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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
Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐
Check the appropriate box:
 
 
Preliminary Proxy Statement
    
 
Confidential, For Use of the Commission Only (as permitted by
 
Rule 14a-6(e)(2))
 
Definitive Proxy Statement
 
Definitive Additional Materials
 
Soliciting Material Pursuant to § 240.14a-12
DOLBY LABORATORIES, INC.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
 
  No fee required.
   
☐       Fee paid previously with preliminary materials.
   
  Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.


LOGO

Dolby Laboratories, Inc.

1275 Market Street

San Francisco, California 94103

(415) 558-0200

December 22, 2023

Dear Stockholder:

We cordially invite you to attend the Annual Meeting of Stockholders of Dolby Laboratories, Inc. The Annual Meeting will be held virtually via live webcast on Tuesday, February 6, 2024, at 10:30 a.m. Pacific Standard Time. Stockholders will not be able to attend the Annual Meeting in person. The Annual Meeting will be accessible at www.meetnow.global/MH6Q6ND. Please see “Additional Meeting Matters—Attending the Virtual Annual Meeting” in the Proxy Statement accompanying this letter for information on how to attend, submit questions and vote at the Annual Meeting.

We are making available to you the accompanying Notice of Annual Meeting, Proxy Statement and form of proxy card or voting instruction form on or about December 22, 2023.

We are pleased to furnish proxy materials to stockholders primarily over the internet. We believe that this process expedites stockholders’ receipt of proxy materials, lowers the costs of our Annual Meeting, and conserves natural resources. On or about December 22, 2023, we mailed to our stockholders a notice that includes instructions on how to access our Proxy Statement and 2023 Annual Report and how to vote online. The notice also includes instructions on how you can receive a paper copy of your Annual Meeting materials, including the Notice of Annual Meeting, Proxy Statement and proxy card or voting instruction form. If you elected to receive your Annual Meeting materials by mail, the Notice of Annual Meeting, Proxy Statement and proxy card or voting instruction form were enclosed. If you elected to receive your Annual Meeting materials via e-mail, the e-mail contains voting instructions and links to the 2023 Annual Report and the Proxy Statement, both of which are available at https://investor.dolby.com/financials/annual-reports/default.aspx.

Additional details regarding admission to and the business to be conducted at the Annual Meeting are described in the accompanying Notice of Annual Meeting and Proxy Statement. A copy of our 2023 Annual Report is included with the Proxy Statement for those stockholders who are receiving paper copies of the proxy materials.

Your vote is important. Regardless of whether you plan to attend the Annual Meeting, we hope that you will vote as soon as possible. You may vote over the internet, by telephone or by mailing a proxy card or voting instruction form. Please review the instructions on the proxy card or voting instruction form regarding each of these voting options. Voting will ensure your representation at the Annual Meeting regardless of whether you attend the Annual Meeting.

Thank you for your ongoing support of Dolby Laboratories, Inc.

Sincerely yours,

 

LOGO

Kevin Yeaman

President, Chief Executive Officer and Director


Dolby Laboratories, Inc.

 

 

Notice of Annual Meeting of Stockholders to be held on February 6, 2024

 

 

To the Stockholders of Dolby Laboratories, Inc.:

The Annual Meeting of Stockholders of Dolby Laboratories, Inc., a Delaware corporation, will be held virtually via live webcast on Tuesday, February 6, 2024, at 10:30 a.m. Pacific Standard Time, for the following purposes:

 

  1.

To elect eight directors to serve until the 2025 Annual Meeting of Stockholders or until their successors are duly elected and qualified;

 

  2.

To hold an advisory vote to approve Named Executive Officer compensation;

 

  3.

To amend our advance notice procedures and make other conforming changes to our Amended and Restated Bylaws (our “Bylaws”);

 

  4.

To amend our Bylaws to add a forum selection provision;

 

  5.

To ratify the appointment of KPMG LLP as Dolby’s independent registered public accounting firm for the fiscal year ending September 27, 2024; and

 

  6.

To transact such other business as may properly come before the Annual Meeting and any postponement, adjournment or continuation of the Annual Meeting.

These items of business are more fully described in the Proxy Statement accompanying this Notice. We are not aware of any other business to come before the Annual Meeting.

Only stockholders of record as of the close of business on December 8, 2023 and their proxies are entitled to notice of and to vote at the Annual Meeting and any postponement, adjournment or continuation thereof.

All stockholders are invited to attend the Annual Meeting virtually and no stockholder will be able to attend the Annual Meeting in person. The Annual Meeting will be accessible at www.meetnow.global/MH6Q6ND. Please see “Additional Meeting Matters—Attending the Virtual Annual Meeting” in the Proxy Statement accompanying this letter for information on how to attend, submit questions and vote at the Annual Meeting.

Stockholders may also vote over the internet, by telephone, or by mail in advance of the Annual Meeting. Voting your shares in advance will not prevent you from attending the Annual Meeting, revoking your earlier submitted proxy, or voting your shares at the Annual Meeting. See “Additional Meeting Matters—How to Vote” in the Proxy Statement accompanying this Notice for more information.

 

By Order of the Board of Directors,

 

LOGO

Andy Sherman
Corporate Secretary

December 22, 2023

Whether or not you expect to attend the Annual Meeting, we encourage you to read the Proxy Statement accompanying this Notice and submit your proxy or voting instructions as promptly as possible in order to ensure your representation at the Annual Meeting. You may submit your proxy or voting instructions for the Annual Meeting by completing, signing, dating and returning your proxy card or voting instruction form in the pre-addressed envelope provided (if applicable), or, in most cases, by using the telephone or the internet. Even if you have given your proxy, you may still vote at the meeting if you attend the Annual Meeting. For specific instructions on how to vote your shares, please refer to “Additional Meeting Matters—How to Vote” in the Proxy Statement accompanying this Notice and the instructions on the proxy card or voting instruction form.


TABLE OF CONTENTS

 

     Page  

Proxy Statement Summary

     1  

Internet Availability of Proxy Materials

     6  

Proposal 1 – Election of Directors

     7  

Compensation of Directors

     12  

Corporate Governance Matters

     16  

Security Ownership of Certain Beneficial Owners and Management

     23  

Certain Relationships and Related Transactions

     28  

Executive Officers

     32  

Compensation Discussion and Analysis

     34  

Report of the Compensation Committee of the Board of Directors

     52  

Executive Compensation Tables and Related Matters

     53  

Proposal 2 – Advisory Vote to Approve Named Executive Officer Compensation

     69  

Proposal 3 – Amendment of Bylaws Advance Notice Procedures and Other Conforming Changes

     70  

Proposal 4 – Amendment of Bylaws to Add Forum Selection Provision

     73  

Report of the Audit Committee of the Board of Directors

     75  

Proposal 5 – Ratification of Independent Registered Public Accounting Firm

     76  

Additional Meeting Matters

     78  

Delinquent Section 16(a) Reports

     83  

2023 Annual Report

     84  

Appendix A — Reconciliation of Non-GAAP to GAAP Financial Measures

     A-1  

Appendix B — Proposed Amended Bylaws Sections 2.10, 2.14 and 10.4

     B-1  

Appendix C — Proposed Additional Bylaws Section 10.5

     C-1  


PROXY STATEMENT SUMMARY

This summary highlights certain information contained elsewhere in this Proxy Statement. You should read the entire Proxy Statement carefully before voting as this summary does not contain all the information that you should consider.

2024 Annual Meeting of Stockholders

The Annual Meeting will be held virtually via live webcast. Stockholders will not be able to attend the Annual Meeting in person.

 

Date and Time:

  Tuesday, February 6, 2024 at 10:30 a.m. Pacific Standard Time

Place:

  Live webcast accessible at www.meetnow.global/MH6Q6ND. Please see “Attending the Virtual Annual Meeting” beginning on page 79 for information on how to attend, submit questions and vote at the Annual Meeting.

Record Date:

  December 8, 2023

Proposals to Be Voted on at 2024 Annual Meeting

 

Proposal

   Board
Recommendation
     Page Number for
Additional
Information

1. Election of Directors

     FOR      7

2. Advisory Vote to Approve Named Executive Officer Compensation

     FOR      69

3. Amendment of Bylaws Advance Notice Procedures and Other Conforming Changes

     FOR      70

4. Amendment of Bylaws to Add Forum Selection Provision

     FOR      73

5. Ratification of Appointment of Independent Registered Public Accounting Firm

     FOR      76

Director Nominees

The nominees for election to our Board at the 2024 Annual Meeting are listed below, along with their current committee assignments and certain biographical information about them as of December 8, 2023, the record date for the Annual Meeting. Micheline Chau, who has served on our Board since 2013, will retire from our Board when her current term expires on the date of the Annual Meeting and therefore is not standing for reelection. We wish to thank Ms. Chau for her decade of service and contributions to the company and its stockholders, and we wish her well in her retirement. The Board will appoint an additional member to serve on the Audit Committee effective on the date of the Annual Meeting.

 

     Committee Memberships

Name

  Age     Director Since     Principal Occupation   Indep.    AC    CC    NGC    SPC    TSC

Kevin Yeaman

    57       2009     President and CEO   No             LOGO   

Peter Gotcher

    64       2003     Chair of the Board   Yes          LOGO      

David Dolby

    46       2011     Chief Executive Officer,

Dolby Family Ventures

  No                LOGO

Tony Prophet

    64       2021     Director   Yes       LOGO    LOGO      

Emily Rollins

    53       2021     Director   Yes    LOGO            

Simon Segars

    56       2015     Director   Yes    LOGO       LOGO      

Anjali Sud

    40       2019     CEO, Tubi, Inc.   Yes       LOGO         

Avadis Tevanian, Jr.

    62       2009     Managing Director,
NextEquity Partners
  Yes       LOGO    LOGO    LOGO    LOGO

 

1


AC = Audit Committee, CC = Compensation Committee, NGC = Nominating and Governance Committee, SPC = Stock Plan Committee, TSC = Technology Strategy Committee

 

LOGO  = Chair    LOGO  = Member

Fiscal 2023 Financial Highlights

Fiscal 2023 was another successful year for Dolby, despite headwinds due to the challenging macroeconomic environment. Our key financial highlights for fiscal 2023 and a comparison to fiscal 2022 were as follows:

 

     Fiscal 2023    Fiscal 2022    Percentage Change  

Total Revenue

   $1.30 billion    $1.25 billion      4.0

Net Income

   $200.7 million    $184.1 million      9.0

Diluted Earnings Per Share

   $2.05    $1.81      13.3

Non-GAAP Net Income(1)

   $348.0 million    $319.9 million      8.8

Non-GAAP Diluted Earnings Per Share(1)

   $3.56    $3.14      13.4

Stock Price Per Share (High and Low)

   $91.02 / $61.55    $96.85 / $65.04       

Stock Price Per Share as of Fiscal Year-End

   $79.26    $65.15      21.7

 

(1)

A reconciliation of our non-GAAP to GAAP financial results is set forth in Appendix A to this Proxy Statement.

Return of Capital to Stockholders

 

 

LOGO

In addition, in November 2023, we announced an 11% increase in our dividend, from $0.27 to $0.30 per share.

Named Executive Officers

Our named executive officers (our “NEOs”) for fiscal 2023 were:

 

   

Kevin Yeaman, our President and Chief Executive Officer;

 

   

Robert Park, our Senior Vice President and Chief Financial Officer;

 

   

Andy Sherman, our Executive Vice President, General Counsel, and Corporate Secretary;

 

   

John Couling, our Senior Vice President, Entertainment; and

 

   

Todd Pendleton, our Senior Vice President and Chief Marketing Officer.

 

2


Principal Elements of Executive Compensation and Fiscal 2023 Executive Compensation Highlights

 

LOGO    LOGO

 

Element of Compensation    Fiscal 2023 Highlights
Base Salary   

•  For calendar 2023, the Compensation Committee of our Board increased the base salary for each of our NEOs by approximately 3%, consistent with the merit-based increases for our general U.S. workforce, which were based on competitive market data for technology companies.

Annual Incentive Compensation (Cash)   

•  NEO annual incentive compensation targets—stated as a percentage of base salary for calendar 2023—were maintained at fiscal 2022 levels (100% for our CEO and 65% for each of our other NEOs).

 

•  Annual incentive compensation payments for our NEOs under our fiscal 2023 Executive Bonus Plan were based on a multiplier keyed to our achievement of a combination of non-GAAP operating income and revenue goals. For purposes of the 2023 Executive Bonus Plan, we achieved adjusted non-GAAP operating income of $378.4 million against a “gate” (below which there would be no funding) of $292.5 million and non-GAAP revenue of $1,280.7 million against a threshold requirement of $1,156.5 million and a target of $1,285.0 million, resulting in a multiplier of 98%. Based on these results, our NEOs received annual incentive compensation payments equal to 98% of their annual incentive compensation targets.

 

•  A reconciliation of our non-GAAP to GAAP financial results is set forth in Appendix A to this Proxy Statement.

 

3


Element of Compensation    Fiscal 2023 Highlights
Long-Term Incentive Compensation (Performance Stock Unit Awards, Stock Options and Restricted Stock Unit Awards)   

•  The equity mix for the long-term incentive compensation granted to our NEOs in fiscal 2023 was as follows:

 

LOGO

  

•  The realization of the long-term incentive compensation granted to our NEOs is conditioned upon the satisfaction of multi-year vesting requirements and, in the case of performance stock unit awards, the achievement of pre-established performance conditions.

Performance Stock Unit Awards

A portion of the long-term incentive compensation granted to our NEOs for fiscal 2023 was in the form of performance stock unit awards. The shares of our Class A Common Stock subject to performance stock unit awards may be earned contingent on our achievement of annualized relative total stockholder return levels for Dolby over a three-year performance period, measured against a comparator index, the S&P Midcap 400 Index (^MID). From 0% to 200% of the target number of shares subject to the performance stock unit awards may be earned, depending on our level of achievement of these performance conditions. The Compensation Committee believes that granting a portion of long-term incentive compensation in the form of equity that is earned only upon the achievement of pre-established performance conditions further aligns the interests of our NEOs with those of our stockholders.

Executive Stock Ownership Guidelines

Based on our belief that stock ownership further aligns the interests of senior management with those of our stockholders, our executive officers, including our NEOs, are subject to our executive stock ownership guidelines, which provide that:

 

   

Our CEO is expected to accumulate and hold an amount of qualifying Dolby equity securities equal to the value of five times his annual base salary; and

 

   

Each other NEO is expected to accumulate and hold an amount of qualifying Dolby equity securities equal to the value of two times his or her annual base salary.

As of the end of fiscal 2023, all of our NEOs were in compliance with our executive stock ownership guidelines.

 

4


Policy on Recoupment of Incentive Compensation (“Clawback”)

Our policy on the recoupment of incentive compensation requires us to recover certain cash or equity-based incentive compensation payments or awards made or granted to an executive officer in the event we are required to prepare an Accounting Restatement (as defined in “Compensation Discussion and Analysis—Policy on Recoupment of Incentive Compensation (“Clawback”)” below).

Advisory Vote on the Compensation of our NEOs

We are asking our stockholders to approve, on an advisory (non-binding) basis, the compensation of our NEOs as described in this Proxy Statement. At our 2023 Annual Meeting of Stockholders, approximately 99% of the voting power of the shares present and entitled to vote voted in favor of the compensation of our NEOs. For fiscal 2023, there were no material changes to our executive compensation program. The Compensation Committee believes that our executive compensation policies and practices continue to support an executive compensation program that is closely aligned with stockholder interests and that benefits us in the long term.

Amendment of Bylaws Advance Notice Procedures and Other Conforming Changes

Stockholders are being asked to approve certain amendments to our Bylaws. The proposed amendments to Section 2.10 (Stockholder Action by Written Consent without a Meeting) would update the Bylaws to reflect certain changes to the Delaware General Corporation Law (the “DGCL”) and make certain other ministerial changes and clarifications. The proposed amendment to Section 10.4 (Amendment) would make a ministerial change to remove an inapplicable section reference. In addition, the proposed amendments to Section 2.14 (Advance Notice Procedures) would make certain changes to our advance notice procedures with respect to the proposal of business and nominations for director elections by stockholders. Our Board has determined that these amendments to our Bylaws are appropriate and in the best interests of the company and our stockholders, has approved and adopted such proposed amendments subject to receipt of the requisite approval by the company’s stockholders and has recommended such proposed amendments to the company’s stockholders for approval and adoption.

Amendment of Bylaws to Add Forum Selection Provision

Stockholders are being asked to approve the addition of Section 10.5 to our Bylaws. The proposed amendment to our Bylaws would create a new Section 10.5 providing that (i) the federal district courts of the United States will be the sole and exclusive forum for any claim asserting a cause of action arising under the Securities Act of 1933, as amended (the “Securities Act”), against any person in connection with any offering of the company’s securities, including any auditor, underwriter, expert, control person or other defendant, unless the company consents to an alternative forum, and (ii) the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain actions involving the company unless the company consents to an alternative forum. Our Board has determined that an amendment to our Bylaws designating the exclusive forums in which certain claims against us may be brought is appropriate and in the best interests of the company and our stockholders, has approved and adopted such proposed amendment subject to receipt of the approval by the company’s stockholders and has recommended such proposed amendment to the company’s stockholders for approval and adoption, even though such stockholder approval is not required under our Bylaws.

Ratification of Independent Registered Accounting Firm

Our Audit Committee has appointed the firm of KPMG LLP as our independent registered public accounting firm for fiscal 2024. Stockholders are being asked to ratify the selection of KPMG LLP as our independent registered public accounting firm.

 

5


Dolby Laboratories, Inc.

1275 Market Street

San Francisco, California 94103

(415) 558-0200

 

 

PROXY STATEMENT

 

 

The Board of Directors (our “Board”) of Dolby Laboratories, Inc., a Delaware corporation, is soliciting proxies to be used at the Annual Meeting of Stockholders to be held virtually via live webcast on Tuesday, February 6, 2024, at 10:30 a.m. Pacific Standard Time and any postponement, adjournment or continuation thereof (the “Annual Meeting”). Stockholders will not be able to attend the Annual Meeting in person. The Annual Meeting will be accessible at www.meetnow.global/MH6Q6ND. Please see “Attending the Virtual Annual Meeting” beginning on page 79 for information on how to attend, submit questions and vote at the Annual Meeting.

This Proxy Statement and the accompanying notice and form of proxy are first being made available to stockholders on or about December 22, 2023.

INTERNET AVAILABILITY OF PROXY MATERIALS

We are furnishing proxy materials to our stockholders primarily via the internet. On or about December 22, 2023, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our Proxy Statement and our 2023 Annual Report. The Notice of Internet Availability of Proxy Materials also provides information on how to access your voting instructions to be able to vote through the internet or by telephone. Other stockholders, in accordance with their prior requests, have received e-mail notification of how to access our proxy materials and vote via the internet, or have been mailed paper copies of our proxy materials and a proxy card or voting instruction form.

Internet distribution of our proxy materials helps to expedite receipt by stockholders, lowers the cost of the Annual Meeting and conserves natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.

