THE SAME ADDRESS
If you and other residents at your mailing address each own shares of Common Stock in street name, your broker or bank may have sent you a notice that your household will receive only one annual report and proxy statement. This practice, known as “householding,” reduces the Company’s printing and postage costs. If any shareholder residing at that address wishes to receive a separate annual report or proxy statement, write or telephone the Company as follows: Investor Relations, Electro Scientific Industries, Inc., 13900 NW Science Park Drive, Portland, Oregon 97229-5497, (503) 641-4141. Contact the Company in the same way if you and other residents at your mailing address are receiving multiple copies of the annual report and proxy statement and wish to receive a single copy in the future.








PROPOSAL 1: ELECTION OF DIRECTORS
Pursuant to the Company’s Bylaws as in effect prior to March 2015, the Board of Directors is divided into three classes, with the term of office of one class expiring each year. In March 2015 the Bylaws were amended so that directors are elected to one year terms, provided that directors previously elected to three-year terms will not have their terms shortened.
Richard H. Wills, John Medica, Raymond A. Link and Laurence E. Cramer are nominees for initial election by shareholders to the Board. Mr. Wills is a current director who was appointed to the Board after the 2014 Annual Meeting. Each of these persons was recommended to the Governance and Nominating Committee for consideration as a director by non-management directors. In addition, the term of David Nierenberg expires in 2015 and he is a nominee for reelection. These nominees are recommended by the Corporate Governance and Nominating Committee. Under Oregon law, if a quorum of shareholders is present at the 2015 Annual Meeting, the directors elected will be the five nominees for election as directors who receive the greatest number of votes cast at the meeting. Abstentions and broker non-votes will have no effect on the results of the vote. Unless otherwise instructed, proxy holders will vote the proxies they receive for Messrs. Nierenberg, Wills, Medica, Link and Cramer. If any of the nominees for election as director at the 2015 Annual Meeting becomes unavailable for election for any reason (none being known at this time), the proxy holders will have discretionary authority to vote pursuant to the proxy for a substitute or substitutes.
The terms of Jon D. Tompkins and Richard J. Faubert expire at the 2015 Annual Meeting. Mr. Tompkins is prohibited from being nominated for another term under the Company’s Corporate Governance Guidelines and Mr. Faubert is retiring from the Board. In addition, Barry L. Harmon is retiring from the Board at the 2015 Annual Meeting even though his term is not expiring.
The following table briefly describes the Company’s nominees for directors, the directors whose terms will continue, and those directors who are retiring from the Board of Directors.
Name, Age, Principal Occupation, and Other Directorships
 
Director
Since
 
Term
Expires
Nominees
 
 
 
 
David Nierenberg, 62 , is the Founder and President of Nierenberg Investment Management Company, Inc. in Camas, Washington, which manages The D3 Family Funds. Prior to founding Nierenberg Investment Management Company in 1996, Mr. Nierenberg was a General Partner at Trinity Ventures, a venture capital fund, where he invested in financial services, healthcare and turnarounds. Prior to 1985, he was a Partner with Bain & Company, a management consulting firm. Mr. Nierenberg is the Co-Chairman of the Advisory Board of the Millstein Center at Columbia University Law School. He serves on the Board of Directors of Rosetta Stone. He is also a member of the board of directors at Kuni Automotive Group and Whitman College. He also serves on the Washington State Investment Board.
 
Mr. Nierenberg brings significant expertise in strategic planning and corporate governance. He also brings broad-based business knowledge to the board.
 
2010

 
2015

Richard H. Wills, 60,   (Chairman), was President and CEO of Tektronix, Inc., a test, measurement, and monitoring company, from 2000 until 2008, and its Chairman from 2001 through 2008. He joined Tektronix in 1979 and served in a range of marketing, product development and management roles, including President of the Measurement Business and President of Regional Operations for both Europe and the Americas. He holds a master's degree in business administration from the University of Oregon and a bachelor's degree in computer systems from Linfield College. Mr. Wills is also a director of FEI Company and Chairman of the Board of General Fusion, a private energy company in Vancouver, Canada. Mr. Wills was appointed as a director by the Board of Directors in August 2015 and accordingly, this will be his initial election by shareholders.

Mr. Wills brings to the Board expertise in strategic planning, corporate governance, marketing and technology, as well as experience serving on the board of another public company.
 
2014

 
2015

 
 
 
 
 
 
 
 
 
 






Name, Age, Principal Occupation, and Other Directorships
 
Director
Since
 
Term
Expires
Nominees
 
 
 
 
John Medica, 57, has served since 2007 as Vice Chairman and Corporate Adviser of Compal Group, a leading global electronics related ODM based in Taiwan with annual revenues in excess of $25 billion. Mr. Medica also served as a member of the Board of Directors of National Instruments from June 2008 through May 2014 and is a Trustee at Wake Forest University. He retired as a Senior Vice President and co-leader of the Product Development organization at Dell Inc. in April 2007 after fourteen years of service and prior to joining Dell, he served ten years at Apple Inc. in a variety of product development and operations related executive roles. He also has served as a Board Member-Advisor of two start-up technology companies, Visible Brands and Aviacomm, over the past two years.  

Mr. Medica brings to the Board significant expertise in the electronics consumer products industries and Asian electronics manufacturing, as well as experience serving on the boards of other public companies.
 
N/A

 
N/A

Raymond A. Link, 61, served as Executive Vice President and Chief Financial Officer of FEI Company, a leading supplier of scientific and analytical instruments for nanoscale imaging from July 2005 to April 2015. He remains with FEI Company to assist with transitioning this role to his successor. Prior to this, Mr. Link served as Vice President, Finance and Administration, Chief Financial Officer and Secretary of TriQuint Semiconductor, Inc., a manufacturer of electronic signal processing components primarily used in wireless communications. Mr. Link joined TriQuint in July 2001 as a result of TriQuint’s merger with Sawtek, Inc. In September 1995 Mr. Link joined Sawtek, Inc., a designer and manufacturer of a broad range of electronic signal processing components primarily for use in the wireless communications industry, as Vice President Finance and Chief Financial Officer. He is also on the board of directors of nLight Corporation, a private company that makes high-power semiconductor lasers and Cascade Microtech Inc. a public company that is a manufacturer of electrical test and measurement equipment for the semiconductor industry. Mr. Link received a B.S. degree from the State University of New York at Buffalo and an M.B.A. from the Wharton School at the University of Pennsylvania. Mr. Link is also a licensed Certified Public Accountant.

Mr. Link brings to the Board important financial management experience and expertise, as well as operations experience with another high-technology company.
 
N/A

 
N/A

Laurence E. Cramer, 64, has been with Continuum Electro-Optics, a manufacturer of high energy laser systems for medical, industrial and scientific research, for the past 16 years where he held the positions of Vice President of R&D, Vice President / General Manager and President. Prior to that, he was President of Laser Diode Inc., a manufacturer of GaAs laser diodes for military and telecom applications. Prior to that he spent 15 years at Spectra-Physics in a range of management roles including, Manager of Marketing and Sales, Strategic Product Group Manger, and President of Spectra-Physics Laser diode systems, developer of advanced diode pumped solid state laser systems. He was a Board Member and past President of the Laser Institute of America, and was a member of the U.S. Department of Commerce Technical Advisory Committee in Electronics from 1988 to 1994. He holds a BA degree in Chemistry and Physics from DePauw University, a PhD in Chemistry from Northwestern University and a Masters Certificate in Six Sigma from Villanova University.

Mr. Cramer brings to the Board significant expertise in lasers and laser development.
 
N/A

 
N/A







Name, Age, Principal Occupation, and Other Directorships
 
Director
Since
 
Term
Expires
Directors Whose Terms Continue
 
 
 
 
Edward C. Grady ,   68, is currently President and Chief Executive Officer (CEO) of the Company and assumed this role in February 2014. He has served on the board of the Company since 2008 and, prior to becoming CEO of the Company, he served as CEO and Chairman at REEL Solar, Inc., a venture funded developer and manufacturer of low cost, high efficiency, thin film solar panels. In February 2014, REEL Solar was sold to a Chinese solar power manufacturer and power provider. Prior to that he served as President and CEO of Brooks Automation, Inc., a company that offers solutions that optimize productivity for the semiconductor and other industries, including clean tech and data storage. Mr. Grady retired from Brooks Automation in 2007. Prior to joining Brooks in 2003, he ran the wafer inspection and metrology groups at KLA-Tencor Corporation, a manufacturer of semiconductor equipment. Prior to KLA-Tencor, he was Chief Executive Officer of Hoya Micromask, a supplier of photo masks and services to the semiconductor industry. He started his career as an engineer for Monsanto Electronic Materials Company, Inc., a manufacturer of silicon wafers to the semiconductor industry, and eventually rose to the position of Vice President of Worldwide Sales. Mr. Grady is also a member of the board of directors at Advanced Energy Industries, Inc., a provider of power and control technologies.

Mr. Grady brings to the Board extensive technical knowledge and manufacturing, engineering, sales, business and operations experience in a high-technology environment. He also brings important business development and leadership experience as well as experience as a result of serving on the boards of directors of other public companies
 
2008

 
2017

Frederick A. Ball , 53, was appointed Senior Vice President and Chief Financial Officer of Marketo, Inc., a leading marketing automation company, in May 2011. Prior to joining Marketo, Mr. Ball served as the Chief Financial Officer of Webroot Software, Inc., a software security solutions provider, from June 2008 to April 2011. Prior to that, Mr. Ball had been the Chief Financial Officer for a number of private and public technology companies including BigBand Networks, Inc., and Borland Software Corporation. Mr. Ball also served as Vice President, Mergers and Acquisitions for KLA-Tencor Corporation, a manufacturer of semiconductor equipment, and prior to that as its Vice President of Finance. Mr. Ball was with PricewaterhouseCoopers LLC for over 10 years. Mr. Ball is a director at Advanced Energy Industries, Inc., a provider of power and control technologies, and is chair of its audit committee.
 
Mr. Ball brings to the Board important financial management experience and financial expertise, having served as Chief Financial Officer of several high-technology companies. He also brings significant experience with mergers and acquisitions as well as experience as a result of serving on the board of directors of another public company.
 
2003

 
2016

Robert R. Walker , 64, is retired from Agilent Technologies, Inc., a measurement company, where he served as Executive Vice President and Chief Financial Officer from May 2000 until December 2001. From May 1999 until May 2000, he was Senior Vice President and Chief Financial Officer. During 1997 and 1998, Mr. Walker served as Vice President and General Manager of Hewlett-Packard Company’s Professional Services Business Unit, a provider of computer and printer products and services. From 1993 to 1997, he led Hewlett-Packard’s information systems function, serving as Vice President and Chief Information Officer from 1995 to 1997. Mr. Walker formerly served as a member of the board of directors for Brocade Communications Systems, Inc., a networking solutions provider, from 2005 until 2008, Liberate Technologies, a supplier of TV set-top box software, from 2003 until 2005, when it became a private company, and InterTrust, a digital rights management company, from 2002 until 2003, when it became a private company.
 
Mr. Walker brings to the Board important financial management experience, financial expertise and industry and technical expertise, having served in several executive financial and operational positions at Agilent and Hewlett Packard. He also brings experience as a result of serving on the board of directors of other public companies.
 
2003

 
2016








Name, Age, Principal Occupation, and Other Directorships
 
Director
Since
 
Directors Who Will Retire at the Annual Meeting
 
 
 
Richard J. Faubert, 67 , retired as President, Chief Executive Officer and Chairman of AmberWave Systems Corporation, a semiconductor technology company, in December 2010, where he had served from September 2003. He served as President, Chief Executive Officer and Director of SpeedFam-IPEC, Inc., a manufacturer of semiconductor equipment, from 1998 through 2002. Upon the sale of SpeedFam-IPEC to Novellus Systems, Inc., a capital equipment manufacturer, he served as Executive Vice President of Novellus until April 2003. Prior to his employment with SpeedFam-IPEC, Inc., he held executive and management positions at Tektronix, Inc., a test, measurement, and monitoring company, and GenRad, Inc., an electronics testing and manufacturing company.
 
