UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported)
August
18, 2006
 MICROCHIP
TECHNOLOGY INCORPORATED
(Exact
Name Of Registrant As Specified In Its
Charter)
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Delaware
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0-21184
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86-0629024
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(State
Or Other Jurisdiction Of Incorporation)
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(Commission
File No.)
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(IRS
Employer Identification No.)
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2355
West Chandler Boulevard, Chandler, Arizona
85224-6199
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(Address
Of Principal Executive Offices)
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(480)
792-7200
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(Registrant’s
Telephone Number, Including Area
Code)
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any
of the following provisions:
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¨
Written communications pursuant to Rule 425 under the Securities
Act (17
CFR 230.425)
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¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR
240.14a-12)
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¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item
1.01 Entry into a Material Definitive Agreement
Amendments
to 2004 Equity Incentive Plan
On
August
18, 2006, the stockholders of Microchip Technology Incorporated (the “Company”)
approved an amendment to the Company’s 2004 Equity Incentive Plan (the “Equity
Plan”) to remove the 30% limitation on the number of shares that can be granted
as restricted stock units (“RSUs”). The amendment was approved by the Company’s
Board of Directors on May 1, 2006. The purpose of the amendment was to enable
the Company to continue to grant RSUs as its primary equity compensation
incentive. The Equity Plan provides for the grant of stock options, stock
appreciation rights, restricted stock (which may be granted in the form of
restricted stock shares or RSUs), performance shares, performance units, and
deferred stock units to Company employees, including executive officers, and
consultants as well as for automatic grants of awards to the non-employee
members of the Company’s Board of Directors. The Compensation Committee or its
delegates may determine the awards to be made under the Equity Plan, but for
the
CEO whose awards are made at the discretion of the Compensation Committee
alone.
On
August
18, 2006, the Company’s Board of Directors further amended the Equity Plan such
that the annual option grants for non-employee directors would be made on the
date of the Company’s annual stockholders meeting. Prior to the amendment, the
grant date for such awards had been the first day of the month in which the
annual stockholders meeting was scheduled.
A
copy of
the Equity Plan, as amended, is attached hereto as Exhibit 10.1.
Executive
Management Incentive Compensation Plan
On
August
18, 2006, the stockholders of the Company approved the Executive Management
Incentive Compensation Plan (the “Executive Plan”) to replace the Company’s
existing Management Incentive Compensation Plan (the “Management Plan”) as it
applies to executive officers.
The
Executive Plan was approved by the Company’s Board of Directors on May 1, 2006.
The
Executive Plan will be effective on October 1, 2006 and provides for the payment
of cash bonuses to the Company’s executive officers based upon the objectives
set by the Compensation Committee after receipt of recommendations from the
Company’s CEO. At the end of each fiscal quarter, the Compensation Committee
will determine whether the objectives were met and determine the amount of
payout to each participant. The CEO may make recommendations regarding awards
to
be made, other than those for himself. The purpose of the Executive Plan is
to
motivate the Company’s executive officers to achieve performance objectives and
to reward them when those objectives are satisfied.
The
performance objectives for each fiscal quarter for fiscal 2007 are based upon
the following areas: quarterly sequential sales growth (overall and in the
Company’s 16-bit and analog product divisions), gross margin percentage,
operating expense percentage, operating profit percentage and earnings per
share. The quarterly payments in fiscal 2007 for the Company’s CEO and the four
other mostly highly paid executive officers participating in the Executive
Plan
are targeted at an aggregate of approximately $290,000 for all such officers.
Because the amount of cash bonuses are dependent upon satisfaction of the
performance objectives, the exact amount of the payout (if any) to an executive
officer under the program cannot be determined at this time. Actual bonuses
may
be higher or lower than the targets depending upon the level of performance
achieved by the Company. The maximum payment that any participant may receive
under the Executive Plan in any Company fiscal year is $2,500,000.
A
copy of
the Executive Plan is attached hereto as Exhibit 10.2.
