DEF 14A 1 a2012proxy.htm DEF 14A 2012 Proxy


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.    )

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Micron Technology, Inc.
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Notice of Fiscal 2012 Annual Meeting of Shareholders
January 22, 2013
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Fiscal 2012 Annual Meeting of Shareholders of Micron Technology, Inc., a Delaware corporation, will be held on January 22, 2013, at 9:00 a.m., Mountain Standard Time, at our headquarters located at 8000 South Federal Way, Boise, Idaho 83716-9632, for the purposes listed below. As used herein "we," "our," "us," "the Company" and similar terms refer to Micron Technology, Inc. unless the context indicates otherwise.
1.    To elect directors to serve for the ensuing year and until their successors are elected and qualified;
2.    To approve the Amended and Restated 2004 Equity Incentive Plan and increase the shares reserved for issuance thereunder by 30,000,000;
3.    To ratify the appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending August 29, 2013;
4.    To approve a non-binding resolution to approve the compensation of our Named Executive Officers as described in the proxy statement;
5.    To transact such other business as may properly come before the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.
Only shareholders of record at the close of business on November 23, 2012, are entitled to notice of and to vote at the meeting and any postponements or adjournments of the meeting. A complete list of shareholders entitled to vote at the meeting will be open to the examination of any shareholder, for any purpose germane to the business to be transacted at the meeting, during ordinary business hours for the ten-day period immediately preceding the date of the meeting, at our headquarters at 8000 South Federal Way, Boise, Idaho 83716-9632.
The Securities and Exchange Commission permits proxy materials to be furnished over the Internet rather than in paper form. Accordingly, we are sending most of our shareholders a notice regarding the availability of this proxy statement, our Annual Report on Form 10-K for fiscal 2012 and other proxy materials via the Internet (the "Notice"). This electronic process gives you fast, convenient access to the materials, reduces the impact on the environment and reduces our printing and mailing costs. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. The Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your vote over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice.
Attendance at the Annual Meeting will be limited to shareholders and our guests. Shareholders may be asked to furnish proof of ownership of our Common Stock before being admitted to the meeting. Directions to the meeting's location accompany the Proxy Statement.
To ensure your representation at the meeting, you are urged to vote. You may vote by telephone or electronically via the Internet. Alternatively, if you received a paper copy, you may sign, date and return the proxy card in the postage-prepaid envelope enclosed for that purpose. Please refer to the instructions included with the proxy card for additional details. Shareholders attending the meeting may vote in person even if they have already submitted their proxy, and any previous votes that were submitted by the shareholder, whether by Internet, telephone or mail, will be superseded by the vote that such shareholder casts at the meeting.


By Order of the Board of Directors


Roderic W. Lewis
Vice President of Legal Affairs,
General Counsel & Corporate Secretary
Boise, Idaho
December 13, 2012


YOUR VOTE IS IMPORTANT. PLEASE SUBMIT YOUR PROXY PROMPTLY.




8000 South Federal Way
Boise, Idaho 83716-9632
____________________________

PROXY STATEMENT
FISCAL 2012 ANNUAL MEETING OF SHAREHOLDERS
January 22, 2013
9:00 a.m. Mountain Standard Time
____________________________

INFORMATION CONCERNING SOLICITATION AND VOTING
General
The proxy is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Micron Technology, Inc., for use at the Fiscal 2012 Annual Meeting of Shareholders to be held on January 22, 2013, at 9:00 a.m., Mountain Standard Time, or at any adjournment or postponement thereof (the "Annual Meeting"). The purpose of the Annual Meeting is set forth herein and in the accompanying Notice of Fiscal 2012 Annual Meeting of Shareholders. The Annual Meeting will be held at our headquarters located at 8000 South Federal Way, Boise, Idaho 83716-9632. Directions to the Annual Meeting accompany this Proxy Statement. Our telephone number is (208) 368-4000.
This Proxy Statement and related proxy card are first being distributed on or about December 13, 2012, to all shareholders entitled to vote at the meeting.
Shareholders can vote their shares using one of the following methods:
Vote through the Internet at www.proxydocs.com/mu using the instructions included in the notice regarding the Internet availability of proxy materials, the proxy card or voting instruction card;
Vote by telephone using the instructions on the proxy card or voting instruction card if you received a paper copy of the proxy materials;
Complete and return a written proxy or voting instruction card using the proxy card or voting instruction card if you received a paper copy of the proxy materials; or
Attend and vote at the meeting.
Internet and telephone voting are available 24 hours a day, and if you use one of those methods, you do not need to return a paper proxy or voting instruction card. Unless you are planning to vote at the meeting, your vote must be received by 11:59 p.m., Eastern Standard Time, on January 21, 2013.
Record Date
Shareholders of record at the close of business on November 23, 2012 (the "Record Date"), are entitled to notice of and to vote at the meeting.
Revocability of Proxy
Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by attending the Annual Meeting and voting in person or by delivering to us a written notice of revocation or another duly executed proxy bearing a date later than the earlier given proxy but prior to the date of the Annual Meeting.

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Solicitation
We will bear the cost of solicitation. In addition, we may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation materials to such beneficial owners. Proxies may be solicited by our directors, officers and employees, without additional compensation, personally or by telephone or Internet. We intend to use the services of AST Phoenix Advisors, a proxy solicitation firm, in connection with the solicitation of proxies. Although the exact cost of the solicitation services is not known at this time, it is anticipated that the fees paid by us for these services will be approximately $12,500.
Outstanding Shares
We have one class of stock outstanding, common stock, $0.10 par value per share (the "Common Stock"). At November 23, 2012, the Record Date, 1,020,960,739 shares of Common Stock were issued and outstanding and entitled to vote.
Voting Rights and Required Vote
Under the Delaware General Corporation Law and our Restated Certificate of Incorporation and our Bylaws, each shareholder will be entitled to one vote for each share of Common Stock held at the Record Date for all matters, including the election of directors, unless cumulative voting for the election of directors is required (in the manner specified below). The required quorum for the transaction of business at the Annual Meeting is a majority of the votes eligible to be cast by holders of shares of our Common Stock issued and outstanding on the Record Date. Shares that are voted "FOR," "AGAINST" or "ABSTAIN" are treated as being present at the Annual Meeting for the purposes of establishing a quorum and are tallied to determine the shareholders' decision with respect to the matter voted upon (the "Votes Cast"). Abstentions will have the same effect as voting against a proposal. Broker non-votes will be considered present and entitled to vote for purposes of determining the presence or absence of a quorum for the transaction of business, but such non-votes are not deemed to be Votes Cast and, therefore, will not be included in the tabulation of the voting results with respect to voting results for the election of directors or issues requiring the approval of a majority of Votes Cast.
Shares held in a brokerage account or by another nominee are considered held in "street name" by the shareholder or "beneficial owner." A broker or nominee holding shares for a beneficial owner may not vote on matters relating to the election of directors or equity compensation plans unless the broker or nominee receives specific voting instructions from the beneficial owner of the shares. As a result, absent specific instructions, brokers or nominees may not vote a beneficial owner's shares on Items 1, 2, and 4 and such shares will be considered "broker non-votes" for such proposals.
Directors will be elected if the number of votes "FOR" a particular director exceeds the number of votes "AGAINST" that same director. With respect to each other item of business, the "FOR" vote of a majority of the Votes Cast is required in order for such matter to be considered approved by the shareholders.
Cumulative voting for the election of directors shall not be required unless a shareholder has requested cumulative voting by written notice to our Corporate Secretary at least 15 days prior to the date of the meeting. If cumulative voting is required with respect to the election of directors, each voting shareholder may cumulate such shareholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder's shares are entitled, or distribute the shareholder's votes among as many candidates as the shareholder thinks fit, provided that votes cannot be cast for more than six candidates. If cumulative voting is required, the persons authorized to vote shares represented by proxies shall have the authority and discretion to vote such shares cumulatively for any candidate or candidates for whom authority to vote has not been withheld.
Voting of Proxies
The shares of Common Stock represented by all properly executed proxies received in time for the meeting will be voted in accordance with the directions given by the shareholders. If no instructions are given with respect to a properly executed Proxy timely received by us, the shares of Common Stock represented thereby will be voted (i) FOR each of the nominees named herein as directors, or their respective substitutes as may be appointed by the Board of Directors, (ii) FOR approval of the Amended and Restated 2004 Equity Incentive Plan, (iii) FOR ratification of the appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending August 29, 2013, (iv) FOR approval of a non-binding resolution to approve the compensation of our Named Executive Officers as described in the proxy statement; and (v) in the discretion of the proxy holders for such business which may properly come before the Annual Meeting.

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PROPOSAL 1 – ELECTION OF DIRECTORS
Nominees
A board of six directors is to be elected at the Annual Meeting, all of whom have been recommended for nomination by a majority of the independent directors of the Board of Directors and all of whom are currently serving as directors. Unless otherwise instructed, the proxy holders will vote the proxies received by them for management's six nominees named below. Your proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement. If any management nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board of Directors to fill the vacancy. It is not expected that any nominee listed below will be unable or will decline to serve as a director. The term of office of each person elected as a director will continue until the next Annual Meeting of Shareholders or until such person's successor has been elected and qualified, except in the case of earlier resignation or removal. Officers are appointed annually by the Board of Directors and serve until their successors are duly appointed and qualified, except in the case of earlier resignation or removal. The names of the nominees and certain information about them are set forth below:

 

 

 
Served as a Director Since
Board Committees*
Name of Nominee
 
Age
 
Principal Occupation
 
 
A
 
C
 
G
Robert L. Bailey
 
55

 
Former Chairman of PMC-Sierra, Inc.
 
2007
 
X
 
 
 
X
Patrick J. Byrne
 
52

 
Vice President Strategy & Business Development and Chief Technical Officer of Danaher Corporation
 
2011
 
 
 
X
 
X
D. Mark Durcan
 
51

 
Chief Executive Officer of Micron Technology, Inc.
 
2012
 
 
 
 
 
 
Mercedes Johnson
 
58

 
Former Chief Financial Officer of Avago Technologies Limited
 
2005
 
X
 
 
 
X
Lawrence N. Mondry
 
52

 
Former President and Chief Executive Officer of CSK Auto Corporation
 
2005
 
 
 
X
 
X
Robert E. Switz
 
66

 
Chairman of the Board of Micron Technology, Inc.
 
2006
 
X
 
 
 
X
_______________________
*    A = Audit Committee, C = Compensation Committee, G = Governance Committee
Set forth below are the principal occupations of the nominees for at least the past five years:
Robert L. Bailey was the Chairman of the Board of Directors of PMC-Sierra ("PMC") from 2005 until May 2011 and also served as PMC's Chairman from February 2000 until February 2003.  Mr. Bailey served as a director of PMC from October 1996 to May 2011.  He also served as the President and Chief Executive Officer of PMC from July 1997 until May 2008.  PMC is a leading provider of broadband communication and semiconductor storage solutions for the next-generation Internet.  Mr. Bailey currently serves on the Board of Directors of Entropic Communications.  Mr. Bailey holds a BS degree in Electrical Engineering from the University of Bridgeport and an MBA from the University of Dallas.  He has served on our Board of Directors since 2007.
Mr. Bailey's experience as CEO and Chairman of a leading technology company has given him expertise in the technology industry as well business operations, finance, corporate development, corporate governance and management.
Patrick J. Byrne has served as the Vice President of Strategy and Business Development and Chief Technical Officer of Danaher Corporation since November 1, 2012. Danaher Corporation designs, manufactures, and markets innovative products and services to professional, medical, industrial, and commercial customers. Prior to that, Mr. Byrne served as Director, President and Chief Executive Officer of Intermec, Inc. from 2007 to May 2012. Mr. Byrne was with Agilent Technologies, Inc. from 1999 to 2007 and served in various management positions. Mr. Byrne is also a member of the Board of Directors of Flow International Corporation.  Mr. Byrne holds a BS degree in Electrical Engineering from the University of California, Berkeley, and an MS degree in Electrical Engineering from Stanford University.  Mr. Byrne joined our Board of Directors in April 2011.
Mr. Byrne's experience in executive management at public companies has given him expertise in the technology industry as well as business operations, finance, corporate development, corporate governance and management.