 
2003

 
Barry L. Harmon , 61, was the Chief Financial Officer of glassybaby, LLC, a privately held business in Seattle, Washington, from February 2012 until April 2015. He served as President and Chief Executive Officer of ESI from April 2003 until January 2004. From July 2000 until September 2001, Mr. Harmon served as Senior Vice President—West Coast Operations for Avocent Corporation, a provider of KVM switching and solutions. Mr. Harmon served as Chief Financial Officer of Apex, Inc., also a provider of KVM switching and solutions, from 1999 until its merger with Cybex to form Avocent in 2000. From 1992 to 1999, he was Senior Vice President and Chief Financial Officer of ESI.
 
 
2002

 
Jon D. Tompkins , 75, retired as Chief Executive Officer of KLA-Tencor Corporation, a manufacturer of semiconductor equipment, in 1998 where he had served as Chief Executive Officer since April 1997. He retired as Chairman of the Board of Directors of KLA-Tencor in 1999. From April 1991 until April 1997, he served as President, Chief Executive Officer and director of Tencor Instruments, a manufacturer of wafer inspection, film measurement and metrology systems for the semiconductor industry. He was appointed Chairman of the Board of Tencor in 1993, a position he held until the merger with KLA in 1997. Prior to that, Mr. Tompkins held various management positions over eighteen years with Spectra-Physics, a leading supplier of commercial lasers, and eventually rose to the position of President and Chief Executive Officer. Mr. Tompkins was a member of the board of directors at Cymer, Inc., a provider of lithography light sources for the semiconductor industry, until its acquisition in May 2013. He has been a member of the board of directors at ESI since 1998 and Chairman of the Board from 2003 through February 2015 when he stepped down as part of a planned succession.
 
1998

 







CORPORATE GOVERNANCE GUIDELINES AND INDEPENDENCE
The Company’s Board of Directors has approved and adopted the Corporate Governance Guidelines and Governance and Nominating Committee Charter that are on the Company’s website at http://investors.esi.com/governance.cfm. Under the Company’s Corporate Governance Guidelines, which reflect the current standards for “independence” under the NASDAQ Stock Market listing standards and the Securities and Exchange Commission rules, two-thirds of the members of the Board of Directors must be independent as determined by the Board of Directors. The Board of Directors has made the following determinations with respect to each director’s independence:
 
 
 
 
Director
  
Status (1)
Frederick A. Ball
  
Independent
Richard J. Faubert
  
Independent
Edward C. Grady
  
Not Independent (2)
Barry L. Harmon
  
Independent
David Nierenberg
  
Independent
Jon D. Tompkins
  
Independent
Robert R. Walker
  
Independent
Richard H. Wills
 
Independent
 
(1)
The Board’s determination that a director is independent was made on the basis of the standards set forth in the Corporate Governance Guidelines.
(2)
Mr. Grady is President and Chief Executive Officer of ESI and therefore is not independent in accordance with the standards set forth in the Corporate Governance Guidelines.
The Company has also adopted a Code of Conduct and Business Practices applicable to the Company’s directors, officers, employees and agents of ESI and its subsidiaries and a Code of Ethics for Financial Managers. Copies of the Company’s Code of Conduct and Business Practices and Code of Ethics for Financial Managers are available on the Company’s website at http://investors.esi.com/governance.cfm.
BOARD LEADERSHIP STRUCTURE AND RISK OVERSIGHT
Board Leadership
In accordance with our Corporate Governance Guidelines, it is the practice of the Board of Directors to select a director as Chairman of the Board who qualifies as independent as defined in the Corporate Governance Guidelines. If the Chairman of the Board ceases to qualify as independent, the Board of Directors will designate an independent director to serve as Lead Director. The Company believes that this structure enhances the Board’s oversight of management, strengthens the Board’s ability to communicate its views to management, increases the Board’s independence and otherwise enhances our governance.
Risk Oversight
The Board as a whole is responsible for overseeing our risk management function and certain members of the Company’s senior management team are expressly authorized by the Board to be responsible for implementation of the Company’s day-to-day risk management processes. In connection with the Board’s annual strategic and financial plan review, senior management makes a multidisciplinary presentation to the Board on significant strategic, operational, financial, legal and compliance risks facing the Company. At the other three quarterly Board meetings, senior management provides an update to the Board on specific risk-related issues.
Additionally, the Board is actively involved in oversight of certain risk areas conducted primarily through committees of the Board, as described in the charters of each of the committees. The Compensation Committee is responsible for overseeing the management of the Company’s executive compensation plans and incentive arrangements and routinely reviews these programs to ensure that incentives do not present inappropriate risk and are aligned with shareholder interests. The Audit Committee oversees management of financial, financial reporting, information technology, legal and insurance related risks and meets with management on at least a quarterly basis. As frequently as necessary, the Audit Committee Chair meets with senior management, the Company’s outside counsel and the Company’s independent auditors to discuss any hotline complaints, allegations of violations of the Code of Ethics and other ethical, legal or compliance matters. The Nominating and Corporate Governance Committee manages risks associated with the qualifications and independence of the Board of Directors and potential conflicts of interest. The Board satisfies their risk oversight responsibility through reports by each committee chair






regarding the committee’s considerations and actions, as well as through regular reports directly from management responsible for oversight of particular risks within the Company.
FISCAL YEAR
The Company’s fiscal year consists of 52 or 53 weeks ending on the Saturday nearest March 31. Accordingly, all references to fiscal year 2015 in this document are to the 52 -week period ended March 28, 2015 ; references to fiscal year 2014 are to the 52 -week period ended March 29, 2014 and references to fiscal year 2013 are to the 52 -week period ended March 30, 2013 .
BOARD COMPENSATION
During fiscal year 2015 , the Board of Directors held five meetings, which included a telephonic meeting, and each member of the Board of Directors attended at least 75 percent of the aggregate number of the meetings of the Board of Directors and the committees of which he was a member. All directors were reimbursed for all reasonable expenses incurred in attending meetings. Directors are expected to attend shareholders meetings. All directors then in office attended the 2014 annual meeting of shareholders.
Directors who are not employees of the Company received the following fees to the extent applicable to the individual directors: (a) an annual cash retainer of $60,000 for the service as the Chairman of the Board; (b) an annual cash retainer of $45,000 for the service as Vice Chairman of the Board; (c) an annual cash retainer of $30,000 for (non-Chairman) Board service, plus $1,500 for each Board meeting attended, $1,000 for each Committee meeting attended and $750 for each telephonic meeting attended; and (d) an annual fee of $10,000 for service as chair of the Audit Committee and an annual fee of $8,000 for service as chair of a committee other than the Audit Committee. The Company also provides for reimbursement in the amount of $2,500 every two years for continuing education programs relating to the performance of duties of a director of a public company.
Non-employee directors also receive equity grants as a component of their total compensation. Stock options were granted prior to fiscal year 2007. Beginning in fiscal year 2007, the Company has granted restricted stock units (RSUs) rather than stock options.
On May 15, 2014 , each director who was not a full-time employee of the Company was granted 7,300 RSUs under the 2004 Stock Incentive Plan. These units vested one hundred percent on the date of grant. On August 21, 2014, in connection with his appointment to the Board, Richard H. Wills was granted 27,300 RSUs under the 2004 Stock Incentive plan that vest annually on the first four anniversaries of the grant date.
FISCAL YEAR 2015 DIRECTOR COMPENSATION
The following table shows compensation earned by the Company’s non-employee directors in fiscal year 2015 .
 
Name
 
Fees Earned or
Paid in Cash
($)
 
 
 
Stock
Awards
($) (1)
 
 
 
All Other
Compensation
($)
 
Total
($)
Frederick A. Ball
 
$
47,500

 
  
 
$
48,983

 
(3)
 
$
6,697

(2
)
$
103,180

Richard J. Faubert
 
$
47,500

 
  
 
$
48,983

 
(3)(4) 
 
$
11,707

(2
)
$
108,190

Barry L. Harmon
 
$
52,750

 
  
 
$
48,983

 
(3)
 
$

 
$
101,733

David Nierenberg
 
$
46,750

 
  
 
$
48,983

 
(3)
 
$

 
$
95,733

Jon D. Tompkins
 
$
80,750

 
  
 
$
48,983

 
(3)
 
$

 
$
129,733

Robert R. Walker
 
$
57,500

 
(4)
 
$
48,983

 
(3)(4) 
 
$
13,579

(2
)
$
120,062

Richard H. Wills
 
$
26,500

 
 
 
$
191,100

 
(5)
 
$
2,208

(6
)
$
219,808

 
(1)
Represents the full grant date fair value of the awards granted to each director in the fiscal year ended March 28, 2015 , computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 “Compensation – Stock Compensation” (ASC Topic 718). Awards are valued at the closing market price of the Company’s common stock on the grant date.
(2)
The reported value is the value of dividend equivalent units relating to restricted stock unit awards that were deferred under the Company’s deferred compensation plan.
(3)
Comprised of a grant of 7,300 restricted stock units on May 15, 2014 , which vested immediately.
(4)
Elected to defer entire amount to the Company’s deferred compensation plan.






(5)
Comprised of a grant of 27,300 restricted stock units on August 21, 2014 that vests annually on the first four anniversaries of the grant date.
(6)
The reported value is the value of dividend equivalent units relating to restricted stock unit awards.
Under the deferred compensation plan, directors can generally elect to defer a minimum of 10% and a maximum of 100% of the fees they receive from the Company for their service on the Board. Cash amounts credited to the deferred compensation plan will earn a rate of return based on investment funds selected by the participants from a prescribed menu of investment options. Generally, deferred amounts will be paid in a lump sum upon termination, except in the case of retirement, in which case the deferred amounts will be paid in a lump sum or in annual installments for up to ten years, as elected by the director. Directors may also defer payment of restricted stock units granted to them by the Company. Payment will be in shares of Company common stock under the same terms as cash amounts.
BOARD COMMITTEES
The Company maintains an Audit Committee that currently consists of Robert R. Walker (Chairman), Frederick A. Ball and Richard J. Faubert. All of the members of the Audit Committee are “independent directors” in accordance with the NASDAQ Stock Market listing standards and pursuant to the criteria established in Section 10A(m) of the Securities Exchange Act of 1934, as amended. Each of Messrs. Walker, Ball and Faubert has financial reporting oversight experience, including serving as chief financial officer of a public company in the case of Messrs. Walker and Ball. The Board of Directors has determined that each of Messrs. Walker, Ball and Faubert is an audit committee financial expert as defined in SEC rules. The Audit Committee Charter requires the Audit Committee to review any transaction with a related person or in which a related person has a direct or indirect interest and to determine whether to ratify or approve the transaction, with such ratification or approval to occur only if the Committee determines that the transaction is fair to the Company or otherwise in the interest of the Company. The Audit Committee meets with management and with representatives of the Company's independent registered public accounting firm, KPMG LLP, including meetings without the presence of management. The Audit Committee met thirteen times in fiscal year 2015 .
The Company maintains a Compensation Committee that currently consists of Barry L. Harmon (Chairman), David Nierenberg, Richard H. Wills and Jon D. Tompkins. All members of the Compensation Committee have been determined to be independent by the Board of Directors in accordance with the NASDAQ Stock Market listing standards and Securities and Exchange Commission rules. The Compensation Committee has been delegated authority to set officers’ compensation and to grant awards under the Company’s stock incentive plan. For additional information about the Compensation Committee, see “Compensation Discussion and Analysis,” set forth below. The Compensation Committee met four times in fiscal year 2015 .
The Company maintains a Corporate Governance and Nominating Committee that currently consists of David Nierenberg (Chairman), Barry L. Harmon, Jon D. Tompkins and Richard Wills. All members of the Corporate Governance and Nominating Committee have been determined to be independent by the Board of Directors in accordance with the NASDAQ Stock Market listing standards and Securities and Exchange Commission rules. The Corporate Governance and Nominating Committee assists the Board of Directors in fulfilling its oversight responsibilities related to seeking candidates for membership on the Board of Directors, assessing the corporate governance policies and processes of the Board of Directors and reviewing from time to time the policies of the Board of Directors related to director qualifications, compensation, tenure and retirement. The Corporate Governance and Nominating Committee met four times in fiscal year 2015 .
Shareholders may recommend individuals for consideration by the Corporate Governance and Nominating Committee to become nominees for election to the Board of Directors by submitting a written recommendation to the Corporate Governance and Nominating Committee c/o Chairman of the Corporate Governance and Nominating Committee, Electro Scientific Industries, Inc., 13900 NW Science Park Drive, Portland, Oregon 97229-5497. Communications should be sent by overnight or certified mail, return receipt requested. Submissions must include sufficient biographical information concerning the recommended individual, including age, five-year employment history with employer names and a description of the employer’s business, whether the individual can read and understand financial statements, and board memberships, if any, for the Corporate Governance and Nominating Committee to consider. The submission must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders. Recommendations received by January 31, 2016 will be considered for nomination for election at the 2016 Annual Meeting of Shareholders. Recommendations received after January 31, 2016 will be considered for nomination for election at the 2017 Annual Meeting of Shareholders. Following the identification of the director candidates, the Corporate Governance and Nominating Committee will meet to discuss and consider each candidate’s qualifications and shall determine by majority vote the candidate(s) whom the Corporate Governance and Nominating Committee believes would best serve the Company. In evaluating director candidates, the Corporate Governance and Nominating Committee will consider a variety of factors, including the composition of the Board as a whole, the characteristics (including independence, age, skills and experience) of each candidate, and the






