Cohu Inc PRE 14A, filed Mar 15, 2022

Cohu Inc (COHU)

PRE 14A 2022-03-15 For: 2022-05-04

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☒	Preliminary Proxy Statement

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☐	Definitive Proxy Statement

☐	Definitive Additional Materials

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Category	Details	#	Proposal	Our Board’s Recommendation
Date and Time	Wednesday, May 4, 2022, 1:00 p.m. Pacific Time	1	Election of two (2) Class 3 directors, for a term of three years each	√ FOR each Director Nominee
Place	Meeting will be held virtually	2	Advisory vote to approve our Named Executive Officer compensation, or “Say-on-Pay”	√ FOR
Record Date	Only stockholders of record at the close of business on March 14, 2022, the “Record Date,” are entitled to notice of, and to vote at, the annual meeting	3	Approve an amendment to our Amended and Restated Certificate of Incorporation increasing the number of authorized shares of common stock from 60,000,000 to 90,000,000 shares	√ FOR
Proxy and Annual Report Materials IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 4, 2022		4	Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2022	√ FOR
			Transaction of other business as may properly come before the annual meeting (including any adjournment or postponement thereof)

Our notice of 2022 Annual Meeting of Stockholders, proxy statement, and annual report to stockholders are available at http://materials.proxyvote.com/192576 and on Cohu’s website at www.cohu.com.		Voting Please vote as soon as possible, even if you plan to attend the annual meeting, on all of the voting matters. You have three options for submitting your vote before the annual meeting: The proxy statement and the accompanying proxy card provide detailed voting instructions. IT IS IMPORTANT THAT YOU VOTE to play a part in the future of the Company. Please carefully review the proxy materials for the 2022 Annual Meeting of Stockholders. By Order of the Board of Directors, Thomas D. Kampfer Secretary

Elect Electronic Delivery Save Time, Money & Trees As part of our efforts to be an environmentally responsible corporate citizen, we encourage Cohu stockholders to voluntarily elect to receive future proxy and annual report materials electronically. • If you are a registered stockholder, please visit www.proxyvote.com for instructions. • If you are a stockholder who owns stock through a broker or brokerage account, please opt for e‑delivery at www.proxyvote.com or by contacting your nominee

Date of Distribution This notice, proxy statement and proxy card are first being made available and/or mailed to our stockholders on or about March 15, 2022.

Proxy Statement Summary	Page 1
About Cohu
Fiscal Year 2021 Financial Highlights
Proposals and Voting Recommendations
Summary Information Regarding our Directors
Director Key Requirements, Skills and Experience Highlights
Director Demographic Highlights
Corporate Governance Highlights
Executive Compensation Highlights
ESG Highlights
Stock Ownership	Page 12
Security Ownership of Certain Beneficial Owners and Management
Delinquent Section 16(a) Reports
Governance Matters	Page 13
Corporate Governance
Board of Directors and Committees
Director Independence
Board Structure and Committee Composition
Audit Committee
Compensation Committee
Nominating and Governance Committee
Board Leadership Structure
Risk Oversight
Stockholder Nominees
Director Qualifications
Identifying and Evaluating Nominees for Directors
Executive Sessions
Communications with the Board
Compensation of Directors
Compensation Matters	Page 21
Executive Compensation and Other Information
Compensation Discussion and Analysis
Executive Summary
Compensation Philosophy
Compensation-Setting Process
Compensation Elements
Post-Employment Compensation
Other Compensation Policies
Tax and Accounting Considerations
Compensation Committee Report
Executive Compensation Tables
CEO Pay Ratio
Equity Compensation Awards and Plan Information
Potential Payments Upon Termination or Change in Control
Audit Matters	Page 48
Audit Committee Report
Audit Fees and Services
Certain Relationships and Related Party Transactions
Voting Proposals	Page 52
Proposal No. 1: Election of Directors
Proposal No. 2: Advisory Vote to Approve Named Executive Compensation
Proposal No. 3: Approve an amendment to our Amended and Restated Certificate of Incorporation to Increase the Number of Authorized Shares of Common Stock
Proposal No. 4: Ratification of Independent Registered Public Accounting Firm
Voting and Meeting Information	Page 60
General Information
Appendices	Page 64