 

6


PROPOSAL 1

ELECTION OF DIRECTORS

Nominees

Our Board currently consists of nine members. Our Bylaws permit our Board to establish by resolution the authorized number of directors, and nine directors are currently authorized. Ms. Chau, who has served on our Board since 2013, will retire from our Board when her current term expires on the date of the Annual Meeting and therefore is not standing for reelection at the Annual Meeting. We wish to thank Ms. Chau for her decade of service and contributions to the company and its stockholders, and we wish her well in her retirement. At that time, the authorized number of directors will be reduced to eight.

Our Board proposes the election of eight directors, each to serve until the next Annual Meeting of Stockholders or until his or her successor is duly elected and qualified. All incumbent directors except Ms. Chau are nominees for re-election to our Board. All of the nominees have been recommended for nomination by the Nominating and Governance Committee, and all of them are currently serving as directors. All nominees were elected by the stockholders at last year’s annual meeting. Your proxy cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement.

Each person nominated for election has agreed to serve if elected, and management has no reason to believe that any nominee will be unavailable to serve. If any nominee is unable or declines to serve as director at the time of the Annual Meeting, an event that we do not currently anticipate, proxies will be voted for any nominee designated by our Board to fill the vacancy. Unless otherwise instructed, the proxy holders will vote the proxies received by them “FOR” the nominees named below.

Information Regarding the Director Nominees and our Director Emeritus

Director Nominees

Names of the nominees, along with their current committee assignments, and certain biographical information about them as of December 8, 2023, the record date for the Annual Meeting, are set forth below:

 

Name

  Age    

Position with the Company

  Director
Since
 

Kevin Yeaman(1)

    57     President, Chief Executive Officer and Director     2009  

Peter Gotcher(2)

    64     Chair of the Board of Directors     2003  

David Dolby(3)

    46     Director     2011  

Tony Prophet(2)(4)

    64     Director     2021  

Emily Rollins(5)

    53     Director     2021  

Simon Segars(2)(5)

    56     Director     2015  

Anjali Sud(4)

    40     Director     2019  

Avadis Tevanian, Jr.(1)(2)(3)(4)

    62     Director     2009  

 

(1)

Member of the Stock Plan Committee

(2)

Member of the Nominating and Governance Committee

(3)

Member of the Technology Strategy Committee

(4)

Member of the Compensation Committee

(5)

Member of the Audit Committee

 

7


LOGO

Kevin Yeaman became our President and CEO in March 2009 and has been a member of our Board since he assumed the role of CEO. He joined Dolby as Chief Financial Officer and Vice President in October 2005, was appointed Senior Vice President in November 2006 and Executive Vice President in July 2007. As Chief Financial Officer, Mr. Yeaman led the company’s global finance organization and, among other things, developed infrastructure to support growth and expansion. Prior to joining Dolby, he worked for seven years at Epiphany, Inc., a publicly traded enterprise software company, most recently as Chief Financial Officer from August 1999 to October 2005. Previously, Mr. Yeaman also served as Worldwide Vice President of Field Finance Operations for Informix Software, Inc., a provider of relational database software, from February 1998 to August 1998. From September 1988 to February 1998, Mr. Yeaman served in Silicon Valley and London in various positions at KPMG LLP, an accounting firm. Mr. Yeaman was inducted as a member of the Academy of Motion Picture Arts and Sciences in 2014. He also sits on the Board of Trustees of the Academy Museum Foundation and participates on industry and education boards. He holds a B.S. degree in commerce from Santa Clara University.

As Dolby’s Chief Executive Officer and former Chief Financial Officer, Mr. Yeaman has extensive experience in Dolby’s markets and brings to our Board a deep understanding of Dolby, its strategy, finances, and operations.

 

LOGO

Peter Gotcher has served as a director since June 2003 and as Chair of the Board of Directors since March 2011. Mr. Gotcher served as Executive Chair of the Board of Directors from March 2009 to March 2011. Mr. Gotcher is an independent investor. Mr. Gotcher was a venture partner with Redpoint Ventures, a private investment firm, from September 1999 to January 2003. Prior to joining Redpoint Ventures, Mr. Gotcher was a venture partner with Institutional Venture Partners, a private investment firm, from 1997 to September 1999. Prior to joining Institutional Venture Partners, Mr. Gotcher founded and served as the President, Chief Executive Officer and Chair of the Board of Digidesign from 1984 to 1995. Digidesign was acquired by Avid Technology, a media software company, in 1995 and Mr. Gotcher served as the General Manager of Digidesign and Executive Vice President of Avid Technology from January 1995 to May 1996. Mr. Gotcher has served on the board of directors of GoPro, Inc. since June 2014, and served on the board of directors of Pandora Media, Inc. from September 2005 to May 2017. Mr. Gotcher also serves on the boards of directors of several private companies. Mr. Gotcher holds a B.A. degree in English literature from the University of California at Berkeley.

As the founder, former Chief Executive Officer and Chair of Digidesign and a former venture capitalist, Mr. Gotcher has a broad understanding of the operational, financial and strategic issues facing public companies. In addition, his service on other boards and committees, including as a member of the Audit Committee and Compensation and Leadership Committee of GoPro, Inc., as a former member of the Compensation Committee and member and chair of the Nominating and Corporate Governance Committee of Pandora Media, Inc., and his extensive experience in Dolby’s markets, provide valuable perspective for our Board and give him significant operating experience, as well as financial, accounting and corporate governance experience.

 

LOGO

David Dolby has served as a director since February 2011. Mr. Dolby is founder and Chief Executive Officer of Dolby Family Ventures, an early-stage venture firm unrelated to Dolby Laboratories that launched in June 2014 to invest in companies and technologies with the potential for significant social impact. Previously, Mr. Dolby served as a consultant to our Board on technology strategy matters from February 2011 to February 2015. Mr. Dolby also served as Manager, Strategic Partnerships of Dolby Laboratories from May 2008 to February 2011. In this role, Mr. Dolby was responsible for managing the company’s strategic partnerships and technology standards for internet media encoding, delivery and playback. He represented the company in technical and business working groups at a variety of international standards groups, including Universal Serial Bus, Digital Living Network Alliance, Digital Entertainment Content

 

8


Ecosystem Ultraviolet, and Blu-ray Disc Association. Mr. Dolby has attended industry events with the company for a significant number of years, including Audio Engineering Society, National Association of Broadcasters, International Consumer Electronics Show, ShoWest, Cine Expo International, IFA, and Custom Electronic Design and Installation Association. From 2006 to 2008, Mr. Dolby was a self-employed entrepreneur and investor. Mr. Dolby attended Stanford Business School between 2004 and 2006. During that time, he served as product manager at Kaleidescape, Inc., a Silicon Valley technology firm focused on high-performance music and movie server systems. From 2003 to 2006, he owned and operated Charter Flight LLC, a private aircraft leasing business. In addition, during 2004, Mr. Dolby was an investment banking analyst focused on technology at Perseus Group (subsequently known as GCA Savvian Corporation and then GCA Corporation until its acquisition by Houlihan Lokey in October 2021). From 2000 to 2002, Mr. Dolby was an employee of NetVMG, a company developing route control software for optimizing multi-homed IP network routing. Before joining NetVMG, Mr. Dolby worked for engineering firms Bechtel and Poe & Associates. From November 2013 to January 2023, Mr. Dolby served on the board of directors of Cogstate Limited, a cognitive assessment and training company focused on the development and commercialization of computerized tests of cognition. Mr. Dolby served on Cogstate’s Remuneration and Nomination Committee. Mr. Dolby currently serves on the governing boards of various not-for-profit entities, including the Boards of Trustees of the Salk Institute for Biological Sciences and the Academy Museum of Motion Pictures. He is also a member of the Academy of Motion Picture Arts and Sciences. Mr. Dolby received a B.S.E. in Civil Engineering from Duke University and an M.B.A. from the Stanford Graduate School of Business.

Mr. Dolby brings experience to our Board in home theater system technology and software technology productization, and offers a long-term perspective on the growth of the company and its commitment to excellence in audio and video.

 

LOGO

Tony Prophet has served as a director since December 2021. Mr. Prophet was formerly the Chief Equality and Recruiting Officer at salesforce.com, inc. (“Salesforce”), which he joined in September 2016 until July 2021. Before Salesforce, Mr. Prophet served as Corporate Vice President, Education Marketing, of Microsoft Corporation, from June 2015 to September 2016, as Corporate Vice President, Windows and Search Marketing, from February 2015 to June 2015, and as Corporate Vice President, Windows Marketing, from May 2014 to February 2015. Prior to Microsoft, Mr. Prophet held leadership roles at HP Inc. from 2006 to 2014, including leading worldwide PC and printing operations. Before that, Mr. Prophet served in positions of increasing responsibility at multiple organizations, including leading worldwide operations for the Carrier Business unit of United Technologies and rising to Partner at Booz Allen Hamilton. In addition to his operating roles, Mr. Prophet served on the board of directors of Gannett Co., Inc., a subscription-led and digitally focused media and marketing solutions company, from 2013 to May 2019. Mr. Prophet is also a Board Advisor to Aviso AI, a provider of a predictive revenue intelligence platform, since September 2021. He holds a BS in industrial engineering from General Motors Institute (now Kettering University) and an MBA from the Stanford Graduate School of Business.

As a long-time, accomplished technology business executive, Mr. Prophet brings to our Board substantial leadership experience in industrial, consumer electronic, hardware, and software spaces.

 

LOGO

Emily Rollins has served as a director since February 2021. She served in various positions at Deloitte & Touche LLP from 1992 to 2020, including as an Audit and Assurance Partner from 2006 until her retirement in September 2020. At Deloitte, Ms. Rollins served technology and media companies and guided hundreds of clients through complex audit and reporting processes. Ms. Rollins also served in positions of increasing responsibility, including leadership roles in Deloitte’s US Technology, Media, and Telecommunications industry group, Audit Innovation and Transformation, and Diversity and Inclusion. She led firmwide initiatives to recruit, develop, and retain women and diverse professionals as well as transform and modernize Deloitte’s audit platform. Ms. Rollins has served on the board of directors of Xometry, Inc., an AI-enabled marketplace for on-demand manufacturing enabling buyers to efficiently source

 

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on-demand manufactured parts and assemblies, since March 2021 and serves as chair of Xometry’s Audit Committee. She also has served on the board of directors of Science 37 Holdings, Inc., a research company that specializes in decentralized clinical trials to enable universal access to clinical research, since October 2021 and is chair of Science 37’s Audit Committee. Ms. Rollins also serves on the boards of three private technology companies and several non-profit entities and associations. Ms. Rollins is a Certified Public Accountant and holds a B.A. degree in Accounting and International Relations from Claremont McKenna College.

After nearly 30 years in public accounting, Ms. Rollins brings to our Board considerable experience as an advisor to boards and executive teams and extensive financial and public accounting expertise as an audit expert in the technology and media spaces.

 

LOGO

Simon Segars has served as a director since February 2015. From 1991 to 2022, Mr. Segars worked for Arm Ltd (known as Arm Holdings Plc prior to 2017), a designer and provider of microprocessors, software development tools and related technologies that was publicly held until its acquisition by SoftBank Group Corp. in September 2016. Mr. Segars served as Arm’s Chief Executive Officer from July 2013, and as a member of its board of directors from 2005, to February 2022, respectively. Mr. Segars also served as a member of SoftBank Group Corp.’s board of directors from June 2017 to June 2021. He served as President of Arm in 2013 before being promoted to Chief Executive Officer. Mr. Segars held the position of Executive Vice President and General Manager, Physical IP Division, from 2007 to 2012. Prior senior roles at Arm include Executive Vice President, Engineering; Executive Vice President, Worldwide Sales; and Executive Vice President, Business Development. Mr. Segars worked on many of the early Arm CPU products and led the development of the ARM7 and ARM9 Thumb® families. He holds a number of patents in the field of embedded CPU architectures. Mr. Segars received his Bachelors in Electronic Engineering from the University of Sussex, and obtained a Masters of Computer Science from the University of Manchester. In recognition of his extraordinary lifetime accomplishments and his impact on the global technology industry, Mr. Segars was conferred an Honorary Doctor of Science from the University of Sussex in 2019. Mr. Segars has served on the board of directors of Vodafone Group Plc, a multinational telecommunications company, since July 2022, where he serves as a member of the ESG Committee, and has served as chair of the Technology Committee since July 2023. Mr. Segars also serves on the boards of directors of Edge Impulse, a development platform for machine learning on edge devices, and TechWorks, a UK industry association.

As chair of Vodafone’s Technology Committee and a trained and former engineer, Mr. Segars has extensive experience in technology strategy and the technological elements of Dolby’s business operations. In addition, with his significant experience as an executive officer of Arm, and his service on the boards of both public and private companies, Mr. Segars brings to our Board a valuable understanding of the operational and strategic issues facing companies. Further, as a member of Vodafone’s ESG Committee, Mr. Segars enhances our Board’s capabilities in sustainability and sustainable business practices.

 

LOGO

Anjali Sud has served as a director since May 2019. Ms. Sud has served as the Chief Executive Officer of Tubi, Inc., a subsidiary of the Fox Corporation that provides free ad-supported TV streaming service in the United States, since September 2023. Before Tubi, from July 2017 to August 2023, Ms. Sud served as the Chief Executive Officer of Vimeo, Inc., a provider of cloud-based software tools that enable creative professionals, marketers and enterprises to stream, host, distribute and monetize videos online and across devices. She also served on Vimeo’s board of directors from May 2021 to August 2023. Prior to that, Ms. Sud held various positions at Vimeo since July 2014, before being promoted to CEO in July 2017. Before Vimeo, Ms. Sud served in various positions at Amazon.com, Inc. from 2010 to 2014, most recently as Director of Marketing. Ms. Sud holds a B.S. degree from the Wharton School at the University of Pennsylvania and an M.B.A. from Harvard Business School.

As the Chief Executive Officer of Tubi and having served in executive positions in other technology and media companies, Ms. Sud brings extensive knowledge of the technology industry and operational experience to the boardroom, including an understanding of the operational, financial and strategic issues facing audio-visual

 

10


content creators and streaming service providers. In addition, through her prior role as Director of Marketing at Amazon, Ms. Sud brings valuable business and marketing insight and experience to our Board.

 

LOGO

Avadis Tevanian, Jr. has served as a director since February 2009. Dr. Tevanian serves as a Managing Director of NextEquity Partners, a firm he co-founded in July 2015, making venture capital investments. Previously, Dr. Tevanian served as the Software Chief Technology Officer of Apple Inc. from 2003 to 2006. As Software CTO, Dr. Tevanian focused on setting the company-wide software technology direction for Apple. Prior to his tenure as Software CTO, Dr. Tevanian was Senior Vice President of Software at Apple, a role he took on when Apple acquired NeXT, Inc. in 1997. As Senior Vice President of Software, Dr. Tevanian led the software engineering team responsible for the creation of macOS and worked as part of Apple’s executive team. Before joining Apple, he was Vice President of Engineering at NeXT, Inc. and was responsible for managing NeXT’s engineering department. Dr. Tevanian started his professional career at Carnegie Mellon University, where he was a principal designer and engineer of the Mach operating system upon which Nextstep, and now macOS and iOS, are based. Dr. Tevanian previously served on the board of directors of Tellme Networks, Inc., an internet telecom company, from May 2006 until the company was acquired by Microsoft in March 2007. He holds a B.A. degree in mathematics from the University of Rochester and M.S. and Ph.D. degrees in computer science from Carnegie Mellon University.

With more than 30 years of operational and software expertise, including as Apple’s Chief Software Technology Officer, Dr. Tevanian brings to our Board extensive experience in consumer technology businesses and a deep understanding of the operational and strategic issues facing companies.

There are no family relationships among any of our directors and executive officers.

See “Corporate Governance Matters” and “Compensation of Directors” for additional information regarding our Board.

Our Board of Directors recommends a vote “FOR” the election of each of the nominees set forth above.

Director Emeritus

 

LOGO

N. William Jasper, Jr. served as a director from June 2003 until his retirement from our Board in February 2021, at which time he received the honorary title of Director Emeritus, in an uncompensated, non-voting capacity. Mr. Jasper joined Dolby in February 1979 as Chief Financial Officer and retired as President and Chief Executive Officer in March 2009. He served in a variety of positions prior to becoming President in May 1983, including as our Vice President, Finance and Administration and as our Executive Vice President. Mr. Jasper is an at-large member of the Academy of Motion Picture Arts and Sciences. He holds a B.S. degree in industrial engineering from Stanford University and an M.B.A. from the University of California at Berkeley.

 

11


COMPENSATION OF DIRECTORS

The following table provides information concerning the compensation paid by us to each of our non-employee directors for fiscal 2023. Our CEO did not receive additional compensation for his service as a director, and his compensation as an employee is presented in the Fiscal 2023 Summary Compensation Table.

 

Name

   Fees Earned
or Paid in
Cash

($)(1)
     Stock Awards
($)(2)
     Option
Awards

($)
     All Other
Compensation
($)
     Total
($)
 

Micheline Chau

     73,000        275,480        —          —          348,480  

David Dolby

     55,000        275,480        —          —          330,480  

Peter Gotcher

     140,000        275,480        —          —          415,480  

Tony Prophet(3)

     63,456        275,480        —          —          338,936  

Emily Rollins

     80,000        275,480        —          —          355,480  

Simon Segars

     70,000        275,480        —          —          345,480  

Roger Siboni(4)

     26,071        —          —          —          26,071  

Anjali Sud

     60,000        275,480        —          —          335,480  

Avadis Tevanian, Jr.

     92,000        275,480        —          —          367,480  

 

(1)

Consists of Board and committee annual retainers and, if applicable, Board chair retainer and committee chair retainers.

(2)

Stock Awards consist solely of restricted stock unit awards for shares of our Class A Common Stock. The amounts reported reflect the grant date fair value of each equity award computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC Topic 718”), excluding estimated forfeitures. See Note 9 to our consolidated financial statements in our 2023 Annual Report on Form 10-K for more information. The amounts reported do not reflect the compensation actually realized by our non-employee directors. There can be no assurance that the restricted stock unit awards will vest (in which case no value will be realized by the individual) or that the value on vesting will approximate the compensation expense recognized by us.

(3)

Mr. Prophet joined the Compensation Committee in the second quarter of fiscal 2023, and his annual retainer for Compensation Committee service reflects a partial year of service.

(4)

Mr. Siboni retired from our Board when his term expired on February 7, 2023, the date of the 2023 Annual Meeting. His compensation reflects a partial year of service.

In fiscal 2023, our non-employee directors received the following restricted stock unit awards (which are also reflected in the table above):

 

Name

   Grant Date      Approval Date      Number of
Securities
Subject to
Restricted
Stock Unit
Awards
     Grant Date
Fair Value

($)
 

Micheline Chau

     2/7/2023        2/7/2023        3,296        275,480  

David Dolby

     2/7/2023        2/7/2023        3,296        275,480  

Peter Gotcher

     2/7/2023        2/7/2023        3,296        275,480  

Tony Prophet

     2/7/2023        2/7/2023        3,296        275,480  

Emily Rollins.