performance and continued tenure of incumbent Board members. The Committee believes that candidates for director should have certain minimum qualifications, including high ethical character, a reputation that enhances the image and reputation of the Company, being highly accomplished and a leader in his or her respective field, relevant expertise and experience, the ability to exercise sound business judgment and the ability to work with management collaboratively and constructively. The Committee also values diversity. In addition, the Committee believes that at least one member of the Board should meet the criteria for an “audit committee financial expert” as defined by Securities and Exchange Commission rules and that at least two-thirds of the members of the Board should meet the definition of independent under the NASDAQ Stock Market listing standards and Securities and Exchange Commission rules. The Committee also believes the Company’s Chief Executive Officer should participate as a member of the Board. A candidate recommended by a shareholder will be evaluated in the same manner as a candidate identified by the Committee.
COMMUNICATIONS WITH BOARD
Any shareholder who desires to communicate with the Board of Directors, individually or as a group, may do so by writing to the intended member or members of the Board of Directors, c/o Corporate Secretary, Electro Scientific Industries, Inc., 13900 NW Science Park Drive, Portland, Oregon 97229-5497. Communications should be sent by overnight or certified mail, return receipt requested. All communications will be compiled by the Secretary and submitted to the Board of Directors in a timely manner.
RECOMMENDATION BY THE BOARD OF DIRECTORS
The Board of Directors recommends that shareholders vote FOR the election of the nominees named in this Proxy Statement.






SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of the Common Stock of the Company as of June 15, 2015 by (i) each person known to the Company to be the beneficial owner of more than 5% of the Company’s Common Stock, (ii) each of the Company’s current directors and nominees for director, (iii) each individual named in the Summary Compensation Table and (iv) all directors and executive officers of the Company on June 15, 2015 as a group. Applicable percentage of ownership is based on 30,737,322 shares of Common Stock outstanding as of June 15, 2015 together with applicable options (including stock appreciation rights) and restricted stock units held by such shareholders. Shares of Common Stock subject to options exercisable at June 15, 2015 or exercisable within 60 days after June 15, 2015 and shares of Common Stock underlying restricted stock units vested at June 15, 2015 or vesting within 60 days after June 15, 2015 , are deemed outstanding for computing the percentage ownership of the person holding such options, but are not deemed outstanding for computing the percentage ownership of any other person.
 
Name of Beneficial Owner
 
Amount and Nature of
Beneficial Ownership (1)
 
 
 
Approximate
Percent of Class
Frederick A. Ball
 
76,390

 
(2)
 
*
Richard J. Faubert
 
78,523

 
(3)
 
*
Edward C. Grady
 
258,014

 
(4)
 
*
Barry L. Harmon
 
69,375

 
(5)
 
*
David Nierenberg
 
2,761,080

 
(6)
 
8.98%
Jon D. Tompkins
 
75,162

 
(7)
 
*
Robert R. Walker
 
82,480

 
(8)
 
*
Richard H. Wills
 
15,159

 
 
 
*
Robert DeBakker
 
255,624

 
(9)
 
*
Kerry Mustoe
 
154,632

 
(10)
 
*
Paul Oldham
 
326,400

 
(11)
 
*
Bing-Fai Wong
 
164,724

 
(12)
 
*
T. Rowe Price Associates, Inc.
 
2,896,360

 
(13)
 
9.42%
100 E. Pratt Street, Baltimore, MD 21202
 
 
 
 
 
 
Nierenberg Investment Management Company, Inc.
 
2,761,080

 
(6)
 
8.98%
19605 NE 8 th  Street, Camas, WA 98607
 
 
 
 
 
 
BlackRock, Inc.
 
2,359,548

 
(13)
 
7.68%
40 East 52nd Street, New York, NY 10022
 
 
 
 
 
 
Dimensional Fund Advisors LP
 
2,275,708

 
(13)
 
7.40%
Palisades West, Building One, 6300 Bee Cave Road,
Austin, TX 78746
 
 
 
 
 
 
Vertex Capital Advisors, LLC
 
1,917,612

 
(13)
 
6.24%
825 Third Ave. 33 rd  Floor, New York, NY 10022
 
 
 
 
 
 
Investment Counselors of Maryland, LLC
 
1,754,875

 
(13)
 
5.71%
803 Cathedral Street, Baltimore, MD 21201
 
 
 
 
 
 
12 directors and executive officers (as of June 15, 2015) as a group
 
4,317,563

 
  
 
14.05%
*
Less than 5 percent.

(1)
Shares are held directly with sole investment and voting power unless otherwise indicated.
(2)
Includes 15,000 shares subject to stock options that were exercisable at or that would become exercisable within 60 days after June 15, 2015 . In addition, includes 28,515 shares deferred under the Company’s deferred compensation plan.
(3)
Includes 15,000 shares subject to stock options that were exercisable at or that would become exercisable within 60 days after June 15, 2015 . In addition, includes 49,848 shares deferred under the Company’s deferred compensation plan.
(4)
Includes 65,762 shares deferred under the Company’s deferred compensation plan.
(5)
Includes 15,000 shares subject to stock options that were exercisable at or that would become exercisable within 60 days after June 15, 2015 .






(6)
David Nierenberg is the President of Nierenberg Investment Management Company, Inc. (“NIMCO”), an investment manager of several investment funds. David Nierenberg and NIMCO have joint beneficial ownership and shared voting authority over the shares managed by NIMCO. The 2,761,080 shares reported herein are based on information provided by Mr. Nierenberg’s office as of June 15, 2015 .
(7)
Includes 15,000 shares subject to stock options that were exercisable at or that would become exercisable within 60 days after June 15, 2015 .
(8)
Includes 15,000 shares subject to stock options that were exercisable at or that would become exercisable within 60 days after June 15, 2015 . In addition, includes 57,805 shares deferred under the Company’s deferred compensation plan.
(9)
Includes 174,250 shares subject to stock options and stock appreciation rights that were exercisable at or that would become exercisable within 60 days after June 15, 2015 .
(10)
Includes 108,500 shares subject to stock options and stock appreciation rights that were exercisable at or that would become exercisable within 60 days after June 15, 2015 .
(11)
Includes 231,250 shares subject to stock options and stock appreciation rights that were exercisable at or that would become exercisable within 60 days after June 15, 2015 .
(12)
Includes 107,167 shares subject to stock options and stock appreciation rights that were exercisable at or that would become exercisable within 60 days after June 15, 2015 . In addition, includes 5,284 shares deferred under the Company’s deferred compensation plan.
(13)
Based on the institutional holding report provided by Nasdaq as of July 1, 2015, which reflects the most recent Schedule 13D, 13F or 13G (or amendments thereto) filed by such person with the SEC.


EXECUTIVE OFFICERS
As of June 15, 2015 , the executive officers of the Company were as follows:
 
Name
 
Age
 
Position
Edward C. Grady
 
68

 
President and Chief Executive Officer
Paul Oldham
 
52

 
Vice President of Administration, Chief Financial Officer and Corporate Secretary
Robert DeBakker
 
57

 
Vice President of Worldwide Operations
Kerry Mustoe
 
58

 
Vice President of Finance, Corporate Controller and Chief Accounting Officer
Bing-Fai Wong
 
56

 
Vice President of Customer Operations
See Mr. Grady’s biography under “Proposal 1: Directors Whose Terms Continue."
Mr. Oldham joined the Company on January 7, 2008 as Vice President of Administration, Chief Financial Officer and Corporate Secretary. Prior to joining ESI, Mr. Oldham was employed at Tektronix, Inc., a test, measurement, and monitoring company, since 1988, where he held several senior leadership positions including Vice President Finance and Corporate Controller, European Operations Controller, and most recently Vice President Treasurer and Investor Relations.
Mr. DeBakker was appointed Vice President of Worldwide Operations in September 2004. From 2000 to 2004, he was employed with IBM, a provider of business and information technology services, first as Vice President i/p Series Manufacturing, then as Vice President Strategy Integrated Supply Chain and finally as Vice President x Series Integrated Supply Chain. From 1997 to 2000, Mr. DeBakker was Vice President of Operations of Sequent Computer Systems, a manufacturer and provider of information technology solutions.
Ms. Mustoe has served as the Company’s Corporate Controller and Chief Accounting Officer since September 2003. In December 2005, she was appointed Interim Chief Financial Officer and served as such until September 2006. She was appointed Vice President on January 18, 2007. She was appointed Interim Chief Financial Officer again from September 28, 2007 until January 7, 2008. Prior to joining the Company, Ms. Mustoe held director of accounting and finance positions at several technology firms based in Portland, Oregon. Previously, Ms. Mustoe was an audit manager and certified public accountant with PricewaterhouseCoopers LLC in Portland, Oregon.
Mr. Wong was promoted to Vice President of Customer Operations in May 2009 and joined ESI in May 1998 from Giga-tronics, an electronics manufacturer. During his tenure at ESI, Mr. Wong has held a variety of positions including director of sales and service and senior director of marketing. Mr. Wong previously worked for Hewlett-Packard Company, a provider of computer and printer products and services, and began his career at Philips HK Ltd., an electronics manufacturer.









COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Electro Scientific Industries, Inc. (ESI) is embarking on a significant turnaround effort that started with a change in the Chief Executive Officer in February 2014. This effort encompasses a wide range of areas, including long-term strategy, governance, leadership and shorter-term tactics. The management team and Board of Directors believe that this turnaround will take multiple years and have aligned our tactics to return the Company to profitable growth.
Edward C. Grady, a director of the Company, was appointed CEO shortly before the start of fiscal year 2015. Mr. Grady quickly assessed the Company’s situation and worked with the management team to develop a multi-year turnaround strategy. Mr. Grady is a very experienced executive and the Board determined that it was in the best interest of the Company to retain him for multiple years. Accordingly, in November 2014 Mr. Grady received equity awards that were a combination of an annual grant and a new hire grant. The Board chose a combination of stock-settled stock appreciation rights (SARs) and performance RSU’s (PRSUs) commensurate with a multi-year turnaround effort. Accordingly, the value of the grants have a higher potential value than would be the case if they were granted as a typical annual refresh grant. The Board believes that 100% of this grant is at risk.
In February 2015 Richard H. Wills was appointed Chairman of the Board, replacing Jon D. Tompkins whose term is set to expire in August 2015 due to age limitations in the Company’s Corporate Governance Guidelines. Mr. Wills joined the Board in August 2014 and is a seasoned technology executive and board member. At the 2015 Annual meeting John Medica, a former executive with Apple, Inc. and Dell Computer and current Vice Chairman of Compal Electronics; Raymond A. Link, former Chief Financial Officer of FEI Co.; and Laurence Cramer, President of Continuum Electro-Optics Inc. and a laser industry veteran, are expected to join the Board, bringing skills that the Board believes will aid in the future success of the Company.
In addition to the leadership changes noted above, the Company has updated various governance policies to bring them into alignment with current best practices. Notable changes to date include:
elimination of the shareholder rights plan (poison pill)
phasing out the staggered Board terms
removal of gross-up provisions in management Change in Control agreements
creation of a better aligned peer group for compensation purposes
Fiscal Year 2015 - The Year in Review
Fiscal year 2015 marked the beginning of ESI’s turnaround effort to achieve long-term growth, profitability, and cash generation led by Mr. Grady, who was appointed President and CEO in February 2014. Key revitalization efforts included bringing in new leadership with fresh thinking, introduction of several key new products, sales channel expansion, inorganic growth through the acquisition of a China-based company, and restructuring and other operational improvements.
New Leadership
As a critical addition to the executive team, James Latham joined the Company as Chief Marketing Officer. In addition, there were several other internal promotions made to key positions which strengthened the leadership team in support of the turnaround plan.
New Products
As part of the Company’s turnaround strategy, several new products were introduced in fiscal year 2015, including the 5335xi, Flex5335 and Gemstone UV Laser Drilling Systems. These systems improve customer cost of ownership across a variety of price points, including providing the industry’s highest throughput and most capable UV via drilling system. The Gemstone product uses an internally developed proprietary fiber laser. The Company also introduced the CornerStone™ ICP Series 1 UV laser drilling system designed for use initially in Integrated Circuit Packaging (ICP) applications. Compared with typical laser drill tools, this new system offers lower overall cost of ownership and improved accuracy with a reduced footprint, enabling production of precisely tapered or shaped holes, known as vias, for current and next-generation products. Finally, the Company announced the LumenESI TM Series precision laser micromachining platform to serve a broad rage of laser micromachining applications. The LumenESI TM was the first platform to utilize ESI developed and manufactured lasers.
Inorganic Growth






In the latter part of fiscal year 2015, the Company acquired Wuhan Topwin Optoelectronics Inc., an innovative laser design and manufacturing systems company based in Wuhan, China. This acquisition is expected to enable ESI to gain high-volume adoption of new products in China, to access a low cost local supply network, to accelerate time to market in China, and to expand our sales channel within China.
Operational Improvements
The Company made progress on its “lean” initiatives focused on eliminating waste and reducing discretionary spending. The Company also initiated a corporate restructuring plan that will streamline its manufacturing and development operations including the closure of the assembly plant and development center located in Chelmsford, Massachusetts.
Fiscal Year 2016 Outlook
During fiscal year 2015, the company made numerous investments to put in place the building blocks to drive growth. The company goals in fiscal 2016 include continuing to expand our addressable market by introducing and growing revenue from new products and platforms, increasing our presence in China, driving the company’s lean programs and leveraging these investments to return the company to breakeven levels of operation. The Board of Directors and Mr. Grady believe that the turnaround efforts are on track, and that the Company is seeing positive interest from customers and additional opportunities to penetrate adjacent markets.
Named Executive Officers
The Company's named executive officers for fiscal 2015 were as follows:
Edward C. Grady, President and Chief Executive Officer
Paul Oldham, Vice President of Administration, Chief Financial Officer and Corporate Secretary
Robert DeBakker, Vice President of Worldwide Operations
Kerry Mustoe, Vice President of Finance, Corporate Controller and Chief Accounting Officer
Bing-Fai Wong, Vice President of Customer Operations
Compensation Philosophy
The Board of Directors and the Compensation Committee of the Board of Directors (the “Committee”) believe that the Company's executive compensation programs should be related to both short-term and long-term corporate performance and improvement in shareholder value. The Company has developed a total compensation philosophy that ties a significant portion of executive compensation to achieving pre-established financial and operational results. The overall objectives of the executive compensation program are to attract and retain talented executives; motivate executives to execute long-term business strategies while achieving near-term financial targets; and align executive performance with the Company's short-term and long-term goals for delivering shareholder value.
The elements of the Company's compensation program for executives are base salary, annual cash incentives, equity incentives and a non-qualified deferred compensation plan which allows executives to defer 10-100% of their compensation, including any restricted stock units granted during the plan year. Performance-based pay is a major element of executive compensation, which includes annual cash incentives and long-term stock-based equity incentives. Additionally, the Company has an employee stock purchase plan, a 401(k) retirement plan and provides health care and other benefits to executives on the same basis as it does for all other employees. During fiscal year 2015 a limited number of key executives had change in control severance agreements, under which they were eligible to receive certain payments and benefits, including excise tax gross-ups, in the event of a termination of employment under certain circumstances following a change in control of the Company. At the beginning of fiscal year 2016, the excise tax gross-ups were eliminated in all company change in control agreements and change of control agreements were extended to all executive staff members.
Each element of the Company's executive compensation program serves a somewhat different purpose, but in combination the compensation program enables the Company to support its compensation philosophy and to offer compensation competitive with companies of similar size and complexity within high-technology electronics and similar industries.
The Committee believes its total compensation philosophy should result in total compensation between the 50th and 75th percentile of similarly-situated executives in the peer group companies, assuming targeted performance results are achieved. Generally, the Committee targets the 50th percentile for solid performance, with the opportunity to achieve total compensation at the 75th percentile for superior performance.






The Committee consists entirely of independent non-employee directors as defined by the rules of the NASDAQ Stock Market, the Company's Corporate Governance Guidelines and the Committee's charter. The current members of the Committee are Barry L. Harmon (Chairman), David Nierenberg, Jon D. Tompkins and Richard H. Wills. The Committee's authority and responsibilities are set forth in a charter adopted by the Board of Directors, which the Committee reviews annually. The Charter is available for review on the Company's web site at www.esi.com .
The Committee reviews and approves the compensation of all of the Company's executives, including the Chief Executive Officer (CEO). The Committee has full authority to determine annual base salary and incentive compensation, equity incentives and all other compensation for the executives. The Committee reviews and approves all equity grants to executives and annual equity grants to all other employees.
Determinations regarding annual cash incentives, long-term incentives and other elements of compensation were made consistent with the Committee's compensation philosophy and in a manner that the Committee believed to be appropriate and reasonable based on individual and corporate performance.
Base salary and incentive compensation award decisions for all executive officers are made at the first quarterly meeting of the Committee in each fiscal year in conjunction with the annual performance reviews for the prior fiscal year. The Committee reviews a tally sheet, which sets forth historic and current information regarding each element of compensation for each executive. It receives recommendations from the CEO as to compensation of other executives, and the CEO participates in discussions regarding their compensation. The Committee meets in executive session without the CEO to determine his compensation.
The Committee has engaged Compensia Inc., a national compensation consulting firm, as an independent outside compensation consultant with respect to executive and director compensation. The Committee has sole authority to retain and terminate Compensia. Compensia reports solely to the Committee for all services related to executive compensation, and did not provide any other services to the Company in fiscal year 2015 except for those related to executive and director compensation. The Committee has assessed the independence of Compensia taking into account, among other things, the factors set forth in Exchange Act Rule 10C-1 and the rules of the NASDAQ Stock Market, and has concluded that no conflict of interest exists with respect to the work that Compensia performs for the Committee.
Compensation-Related Risks
The Committee believes that the Company's executive incentive compensation arrangements do not encourage executives to take unnecessary or excessive risks that could threaten the value of the Company. For example, a significant portion of the executives' performance-based compensation is in the form of long-term equity incentives which generally vest over a three to four year period of time, thereby focusing the executives on the Company's long-term interests. As a matter of best practice, the Company will continue to monitor its executive compensation program to ensure that it continues to align the interest of executives with those of its long-term shareholders while avoiding unnecessary or excessive risk.
Competitive Positioning
The Committee uses comparative information from a group of similarly-situated business and labor market competitors as well as similarly-sized broad technology industry companies in reviewing the compensation of our executives. Given that the Company was entering a turnaround year, no changes were made to the peer group for fiscal year 2015 which consisted of the following companies:

Advanced Energy Industries, Inc            Nanometrics Incorporated
Affymetrix, Inc.                    Newport Corporation
Coherent, Inc.                    Rofin-Sinar Technologies
Cohu, Inc.                        Rudolf Technologies, Inc.
FEI Company                    Ultratech, Inc
IPG Photonics                    Veeco Instruments, Inc
Intevac, Inc.                    II-VI
Compensia completed the market analysis for fiscal year 2015 executive compensation using publicly available peer group proxy filings, supplemented by with Radford January 2014 High-Tech Industry Survey peer company data and broad high-tech industry data for companies with revenue of $200 million to $500 million. Data points were blended together to create a “market average”. The Committee believes that this range reflects the talent pool from which the Company competes for executive talent.






To supplement the peer company data with a market reference that better reflected ESI’s current revenue size, Compensia also completed a Supplemental Peer Company Assessment. Data was gathered from publicly available peer group proxy filings for a group of 14 companies with revenue 0.4x - 1.9x of ESI and the Radford January 2014 High-Tech Industry Survey representing companies with revenue of $50 million to $200 million.
In February 2015, the Committee underwent a detailed review of the peer group to ensure all companies in the group are more reasonably comparable to ESI in terms of revenue and market cap, thereby eliminating the need for a supplemental analysis for fiscal year 2016. This review led to several changes in the peer group, with the peer group for fiscal 2016 consisting of the following companies:

Axcelis Technologies, Inc.                Nanometrics Incorporated
Affymetrix, Inc.                    Rudolf Technologies, Inc.
Cascade Microtech, Inc.                Ultratech, Inc
Cohu, Inc.                        Veeco Instruments, Inc.
Form Factor, Inc.                    Vishay Precision Group, Inc.
GSI Group, Inc.                    Xcerra Corporation
Mattson Technology, Inc.

Consideration of Say-on-Pay Vote Results
The advisory (non-binding) proposal regarding compensation of the named executive officers submitted to shareholders at the August 2014 Annual Meeting of Shareholders was approved by over 98% of the votes cast. The Committee considered this vote to reflect strong alignment of the Company's executive compensation program with shareholder interests. In considering potential changes to the executive pay program, the Committee recognized that a significant portion of both short term and long term executive compensation is based on aggressive “stretch” performance goals. As a result of these factors the Committee believes that the executive compensation program is aligned with shareholder interests and did not make any substantive changes in response to that vote. The Company will conduct a Say-on-Pay vote annually.
Executive Compensation
In setting executive compensation for fiscal 2015 , the Committee reviewed the Company's existing compensation programs and philosophy in light of current industry compensation practices and trends. Applying this philosophy for each executive officer, the Committee reviewed base salary, annual cash incentives, long-term incentives and all other elements of total compensation and compared these components to comparable elements of compensation at the peer group companies (CEO compensation is described separately below).
Base Salaries
Base salary levels are reviewed annually at the first fiscal quarterly meeting of the Committee. Base salaries for executives are determined by evaluating the responsibilities of the position and the experience of the individual and by reference to the competitive marketplace for corporate executives, including a comparison to base salaries for comparable positions at the compensation peer group as provided by Compensia. The Committee establishes base salary compensation levels for executives, including the named executive officers, generally at levels approximating the 50th percentile of the compensation peer group. Individuals with outstanding performance in any given year may be provided with base pay up to the level of the 75th percentile of the compensation peer group. The Committee believes targeting these salary levels is necessary to attract and retain talented executives.
The named executive officers received base salary increases ranging from three to four percent (3-4%) in fiscal year 2015 resulting in base salaries generally paid at the 50th percentile. For fiscal year 2016, the named executive officers received no salary increase commensurate with the critical stage of the turnaround effort.
Annual Cash Incentive Compensation
The Company's executives, including Mr. Grady, are eligible to participate in an annual cash incentive plan, referred to as the Management Incentive Plan (MIP). The performance objectives are established at the beginning of each fiscal year and are comprised of specific financial objectives based on the Company's annual operating plan (as approved by the Board of Directors) as well as shared management objectives. The Company's financial performance objectives for fiscal year 2015 were specified levels of revenue and operating income before taxes (OIBT). The OIBT objective is measured on a non-GAAP basis, consistent with the Company's reporting of these measures. The Committee selected these performance objectives because they believe maximizing revenue and operating income are critical to the Company's success. The Committee limited