Voting Matters	Board Vote Recommendation
Proposal No. 1: Election of Two Class 3 Directors	√ FOR each Nominee
Proposal No. 2: Advisory Vote to Approve Our Named Executive Officer Compensation, or “Say-on-Pay”	√ FOR
Proposal No. 3: Approve an Amendment to our Amended and Restated Certificate of Incorporation Increasing the Number of Authorized Shares of Common Stock from 60,000,000 to 90,000,000 Shares	√ FOR
Proposal No. 4: Ratification of the Appointment of Ernst & Young LLP as our Independent Registered Public Accounting Firm for Fiscal Year 2022	√ FOR
Transaction of other business as may properly come before the annual meeting (including any adjournment or postponement thereof)

Name	Age	Since	Independent ⁽¹⁾	Class and When Term Expires	AC	CC	NGC	Other Current Public Boards
Steven J. Bilodeau	63	2009	Yes	3 -- 2022		C	M
James A. Donahue	73	1999	No	3 -- 2022
Other Directors Not Standing for Election in 2022
William E. Bendush	73	2011	Yes	1 -- 2023	C+		M
Andrew M. Caggia	73	2014	Yes	2 -- 2024	M+		C
Lynne J. Camp⁽²⁾	64	2019	Yes	3 -- 2022		M
Yon Y. Jorden	67	2021	Yes	2 -- 2024	M+			Alignment Healthcare, Inc., Capstone Green Energy Corp.
Luis A. Müller	52	2014	No	2 -- 2024				Celestica Inc.
Nina L. Richardson	63	2019	Yes	1 -- 2023		M		Eargo, Inc., Resideo Technologies, Inc., Silicon Laboratories Inc.

(1)	Independence is determined annually by the board of directors in accordance with the company’s corporate governance guidelines and Nasdaq rules.
(2)	Ms. Camp is not standing for re-election and her term will expire as of the meeting date.

AC - Audit Committee	C - Chair
CC - Compensation Committee	M - Member
NGC - Nominating and Governance Committee	+ - Also qualifies as an audit committee financial expert (as determined based on SEC rules)

Key Qualifications, Skills and Experiences of our Directors	Bendush	Bilodeau	Caggia	Camp⁽¹⁾	Donahue	Jorden	Müller	Richardson
Industry Knowledge – Knowledge of and experience with our semiconductor equipment and broader semiconductor markets	√	√	√	√	√	√	√	√
Public Company Board Experience – Experience as current or former member of other public company boards in technology industries; experience with board governance requirements and practices	√	√	√	√	√	√	√	√
Leadership Experience – Experience as a current or former chief executive officer (“CEO”), president, chief financial officer (“CFO”), chief operating officer and/or general manager of a significant business	√	√	√	√	√	√	√	√
Customer/Deep Technology Knowledge – Deep knowledge and understanding of semiconductor equipment technologies, including an understanding of our customers’ markets and needs		√			√		√
Global Business Experience – Experience as a current or former business executive of a business with significant global operations and customer base	√	√	√	√	√	√	√	√
Finance and Accounting – Experience as current or former public company executive directly responsible for accounting operations and financial reporting with a level of complexity comparable to the company	√		√		√	√
Operations – Experience as a current or former senior executive in operational roles, with complex global operations and supply chain		√			√		√	√
Human Capital Management Experience – Experience serving as a member of the compensation committee of a public company, head of human resources, or as direct manager of the head of human resources, or other experience in setting HCM policies in large organizations, including recruiting, retention, compensation, organizational planning and leadership development	√	√		√	√	√	√	√
Mergers and Acquisitions (“M&A”) Experience – M&A and integration experience (including buy- and sell-side) as a public company officer	√	√	√		√	√	√
Risk Management Experience – Experience serving as a member of the audit committee of a public company, or directly overseeing enterprise risk management or business continuity planning in a large organization, or other experience in managing risk at the enterprise level or in a senior compliance or regulatory role	√	√	√		√	√	√	√

Additional Qualifications and Information
Tenure on Cohu Board (years) ⁽²⁾	11	13	8	3	23	1	8	3
Other Current Public Company Boards ⁽³⁾						2	1	3

(1)	Ms. Camp is not standing for re-election and her term will expire as of the meeting date.
(2)	Measured as of 2022 annual meeting.
(3)	As of March 15, 2022.