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D. Mark Durcan joined us in June 1984 and has served in various positions since that time.  Mr. Durcan was appointed our Chief Operating Officer in February 2006, President in June 2007 and Director and Chief Executive Officer in February 2012. Mr. Durcan has been an officer since 1996.  Mr. Durcan holds a BS and MChE in Chemical Engineering from Rice University. Mr. Durcan has served on our Board of Directors since February 2012.
Mr. Durcan has been with us for over 28 years and his experiences have given him extensive expertise in our business and operations. He has also developed expertise in the areas of finance, corporate development, corporate governance, business strategy and management.
Mercedes Johnson was the Senior Vice President and Chief Financial Officer of Avago Technologies Limited, a supplier of analog interface components for communications, industrial and consumer applications, from December 2005 to August 2008.  She also served as the Senior Vice President, Finance, of Lam Research Corporation ("Lam") from June 2004 to January 2005 and as Lam's Chief Financial Officer from May 1997 to May 2004.  Ms. Johnson holds a degree in Accounting from the University of Buenos Aires and currently serves on the Board of Directors for Intersil Corporation and Juniper Networks, Inc.  Ms. Johnson is the Chairman of the Board's Audit Committee and has served on our Board of Directors since 2005.
Ms. Johnson's experience as the CFO of several technology companies has given her expertise in finance, corporate development, corporate governance, management and operations.
Lawrence N. Mondry was the President and Chief Executive Officer of CSK Auto Corporation ("CSK"), a specialty retailer of automotive aftermarket parts, from August 2007 to July 2008.  Prior to his appointment at CSK, Mr. Mondry served as the Chief Executive Officer of CompUSA Inc. from November 2003 to May 2006.  Mr. Mondry joined CompUSA in 1990.  Mr. Mondry is the Chairman of the Board's Compensation Committee and Governance Committee. He has served on our Board of Directors since 2005.
Mr. Mondry's experience as the CEO of various retailers has given him expertise in operations, management, finance and corporate development. Mr. Mondry's retail expertise is especially relevant to our Lexar and Crucial businesses.
Robert E. Switz was the Chairman, President and Chief Executive Officer of ADC Telecommunications, Inc., ("ADC"), a supplier of network infrastructure products and services from August 2003 until December 2010, when Tyco Electronics Ltd. acquired ADC.  Mr. Switz joined ADC in 1994 and throughout his career there held numerous leadership positions.  Mr. Switz holds an MBA from the University of Bridgeport as well as a degree in Marketing/Economics from Quinnipiac University.  Mr. Switz also serves on the Board of Directors for Broadcom Corporation, GT Advanced Technologies and Leap Wireless International, Inc.  He has served on our Board of Directors since 2006 and was appointed Chairman of the Board in February 2012.
Mr. Switz's experience as CEO and Chairman of a leading technology company has given him expertise in the technology industry as well business operations, finance, corporate development, corporate governance and management.
There are no family relationships between any of our directors or executive officers.
The Board of Directors recommends voting "FOR" approval of the nominees listed above.
CORPORATE GOVERNANCE
Code of Business Conduct and Ethics
The Board of Directors has adopted a Code of Business Conduct and Ethics that is applicable to all our directors, officers and employees. A copy of the Micron Code of Business Conduct and Ethics is available at www.micron.com/about/our-commitment/governance/ethics and is also available in print upon request. Any amendments or waivers of the Code of Business Conduct and Ethics will also be posted on our website within four business days of the amendment or waiver as required by applicable rules and regulations of the Securities and Exchange Commission ("SEC") and the Listing Rules of NASDAQ.
Director Independence
The Board of Directors has determined that directors Bailey, Byrne, Johnson, Mondry and Switz qualify as independent directors. In determining the independence of our directors, the Board of Directors has adopted independence standards that mirror exactly the criteria specified by applicable laws and regulations of the SEC and the Listing Rules of NASDAQ. None of these directors have a relationship with us, other than any relationship that is categorically not material under the guidelines

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referenced above and other than as disclosed in this Proxy Statement under "Compensation of Directors" and "Certain Relationships and Related Transactions."
Board Leadership Structure
In February 2012, Mr. Switz was appointed to succeed Steven Appleton, our former Chairman and CEO, as Chairman of the Board. We do not have a fixed policy on whether the roles of chairman and CEO should be separate or combined. The decision is based on our and our shareholders' best interests under the circumstances existing at the time. In his role as Chairman, Mr. Switz oversees meetings of the independent directors and acts as a liaison between the independent directors and CEO.
Risk Assessment Role
The Board of Directors is responsible for overseeing the major risks we face and reviewing management's proposals for their mitigation. In addition, the Board has delegated oversight of certain categories of risk to the Audit, Compensation and Governance Committees. The Audit Committee reviews and discusses with management significant financial and nonfinancial risk exposures and the steps management has taken to monitor, control, and report such exposures. The Compensation Committee oversees management of risks relating to our compensation plans and programs. The Governance Committee manages risks associated with board governance and director independence. The Audit, Compensation and Governance Committees report to the Board regularly on matters relating to the specific areas of risk the committees oversee.
Compensation Risks
We have assessed our compensation programs and have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. We assessed our compensation programs to determine if the programs' provisions and operations create undesired or unintentional risk of a material nature. We also reviewed the results of our findings with Mercer, our outside compensation consultant. This risk assessment process included a review of program policies and practices; program analysis to identify risk and risk control related to the programs; and determinations as to the sufficiency of risk identification, the balance of potential risk to potential reward and risk control. Although we reviewed all compensation programs, we focused on the programs with variability of payout, with the ability of a participant to directly affect payout and the controls on participant action and payout. In most cases, our compensation policies and practices are centrally designed and administered, and are substantially the same at each business unit. Certain internal groups have different or supplemental compensation programs tailored to their specific operations and goals, and programs may differ by country due to variations in local laws and customs.
Compensation Consultant
The Compensation Committee annually engages a compensation consultant, currently Mercer, to provide a comprehensive review of executive compensation matters. Mercer provides the Compensation Committee with information for all of our officers on cash and non-cash compensation elements and historical and trend payment data.
The Compensation Committee has established procedures that it considers adequate to ensure that Mercer's advice to the Compensation Committee remains objective and is not influenced by our management. These procedures include: a direct reporting relationship to the Compensation Committee; a provision in the Compensation Committee's engagement letter with Mercer specifying what information, data, and recommendations can be shared with management; and an annual update to the Compensation Committee on Mercer's relationship with us, including a summary of the work performed for us during the preceding 12 months. The specific activities that Mercer undertakes for us include:
review the Compensation Peer Group (as defined in the Compensation Discussion and Analysis) and recommend any changes to its members;
benchmark total direct compensation levels (salary, short-term incentives, long-term incentives and total direct compensation) of our executive team using several data sources;
evaluate our historical pay-for-performance relationship;
review the metrics and targets associated with the annual short-term incentives and long-term incentive plans;
review the proposed equity grants for executives, along with vesting recommendations;
assist with a risk assessment of our compensation practices;
review a draft of the compensation discussion and analysis component of proxy disclosure; and
attend the Compensation Committee meetings in which executive compensation matters are discussed.

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We paid Mercer a total of $447,123 in fiscal 2012 for services provided. Of this amount, $127,725 was paid as a result of the executive and non-employee director compensation consulting work Mercer performed for the Compensation Committee and Governance Committee, $233,360 was paid as a result of the work Mercer performed related to our 401(k) Plan and other human resource functions and $86,038 was paid for various types of employee insurance. The decision to use Mercer for services other than those provided to the Compensation Committee and Governance Committee was made by our management and was not approved by the Compensation Committee.
In addition, the Compensation Committee considered the independence of Mercer in light of new SEC rules and proposed NASDAQ listing standards. The Compensation Committee received a letter from Mercer addressing its independence, including the following factors: (i) other services provided to the Company by Mercer; (ii) fees paid by the Company as a percentage of Mercer's total revenue; (iii) policies or procedures maintained by Mercer that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the individual consultants involved in the engagement and any member of the Compensation Committee; (v) any Company stock owned by the individual consultants involved in the engagement; and (vi) any business or personal relationships between the Company's executive officers and Mercer or the individual consultants involved in the engagement. The Compensation Committee concluded that the work of Mercer did not raise any conflict of interest.
Board Meetings and Committees
Our Board of Directors held eight meetings during fiscal 2012. The Board of Directors met in Executive Session four times during fiscal 2012. In fiscal 2012, the Board of Directors had a standing Audit Committee, Governance Committee and Compensation Committee. During fiscal 2012, the Audit Committee met twelve times, the Compensation Committee met six times and the Governance Committee met two times. In addition to formal committee meetings, the chairmen of the committees engaged in regular discussions with management regarding various issues relevant to their respective committees. All incumbent directors attended 75% or more of the total number of meetings of the Board of Directors during fiscal 2012. All incumbent directors who served on the Compensation, Audit and Governance Committees attended 75% or more of the total number of committee meetings during fiscal 2012. All members of our Board were present at the fiscal 2011 Annual Meeting of Shareholders. We encourage director attendance at the Annual Meeting of Shareholders.
The Audit Committee, the Governance Committee and the Compensation Committee each have written charters that comply with federal and NASDAQ rules relating to corporate governance matters. Copies of the committee charters as well as our Corporate Governance Guidelines are available at www.micron.com and are also available in print upon request to corporatesecretary@micron.com. The Board has determined that all the members of the Audit Committee, the Governance Committee, and the Compensation Committee satisfy the independence requirements of applicable federal laws and the Listing Rules of NASDAQ for such committees.
Our Corporate Governance Guidelines specify a mandatory retirement age of 70 for members of its Board of Directors.
Audit Committee
Ms. Johnson and Messrs. Bailey and Switz currently serve on the Audit Committee. Ms. Johnson has served as the Chairman of the Audit Committee since October 2010. The Board has determined that Ms. Johnson and Messrs. Bailey and Switz each qualify as an "audit committee financial expert" for purposes of the rules and regulations of the SEC. The purpose of the Audit Committee is to assist the Board in overseeing and monitoring:
the integrity of our financial statements;
the performance of our internal audit function;
the performance of our Independent Registered Public Accounting Firm;
the qualifications and independence of our Independent Registered Public Accounting Firm; and
our compliance with legal and regulatory requirements.
The Audit Committee is also responsible for preparing the Audit Committee report that is included in our annual Proxy Statement. See "Report of the Audit Committee of the Board of Directors." The complete duties and responsibilities of the Audit Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.
Governance Committee
Ms. Johnson and Messrs. Bailey, Byrne, Mondry and Switz currently serve on the Governance Committee. Mr. Mondry has served as Chairman of the Governance Committee since October 2009. The responsibilities of the Governance Committee include assisting the Board in discharging its duties with respect to (i) the identification and selection of nominees to our Board of

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Directors, (ii) director compensation, (iii) the development of our Corporate Governance Guidelines and (iv) the annual evaluations of the Board and its committees. The complete duties and responsibilities of the Governance Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.
The Governance Committee is responsible for identifying nominees for our Board of Directors. There are no minimum qualifications that nominees must possess, however, the following factors are strongly considered by the Governance Committee in making its recommendations: substantial experience in the semiconductor industry or related industries; strong business acumen and judgment; excellent interpersonal skills; business relationships with key individuals in industry, government and education that may be of significant assistance to us and our operations; familiarity with accounting rules and practices; and "independence" as defined and required by the Listing Rules of NASDAQ and relevant rules and regulations of the SEC. In the event the Board of Directors has determined that it would be advisable to add additional members to the Board, the Governance Committee works with a third party executive search firm to assist them in the identification and evaluation of potential candidates to our Board of Directors. It is currently anticipated that additional members may join our Board of Directors in 2013.
The Governance Committee will consider director nominee recommendations from shareholders. Shareholder recommendations for directors are subject to the same criteria used to evaluate other candidates. Shareholders wishing to recommend a prospective nominee should submit the candidate's name and qualifications to our Corporate Secretary at corporatesecretary@micron.com. Our Bylaws contain the provisions that address the process by which a shareholder may nominate an individual to stand for election to our Board of Directors. A copy of our Bylaws can be found on the Corporate Governance page of our website at www.micron.com and is available in print upon request to corporatesecretary@micron.com.
Compensation Committee
Messrs. Byrne and Mondry currently serve on the Compensation Committee of the Board of Directors. Mr. Mondry has served as the Chairman of the Compensation Committee since January 2012. The Compensation Committee is responsible for reviewing and approving the compensation of our officers. See the "Compensation Discussion and Analysis" and the "Compensation Committee Report" for information regarding how the Compensation Committee sets executive compensation levels. The complete duties of the Compensation Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.
Executive Sessions and Communications with the Board of Directors
In February 2012, Mr. Switz was appointed Chairman of our Board of Directors. As part of his duties as Chairman, Mr. Switz chairs executive session meetings of our Board (meetings in which only non-employee directors are present). Shareholders and interested parties wishing to communicate with our Board of Directors may contact Mr. Switz at chairman@micron.com.
COMPENSATION OF DIRECTORS
The Governance Committee of the Board of Directors oversees the setting of compensation for our non-employee members of the Board of Directors. At the end of each of fiscal 2011 and fiscal 2012, the Governance Committee engaged Mercer to review and evaluate director compensation for the ensuing year, in light of prevailing market conditions. Mercer gathered and reviewed market data for non-employee directors from the same Compensation Peer Group used to evaluate officer compensation. For a discussion of peer group companies please see "Executive Compensation and Related Information Compensation Discussion and Analysis." For fiscal 2012, upon completion of its review and evaluation, the Governance Committee recommended that the Board of Directors increase (i) the annual retainer paid to non-employee directors, (ii) the fee paid to the Chairman of the Compensation Committee and (iii) the amount of the annual equity award. For fiscal 2013, upon completion of its review and evaluation, the Governance Committee recommended that the Board of Directors make no changes to the directors' compensation.
Elements of Director Compensation
Annual Retainer
Non-employee directors are entitled to receive an annual retainer of $80,000. Pursuant to our 2008 Director's Compensation Plan (the "DCP"), non-employee directors may elect to take some or their entire annual retainer in the form of cash, shares of Common Stock or deferred rights to receive Common Stock upon termination as a director. During the period from October 1, 2011 to September 30, 2012, Mr. Byrne received 4,491 shares of Common Stock under the DCP in lieu of cash. Employee directors receive no additional or special remuneration for their service as directors.
Set forth below are the amounts received by directors for their service as committee chair, Presiding Director or Chairman of the Board in fiscal 2012 and the amounts that are expected to be received in fiscal 2013:

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2012
 
2013
Audit Committee Chair
 
$
20,000

 
$
20,000

Compensation Committee Chair
 
15,000

 
15,000

Governance Committee Chair
 
10,000

 
10,000

Presiding Director (1)
 
15,000

 
699

Chairman of the Board (1)
 