payments for financial measures under the plan to 20% of operating income after variable pay. For fiscal year 2016 the financial performance objectives are based solely on specified levels of revenue given the importance of product adoption and revenue growth.
Of the total awards available to each executive under the Management Incentive Plan for fiscal year 2015 , 40% of the award was based on a revenue objective, 40% was based on an OIBT objective, and 20% was based on shared executive objectives (MBOs).These weightings were designed to motivate and reward sales growth and positive operating income, which the Committee believes are important Company objectives. These objectives were based on achieving specific goals reviewed and approved by the Committee at the beginning of fiscal year 2015 .
The 20% portion of the plan related to MBOs was specific to a set of shared key business initiatives related to discretionary spending, cash flow, localization, market growth and customer penetration, commonality and specific “lean” projects.
The Committee assigned each executive officer, including Mr. Grady, a target of 60-100% of base salary which was used to calculate benefits under the MIP. The percentage of target achieved for the shared MBOs was determined based upon performance and a review of the objectives as of the end of the fiscal year.
For fiscal year 2015 , the Committee set a baseline plan, a minimum threshold amount and a maximum amount for revenue and OIBT for payouts under the MIP and results were calculated quarterly. If the OIBT attainment had exceeded the threshold of 100%, that attainment percentage would be used as a multiplier towards the annual payout based on the MBO attainment percentage. This multiplier is used to recognize and reward the achievement of difficult group and individual stretch goals contained in the MBO portion and to create an upside to the MBO measure when the Company has exceeded the OIBT target. In addition, the Committee set a limit for total payments of cash incentive compensation for fiscal 2015 of 20% of non-GAAP operating income after the annual cash incentive compensation. The MBO component was excluded from the cap.
The Company's Variable Pay Plans also include a Profit Sharing Plan (PSP). Approximately 8% of the Company's employees participate in the MIP and approximately 92% in the PSP.
For fiscal year 2015 , the quarterly baseline targets and thresholds for revenue and OIBT for the MIP and PSP were as follows:
 
 
Revenue
(in millions)
 
OIBT
(in millions)
Threshold
$
47.3

$
7.6

Target
 
60.3

 
30.4

Maximum
 
76.5

 
68.4


In this first year of an expected multi-year turnaround, the named executive officers earned 13.5% of target compensation under the MIP by earning a portion of the MBO target only. Consequently actual total compensation was below fiscal year 2015 target compensation levels.
Long-Term Incentive Compensation
To align shareholder and executive interests and to create incentives for improving shareholder value, the long-term incentive compensation component of the Company's fiscal year 2015 executive annual compensation program consisted of a mix of 20% of the value in SARs, 48% of the value in time-based RSUs (TRSUs) and 32% of the value in PRSUs.
In addition, to align the executive team with the CEO’s PRSU goals, executives received an additional PRSU grant with consistent long-term measures in November 2014. In total, approximately 50% of executive equity value was awarded in PRSUs.
Equity award amounts are generally established by the Committee at levels approximating the 50th percentile of the compensation peer group. However, in fiscal year 2015 the Committee granted awards that placed the named executive officers at approximately the 70th percentile, of which a significant portion was performance based. The Committee believes this level of equity is appropriate for retaining talented executives through the successful turnaround of the Company. The Company determines grant sizes based on assessment of individual performance, current equity holdings and expected future contributions as compared to those of the companies in the compensation peer group.






Time-based Restricted Stock Unit Awards. TRSUs are intended to serve as a retention incentive for all executives. Sixty-seven percent of the TRSUs awarded during fiscal year 2015 vest annually over 4 years and 33% of the TRSUs awarded vest annually over 3 years. All TRSUs have a “double trigger” in the event of a change in control and are not to be otherwise prorated in the event of termination of employment prior to vesting except in the case of termination due to death or disability.
Stock-Settled Stock Appreciation Rights. SARs granted to the named executives vest 25% over a 4 year period following the grant date.
Performance-based Restricted Stock Unit Awards. The fiscal year 2015 annual PRSUs awarded to the named executives in May 2014 can be earned based on achievement of Return on Net Asset (RONA) targets pre-established for fiscal years 2015, 2016 and 2017, and executives can earn between 0% and 200% of the target award.
May 2014 PRSU Attainment Thresholds
2015 Return on Net Assets
 
Vesting % (calculated linearly)
 
2016 Return on Net Assets
 
Vesting % (calculated linearly)
 
2017 Return on Net Assets
 
Vesting % (calculated linearly)
0%
 
50%
 
10%
 
50%
 
20%
 
50%
0% - 2.99%
 
50% - 100%
 
10% - 17.99%
 
50% - 100%
 
20% - 34.99%
 
50% - 100%
3% - 3.99%
 
100% - 200%
 
18% - 20.99%
 
100% - 200%
 
35% - 41.99%
 
100% - 200%
4% and up
 
200%
 
21% and up
 
200%
 
42% and up
 
200%
To align with the PRSU grants made to the CEO in November 2014 described below, additional PRSUs awarded in November to other named executives are based on achievement of fiscal year 2017 revenue goals (and are subject to achieving an OIBT threshold). Executives can earn between 0% and 200% of the target award.
November 2014 PRSU Attainment Thresholds
2017
Revenues
 
Vesting % (calculated linearly)
 
2017
Operating Income before Taxes
 
Vesting % (calculated linearly)
<$225M
 
0%
 
<2%
 
0%
$225M - $274.9M
 
0% - 100%
 
 
 
 
$275M - $385M
 
100% - 200%
 
 
 
 
The awards have a “double trigger” in the event of a change in control and are not to be otherwise prorated in the event of termination of employment prior to vesting except in the case of termination due to death or disability.
During fiscal year 2015, each of the named executive officers received equity grants, as follows:
 
 Fiscal 2015 Equity Grants
 
RSUs (1)
SSAR
 PRSUs (Target) (2)
RSUs (3)
PRSUs (Target) (4)
Oldham, Paul
22,500
45,000
22,500
11,250
25,000

DeBakker, Robert
12,500
25,000
12,500
6,250
20,000

Wong, Bing Fai
12,500
25,000
12,500
6,250
10,000

Mustoe, Kerry
5,000
10,000
5,000
2,500
5,000

(1)
May 2014 grant vesting 25% annually.
(2)
May 2014 grant vesting based on RONA.
(3)
May 2014 grant vesting 33% annually.
(4)
November 2014 grant vesting based on 2017 revenue.
CEO Compensation
During fiscal year 2015, Mr. Grady’s annual base salary was $590,000 consistent with his predecessor’s base salary for the prior fiscal year. This placed him at approximately the 50th percentile of peer company CEOs, which the Committee considered appropriate given his overall qualifications, executive level experience and in comparison with market data. The targeted amount under the MIP for the CEO was 100% of base salary and was based on the same measures as for the rest of the executives. Mr. Grady earned a 13.5% payout under the MIP based solely on achievement of MBOs, as discussed above.
The Company provides limited perquisites to Mr. Grady for spousal travel to Portland, automobile rental and rental housing near corporate headquarters in Portland, Oregon.






In connection with Mr. Grady’s appointment as CEO at the end of fiscal year 2014 to replace the Company’s former CEO, a small number of TRSUs were awarded in May 2014 (15,000 TRSUs with a grant value of $96,900).
In November 2014, realizing that the Company turnaround was a long-term effort that would require Mr. Grady’s active involvement over several years, the Board of Directors determined that his equity compensation should be adjusted to be consistent with other similarly situated CEOs in the peer group on an annual basis. The Committee also considered this grant as part of an overall package to retain Mr. Grady for multiple years, similar to a new hire grant. Therefore, Mr. Grady received a grant with 40% of the value awarded in SARs and 60% in PRSUs.
The SAR award, which is for 350,000 shares, vests one-third in each of May 2015, May 2016 and May 2017.
One half (50%) of the PRSUs awarded in November 2014 to Mr. Grady can be earned based on achievement of fiscal 2017 revenue goals and one half (50%) based on non-GAAP operating income before tax goals. The target number of shares under the award is 155,000 and Mr. Grady can earn between 0% and 200% of target shares based on performance. The total value of Mr. Grady’s fiscal 2015 equity grants approximated the peer company 60th percentile.
November 2014 PRSU Attainment Thresholds
50% of Award
 
50% of Award
2017
Revenues
 
Vesting % (calculated linearly)
 
2017
Operating Income before Taxes
 
Vesting % (calculated linearly)
<$225M
 
0%
OR
<2%
 
0%
$225M - $274.9M
 
0% - 100%
 
2% - 5.9%
 
0% - 100%
$275M - $385M
 
100% - 200%
 
6% - 10%
 
100% - 200%
In order to induce Mr. Grady to remain employed by the Company throughout the turnaround period, he was also provided a Change in Control Agreement that remains in effect for 12 months following the effective date of the change in control. The agreement provides for severance equal to 24 month’s base salary, a lump-sum payment equal to 100% of target bonus, and 12 month’s medical and dental insurance for Mr. Grady and his dependents. This agreement contains a “double trigger” provision that provides payments and benefits only in the event that: (i) ESI is involved in a change of control transaction; and (ii) the executive officer's employment is terminated (or constructively terminated) in connection with the change in control within a 12-month period or he retires not less than 60 days following the change in control    .
Consistent with the Board of Directors’ strong belief and expectation that Mr. Grady should be rewarded if he is successful in turning around the Company, his compensation is heavily performance based, and, as such, his actual compensation for fiscal 2015 was well below fiscal year 2015 target levels. Additionally, Mr. Grady did not receive an increase to fiscal 2016 base pay commensurate with the status of company turnaround.


Dividend Equivalents on Restricted Stock Unit Awards (RSUs)
Pursuant to the terms of the Company's RSU awards, upon the Company's payment of a dividend on its common stock, the number of units with respect to each award is increased by a number equal to the value of the dividends that would have been paid on the common stock deliverable pursuant to the award, divided by the closing market price of the Company's common stock on the dividend payment date. In fiscal year 2015, the Company paid three quarterly dividends of $0.08 each






through December 2014. On February 23, 2015, the dividend was suspended to concentrate the Company’s resources on growth. The additional shares resulting from the dividends are forfeitable if the associated awards do not vest.
Stock Ownership Guidelines
The Company maintains stock ownership guidelines for its executive management and directors.
The stock ownership guidelines for executive management are intended to further motivate executives to focus on company performance, drive high performance among individuals within the organization overall, and support the Company's compensation philosophy. The stock ownership guidelines require executive management to own and hold a specific number of shares of the Company's common stock with a value determined as follows:
3x base salary for CEO
1x base salary for Vice Presidents
The stock ownership guidelines for directors require them to own and hold an amount of common stock determined as a multiple of each director's annual retainer, which is then converted to specific number of shares of the Company's common stock. The guideline for directors is 3x the annual retainer.
Executives will have five years (or more, as may be necessary on a case by case basis) to achieve ownership levels. Shares owned outright, employee stock purchase plan shares, and unvested restricted stock units will be included. Vested or unvested stock options and stock appreciation rights are not included. With the exception of Mr. Grady who was recently appointed President and CEO, each of the Company's named executive officers has satisfied the applicable stock ownership guidelines.
Compensation Recovery
Under the Company's 2004 Stock Incentive Plan, the Board of Directors is permitted to suspend the exercise or vesting of an award if it believes a participant, other than a non-employee director, has engaged in certain acts of misconduct harmful to the Company. If it is determined that one of these acts has been committed by the recipient, no options or stock appreciation rights can be exercised by the participant and the restricted stock or restricted stock unit awards previously granted to the participant will be terminated. In addition, if the Board of Directors determines that an executive officer has engaged in an act of embezzlement, fraud, or breach of fiduciary duty that contributed to an obligation to restate the Company's financial statements, the executive officer will be required to repay proceeds from the sale of equity awards within the 12-month period following the first public issuance or filing with the SEC of the financial statements required to be restated.
Anti-Hedging/Anti-Pledging Policy
The Company has adopted an insider trading policy which incorporates anti-hedging and anti-pledging provisions. Consequently, no employee, executive officer or director may enter into a hedge or pledge of the Company's common stock.
Change In Control and Severance Agreements
2015 Agreements
At the end of fiscal 2015, the Company had Change in Control severance agreements in place for Messrs. Grady, DeBakker and Oldham. The Committee believes that these agreements could be an important factor in maintaining stability of the management team at a time when there is uncertainty about their continued employment by the Company. The terms of the Change in Control severance agreements for these executive officers were established by the Committee to provide what it believed at the time to be reasonable payments and benefits in the event of termination of employment following a change in control of the Company. These Change in Control agreements for Messrs. DeBakker and Oldham remain in effect for 24 months following the effective date change of the change in control with severance amount in cash equal to 12 month’s base salary, a lump-sum payment equal to 100% of bonus target (with excise tax gross up provision), and arrangement for 12 month’s medical and dental insurance for the executive and his dependents which are substantially similar to insurance in place immediately prior to the change in control. The terms of Mr. Grady’s Change in Control agreement are described above.
At the time the agreements with Messrs. Oldham and Debakker were entered into, the Committee believed that the gross-up provision was fair to executives in that it ensures the excise tax neither undoes the intended economic goals of the severance arrangement nor results in worse outcome for those executives who have deferred the exercise of options as compared to those who have exercised prior to a change of control. It was also viewed as an incentive for executives to stay through any