     2/7/2023        2/7/2023        3,296        275,480  

Simon Segars

     2/7/2023        2/7/2023        3,296        275,480  

Roger Siboni

     —          —          —          —    

Anjali Sud

     2/7/2023        2/7/2023        3,296        275,480  

Avadis Tevanian, Jr.

     2/7/2023        2/7/2023        3,296        275,480  

As of September 29, 2023, the aggregate number of shares of our Class A Common Stock subject to restricted stock unit awards held by each of our non-employee directors is listed in the table below. As of such

 

12


date, no stock options to purchase shares of our Class A Common Stock were held by any of our non-employee directors.

 

Name

   Aggregate Number
of Shares of
Class A Common
Stock Subject to
Outstanding
Restricted Stock
Unit Awards at
Sep. 29, 2023
 

Micheline Chau

     3,296  

David Dolby

     3,296  

Peter Gotcher

     3,296  

Tony Prophet

     3,296  

Emily Rollins

     3,296  

Simon Segars

     3,296  

Anjali Sud

     3,296  

Avadis Tevanian, Jr.

     3,296  

Standard Non-Employee Director Compensation Arrangements

We offer a combination of cash and equity compensation to our non-employee directors, with the goal of attracting and retaining highly-qualified non-employee directors and director candidates to serve on our Board. The Nominating and Governance Committee is responsible for conducting periodic reviews of our non-employee director compensation and, if appropriate, recommending to our Board any changes in the type or amount of compensation so that our non-employee director compensation remains attractive and competitive.

Cash Compensation

During fiscal 2023, the annual cash retainers for serving as a non-employee director on our Board or committees of our Board were as follows:

 

Board/Committee

   Member
Annual
Retainer
     Chair Annual
Retainer
(in Addition
to Member
Annual
Retainer)
 

Board

   $ 50,000      $ 75,000  

Audit

   $ 13,000      $ 17,000  

Compensation

   $ 10,000      $ 15,000  

Nominating and Governance

   $ 7,000      $ 8,000  

Technology Strategy

   $ 5,000      $ 5,000  

Members of the Stock Plan Committee receive no annual cash retainer for serving on this committee.

Equity Compensation

The substantial majority of our outside director compensation is in the form of equity in order to align the interests of our non-employee directors with the interests of our stockholders. During fiscal 2023, a newly appointed non-employee director was eligible to receive an initial restricted stock unit award, and all incumbent/continuing non-employee directors were eligible to receive an annual ongoing restricted stock unit award, in each case covering that number of shares of our Class A Common Stock as determined by dividing $250,000 (pro-rated for complete months of service in the case of an initial restricted stock unit award for a newly-appointed director) by the average closing price of our Class A Common Stock for the 30 trading days ending on (and

 

13


including) the trading day immediately preceding the grant date, rounded down to the nearest whole share. Both initial and ongoing restricted stock unit awards vest in full on the day preceding the date of the next Annual Meeting of Stockholders following the grant date of the award (or if earlier, the first anniversary of the award’s grant date), subject to continued service on our Board. All shares covered by initial or ongoing restricted stock unit awards will become fully vested immediately prior to a change in control of Dolby, so long as the director is then on our Board.

Director Compensation Review

The Nominating and Governance Committee reviews our non-employee director compensation on an annual basis, and if appropriate, recommends changes to our Board to further our goal of keeping non-employee director compensation attractive and competitive. For fiscal 2023, the Nominating and Governance Committee engaged Compensia, Inc. (“Compensia”), the Compensation Committee’s independent executive compensation consulting firm, for purposes of advising the Nominating and Governance Committee on its non-employee director compensation review. The Nominating and Governance Committee directed Compensia to evaluate our director compensation relative to director compensation at companies included in our compensation peer group that we used as a market check for our fiscal 2023 executive officer compensation, in light of our goal of attracting and retaining highly-qualified non-employee directors and director candidates. Following such review, Compensia concluded that our non-employee director compensation program remained aligned with peer practice, and the Nominating and Governance Committee concluded that no changes to director compensation were advisable for fiscal 2023.

In addition to assisting the Nominating and Governance Committee on its non-employee director compensation review, Compensia has advised the Compensation Committee on executive officer and equity compensation. The Compensation Committee took into account the provision of these services and the compensation to Compensia for such services in determining that its relationship with Compensia and the work of Compensia on behalf of the Compensation Committee has not raised any conflict of interest, as described in “Compensation Discussion and Analysis—Roles of the Compensation Committee, Management and Compensation Consultant—Role of Compensation Consultant.”

Other Arrangements

We reimburse our non-employee directors for reasonable travel, lodging, and related expenses in connection with attendance at our Board and committee meetings and company-related activities. In addition, consistent with our Corporate Governance Guidelines, we encourage and support the activities of our directors in attending corporate governance and other professional development, continuing education and training programs designed for board members of publicly-held companies, and we reimburse our directors for reasonable expenses incurred in connection with these activities. Further, eligible non-employee directors may elect to participate in our company-wide healthcare program (which is a program generally applicable to all employees and that does not discriminate in scope, terms or operation, in favor of executive officers or directors), provided that they pay the premiums associated with their (and their eligible dependents’) healthcare coverage.

Non-Employee Director Stock Ownership Guidelines

Our Board has approved stock ownership guidelines for our non-employee directors based on our belief that stock ownership further aligns the interests of our non-employee directors with those of our stockholders. These guidelines provide that each non-employee director is expected to accumulate and hold an amount of qualifying Dolby equity securities equal to the value of five times his or her annual retainer for service on our Board (subject to a “floor” to account for potential significant decreases in stock price, consisting of a fixed number of shares having a value equal to five times the annual Board retainer on September 22, 2015, representing the date of the most recent amendment of the stock ownership guidelines; or in the case of directors who joined our Board after such date, a value equal to five times the annual Board retainer in effect when he or she joined the Board).

 

14


Compliance is measured as of the last day of each fiscal year. For purposes of our non-employee director stock ownership guidelines, a director’s “annual retainer” excludes any retainer for serving as a member or chair of any Board committees, or for serving as the Chair of the Board. New directors have a compliance period of five years from the date they first become a non-employee director to achieve the requisite level of ownership.

As of the end of fiscal 2023, all of our non-employee directors were in compliance with, or within the new director compliance period specified in, our non-employee director stock ownership guidelines.

 

15


CORPORATE GOVERNANCE MATTERS

Board Meetings and Committees

Our Board held five meetings during fiscal 2023. Each of our directors attended at least 75% of the aggregate number of meetings held by our Board and the committees on which he or she served during fiscal 2023.

The standing committees of our Board consist of an Audit Committee, a Compensation Committee, a Nominating and Governance Committee, and a Stock Plan Committee, each of which has the composition and responsibilities described below. Our Board also has convened an ad hoc Technology Strategy Committee, which has the composition and responsibilities described below. Our Board may in the future convene additional ad hoc committees of our Board as it deems necessary or advisable.

Each of the committees of our Board described below acts pursuant to a written charter approved by our Board, each of which is available on the Governance Overview page of the Investor Relations section of our website at https://investor.dolby.com/governance/Governance-Overview/default.aspx.

The non-employee members of our Board regularly meet in executive session without management present. In addition, the independent members of our Board also meet regularly in executive session. Peter Gotcher, the independent Chair of our Board, serves as the Presiding Director of these executive sessions.

Audit Committee

The current members of the Audit Committee are Micheline Chau, Emily Rollins, and Simon Segars, each of whom is a non-employee member of our Board. Ms. Chau is not standing for reelection at the Annual Meeting and therefore will cease to serve on the Audit Committee effective on the date of the Annual Meeting. The Board will appoint an additional member to serve on the Audit Committee effective on the date of the Annual Meeting. In addition, Roger Siboni served as a member of the Audit Committee during fiscal 2023, through the date of his retirement from our Board on February 7, 2023. No other members of our Board served on the Audit Committee during fiscal 2023. Ms. Rollins is the chair of the Audit Committee. The Audit Committee held seven meetings during fiscal 2023. Our Board has determined that each member of the Audit Committee meets the requirements for independence under the current requirements of the New York Stock Exchange (the “NYSE”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). In addition, our Board also has determined that each member of the Audit Committee meets the requirements for financial literacy under the applicable rules and regulations of the NYSE and SEC, and is an “audit committee financial expert” as defined in SEC rules.

The Audit Committee has established a telephone and internet whistleblower hotline for the anonymous submission of suspected violations, including accounting, internal controls or auditing matters, harassment, fraud, and policy violations.

The Audit Committee is responsible for, among other things:

 

   

Monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;

 

   

Selecting and hiring our independent auditors, and approving the audit and permissible non-audit services to be performed by them;

 

   

Evaluating the qualifications, performance and independence of our independent auditors;

 

   

Evaluating the performance of our internal audit function;

 

   

Reviewing the adequacy and effectiveness of our control policies and procedures;

 

16


   

Acting as our Qualified Legal Compliance Committee to review any report made known to the committee by attorneys employed or retained by Dolby or its subsidiaries of a material violation of U.S. federal or state securities or similar laws;

 

   

Reviewing, approving or ratifying related person transactions;

 

   

Attending to risk management matters, including cybersecurity risk oversight; and

 

   

Preparing the Audit Committee report that the SEC requires in this Proxy Statement.

Compensation Committee

The current members of the Compensation Committee are Micheline Chau, Tony Prophet, Anjali Sud, and Avadis Tevanian, Jr., each of whom is a non-employee member of our Board. Our Board appointed Mr. Prophet to the Compensation Committee, effective February 7, 2023. Ms. Chau is not standing for reelection at the Annual Meeting and therefore will cease to serve on the Compensation Committee effective on the date of the Annual Meeting. Roger Siboni served as a member of the Compensation Committee during fiscal 2023, through the date of his retirement from our Board on February 7, 2023. No other members of our Board served on the Compensation Committee during fiscal 2023. Mr. Tevanian is the chair of the Compensation Committee. In fiscal 2023, the Compensation Committee held seven meetings and acted by unanimous written consent on one occasion. Our Board has determined that each member of the Compensation Committee meets the requirements for independence under current NYSE and SEC rules and regulations. The Compensation Committee is responsible for, among other things:

 

   

Reviewing and approving corporate goals and objectives relevant to our CEO’s compensation and evaluating our CEO’s performance in light of those goals and objectives;

 

   

Reviewing and approving the following elements of compensation for our CEO and other executive officers: annual base salary; annual incentive compensation, including the specific performance goals and amounts; long-term incentive compensation; employment agreements; severance arrangements and change in control provisions; and any other significant benefits, compensation or arrangements that are not available to employees generally;

 

   

Administering Dolby’s broad-based equity incentive plans, including granting equity awards under such plans;

 

   

Evaluating and approving compensation plans, policies and programs for our CEO and other executive officers;

 

   

Reviewing and monitoring matters related to human capital management;

 

   

Attending to compensation-related risk management matters;

 

   

Overseeing our policy on the recoupment (“clawback”) of incentive compensation and our executive stock ownership guidelines;

 

   

Retaining and assessing the independence of any Compensation Committee advisors; and

 

   

Reviewing the Compensation Discussion and Analysis, and preparing the Compensation Committee report, that the SEC requires in our annual report on Form 10-K or in this Proxy Statement.

Nominating and Governance Committee

The current members of the Nominating and Governance Committee are Peter Gotcher, Tony Prophet, Simon Segars, and Avadis Tevanian, Jr., each of whom is a non-employee member of our Board. No other members of our Board served on the Nominating and Governance Committee during fiscal 2023. Mr. Gotcher is the chair of the Nominating and Governance Committee. The Nominating and Governance Committee held four meetings during fiscal 2023. Our Board has determined that each member of the Nominating and Governance

 

17


Committee meets the requirements for independence under current NYSE and SEC rules and regulations. The Nominating and Governance Committee is responsible for, among other things:

 

   

Assisting our Board in identifying and recommending director nominees;

 

   

Developing and recommending corporate governance principles;

 

   

Overseeing the evaluation of our Board, Board committees and individual directors;

 

   

Recommending Board committee assignments;

 

   

Making an annual report to our Board on succession planning for the position of CEO;

 

   

Reviewing and monitoring environmental, social and governance matters of significance to us;

 

   

Attending to Board- and corporate governance-related risk management matters; and

 

   

Reviewing and making recommendations to our Board regarding director compensation.

Stock Plan Committee

The current members of the Stock Plan Committee are Avadis Tevanian, Jr. and Kevin Yeaman. No other members of our Board served on the Stock Plan Committee during fiscal 2023. In fiscal 2023, the Stock Plan Committee held one meeting and granted equity awards by written consent on 12 occasions. The Stock Plan Committee has the authority to grant stock options, stock appreciation rights and restricted stock unit awards to newly hired employees and consultants who will not be executive officers or directors of Dolby on the date of grant, and to make performance, promotion or retention grants of equity awards to employees and consultants who are not executive officers or directors of Dolby on the date of grant. Equity awards granted by the Stock Plan Committee are subject to the terms and conditions of the Equity-Based Award Grant and Vesting Policy described in the Compensation Discussion and Analysis below.

Technology Strategy Committee

The current members of the Technology Strategy Committee are David Dolby and Avadis Tevanian, Jr. No other members of our Board served on the Technology Strategy Committee during fiscal 2023. Mr. Tevanian is the chair of the Technology Strategy Committee. The Technology Strategy Committee held one meeting during fiscal 2023. The Technology Strategy Committee is responsible for exploring the opportunities and issues associated with Dolby’s technology strategies and intellectual property.

Board’s Role in Risk Oversight

Our Board is responsible for overseeing Dolby’s risk management structure. Management is responsible for establishing our business and operational strategies, identifying and assessing the related risks and implementing appropriate risk management practices on a day-to-day basis. Our Board reviews our business and operational strategies and management’s assessment of the related risk, and discusses with management the appropriate level of risk for the company. Our Board meets with management at least quarterly to review, advise, and direct management with respect to strategic business risks, operational risks, legal risks and risks related to Dolby’s acquisition strategies, among others. In fiscal 2023, this also included review of risks relating to macroeconomic conditions and related uncertainty and geopolitical instability. Our Board also delegates oversight to Board committees to oversee selected elements of risk.

The Audit Committee oversees financial risk exposures, including monitoring our financial condition and investments, the integrity of our financial statements, accounting matters, internal control over financial reporting, the independence of Dolby’s independent registered public accounting firm, KPMG, plans regarding business continuity and cybersecurity, and guidelines and policies with respect to risk assessment and risk management. The Audit Committee receives periodic updates on internal controls and related assessments from

 

18


Dolby’s finance department and an annual attestation report on internal control over financial reporting from KPMG. The Audit Committee oversees Dolby’s annual enterprise business risk assessment, which is conducted by our Internal Audit Department. The annual enterprise business risk assessment reviews the primary risks facing the company and Dolby’s associated risk mitigation measures. In addition, the Audit Committee discusses other risk assessment and risk management policies of the company periodically with management.

The Compensation Committee oversees the design of executive compensation structures that create incentives that encourage behaviors and decisions consistent with our business strategy, including a review of an annual risk assessment with respect to our compensation programs and policies generally.

The Nominating and Governance Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks associated with Board organization, membership, structure and compensation, succession planning for our directors and executive officers and corporate governance policies.

Board Leadership Structure

Our Corporate Governance Guidelines provide that our Board does not have a policy regarding the separation of the offices of the Chair of the Board and CEO and that our Board is free to choose the Chair of the Board in any way that it deems best for the company at any given point in time. Our Board believes that these issues should be considered as part of our Board’s broader governance responsibilities.

Our Board has determined that having two different individuals serve in the roles of Chair of the Board and CEO is in the best interest of the company’s stockholders at this time. Mr. Yeaman currently serves as our CEO and Mr. Gotcher currently serves as the independent Chair of our Board. The CEO is responsible for the strategic direction, day-to-day leadership, and performance of the company, while the Chair of the Board provides overall leadership to our Board. The Chair of the Board also works with the CEO and General Counsel to prepare Board meeting agendas and chairs meetings of our Board. The leadership structure allows the CEO to focus on his operational responsibilities, while keeping a measure of independence between the oversight function of our Board and those operating decisions. Our Board believes that this leadership structure provides an appropriate allocation of roles and responsibilities at this time.

Board Independence

Our Board has determined that Mses. Chau, Rollins and Sud, and Messrs. Gotcher, Prophet, Segars, and Dr. Tevanian do not have any material relationship with Dolby and are independent within the meaning of the standards established by the NYSE. In making this determination, our Board considered all relevant facts and circumstances known to us, including each director’s commercial, accounting, legal, banking, consulting, charitable and familial relationships.

Succession Planning

As reflected in our Corporate Governance Guidelines, a key responsibility of our Board is to work with the Nominating and Governance Committee on succession planning for our CEO. As part of this process, our Board works with the Nominating and Governance Committee to identify potential successors to our CEO and the committee makes an annual report to our Board. Our Board also has adopted an emergency succession plan in the event of the death, disability, incapacity or unanticipated departure or leave of our CEO.

Policy for Director Recommendations

It is the policy of the Nominating and Governance Committee to consider recommendations for candidates to our Board from stockholders holding at least 250,000 shares of our Common Stock continuously for at least 12 months prior to the date of the submission of the recommendation.

 

19


A stockholder that wishes to recommend a candidate for election to our Board should send the recommendation by letter to Dolby Laboratories, Inc., 1275 Market Street, San Francisco, California 94103, Attn: General Counsel. The recommendation must include the candidate’s name, home and business contact information, detailed biographical data, relevant qualifications, a signed letter from the candidate confirming willingness to serve, information regarding any relationships between the candidate and Dolby, and evidence of the recommending stockholder’s ownership of Dolby Common Stock. Such recommendations must also include a statement from the recommending stockholder in support of the candidate, particularly within the context of the criteria for Board membership, addressing issues of character, integrity, judgment, independence, areas of expertise, corporate experience, length of service, potential conflicts of interest, other commitments, personal references, diversity characteristics, and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board.

The committee will use the following procedures to identify and evaluate any individual recommended or offered for nomination to our Board:

 

   

The committee will consider candidates recommended by stockholders in the same manner as candidates recommended to the committee from other sources;

 

   

In its evaluation of director candidates, including the members of our Board eligible for re-election, the committee will consider the following: (i) the current size and composition of our Board and the needs of our Board, and the respective committees of our Board; (ii) without assigning any particular weighting or priority to any of these factors, such factors as character, integrity, judgment, independence, areas of expertise, corporate experience, length of service, potential conflicts of interest, other commitments, and diversity with respect to experience, perspective, professional background, education, race, ethnicity, gender, age and geography, as well as other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board; and (iii) other factors that the committee may consider appropriate;

 

   

The committee requires the following minimum qualifications, which are the desired qualifications and characteristics for Board membership, to be satisfied by any nominee for a position on our Board: (i) the highest personal and professional ethics and integrity; (ii) proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment; (iii) skills that are complementary to those of the existing Board; (iv) the ability to assist and support management and make significant contributions to Dolby’s success; and (v) an understanding of the fiduciary responsibilities that are required of a member of our Board and the commitment of time and energy necessary to diligently carry out those responsibilities;

 

   

If the committee determines that an additional or replacement director is required, the committee may take such measures that it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information, or reliance on the knowledge of the members of the committee, our Board or management; and

 

   

The committee may propose to our Board a candidate recommended or offered for nomination by a stockholder as a nominee for election to our Board.