85,685

 
150,000

_______________________
(1)
Mr. Switz was appointed Chairman of the Board on February 4, 2012. As of result of having an independent Chairman, the position of Presiding Director was eliminated in fiscal 2013.
Except for the foregoing, directors do not receive any additional or special remuneration for their service on any of the committees established by the Board of Directors.
We also reimburse directors for travel and lodging expenses, if any, incurred in connection with attendance at Board of Directors' meetings.
Equity Award
Non-employee directors receive an annual equity award. Since fiscal 2007, the equity award has been exclusively in the form of restricted stock. The "targeted value" for the annual non-employee director equity award is established each year by the Board following discussions with Mercer. From fiscal 2009 through fiscal 2011 the targeted value was $225,000. In October 2011, the Board approved an increase in the targeted value for fiscal 2012 compensation to $240,000. The Board did not change the targeted value for fiscal 2013 compensation. The number of restricted shares awarded to each non-employee director is determined by dividing the applicable targeted value by the Fair Market Value of a share of our Common Stock, as defined under our equity plans. For purposes of our equity plans, "Fair Market Value" is the closing price of our Common Stock on the last market-trading day prior to the date of grant. The restrictions on the shares awarded through fiscal 2012 lapse for 50% of such shares on the first anniversary of the date of grant and will lapse for the remaining 50% on the second anniversary of the date of grant (the "Vesting Period"). The restrictions on the shares awarded in fiscal 2013 lapse for 100% of such shares on the first anniversary of the date of grant. Notwithstanding the foregoing, the restrictions will lapse for 100% of such shares in the event a director either reaches the mandatory retirement age or retires from the Board during the Vesting Period having achieved a minimum of three years of service with the Board prior to the effective date of his or her retirement.
Fiscal 2012 Director Compensation
The following table details the total compensation earned by our non-employee directors in fiscal 2012.
Name
 
Fees Earned or Paid in Cash
 
Stock Awards(1)
 
All Other Compensation
Total
Teruaki Aoki (2)
 
$
36,962

 
 
$
239,996

 
$
2,286

(3
)
 
$
279,244

James W. Bagley (2)
 
31,411

 
 
239,996

 

 
 
271,407

Robert L. Bailey
 
79,583

 
 
239,996

 

 
 
319,579

Patrick J. Byrne
 
79,588

(4)
 
239,996

 

 
 
319,584

Mercedes Johnson
 
99,583

 
 
239,996

 

 
 
339,579

Lawrence N. Mondry
 
110,632

 
 
239,996

 

 
 
350,628

Robert E. Switz
 
165,268

 
 
239,996

 

 
 
405,264

_______________________
(1)
On October 12, 2011, each director who was not an employee was granted 46,153 shares of restricted stock or restricted stock units with a grant date fair value of $239,996 ($5.20 per share). Specific amounts expensed for each director vary as a result of the director's holdings, length of service and age. Grant date fair values were determined in accordance with Financial Accounting Standards Board Accounting Statements Codification Topic 718 ("ASC 718"). For information on the restrictions associated with these awards, see "Elements of Director Compensation—Equity Awards" above. Any dividends payable with respect to our Common Stock will be payable with respect to all awards of restricted stock. The total number of outstanding restricted shares held as of August 30, 2012, for each non-employee director was as follows:

8



Name
 
Restricted Stock
Teruaki Aoki
 

James W. Bagley
 

Robert L. Bailey
 
60,975

Patrick J. Byrne
 
51,281

Mercedes Johnson
 
60,975

Lawrence N. Mondry
 
60,975

Robert E. Switz
 
60,975

(2)
Dr. Aoki and Mr. Bagley served as members of our Board of Director through January 24, 2012. Dr. Aoki received restricted stock units in place of restricted stock.
(3)
Reflects amounts incurred to cover tax services provided by Deloitte Touche Tohmatsu Japan ("Deloitte") and the gross-up to Dr. Aoki to cover the taxes on the services provided by Deloitte.
(4)
Amount paid to Mr. Byrne in fiscal 2012 is comprised of $26,672 (approximately 3,933 shares) paid in stock and $52,916 paid in cash.

9



PRINCIPAL SHAREHOLDERS
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth security ownership information of our Common Stock as of the Record Date (November 23, 2012), based on the most current information provided to us by the beneficial owners, available to us from our own records or provided in SEC filings made by the beneficial owners, for (i) persons known by us to own beneficially more than 5% of our Common Stock, (ii) each director, (iii) each Named Executive Officer listed in the "Summary Compensation Table" set forth herein, with the exception of Mr. Appleton and (iv) all directors and executive officers as a group:
Name and Address of Beneficial Owner
 
Number of
Shares Owned(1)
 
Right to Acquire(2)
 
Total
Beneficial
Ownership
 
Percent of
Class(3)
Orbis Investment Management (U.S.), LLC ("OIMUS"), Orbis Investment Management Limited ("OIML") and Orbis Asset Management Limited ("OAML") (4)
 
101,298,436

 

 
101,298,436

 
9.9
%
25 Front Street
 
 
 
 
 
 
 

Hamilton, Bermuda HM11
 
 
 
 
 
 
 

BlackRock, Inc.(5)
 
69,695,234

 

 
69,695,234

 
6.8
%
40 East 52nd Street
 
 
 
 
 
 
 

New York, NY 10022
 
 
 
 
 
 
 
 
T. Rowe Price Associates, Inc. (6)
 
69,302,202

 

 
69,302,202

 
6.8
%
100 E. Pratt Street
 
 
 
 
 
 
 
 
Baltimore, MD 21202
 
 
 
 
 
 
 
 
FMR LLC (7)
 
64,217,115

 

 
64,217,115

 
6.3
%
82 Devonshire Street
 
 
 
 
 
 
 
 
Boston, MA 02109
 
 
 
 
 
 
 
 
AllianceBernstein LP (8)
 
63,766,816

 

 
63,766,816
 
6.2
%
1345 Avenue of the Americas
 
 
 
 
 
 
 
 
New York City, NY 10105
 
 
 
 
 
 
 
 
Mark W. Adams
 
700,969

 
671,748

 
1,372,717

 
*

Robert L. Bailey
 
171,608

 

 
171,608

 
*

Patrick J. Byrne
 
102,422

 

 
102,422

 
*

D. Mark Durcan(9)
 
2,101,774

 
1,722,000

 
3,823,774

 
*

Ronald C. Foster(10)
 
811,382

 
1,199,750

 
2,011,132

 
*

Mercedes Johnson
 
212,113

 

 
212,113

 
*

Roderic W. Lewis
 
802,898

 
923,000

 
1,725,898

 
*

Mario Licciardello
 

 

 

 
*

Lawrence N. Mondry
 
236,691

 

 
236,691

 
*

Brian M. Shirley
 
611,810

 
768,250

 
1,380,060

 
*

Robert E. Switz
 
183,566

 

 
183,566

 
*

All directors and executive officers as a group (17 persons)
 
8,453,987

 
6,954,198

 
15,408,185

 
1.5
%
_______________________
*
Represents less than 1% of shares outstanding
(1)
Excludes shares that may be acquired through the exercise of outstanding stock options.
(2)
Represents shares that an individual has a right to acquire within 60 days of the Record Date.
(3)
For purposes of calculating the Percent of Class, shares that the person or entity had a Right to Acquire are deemed to be outstanding when calculating the Percent of Class of such person or entity.
(4)
Address listed is for OIML and OAML, the address for OIMUS is 600 Montgomery Street, Suite 3800, San Francisco, CA 94111. OIML is the beneficial owner of 100,530,861 shares of common stock, OIMUS is the beneficial owner of 596,850 shares of common stock and OAML is the beneficial owner of 170,725 shares of common stock. Collectively, OIML,

10



OIMUS and OAML have sole voting and dispositive power as to 101,298,436 shares. This information was taken from Schedule 13G filed July 10, 2012.
(5)
BlackRock Inc. has sole voting and dispositive power as to 69,695,234 shares. This information was taken from Schedule 13G filed February 10, 2012.
(6)
T. Rowe Price Associates, Inc. has sole voting power as to 25,553,387 shares and sole dispositive power as to 69,302,202 shares. This information was taken from Schedule 13G filed February 10, 2012.
(7)
FMR LLC has sole power to vote or to direct the vote as to 2,434,947 shares and sole power to dispose or to direct the disposition of 64,217,115 shares. This information was taken from Schedule 13G filed February 14, 2012.
(8)
AllianceBernstein LP has sole voting power as to 48,952,533 shares, sole dispositive power as to 63,734,901 shares and shared dispositive power as to 31,915 shares. This information was taken from Schedule 13G filed February 14, 2012.
(9)
Includes 284,653 shares beneficially owned by C&E Partners L.P. and 3,101 shares beneficially owned by Mr. Durcan's spouse.
(10)
Includes 1,026 shares held jointly with Mr. Foster's spouse.

EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis presents material information helpful or necessary to understand the objectives and policies of our compensation program for executive officers and the compensation reported in the tables that follow. This discussion focuses on the compensation awarded to, earned by, and paid to the following individuals:
Mark W. Adams, our current President and our Vice President of Worldwide Sales for a portion of the year;
D. Mark Durcan, our current Chief Executive Officer and our President and Chief Operating Officer for a portion of fiscal 2012;
Ronald C. Foster, our Chief Financial Officer;
Roderic W. Lewis, our Vice President of Legal Affairs and General Counsel; and
Brian M. Shirley, our Vice President of DRAM Solutions.
In addition, we have included information related to two executives who served for a portion of fiscal 2012: Steven R. Appleton, who served as our Chairman and Chief Executive Officer from September 1994 until his death in February 2012, and Mario Licciardello, our former Vice President of Wireless Solutions.
Throughout this discussion, the foregoing individuals, who are also named in the "Fiscal 2012 Summary Compensation Table," are referred to as our "Named Executive Officers" and the Compensation Committee of the Board of Directors is referred to as the "Committee."
Executive Summary
Objective of our Executive Compensation Program
Our primary long-term corporate objective is to create superior value for our shareholders. The objective of the executive compensation program is to attract, motivate, reward, and retain highly qualified executive officers who are able to achieve the corporate objective of superior value for our shareholders. The executive compensation program is designed to provide a foundation of fixed compensation (base salary and time-based restricted shares) and a significant portion of performance-based compensation (short-term and long-term incentive opportunities, such as cash bonuses and performance-based restricted stock), that align the interests of executives with those of our shareholders. We also use time-based stock options, the value of which is directly tied to stock price performance.
Fiscal 2012 Highlights
We generated $2.1 billion in operating cash flows and ended the year with over $2.9 billion in cash and marketable investments.
We increased gigabit sales of DRAM and NAND flash to trade customers by 59% and 164%, respectively, as compared to fiscal 2011.
We reduced our cost per gigabit sold of DRAM and NAND flash to trade customers by 32% and 54%, respectively, as compared to fiscal 2011.

11



The average selling prices for our DRAM and NAND flash products sold to trade customers declined by 45% and 55%, respectively, and our revenue declined by 6% from fiscal 2011 levels. Notwithstanding these declines, we remained free cash flow positive.
We prevailed in our multi-year litigation with Rambus, Inc. ("Rambus") and were found not liable for any claims. Rambus had alleged antitrust violations and was seeking approximately $12 billion in damages.
In April 2012, we restructured our IM Flash joint venture with Intel Corporation to expand the scope of the joint venture and include certain emerging memory technologies.
In July 2012, we announced our intention to acquire Elpida Memory, Inc. ("Elpida"). Elpida is currently in bankruptcy proceedings in Japan and the acquisition is subject to various regulatory approvals and closing conditions. Successful completion of the acquisition would result in the creation of the second largest semiconductor memory company in the world.
Fiscal 2012 Compensation Highlights
In October 2011, the Committee set compensation levels and performance goals for fiscal 2012 based on a review of financial results, projections, individual contributions, strategic objectives and Market Data (as defined below).
As a result of this review, none of the Named Executive Officers received an increase in base salary, targeted short-term incentive compensation or long-term equity incentive compensation, as those amounts were consistent with the market median.
The performance goals used for our short-term incentives were selected due to their correlation to the creation of shareholder value and their alignment with our strategic objectives. For fiscal 2012, our corporate goals were tied to cash management, operating expense, customer delivery performance and inventory management. We also had goals tied to each of our business units.
The following pay mix, based on target amounts, was established for our Named Executive Officers for fiscal 2012:
Named Executive Officer
 
Base Salary
 
Short-term
Incentive
 
Long-term
Incentive
Mark W. Adams
 
20
%
 
23
%
 
57
%
D. Mark Durcan
 
12
%
 
17
%
 
71
%
Ronald C. Foster
 
17
%
 
17
%
 
66
%
Roderic W. Lewis
 
19
%
 
15
%
 
66
%
Brian M. Shirley
 
20
%
 
20
%
 
60
%
Steven R. Appleton
 
11
%
 
16
%
 
73
%
Mario Licciardello
 
21
%
 
21
%
 
58
%
For our long-term equity incentives, we use stock options, time-based restricted stock and performance-based restricted stock. For the performance-based restricted stock, we use a performance goal tied to Return on Assets ("ROA"). ROA is an indicator of how profitable a company is relative to its total assets and is calculated by dividing annual earnings by total assets.
CEO Compensation
Mr. Durcan succeeded Mr. Appleton as CEO in February 2012. Upon his appointment as CEO, Mr. Durcan's base salary increased from $645,000 to $900,000 and his short-term incentive target increased from 120% to 150%of base salary. Information on Mr. Durcan's compensation is included below under the heading "CEO Compensation - Mr. Durcan."
For fiscal 2012, the Committee did not change Mr. Appleton's base salary ($950,000), short-term incentive target (150%) or long-term incentive target ($6,500,000) from fiscal 2011 levels.
In October 2012, the Committee reviewed performance goals and results for fiscal 2012 and approved the Executive Officer Performance Incentive Plan ("EIP") payments identified in the Fiscal 2012 Summary Compensation Table. The average payout for fiscal 2012 bonuses under the EIP for our Named Executive Officers was 10% of target.
In February 2012, an aggregate of $2.9 million was paid out in bonuses to certain employees, including Messrs. Durcan, Lewis and Shirley, related to successful litigation results.