Total Number of Directors	8
Gender	Male	Female	Non-Binary	Gender Undisclosed
Number of directors based on gender identify	5	3 ⁽¹⁾	-	-
Number of directors who identify in any of the categories below
African American or Black	-	-	-	-
Alaskan Native or Native American	-	-	-	-
Asian	-	1	-	-
Hispanic or Latinx	1	-	-	-
Native Hawaiian or Pacific Islander	-	-	-	-
White	4	2	-	-
Two or More Races or Ethnicities	-	-	-	-
LGBTQ+	-
Demographic Background Undisclosed	-

Board and Other Governance Information	As of March 15, 2022
Size of Board	8
Number of Independent Directors	6
Number of Directors Who Attended ≥ 75% of Meetings	8
Limitations on Other Public Board and Committee Memberships	Yes
Hedging and Pledging Prohibited	Yes
Voting Standard of Election of Directors	Majority
Plurality Voting Carveout for Contested Elections	Yes
Separate Chair and CEO	Yes
Lead Independent Director	Yes
Independent Directors Meet Without Management Present	Yes
Annual Board and Committee Self-Evaluations	Yes
Annual Independent Director Evaluation of CEO	Yes
Risk Oversight by Full Board and Committees	Yes
Commitment to Board Diversity	Yes
Significant Board Engagement - 42 Board and Committee meetings held in 2021	Yes
Code of Ethics Applicable to Directors	Yes
Stockholder Engagement Program	Yes
Poison Pill	No
Board Oversight of ESG	Yes
Publication of Annual ESG Report on Our Website	Yes
Board Oversight of Cybersecurity Risks	Yes

	●	Continued to increase our transparency through the publication of corporate Sustainability and Human Capital reports. These reports are available on our website at https:// www.cohu.com/corporate-responsibility.
	●	Completed our site consolidation plan, reducing principal operating sites from 14 to 10.
	●	Achieved 18% reduction in energy to revenue ratio, while growing revenue by 39% year-over-year.
	●	Two of our operating sites have on-site solar power and our new Kolbermoor, Germany building is certified as a “KfW Efficiency House 70” energy efficient building.
	●	Published for the first time our Scope 1 and 2 Greenhouse Gas Emissions data.
	●	Established and published enterprise Sustainability goals.
	●	Hired a greater percentage of female employees than our current 28% representation, and 39% of U.S. employees identify as from underrepresented communities.
	●	Returned 4.5% of profits globally to eligible non-executive employees, which driven by our record 2021, amounted to $7.8 million.
	●	Continued our excellent employee safety record, with a 2021 global recordable incident rate of 0.2, which is 78% below our industry benchmark.

Name and address of beneficial owner	Beneficially owned common stock	Common stock equivalents ⁽¹⁾	Total	Percent of class ⁽²⁾
BlackRock, Inc.⁽³⁾	7,340,752	-	7,340,752	15.12%
55 East 52nd Street, New York, NY 10055
Dimensional Fund Advisors LP⁽⁴⁾	2,250,012	-	2,250,012	4.63%
6300 Bee Cave Road, Austin, TX 78746
The Vanguard Group⁽⁵⁾	3,662,219	-	3,662,219	7.54%
100 Vanguard Blvd. Malvern, PA 19355
William E. Bendush	33,347	-	33,347	*
Steven J. Bilodeau⁽⁶⁾	79,476	-	79,476	*
Christopher G. Bohrson	22,245	17,891	40,136	*
Andrew M. Caggia⁽⁷⁾	35,875	-	35,875	*
Lynne J. Camp	13,128	-	13,128	*
James A. Donahue	367,056	-	367,056	*
Yon Y. Jorden	3,000	-	3,000	*
Jeffrey D. Jones	148,299	40,213	188,512	*
Thomas D. Kampfer	18,208	14,630	32,838	*
Ian P. Lawee	8,819	3,816	12,635	*
Luis A. Müller	240,841	76,026	316,867	*
Nina L. Richardson⁽⁸⁾	13,915	-	13,915	*
All directors and executive officers as a group (12 persons)	984,209	152,576	1,136,785	2.33%

