Cohu Inc PRE 14A, filed Apr 12, 2024

Cohu Inc (COHU)

PRE 14A 2024-04-12 For: 2024-06-05

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☑	Preliminary Proxy Statement

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☐	Definitive Proxy Statement

☐	Definitive Additional Materials

☐	Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

☑	No fee required.

☐	Fee paid previously with preliminary materials

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

Category	Details
Date and Time	Wednesday, June 5, 2024, 1:00 p.m. Pacific Time
Place	Meeting will be held virtually
Record Date	Only stockholders of record at the close of business on April 12, 2024, the “Record Date,” are entitled to notice of, and to vote at, the annual meeting

	Proposal	Our Board’s Recommendation
1	Election of three (3) Class 2 directors, for a term of three years each	√ FOR each Director Nominee
2	Advisory vote to approve our Named Executive Officer compensation, or “Say-on-Pay”	√ FOR
3	Approve an amendment to our Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding exculpation of Officers	√ FOR
4	Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2024	√ FOR
	Transaction of other business as may properly come before the annual meeting (including any adjournment or postponement thereof)

Proxy Statement Summary	Page 1
About Cohu
Fiscal Year 2023 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
Sustainability Highlights
Stock Ownership	Page 13
Security Ownership of Certain Beneficial Owners and Management
Delinquent Section 16(a) Reports
Governance Matters	Page 14
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 22
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
Pay Versus Performance
CEO Pay Ratio
Equity Compensation Awards and Plan Information
Potential Payments Upon Termination or Change in Control
Audit Matters	Page 51
Audit Committee Report
Audit Fees and Services
Certain Relationships and Related Party Transactions
Voting Proposals	Page 56
Proposal No. 1: Election of Directors
Proposal No. 2: Advisory vote to approve Named Executive Officer Compensation
Proposal No. 3: Approve an amendment to our Amended and Restated Certificate of Incorporation to reflect new Delaware
law provisions regarding exculpation of Officers
Proposal No. 4: Ratification of Independent Registered Public Accounting Firm
Voting and Meeting Information	Page 66
General Information
Appendices	Page 70

Voting Matters	Board Vote Recommendation
Proposal No. 1: Election of Three Class 2 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 to reflect new Delaware law provisions regarding exculpation of Officers	√ FOR
Proposal No. 4: Ratification of the Appointment of Ernst & Young LLP as our Independent Registered Public Accounting Firm for Fiscal Year 2024	√ 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
Andrew M. Caggia	75	2014	Yes	2 -- 2024	M+		C
Yon Y. Jorden	69	2021	Yes	2 -- 2024	M+		M	Alignment Healthcare, Inc., Capstone Green Energy Corp.
Luis A. Müller	54	2014	No	2 -- 2024				Celestica Inc.
Other Directors Not Standing for Election in 2024
William E. Bendush	75	2011	Yes	1 -- 2026	C+		M
Steven J. Bilodeau	65	2009	Yes	3 -- 2025		C	M
James A. Donahue	75	1999	No	3 -- 2025
Andreas W. Mattes	62	2022	Yes	3 -- 2025		M		ams-OSRAM AG
Nina L. Richardson	65	2019	Yes	1 -- 2026		M		Resideo Technologies, Inc., Silicon Laboratories Inc.

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	Donahue	Jorden	Mattes	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) ⁽¹⁾	13	15	10	25	3	2	10	5
Other Current Public Company Boards ⁽²⁾					2	1	1	2

Total Number of Directors	8
Gender	Male	Female	Non-Binary	Gender Undisclosed
Number of directors based on gender identity	6	2	-	-
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	5	1	-	-
Two or More Races or Ethnicities	-	-	-	-
LGBTQ+	-
Demographic Background Undisclosed	-

Board and Other Governance Information	As of April 12, 2024
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 - 27 Board and Committee meetings held in 2023	Yes
Code of Ethics Applicable to Directors	Yes
Stockholder Engagement Program - Conducted 242 investor and prospective investor meetings in 2023	Yes
Poison Pill	No
Board Oversight of Sustainability	Yes
Publication of Annual Sustainability Report on Our Website	Yes
Board Oversight of Cybersecurity Risks	Yes

	(1)	TCFD: Task Force on Climate-related Financial Disclosures; note that, as of October 12, 2023, TCFD announced that it had fulfilled its mandate and was disbanding; TCFD recommendations will now be monitored by the IFRS Foundation and Cohu has opted to continue to reference and conform to TCFD recommendations for our 2023 sustainability report.
	(2)	CDP, formerly the Carbon Disclosure Project, is a third-party global disclosure system for environmental reporting.
	(3)	Represents percentage of grid electricity derived from renewable sources.