12



Corporate Governance and Compensation Practices Highlights
The EIP is performance-based and we have no history of changing performance metrics mid-cycle. The weightings of the performance metrics for Messrs. Durcan and Adams were changed in February 2012 when their positions were changed due to Mr. Appleton's death.
We offer limited perquisites to our Named Executive Officers and we do not offer any special retirement benefits for our Named Executive Officers other than participation in our retirement plans on the same basis as other employees.
We do not have agreements with our officers that provide tax gross-up protection for change in control excise taxes.
Our equity incentive plans prohibit repricing of options or stock appreciation rights ("SARs") (directly or indirectly) without prior shareholder approval.
Our insider trading policy prohibits our officers and directors from engaging in pledging or hedging activities involving our stock.
We have established stock ownership guidelines for our directors and officers. For fiscal 2012, all officers and directors were in compliance with the guidelines.
Consideration of the 2012 Advisory Vote on Executive Compensation
At the Annual Meeting of Shareholders on January 24, 2012, in the first advisory vote on executive compensation, over 90% of the shares voted were voted in support of the compensation of our named executive officers. The Committee appreciates and values the views of our shareholders. In considering the results of the 2012 advisory vote on executive compensation, the Committee concluded that the compensation paid to our executive officers and the Company's overall executive pay practices have strong shareholder support and have been effective in implementing the Company's stated compensation philosophy and objectives. The Committee recognizes that executive pay practices and notions of sound governance principles continue to evolve. Consequently, the Committee intends to continue to seek the advice and counsel of its compensation advisors. Our shareholders may communicate any concerns or opinions on executive pay directly to the Committee or the Board. Please refer to “Executive Sessions and Communications with the Board of Directors” on page 7 for information about communicating with the Board.

Also at the Annual Meeting of Shareholders on January 24, 2012, our shareholders expressed a preference that advisory votes on executive compensation occur every year. In accordance with the results of this vote, the Board determined to implement an advisory vote on executive compensation every year until the next required vote on the frequency of shareholder votes on the compensation of executives, which is scheduled to occur at the 2017 Annual Meeting of Shareholders.
Oversight of the Executive Compensation Program
Our executive compensation program is administered by the Committee, which is comprised of Messrs. Byrne and Mondry. The Committee assists the Board of Directors in discharging its responsibilities with respect to the compensation of our officers. The Committee has direct responsibility to review and approve corporate goals and objectives used to determine the CEO's compensation, evaluate his performance in light of such goals and objectives, and determine and approve his compensation level based on this evaluation. The Committee also reviews the evaluation process and compensation structure for our other officers, including the other Named Executive Officers, and approves their compensation.
The Committee annually engages an outside compensation consultant, currently Mercer. The Committee also works closely with our CEO with respect to the determination of compensation of other officers. A more complete description of the Committee's responsibilities is provided in the Committee's Charter approved by the Board of Directors, which can be found on our website (www.micron.com) in the governance section. A more complete description of the role of the CEO and Mercer in the compensation process is described later in this Compensation Discussion and Analysis. Additional information regarding Mercer, the specific activities that Mercer undertakes for us and related fees can be found under "Corporate Governance—Compensation Consultant" on page 5.
Guiding Principles
We believe we have the best opportunity to attract, motivate, reward and retain qualified individuals, and, thus, to meet our overall objective of increasing shareholder value, by offering a compensation package that is "reasonable" and "competitive" with what our executives could otherwise obtain in the market, and especially from companies within our Compensation Peer Group. Our Compensation Peer Group consists of companies that we believe are especially likely to be our competitors for executive talent and is discussed further in "Market Data Defined" below. What is "reasonable" and "competitive" is gauged against the Market Data (as defined below) and reviewed by the Committee for each of the primary elements of compensation.

13



Reasonable
As an indication of reasonableness, the Committee typically targets the Market Data median. We believe it is important to retain flexibility in determining the compensation of our officers and, when appropriate, to deviate from the Market Data median due to factors such as:
differences in position and level of responsibility among officers, both in absolute terms and relative to our other officers and as compared to similarly situated officers within the Compensation Peer Group,
past and anticipated contributions by an officer,
technical expertise,
Company performance,
applicable business unit performance, and
length of service and/or experience both in absolute terms and relative to our other officers and as compared to officers within the Compensation Peer Group.
The semiconductor industry is highly volatile and changes in Market Data, which is a compilation of data from many companies, may be dramatic from year to year. Market Data can change as compensation practices change, executives retire or are replaced with less experienced and lower-paid executives, goals are achieved or not achieved resulting in varying payouts, participants in proprietary surveys change, and the completeness or accuracy of compensation data improves or deteriorates. Accordingly, what may have been the "median" or within a reasonable range of competitiveness in one year, may be higher or lower for the next. For this reason, even though the Committee manages compensation in accordance with such guiding principles, officer compensation may vary, above or below the median, or a range from the median, year over year.
Competitive
Given our experience, as well as advice we have received from Mercer, we believe a competitive compensation package will consider and measure compensation practices for executive positions with respect to three primary elements of compensation:
base compensation (salary),
short-term incentive compensation (cash bonus programs), and
long-term incentive compensation (stock options and restricted stock).
We do not require that a particular element comprise a set portion of the total compensation mix. We do believe, however, that a significant portion of the compensation should be variable (such as performance-based incentives) as compared to fixed (such as base salary and time-based restricted shares) and that such variable compensation align executives' interests with those of our shareholders. Additionally, although the Committee reviews total direct compensation, which is the sum of base salary, short-term incentive and long-term incentive compensation for the Named Executive Officers, it does not have a fixed objective with respect to such total direct compensation. For fiscal 2012, the total direct compensation approved by the Committee was below the 75th percentile of Market Data values for all our Named Executive Officers and below the 25th percentile of Market Data values for three of our Named Executive Officers.
Compensation-setting Process and the Determination of Compensation Levels
The Committee reviews the compensation of our executive officers on an annual basis and sets compensation levels at the beginning of each fiscal year. As part of this process, the Committee reviews our financial results for the year just ended, projections for future periods, our strategic business plan and the Market Data provided by Mercer. The Committee also works with our CEO to establish performance goals that further our strategic objectives, which typically include keeping costs down, providing innovative products and memory solutions, improving our sales channel, growing our non-memory businesses and being a technology leader.
Mercer reviews the most recent available data and identifies the Market Data values for the 25th, 50th (i.e. median) and 75th percentile with respect to each position or rank. Mercer compares our compensation data, both as to elements and amounts to be paid or potential value to be delivered, with that of the Market Data and reports its findings to the CEO and the Committee. Our CEO works with Mercer by providing our financial data with respect to the most-recently completed fiscal year. The CEO also reviews projected financial results for the current fiscal year and our strategic business plan. The CEO makes suggestions as to base salary, recommends a potential set of Company-wide and/or business unit metrics and targets for the current fiscal year

14



with respect to short-term incentives and offers suggestions as to long-term incentive compensation for the Named Executive Officers other than himself. He makes no recommendations as to his own level of compensation.
The Committee reviews the Market Data, discusses the Market Data with the CEO and with Mercer, discusses individual officer performance based on input from the CEO and, without the CEO present, discusses the CEO's own performance for the most-recently completed fiscal year and anticipated performance for the current year. The Committee uses the Market Data and the deliberations to determine whether our compensation is competitive and reasonable as described above and whether, and to what extent, the Committee believes it would be appropriate to deviate from the Market Data and competitive practices. Following this deliberation, the Committee exercises its business judgment to certify the payment of compensation based on the financial results for the most-recently completed fiscal year, and approves the compensation for the current fiscal year, including the metrics and targets for the current year.
Components of the Executive Compensation Program
Fiscal 2012 base salaries
The purpose of a competitive base salary is to compensate executives for performing their day-to-day job responsibilities. Base salaries are generally targeted to approximate the Market Data median but may be above or below depending upon an executive's contributions, experience, performance and length of service. At the completion of fiscal 2011, the Market Data showed that the base salaries of all of the Named Executive Officers were between the 25th and 75th percentiles for their positions or ranks. The Committee determined not to change the base salaries of the Named Executive Officers for fiscal 2012 with the exception of Messrs. Durcan and Adams. Mr. Durcan's base salary was increased from $645,000 to $900,000 when he became our CEO and Mr. Adams' base salary was increased from $450,000 to $600,000 when he became our President. Market Data showed that Mr. Durcan's base salary as CEO was approximately 8% below the median and Mr. Adams' base salary as President was approximately 17% below the median.
Fiscal 2012 short-term incentive awards
With respect to short-term incentive compensation, we pay for achievement of financial, operational and strategic objectives approved by the Committee at the beginning of each fiscal year. The short-term incentive opportunities are set to be competitive with market practices but actual incentive payouts are commensurate with achievement. Thus, we have adopted a "pay for performance" approach as it relates to short-term incentives.
Annual short-term incentive awards are paid in cash to our officers under the Executive Officer Performance Incentive Plan ("EIP"). The short-term incentive "opportunity" ("Target Award") for each officer is stated in terms of a specified percentage of such officer's base salary and is designed to reward participants for the achievement of specified short-term business-unit and/or Company-wide financial, operational or strategic goals. The Committee believes the pre-determined goals, regardless of whether tied to business unit or Company-wide performance, promote our long-term success and shareholder value.
In October 2011, and in accordance with the provisions of the EIP, the Committee established the following goals for fiscal 2012:
(a)
Cash Management—meeting specified net cash goals taking into account capital expenditures and investments,
(b)
Operating Expense—meeting an operating expense (SG&A plus R&D) target that did not exceed a specified level of revenue,
(c)
Customer Delivery Performance—meeting specified delivery requirements for certain customers,
(d)
Inventory Management—achieving annual inventory turn targets,
(e)
WSG—meeting specified inventory turn targets for our WSG business unit,
(f)
DSG—meeting a specified percentage of DRAM wafer equivalents to certain markets,
(g)
NSG—meeting specified shipment targets for SSDs and eNAND units, and
(h)
ESG—meeting specified gross margin targets for our ESG business unit.
The target incentive amounts that could be payable under the EIP for achievement of the fiscal 2012 goals are shown in the columns "Estimated Future Payouts under Non-Equity Incentive Plan Awards" of the "Grants of Plan-Based Awards in Fiscal 2012" table. All goals were established with threshold, target and maximum payout levels, with the target payout requiring a significant level of effort and no assurance of goal achievement.

15



The Target Awards established for fiscal 2012 for the Named Executive Officers were measured against the Market Data median. However, opportunities are not necessarily limited to the Market Data median, but considered within the factors described under the section labeled "Reasonable" above. The actual payouts of the awards established in October 2011 with respect to fiscal 2012 bonuses under the EIP are based on actual fiscal 2012 results in the manner set forth below. For fiscal 2012, the following Target Awards were established:
Mr. Adams—100% of base salary (Mr. Adams' short-term incentive target was increased to 120% when he became President in February 2012)
Mr. Durcan—120% of base salary (Mr. Durcan's short-term incentive target was increased to 150% when he became CEO in February 2012)
Mr. Foster—100% of base salary
Mr. Lewis—80% of base salary
Mr. Shirley—100% of base salary
Mr. Appleton—150% of base salary
Mr. Licciardello—100% of base salary
The following table shows the Target Award weighting for Messrs. Adams, Appleton, Durcan, Foster, Lewis, Licciardello, and Shirley among the various goals. The weightings reflect the officer's responsibilities and ability to affect the attainment of the goal.
EIP Weightings (as Percentage of Target Incentive)
Named Executive Officer
 
(a)
Cash
 
(b)
Operating Expense
 
(c)
Customer
Delivery
 
(d)
Inventory Management
 
(e)
WSG
 
(f)
DSG
 
(g)
NSG
 
(h)
ESG
Mark W. Adams (1)
 
27
%
 
24
%
 
12
%
 
9
%
 
7
%
 
7
%
 
7
%
 
7
%
D. Mark Durcan (2)
 
35
%
 
33
%
 
13
%
 
11
%
 
2
%
 
2
%
 
2
%
 
2
%
Ronald C. Foster
 
35
%
 
35
%
 
15
%
 
15
%
 
 
 
 
 
 
 
 
Roderic W. Lewis
 
35
%
 
35
%
 
15
%
 
15
%
 
 
 
 
 
 
 
 
Brian M. Shirley
 
20
%
 
15
%
 
15
%
 
15
%
 
 
 
35
%
 
 
 
 
Steven R. Appleton
 
35
%
 
35
%
 
15
%
 
15
%
 
 
 
 
 
 
 
 
Mario Licciardello
 
15
%
 
15
%
 
15
%
 
20
%
 
35
%
 
 
 
 
 