(1)	Shares issuable upon exercise of stock options and restricted stock units and performance stock units held by directors and executive officers that were exercisable or will otherwise vest on or within 60 days of March 1, 2022.
(2)	Computed on the basis of 48,563,962 shares of Cohu common stock outstanding as of March 1, 2022, plus, with respect to each person holding options and restricted stock units and performance stock units that were exercisable or will otherwise vest on or within 60 days of March 1, 2022, the number of shares of Cohu common stock issuable upon exercise or vesting thereof.
(3)	According to Schedule 13G/A filed with the SEC on January 27, 2022, BlackRock, Inc. reported that its affiliated companies collectively had sole voting and dispositive power with respect to 7,282,590 and 7,340,752 shares, respectively, and no shared voting or dispositive power with respect to these shares.
(4)	According to Schedule 13G/A filed with the SEC on February 8, 2020, Dimensional Fund Advisors LP reported that it had sole voting and dispositive power with respect to 2,196,203 and 2,250,012 shares, respectively, and no shared voting or dispositive power with respect to these shares.
(5)	According to Schedule 13G/A filed with the Securities SEC on February 9, 2022, The Vanguard Group reported that it had sole dispositive power with respect to 3,536,901 shares, and no sole voting power, and shared voting and dispositive power with respect to 88,558 and 125,318 shares, respectively.
(6)	Beneficially owned common stock includes 39,371 deferred stock unit awards issued pursuant to the 2005 Plan.
(7)	Beneficially owned common stock includes 25,875 deferred stock unit awards issued pursuant to the 2005 Plan.
(8)	Beneficially owned common stock includes 11,992 deferred stock unit awards issued pursuant to the 2005 Plan.

Initial Appointment	RSUs with a total value of $150,000 ⁽¹⁾, but the total value of such grant is prorated based on the period of time between appointment as director and the next scheduled director annual equity grant date
Annual Grants	RSUs with a total value of $150,000 ⁽¹⁾

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($) ⁽¹⁾	All Other Compensation ($) ⁽²⁾	Total ($)
William E. Bendush	88,962	149,997	-	238,959
Steven J. Bilodeau ⁽³⁾	95,981	149,997	-	245,978
Andrew M. Caggia ⁽³⁾	80,000	149,997	-	229,997
Lynne J. Camp	67,500	149,997	-	217,497
James A. Donahue	95,000	149,997	17,901	262,898
Yon Y. Jorden ⁽⁴⁾	44,423	147,520	-	191,943
Nina L. Richardson ⁽³⁾	68,413	149,997	-	218,410
Jorge L. Titinger ⁽⁵⁾	24,663	-	-	24,663

(1)	Amounts shown do not reflect compensation actually received by the directors. Instead, the amounts above are the grant date fair value for stock awards issued in the form of RSUs granted in fiscal 2021 calculated in accordance with FASB ASC Topic 718. The assumptions used to calculate the grant date fair value of the stock awards are set forth in Note 6, “Employee Benefit Plans”, included in Part IV, Item 15(a) of Cohu’s Annual Report on Form 10-K for the year ended December 25, 2021, filed with the SEC. The derived grant date fair value for the stock award is recognized, for financial statement purposes, over the number of days of service required for the award to vest in full. As of December 25, 2021, Mses. Camp, Jorden and Richardson had 6,298, 4,035 and 5,923 unvested RSUs outstanding, respectively, and Messrs. Bendush, Bilodeau, Caggia and Donahue each had 4,001 unvested RSUs outstanding.
(2)	Amount shown for Mr. Donahue is for reimbursement of health insurance premiums and other medical costs for him and his spouse not covered by insurance.
(3)	During the year ended December 25, 2021, Mr. Bilodeau elected to defer his cash director fees. The deferred amounts are credited in the form of DSU awards and ultimately payable in shares of Cohu common stock, if the director ceases to be a director for any reason, upon the occurrence of a change in control of Cohu or at a future date selected at the time of deferral. As of December 25, 2021, Ms. Richardson and Messrs. Bilodeau and Caggia had 11,992, 53,954 and 25,875 DSUs, respectively.
(4)	Ms. Jorden was appointed to the Board effective May 10, 2021.
(5)	Mr. Titinger did not stand for re-election effective May 5, 2021, and fees shown above represent amounts earned prior to his departure from the Board.