We do not maintain a separate policy regarding the diversity of our Board, but during the director nomination process, as described above, the Nominating and Governance Committee considers certain diversity characteristics and attributes in the evaluation of director candidates.

For stockholders who wish to nominate a candidate for election to our Board (as opposed to only recommending a candidate for consideration by the Nominating and Governance Committee as described above), see the procedures discussed in “Additional Meeting Matters” below.

 

20


Policies and Procedures for Communications to Non-Employee or Independent Directors

In cases where stockholders or interested parties wish to communicate directly with our non-employee or independent directors, messages may be sent to our General Counsel, at generalcounsel@dolby.com, or to Dolby Laboratories, Inc., 1275 Market Street, San Francisco, California 94103, Attn: General Counsel. The office of our General Counsel monitors these communications and our General Counsel will provide a summary of all received messages to our Board at each regularly scheduled meeting of our Board, or if appropriate, solely to the non-employee or independent directors at each regularly scheduled executive session of non-employee or independent directors. Where the nature of a communication warrants, our General Counsel may obtain the more immediate attention of the appropriate committee of our Board, of non-employee or independent directors, of independent advisors or of Dolby management, as our General Counsel considers appropriate. Our General Counsel may decide in the exercise of his judgment whether a response to any stockholder or interested party communication is necessary.

Attendance at Annual Meeting of Stockholders

We encourage our directors to attend our Annual Meetings of Stockholders, and all of the members of our Board attended the 2023 Annual Meeting.

Code of Business Conduct and Ethics

Our Board has adopted a Code of Business Conduct and Ethics, which is applicable to all of our directors and our employees, including our principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions. The Code of Business Conduct and Ethics is available on the Governance Overview page of the Investor Relations section of our website at https://investor.dolby.com/governance/Governance-Overview/default.aspx. We will post any amendments or waivers to the Code of Business Conduct and Ethics that are required to be disclosed by the rules of the SEC or NYSE on this website.

Corporate Governance Guidelines

Our Board has adopted Corporate Governance Guidelines that contain the general framework for the governance of the company. Among other things, our Corporate Governance Guidelines address:

 

   

The role of our Board;

 

   

The size and composition of our Board and its committees;

 

   

New director orientation and continuing education;

 

   

Board and committee authority to retain independent advisors;

 

   

Board meetings and process;

 

   

Board self-evaluation;

 

   

Evaluation of our CEO and succession planning;

 

   

Corporate business principles and policies applicable to our Board; and

 

   

Communications by Board members with outside constituencies.

The Nominating and Governance Committee will periodically review the guidelines and report any recommended changes to our Board. The Corporate Governance Guidelines are available on the Governance Overview page of the Investor Relations section of our website at https://investor.dolby.com/governance/Governance-Overview/default.aspx.

 

21


Compensation Committee Interlocks and Insider Participation

The current members of the Compensation Committee are Micheline Chau, Tony Prophet, Anjali Sud, and Avadis Tevanian, Jr. None of the members of our Compensation Committee during the last fiscal year is or has been an officer or employee of our company or had any relationship requiring disclosure under Item 404 of Regulation S-K under the Securities Act of 1933. None of our executive officers has served as a member of the board of directors or compensation committee (or other committee serving an equivalent function) of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

Rule 10b5-1 Trading Plans

Certain of our directors and executive officers have adopted, and in the future may adopt, written trading plans that meet the requirements of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (“Rule 10b5-1”). Rule 10b5-1 allows persons who may be considered insiders of an issuer to adopt pre-arranged written plans for trading specified amounts of stock. Rule 10b5-1 trading plans establish predetermined trading parameters that, among other things, do not permit the person adopting the trading plan to exercise subsequent influence over how, when or whether to effect trades. Once a Rule 10b5-1 trading plan has been properly adopted, trades may be executed pursuant to the terms of the trading plan at times when the person would otherwise be restricted from trading (e.g., during a closed trading window). Rule 10b5-1 trading plans are designed to allow individuals to purchase or sell shares in an orderly fashion for asset diversification, liquidity, tax planning and other purposes when they might otherwise be restricted from doing so due to material, non-public information that they might possess at the time of the purchase or sale.

We maintain policies and procedures governing the use of Rule 10b5-1 trading plans relating to Dolby securities. Upon the recommendation of our Nominating and Governance Committee, our Board adopted amendments to our Rule 10b5-1 Trading Plan Policy (“Rule 10b5-1 Plan Policy”) in February 2023 in order to reflect amendments to Rule 10b5-1 that were approved by the SEC and became effective in February 2023. Under our Rule 10b5-1 Plan Policy, directors and executive officers may enter into a new Rule 10b5-1 trading plan or amend an existing trading plan only during an open trading window and only if they are not in possession of any material non-public information concerning Dolby at the time. In addition, trades pursuant to a new or amended Rule 10b5-1 trading plan are subject to a “cooling off” period and may not be made until the later of (i) 91 days after the adoption or amendment of such trading plan, or (ii) three business days following the disclosure of our financial results in a Form 10-Q or Form 10-K for the completed fiscal quarter in which such trading plan was adopted or amended; provided, that trading under such trading plan may begin 121 days after adoption or amendment of such trading plan. Each Rule 10b5-1 trading plan generally must remain in effect for at least one year following its adoption and must automatically terminate within two years from the adoption date. Our Rule 10b5-1 Plan Policy does not generally restrict directors or executive officers from making trades outside of Rule 10b5-1 trading plans, provided that any such trades do not consist of the sale or transfer of Dolby securities that may potentially transact under any such trading plan, and any such trades may only occur during open trading windows and are otherwise subject to our insider trading policy requirements, including any applicable pre-clearance requirements.

The adoption, amendment, and termination of Rule 10b5-1 trading plans and non-Rule 10b5-1 trading arrangements by our directors and executive officers, as well as purchase and sale transactions under Rule 10b5-1 trading plans and non-Rule 10b5-1 trading arrangements by our directors and executive officers, will be disclosed publicly through filings with the SEC to the extent required.

 

22


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the number of shares of our Common Stock beneficially owned by:

 

   

each person who is known by us to own beneficially more than 5% of either our Class A Common Stock or Class B Common Stock;

 

   

each of our directors;

 

   

each of our NEOs; and

 

   

all of our directors and executive officers as a group. The information provided in the table is as of November 30, 2023, and is based on our records, information filed with the SEC, and information furnished by the respective individuals or entities, as the case may be.

Applicable percentage ownership is based on 59,063,519 shares of our Class A Common Stock and 36,085,779 shares of our Class B Common Stock outstanding as of November 30, 2023. In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding: (i) shares of Common Stock subject to stock options held by that person that were exercisable on or are exercisable within 60 days after November 30, 2023; and (ii) shares of Common Stock subject to restricted stock unit awards held by that person that are subject to vest within 60 days after November 30, 2023 (excluding performance stock units that may vest, if at all, within such 60-day period based on the achievement of performance criteria).

Unless otherwise indicated below, the address of each beneficial owner listed in the table is c/o Dolby Laboratories, Inc., 1275 Market Street, San Francisco, California 94103.

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information available or furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of Common Stock that they beneficially own, subject to applicable community property laws.

 

     Shares Beneficially Owned        
     Class A Common Stock(1)     Class B Common Stock(1)        

Name of Beneficial Owner

         Shares                  %                 Shares                  %           % Total
Voting
Power(2)
 

5% Stockholders:

            

Ray Dolby 2002 Trust A dated April 19, 2002(3)

     —          —         160,592        *       *  

Ray Dolby 2002 Trust B dated April 19, 2002(4)

     —          —         463,262        1.3     1.1

Dolby Holdings II LLC(5)

     —          —         1,040,000        2.9     2.5

Marital Trust under the Dolby Family Trust Instrument dated May 7, 1999(6)

     —          —         24,108,162        66.8     57.4

Dagmar Dolby Trust under the Dolby Family Trust Instrument dated May 7, 1999(7)

     —          —         9,487,117        26.3     22.6

Dolby Holdings III LLC(8)

     —          —         350,000        1.0     *  

Dagmar Dolby 2016 Trust B, dated March 23, 2016(9)

     —          —         403,600        1.1     1.0

Dagmar Dolby(10)

     232,250        *       36,012,733        99.8     85.8

Thomas E. Dolby(11)

     —          —         680,592        1.9     1.6

The Vanguard Group(12)

     6,012,094        10.2     —          —         1.4

Kayne Anderson Rudnick Investment Management(13)

     5,110,252        8.7     —          —         1.2

Morgan Stanley(14)

     4,261,695        7.2     —          —         1.0

Atlanta Capital Management Company(15)

     3,759,684        6.4     —          —         *  

BlackRock(16)

     3,117,785        5.3     —          —         *  

 

23


     Shares Beneficially Owned        
     Class A Common Stock(1)     Class B Common Stock(1)        

Name of Beneficial Owner

         Shares                  %                 Shares                  %           % Total
Voting
Power(2)
 

Named Executive Officers and Directors:

            

Kevin Yeaman(17)

     1,140,233        1.9     —          —         *  

Robert Park(18)

     51,709        *       —          —         *  

Andy Sherman(19)

     269,937        *       —          —         *  

John Couling(20)

     442,683        *       —          —         *  

Todd Pendleton(21)

     61,618        *       —          —         —    

Micheline Chau

     63,586        *       —          —         *  

David Dolby(22)

     79,422        *       35,332,141        97.9     84.2

Peter Gotcher

     37,424        *       —          —         *  

Tony Prophet

     3,019        *       —          —         *  

Emily Rollins

     2,245        *       —          —         *  

Simon Segars

     33,854        *       —          —         *  

Anjali Sud

     2,783        *       —          —         *  

Avadis Tevanian, Jr.(23)

     53,282        *       —          —         *  

All executive officers and directors as a group (14 persons)(24)

     2,287,163        3.8     35,332,141        97.9     84.3

 

*

Less than one percent.

(1)

Each holder of Class B Common Stock is entitled to ten votes per share of Class B Common Stock and each holder of Class A Common Stock is entitled to one vote per share of Class A Common Stock on all matters submitted to our stockholders for a vote. The Class A Common Stock and Class B Common Stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may otherwise be required by law. The Class B Common Stock is convertible at any time at the election of the holder into shares of Class A Common Stock on a one-for-one share basis. The Class A Common Stock beneficial ownership percentages shown in the “Class A Common Stock” column of this table are calculated based on the number of shares of Class A Common Stock that are outstanding and beneficially owned by each beneficial owner as of November 30, 2023, and do not reflect the conversion of any shares of Class B Common Stock beneficially owned by such beneficial owner as of such date.

(2)

Percentage total voting power represents voting power with respect to all shares of our Class A Common Stock and Class B Common Stock, as a single class.

(3)

Consists of 160,592 shares of Class B Common Stock held of record by Dagmar Dolby, as Trustee of the Ray Dolby 2002 Trust A, dated April 19, 2002 (the “Ray Dolby 2002 Trust A”). Thomas E. Dolby, Dagmar Dolby’s son, is the Special Trustee of the Ray Dolby 2002 Trust A. Dagmar Dolby has sole dispositive power over the shares held of record by the Ray Dolby 2002 Trust A, and Thomas E. Dolby has sole voting power over the shares held of record by the Ray Dolby 2002 Trust A. Assuming conversion of the shares of Class B Common Stock beneficially owned by the Ray Dolby 2002 Trust A into shares of Class A Common Stock, such converted shares would represent beneficial ownership of less than one percent of the outstanding shares of Class A Common Stock as of November 30, 2023. Dagmar Dolby and Thomas E. Dolby disclaim beneficial ownership of these securities except to the extent of their respective pecuniary interests therein.

(4)

Consists of 463,262 shares of Class B Common Stock held of record by Dagmar Dolby, as Trustee of the Ray Dolby 2002 Trust B, dated April 19, 2002 (the “Ray Dolby 2002 Trust B”). David Dolby, Dagmar Dolby’s son, is the Special Trustee of the Ray Dolby 2002 Trust B. Dagmar Dolby has sole dispositive power over the shares held of record by the Ray Dolby 2002 Trust B, and David Dolby has sole voting power over the shares held of record by the Ray Dolby 2002 Trust B. Assuming conversion of the shares of Class B Common Stock beneficially owned by the Ray Dolby 2002 Trust B into shares of Class A Common Stock, such converted shares would represent beneficial ownership of less than one percent of the outstanding shares of Class A Common Stock as of November 30, 2023. Dagmar Dolby and David Dolby

 

24


  disclaim beneficial ownership of these securities except to the extent of their respective pecuniary interests therein.
(5)

Consists of 1,040,000 shares of Class B Common Stock held of record by Dolby Holdings II LLC (“Dolby Holdings II”). Dagmar Dolby has sole dispositive power over the shares held of record by Dolby Holdings II as the Manager of Dolby Holdings II. Each of Thomas E. Dolby and David Dolby has sole voting power over 50% of the shares held of record by Dolby Holdings II, as Special Managers of Dolby Holdings II. Assuming conversion of the shares of Class B Common Stock beneficially owned by Dolby Holdings II into shares of Class A Common Stock, such converted shares would represent beneficial ownership of 1.7% of the outstanding shares of Class A Common Stock as of November 30, 2023. Dagmar Dolby, Thomas E. Dolby, and David Dolby disclaim beneficial ownership of these securities except to the extent of their respective pecuniary interests therein.

(6)

Consists of 24,108,162 shares of Class B Common Stock held of record by Dagmar Dolby, as Trustee of the Marital Trust under the Dolby Family Trust Instrument dated May 7, 1999 (the “Marital Trust”). David Dolby is the Special Trustee of the Marital Trust. Dagmar Dolby has sole dispositive power over the shares held of record by the Marital Trust, and Dagmar Dolby and David Dolby have shared voting power over the shares held of record by the Marital Trust, with voting decisions requiring the unanimous vote of the Trustee and the Special Trustee. Assuming conversion of the shares of Class B Common Stock beneficially owned by the Marital Trust into shares of Class A Common Stock, such converted shares would represent beneficial ownership of 29.0% of the outstanding shares of Class A Common Stock as of November 30, 2023. Dagmar Dolby and David Dolby disclaim beneficial ownership of these securities except to the extent of their respective pecuniary interests therein.

(7)

Consists of 9,487,117 shares of Class B Common Stock held of record by Dagmar Dolby, as Trustee of the Dagmar Dolby Trust under the Dolby Family Trust Instrument dated May 7, 1999 (the “Dagmar Dolby Trust”). David Dolby is the Special Trustee of the Dagmar Dolby Trust. Dagmar Dolby has sole dispositive power over the shares held of record by the Dagmar Dolby Trust, and Dagmar Dolby and David Dolby have shared voting power over the shares held of record by the Dagmar Dolby Trust, with voting decisions requiring the unanimous vote of the Trustee and the Special Trustee. Assuming conversion of the shares of Class B Common Stock beneficially owned by the Dagmar Dolby Trust into shares of Class A Common Stock, such converted shares would represent beneficial ownership of 13.8% of the outstanding shares of Class A Common Stock as of November 30, 2023. Dagmar Dolby and David Dolby disclaim beneficial ownership of these securities except to the extent of their respective pecuniary interests therein.

(8)

Consists of 350,000 shares of Class B Common Stock held of record by Dolby Holdings III LLC (“Dolby Holdings III”). Dagmar Dolby has sole dispositive power over the shares held of record by Dolby Holdings III as the Manager of Dolby Holdings III. David Dolby has sole voting power over the shares of record held by Dolby Holdings III as a Special Manager of Dolby Holdings III. Assuming conversion of the shares of Class B Common Stock beneficially owned by Dolby Holdings III into shares of Class A Common Stock, such converted shares would represent beneficial ownership of less than one percent of the outstanding shares of Class A Common Stock as of November 30, 2023. Dagmar Dolby and David Dolby disclaim beneficial ownership of these securities except to the extent of their respective pecuniary interests therein.

(9)

Consists of 403,600 shares of Class B Common Stock held of record by Dagmar Dolby, as Trustee of the Dagmar Dolby 2016 Trust B, dated March 23, 2016 (the “Dagmar Dolby 2016 Trust B”). David Dolby is the Special Trustee of the Dagmar Dolby 2016 Trust B. Dagmar Dolby has sole dispositive power over the shares held of record by the Dagmar Dolby 2016 Trust B, and David Dolby has sole voting power over the shares held of record by the Dagmar Dolby 2016 Trust B. Assuming conversion of the shares of Class B Common Stock beneficially owned by the Dagmar Dolby 2016 Trust B into shares of Class A Common Stock, such converted shares would represent beneficial ownership of less than one percent of the outstanding shares of Class A Common Stock as of November 30, 2023. Dagmar Dolby and David Dolby disclaim beneficial ownership of these securities except to the extent of their respective pecuniary interests therein.

(10)

Consists of (i) the shares described in Notes 3 through 9, which descriptions are incorporated herein by reference, (ii) 128,750 shares of Class A Common Stock held of record by the Dagmar Dolby Fund, a California nonprofit public benefit corporation (the “Dagmar Dolby Fund”) and (iii) 103,500 shares of

 

25


  Class A Common Stock held of record by the Ray Dolby Legacy Fund, a California nonprofit public benefit corporation (the “Ray Dolby Legacy Fund”). Dagmar Dolby, as one of three directors of the Dagmar Dolby Fund, has shared voting and dispositive power over all 128,750 shares of Class A Common Stock held of record by the Dagmar Dolby Fund, with voting and disposition decisions requiring the majority vote of the Dagmar Dolby Fund’s board of directors. Dagmar Dolby, as one of three directors of the Ray Dolby Legacy Fund, has shared voting power over all 103,500 shares of Class A Common Stock held of record by the Ray Dolby Legacy Fund, with voting and disposition decisions regarding such shares requiring the majority vote of the Ray Dolby Legacy Fund’s board of directors. All shares beneficially owned by Dagmar Dolby collectively represent 85.8% of the total voting power of the Class A Common Stock and Class B Common Stock, and the shares over which Dagmar Dolby has sole or shared voting power collectively represent 80.1% of the total voting power of the Class A Common Stock and Class B Common Stock. Assuming conversion of the shares of Class B Common Stock beneficially owned by Dagmar Dolby into shares of Class A Common Stock, such converted shares, together with the other shares of Class A Common Stock beneficially owned by Dagmar Dolby, would represent beneficial ownership of 38.1% of the outstanding shares of Class A Common Stock as of November 30, 2023. Dagmar Dolby disclaims beneficial ownership of these securities except to the extent of her pecuniary interest therein.
(11)

Consists of all of the shares described in Note 3 and 50% of the shares described in Note 5, which descriptions are incorporated herein by reference. Assuming conversion of the shares of Class B Common Stock beneficially owned by Thomas E. Dolby into shares of Class A Common Stock, such converted shares would represent beneficial ownership of 1.1% of the outstanding shares of Class A Common Stock as of November 30, 2023. Thomas E. Dolby disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein.