 
_______________________
(1)
For the period from September 1, 2011 to February 3, 2012, during which time Mr. Adams served as our Vice President of Worldwide Sales, his EIP weightings were 15%, 15%, 15%, 15%, 10%, 10%, 10%, and 10% for goals (a), (b), (c), (d), (e), (f), (g) and (h), respectively. Upon Mr. Adams' appointment as President, his EIP weightings were changed to 35%, 30%, 10%, 5%, 5%, 5%, 5%, and 5% for goals (a), (b), (c), (d), (e), (f), (g) and (h), respectively. The percentages shown in the table represent the average weighting for the two periods.
(2)
For the period from September 1, 2011 to February 3, 2012, during which time Mr. Durcan served as our Chief Operating Officer and President, his EIP weightings were 35%, 30%, 10%, 5%, 5%, 5%, 5%, and 5% for goals (a), (b), (c), (d), (e), (f), (g) and (h), respectively. Upon Mr. Durcan's appointment as CEO, his EIP weightings were changed to 35%, 35%, 15%, 15%, 0%, 0%, 0%, and 0% for goals (a), (b), (c), (d), (e), (f), (g) and (h), respectively. The percentages shown in the table represent the average weighting for the two periods.
Following a review of fiscal 2012 results, the Committee determined that the goals (d) and (f) were achieved at 50% and 59% of target, respectively. The Committee determined that goals (a), (b), (c), (e), (g) and (h) were not achieved. The average payout for fiscal 2012 bonuses under the EIP was 10% of target for our Named Executive Officers. As a result of goals met, the Named Executive Officers received bonuses in the following amounts:

16



Named Executive Officer
 
Bonus
 
% of Target
Mark W. Adams
 
$
48,148

 
7.9%
D. Mark Durcan
 
76,403

 
6.9%
Ronald C. Foster
 
36,750

 
7.5%
Roderic W. Lewis
 
25,200

 
7.5%
Brian M. Shirley
 
136,246

 
28.2%
Steven R. Appleton
 
106,875

 
7.5%
Mario Licciardello (1)
 

 
—%
_______________________
(1)
Mr. Licciardello retired before the fiscal 2012 EIP Plan payments were made and he was not entitled to continue participation in the EIP after his retirement.
The foregoing amounts are included in the "Fiscal 2012 Summary Compensation Table" in the column "Non-Equity Incentive Plan Compensation."
The EIP calls for certain performance goals to be modified with respect to major corporate transactions if permitted by Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"). These events are more fully described in the EIP. Additionally, the Committee has the discretion to modify performance goals with respect to Target Awards that are not intended to satisfy Section 162(m) if the Committee determines that due to changes in our business, operations, corporate or capital structure, the existing performance goals are rendered unsuitable for a given performance period. In this regard, the weighting of the EIP goals for Mr. Durcan and Mr. Adams were modified in February 2012 upon their appointments as Chief Executive Officer and President, respectively. As a result of these changes, the EIP bonus paid to Mr. Durcan and Mr. Adams do not satisfy the requirements of Section 162(m). Upon the occurrence of a "change in control" (as defined in the EIP), performance periods are deemed to have ended and the Committee will determine whether performance goals were achieved. Finally, the Committee always retains the ability to exercise "negative discretion" and reduce an amount otherwise earned pursuant to the EIP. In fiscal 2012, the Committee did not exercise any such discretion.
Supplemental Achievement Bonuses
In February, 2012, an aggregate of $2.9 million was paid in bonuses to certain of our employees as a result of successful litigation outcomes over a period of years. Pursuant to this program, Messrs. Durcan, Lewis and Shirley received $500,000, $900,000 and $75,000, respectively. The foregoing amounts are included in the "Fiscal 2012 Summary Compensation Table" in the column "Bonus."
Fiscal 2012 long-term equity incentives
We believe long-term incentive compensation should be tied to our success and increases in shareholder value. Accordingly, stock options and performance-based restricted stock awards are significant components of our executive compensation program. We believe these types of awards are especially aligned with shareholders interests as their value is contingent upon an increase in stock price or the achievement of certain milestones. To ensure our long-term incentive program helps retain executives, we also grant time-based restricted stock awards. The Committee works with Mercer to determine the allocation and type of performance- and time-based awards to grant each fiscal year. In connection therewith, the Committee reviewed the Market Data, and found that 82% of the companies in the Compensation Peer Group used stock options, 64% of the companies used time-based restricted shares and 64% also used performance-based restricted shares as compensation vehicles for their executives. In setting fiscal 2012 compensation, the Committee determined that a 50-25-25 split between stock options, performance-based restricted stock and time-based restricted stock, respectively, represented the right balance between reward for our long-term success and retentive effect. Despite the 25-25 split for restricted shares, the actual number of restricted shares awarded with performance-based restrictions was not the same as the number of such shares awarded having time-based restrictions because there is a "probability-of-achievement" discount was applied to the value ascribed to performance-based restricted shares. This resulted in the actual number of shares in the two categories being different from one another with the number of performance-based shares exceeding the number of time-based shares. We used a 20% discount in calculating the number of performance-based restricted shares. The same approach was used by Mercer for valuing the performance-based equity of Compensation Peer Group companies to ensure Market Data and Micron values were comparable. For information on how the number of award shares was calculated and the application of the probability-of-achievement discount, please see the discussion below on "CEO Compensation—Long-Term Equity Incentives."
With respect to the time-based restricted stock awards for fiscal 2012, the restrictions lapse as to one-fourth of the shares on each anniversary of the date of grant. With respect to the stock option awards for fiscal 2012, the options vest as to one-fourth of the shares on each anniversary of the date of grant. With respect to the performance-based restricted stock awards granted in

17



fiscal 2012, the restrictions will lapse if we achieve a certain percentage ROA over a consecutive rolling four-quarter period between the beginning of fiscal 2012 and the end of fiscal 2014 (the "Share Performance Period"). The achievement during the Share Performance Period of a lower threshold ROA percentage will result in the restrictions lapsing as to one-half of the fiscal 2012 performance-based shares. The achievement during the Share Performance Period of the target ROA percentage will result in the restrictions lapsing as to all of the fiscal 2012 performance-based shares. Both the threshold and target ROA percentages require significant effort with the achievement of neither ROA percentage being assured. In the absence of at least the threshold ROA percentage being achieved during the Share Performance Period, the restrictions will not lapse and the shares will be forfeited.
In determining the amount of the long-term equity incentive award for Messrs. Adams, Durcan, Foster, Lewis, Licciardello and Shirley, the Committee reviewed the Market Data and information provided by Mr. Appleton related to the other Named Executive Officer's performance and his recommendation as to the amount of their awards. For fiscal 2012, the long-term equity incentive awards approved by the Committee for each of Messrs. Adams, Durcan, Foster, and Shirley were all below the 50th percentile of the Market Data for their position or rank. Mr. Lewis' fiscal 2012 long-term equity incentive was slightly above the 75th percentile for his position or rank. Because Mr. Licciardello is based in Italy, there was limited comparable Market Data available related to long-term equity incentives for his position. For information on Mr. Appleton's and Mr. Durcan's long-term equity incentive, please see the discussion below on CEO compensation.
We have not and do not plan to time the granting of long-term incentive awards (or the payment of any other compensation) with the release of material, non-public information. Historically, long-term incentive awards have been made in the first quarter of the fiscal year with the exact grant date corresponding with the date of the meeting of the Committee (which typically occurs approximately within the week following the announcement of our results for the fiscal year). Historically, long-term incentive grants to the Named Executive Officers are approved by the Committee on the same day as the grants to other officers and the exercise price of stock options is equal to the fair market value of our Common Stock as defined by the equity plan pursuant to which the award is granted. For purposes of our equity plans, fair market value is defined as the closing price as quoted on NASDAQ for the last market-trading day prior to the date of grant.
Other fiscal 2012 employee benefits
Executive perquisites, which for us are minor in scope and amount, are not considered to be material elements of compensation. We provide a competitive level of time off and health, welfare and retirement benefits to substantially all employees. The Named Executive Officers participate in the same plans as our other employees.
U.S. Time Off with Pay. The U.S.-based Named Executive Officers participate in our time-off plan. Under the time-off plan, all of our U.S.-based employees, including the Named Executive Officers, are allowed to accumulate up to 999 hours of time-off to be used for vacation, holiday, sick time, emergencies and personal needs.
U.S. 401(k) Retirement Benefits. We provide retirement benefits to our U.S.-based employees, including the Named Executive Officers, under our tax-qualified 401(k) plan. Due to market conditions, in March 2009, we suspended making matching contributions. In January 2011, we started making matching contributions of up to 5% of the employee's eligible pay. The Named Executive Officers participate in the 401(k) plan on the same terms as our other employees.
Mr. Licciardello's Benefits.  Mr. Licciardello was employed in Europe and did not receive the U.S. benefits described above. He was employed in Switzerland until December 1, 2010, when he transferred to employment in Italy. In Switzerland, Mr. Licciardello's benefit arrangements had been made by Numonyx and assumed by us. Due to his age, Mr. Licciardello did not qualify for Numonyx's Swiss pension arrangements. In lieu of participation in a pension arrangement, while he was employed in Switzerland Mr. Licciardello was paid an additional amount per month based on the amount we would have otherwise contributed to a retirement account. While he was employed in Switzerland, Mr. Licciardello also received a monthly meal allowance and housing allowance.
As an Italy-based employee, Mr. Licciardello generally received the same benefits as our other Italy-based senior leader level employees, including paid holidays and a vehicle allowance. However, due to his age, Mr. Licciardello did not qualify for our Italy-based disability insurance or for additional Italian pension contributions.
CEO Compensation - Mr. Durcan
Mr. Durcan was appointed our Chief Executive Officer on February 4, 2012. Prior to his appointment as CEO, Mr. Durcan served as our President and Chief Operating Officer. Upon his appointment as CEO, the Committee examined Mr. Durcan's compensation in light of his changed position and the prevailing market practices for our Compensation Peer Group. Mr. Durcan's compensation is comprised of the following elements:

18



Base Salary - Mr. Durcan's base salary was increased from $645,000 to $900,000 when he became our CEO. Market Data showed that Mr. Durcan's base salary as CEO was approximately 8% below the median.
Short-Term Incentive - Mr. Durcan's short-term incentive Target Award was increased from 120% to 150% when he became CEO. Market Data showed that for short-term incentives a Target Award of 150% of base salary is at the median for CEOs. In fiscal 2012, Mr. Durcan received $76,403 under the EIP. Information regarding Mr. Durcan's specific goals under the EIP is included in the discussion above on "Fiscal 2012 Short-Term Incentive Awards." Mr. Durcan also received $500,000 pursuant to the supplemental achievement bonus related to patent and antitrust litigation outcomes described above.
Long-Term Equity Incentive - Mr. Durcan's long-term equity incentive targets were not changed when he became CEO. Mr. Durcan was granted 491,000 shares of restricted stock and options to purchase 777,000 shares of Common Stock in October 2011, while he was serving as our Chief Operating Officer and President. The aggregate value of Mr. Durcan's fiscal year 2012 long-term incentive opportunity is below the 25th percentile for CEOs in our peer group.
CEO Compensation - Mr. Appleton
Mr. Appleton served as our CEO and Chairman of the Board from September 1994 until his death in February 2012. The following discussion relates to the actions taken by the Committee in October 2011 in setting Mr. Appleton's fiscal 2012 compensation. For a discussion of the death benefits received by Mr. Appleton's estate please see "Severance and Change in Control Arrangements."
With respect to Mr. Appleton's compensation, the Committee reviewed his performance, our financial results and Market Data values at the 25th, 50th and 75th percentiles. Please see "Guiding Principles" above for a discussion of other factors the Committee considers in setting compensation levels and deviations from the market median.
Base Salary
While the Market Data showed that Mr. Appleton's base salary was approximately 3% below the median, the Committee decided to keep Mr. Appleton's salary at $950,000. Mr. Appleton's base salary did not change from fiscal 2007.
Short-Term Incentive
The Market Data showed that for short-term incentives a Target Award of 150% of base salary is at the median. Mr. Appleton's Target Award has been at 150% since 2007. For fiscal 2012, Mr. Appleton' estate received $106,875 under the EIP. Information regarding Mr. Appleton's specific goals under the EIP is included in the discussion above on "Fiscal 2012 Short-Term Incentive Awards."
Long-Term Equity Incentive
The following charts show the long-term equity incentive mix for Mr. Appleton and for CEOs who were granted long-term equity incentives in the Compensation Peer Group:
While the Market Data showed that Mr. Appleton's long-term equity incentive opportunity based on value was approximately 11% below the median, the Committee decided to keep the value of Mr. Appleton's targeted long-term equity incentive award for fiscal 2012 targeted at $6,500,000. Mr. Appleton's long-term incentive award value did not change from fiscal 2007.