Name and address of beneficial owner	Beneficially owned common stock	Common stock equivalents ⁽¹⁾	Total	Percent of class ⁽²⁾
BlackRock, Inc.⁽³⁾	7,478,150	-	7,478,150	15.87%
55 East 52nd Street, New York, NY 10055
Dimensional Fund Advisors LP⁽⁴⁾	3,064,076	-	3,064,076	6.50%
6300 Bee Cave Road, Austin, TX 78746
Franklin Mutual Advisers, LLC⁽⁵⁾	2,782,581	-	2,782,581	5.91%
101 John F. Kennedy Parkway Short Hills, NJ 07078‑2789
The Vanguard Group⁽⁶⁾	4,165,622	-	4,165,622	8.84%
100 Vanguard Blvd. Malvern, PA 19355
Victory Capital Management Inc.⁽⁷⁾	2,971,600	-	2,971,600	6.31%
4900 Tiedeman Rd. 4th Floor Brooklyn, OH 44144
William E. Bendush	34,906	4,347	39,253	*
Steven J. Bilodeau⁽⁸⁾	60,688	4,347	65,035	*
Christopher G. Bohrson	57,593	-	57,593	*
Andrew M. Caggia⁽⁹⁾	50,557	4,347	54,904	*
James A. Donahue	376,148	4,347	380,495	*
Yon Y. Jorden	10,781	5,692	16,473	*
Jeffrey D. Jones	182,943	-	182,943	*
Thomas D. Kampfer	18,824	-	18,824	*
Ian P. Lawee	24,215	-	24,215	*
Andreas W. Mattes	905	4,347	5,252	*
Luis A. Müller	398,048	-	398,048	*
Nina L. Richardson⁽¹⁰⁾	24,047	4,347	28,394	*
All directors and executive officers as a group (12 persons)	1,239,655	31,774	1,271,429	2.70%

(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 April 5, 2024. For employees, restricted stock units and performance stock units issue for a net number of shares to satisfy payment of the statutory tax withholding requirements to be paid by us on behalf of such employees and, as a result, the actual number of shares received after taxes will be fewer.
(2)	Computed on the basis of 47,079,623 shares of Cohu common stock outstanding as of April 5, 2024, 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 April 5, 2024, 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 22, 2024, BlackRock, Inc. reported that its affiliated companies collectively had sole voting and dispositive power with respect to 7,357,923 and 7,478,150 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 9, 2024, Dimensional Fund Advisors LP reported that it had sole voting and dispositive power with respect to 3,006,603 and 3,064,076 shares, respectively, and no shared voting or dispositive power with respect to these shares.
(5)	According to Schedule 13G filed with the SEC on January 30, 2024, Franklin Mutual Advisers, LLC reported that it had sole voting and dispositive power with respect to 2,630,340 and 2,782,581 shares, respectively, and no shared voting or dispositive power with respect to these shares.
(6)	According to Schedule 13G/A filed with the Securities SEC on February 13, 2024, The Vanguard Group reported that it had sole dispositive power with respect to 4,091,933 shares, no sole voting power, and shared voting and dispositive power with respect to 31,175 and 73,689 shares, respectively.

(7)	According to Schedule 13G/A filed with the Securities SEC on February 6, 2024, Victory Capital Management Inc. reported that it had sole voting and dispositive power with respect to 2,955,729 and 2,971,600 shares, respectively, and no shared voting or dispositive power with respect to these shares.
(8)	Beneficially owned common stock includes 29,629 deferred stock unit awards issued pursuant to the 2005 Plan.
(9)	Beneficially owned common stock includes 35,305 deferred stock unit awards issued pursuant to the 2005 Plan.
(10)	Beneficially owned common stock includes 11,992 deferred stock unit awards issued pursuant to the 2005 Plan.