	●	All directors who serve on the Audit, Compensation and Nominating and Governance committees are independent under applicable Nasdaq listing standards and SEC rules.
	●	All members of the Audit and Compensation Committee meet the additional independence requirements as required by Nasdaq listing standards and SEC rules.
	●	All members of the Audit Committee, currently Ms. Jorden and Messrs. Bendush and Caggia, qualify as an “audit committee financial expert” under SEC guidelines.

Name of Director	Audit	Compensation	Nominating and Governance
*Independent Directors:*
William E. Bendush	Chair		√
Steven J. Bilodeau ⁽¹⁾		Chair	√
Andrew M. Caggia	√		Chair
Lynne J. Camp ⁽²⁾		√
Nina L. Richardson		√
Yon Y. Jorden ⁽³⁾	√
Total committee size:	3	3	3
*Other Directors:*
James A. Donahue
Luis A. Müller
Number of Meetings in 2021	7	10	9

(1)	Lead Independent Director.
(2)	Ms. Camp is not standing for re-election and her term will expire as of the meeting date.
(3)	Ms. Jorden was appointed to the Board effective May 10, 2021 and joined the Audit Committee at that time.

	Compensation	2021
	Chairperson of the Board	$95,000
Annual Retainer	Lead Independent Director	$75,000
	Other Directors	$60,000
Annual Fees for	Audit Committee⁽¹⁾	$25,000
Committee Chairs	Compensation Committee ⁽¹⁾	$16,500
	Nominating and Governance Committee	$10,000
Annual Fees for Other	Audit Committee	$10,000
Committee Members	Compensation Committee	$7,500
	Nominating and Governance Committee	$5,000

Named Executive Officer	Position(s)
Luis A. Müller	President and Chief Executive Officer (our “CEO”)
Jeffrey D. Jones	Senior Vice President Finance and Chief Financial Officer ⁽¹⁾
Christopher G. Bohrson	Senior Vice President, Global Customer Group
Thomas D. Kampfer	Vice President Corporate Development, General Counsel and Secretary
Ian P. Lawee	Senior Vice President and General Manager, Semiconductor Test Group

	●	Sales were up 39% year-over-year to $887.2 million.
	●	Seventh consecutive year of sales growth with 5-year CAGR 26%.
	●	Non-GAAP earnings per share were $3.20 ⁽¹⁾
	●	Outstanding operational execution despite continuing COVID-19 business disruptions throughout the year.

	●	Paid our NEOs, including our CEO, annual cash incentives at 168% of their target annual cash incentive opportunity; and
	●	Granted long-term incentive compensation in the form of time-based restricted stock units (“RSUs”) and performance share units (“PSUs”) to be earned based on our total stockholder return (“TSR”) relative to a preselected comparator group for a 3-year period from 2021 through 2023.



	(1)	Percentages shown are percentage of votes cast. Abstentions are treated as votes cast and have the effect of “Against” in respect to the Say-on-Pay proposal.

	●	The recommendations of our CEO (except with respect to his own compensation) as described below.
	●	Our corporate growth and other elements of financial performance.
	●	The individual performance of each executive officer, including his or her achievement of management objectives.
	●	A review of the relevant competitive market data, as described below.
	●	The skill set, prior experience, and tenure of the executive officer.
	●	The role and responsibilities of the executive officer.
	●	The past and expected future contribution of the executive officer.
	●	Internal pay consistency for similar positions or skill levels within Cohu.
	●	External factors to attract and retain talent and overall market conditions.