19



The following table sets forth the elements and amounts of Mr. Appleton's long-term incentive award for fiscal 2012:
Security
 
Number of Options/Shares(1)(2)
 
Value(1)
Options
 
1,123,000

 
$
3,250,000

Time-based Restricted Stock
 
315,000

 
1,625,000

Performance-based Restricted Stock
 
394,000

 
1,625,000

 
 
1,832,000

 
$
6,500,000

_______________________
(1)
Information related to Mr. Appleton's long-term incentive award also is included in the "Grants of Plan-Based Awards in Fiscal 2012" table. The stock options are listed in the column "Option Awards: Number of Securities Underlying Options," the time-based share amounts are listed in the column "Stock Awards: Number of Shares of Stock or Units," and the performance-based share amounts are listed in the column "Estimated Future Payouts under Equity Incentive Plan Awards Target." The values included in those tables reflect the grant-date fair value under ASC Topic 718. The amounts included on the table above are consistent with the approach used by Mercer and differ from the amounts included in the "Grants of Plan-Based Awards Table in Fiscal 2012" as they reflect the 20% "probability-of-achievement" discount applied to the performance-based shares.
(2)
The number of options granted to Mr. Appleton was determined by dividing $3,250,000 (50% of $6,500,000) by approximately $2.89, the estimated fair value of our stock options at the time of the Committee's meeting on executive compensation. The number of time-based restricted shares granted to Mr. Appleton was determined by dividing $1,625,000 (25% of $6,500,000) by $5.16, the approximate fair market value of our Common Stock at the time of the Committee's meeting on executive compensation. The number of performance-based restricted shares granted to Mr. Appleton was determined by dividing $1,625,000 (25% of $6,500,000) by approximately $4.13 (20% discount to the $5.16 share price).
Severance and Change in Control Arrangements
Severance Agreements
Each of our Named Executive Officers, except Mr. Licciardello, has a similar severance agreement in place (the "Severance Agreements"). We believe severance agreements for certain of our officers are in the best interests of us and our shareholders because they are necessary to attract and retain qualified executive talent, promote candid discussion among our officers, help provide for a smooth transition when there is a change in management, provide the officer with benefits in consideration of a promise not to compete with us after termination of employment, and release us, and our officers, directors, employees and agents from any and all claims.
In general, the Severance Agreements provide for severance payments upon termination of employment for any reason, including death, voluntary or involuntary termination or termination with or without cause. The Severance Agreements provide for a "Transition Period," which begins upon a "separation of service" as defined in Section 409A of the Code, regardless of when a termination of employment or loss of officer status occurs, and ends after a period of one year.
Provided an officer complies with post-employment obligations and restrictions described below and all other terms of the Severance Agreement, the officer is entitled to receive compensation during the Transition Period equivalent to the compensation and benefits customarily provided to such officer while employed including, but not limited to, salary, bonuses, executive bonuses, benefits and continued vesting of any granted stock options and restricted shares. With respect to short-term incentive awards and long-term equity awards that are performance-based, the officer is entitled to receive such awards only if the goals are achieved before or during the applicable Transition Period. Such terminated officers are not entitled to receive any new awards under our equity plans or EIP or to the payment of any compensation that would be deferred past the Transition Period due to payment criteria of an incentive program, as those criteria exist as of the Termination Date.
Terminated officers are subject to the following obligations and restrictions:
A one-year non-competition obligation.
Confidentiality obligations related to our proprietary and confidential information that last indefinitely.
A non-disparagement and confidentiality obligation surrounding the reasons for, and circumstances of, the officer's termination of employment or change in officer status that lasts indefinitely. However, we may disclose such information if we determine, in our sole discretion, it is either required by law to be disclosed or necessary to be disclosed to serve a valid business purpose.

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Non-solicitation and non-interference provisions relating to our employees and business partners that last at least one year.
Upon receipt of all benefits under the Severance Agreement, we and the officer are considered to have settled, waived, and voluntarily released any and all claims each has or may have against the other, inclusive of any of our affiliates, officers, directors, employees or agents, both individually and in their official capacities, which claims are accruing prior to the end of the Transition Period.
Mr. Licciardello
Mr. Licciardello retired on May 31, 2012. In connection with his retirement, we entered into an agreement with Mr. Licciardello that provided for a severance payment and additional payments in exchange for certain waivers, releases and covenants.
Death Benefits
Most of our equity plans currently provide for automatic acceleration of vesting and lapsing of restrictions in the event of death. At the time of Mr. Appleton's passing, our 2004 Plan provided for automatic pro rata lapsing of restrictions on the performance-based restricted stock awards upon the death of the award recipient. The 2004 Plan gave the Committee the discretion to lapse restrictions on restricted stock awards which had not automatically lapsed. The Committee exercised this discretion and approved the lapsing of the restrictions on Mr. Appleton's performance-based restricted stock awards under the 2004 Plan.
Under our time-off plan, in some states, including Idaho, our team members are entitled to 50% of their accrued but unused time-off upon a normal termination of employment. At the time of Mr. Appleton's passing, our longstanding practice had been to pay out 100% in the event of death, but this practice had not been formalized. The Committee approved paying out Mr. Appleton's time-off at 100% in accordance with our practice. Our time-off plan was subsequently changed to explicitly provide for team members to be paid 100% of their accrued but unused time-off in the event of death.
Actual and Estimated Severance Payments and Death Benefits
The "Voluntary or Involuntary Termination of Employment" table on page 31 describes the actual amounts payable and other benefits applicable to Mr. Appleton and Mr. Licciardello's terminations of employment and the estimated severance payments as of the end of fiscal 2012 for the current Named Executive Officers.
Change in Control Arrangements
We do not have separate change in control agreements for our executive officers and directors. The Severance Agreements referenced above provide for transitional benefits in the event of termination of employment, including following a change in control. In addition, under the terms of our executive incentive plan and our equity compensation plans, awards may be substituted, assumed or accelerated upon a change in control, depending upon the circumstances. The compensation that executive officers and directors could receive if a change of control occurs is intended to allow them to evaluate objectively whether a potential change in control is in the best interest of us and our shareholders. Estimated value that the Named Executive Officers could receive from our change in control provisions can be found in the "Change in Control" table on page 32.
Consideration of Tax Consequences when Making Compensation Decisions
Section 162(m) of the Code generally disallows a tax deduction to public companies for compensation over $1,000,000 paid to certain of our Named Executive Officers. Qualifying performance-based compensation is not subject to the deduction limit if certain requirements are met. The key components of our long-term incentives in the form of stock option grants and performance-based restricted stock awards are designed to comply with the statute. Awards under the EIP also are generally designed to comply with the statute. Although the Committee believes it is important to preserve the deductibility of compensation under Section 162(m) whenever practicable, it reserves the right to grant or approve compensation or awards that may be non-deductible when it believes such compensation or awards are in our and our shareholders' best interests.
"Market Data" Defined
Compensation data is gathered by Mercer from proxy statements of the Compensation Peer Group and from published compensation surveys. The relevant survey and Compensation Peer Group data for fiscal 2012, each as discussed below, were weighted equally by the Committee and are collectively referred to throughout this discussion as the "Market Data."

21



Compensation Peer Group Data
Data is gathered from proxy statements and other documents that are filed with the SEC to develop the Compensation Peer Group data.
Mercer works with the Committee and our management team, including our CEO, to identify peer companies for compensation comparison purposes. The peer companies are primarily selected based on their industry, degree of business match (i.e., semiconductor or electronics manufacturing), and comparability of revenue size. All the peer companies have a Global Industry Classification Standard economic sector classification of Information Technology and an industry classification related to semiconductor or other electronic equipment. The companies selected generally fall within a revenue range of approximately 35% to 140% of the size of Micron and have a high degree of business match. We believe our custom peer group is comprised of companies that are likely to be our competitors for executive talent.
Each year we reevaluate the composition of our Compensation Peer Group to ensure that it reflects industry or economic changes that may have occurred during the fiscal year, such as changes in business strategies, operations, revenues, product lines or availability of information. For fiscal 2012, the Compensation Peer Group of companies changed from the group used for fiscal 2011, with the removal of Infinion Technologies and STMicroelectronics due to a lack of robust publicly available data. As a result of these changes, our Compensation Peer Group for 2012 consisted of: Advanced Micro Devices, Inc., Agilent Technologies, Inc., Applied Materials, Inc., Broadcom Corporation, Marvell Technology Group Ltd, Nvidia Corporation, QUALCOMM Incorporated, SanDisk Corporation, Seagate Technology Plc., Texas Instruments Incorporated and Western Digital Corp. These companies are referred to in the compensation discussion and analysis as the "Compensation Peer Group."
When collecting and assessing market compensation data we collect data based on job descriptions first. This permits the Committee to "match" positions held by our executives with those of other companies and, as described more fully below, deviate from benchmarked data based on the factors described earlier. If we are not able to match positions to a reasonable number of companies within the Compensation Peer Group, we look to the rank of the person involved and match ranks, e.g., highest paid Company officer is ranked to the highest paid officer at each company within the Compensation Peer Group.
Survey Data
Survey data may vary from year to year. For fiscal 2012, Mercer used the Radford Executive Survey and Towers Watson Survey. We believe these surveys are particularly relevant for high technology companies given the high level of participation by such companies in the survey. We used survey data as guidance in reviewing Mr. Licciardello's compensation since limited peer data was available.
Stock Ownership Guidelines
We have established stock ownership guidelines for our officers and directors. The Committee believes that officers will more effectively manage a company in the best interests of the shareholders if they are also shareholders. The minimum ownership guideline for directors is to hold shares with a value equal to three times their annual retainer. The minimum ownership guideline for our CEO is to hold shares with a value equal to five times his base salary. The other Named Executive Officers are required to hold shares with a value equal to three times their base salary. Directors and officers are given five years to meet the ownership guidelines. The Governance Committee reviews the Ownership Guidelines and monitors each covered executive's progress toward, and continued compliance with, the guidelines. Stock sales restrictions may be imposed upon officers and directors if the stock ownership guidelines are not met. All our officers and directors are in compliance with the guidelines.
The following table shows the guidelines for each of the current Named Executive Officers:        
Named Executive Officer
 
Guideline Amount
 
Compliance with Guideline
Mark W. Adams
 
$
1,800,000

 
Yes
D. Mark Durcan
 
4,500,000

 
Yes
Ronald C. Foster
 
1,470,000

 
Yes
Roderic W. Lewis
 
1,260,000

 
Yes
Brian M. Shirley
 
1,452,000

 
Yes


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COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis section of this Proxy Statement. Based upon this review and our discussions, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
 
The Compensation Committee
Patrick J. Byrne
Lawrence N. Mondry
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee (Messrs. Byrne and Mondry) is or has been one of our officers or employees or an officer or employee of any of our subsidiaries. During fiscal 2012, none of our executive officers served on the Compensation Committee (or equivalent), or the board of directors of another entity whose executive officer(s) served on our Compensation Committee or Board of Directors.
FISCAL 2012 SUMMARY COMPENSATION TABLE
The following table details the total compensation earned by our Named Executive Officers in fiscal 2012, 2011 and 2010.
Name and Principal Position
 
Year
Salary
(1)
Bonus
(2)
Stock Awards
(3)
Option Awards
(3)
Non-Equity Incentive Plan Compensation
(4)
All Other Compensation
(5)
Total
Mark W. Adams
 
2012
 
$
535,961

 
$

 
$
846,240

 
$
749,612

 
$
48,148

 
$
13,130

 
$
2,193,091

President
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
D. Mark Durcan
 
2012
 
791,135

 
500,000

 
2,533,560

 
2,248,837

 
76,403

 
14,018

 
6,163,953

Chief Executive Officer
 
2011
 
641,366

 

 
1,692,570

 
1,500,134

 
421,056

 
12,250

 
4,267,376

(Principal Executive Officer)
2010
 
507,692

 
456,000

 
1,693,420

 
1,494,327

 
612,000

 

 
4,763,439

Ronald C. Foster
 
2012
 
490,000

 

 
1,238,400

 
1,099,817

 
36,750

 
15,661

 
2,880,628

Chief Financial Officer
 
2011
 
486,769

 

 
1,123,320

 
997,531

 
260,435

 
12,250

 
2,880,305

(Principal Financial Officer)
2010
 
404,654

 
264,000

 
1,126,460

 
997,532

 
405,000

 

 
3,197,646

Roderic W. Lewis
 
2012
 
420,000

 
900,000

 
846,240

 
749,612

 
25,200

 
14,409

 
2,955,461

Vice President of Legal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Affairs and General Counsel
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Brian M. Shirley
 
2012
 
484,000

 
75,000

 
846,240

 
749,612

 
136,246

 
13,021

 
2,304,119

Vice President of
 
2011
 
484,000

 

 
842,490

 
748,149

 
453,750

 
12,250

 
2,540,639

DRAM Solutions
 
2010
 
433,452

 
284,200

 
842,980

 
745,192

 
363,000

 

 
2,668,824

Steven R. Appleton
 
2012
 
405,577

 

 
7,542,714

 
3,250,249

 
106,875

 
1,458,496

 
12,763,911

Former Chief Executive
 
2011
 
950,000

 

 
3,658,380

 
3,245,814

 
775,200

 
12,250

 
8,641,644

Officer
 
2010
 
806,405

 
807,500

 
3,655,400

 
3,237,051

 
1,282,500

 

 
9,788,856

Mario Licciardello
 
2012
 
418,846

 

 
846,240

 
749,612

 

 
1,368,639

 
3,383,337

Former Vice President of
 
2011
 
510,616

 

 
842,490

 
748,149

 
512,423

 
79,491

 
2,693,169

Wireless Solutions
 
2010
 
165,118

 

 
3,959,874

 

 
498,868

 
37,602

 
4,661,462

_______________________
(1)
In light of the impact of the global financial crisis on our operations, in October 2008, we implemented a 20% reduction in the base salaries of all our officers. In addition, in January 2009, Messrs. Appleton and Durcan reduced their base salary by an additional 10%. In March 2010, the officers' full salary was reinstated.
Mr. Licciardello joined us in May 2010 following our acquisition of Numonyx and resigned in May 2012. Mr. Licciardello's base salary was approximately $500,000 (EUR 396,000) for each of the years reported. The amounts shown for 2010 and 2012 reflects his prorated salary. Mr. Licciardello was paid in Swiss francs from May 2010 through November 30, 2010