Name of Director	Audit	Compensation	Nominating and Governance
*Independent Directors:*
William E. Bendush	Chair		√
Steven J. Bilodeau ⁽¹⁾		Chair	√
Andrew M. Caggia	√		Chair
Yon Y. Jorden	√		√
Andreas W. Mattes		√
Nina L. Richardson		√
Total committee size:	3	3	4
*Other Directors:*
James A. Donahue
Luis A. Müller
Number of Meetings in Fiscal Year 2023	7	5	5

	Compensation	2023
	Chairperson of the Board	$110,000
Annual Retainer	Lead Independent Director	$80,000
	Other Directors	$60,000
Annual Fees for Committee Chairs	Audit Committee	$25,000
	Compensation Committee	$16,500
	Nominating and Governance Committee	$10,000
	Audit Committee	$10,000
Annual Fees for Other Committee Members	Compensation Committee	$7,500
Annual Fees for Other Committee Members	Nominating and Governance Committee	$5,000

Initial Appointment	RSUs with a total value of $150,000, 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

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($) ⁽¹⁾	All Other Compensation ($) ⁽²⁾	Total ($)
William E. Bendush	90,721	148,841	-	239,562
Steven J. Bilodeau⁽³⁾	101,500	148,841	-	250,341
Andrew M. Caggia⁽³⁾	80,000	148,841	-	228,841
James A. Donahue	110,000	148,841	34,120	292,961
Yon Y. Jorden	73,269	148,841	-	222,110
Andreas W. Mattes	67,500	148,841	-	216,341
Nina L. Richardson⁽³⁾	67,500	148,841	-	216,341

(1)	The amounts shown do not reflect the 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 year 2023 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 30, 2023, 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 30, 2023, Mses. Jorden and Richardson had 5,692 and 4,347 unvested RSUs outstanding, respectively, and Messrs. Bendush, Bilodeau, Caggia, Donahue each had 4,347 unvested RSUs outstanding. Mr. Mattes had 6,156 unvested RSUs outstanding.
(2)	The 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 30, 2023, Messrs. Bilodeau and Caggia elected to defer their 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 30, 2023, Ms. Richardson and Messrs. Bilodeau and Caggia had 11,992, 29,629 and 39,926 DSUs, respectively.

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
Christopher G. Bohrson	Senior Vice President and Chief Customer Officer
Thomas D. Kampfer	Senior Vice President Corporate Development, General Counsel and Secretary ⁽¹⁾
Ian P. Lawee	Senior Vice President and General Manager, Semiconductor Test Group ⁽²⁾

(1)	Mr. Kampfer’s title was changed to Senior Vice President Corporate Development, General Counsel and Secretary on February 6, 2024.
(2)	Mr. Lawee continued to be employed with us but was no longer an executive officer as of September 6, 2023.

Advanced Energy Industries	FormFactor	MaxLinear	Photronics
Alpha and Omega Semiconductor	Harmonic	National Instruments	SMART Global Holdings
Axcelis Technologies	Ichor Holdings	Novanta	Ultra Clean Holdings
Badger Meter	Kulicke & Soffa	Onto Innovation	Veeco Instruments
Cirrus Logic	MACOM Technology Solutions	OSI Systems

Named Executive Officer	2022 Base Salary	2023 Base Salary	Percentage Change
Luis A. Müller	$675,000	$715,000	5.9%
Jeffrey D. Jones	$437,000	$455,000	4.1%
Christopher G. Bohrson	$385,000	$425,000	10.4%
Thomas D. Kampfer	$378,000	$405,000	7.1%
Ian P. Lawee⁽¹⁾	$328,000	$335,000	2.1%

Named Executive Officer	2023 Target Short-Term Incentive Opportunity	Range of Possible 2023 Short-Term Incentive as Percentage of Base Salary
Luis A. Müller	110%	0% - 220%
Jeffrey D. Jones	75%	0% - 150%
Christopher G. Bohrson	75%	0% - 150%
Thomas D. Kampfer	50%	0% - 100%
Ian P. Lawee	55%	0% - 110%

Named Executive Officer	Sales Growth	Non-GAAP Pre-tax Income
Luis A. Müller	30%	70%
Jeffrey D. Jones	30%	70%
Christopher G. Bohrson	30%	70%
Thomas D. Kampfer	30%	70%
Ian P. Lawee	30%	70%