(12)

Based on a Schedule 13G/A filed with the SEC on March 10, 2023, wherein The Vanguard Group (“Vanguard”) reported beneficial ownership of 6,012,094 shares of Class A Common Stock. Vanguard reported sole dispositive power as to 5,921,205 of the shares, shared dispositive power as to 90,889 of the shares, and shared voting power as to 29,011 of the shares. The address for Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.

(13)

Based on a Schedule 13G filed with the SEC on February 14, 2023, wherein Kayne Anderson Rudnick Investment Management LLC (“Kayne”) reported beneficial ownership of 5,110,252 shares of Class A Common Stock. Kayne reported shared voting and dispositive power as to 1,208,432 of the shares, sole voting power as to 3,841,387 of the shares, and sole dispositive power as to 3,901,820 of the shares. The address for Kayne is 2000 Avenue of the Stars, Suite 1110, Los Angeles, CA 90067.

(14)

Based on a Schedule 13G/A filed with the SEC on February 9, 2023, wherein Morgan Stanley (“MS”) reported beneficial ownership of 4,261,695 shares of Class A Common Stock. MS reported shared dispositive power as to all of the shares and shared voting power as to 4,106,347 of the shares. The address for MS is 1585 Broadway, New York, New York 10036.

(15)

Based on a Schedule 13G/A filed with the SEC on February 9, 2023, wherein Atlanta Capital Management Company, LLC (“Atlanta Capital”) reported beneficial ownership of 3,759,684 shares of Class A Common Stock. Atlanta Capital reported shared dispositive power as to all of the shares and shared voting power as to 3,667,162 of the shares. The address for Atlanta Capital is 1075 Peachtree Street, Suite 2100, Atlanta, GA 30309.

(16)

Based on a Schedule 13G filed with the SEC on February 3, 2023, wherein BlackRock, Inc. (“BlackRock”) reported beneficial ownership of 3,117,785 shares of Class A Common Stock. BlackRock reported sole dispositive power as to all of the shares and sole voting power as to 2,919,213 of the shares. The address for BlackRock is 55 East 52nd Street, New York, New York 10055.

(17)

Includes shares held in the name of Kevin and Rachel Yeaman, Trustees of the Yeaman Family Trust dated May 14, 2009 (the “Yeaman Trust”). Includes stock options held in the name of the Yeaman Trust to purchase 1,042,399 shares of Class A Common Stock that are exercisable within 60 days after November 30, 2023. Includes 45,955 shares of Class A Common Stock subject to restricted stock unit awards that vest within 60 days after November 30, 2023.

 

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(18)

Includes stock options held by Mr. Park to purchase 36,638 shares of Class A Common Stock that are exercisable within 60 days after November 30, 2023. Includes 4,398 shares of Class A Common Stock subject to restricted stock unit awards that vest within 60 days after November 30, 2023.

(19)

Includes stock options held by Mr. Sherman to purchase 237,879 shares of Class A Common Stock that are exercisable within 60 days after November 30, 2023. Includes 15,131 shares of Class A Common Stock subject to restricted stock unit awards that vest within 60 days after November 30, 2023.

(20)

Includes stock options held by Mr. Couling to purchase 374,039 shares of Class A Common Stock that are exercisable within 60 days after November 30, 2023. Includes 15,910 shares of Class A Common Stock subject to restricted stock unit awards that vest within 60 days after November 30, 2023.

(21)

Includes stock options held by Mr. Pendleton to purchase 46,494 shares of Class A Common Stock that are exercisable within 60 days after November 30, 2023. Includes 12,818 shares of Class A Common Stock subject to restricted stock unit awards that vest within 60 days after November 30, 2023

(22)

Consists of (i) 79,422 shares of Class A Common Stock held of record by David Dolby, plus (ii) all of the shares described in Notes 4, 6, 7, 8 and 9, which descriptions are incorporated herein by reference, plus (iii) 50% of the shares described in Note 5, which description is incorporated herein by reference. Assuming conversion of the shares of Class B Common Stock beneficially owned by David Dolby into shares of Class A Common Stock, such converted shares, together with the other shares of Class A Common Stock beneficially owned by David Dolby, would represent beneficial ownership of 37.5% of the outstanding shares of Class A Common Stock as of November 30, 2023. David Dolby disclaims beneficial ownership of the securities referenced in clauses (ii) and (iii) except to the extent of his pecuniary interest therein.

(23)

Shares held in the name of Avadis Tevanian, Jr. and Nancy Tevanian Trust u/a/d 5/29/96.

(24)

Includes (i) stock options held by all executive officers and directors as a group to purchase an aggregate of 1,771,516 shares of Class A Common Stock that are exercisable within 60 days after November 30, 2023 and (ii) 96,851 shares of Class A Common Stock subject to restricted stock unit awards held by all executive officers and directors as a group that vest within 60 days after November 30, 2023. Assuming conversion of the shares of Class B Common Stock beneficially owned by the executive officers and directors as a group into shares of Class A Common Stock, such converted shares, together with the other shares of Class A Common Stock beneficially owned by the executive officers and directors as a group, including the aforementioned shares of Class A Common Stock subject to stock options and restricted stock unit awards, would represent beneficial ownership of 39.1% of the outstanding shares of Class A Common Stock as of November 30, 2023.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Review, Approval or Ratification of Related Person Transactions

Our Board has adopted a written Related Person Transactions Policy. Pursuant to this policy, any related person transaction proposed or entered into by Dolby must be reported to Dolby’s General Counsel and reviewed, approved or ratified by the Audit Committee in accordance with the terms of the policy. A “related person transaction” is a transaction between Dolby and a related person in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of the policy, a “related person” is any person who is or was an executive officer, director or nominee for director at any time since the beginning of the last fiscal year and such person’s immediate family members, or a greater than 5% beneficial owner of any class of our voting securities at the time of the occurrence or existence of the transaction and such owner’s immediate family members.

In the course of its review and approval or ratification of a related person transaction, the Audit Committee considers:

 

   

The approximate dollar value of the amount involved in the transaction;

 

   

The related person’s interest in the transaction and the approximate dollar value of such interest without regard to any profit or loss;

 

   

Whether the transaction was undertaken in the ordinary course of business of the company;

 

   

Whether the transaction with the related person is proposed to be, or was, entered into on terms no less favorable to Dolby than terms that could have been reached with an unrelated third party;

 

   

The purpose of, and the potential benefits to Dolby of, the transaction; and

 

   

Any other information regarding the transaction or the related person in the context of the transaction that would be material to investors in light of the circumstances of the particular transaction.

In addition, the use of certain theatres of the company by the immediate family members of Ray Dolby, to the extent that it may constitute a related person transaction, is deemed to be pre-approved under the terms of the policy.

Since October 1, 2022, we have not been a party to any related person transactions, other than the transactions described below.

Real Estate Transactions

Master Lease for 100 Potrero Avenue Premises

Since 1980, we have leased approximately 70,000 square feet of office space located at 100 Potrero Avenue, San Francisco, California from several Dolby family entities pursuant to a master lease (the “Master Lease”). The Master Lease expires on October 31, 2024 and provides us an option, which we do not intend to exercise, to renew for two additional five-year terms at a rate equal to the rent that the landlord could obtain for the applicable option term from a third party desiring to lease the premises for the option term, as determined by the landlord and agreed to by us. We are generally responsible for operating expenses, taxes, and the condition, operation, repair, maintenance, security and management of the premises. We also agreed to indemnify and hold the Dolby family entities, as landlord, harmless from and against certain liabilities, damages, claims, costs, penalties and expenses arising from our conduct related to the premises.

Our Ceased Occupation of 100 Potrero Avenue Premises

As previously disclosed, in fiscal 2019, we ceased occupying the 100 Potrero premises and executed a sublease with a third-party tenant for our remaining lease term (through October 31, 2024) at a rental rate that is

 

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higher than what we are paying to the Dolby family entity under our Master Lease. Under the sublease, the subtenant is required to reimburse us for our costs related to operating expenses, taxes, and the condition, operation, repair, maintenance, security, and management of the subleased premises and to indemnify and hold us harmless with respect to the subleased premises in substantially the same manner as provided in the Master Lease and described above.

Fiscal 2023 Rent Expense for 100 Potrero Avenue Premises

Our rent expense under the 100 Potrero Master Lease was $3.3 million in fiscal 2023. As described above, we ceased occupying the 100 Potrero Avenue premises in fiscal 2019 and entered into a sublease with a third party for the remainder of our term, at a rental rate that is higher than what we are paying to the Dolby family under our Master Lease. However, Item 404 of the SEC’s Regulation S-K requires us to disclose our estimated rent expense over the remaining life of the Master Lease for these premises, which is $37.0 million as of September 29, 2023. This figure includes $33.4 million in rent payable for the option—which we do not intend to exercise—to renew the 100 Potrero Avenue lease for two additional five year terms beyond its October 31, 2024 expiration, assuming a rental rate equal to the rate applicable to the month in which the lease is to expire (the actual rental rate during any option term is not known at this time and may be materially different from the rate used in our assumptions).

Dolby Family Sub-lease of 100 Potrero Avenue Premises

Under the terms of the Master Lease, a Dolby family entity acting as landlord or a member of the Dolby family, as assignee, retains the right to sublease office space at 100 Potrero with prior notice to us, at a rental rate equal to the then-current base rent per square foot paid by us plus $14 per square foot per year (reflecting estimated costs payable by us for the operation and maintenance of the premises, subject to an annual increase of 1.5% per year during each year of the sublease term), which we refer to as the rent and related expenses below. In fiscal 2021, a member of the Dolby family, as assignee, exercised its right to sublease this space, comprising approximately 1,617 rentable square feet. The amount of rent and related expenses paid to us for this space by the member of the Dolby family in fiscal 2023 was $95,290 and the aggregate amount of rent and related expenses over the remaining life of this sublease arrangement is $105,460, as of September 29, 2023.

Jointly-Owned Real Estate Entities

As of the end of fiscal 2023, the Dagmar Dolby Trust and Dolby Wootton Bassett, LLC (“DWB”), of which the Dagmar Dolby Trust is the sole member, each own a majority financial interest in real estate entities that owned and leased commercial real property in fiscal 2023. We own the remaining financial interests in these real estate entities. The following table sets forth, as of the end of fiscal 2023, for each of these real estate entities, the entity that owns the majority financial interest in the real estate entity, the percentage interest owned, and the location of the property.

 

Real Estate Entity

   Majority Owner    Majority
Ownership
Interest
    Location of Property

Dolby Properties Burbank, LLC

   Dagmar Dolby Trust      51   Burbank, California

Dolby Properties, LP

   DWB      90   Wootton Bassett, England

We lease our 3601 W. Alameda Avenue, Burbank, California offices from Dolby Properties Burbank, LLC. The expense attributable to Dolby and recorded for rents payable to Dolby Properties Burbank was $282,947 in fiscal 2023. The estimated rent expense attributable to Dolby over the remaining life of the lease is approximately $3.42 million as of September 29, 2023, assuming the exercise of our two five-year renewal options under that lease (for these purposes, assuming a rental rate equal to the rate applicable to the month in which the lease is scheduled to expire; the actual rental rate during any option term is not known at this time and may be materially different from the rate used in our assumptions).

 

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As previously disclosed, we used to lease 17,747 square feet of office space in a property located in Wootton Bassett, England from Dolby Properties, LP. Our lease expired and we occupied the premises through March 31, 2021. In fiscal 2023, an unrelated third-party tenant leased 17,768 square feet of the property and paid an aggregate of £195,113 in rent to Dolby Properties, which amount inured to Dolby and the Dolby family in proportion to their respective ownership interests in Dolby Properties (10% and 90%, respectively). In addition, in fiscal 2023, Dolby Properties undertook certain capital improvement works of approximately £10,000 (with up to an additional £40,000 anticipated to be expended in fiscal 2024) on the premises for the benefit of such third-party tenant, the costs of which were also borne by Dolby and the Dolby family in proportion to their respective ownership interests in Dolby Properties.

When we negotiate new terms for any lease agreement with the Dolby family or any of the jointly-owned real estate entities, we engage real estate brokers to provide fair market rent and lease terms based on a summary of comparable properties located in the area of the subject property. The brokers are instructed that the transaction is intended to be completed on an arm’s-length basis. We believe that all such leases were entered into on a reasonable fair market basis.

Academy Museum Donations

In June 2014, we agreed to donate cinema products and related services to the Museum of the Academy of Motion Picture Arts and Sciences (the “Academy Museum”) having a retail value of approximately $7 million, in exchange for promotional benefits over a 15 year period, including our exclusive appointment as the audio/video sponsor of the Academy Museum theaters, public recognition of our donation, access to Academy Museum space for events, invitations to certain events, board membership at the Academy Foundation, Academy Museum membership rights, and other benefits. Contemporaneously, the Dolby family agreed to donate $5 million in cash and/or marketable securities to the Academy Museum over time based on achievement of certain key project milestones, in exchange for certain naming rights, public recognition of the Dolby family’s donation, an installation at the Academy Museum dedicated to portraying Ray Dolby’s story, invitations to certain events, board membership at the Academy Foundation, Academy Museum membership rights, and other benefits.

Smithsonian Institution Donations

In September 2018, we agreed to make an in-kind donation to the Smithsonian Institution (the “Smithsonian”), for use in the National Museum of American History (the “Museum”), of certain audio/visual equipment and related services together having a retail value of up to approximately $2 million, including equipment for and refurbishment of an exhibition theatre in the Museum. In exchange for the donation, we are entitled to promotional benefits for a certain period of time, including our exclusive audio/video sponsorship of the Smithsonian, public recognition of our donation, access to the Museum space for events, and invitations to certain events. Contemporaneously, a charitable entity associated with the Dolby family agreed to donate $5 million in cash and/or marketable securities to the Smithsonian over time based on achievement of certain milestones, in exchange for certain benefits, including naming rights and public recognition of the Dolby family’s donation.

BAFTA Donations

In January 2020, we agreed to make an in-kind donation to the British Academy of Film and Television Arts (the “BAFTA”), for use in the redevelopment of the Princess Anne Theater at 195 Piccadilly in London (the “Theater”), of certain audio/visual equipment and related services together having a retail value of up to $930,000, including equipment and services following the Theater’s redevelopment. In exchange for this donation, we are entitled to receive certain benefits from BAFTA, including branding rights, exclusive audio/video sponsorship of the Theater, private use of the Theater under certain circumstances, and event tickets. Contemporaneously, the Dolby family agreed to make a donation to a BAFTA-affiliated organization of cash and/or marketable securities in the amount of $3.5 million, payable in installments based on the achievement of certain milestones, in exchange for certain benefits, including certain naming rights and event tickets.

 

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Other Arrangements with the Dolby Family

In the past, we have allowed members of the Dolby family to use our office facilities for their personal purposes on a limited basis, and we expect this use to continue in the future. For example, members of the Dolby family are allowed to use our conference and screening rooms for personal purposes up to ten times per year. Our Board has approved these arrangements.

 

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EXECUTIVE OFFICERS

Our executive officers serve at the discretion of our Board. The names of our executive officers and their ages, titles, and biographies as of December 8, 2023, the record date for the Annual Meeting, are set forth below:

 

Executive Officers

   Age     

Position(s)

Kevin Yeaman

     57      President and Chief Executive Officer

Robert Park

     53      Senior Vice President and Chief Financial Officer

Andy Sherman

     56      Executive Vice President, General Counsel and Corporate Secretary

John Couling

     48      Senior Vice President, Entertainment

Todd Pendleton

     51      Senior Vice President and Chief Marketing Officer

Shriram Revankar

     61      Senior Vice President, Advanced Technology Group

For Mr. Yeaman’s biography, please see the section titled “Proposal 1—Election of Directors—Information Regarding the Director Nominees and our Director Emeritus.”

Robert Park joined us as Senior Vice President and Chief Financial Officer in October 2021. Mr. Park leads the global finance organization and is responsible for all finance functions, information technology, and investor relations. Mr. Park has over 30 years of financial and strategic business experience. Prior to joining us, from April 2016 to October 2021, Mr. Park served as the Chief Financial Officer of BlueJeans, a cloud-based enterprise video conferencing and communications company. Prior to BlueJeans, Mr. Park held a variety of positions of increasing responsibility at multiple public and private companies. Mr. Park began his finance career with Ernst & Young LLP, an accounting firm, serving numerous clients across various industries. Mr. Park holds a B.S. degree in Business Administration with a concentration in accounting from California Polytechnic State University, San Luis Obispo.

Andy Sherman joined us as Executive Vice President, General Counsel and Corporate Secretary in January 2011. Mr. Sherman oversees Dolby’s patent and IP licensing businesses, government relations, and Dolby’s worldwide legal affairs, including all corporate, regulatory, IP, litigation, and licensing activities. Mr. Sherman also serves as the chair of the board of directors of Via Licensing Alliance, a leading global provider of multilateral patent licensing solutions. Prior to joining us, from June 2008 to January 2011, Mr. Sherman served as Senior Vice President and General Counsel at CBS Interactive, an online content network, where he led the legal group advising CBS’s online entertainment, mobile, technology, sports, news, games, lifestyle, and international business units. Mr. Sherman joined CBS Interactive following CBS’s acquisition of CNET Networks, an online content network, where from June 2007 to June 2008 he was Senior Vice President, General Counsel and Secretary. Before CNET, Mr. Sherman served as Vice President, Legal at Sybase, an enterprise software and services company, from November 2006 to May 2007, following Sybase’s acquisition of Mobile 365, where he was Vice President, General Counsel and Secretary. Prior to joining Mobile 365, he held senior legal positions with global responsibility at a variety of public technology companies including PeopleSoft and Epiphany. Earlier in his career, Mr. Sherman worked in private practice with Gray Cary Ware & Freidenrich (now DLA Piper), focusing on the representation of emerging technology companies. Mr. Sherman holds a J.D. from the University of the Pacific, as well as a B.S. degree from the University of Southern California. He is the executive sponsor of Mundo, Dolby’s employee network dedicated to the Hispanic members of the Dolby community.

John Couling joined us in 1997 and has held multiple leadership roles at the company, including most recently as Senior Vice President, Entertainment since October 2021 and previously as Senior Vice President, Commercial Partnerships from October 2016 through October 2021. In his current role, Mr. Couling oversees Dolby’s customer and partner relationships organization across the entertainment industry, leading sales, delivery, and integration of Dolby technologies and solutions into partners’ services and products. Mr. Couling holds a B.S. degree in astrophysics from the University of Bristol.