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and thereafter was paid in euros. Dollar amounts shown for Mr. Licciardello in fiscal 2012 were calculated using the conversion ratio of 1.32 for euros, which was the average daily exchange rate for the period from September 2, 2011 through June 30, 2012. Dollar amounts shown for Mr. Licciardello in fiscal 2011 were calculated using the conversion ratio of 1.02 for Swiss francs, which was the average daily exchange rate for the period from September 3, 2010 through November 30, 2010 and 1.40 for euros, which was the average daily exchange rate for the period from December 1, 2010 to September 1, 2011. Dollar amounts shown for Mr. Licciardello in fiscal 2010 were calculated using the conversion ratio of 0.92 for Swiss francs, which was the average daily exchange rate for the period from May 7, 2010 to September 2, 2010.
(2)
Includes amounts paid in fiscal 2012 pursuant to a supplemental achievement bonus related to successful litigation outcomes. Under this program, Mr. Durcan received $500,000, Mr. Lewis received $900,000 and Mr. Shirley received $75,000.
Includes amounts paid in fiscal 2010 pursuant to a supplemental bonus for our officers for extraordinary achievement in fiscal 2010. Pursuant to this program, Mr. Appleton received $427,500, Mr. Durcan received $216,000, Mr. Foster received $135,000 and Mr. Shirley received $145,200.
Also includes bonus amounts paid in April 2010 to team members, including our officers, whose base salary was reduced in fiscal 2009 in response to the global financial crisis. Pursuant to this program, Mr. Appleton received $380,000, Mr. Durcan received $240,000, Mr. Foster received $129,000 and Mr. Shirley received $139,000.
(3)
Assumptions used in determining the grant-date fair values of option awards is set forth in the "Equity Plans" note to the financial statements included in our annual reports on Form 10-K for fiscal years 2012, 2011 and 2010, which note is incorporated herein by reference. The grant-date fair values for the stock awards is based on the closing price on the last market-trading day prior to the date of grant. The fiscal 2012 amount for Mr. Appleton's stock awards includes $3,658,440 of time- and performance-based restricted stock granted at the beginning of fiscal 2012 and $3,884,274 related to the fair value associated with the accelerated vesting of his performance-based restricted stock by the Committee as a result of his death.
(4)
All amounts shown for Messrs. Adams, Durcan, Foster, Lewis, Shirley and Appleton were paid or payable pursuant to the Executive Officer Incentive Plan (the "EIP") and relate to the achievement of certain performance milestones. For Mr. Licciardello, amount shown for fiscal 2011 was paid in euros pursuant to the EIP and amount shown for fiscal 2010 was paid in Swiss francs pursuant to a legacy Numonyx bonus plan. Dollar amounts shown for Mr. Licciardello in fiscal 2011 were calculated using the conversion ratio of 1.45 for euros, which was the exchange rate on September 1, 2011. Dollar amount shown for Mr. Licciardello in fiscal 2010 was calculated using the conversion ratio of 0.92 for Swiss francs, which was the average daily exchange rate for the period from May 7, 2010 to September 2, 2010.
(5)
Amounts shown reflect the following compensation for each Named Executive Officer:
Matching contributions allocated by us to each of the Named Executive Officers, other than Mr. Licciardello, pursuant to our 401(k) plan. For fiscal 2012, the contribution for each of Messrs. Adams, Durcan, Foster, Lewis, Shirley and Appleton was $12,500. For fiscal 2011, the contribution for each of Messrs. Durcan, Foster, Shirley and Appleton was $12,250. No matching contributions were made in fiscal 2010.
The fiscal 2012 amount for Mr. Appleton includes $38,671 cash paid in lieu of benefits and $950,000 in salary-based severance payable pursuant to Mr. Appleton's Severance Agreement (See the "Voluntary or Involuntary Termination of Employment" table on page 31). At the time of his death Mr. Appleton had accumulated 999 hours of unused time-off under our time-off plan; his fiscal 2012 amount also includes $456,274 for such unused time-off.
The fiscal 2012 amount for Mr. Licciardello includes $1,267,681 (dollar amount calculated based on a conversion ratio of 1.22 for euros on July 31, 2012, the date of payment) pursuant to a severance agreement entered into in connection with his retirement. The fiscal 2012 amount for Mr. Licciardello also includes a payment for his Trattamento di fine rapporto (a statutorily required termination payment) in the amount of $88,975 (dollar amount calculated based on a conversion ratio of 1.24 for euros on June 29, 2012, the date of payment). Mr. Licciardello's amounts for fiscal 2011 include payout of accrued Swiss vacation time of $31,785, a vehicle allowance of $26,026, a housing allowance of $16,492, a pension allowance of $3,808, a meal allowance of $914 and tax support of $466. Mr. Licciardello's amounts for 2010 include a housing allowance of $31,752, a pension allowance of $4,717 and a meal allowance of $1,131.

24



GRANTS OF PLAN-BASED AWARDS IN FISCAL 2012
The table below sets forth the plan-based award grants to our Named Executive Officers in fiscal 2012.
Name
 
Plan Name
 
Grant Date
 
Estimated Future Payouts under Non-Equity Incentive Plan Awards(1)
Estimated Future Payouts under Equity Incentive Plan Awards(2)
Stock Awards: Number of Shares of Stock or Units(3)
Option Awards: Number of Securities Underlying Options(4)
Exercise Price of Options(5)
Close Price on
Grant Date(5)
Grant Date Fair Value of Stock (or units) and Option(6)
 
 
 
Threshold
Target
Max
Threshold
Target
 
Mark W. Adams
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
45,500

91,000
 
 
 
 
 
 
 
 
 
 
$
469,560

President
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
73,000

 
 
 
 
 
 
 
376,680

 
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
 
 
259,000

 
$
5.16

 
$
5.20

 
749,612

 
 
EIP
 
10/11/11
 
$
302,671

 
$
605,342

 
$
756,678

 
 
 
 
 
 
 
 
 
 
 
 
 
 
D. Mark Durcan
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
136,500

 
273,000

 
 
 
 
 
 
 
 
 
1,408,680

Chief Executive
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
218,000

 
 
 
 
 
 
 
1,124,880

Officer
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
 
 
777,000

 
5.16

 
5.20

 
2,248,837

 
 
EIP
 
10/11/11
 
553,973

 
1,107,945

 
1,384,932

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ronald C. Foster
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
66,500

 
133,000

 
 
 
 
 
 
 
 
 
686,280

Chief Financial
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
107,000

 
 
 
 
 
 
 
552,120

Officer
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
 
 
380,000

 
5.16

 
5.20

 
1,099,817

 
 
EIP
 
10/11/11
 
250,000

 
500,000

 
625,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Roderic W. Lewis
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
45,500

 
91,000

 
 
 
 
 
 
 
 
 
469,560

Vice President of
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
73,000

 
 
 
 
 
 
 
376,680

Legal Affairs and
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
 
 
259,000

 
5.16

 
5.20

 
749,612

General Counsel
 
EIP
 
10/11/11
 
168,000

 
336,000

 
420,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brian M. Shirley
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
45,500

 
91,000

 
 
 
 
 
 
 
 
 
469,560

Vice President of
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
73,000

 
 
 
 
 
 
 
376,680

DRAM Solutions
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
 
 
259,000

 
5.16

 
5.20

 
749,612


 
EIP
 
10/11/11
 
242,000

 
484,000

 
605,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Steven R. Appleton
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
197,000

394,000
 
 
 
 
 
 
 
 
 
 
2,033,040

Former Chief
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
315,000

 
 
 
 
 
 
 
1,625,400

Executive Officer
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
 
 
1,123,000

 
5.16

 
5.20

 
3,250,249

 
 
2004 Plan
 
04/02/12
 
 
 
 
 
 
 
 
479,540

 
 
 
 
 
 
 
 
 
3,884,274

 
 
EIP
 
10/11/11
 
712,500

1,425,000
 
1,781,250
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mario Licciardello
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
45,500

 
91,000

 
 
 
 
 
 
 
 
 
469,560

Former Vice
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
73,000

 
 
 
 
 
 
 
376,680

President of
 
2004 Plan
 
10/11/11
 
 
 
 
 
 
 
 
 
 
 
 
 
259,000

 
5.16

 
5.20

 
749,612

Wireless Solutions
 
EIP
 
10/11/11
 
269,140

 
538,280

 
672,850

 
 
 
 
 
 
 
 
 
 
 
 
 
 
_______________________
(1)
Represents potential payouts set in fiscal 2012 under the EIP. Payment of bonuses under the EIP is dependent upon meeting specified performance goals. The average payout for fiscal 2012 bonuses under the EIP for our Named Executive Officers was 10% of target. Dollar amounts shown for Mr. Licciardello in fiscal 2012 were calculated using the conversion ratio of 1.36, which is the conversion rate from euros as of October 11, 2011.
(2)
Represents restricted stock awarded in fiscal 2012 under the 2004 Equity Incentive Plan (the "2004 Plan") with performance-based restrictions. Information related to the performance-based restrictions associated with these shares is contained in Compensation Discussion and Analysis. Target amounts also represent the maximum number of shares that may be awarded.
On April 2, 2012, our Board exercised its discretion under the 2004 Plan to accelerate the vesting of 479,540 performance-based restricted stock awards previously granted to Mr. Appleton.
(3)
Represents restricted stock with time-based restrictions which lapse in four equal installments over a four-year period from the date of the award.
(4)
Represents options which have a term of six years and vest in equal installments over a four-year period.
(5)
Under the 2004 Plan options are required to have an exercise price equal to the fair market value. Fair market value is defined as the closing price on the last market-trading day prior to the date of grant. For purpose of the 2004 Plan and the calculation of "Grant Date Fair Value", the fair market value of our Common Stock on the date of grant referenced in this

25



table for October 11, 2011, was $5.16 (the closing price on October 10, 2011). The closing price of our Common Stock on the date of grant referenced in this table was $5.20 on October 11, 2011.
(6)
The expense shown for stock awards is based solely on the fair value as of the date of grant, disregarding any assumptions as to estimated forfeitures based on continued service. No other assumptions are used in the expense calculation for the stock awards. Assumptions used in determining the fair values of these option awards are set forth in the "Equity Plans" note to our financial statements included in our annual report on Form 10-K for fiscal 2012.
Plan Information
In fiscal 2012, compensatory awards were made to the Named Executive Officers pursuant to the EIP and the 2004 Plan. The EIP was approved by our shareholders in 2004 and 2009. The purpose of the EIP is to attract, retain and reward qualified executives who are important to our success by providing performance-based, incentive cash awards for outstanding performance at the individual, business-unit and company-wide level. The purpose of the 2004 Plan is to promote our success by linking the personal interests of our employees, officers, directors and consultants to those of our shareholders, and by providing participants with an incentive for outstanding performance. Permissible awards under the 2004 Plan include: options, restricted stock, restricted stock units, stock appreciation rights, deferred stock units and dividend equivalent rights. We have issued options, restricted stock and restricted stock units under the 2004 Plan. Options granted under the 2004 Plan have an exercise price equal to the fair market value (as defined by the plan) on the date of grant and a term of six years. For purposes of share counting, each share of restricted stock issued under the 2004 Plan reduces the number of shares available for issuance by two.
Lapsing of Restrictions Associated with Restricted Stock Awards
The restrictions associated with the restricted stock granted to the Named Executive Officers include both time-based restrictions and performance-based restrictions. Time-based restrictions lapse in four equal installments over a four-year period. The restrictions associated with performance-based awards are described below.
Issuance of Performance-based Awards
Restricted Stock
Our executive officers have been granted restricted stock with performance-based restrictions related to the achievement of a minimum specified ROA goal. The restrictions related to these shares lapse if we achieve a certain ROA over a consecutive rolling four-quarter period (the "Share Performance Period"). The achievement during the Share Performance Period the threshold ROA percentage will result in the restrictions lapsing as to one-half of the performance-based shares. The achievement during the Share Performance Period of the target ROA percentage will result in the restrictions lapsing as to all the performance-based shares. Both the threshold and target ROA percentages require significant effort with the achievement of neither ROA percentage being assured. In the absence of at least the threshold ROA percentage being achieved during the Share Performance Period, the restrictions will not lapse and the shares will be forfeited. The ROA goal associated with the performance-based restricted stock awards granted in fiscal 2010 were achieved and the restrictions as to those shares lapsed in October 2010. The ROA goal associated with the performance-based stock granted in fiscal 2011 and 2012 have not yet been achieved and those shares will be forfeited if the goal is not met by the end of fiscal 2013 and 2014, respectively.
Cash Awards
The performance milestones related to the payment of bonuses under the EIP for fiscal 2012, 2011 and 2010 were partially achieved or not achieved at all. As a result, bonuses for those fiscal years were not paid out at the levels indicated in the columns labeled "Estimated Future Payouts under Non-equity Incentive Plan Awards" on the "Grants of Plan-Based Awards in Fiscal 2012" table. The actual amount of the EIP bonuses paid for fiscal 2012, 2011 and 2010 performance are included in the "Fiscal 2012 Summary Compensation Table" in the column labeled "Non-Equity Plan Incentive Compensation." The performance milestones related to the EIP are discussed in Compensation Discussion and Analysis.
Supplemental cash bonuses were awarded in February 2012 to certain employees, including Messrs. Durcan, Lewis and Shirley as a result of successful litigation outcomes. In addition, in light of achieving historical highs for revenue, income and cash flows in fiscal 2010, our officers received supplemental bonuses for extraordinary achievement in October 2010. The amounts awarded pursuant to these supplemental bonuses are included in the "Fiscal 2012 Summary Compensation Table" in the column "Bonus."