transaction. See “Potential Payments upon Termination or Change in Control” in this proxy statement for more information regarding these agreements.
New Agreements, fiscal year 2016
In May 2015, Messrs. DeBakker’s and Oldham’s Change in Control agreements described above were amended and restated. The new Change in Control agreements remain in effect for 24 months following the effective date change of the change in control with severance amount in cash equal to 24 month’s base salary, a lump-sum payment equal to 200% of target bonus and arrangement for 24 month’s medical and dental insurance for the executive and his dependents which are substantially similar to insurance in place immediately prior to the change in control. These agreements do not include gross-up provisions in the event the change in control payment triggers excise tax.
In May 2015, the Company also put in place Change in Control severance agreements for Ms. Kerry Mustoe and Mr. Bing-Fai Wong. These agreements are to remain in effect for 24 months following the effective date change of the Change in Control with severance amount in cash equal to 12 month’s base salary, a lump-sum payment equal to 100% of target bonus and arrangement for 12 month’s medical and dental insurance for the Executive and his dependents which are substantially similar to insurance in place immediately prior to the change in control.
All Change of Control agreements contain a “double trigger” provision that provides payments and benefits only in the event that: (i) ESI is involved in a change of control transaction; and (ii) the executive officer's employment is terminated (or constructively terminated) in connection with the change of control (or, in the case of Mr. Grady, he retires not less than 60 days after the change in control).
Deferred Compensation Plan
Executives can generally elect to defer receipt of up to 50% of their base salary and 100% of their cash incentive compensation under the Deferred Compensation Plan. Cash amounts credited to the deferred compensation plan will earn a rate of return based on investment funds selected by the participants from a prescribed menu of investment options. Generally, deferred amounts will be paid in a lump sum upon the date six months after termination of employment, except in the case of retirement, in which case the deferred amounts will be paid in a lump sum or in annual installments for five or 10 years, as elected by the executive. The Company sets aside deferred cash amounts in a grantor trust to cover the Company's obligation to pay deferred compensation.
Directors, executive officers and other eligible employees may defer payment of RSUs granted to them by the Company. Issuance of shares of common stock is under the same terms as cash amounts.
The deferred compensation plan is offered to executives to allow them to defer more compensation than they otherwise would be permitted to defer under a tax-qualified retirement plan, such as the Company's 401(k) retirement plan. The Company offers the deferred compensation plan as a supplement to the 401(k) plan where employee contributions are limited and as a competitive practice to enable it to attract and retain top talent.
Other Benefits
The Company's executive officers are eligible to participate in the 401(k) retirement plan, employee stock purchase plan and health and welfare plans on the same basis as other employees. During fiscal year 2014 and the first quarter of fiscal 2015 the Company’s policy was to match 50% of the first 6% of employee contributions, subject to Company profitability on a quarterly basis. Due to the Company’s lack of profitability, matches were not made for most of those periods. Effective July 1, 2014, the Company match without limitations on profitability was reinstated. The Company has not provided perquisites to its executive officers, other than to Mr. Grady.
Deductibility of Compensation
It is the Company's policy to make reasonable efforts to cause executive compensation to be eligible for deductibility under Section 162(m) of the Internal Revenue Code. Under Section 162(m), the federal income tax deductibility of compensation paid to the Company's chief executive officer and to each of its three other most highly compensated executive officers other than its chief financial officer may be limited to the extent that such compensation exceeds $1.0 million in any taxable year. Under Section 162(m), the Company may deduct compensation in excess of $1.0 million if it qualifies as “performance-based compensation,” as defined in Section 162(m).
It is possible that non-qualifying compensation paid to the Company's executives, such as salary and TRSUs, may exceed $1.0 million in a taxable year and therefore limit the deductibility by the Company of a portion of such compensation. The Company believes that all of the stock options, SARs and PRSUs granted to its executives under its shareholder approved plans






should qualify under Section 162(m) as performance-based compensation. The Committee may, from time to time, award compensation that will not be deductible for purposes of Section 162(m) if determined to be in the best interests of the Company and its stockholders.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid to the following officers for services provided to the Company, as well as the aggregate grant date fair value of all equity awards granted in fiscal years 2015, 2014 and 2013:
The Company’s chief executive officer;
The Company’s chief financial officer; and
The three other individuals who were serving as executive officers of the Company at the end of fiscal year 2015.
The above individuals are referred to hereafter as the “named executive officers.”
SUMMARY COMPENSATION TABLE
Name and Principal Position
 
Fiscal
Year
(1)
 
Salary
 
Bonus
 
Stock
Awards
(2)
 
 
Option
Awards
(3)
 
Non-Equity
Incentive Plan
Compensation
(4)
 
All  Other
Compensation
(5)
 
Total
Edward C. Grady
 
2015
 
$
590,000

 
$

 
$
1,185,200

(6)
 
$
759,010

 
$
79,650

 
$
45,632

(23
)
$
2,659,492

President and Chief Executive Officer

 
2014
 
$
60,512

 
$

 
$

 
 
$
187,881

 
$

 
$

 
$
248,393

2013
 
NA

 
NA

 
NA

 
 
NA

 
NA

 
NA

 
NA

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Paul Oldham
 
2015
 
$
348,333

 
$

 
$
401,463

(7)
 
$
91,251

 
$
32,917

 
$
26,115

 
$
900,079

Vice President Administration, Chief Financial Officer and Corporate Secretary
 
2014
 
$
338,333

 
$

 
$
249,075

(8)
 
$

 
$

 
$
28,489

 
$
615,897

2013
 
$
329,167

 
$

 
$
221,940

(9)(10)
 
$

 
$
160,969

 
$
202,028

 
$
914,104

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Robert DeBakker
 
2015
 
$
288,000

 
$

 
$
265,813

(11)
 
$
50,695

 
$
23,328

 
$
18,054

 
$
645,890

Vice President of Worldwide Operations
 
2014
 
$
277,167

 
$

 
$
166,050

(12)
 
$

 
$

 
$
18,427

 
$
461,644

2013
 
$
271,667

 
$

 
$
119,896

(13)(14)
 
$

 
$
114,931

 
$
125,230

 
$
631,724

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kerry Mustoe
 
2015
 
$
213,833

 
$

 
$
85,325

(15)
 
$
20,278

 
$
17,321

 
$
10,209

 
$
346,966

Vice President of Finance, Corporate Controller and Chief Accounting Officer
 
2014
 
$
207,167

 
$

 
$
55,350

(16)
 
$

 
$

 
$
12,831

 
$
275,348

2013
 
$
202,167

 
$

 
$
77,406

(17)(18)
 
$

 
$
83,551

 
$
114,768

 
$
477,892

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bing-Fai Wong
 
2015
 
$
271,667

 
$

 
$
195,813

(19)
 
$
50,695

 
$
22,005

 
$
18,833

 
$
559,013

Vice President of Customer Operations
 
2014
 
$
262,500

 
$

 
$
166,050

(20)
 
$

 
$

 
$
17,217

 
$
445,767

2013
 
$
247,500

 
$

 
$
133,796

(21)(22)
 
$

 
$
99,495

 
$
121,681

 
$
602,472


(1)
The Company’s fiscal year consists of the 52 or 53 weeks ending on the Saturday nearest March 31. Accordingly, references in this table to fiscal year 2015 are to the 52 -week period ended March 28, 2015 ; references to fiscal year 2014 are to the 52 -week period ended March 29, 2014 ; and references to fiscal year 2013 are to the 52 -week period ended March 30, 2013 .
(2)
Represents the aggregate grant date fair value of stock awards computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 “Compensation – Stock Compensation” (ASC Topic 718). Awards are valued at the closing market price of the Company’s common stock on the grant date.
(3)
Represents the aggregate grant date fair value of option and stock appreciation right awards computed in accordance with ASC Topic 718. The fair value of options and stock appreciation rights is estimated using the Black-Scholes option pricing model. The assumptions made in determining the grant date fair value of options and stock appreciation rights under ASC Topic 718 are disclosed in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015 . In all fiscal years presented, stock appreciation rights were issued in lieu of options and are explained in the Long-Term Incentive Compensation section of the Compensation Discussion and Analysis.
(4)
Represents payments under the Company’s annual cash incentive plan. Actual payments with respect to 2015 are delayed until September 2015.
(5)
Except as otherwise indicated, represents the value of dividend equivalent units issued pursuant to the Company’s restricted stock unit awards and 401(k) retirement plan matching contributions made by the Company. The Company suspended the 401(k) retirement plan match effective March 1, 2009 and reinstated it effective January 1, 2011 on a quarterly basis, subject to






Company profitability. In May of 2014, the Company reinstated the 401(k) retirement plan match effective July 1, 2014, without regard to profitability.
(6)
Represents the aggregate grant date fair value of time-based restricted stock unit awards of $100,200 and performance-based restricted stock awards of $1,085,000 granted in fiscal year 2015 based on achievement at target. The maximum grant date fair value which may be attained for the performance-based restricted stock awards granted in 2015 is $2,170,000.
(7)
Represents the aggregate grant date fair value of time-based restricted stock unit awards and a performance-based restricted stock awards granted in fiscal year 2015 calculated at a 100% attainment rate based on the estimated likelihood of achievement. The maximum grant date fair value which may be attained for the performance-based restricted stock awards granted in 2015 is $651,950.
(8)
Represents the aggregate grant date fair value of time-based restricted stock unit awards only; performance-based restricted stock awards granted in fiscal year 2014 are calculated at a 0% attainment rate based on the estimated likelihood of achievement. The maximum grant date fair value which may be attained for this award is $498,150.
(9)
Represents the aggregate grant date fair value of time-based restricted stock unit awards only; performance-based restricted stock awards granted in fiscal year 2013 are calculated at a 0% attainment rate based on the estimated likelihood of achievement. The maximum grant date fair value which may be attained for this award is $360,900.
(10)
Includes $13,440 in grant date fair value for the additional 5.4% beyond 100% attainment earned on the performance-based restricted stock units granted in fiscal year 2011 based on actual performance and which vested at the end of fiscal year 2013.
(11)
Represents the aggregate grant date fair value of time-based restricted stock unit awards and performance-based restricted stock awards granted in fiscal year 2015 based on achievement at target. The maximum grant date fair value which may be attained for the performance-based restricted stock awards granted in 2015 is $447,750.
(12)
Represents the aggregate grant date fair value of time-based restricted stock unit awards only; performance-based restricted stock awards granted in fiscal year 2014 are calculated at a 0% attainment rate based on the estimated likelihood of achievement. The maximum grant date fair value which may be attained for this award is $332,100.
(13)
Represents the aggregate grant date fair value of time-based restricted stock unit awards only; performance-based restricted stock awards granted in fiscal year 2013 are calculated at a 0% attainment rate based on the estimated likelihood of achievement. The maximum grant date fair value which may be attained for this award is $192,480.
(14)
Includes $8,696 in grant date fair value for the additional 5.4% beyond 100% attainment earned on the performance-based restricted stock units granted in fiscal year 2011 based on actual performance and which vested at the end of fiscal year 2013.
(15)
Represents the aggregate grant date fair value of time-based restricted stock unit awards and performance-based restricted stock awards granted in fiscal year 2015 based on achievement at target. The maximum grant date fair value which may be attained for the performance-based restricted stock awards granted in 2015 is $137,100.
(16)
Represents the aggregate grant date fair value of time-based restricted stock unit awards only; performance-based restricted stock awards granted in fiscal year 2014 are calculated at a 0% attainment rate based on the estimated likelihood of achievement. The maximum grant date fair value which may be attained for this award is $110,700.
(17)
Represents the aggregate grant date fair value of time-based restricted stock unit awards only; performance-based restricted stock awards granted in fiscal year 2013 are calculated at a 0% attainment rate based on the estimated likelihood of achievement. The maximum grant date fair value which may be attained for this award is $120,300.
(18)
Includes $7,906 in grant date fair value for the additional 5.4% beyond 100% attainment earned on the performance-based restricted stock units granted in fiscal year 2011 based on actual performance and which vested at the end of fiscal year 2013.
(19)
Represents the aggregate grant date fair value of time-based restricted stock unit awards and performance-based restricted stock awards granted in fiscal year 2015 based on achievement at target. The maximum grant date fair value which may be attained for the performance-based restricted stock awards granted in 2015 is $307,750.
(20)
Represents the aggregate grant date fair value of time-based restricted stock unit awards only; performance-based restricted stock awards granted in fiscal year 2014 are calculated at a 0% attainment rate based on the estimated likelihood of achievement. The maximum grant date fair value which may be attained for this award is $332,100.
(21)
Represents the aggregate grant date fair value of time-based restricted stock unit awards only; performance-based restricted stock awards granted in fiscal year 2013 are calculated at a 0% attainment rate based on the estimated likelihood of achievement. The maximum grant date fair value which may be attained for this award is $216,540.
(22)
Includes $8,696 in grant date fair value for the additional 5.4% beyond 100% attainment earned on the performance-based restricted stock units granted in fiscal year 2011 based on actual performance and which vested at the end of fiscal year 2013.
(23)
Represents the value of housing in the amount of $18,773, dividend equivalent shares of $15,445, car rental of $9,222 and spousal airfare of $2,192.