 

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Todd Pendleton joined us in July 2018 as Senior Vice President and Chief Marketing Officer. He leads Dolby’s marketing efforts and is responsible for promoting the brand globally to consumers and through its partners. Prior to Dolby, Mr. Pendleton led his own marketing creative agency, Defi 9, working with start-ups and entertainment personalities. Prior to leading his own business, Mr. Pendleton served as Chief Marketing Officer of Samsung Telecommunications America from June 2011 to April 2015, where he, among other things, led the launch of the Samsung Galaxy mobile franchise. Prior to Samsung Telecommunications America, Mr. Pendleton was with Nike for over 15 years, where he held country, regional, and global leadership roles working across North America, Europe, and Asia. Mr. Pendleton earned his B.A. degree in Political Science and International Business from Northeastern University in Boston, Massachusetts.

Shriram Revankar joined us as Senior Vice President, Advanced Technology Group in May 2022. Dr. Revankar oversees teams creating and delivering innovations that transform immersive entertainment experiences, including the office of the Chief Technology Officer, image and sound research and development, prototyping, and technical operations. He previously served in various positions at Adobe from 2009 through 2022, most recently as Vice President and Fellow at Adobe Research, where he focused on delivering high impact technologies to Adobe’s Digital Experience and Document Cloud businesses. Prior to joining Adobe, Dr. Revankar was a Xerox Fellow and the head of Smart Systems Lab and also the Chief Architect of the Production Solutions business at Xerox Corporation. He has a masters and Ph.D. in computer science from State University of New York at Buffalo.

 

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COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Discussion and Analysis (“CD&A”) below is intended to:

 

   

Explain our fiscal 2023 executive compensation program and philosophy to assist you in evaluating the compensation of our Named Executive Officers; and

 

   

Review how the Compensation Committee of our Board of Directors (for purposes of this CD&A, the “Committee”) made its executive compensation decisions for fiscal 2023.

Named Executive Officers

Our Named Executive Officers are the individuals whose compensation is set forth in the Summary Compensation Table and accompanying tables. For fiscal 2023, our Named Executive Officers (“NEOs”) were:

 

   

Kevin Yeaman, our President and Chief Executive Officer;

 

   

Robert Park, our Senior Vice President and Chief Financial Officer;

 

   

Andy Sherman, our Executive Vice President, General Counsel, and Corporate Secretary;

 

   

John Couling, our Senior Vice President, Entertainment; and

 

   

Todd Pendleton, our Senior Vice President and Chief Marketing Officer.

Fiscal 2023 Financial and Operational Highlights

Note Regarding Forward-Looking Statements

This CD&A includes forward-looking statements concerning our current expectations and business opportunities. These forward-looking statements are based on management’s current assumptions and expectations, and actual results could differ materially. Risk factors that could cause actual results to differ are set forth in the “Risk Factors” section of our 2023 Annual Report on Form 10-K.

Business Overview

We create audio and imaging technologies that transform entertainment for content playback in movies, TV, music, gaming and user-generated content. Founded in 1965, our strengths stem from expertise in analog and digital signal processing and digital compression technologies that have transformed the ability of artists to convey entertainment experiences to their audiences through recorded media. Such technologies led to the development of our noise-reduction systems for analog tape recordings, and have since evolved into multiple offerings that enable more immersive sound for cinema, digital television transmissions and devices, mobile devices, over-the-top video and music services, home entertainment devices, and automobiles.

In fiscal 2023, we continued to focus on expanding our leadership in audio and imaging solutions for premium entertainment content by increasing the number of Dolby experiences that people can enjoy, which we believe will drive revenue growth across the markets we serve. We can increase our value proposition and create opportunities by broadening Dolby technologies into new types of content, such as music, gaming, live sports, and user-generated content. We are increasingly making our audio and imaging technologies available for content beyond premium entertainment through cloud services, creating new revenue generating opportunities. We also seek to expand the reach of our technology by incorporating it into industry standards and offering licenses to our patents covering that technology, along with our partners, through patent pools.

 

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Key Financial Highlights

Fiscal 2023 was another successful year for Dolby, despite headwinds due to the challenging macroeconomic environment. Our key financial highlights for fiscal 2023 and a comparison to fiscal 2022 were as follows:

 

    Fiscal 2023   Fiscal 2022   Percentage
Change
 

Total Revenue

  $1.30 billion   $1.25 billion     4.0

Net Income

  $200.7 million   $184.1 million     9.0

Diluted Earnings Per Share

  $2.05   $1.81     13.3

Non-GAAP Net Income(1)

  $348.0 million   $319.9 million     8.8

Non-GAAP Diluted Earnings Per Share(1)

  $3.56   $3.14     13.4

Stock Price Per Share (High and Low)

  $91.02 / $61.55   $96.85 / $65.04     —    

Stock Price Per Share as of Fiscal Year-End

  $79.26   $65.15     21.7

 

(1)

A reconciliation of our non-GAAP to GAAP financial results is set forth in Appendix A to this Proxy Statement.

Return of Capital to Stockholders

In fiscal 2023, we returned capital to our stockholders in the form of stock repurchases and dividends as indicated below.

 

 

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In addition, in November 2023, we announced an 11% increase in our dividend, from $0.27 to $0.30 per share.

Fiscal 2023 Executive Compensation Highlights

In fiscal 2023, the Committee took the following actions with respect to the compensation of our NEOs:

 

   

Base Salary. For calendar 2023, the Committee increased the base salaries for each of our NEOs by approximately 3%. These increases were consistent with the merit-based increases for our general U.S. workforce, which were based on competitive market data for technology companies.

 

   

Annual Incentive Compensation. With respect to our annual incentive compensation plan for our executive officers, the 2023 Dolby Executive Bonus Plan (the “2023 Executive Bonus Plan”):

 

   

The Committee approved annual incentive compensation targets for our NEOs under the 2023 Executive Bonus Plan—stated as a percentage of base salary for calendar 2023—at the same levels as in fiscal 2022 (100% for our CEO and 65% for each of our other NEOs).

 

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Annual incentive compensation payments for our NEOs under the 2023 Executive Bonus Plan were based on: (i) achieving (below which there would be no payments) a gating funding requirement of $292.5 million non-GAAP operating income and a threshold of $1,156.5 million revenue, and (ii) revenue performance against a target of $1,285.0 million, which results in 100% funding. To the extent revenue is between the threshold amount and a maximum of $1,413.5 million, the plan is funded between 50% and 150% of target. For purposes of the 2023 Executive Bonus Plan, we achieved adjusted non-GAAP operating income of $378.4 million and non-GAAP revenue of $1,280.7 million, resulting in the gating requirement being satisfied and a funding level of 98% of target. A reconciliation of our non-GAAP to GAAP financial results is set forth in Appendix A to this Proxy Statement.

 

   

The Committee approved annual incentive compensation payments equal to 98% of the annual incentive compensation targets for our NEOs based on the achievement of the performance metrics described above. While the Committee had discretion to consider team and individual performance in determining final payouts, it determined not to make adjustments on that basis for 2023.

 

   

Long-Term Incentive Compensation. The Committee approved the grant of performance stock unit awards, stock options, and restricted stock unit awards for each NEO, as reflected in the Grants of Plan-Based Awards in Fiscal 2023 table in “Executive Compensation Tables and Related Matters.”

Consideration of Advisory Vote to Approve Named Executive Officer Compensation; Stockholder Engagement

At our 2023 Annual Meeting of Stockholders, we conducted an advisory (non-binding) vote of our stockholders to approve the compensation of our NEOs (a “Say-on-Pay” vote). At that meeting, approximately 99% of the voting power of the shares present and entitled to vote on the proposal voted to approve the compensation of our NEOs.

On an annual basis, members of our senior management contact our largest stockholders in advance of our Annual Meeting of Stockholders to solicit their views on a variety of topics. In fiscal 2023, we contacted our top 25 stockholders, who collectively held approximately 65% of our outstanding shares of Class A Common Stock, to ask if they would be interested in meeting with us to discuss the proxy statement, proxy proposals, and any corporate governance or other matters of interest to them. We had conversations with the stockholders that accepted our invitation to engage and discussed our proxy proposals and a broad range of governance matters, including Board and Board committee composition and refreshment, our dual class structure, and our executive compensation policies and practices. These engagement efforts provided us with a valuable understanding of investors’ perspectives and an opportunity to exchange views. Management reports this feedback to the Committee, which then considers it, as well as the results of our most recent Say-on-Pay votes and other factors, in assessing its overall approach to executive compensation. For example, in prior years, as part of the Committee’s ongoing efforts to enhance the effectiveness of our executive compensation program, the Committee added performance-based equity to our long-term incentive compensation program and adopted a policy on the recoupment of incentive compensation (“clawback”) for our executive officers (which the Committee amended and restated in August of 2023) after taking stockholders’ feedback into consideration.

The Committee will continue to carefully consider the results of our Say-on-Pay votes as well as stockholder feedback in overseeing our executive compensation program.

Reinforcing our Business Strategy through an Emphasis on Incentive Compensation

The principal elements of the target total direct compensation opportunity of our executive officers are:

 

   

long-term incentive compensation in the form of performance stock unit awards, stock options, and restricted stock unit awards;

 

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annual incentive compensation consisting of a cash bonus opportunity; and

 

   

base salary.

These principal elements are further described below.

The Committee allocated a substantial portion of the target total direct compensation opportunity of our NEOs to incentive compensation in fiscal 2023, the vast majority of which consists of long-term incentive compensation. The graphs below illustrate this emphasis on long-term incentive compensation in the target total direct compensation opportunities of our NEOs. Our long-term incentive compensation is tied to equity vehicles, the value of which is driven by the value of our stock, and approximately 25% of which (by value) is comprised of performance stock unit awards tied to pre-established performance conditions. In addition, the realization of this long-term incentive compensation is conditioned upon the satisfaction of multi-year vesting requirements. Because the value our NEOs could realize from their equity awards depends on the performance of our stock price, changes in our stock price will impact the value of their equity awards, and correspondingly, the total compensation realizable by our NEOs. This design is intended to align the interests of our NEOs with those of our stockholders and focus our NEOs on the successful execution of our business strategy.

 

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*

The long-term incentive compensation percentage is based on the grant date fair value of the underlying equity awards (at target, in the case of performance stock unit awards), computed in accordance with ASC Topic 718, and does not represent the compensation actually realized or currently realizable by our NEOs from such awards.

Roles of the Compensation Committee, Management and Compensation Consultant

Role of the Compensation Committee

The Committee approves and oversees the compensation program for our executive officers, including base salaries and annual and long-term incentive compensation opportunities. In discharging these duties, the Committee determines these elements of compensation for our CEO, and, with the input of our CEO, determines these compensation elements for our other executive officers. In addition, the Committee oversees the broad-based equity incentive plans for our employee population and reviews equity grant guidelines for these employees on an annual basis.

The Committee routinely meets throughout the fiscal year in the ordinary discharge of its duties, including to determine the compensation for our executive officers. The Committee also regularly meets in executive session without management present.

 

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Role of Management

Our CEO and members of our People & Places, Legal and Finance Departments (collectively, “Management”) assist and support the Committee. At least annually, Management reviews our executive compensation philosophy with the Committee and, at the Committee’s direction, develops compensation proposals for Committee consideration. The Committee considers and approves any proposed changes with the intent to continue aligning our compensation philosophy and policies with our business objectives and to support our efforts to attract and retain key talent in a highly competitive environment. In this regard, Management assesses a market review and analysis of peer company executive compensation levels and practices prepared by the Committee’s compensation consultant Compensia as well as executive compensation data drawn from industry-specific compensation surveys (collectively, the “Market Comparables”) and provides the Committee with executive compensation recommendations informed by the Market Comparables, including: historical base salary and annual incentive compensation payments; fiscal year-end levels of equity ownership; equity award holdings; unrealized value calculations of vested and unvested equity awards at various stock prices; grant date fair values of equity award holdings (as computed for financial reporting purposes); and other relevant information.

At least annually, our CEO reviews with the Committee the performance of our other executive officers and recommends to the Committee base salary adjustments, annual incentive compensation targets, and long-term incentive compensation awards for each of these individuals. He also uses these individual performance assessments to make recommendations for annual incentive compensation payouts under the fiscal year’s annual incentive compensation plan. The Committee considers our CEO’s input, but the Committee makes the final determinations regarding executive officer compensation. The Committee makes decisions with respect to our CEO’s compensation without him present and after considering input from our Chair of the Board, the Chair of the Committee and other members of our Board. Committee and other Board members also meet separately with our CEO’s direct reports to gather input on his performance. The Committee considers such input when making decisions with respect to our CEO’s compensation.

Role of Compensation Consultant

The Committee engages independent advisors to assist it in carrying out its responsibilities. During fiscal 2023, the Committee engaged Compensia for the purpose of advising the Committee on executive compensation matters. Compensia also advised the Committee on certain matters related to our broad- based equity compensation programs for employees, including our equity utilization, participation, and grant guidelines relative to competitive market practices.

The Committee provided Compensia with instructions regarding the parameters of the competitive analysis of executive officer compensation packages that it was to conduct, in light of our goal to attract and retain key talent in a highly competitive environment. In particular, the Committee instructed Compensia to analyze whether the compensation packages of our executive officers were consistent with our compensation philosophy and competitive relative to the Market Comparables. The Committee further instructed Compensia to evaluate the following elements to assist the Committee in establishing fiscal 2023 compensation:

 

   

Base salary;

 

   

Target and actual annual incentive compensation;

 

   

Target and actual total cash compensation (base salary and annual incentive compensation);

 

   

Long-term incentive compensation (equity awards);

 

   

Target and actual total direct compensation (base salary, annual incentive compensation, and long-term incentive compensation); and

 

   

The current and potential value of vested and unvested equity awards.

 

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Accordingly, Compensia performed an analysis of the compensation for each of our executive officers against the compensation of executives with similar positions within the Market Comparables and presented its report to the Committee. In November 2022, the Committee used the analysis in the course of its deliberations and determinations of executive compensation for fiscal 2023.

Representatives from Compensia attend most meetings of the Committee and periodically communicate with members of the Committee and Management outside the formal Committee meetings.

During fiscal 2023, Compensia also performed services for us at the direction of the Committee relating to equity utilization, proxy statement support, SEC rulemaking relating to executive compensation, executive new-hire arrangements, and general Committee meeting support. In addition, Compensia assisted the Nominating and Governance Committee with its review of the compensation of our non-employee directors. Compensia received compensation for these services. Based on an assessment of the factors set forth in the NYSE listing standards and the SEC’s rules and regulations, and taking into account the provision of these services, the Committee does not believe that its relationship with Compensia and the work of Compensia on behalf of the Committee has raised any conflict of interest.

Use of Market Data for Competitive Positioning

The Committee does not benchmark compensation of our executive officers against the Market Comparables or pay practices of our compensation peer group. Rather, the Committee uses the Market Comparables and the pay practices of our compensation peer group only as a point of reference when setting compensation levels for each of our executive officers.

To assist it in analyzing our executive compensation program for fiscal 2023, the Committee directed Compensia to review and recommend potential changes to our compensation peer group and, thereafter, compile and analyze the executive compensation data for the companies in the peer group. Compensia also compiled and analyzed executive compensation data drawn from published industry-specific compensation surveys and prepared a report for the Committee on the competitive positioning of our executive compensation program.

As part of this process, and based on advice from Compensia, the Committee instructed Compensia that, for a company to be considered as a potential compensation peer group candidate, the company must operate in one of several designated industries (consumer electronics, technology IP licensing, entertainment technology, electronic equipment, software, or cloud-based/focused products or services) and have a market capitalization within the range of approximately 0.25 to 4.0 times our mid-calendar year market capitalization based on a 30-day average measured as of July 15, 2022. Once an initial group of companies that met these industry and market capitalization thresholds had been identified, with Compensia’s input, the Committee evaluated them using the following additional selection criteria relative to the same criteria for Dolby:

 

   

Revenue within the range of approximately 0.5 to 4.0 times that of Dolby;

 

   

Market capitalization as a multiple of revenue within the range of 0.5 to 2.0 times that of Dolby;

 

   

Market capitalization per employee within the range of 0.5 to 2.0 times that of Dolby;

 

   

Net income margin greater than 0.5x that of Dolby; and

 

   

Number of employees within the range of approximately 0.5 to 4.0 times that of Dolby.

In addition, the Committee also considered whether the potential companies were direct competitors for executive talent, either because of their geographic proximity to us, prior recruitment history, or employment of individuals with unique skills or expertise that are comparable to the unique skills or expertise that are either required or desirable in our business.

 

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Using these selection criteria, the Committee removed Nuance Communications, Citrix Systems, and Coherent from our compensation peer group due to the acquisition or proposed acquisition of those companies, and also removed Cadence Design Systems, Fortinet, and Synopsys due to market capitalizations significantly above the applicable selection criteria. The Committee replaced these companies in our compensation peer group with DocuSign, F5, Paylocity Holding, Qualys, Twilio, and Zoom Video, thus maintaining our compensation peer group at 17 companies for fiscal 2023, as follows:

 

   

Akamai Technologies Inc.

 

   

ANSYS, Inc.

 

   

Cognex Corporation

 

   

CommVault Systems, Inc.

 

   

CoStar Group, Inc.

 

   

DocuSign, Inc.

 

   

F5, Inc.

 

   

Fair Isaac Corporation

 

   

InterDigital, Inc.

 

   

Paylocity Holding Corporation

 

   

PTC Inc.

 

   

Qualys, Inc.

 

   

Twilio Inc.

 

   

Verisign, Inc.

 

   

Xperi Holding Corporation (subsequently spun off into Xperi Inc. and Adeia Inc.)

 

   

Ziff Davis, Inc. (fka J2 Global, Inc.)

 

   

Zoom Video Communications, Inc.

As discussed above, the Committee does not benchmark compensation of our executive officers against the Market Comparables or pay practices of our compensation peer group. Instead, the Committee uses the Market Comparables as a reference point, among many as outlined below under Committee Considerations, in its determinations of our executive officers’ compensation.

The Committee has carefully considered its compensation peer group selection methodology and has consistently applied this methodology over time. However, given the unique nature of our business, selection of our peer group requires the Committee to use its judgment, in addition to the objective criteria contained in our peer group selection methodology. The Committee from time to time considers alternative peer group selection methodologies and has determined that our current peer group selection methodology continues to be the most appropriate methodology for us.

Overview of Executive Compensation Program

Objectives

The objectives of our executive compensation program are to:

 

   

Provide a competitive compensation package that enables us to attract, motivate, and retain high-caliber talent;

 

40


   

Provide a total compensation package, aligned with the nature and dynamics of our business, which focuses management on achieving our annual and long-term corporate objectives and strategies;

 

   

Reward both individual and collective contributions to Dolby’s success consistent with our pay-for-performance orientation; and

 

   

Emphasize long-term value creation and further align the interests of management and stockholders through the use of equity-based awards.

Consistent with these objectives, our pay positioning strategy emphasizes the total direct compensation opportunity provided to our executive officers and places less weight on the discrete positioning of individual compensation elements. In addition, when evaluating total direct compensation, the Committee considers, as a point of reference only, compensation trends reflected by the companies in our compensation peer group (as described above) and companies with which we compete for talent. Individual elements of compensation are designed to create incentives that are consistent with our business needs and strategic objectives.