26




Stock Option Vesting
Since September 2004, options granted generally vest in four equal installments over a four-year period from the date of grant and have a term of six years.
Determination of Stock-based Compensation
The fair values of option awards were estimated as of the dates of grant using the Black-Scholes option valuation model in accordance with ASC Topic 718. The Black-Scholes model requires the input of assumptions, including the expected stock price volatility and estimated option life. The expected volatilities utilized were based on implied volatilities from traded options on our stock and on historical volatility. The expected lives of options granted were based, in part, on historical experience and on the terms and conditions of the options. The risk-free interest rates utilized were based on the U.S. Treasury yield in effect at the time of the grant. No dividends were assumed in estimated option values.



27



OUTSTANDING EQUITY AWARDS AT 2012 FISCAL YEAR-END
The following table provides information with respect to outstanding stock options and restricted stock held by our Named Executive Officers as of August 30, 2012, with the exception of Mario Licciardello. Mr. Licciardello did not have any outstanding equity awards as of August 30, 2012 due to the expiration of his awards as a result of his resignation on May 31, 2012.
 
 
Option Awards
 
Stock Awards
 
 
Number of Securities Underlying Unexercised Options
Option Exercise Price
Option Expiration Date
Shares or Units of Stock That Have Not Vested
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(1)
Name
 
Exercisable
Unexercisable
Number
Market Value(1)
Mark W. Adams
 
59,249

 
 
 
 
$
14.52

 
1/4/2016
 
20,750

(6)
 
$
128,235

 
62,000

(10)
 
$
383,160

President
 
118,499

 
 
 
 
10.89

 
2/10/2016
 
25,000

(7)
 
154,500

 
91,000

(11)
 
562,380

 
 
95,250

 
94,750

(2)
 
4.48

 
10/3/2014
 
36,750

(8)
 
227,115

 
 
 
 
 
 
 
94,500

 
94,500

(3)
 
7.46

 
10/5/2015
 
73,000

(9)
 
451,140

 
 
 
 
 
 
 
48,750

 
146,250

(4)
 
7.59

 
10/11/2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
259,000

(5)
 
5.16

 
10/11/2017
 
 
 
 
 
 
 
 
 
 
D. Mark Durcan
 
300,000

 
 
 
 
17.43

 
9/10/2012
 
41,750

(6)
 
258,015

 
124,000

(10)
 
766,320

Chief Executive
 
40,000

 
 
 
 
9.16

 
4/22/2013
 
50,500

(7)
 
312,090

 
273,000

(11)
 
1,687,140

Officer
 
125,000

 
 
 
 
14.35

 
9/23/2013
 
74,250

(8)
 
458,865

 
 
 
 
 
 
 
125,000

 
 
 
 
15.91

 
3/29/2014
 
218,000

(9)
 
1,347,240

 
 
 
 
 
 
 
568,500

 
189,500

(2)
 
4.48

 
10/3/2014
 
 
 
 
 
 
 
 
 
 
 
 
189,500

 
189,500

(3)
 
7.46

 
10/5/2015
 
 
 
 
 
 
 
 
 
 
 
 
97,750

 
293,250

(4)
 
7.59

 
10/11/2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
777,000

(5)
 
5.16

 
10/11/2017
 
 
 
 
 
 
 
 
 
 
Ronald C. Foster
 
300,000

 
 
 
 
5.97

 
4/1/2014
 
27,750

(6)
 
171,495

 
82,000

(10)
 
506,760

Chief Financial
 
358,750

 
126,250

(2)
 
4.48

 
10/3/2014
 
33,500

(7)
 
207,030

 
133,000

(11)
 
821,940

Officer
 
126,500

 
126,500

(3)
 
7.46

 
10/5/2015
 
49,500

(8)
 
305,910

 
 
 
 
 
 
 
65,000

 
195,000

(4)
 
7.59

 
10/11/2016
 
107,000

(9)
 
661,260

 
 
 
 
 
 
 
 
 
380,000

(5)
 
5.16

 
10/11/2017
 
 
 
 
 
 
 
 
 
 
Roderic W. Lewis
 
300,000

 
 
 
 
17.43

 
9/10/2012
 
20,750

(6)
 
128,235

 
62,000

(10)
 
383,160

Vice President of
 
40,000

 
 
 
 
9.16

 
4/22/2013
 
25,000

(7)
 
154,500

 
91,000

(11)
 
562,380

Legal Affairs and
 
125,000

 
 
 
 
14.35

 
9/23/2013
 
36,750

(8)
 
227,115

 
 
 
 
 
General Counsel
 
125,000

 
 
 
 
15.91

 
3/29/2014
 
73,000

(9)
 
451,140

 
 
 
 
 
 
 
234,250

 
94,750

(2)
 
4.48

 
10/3/2014
 
 
 
 
 
 
 
 
 
 
 
 
94,500

 
94,500

(3)
 
7.46

 
10/5/2015
 
 
 
 
 
 
 
 
 
 
 
 
48,750

 
146,250

(4)
 
7.59

 
10/11/2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
259,000

(5)
 
5.16

 
10/11/2017
 
 
 
 
 
 
 
 
 
 
Brian M. Shirley
 
65,000

 
 
 
 
12.44

 
10/16/2012
 
20,750

(6)
 
128,235

 
62,000

(10)
 
383,160

Vice President of
 
5,000

 
 
 
 
9.00

 
5/5/2013
 
25,000

(7)
 
154,500

 
91,000

(11)
 
562,380

DRAM Solutions
 
100,000

 
 
 
 
12.52

 
11/19/2013
 
36,750

(8)
 
227,115

 
 
 
 
 
 
 
75,000

 
 
 
 
11.51

 
9/1/2014
 
73,000

(9)
 
451,140

 
 
 
 
 
 
 
189,500

 
94,750

(2)
 
4.48

 
10/3/2014
 
 
 
 
 
 
 
 
 
 
 
 
94,500

 
94,500

(3)
 
7.46

 
10/5/2015
 
 
 
 
 
 
 
 
 
 
 
 
48,750

 
146,250

(4)
 
7.59

 
10/11/2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
259,000

(5)
 
5.16

 
10/11/2017
 
 
 
 
 
 
 
 
 
 
Steven R. Appleton (12)
 
600,000

 
 
 
 
17.43

 
9/10/2012
 
 
 
 
 
 
 
 
 
 
Former Chief
 
80,000

 
 
 
 
9.16

 
3/5/2013
 
 
 
 
 
 
 
 
 
 
Executive Officer
 
300,000

 
 
 
 
14.35

 
3/5/2013
 
 
 
 
 
 
 
 
 
 
 
 
300,000

 
 
 
 
15.91

 
3/5/2013
 
 
 
 
 
 
 
 
 
 
 
 
966,000

 
 
 
 
4.48

 
3/5/2013
 
 
 
 
 
 
 
 
 
 
 
 
615,750

 
 
 
 
7.46

 
3/5/2013
 
 
 
 
 
 
 
 
 
 
 
 
423,000

 
 
 
 
7.59

 
3/5/2013
 
 
 
 
 
 
 
 
 
 
 
 
1,123,000

 
 
 
 
5.16

 
3/5/2013
 
 
 
 
 
 
 
 
 
 
_______________________

28



(1)
Calculated by multiplying the number of shares of restricted stock by $6.18, the closing price of our common stock on August 30, 2012.
(2)
Options vest on October 3, 2012.
(3)
Options vest in equal installments on October 5, 2012, and October 5, 2013.
(4)
Options vest in equal installments on October 11, 2012, October 11, 2013, and October 11, 2014.
(5)
Options vest in equal installments on October 11, 2012, October 11, 2013, October 11, 2014, and October 11, 2015.
(6)
Restrictions on shares lapse on October 3, 2012.
(7)
Restrictions on shares lapse in equal installments on October 5, 2012, and October 5, 2013.
(8)
Restrictions on shares lapse in equal installments on October 11, 2012, October 11, 2013, and October 11, 2014.
(9)
Restrictions on shares lapse in equal installments on October 11, 2012, October 11, 2013, October 11, 2014, and October 11, 2015.
(10)
Performance-based restrictions on shares lapse upon the achievement of an ROA goal over a consecutive rolling four-quarter period through the fourth fiscal quarter of 2013.
(11)
Performance-based restrictions on shares lapse upon the achievement of an ROA goal over a consecutive rolling four-quarter period through the fourth fiscal quarter of 2014.
(12)
Pursuant to the terms of Mr. Appleton's Severance Agreement, his options expire at the earlier of the option's original expiration date or after the conclusion of a one year "Transition Period" beginning on February 4, 2012. Options continue to vest through the Transition Period. Pursuant to the terms of the equity plans, his options will expire 30 days after his options cease to vest, which is March 5, 2013.
OPTION EXERCISES AND STOCK VESTED IN FISCAL 2012
The following table sets forth information related to the number of options and restricted awards held by each of the Named Executive Officers that were exercised or vested in fiscal 2012 and the value realized.
 
 
Option Awards
 
Stock Awards
Name
 
Number of Shares Acquired on Exercise
 
Value Realized on Exercise
 
Number of Shares Acquired on Vesting
 
Value Realized on Vesting(1)
Mark W. Adams
President
 

 

 
54,760

 
$
270,127

D. Mark Durcan
Chief Executive Officer
 

 

 
126,473

 
624,139

Ronald C. Foster
Chief Financial Officer
 

 

 
81,939

 
470,316

Roderic W. Lewis
Vice President of Legal Affairs and General Counsel
 

 

 
62,862

 
310,232

Brian M. Shirley
Vice President of DRAM Solutions
 

 

 
62,862

 
310,232

Steven R. Appleton
Former Chief Executive Officer
 

 

 
1,610,582

 
11,671,101

Mario Licciardello
Former Vice President of Wireless Solutions
 

 

 
166,120

 
1,262,518

_______________________
(1)
Value calculated by multiplying number of shares by the market value per share on the vesting date.

29




POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following tables quantify the actual and estimated payments and benefits for each of the Named Executive Officers pursuant to the Severance Agreements described in the "Severance Agreements" and "Change in Control" sections of the "Compensation Discussion and Analysis." The amounts listed for Mr. Appleton and Mr. Licciardello are actual amounts paid or payable in connection with their separations from employment. The amounts listed for the current Named Executive Officers are estimated amounts that were calculated as if the Named Executive Officers separated from service on August 30, 2012, the last day of fiscal 2012.
U.S.-based Named Executive Officers
For U.S.-based Named Executive Officers (which excludes Mr. Licciardello), the "Salary" portion of severance payments are paid on our regular bi-weekly payroll schedule during the officer's Transition Period subject to the possibility of a six-month delay that may be required by Section 409A of the Code. If Section 409A imposes a six-month delay, payments during the delay would be accumulated and paid to the officer on the first day of the seventh month following the officer's separation from service. The remaining payments would then be paid according to our regular payroll schedule. Since Mr. Appleton's Severance Agreement was triggered due to his death, Section 409A does not impose a six-month delay.
The "Bonus" portion of the severance payments is paid only if the applicable performance goals are achieved before or during the applicable Transition Period. Such payments are made at the same time that the other officers participating in the applicable bonus plan receive their payments, if any, and typically would occur during our first fiscal quarter.
The "Cash in Lieu of Benefits" portion of the severance payments is calculated based on the difference between the amount of premiums the U.S.-based Named Executive Officer paid each month for benefits coverage as an employee of us and the estimated premiums the U.S.-based Named Executive Officer would need to pay each month for the same or similar coverage as a former employee. This monthly amount is multiplied by the number of months in the U.S.-based Named Executive Officer's Transition Period and is grossed-up for taxes. All gross-up calculations and payments are based on the standard supplemental withholding rates provided by federal and state guidelines. We do not use the U.S.-based Named Executive Officer's actual tax rate for these calculations. The "Cash in Lieu of Benefits" payment is made within 30 days after the officer's separation from service, subject to the possibility of a six-month delay that may be required by Section 409A of the Code. If Section 409A imposes a six-month delay, the payment would be made to the officer on the first day of the seventh month following the officer's separation from service. Since Mr. Appleton's Severance Agreement was triggered due to his death, Section 409A does not impose a six-month delay.
Mr. Licciardello
Mr. Licciardello retired from the Company on May 31, 2012. In connection with his retirement, we entered into an agreement with Mr. Licciardello that provided for a severance payment and additional payments in exchange for certain waivers, releases and covenants.


30



Voluntary or Involuntary Termination of Employment
Name
 
Salary
(1)
 
Bonus
(2)
 
Cash in Lieu of Benefits Payment(3)
 
Value of Extended Option Vesting and Exercise Period
(4)
 
Value of Extended Restricted Stock Vesting
(5)
 
Value of Unearned Stock Awards(6)
 
Other
(7)
 
Total
Mark W. Adams
President
 
$
600,000

 
$
48,148

 
$
48,294

 
$
630,951

 
$
393,975

 
$
562,380

 
$

 
$
2,283,748

D. Mark Durcan
Chief Executive Officer
 
900,000

 
76,403

 
56,115

 
1,636,462

 
903,825

 
1,687,140

 

 
5,259,945

Ronald C. Foster
Chief Financial Officer
 
490,000

 
36,750

 
68,119

 
1,282,936

 
542,295

 
821,940

 

 
3,242,040

Roderic W. Lewis
Vice President of Legal Affairs and General Counsel
 
420,000
<