FISCAL YEAR 2015 GRANTS OF PLAN-BASED AWARDS
The following table contains information concerning fiscal year 2015 incentive opportunities for the named executive officers and the equity awards granted to the named executive officers in fiscal year 2015 .
 
Name
 
Grant
Date
 
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (1)
 
Estimated Future Payouts
Under Equity Incentive Plan
Awards
 
All
Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
 
 
All Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
 
 
Exercise
or Base
Price of
Option
Awards
($/Share)
 
Grant
Date
Fair
Value
($)
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold
(#)
 
Target
(#)
 
Maximum
(#)
 
Edward C. Grady
 

 
$
2,006

 
$
590,000

 
$
1,180,000

 

 

 

 
 
 
 

 
 

 

5/16/14

 

 

 

 

 

 

 
15,000

(5)
 

 
 

 
$
100,200

11/18/14

 

 

 

 
1,550

 
155,000

 
310,000

(3
)

 
 

 
 

 

11/18/14

 

 

 

 

 

 

 

 
 
350,000

(10
)
 
$
7.00

 
$
759,010

Paul Oldham
 

 
$
829

 
$
243,833

 
$
487,666

 

 

 

 

  
 

 
 

 

5/15/14

 

 

 

 

 

 

 
33,750

(6)
 
45,000

(11
)
 
$
6.71

 
$
317,714

5/15/14

 

 

 

 
11,250

 
22,500

 
45,000

(2
)

 
 

 
 

 

 
11/18/14

 

 

 

 
50

 
25,000

 
50,000

(4
)
 
 
 

 
 

 

Robert DeBakker
 

 
$
588

 
$
172,800

 
$
345,600

 

 

 

 

  
 

 
 

 

5/15/14

 

 

 

 

 

 

 
18,750

(7)
 
25,000

(11
)
 
$
6.71

 
$
176,508

5/15/14

 

 

 

 
6,250

 
15,000

 
30,000

(2
)

 
 

 
 

 

 
11/18/14

 

 

 

 
40

 
20,000

 
40,000

(4
)

 
 

 
 

 

Kerry Mustoe
 

 
$
436

 
$
128,300

 
$
256,600

 

 

 

 

  
 

 
 

 

5/15/14

 

 

 

 

 

 

 
7,500

(8)
 
10,000

(11
)
 
$
6.71

 
$
70,603

5/15/14

 

 

 

 
2,500

 
5,000

 
10,000

(2
)

 
 

 
 

 

 
11/18/14

 

 

 

 
10

 
5,000

 
10,000

(4
)

 
 

 
 

 

Bing-Fai Wong
 

 
$
554

 
$
163,000

 
$
326,000

 

 

 

 

  
 

 
 

 

5/15/14

 

 

 

 

 

 

 
18,750

(9)
 
25,000

(11
)
 
$
6.71

 
$
176,508

5/15/14

 

 

 

 
6,250

 
15,000

 
30,000

(2
)

 
 

 
 

 

 
11/18/14

 

 

 

 
20

 
10,000

 
20,000

(4
)

 
 

 
 

 

 
(1)
Represents the incentive for fiscal year 2015 under the Company’s annual executive team bonus plan and estimated payouts at threshold, target and maximum levels of performance. The actual amount earned by each named executive officer for fiscal year 2015 is set forth in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.”
(2)
Represents PRSUs granted on May 15, 2014. Vesting under these awards is based on return on net assets ("RONA") performance goal, which is calculated as non-GAAP operating income for a given fiscal year (which excludes stock compensation expense, purchase accounting and other one-time charges, but includes charges related to inventory) divided by the average of the net assets (other than cash and assets acquired in acquisitions by ESI after the date of grant) at the end of each quarter in the fiscal year. Vesting of one-third of the PRSUs awarded is based on the Company's RONA in each of the fiscal years 2015 through 2017. Of the PRSUs vesting based on fiscal 2015 RONA, 50% vest on RONA equal to 0%, 100% vest on RONA equal to 3% and 200% maximum vest on RONA equal to 4%. There is no vesting below the 50% vesting threshold. Of the PRSUs vesting based on fiscal 2016 RONA, 50% vest on RONA equal to 10%, 100% vest on RONA equal to 18% and 200% maximum vest on RONA equal to 21%. Of the PRSUs vesting based on fiscal 2017 RONA, 50% vest on RONA equal to 20%, 100% vest on RONA equal to 35% and 200% maximum vest on RONA equal to 42%. Vesting is linear for achievement between the 50% and 100% vesting levels and between the 100% and 200% vesting levels. As the threshold was not reached for fiscal year 2015, no PRSUs were vested in fiscal year 2015.
(3)
Represents PRSUs granted on November 18, 2014 that vest based on two performance goals. Vesting of one-half of the restricted stock units awarded is based on the Company's revenues in fiscal 2017 and one-half vest based on the Company's non-GAAP operational income before taxes ("OIBT") as a percentage of revenue in fiscal 2017. Of the PRSUs vesting based on Company's revenue goal, vesting starts at revenues of $225 million with vesting linear up to revenues of $275 million, at which level 100% vesting occurs. Additional shares vest linearly based on revenues between $275 million and $385 million, at which level the maximum vesting of 200% occurs. Of the PRSUs vesting based on Company's OIBT as a percentage of revenue, vesting starts on OIBT of 2% with vesting linear up to OIBT of 6%, at which level 100% vesting occurs. Additional shares vest linearly based on OIBT between 6% and 10%, at which level the maximum vesting of 200% occurs. No shares shall vest under either performance measure unless the minimum vesting threshold has been attained for both performance measures.
(4)
Represents PRSUs granted on November 18, 2014 that vest based on the Company's revenues in fiscal 2017. Vesting starts at revenues of $225 million with vesting linear up to revenues of $275 million, at which level 100% vesting occurs. Additional shares vest linearly based on revenues between $275 million and $385 million, at which level the maximum vesting of 200% occurs. No shares vest unless OIBT in fiscal 2017 is at least 2%.
(5)
Represents RSUs granted on May 16, 2014 that vest 50% on date of grant and the remaining 50% vest on the first anniversary of the grant, subject to employment criteria.






(6)
Represents RSUs granted on May 15, 2014. 22,500 units vest one-fourth annually on the first four anniversaries of the date of grant and 11,250 units vest one-third annually on the first three anniversaries of the date of grant, subject to employment criteria.
(7)
Represents RSUs granted on May 15, 2014. 12,500 units vest one-fourth annually on the first four anniversaries of the date of grant and 6,250 units vest one-third annually on the first three anniversaries of the date of grant, subject to employment criteria.
(8)
Represents RSUs granted on May 15, 2014. 5,000 units vest one-fourth annually on the first four anniversaries of the date of grant and 2,500 units vest one-third annually on the first three anniversaries of the date of grant, subject to employment criteria.
(9)
Represents RSUs granted on May 15, 2014. 12,500 units vest one-fourth annually on the first four anniversaries of the date of grant and 6,250 units vest one-third annually on the first three anniversaries of the date of grant, subject to employment criteria.
(10)
Represents SARs granted on November 18, 2014 that vest one-third annually on the 18th of May starting in 2015 through 2017, subject to employment criteria.
(11)
Represents SARs granted on May 15, 2014 that vest one-fourth annually on the first four anniversaries of the date of grant, subject to employment criteria.








OUTSTANDING EQUITY AWARDS AT END OF FISCAL YEAR 2015
The following table sets forth the information concerning outstanding options (which includes stock appreciation rights) and unvested restricted stock units held by the named executive officers at March 28, 2015 .
 
 
Option Awards
 
Stock Awards
Name
 
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
 
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
 
Equity Incentive  Plan
Awards: Number of
Securities Underlying
Unexercised
Unearned Options (#)
 
Option
Exercise
Price  ($)(1)
 
Option
Expiration
Date
 
Number of
Shares or
Units of Stock
That Have
Not Vested (#)
 
Market Value of
Shares  or Units
of Stock That
Have Not
Vested ($)(2)
 
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 ($)(2)
Edward C. Grady
 
21,285

(3)
 
42,568

(3)
 
 
$
9.24

 
2/22/2024
 
7,750

(15)
 
$
47,740

 
156,676

(23)
 
$
965,124

 
 
 
 
 
350,000

(4)
 
 
$
7.00

 
11/17/2024
 
 
 
 
$

 
 
 
 
$

Paul Oldham
 
80,000

(5)
 

 
 
 
$
18.11

 
1/6/2018
 
19,789

(16)
 
$
121,900

 
23,978

(21)
 
$
147,704

15,000

(6)
 

 
 
 
$
15.78

 
5/14/2018
 
6,631

(17)
 
$
40,847

 
23,251

(22)
 
$
143,226

90,000

(7)
 

 
 
 
$
7.26

 
5/13/2019
 
23,978

(18)
 
$
147,704

 
25,270

(24)
 
$
155,663

17,000

(8)
 
 
 
 
 
$
13.84

 
5/12/2020
 
23,251

(19)
 
$
143,226

 

   
 
$

13,500

(9)
 
4,500

(9)
 
 
 
$
18.02

 
5/11/2021
 
11,625

(20)
 
$
71,610

 
 
 
 
$


(10)
 
45,000

(10)
 
 
 
$
6.71

 
5/14/2024
 
 
 
 
$

 
 
 
 
$

Robert DeBakker
 
38,000

(11)
 

 
 
 
$
19.04

 
7/20/2015
 
10,554

(16)
 
$
65,013

 
15,985

(21)
 
$
98,468

35,000

(12)
 

 
 
 
$
19.20

 
5/24/2016
 
6,631

(17)
 
$
40,847

 
12,917

(22)
 
$
79,569

14,000

(13)
 

 
 
 
$
22.03

 
7/24/2017
 
15,985

(18)
 
$
98,468

 
20,216

(24)
 
$
124,531

12,000

(6)
 