Executive Compensation Policies

In discharging its responsibilities relating to executive compensation, the Committee, with the assistance of its compensation consultant, monitors trends and developments in compensation policies and practices and seeks to enhance the effectiveness of our executive compensation program on an ongoing basis. As a result, our executive compensation program includes:

 

   

Pay-for-Performance. An effective pay-for-performance orientation, including an annual cash incentive compensation plan tied to financial performance, as well as the use of long-term incentive compensation that represents the largest portion of each executive officer’s total compensation package, consisting of performance stock unit awards, stock options, and restricted stock unit awards;

 

   

No Golden Parachute Gross-ups. A practice of not providing “golden parachute” excise tax “gross-ups” for our executive officers;

 

   

Double-Trigger, not Single-Trigger, Vesting. “Double-trigger” vesting acceleration arrangements in connection with a change in control of Dolby (that is, accelerated vesting that is triggered only upon certain specified terminations of employment following a change in control of Dolby, and not upon a change in control alone) for equity awards granted to our executive officers, which are generally consistent with the arrangements provided to our other employees as described in “—Severance and Change in Control Arrangements—General” below;

 

   

Limited Perquisites. A practice of providing our executive officers with only limited perquisites or other personal benefits that are both customary in the industry in which we operate and in furtherance of accomplishing our business objectives;

 

   

Compensation Survey Data. The use of compensation survey data, as well as publicly-available data about the compensation practices of our peers, to inform the design of our executive compensation program;

 

   

Stock Ownership Guidelines. Stock ownership guidelines for our executive officers that require them to hold a minimum number of qualifying Dolby equity securities;

 

   

Clawback Policy. A policy on recoupment of incentive compensation (“clawback”) that is applicable to our executive officers and provides for the recoupment of certain cash or equity-based incentive compensation payments or awards made or granted to an executive officer in the event we are required to prepare an Accounting Restatement (as defined in “—Policy on Recoupment of Incentive Compensation (“Clawback”)” below);

 

   

No Short Selling, Pledging or Hedging. A general prohibition against short sales, pledging of stock, hedging of stock ownership positions and transactions involving derivative securities relating to shares of our Common Stock; and

 

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Annual Compensation Risk Assessment. An annual risk assessment with respect to our compensation programs, policies, and practices, including the programs and policies for non-executive officer employees, as described in “Executive Compensation Tables and Related Matters—Compensation Program Risk Assessment.”

Fiscal 2023 Compensation Determinations

Committee Considerations

The Committee considered a variety of factors in determining the compensation for our NEOs for fiscal 2023. These factors included:

 

   

An evaluation of Dolby’s financial and operational performance, including progress against our business strategy and financial and operational performance;

 

   

An evaluation of each NEO’s current scope of responsibility and contribution to Dolby’s success, including a review of his or her achievement of strategic business objectives;

 

   

An assessment of each NEO’s potential to make future contributions to Dolby, including a review of his or her skills, experience, and past performance;

 

   

A review of retention considerations, including the current and potential value of unvested equity awards held by each NEO;

 

   

A review of internal pay equity, including an analysis of how a NEO’s target total direct compensation compares to other executive officers;

 

   

A review of the Market Comparables;

 

   

The recommendation of our CEO with respect to his direct reports; and

 

   

With respect to our CEO, an assessment of his performance that includes feedback from our Chair of the Board, the Chair of the Compensation Committee, other members of our Board, and our CEO’s direct reports.

Our CEO applied a similar list of factors when formulating compensation recommendations for his direct reports (he did not participate in recommending or setting his own compensation). The Committee members and our CEO may have weighed these factors differently depending on the compensation element.

Base Salary

The Committee makes base salary adjustments, if any, on a calendar year (as opposed to a fiscal year) basis. Consequently, the fiscal 2023 base salary information reported in the Summary Compensation Table reflects a blend of calendar 2022 and calendar 2023 base salaries.

In November 2022, following its review of our executive compensation program objectives for fiscal 2023, the Committee assessed the base salaries of our NEOs in light of the factors described in “—Committee Considerations” above. As a result of this assessment, for calendar 2023, the Committee approved base salary increases of approximately 3% for each of our NEOs. These base salary increases were consistent with the merit-based increases for our general U.S. workforce, which members of our People & Places Department established based on competitive market data for technology companies.

 

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The annualized base salaries of our NEOs for calendar 2023 and 2022 are set forth below:

 

NEO

   Calendar 2023
Base Salary
     Calendar 2022
Base Salary
     Change  

Kevin Yeaman

   $ 935,000      $ 910,000        2.7

Robert Park

   $ 489,000      $ 475,000        2.9

Andy Sherman

   $ 562,000      $ 546,000        2.9

John Couling

   $ 558,000      $ 542,000        3.0

Todd Pendleton

   $ 546,000      $ 530,000        3.0

Annual Incentive Compensation – 2023 Executive Bonus Plan

Our annual incentive compensation plan consists of performance-based compensation, which is paid in cash. Payouts under the plan are contingent on Dolby’s financial performance so that our NEOs are rewarded based on the achievement of financial objectives.

Fiscal 2023 Executive Bonus Plan – Structure

The purpose of our 2023 Executive Bonus Plan was to motivate our NEOs to achieve pre-established financial goals and to maintain a high level of team and individual performance. Funding for the 2023 Executive Bonus Plan was determined based on surpassing a gating level of non-GAAP operating income and achievement of a revenue goal set by the Committee for fiscal 2023. We calculated the potential payouts under the 2023 Executive Bonus Plan for our NEOs using the following formula, the terms of which are described further below:

 

 

LOGO

Annual Incentive Compensation Targets

For fiscal 2023, the Committee maintained the NEOs’ annual incentive compensation targets (stated as a percentage of base salary for calendar 2023) at the same levels that were used for our fiscal 2022 annual incentive compensation plan.

 

NEO

   Target
Percentage of
Calendar 2023
Base Salary
    Fiscal 2023
Annual
Incentive
Compensation
Target
 

Kevin Yeaman

     100   $ 935,000  

Robert Park

     65   $ 317,850  

Andy Sherman

     65   $ 365,300  

John Couling

     65   $ 362,700  

Todd Pendleton

     65   $ 354,900  

A NEO may receive an actual award payout that is larger or smaller than his annual incentive compensation target, or may receive no award payout at all, depending on the extent to which the applicable corporate performance goals were met and subject to any discretionary adjustments based on individual performance or other factors determined by the Committee as described further below.

 

43


Multiplier — Revenue and Non-GAAP Operating Income Goals

In November 2022, the Committee approved a sliding scale corporate financial performance formula for determining payout levels for the 2023 Executive Bonus Plan based on our achievement of a combination of revenue and non-GAAP operating income goals. The revenue and non-GAAP operating income goals underlying the multiplier were consistent with our fiscal 2023 financial performance objectives and operating plan. In approving these targets for fiscal 2023, the Committee set goals aimed at motivating our NEOs to achieve strong financial, team, and individual performance.

Our 2023 Executive Bonus Plan was based on revenue and profitability measures because the Committee believed that solid performance in these areas would contribute to long-term stockholder value creation. No payouts would be made under the 2023 Executive Bonus Plan unless we achieved both a non-GAAP operating income “gate” and threshold revenue as set forth in the table below, which represented 75% and 90% of the non-GAAP operating income and revenue target objectives under our fiscal 2023 operating plan, respectively. The maximum multiplier was 150%.

 

 

LOGO

 

*

See discussion below regarding the use of non-GAAP financial measures and adjustments to results for purposes of determining payouts under the 2023 Executive Bonus Plan.

For purposes of the 2023 Executive Bonus Plan, “non-GAAP operating income” excluded from GAAP operating income expenses related to stock based compensation, the amortization of intangibles from business combinations, and restructuring charges. In addition, the 2023 Executive Bonus Plan provides that at the discretion of the Committee, the financial impact of M&A transactions will be excluded for purposes of assessing achievement of the revenue and non-GAAP operating income goals under the 2023 Executive Bonus Plan. Accordingly, the Committee excluded from our revenue and non-GAAP operating income results the impact of an acquisition that closed in fiscal 2023. Absent such exclusions, the 2023 Executive Bonus Plan would have funded at a higher level than it did with these exclusions. We achieved non-GAAP operating income, as so adjusted, of $378.4 million which satisfied the “gate” requirement of $292.5 million. We also achieved non-GAAP revenue of $1,280.7 million against a threshold requirement of $1,156.5 million and a target of $1,285.0 million, resulting in a multiplier of 98%. A reconciliation of our non-GAAP to GAAP financial results is set forth in Appendix A to this Proxy Statement.

 

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Potential Adjustments for Individual Performance and 2023 Executive Bonus Plan Payouts

For fiscal 2023, our CEO received 98% of his annual incentive compensation target, based on a multiplier of 98%. The Committee had the discretion to adjust the calculated award payout amount for our CEO under the 2023 Executive Bonus Plan to take into account additional factors that the Committee deemed relevant to the assessment of individual or corporate performance. In November 2023, the Committee, based on its evaluation of our CEO’s performance and his contributions during the fiscal year, determined not to make any such adjustment.

For each of our other NEOs, our CEO had the discretion under the 2023 Executive Bonus Plan to recommend, subject to the limitations set forth in the 2023 Executive Bonus Plan, increases or decreases of up to 25% of each such NEO’s calculated award payout amount for the entire fiscal year based on team and individual performance. Approval of any such adjustments, however, is up to the Committee. In November 2023, the Committee, after consultation with our CEO, determined not to make any adjustments to the calculated award payout amounts of our NEOs, resulting in payments at 98% of their annual incentive compensation targets, based on a multiplier of 98% for fiscal 2023. All final determinations were made by the Committee alone.

Accordingly, the Committee awarded the following annual incentive compensation payouts to our NEOs under the 2023 Executive Bonus Plan:

 

NEO

   Annual
Incentive
Compensation
Target
     Approved
Award Payout
     Award Payout
as Percentage
of Annual
Incentive
Compensation
Target
 

Kevin Yeaman

   $ 935,000      $ 916,300        98

Robert Park

   $ 317,850      $ 311,493        98

Andy Sherman

   $ 365,300      $ 357,994        98

John Couling

   $ 362,700      $ 355,446        98

Todd Pendleton

   $ 354,900      $ 347,802        98

Long-Term Incentive Compensation

The objectives of our long-term incentive compensation program are to: encourage our NEOs to focus on our long-term strategic objectives; further align the interests of our NEOs and our stockholders; provide compensation that is market competitive; recruit, motivate, and retain top talent; and make efficient use of compensation resources. The Committee periodically reviews the design of our long-term incentive compensation program in furtherance of these objectives.

Equity Mix of Awards

We use a “portfolio” approach that mixes different types of equity awards for the long-term incentive compensation granted to our NEOs, consisting in fiscal 2023 of a combination of performance stock unit awards, stock options, and restricted stock unit awards. The graph below illustrates how the Committee allocated the long-term incentive compensation granted to our NEOs among these equity vehicles in fiscal 2023, based on the aggregate grant date fair value of the awards granted to our NEOs.

 

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LOGO

In determining the mix of equity for our executives, the Committee considered the following:

Stock Options. This vehicle directly ties a sizable portion of our NEOs’ target total direct compensation opportunities to increases in the market price of our Class A Common Stock and presents an effective incentive for them to make long-term decisions that sustain stock price growth and to maximize performance over the term of the award, which is generally a maximum of ten years. Because stock options provide real economic value only if the price of the underlying stock increases, our NEOs realize no economic benefit from their outstanding stock options if our stock price declines or stays flat.

Restricted Stock Unit Awards. This vehicle aligns the interests of our NEOs with those of our stockholders by rewarding them for increases in our stock price. Unlike stock options, however, restricted stock unit awards have real economic value when they vest even if the stock price declines or stays flat, thus delivering more predictable value to our NEOs and furthering our retention objectives over the vesting term of the awards. In addition, because of their “full value” nature, restricted stock unit awards deliver the desired grant date fair value using a lesser number of shares than we would otherwise use for stock option grants, enabling us to use our equity compensation resources more efficiently and manage the overall number of shares granted and potential resulting dilution.

Performance Stock Unit Awards. This vehicle ties a portion of our NEOs’ total direct compensation opportunities to the total stockholder return of Dolby’s Class A Common Stock relative to the total stockholder return of a comparator stock index. Specifically, the shares of our Class A Common Stock subject to outstanding performance stock unit awards may be earned contingent on our achievement of annualized relative total stockholder return levels for Dolby over a three-year performance period beginning on the date of grant, measured against the S&P Midcap 400 Index (^MID). From 0% to 200% of the target number of shares subject to the performance stock unit awards may be earned, depending on our level of achievement of these performance conditions, as follows:

 

     3-Year Annualized TSR
Dolby vs. ^MID
   % of Target PSUs
Vested*
   <-16.667%    0%

Threshold

   -16.667%    50%

Target

   0%    100%

Maximum

   ≥33.333%    200%

 

*

Linear scaling between performance levels.

 

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If the total stockholder return of our Class A Common Stock lags significantly behind that of the S&P Midcap 400 Index over the term of the performance period, no shares will be earned under the performance stock unit awards and our NEOs will not realize any value from these awards.

The Committee believes that providing a portfolio of stock options, restricted stock unit awards, and performance stock unit awards supports the objectives of our long-term incentive compensation program by further aligning the interests of our NEOs and stockholders, balancing performance and retention considerations, and enabling us to use our equity compensation resources more efficiently.

Award Terms

Generally, we make an initial equity award to an executive officer when he or she joins us. Thereafter, our executive officers are considered for additional equity awards on an annual basis. The Committee determines the size of each executive officer’s equity award, if any, based on the factors described in “—Committee Considerations” above.

One of the objectives of our long-term incentive compensation program is to encourage executive officer retention by requiring that the awards be earned over a multi-year period. Accordingly, in fiscal 2023, we granted stock options and restricted stock unit awards that vest over a period of four years, as well as performance stock unit awards that are subject to a three-year performance period, as follows:

 

   

For stock options, a quarter of the total number of shares of our Class A Common Stock subject to each stock option vests on the first anniversary of the grant date and the balance of the shares subject to the stock option vests in equal monthly installments over the next 36 months;

 

   

For restricted stock unit awards, a quarter of the total number of shares of our Class A Common Stock subject to each award vests on each of the first four anniversaries of the grant date; and

 

   

For performance stock unit awards, shares of our Class A Common Stock subject to each stock unit award will be earned contingent on our achievement of annualized relative total stockholder return levels for Dolby relative to the S&P Midcap 400 Index (^MID) measured over a three-year performance period beginning on the date of grant and ending on the third anniversary thereof and subject to the continued service of the executive officer through such date. Settlement of the number of shares earned (if any) will occur following completion of the performance period, upon certification of achievement of the performance conditions by the Committee. From 0% to 200% of the target number of shares subject to the performance stock units award may be earned, depending on our achievement of these performance conditions.

In fiscal 2023, after considering the factors described in “—Committee Considerations” above, the Committee approved the following stock options, restricted stock unit awards, and performance stock unit awards for our NEOs listed in the table below.

 

NEOs

  Grant
Date
    Shares
Subject to
Time-Based
Stock
Options
    Per
Share
Exercise
Price
    Grant Date
Fair Value
of Time-
Based
Stock
Options
    Shares
Subject to
Restricted
Stock
Unit
Awards
    Grant Date
Fair Value
of
Restricted
Stock Unit
Awards
    Shares
Subject to
Performance
Stock Unit
Awards

(at Target)
    Grant Date
Fair Value
of
Performance
Stock Unit
Awards

(at Target)
 

Kevin Yeaman

    12/15/2022       98,200     $ 71.07     $ 1,880,530       54,546     $ 3,727,128       27,273     $ 2,015,747  

Robert Park

    12/15/2022       31,677     $ 71.07     $ 606,615       17,595     $ 1,202,266       8,797     $ 650,186  

Andy Sherman

    12/15/2022       32,944     $ 71.07     $ 630,878       18,299     $ 1,250,371       9,149     $ 676,203  

John Couling

    12/15/2022       38,013     $ 71.07     $ 727,949       21,114     $ 1,442,720       10,557     $ 780,268  

Todd Pendleton

    12/15/2022       29,143     $ 71.07     $ 558,088       16,188     $ 1,106,126       8,094     $ 598,228  

All stock options were granted with a per-share exercise price equal to the fair market value of our Class A Common Stock on the grant date.

 

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Equity-Based Award Grant and Vesting Policy

The Committee has adopted an Equity-Based Award Grant and Vesting Policy (the “Equity Policy”), which applies to all equity awards granted to any of our employees, including our NEOs. The Equity Policy provides that:

 

   

New hire, promotion, and retention equity awards may only be granted once per month on the 15th day of the month. If the 15th day of the month falls on a weekend or holiday, awards will be granted on the first business day immediately following the 15th day of the month.

 

   

Ongoing equity awards (i.e., other than new hire, promotion, and retention awards) may only be granted on December 15th. If December 15th falls on a weekend or holiday, awards will be granted on the first business day immediately following December 15th.

 

   

If a pricing term is applicable to a particular equity award (e.g., the exercise price for a stock option), the pricing term will be established by reference to the fair market value of our Class A Common Stock on the award date as determined in accordance with the applicable equity plan provisions.

 

   

Equity award approvals by meeting and by unanimous written consent may precede the award date so long as the approval is effective as of the respective award date. Approvals of equity-based awards may never occur after the award date.

 

   

If the Committee adopts an executive annual incentive compensation plan that permits the Committee to grant restricted stock unit awards in lieu of cash, the timing of any such restricted stock unit award grants will be determined by the Committee at the time it adopts the applicable executive annual incentive compensation plan. When determining the timing of such awards, the Committee will consider the principles embodied in the Equity Policy.

Insider Trading Policies and Procedures (Including Hedging and Pledging)

We maintain insider trading policies and procedures governing the purchase, sale, and other dispositions of Dolby securities that are applicable to Dolby, all of our directors, officers, and employees, all contractors of the company and all members of their immediate families and households. Our insider trading policies and procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and the NYSE listing standards. Our insider trading policy prohibits, among other things, short sales, hedging or similar transactions designed to decrease the risks associated with holding Dolby securities, and transactions involving derivative securities relating to Dolby securities. Our insider trading policy also generally prohibits pledging of Dolby securities.

Executive Stock Ownership Guidelines

We maintain stock ownership guidelines for our executive officers, including our NEOs, based on our belief that stock ownership further aligns the interests of our executive officers with those of our stockholders. These guidelines provide that:

 

   

Our CEO is expected to accumulate and hold an amount of qualifying Dolby equity securities equal to the value of five times his annual base salary (subject to a “floor” to account for potential significant decreases in stock price, consisting of a fixed number of shares having a value equal to five times his base salary on the date of adoption of the guidelines (September 22, 2015)); and

 

   

Each other executive officer who reports to our CEO is expected to accumulate and hold an amount of qualifying Dolby equity securities equal to the value of two times his or her annual base salary (subject to a similar floor described above, consisting of a fixed number of shares having a value equal to two times his or her base salary on the date of adoption of the guidelines (September 22, 2015); or with respect to executive officers who became CEO direct reports after such date, a value equal to two times his or her base salary on the date he or she became a CEO direct report).