Advanced Energy Industries	CMC Materials	MACOM Technology Solutions	Photronics
Axcelis Technologies	FormFactor	MaxLinear	SMART Global Holdings
Azenta	Harmonic	Novanta	Ultra Clean Holdings
Badger Meter	Ichor Holdings	Onto Innovation	Vecco Instruments
Cirrus Logic	Kulicke & Soffa	OSI Systems

	●	Base salary,
	●	Short-term incentive opportunities paid in cash,
	●	Long-term incentive compensation in the form of equity awards,
	●	Deferred compensation benefits;
	●	Welfare and health benefits, including a Section 401(k) plan; and
	●	Limited perquisites and other personal benefits.

Named Executive Officer	2021 Base Salary	2022 Base Salary	Percentage Change
Luis A. Müller	$625,000	$675,000	8.0%
Jeffrey D. Jones	$410,000	$437,000	6.6%
Christopher G. Bohrson	$366,000	$385,000	5.2%
Thomas D. Kampfer	$355,000	$378,000	6.5%
Ian P. Lawee	$312,000	$328,000	5.1%

Named Executive Officer	Target Short-Term Incentive Opportunity	Range of Possible 2021 Short-Term Incentive as Percentage of Base Salary
Luis A. Müller	100%	0% - 200%
Jeffrey D. Jones	70%	0% - 140%
Christopher G. Bohrson	70%	0% - 140%
Thomas D. Kampfer	50%	0% - 100%
Ian P. Lawee	55%	0% - 110%

	●	Sales growth based on a four-year rolling sales growth target; and
	●	Profitability based on non-GAAP pre-tax income target.

Named Executive Officer	Sales Growth	Non-GAAP Pre-tax Income
Luis A. Müller	20%	80%
Jeffrey D. Jones	20%	80%
Christopher G. Bohrson	20%	80%
Thomas D. Kampfer	20%	80%
Ian P. Lawee	20%	80%

2021 STI Scale
Performance to 4-Year Rolling Sales Growth	0%	5%	>10%
Payout Level Earned	None	100%	200%
Performance to Non-GAAP Pre-tax Income	<5% Pretax Income	15%	>22.5%
Payout Level Earned	None	100%	200%

Actual Achievement 2021 STI Performance Measures and Objectives
	Dr. Müller	Mr. Jones	Mr. Bohrson	Mr. Kampfer	Mr. Lawee
4-year Rolling Sales Growth	26.4%	26.4%	26.4%	26.4%	26.4%
Goal Payout %	200%	200%	200%	200%	200%
Non-GAAP Pre-tax Income ⁽¹⁾	19.5%	19.5%	19.5%	19.5%	19.5%
Goal Payout %	160%	160%	160%	160%	160%
Actual Amount of Fiscal 2021 STI Cash Incentives
Non-Equity Incentive Award Payable	$1,049,282	$481,830	$430,122	$297,996	$288,091
% of targeted award amount	168%	168%	168%	168%	168%

Named Executive Officer	Number of Restricted Stock Units Granted	Number of Performance Stock Units Granted ⁽¹⁾	Total Face Value of Stock Units at Time of Grant ⁽²⁾
Luis A. Müller	28,604	28,604	$2,499,990
Jeffrey D. Jones	9,382	9,382	$819,987
Christopher G. Bohrson	6,178	6,178	$539,957
Thomas D. Kampfer	4,576	4,576	$399,942
Ian P. Lawee	4,004	4,004	$349,950

(1)	PSUs granted at the target award level.
(2)	Closing price of COHU on March 15, 2021 was $43.70. The amounts shown above are the grant date face value for stock awards issued in the form of RSUs and PSUs granted in fiscal 2022.

PSU Award Feature	Description
Performance Period	Three fiscal years beginning on first day of fiscal 2021
Performance Measure	TSR performance relative to the Russell 2000 Index (“RUT”)
Performance Scale	2x spread between COHU and Russell 2000 index measured and added or subtracted from target (100%)
Performance Methodology	Net change in average closing price of COHU and RUT over the twenty trading-day period immediately preceding the beginning and end of the Performance Period. In the event that both COHU and RUT TSRs are less than zero, the number of shares earned will not exceed 100% of target.
Range of PSUs Earnable	0-200% of number of shares granted
Vesting Period	100% on third anniversary of grant