Discretionary
Executive Incentive Compensation
On
August
18, 2006, the Company’s Board of Directors approved the Discretionary Executive
Management Incentive Compensation Plan (the “Discretionary Plan”) to replace the
discretionary portion of the Company’s Management Plan as it applies to
executive officers. The Discretionary Plan is intended to increase stockholder
value and the success of the Company by providing incentive and reward to
executive officers for exceptional performance in
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achieving
key objectives. Cash bonuses awarded under the Discretionary Plan are determined
by the Compensation Committee of the Board of Directors based upon the
objectives set by the Compensation Committee. At the end of each fiscal quarter,
the Compensation Committee will determine whether the objectives have been
met
and determine the amount of payouts (if any) under the Executive Plan. The
CEO
may make recommendations regarding objectives and awards, other than awards
for
himself.
Quarterly
payments in fiscal 2007 for the executive officers participating in the
Discretionary Plan are dependent upon the satisfaction of objectives and the
level of performance achieved by the Company. The exact amount of the payout
(if
any) to an executive officer under the program cannot be determined at this
time. The quarterly payouts for fiscal 2007 will be based upon achievement
of
specific operational objectives as well as additional factors as the
Compensation Committee may determine.
A
copy of
the Discretionary Plan is attached hereto as Exhibit 10.3.
Management
Incentive Compensation Plan
Since
1992, the Company has had a management incentive compensation plan for
motivating its executive officers, managers and senior technical employees
using
a formula based upon the Company’s financial performance. As described above, on
August 18, 2006, the Company’s stockholders approved the Executive Plan to
replace the Management Plan as it applies to executive officers in order to
enhance the Company’s ability to obtain tax deductions for “performance-based
compensation” under Section 162(m) of the Internal Revenue Code of 1986, as
amended. In connection with the approval of the Executive Plan and the
Discretionary Plan, the Company’s Board of Directors approved an amendment and
restatement of the Management Plan so that it applies to awards to employees
who
are not executive officers and to more closely correspond to the applicable
provisions of the Executive Plan and the Discretionary Plan. The purpose of
the
Management Plan is to motivate management and senior technical employees to
achieve performance objectives and to reward them for achievement of those
objectives. Incentive cash bonuses awarded under the Management Plan are
calculated by the Compensation Committee of the Board of Directors or their
delegates based upon the objectives set by the Compensation Committee. At the
end of each fiscal quarter, the Compensation Committee or their delegates will
determine whether the objectives have been met and determine the amount of
payout under the Management Plan. The Management Plan also has a discretionary
element to reward exceptional performance.
Quarterly
payments in fiscal 2007 for the non-executive employees participating in the
Management Plan cannot be determined at this time as they are dependent upon
satisfaction of objectives and the level of performance achieved by the Company.
Beginning on October 1, 2006, the Company’s executive officers will not
participate in the Management Plan. The performance objectives for each fiscal
quarter for fiscal 2007 are based upon the following areas: quarterly sequential
sales growth (overall and in the Company’s 16-bit and analog product divisions),
gross margin percentage, operating expense percentage, operating profit
percentage and earnings per share, as well as additional objectives as the
Compensation Committee may determine.
A
copy of
the Management Plan is attached hereto as Exhibit 10.4.
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits
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10.1
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2004
Equity Incentive Plan, as amended
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10.2
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Executive
Management Incentive Compensation Plan
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10.3
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Discretionary
Executive Incentive Compensation
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10.4
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Management
Incentive Compensation Plan
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Dated:
August 24, 2006
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Microchip
Technology Incorporated
(Registrant)
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By: /s/
Gordon W. Parnell
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Gordon
W. Parnell
Vice
President, Chief Financial Officer
(Principal
Accounting and Financial Officer)
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EXHIBITS
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10.1
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2004
Equity Incentive Plan, as amended
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10.2
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Executive
Management Incentive Compensation Plan
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10.3
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Discretionary
Executive Incentive Compensation
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10.4
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Management
Incentive Compensation Plan
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