2023 STI Performance Measure Targets and Achievement Scale
	Threshold	Target	Maximum
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 of 2023 STI Performance Measures
	Dr. Müller	Mr. Jones	Mr. Bohrson	Mr. Kampfer	Mr. Lawee
4-year Rolling Sales Growth ⁽¹⁾	1.8%	1.8%	1.8%	1.8%	1.8%
Goal Payout % ⁽²⁾	36.3%	36.3%	36.3%	36.3%	36.3%
Non-GAAP Pre-tax Income ⁽³⁾	16.6%	16.6%	16.6%	16.6%	16.6%
Goal Payout % ⁽³⁾	121.1%	121.1%	121.1%	121.1%	121.1%
Actual Amount of Fiscal Year 2023 STI Cash Incentives
Non-Equity Incentive Award Payable	$752,378	$326,445	$304,921	$193,715	$176,256
% Targeted Award Amount	95.7%	95.7%	95.7%	95.7%	95.7%

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	44,004	66,006	$4,093,472
Jeffrey D. Jones	14,521	21,782	$1,350,835
Christopher G. Bohrson	11,001	16,501	$1,023,349
Thomas D. Kampfer	6,600	9,900	$613,965
Ian P. Lawee	4,620	6,930	$429,776

PSU Award Feature	Description
Performance Period	Three fiscal years beginning on first day of 2023
Performance Measure	TSR performance relative to the Russell 2000 Index (“RUT”)
Performance Scale	2x spread between COHU and RUT measured and added or subtracted from target (100%)
Performance Methodology	Net change in average closing price of COHU and RUT over the 20 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 the date of the grant

Named Executive Officer	Performance Stock Unit Award (Target Number of Shares)	2021-23 TSR Result ⁽¹⁾	Final Shares Earned	Final Shares Earned as a Percentage of Target Number of Shares ⁽²⁾
Luis A. Müller	28,604	-6.2%	25,057	87.6%
Jeffrey D. Jones	9,382	-6.2%	8,218	87.6%
Christopher G. Bohrson	6,178	-6.2%	5,411	87.6%
Thomas D. Kampfer	4,576	-6.2%	4,008	87.6%
Ian P. Lawee	4,004	-6.2%	3,507	87.6%

(1) COHU TSR (-4.2%) compared to RUT TSR (+2.0%)
(2) 100% + (2 times (RUT TSR - COHU TSR)), which for 2023, is 100% + (2 times (- 6.2%)) = 87.6%

Named Executive Officer	Annual Auto Allowance
Luis A. Müller	$9,000
Jeffrey D. Jones	$6,000
Christopher G. Bohrson	$6,000
Thomas D. Kampfer	$6,000
Ian P. Lawee	$6,000

Individual Subject to Stock Ownership Policy	Minimum Required Level of Stock Ownership
Chief Executive Officer	Three times annual base salary
Chief Financial Officer	Two times annual base salary
All other executive officers	One times annual base salary

Named Executive Officer	Year	Salary ($)	Stock Awards ($) ⁽¹⁾	Non-Equity Incentive Plan Comp. ($)⁽²⁾	All Other Comp. ($)⁽³⁾	Total ($)
Luis A. Müller	2023	708,846	5,051,219	752,378	24,164	6,536,607
President &	2022	667,307	3,321,901	1,303,528	22,550	5,315,286
Chief Executive Officer	2021	619,231	2,891,579	1,049,282	22,324	4,582,416
Jeffrey D. Jones	2023	452,231	1,666,891	326,445	21,043	2,466,610
Sr. Vice President, Finance &	2022	432,846	1,074,088	590,740	19,381	2,117,055
Chief Financial Officer	2021	404,232	948,426	481,830	19,000	1,853,488
Christopher G. Bohrson	2023	418,846	1,262,779	304,921	20,962	2,007,508
Sr. Vice President,	2022	382,077	708,669	520,446	19,240	1,630,432
Chief Customer Officer	2021	362,923	624,534	430,122	18,919	1,436,498
Thomas D. Kampfer	2023	400,846	757,614	193,715	20,908	1,373,083
Sr. Vice President, Corp. Development,	2022	374,462	525,929	364,988	19,221	1,284,600
General Counsel & Secretary	2021	351,154	462,588	297,996	18,786	1,130,524
Ian P. Lawee ⁽⁴⁾	2023	333,923	530,330	176,256	20,719	1,061,228
Sr. Vice President & General Manager,	2022	319,539	465,056	348,380	19,086	1,152,061
Semiconductor Test Group	2021	308,333	404,765	288,091	18,991	1,020,180