 
 
 
$
15.78

 
5/14/2018
 
12,917

(19)
 
$
79,569

 

 
 
$

50,000

(7)
 

 
 
 
$
7.26

 
5/13/2019
 
6,458

(20)
 
$
39,781

 

 
 
$

11,000

(8)
 
 
 
 
 
$
13.84

 
5/12/2020
 

 
 
$

 

 
 
$

6,000

(9)
 
2,000

(9)
 
 
$
18.02

 
5/11/2021
 

 
 
$

 

 
 
$


(10)
 
25,000

(10)
 
 
$
6.71

 
5/14/2024
 

   
 
$

 

 
 
$

Kerry Mustoe
 
9,000

(14)
 

 
 
 
$
16.12

 
4/19/2015
 
6,596

(16)
 
$
40,631

 
5,328

(21)
 
$
32,820

15,000

(11)
 

 
 
 
$
19.04

 
7/20/2015
 
6,631

(17)
 
$
40,847

 
5,167

(22)
 
$
31,829

20,000

(12)
 

 
 
 
$
19.20

 
5/24/2016
 
5,328

(18)
 
$
32,820

 
5,054

(24)
 
$
31,133

10,000

(13)
 

 
 
 
$
22.03

 
7/24/2017
 
5,167

(19)
 
$
31,829

 

 
 
$

8,000

(6)
 

 
 
 
$
15.78

 
5/14/2018
 
2,583

(20)
 
$
15,911

 

 
 
$

35,000

(7)
 

 
 
 
$
7.26

 
5/13/2019
 

 
 
$

 

 
 
$

10,000

(8)
 
 
 
 
 
$
13.84

 
5/12/2020
 

 
 
$

 

 
 
$

6,000

(9)
 
2,000

(9)
 
 
$
18.02

 
5/11/2021
 

   
 
$

 

 
 
$


(10)
 
10,000

(10)
 
 
 
$
6.71

 
5/14/2024
 
 
 
 
$

 
 
 
 
$

Bing-Fai Wong
 
12,000

(14)
 
 
 
 
 
 
$
16.92

 
4/19/2015
 
11,873

(16)
 
$
73,138

 
15,985

(21)
 
$
98,468

26,000

(11)
 

 
 
 
$
19.04

 
7/20/2015
 
6,631

(17)
 
$
40,847

 
12,917

(22)
 
$
79,569

8,667

(12)
 

 
 
 
$
19.20

 
5/24/2016
 
15,985

(18)
 
$
98,468

 
10,108

(24)
 
$
62,265

3,250

(6)
 

 
 
 
$
15.78

 
5/14/2018
 
12,917

(19)
 
$
79,569

 

 
 
$

40,000

(7)
 

 
 
 
$
7.26

 
5/13/2019
 
6,458

(20)
 
$
39,781

 

 
 
$

11,000

(8)
 
 
 
 
 
$
13.84

 
5/12/2020
 

 
 
$

 

 
 
$

9,000

(9)
 
3,000

(9)
 
 
$
18.02

 
5/11/2021
 

 
 
$

 

 
 
$


(10)
 
25,000

(10)
 
 
$
6.71

 
5/14/2024
 

 
 
$

 

 
 
$










(1)
The reported option exercise prices reflect an adjustment to outstanding option and SAR grants as provided for under the company's 2004 Stock Incentive Plan resulting from the company's issuance of a special one-time dividend of $2.00 per share, paid on December 27, 2012 to shareholders of record as of the close of business on December 13, 2012.  As approved by the Compensation Committee of the Board of Directors of the Company, the option exercise prices of all outstanding awards were adjusted downward on January 30, 2013 to preserve their value. For options with an exercise price of $11.70 or less, the exercise price was reduced by $0.88. For options with an exercise price greater than $11.70, the exercise price was reduced by $0.80.  
(2)
Based on closing stock price on March 28, 2015 of $6.16 .
(3)
Stock-settled stock appreciation right granted on February 23, 2014 and becomes exercisable for one third of the shares on each of the first three anniversaries of the grant date, subject to employment criteria.
(4)
Stock-settled stock appreciation right granted on November 18, 2014 and becomes exercisable for one-third of the shares annually on the 18th of May starting in 2015 through 2017, subject to employment criteria.
(5)
Option granted on January 7, 2008 and became exercisable for 25% of the shares on each of the first four anniversaries of the grant date.
(6)
Option granted on May 15, 2008 and became exercisable for 25% of the shares on each of the first four anniversaries of the grant date.
(7)
SARs granted on May 14, 2009 and became exercisable for 25% of the shares on each of the first four anniversaries of the grant date, subject to employment criteria.
(8)
SARs granted on May 13, 2010 and became exercisable for 25% of the shares on each of the first four anniversaries of the grant date, subject to employment criteria.
(9)
SARs granted on May 12, 2011 and became exercisable for 25% of the shares on each of the first four anniversaries of the grant date, subject to employment criteria.
(10)
SARs granted on May 15, 2014 and becomes exercisable for 25% of the shares on each of the first four anniversaries of the grant date, subject to employment criteria.
(11)
Option granted on July 20, 2005 and became 100% vested on May 26, 2006. The shares underlying the option were restricted from being sold for a period of three years from the grant date.
(12)
Option granted on May 24, 2006 and became 100% vested on May 26, 2006. The shares underlying the option were subject to sale restrictions that lapsed as to one-third of the shares on each of the first three anniversaries of the grant date.
(13)
Option granted on July 25, 2007 and became exercisable for 25% of the shares on each of the first four anniversaries of the grant date.
(14)
Option granted on April 20, 2005 and became 100% vested on April 20, 2006. The shares underlying the option were restricted from being sold for a period of three years from the grant date.
(15)
RSUs granted on May 16, 2014 and vest 100% on May 16, 2015, subject to employment criteria. The number of unvested shares includes dividend equivalent RSUs issued on the Company’s dividend payment dates pursuant to the terms of the Company’s RSUs.
(16)
RSUs granted on May 10, 2012 and vest 100% on May 10, 2015, subject to employment criteria. The number of unvested shares includes dividend equivalent RSUs issued on the Company’s dividend payment dates pursuant to the terms of the Company’s RSUs.
(17)
RSUs granted on May 13, 2010 and vest 100% on May 13, 2015, subject to employment criteria. The number of unvested shares includes dividend equivalent RSUs issued on the Company’s dividend payment dates pursuant to the terms of the Company’s RSUs.
(18)
RSUs granted on May 9, 2013 and vest 100% on May 9, 2016, subject to employment criteria. The number of unvested shares includes dividend equivalent RSUs issued on the Company’s dividend payment dates pursuant to the terms of the Company’s RSUs.
(19)
RSUs granted on May 15, 2014 and vest 100% on May 9, 2018, subject to employment criteria. The number of unvested shares includes dividend equivalent RSUs issued on the Company’s dividend payment dates pursuant to the terms of the Company’s RSUs.
(20)
RSUs granted on May 15, 2014 and vest 100% on May 9, 2017, subject to employment criteria. The number of unvested shares includes dividend equivalent RSUs issued on the Company’s dividend payment dates pursuant to the terms of the Company’s RSUs.
(21)
PRSUs granted on May 9, 2013, subject to employment criteria and based on levels of performance achieved. Vesting of one-third of the PRSUs is based on the Company's fiscal 2015 sales with 90% vesting on sales of $261 million, 100% vesting at $290 million and 200% maximum vesting on sales of $435 million. No amount was earned as the sales were below $261 million in fiscal 2015. Vesting of two-thirds of the PRSUs is based on the Company's fiscal 2016 sales with 100% earned on sales of $335 million, with additional amounts earned in 20% increments up to a maximum of 200% as follows: 120% if $368.5 million; 140% if $402 million; 160% if $435.5 million; 180% if $469 million; and 200% if $502.5 million. For sales below $335 million, 85% will be earned on sales of $284.75 million and 92.5% will be earned on sales of $309.9 million, with the amounts earned for additional sales growing linearly from 85% to 92.5% and from 92.5% to 100%. No amount shall be earned if sales are below $284.75 million.
(22)
PRSUs granted on May 15th, 2014, subject to employment criteria. Vesting under these awards is based on return on net assets ("RONA") performance goal, which is calculated as non-GAAP operating income for a given fiscal year (which excludes stock compensation expense, purchase accounting and other one-time charges, but includes charges related to inventory) divided by the average of the net assets (other than cash and assets acquired in acquisitions by ESI after the date of grant) at the end of each quarter in the fiscal year. Vesting of one-third of the PRSUs is based on the Company's RONA in each of the fiscal years 2015 through 2017. Of the PRSUs vesting based on fiscal 2015 RONA, 50% vest on RONA equal to 0%, 100% vest on RONA equal to 3% and 200% maximum vest on RONA equal to 4%. There is no vesting below the 50% vesting threshold. Of the PRSUs vesting based on fiscal 2016 RONA, 50% vest on RONA equal to 10%, 100% vest on RONA equal to 18% and 200% maximum vest on RONA equal to 21%. Of the PRSUs vesting based on fiscal 2017 RONA, 50% vest on RONA equal to 20%, 100% vest on RONA equal to 35% and 200% maximum vest on RONA equal to 42%. Vesting is linear for achievement between the 50% and 100% vesting levels and between the 100% and 200% vesting levels.
(23)
PRSUs granted on November 18th, 2014, subject to employment criteria and based on two performance goals. Vesting of one-half of the PRSUs is based on the Company's revenues in fiscal 2017 and one-half vest based on the Company's non-GAAP operational income before taxes ("OIBT") as a percentage of revenue in fiscal 2017. Of the PRSUs vesting based on Company's revenue goal, vesting starts at revenues of $225 million with vesting linear up to revenues of $275 million, at which level 100% vesting occurs. Additional shares vest linearly based on revenues between $275 million and $385 million, at which level the maximum vesting of 200% occurs. Of the PRSUs vesting based on Company's OIBT as a percentage of revenue, vesting starts on OIBT of 2% with vesting linear up to OIBT of 6%, at which level 100% vesting occurs. Additional shares vest linearly based on OIBT between 6% and 10%, at which level the maximum vesting of 200% occurs. No shares shall vest under either performance measure unless the minimum vesting threshold has been attained for both performance measures.
(24)
PRSUs granted on November 18, 2014, subject to employment criteria and vest based on the Company's revenues in fiscal 2017. Vesting starts at revenues of $225 million with vesting linear up to revenues of $275 million, at which level 100% vesting occurs. Additional shares vest linearly based on revenues between $275 million and $385 million, at which level the maximum vesting of 200% occurs. No shares vest unless OIBT in fiscal 2017 is at least 2%.






OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2015
The following table sets forth information with respect to options that were exercised and stock awards that vested with respect to the named executive officers in fiscal year 2015 .
 
 
 
Option Awards
 
Stock Awards
Name
 
Number of
Shares
Acquired
on Exercise
(#)
 
Value Realized
on Exercise
($)
 
Number of
Shares
Acquired
on Vesting
(#)
 
Value
Realized
($)
Edward C. Grady
 

 

 

 
 
$

Paul Oldham
 

 

 
35,937

 
 
$
281,537

Robert DeBakker
 

 

 
20,535

 
 
$
157,710

Kerry Mustoe
 

 

 
17,968

 
 
$
139,383

Bing-Fai Wong
 

 

 
13,861

 
 
$
113,939

 
FISCAL YEAR 2015 NON-QUALIFIED DEFERRED COMPENSATION
 
Name
 
Executive
Contributions
in Fiscal Year 2015
 
Registrant
Contributions
in Fiscal Year 2015
 
Aggregate
Earnings in Fiscal Year 2015
 
Aggregate
Withdrawals/
Distributions
 
Aggregate
Balance at
3/28/15
($)
 
($)
 
($) (1)
 
($)
 
($)
Edward C. Grady
 
$
111,558

(3)
 

 
$
(170,131
)
 
 

 
$
419,974

 
Paul Oldham
 

  
 

 

 
 

 

  
Robert DeBakker
 

  
 

 

 
 

 

  
Kerry Mustoe
 
$
42,767

 
 

 
$
4,156

 
 

 
$
369,493