 

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Compliance is measured as of the last day of each fiscal year, and our executive officers are expected to achieve the applicable level of ownership by the fifth anniversary of the adoption date of the guidelines (or with respect to future executive officers, within five years of becoming an executive officer). As of the end of fiscal 2023, all of our NEOs were in compliance with our executive stock ownership guidelines.

Policy on Recoupment of Incentive Compensation (“Clawback”)

In July 2016, our Board adopted a policy on the recoupment of incentive compensation (the “Previous Policy”), which it amended and restated in August 2023 (as amended, the “Clawback Policy”) to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as implemented by NYSE listing standards and the SEC’s rules and regulations. The Clawback Policy requires us to recover certain cash or equity-based incentive compensation payments or awards made or granted to an executive officer in the event we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (an “Accounting Restatement”). The Clawback Policy covers cash or equity-based compensation that is granted, earned, or vested based wholly or in part upon the attainment of a company financial reporting measure (including stock price or total stockholder return). Recovery under the Clawback Policy applies to incentive compensation subject to the policy that is received (i) on or after October 2, 2023, (ii) by a person after such individual became an executive officer and (iii) during the three completed fiscal years immediately preceding the date on which we are required to prepare the Accounting Restatement. In addition, recoupment is only required where the executive officer would have received a lower payment based upon the restated financial results.

Incentive compensation received prior to October 2, 2023 may be subject to recoupment under the Previous Policy. The Previous Policy allows us to recoup certain cash or equity-based incentive compensation payments or awards made or granted to an executive officer in the event they are involved in fraud or misconduct that results in the need for the company to prepare a material financial restatement. The Previous Policy covers cash or equity-based compensation based on the attainment of company financial reporting measures (excluding stock price or total stockholder return). Recovery under the Previous Policy applies to incentive compensation subject to the policy that is paid, awarded or granted during the three completed fiscal years immediately preceding the date on which we are required to prepare the restatement. In addition, no recoupment under the Previous Policy can be made unless the executive officer would have received a lower payment based upon the restated financial results.

Generally Available Benefits

In fiscal 2023, our NEOs were eligible to participate in our Employee Stock Purchase Plan and the health and welfare programs that are generally available to our other full-time employees, including medical, dental and vision plans; flexible spending accounts for healthcare and dependent care; life, accidental death and dismemberment, and disability insurance; and paid time off.

We also maintain a tax-qualified Section 401(k) Plan, which is broadly available to our U.S. general employee population. Under the Section 401(k) Plan, U.S. employees are eligible to receive matching contributions and profit-sharing contributions from Dolby, which together were capped at a maximum of up to $34,890 per participating employee in calendar 2023.

Severance and Change in Control Arrangements

General

Our employee stock plans contain “double-trigger” vesting acceleration provisions for outstanding and unvested equity awards that may be triggered by a termination of employment by Dolby without “cause” or an

 

49


employee resignation with “good reason” within 12 months following a change in control of Dolby. The vesting of outstanding and unvested equity awards also accelerates if an equity award is not assumed by the successor entity in connection with such a change in control. These vesting acceleration provisions are intended to secure the continued dedication of our employees, including our executive officers, notwithstanding the possibility or occurrence of a change in control of Dolby.

We do not provide “golden parachute” excise tax gross-ups for our executive officers.

Severance Arrangement with Mr. Yeaman

We have entered into a severance arrangement with our CEO as described under the section entitled “Executive Compensation Tables and Related Matters—Potential Payments upon Termination or Change in Control.” We negotiated this arrangement to induce him to resign from his former position and accept the position of CEO in fiscal 2009. This arrangement is intended to provide him with certain payments and benefits in the event of an involuntary termination of his employment without cause or his resignation for good reason, including following a change in control of Dolby.

No Other Severance or Change in Control Arrangements

Apart from the arrangement with Mr. Yeaman and the “double-trigger” vesting acceleration provisions in our 2020 Stock Plan as described above, none of our executive officers has any severance, change in control, or similar agreements or arrangements with Dolby.

Perquisites and Other Personal Benefits

We provide our NEOs with only limited perquisites or other personal benefits that are both customary in the industry in which we operate and are in furtherance of accomplishing our business objectives. For example, given our role in the entertainment industry, our NEOs may be asked to attend industry events, including film festivals, film premieres, award shows, or other similar events, where the attendance of a spouse or significant other may be expected or customary. In those cases, we may pay for or reimburse the business travel and dining expenses of a NEO’s spouse or significant other (not to exceed $8,000 per NEO in any single fiscal year). We believe that payment or reimbursement of these expenses serves a legitimate business purpose in, among other things, advancing our brand and business relationships within the entertainment industry.

Employment Agreement with Mr. Yeaman

In connection with the appointment of Mr. Yeaman as our President and CEO in fiscal 2009, we entered into an employment agreement with him, which provides that, among other things, his target annual incentive compensation will be at least equal to a specified minimum percentage of his annual base salary. The agreement also provides Mr. Yeaman with certain payments and benefits in the event of his termination of employment under specified circumstances, including following a change in control of Dolby. For a summary of the material terms and conditions of these provisions, see “Executive Compensation Tables and Related Matters—Potential Payments upon Termination or Change in Control.”

Accounting and Tax Considerations

The Committee generally takes into consideration the accounting and tax treatment of each element of compensation when establishing the compensation programs, practices, and packages for our executive officers.

Accounting for Stock-Based Compensation

We examine the accounting cost associated with equity compensation in light of the requirements under ASC Topic 718. ASC Topic 718 requires companies to measure the compensation expense for all share-based

 

50


payment awards made to employees and directors, including stock options, restricted stock unit awards and performance stock unit awards, based on the grant date “fair value” of the awards. This calculation is performed for accounting purposes, even though recipients may never realize any value from their awards. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements (net of estimated forfeitures, which are determined based on historical experience) over the period that a recipient is required to render service in exchange for the award.

Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code (the “Code”) imposes limitations on the deductibility for federal income tax purposes of compensation over $1 million paid to certain executive officers in a taxable year. Under Section 162(m), the affected executive officers are our CEO, CFO, next three most highly compensated executive officers, and certain of our other current and former executive officers who have been subject to the Section 162(m) deduction limit while at Dolby.

The Committee generally has considered the deductibility of executive compensation in structuring our executive compensation program but, in light of Section 162(m), expects to pay non-deductible compensation to one or more executive officers in furtherance of the goals and purposes of our executive compensation program as the Committee determines appropriate from time to time.

 

51


REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

This report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent Dolby specifically incorporates this report by reference, and shall not otherwise be deemed filed under such acts.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee

Avadis Tevanian, Jr., Chair

Micheline Chau

Tony Prophet

Anjali Sud

 

52


EXECUTIVE COMPENSATION TABLES AND RELATED MATTERS

Fiscal 2023 Summary Compensation Table

The Summary Compensation Table and accompanying footnotes below describe the “total compensation” of our NEOs for the past three fiscal years (or such less period that they have been a NEO), calculated in accordance with SEC rules. The total compensation presented below does not reflect the actual compensation received by, or the target compensation of, our NEOs in each fiscal year. The actual value realized by our NEOs in fiscal 2023 from their long-term incentive compensation awards is presented in the Option Exercises and Stock Vested at 2023 Fiscal Year-End table below.

The individual elements of the total compensation amount reported in the Summary Compensation Table are as follows:

Base Salary. For each of fiscal 2021 and fiscal 2023, the amounts reported represent 52 weeks of base salary. For fiscal 2022, the amounts reported represent 53 weeks of base salary. Base salary adjustments are set on a calendar year (as opposed to a fiscal year) basis. Consequently, the amounts reported in the Summary Compensation Table represent a blend of calendar year base salaries.

Bonus. The figure reported for Mr. Park in fiscal 2022 reflects a sign-on bonus that he received in connection with his offer of employment.

Stock Awards and Option Awards. Stock Awards consist of restricted stock unit and performance stock unit awards, and Option Awards consist of stock options, as indicated. Amounts reported in the Stock Awards and Option Awards columns reflect the aggregate grant date fair value of the equity awards computed in accordance with ASC Topic 718, excluding estimated forfeitures. See Note 9 to our consolidated financial statements in our 2023 Annual Report on Form 10-K for more information about the assumptions used to calculate the grant date fair value of such awards.

Non-Equity Incentive Plan Compensation. The amount of Non-Equity Incentive Plan Compensation consists of the Executive Bonus Plan awards earned for the fiscal year. Such awards are based on our financial performance during the specified fiscal year and are paid in the following fiscal year.

 

Name and Principal Position

  Fiscal
Year
    Salary
($)
    Bonus
($)
    Stock Awards
($)(1)
    Option Awards
($)(2)
    Non-Equity
Incentive Plan
Compensation
($)
    All Other
Compensation
($)
    Total
($)
 

Kevin Yeaman

    2023       928,750       —         5,742,876       1,880,530       916,300       35,745 (3)      9,504,201  

President and Chief

Executive Officer

    2022       919,154       —         6,149,772       1,968,436       336,700       33,155 (3)      9,407,217  
    2021       872,100       —         5,842,577       1,872,243       1,010,850       31,348 (3)      9,629,118  

Robert Park

    2023       485,500       —         1,852,453       606,615       311,493       35,745 (4)      3,291,806  

Senior Vice President and Chief Financial Officer

    2022       458,558       400,000       2,931,251       1,039,125       108,079       11,649 (4)      4,948,662  

Andy Sherman

    2023       558,000       —         1,926,573       630,878       357,994       35,745 (5)      3,509,190  

Executive Vice President, General Counsel and Corporate Secretary

    2022       552,192       —         2,063,126       660,383       131,313       33,155 (5)      3,440,169  
    2021       526,019       —         1,948,770       624,503       396,175       31,848 (5)      3,527,315  
               

John Couling

    2023       554,000       —         2,222,987       727,949       355,446       35,745 (6)      3,896,127  

Senior Vice President, Entertainment

    2022       541,654       —         2,380,494       761,975       130,351       33,155 (6)      3,847,629  

Todd Pendleton

    2023       542,000       —         1,704,354       558,088       347,802       35,995 (7)      3,188,239  

Senior Vice President, Chief Marketing Officer

    2022       536,154       —         1,825,080       584,172       127,465       33,155 (7)      3,106,026  
    2021       511,019       —         1,738,307       557,051       384,963       33,782 (7)      3,225,122  

 

(1)

The grant date fair value of restricted stock unit awards represents their intrinsic values on the date of grant, calculated for each restricted stock unit award by multiplying the number of shares of our Class A Common Stock subject to such award by the grant date fair value on the date of grant. The Stock Awards amount also includes the grant date fair value of performance stock unit awards, which was determined using a Monte Carlo simulation to determine the probability of achieving the underlying performance conditions. For fiscal

 

53


  2023, the grant date fair value of these performance stock units awards at target performance is reported as follows for Messrs. Yeaman, Park, Sherman, Couling, and Pendleton, respectively: $2,015,747, $650,186, $676,203, $780,268, and $598,228. For fiscal 2022, the grant date fair value of these performance stock units awards at target performance is reported as follows for Messrs. Yeaman, Sherman, Couling, and Pendleton, respectively: $2,223,052, $745,768, $860,494, and $659,749. For fiscal 2021, the grant date fair value of these performance stock units awards at target performance is reported as follows for Messrs. Yeaman, Sherman, and Pendleton, respectively: $2,012,106, $671,141, and $598,628. For fiscal 2023, the grant date fair value of these performance stock units awards at maximum performance is reported as follows for Messrs. Yeaman, Park, Sherman, Couling, and Pendleton, respectively: $4,031,495, $1,300,373, $1,352,405, $1,560,536, and $1,196,455. For fiscal 2022, the grant date fair value of these performance stock units awards at maximum performance is reported as follows for Messrs. Yeaman, Sherman, Couling, and Pendleton, respectively: $4,446,105, $1,491,536, $1,720,988, and $1,319,498. For fiscal 2021, the grant date fair value of these performance stock units awards at maximum performance is reported as follows for Messrs. Yeaman, Sherman, and Pendleton, respectively: $4,024,211, $1,342,282, and $1,197,257. See Note 9 to our consolidated financial statements in our 2023 Annual Report on Form 10-K for more information about the assumptions used to calculate the value of such awards.
(2)

The grant date fair value of stock options was determined using the Black-Scholes option pricing model. See Note 9 to our consolidated financial statements in our 2023 Annual Report on Form 10-K for more information about the assumptions used to calculate the value of such awards.

(3)

In fiscal 2023, comprised of $34,890 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums. In fiscal 2022, comprised of $32,300 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums. In fiscal 2021, comprised of $30,560 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan and $788 in life insurance premiums.

(4)

In fiscal 2023, comprised of $34,890 in employer matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums. In fiscal 2022, comprised of $10,794 in employer matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums.

(5)

In fiscal 2023, comprised of $34,890 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums. In fiscal 2022, comprised of $32,300 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums. In fiscal 2021, comprised of $30,560 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan, $788 in life insurance premiums, and a $500 bonus to Mr. Sherman to commemorate his 10-year anniversary.

(6)

In fiscal 2023, comprised of $34,890 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums. In fiscal 2022, comprised of $32,300 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums.

(7)

In fiscal 2023, comprised of $34,890 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums, and a $250 bonus to Mr. Pendleton to commemorate his 5-year anniversary. In fiscal 2022, comprised of $32,300 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan and $855 in life insurance premiums. In fiscal 2021, comprised of $30,560 in employer profit-sharing and matching 401(k) plan contributions under our retirement plan, $788 in life insurance premiums, and a tax gross-up payment of $2,434 in connection with the reimbursement of the business travel and dining expenses of Mr. Pendleton’s spouse at an industry event, per the reimbursement policy described in “Compensation Discussion and Analysis—Perquisites and Other Personal Benefits.”

Grants of Plan-Based Awards in Fiscal 2023 Table

During fiscal 2023, we granted the following plan-based awards to our NEOs:

 

  1.

Annual incentive compensation awards under the 2023 Executive Bonus Plan,

 

  2.

performance stock unit awards,

 

  3.

restricted stock unit awards, and

 

  4.

stock options.

 

54


Information with respect to each of these awards on a grant-by-grant basis is set forth in the table below.

 

                Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)
    Estimated Possible Payouts
Under Equity Incentive
Plan Awards(2)
    All
Other
Stock
Awards:
Number
of
Shares
of

Stock or
Units(3)
(#)
    All Other
Option
Awards:
Number
of
Securities

Subject to
Options(4)
(#)
    Exercise
or Base
Price

of
Option
Awards
($/Sh)
    Grant
Date Fair
Value of
Stock and

Option
Awards(5)
($)
 

Name

  Grant
Date
    Approval
Date
    Threshold
($)
    Target
($)
    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
 

Kevin Yeaman

    n/a       11/16/2022       467,500       935,000       1,402,500       —         —         —         —         —         —         —    
    12/15/2022       11/16/2022       —         —         —         —         —         —         —         98,200 (6)      71.07       1,880,530  
    12/15/2022       11/16/2022       —         —         —         13,636       27,273       54,546       —         —         —         2,015,747  
    12/15/2022       11/16/2022       —         —         —         —         —         —         54,546       —         —         3,727,128  

Robert Park

    n/a       11/16/2022       158,925       317,850       476,775       —         —         —         —         —         —         —    
    12/15/2022       11/16/2022       —         —         —         —         —         —         —         31,677       71.07       606,615  
    12/15/2022       11/16/2022       —         —         —         4,398       8,797       17,594       —         —         —         650,186  
    12/15/2022       11/16/2022       —         —         —         —         —         —         17,595       —         —         1,202,266  

Andy Sherman

    n/a       11/16/2022       182,650       365,300       547,950       —         —         —         —         —         —         —    
    12/15/2022       11/16/2022       —         —         —         —         —         —         —         32,944       71.07       630,878  
    12/15/2022       11/16/2022       —         —         —         4,574       9,149       18,298       —         —         —         676,203  
    12/15/2022       11/16/2022       —         —         —         —         —         —         18,299       —         —         1,250,371  

John Couling

    n/a       11/16/2022       181,350       362,700       544,050       —         —         —         —         —         —         —    
    12/15/2022       11/16/2022       —         —         —         —         —         —         —         38,013       71.07       727,949  
    12/15/2022       11/16/2022       —         —         —         5,278       10,557       21,114       —         —               780,268  
    12/15/2022       11/16/2022       —         —         —         —         —         —         21,114       —         —         1,442,720  

Todd Pendleton

    n/a       11/16/2022       177,450       354,900       532,350       —         —         —         —         —         —         —    
    12/15/2022       11/16/2022       —         —         —         —         —         —         —         29,143       71.07       558,088  
    12/15/2022       11/16/2022       —         —         —         4,047       8,094       16,188       —         —         —         598,228  
    12/15/2022       11/16/2022       —         —         —         —         —         —         16,188       —         —         1,106,126  

 

(1)

Reflects threshold, target and maximum bonus amounts for fiscal 2023 performance under the 2023 Executive Bonus Plan, as described in “Compensation Discussion and Analysis—Fiscal 2023 Compensation Determinations—Annual Incentive Compensation.” The actual bonus payouts were determined by the Compensation Committee in November 2023 and are reported in the Non-Equity Incentive Plan Compensation column of the Fiscal 2023 Summary Compensation Table.

(2)

Reflects threshold, target and maximum amounts of shares that may be earned under performance stock unit awards granted in fiscal 2023 under the 2020 Stock Plan. Shares of our Class A Common Stock subject to performance stock unit awards may be earned contingent on our achievement of annualized relative total stockholder return levels for Dolby over a three-year performance period, measured against a comparator index, the S&P Midcap 400 Index (^MID). From 0% to 200% of the target number of shares subject to the performance stock unit awards may be earned, depending on our level of achievement of these performance conditions. Vesting of earned shares (if any) will occur following completion of the performance period, upon certification of achievement of the performance conditions by the Compensation Committee, and subject to continued service through the date of such certification. See “—Potential Payments upon Termination or Change in Control—Termination and Change in Control Arrangements” for a further description of certain terms relating to these awards.

(3)

Reflects awards of restricted stock units granted under the 2020 Stock Plan. A quarter of the total number of shares of our Class A Common Stock subject to each restricted stock unit award vests on each of the first four anniversaries of the grant date, subject to continued service through such vesting dates. See “—Potential Payments upon Termination or Change in Control—Termination and Change in Control Arrangements” for a further description of certain terms relating to these awards.

(4)

Reflects stock options granted under the 2020 Stock Plan, which were granted with a ten-year term and an exercise price equal to the closing price of our Class A Common Stock on the date of grant. A quarter of the total number of shares issuable under each stock option vests on the first anniversary of the grant date and the balance of the shares subject to the stock option vests in equal monthly installments over the subsequent 36 months, subject to continued service through such vesting dates. See “—Potential Payments upon Termination or Change in Control—Termination and Change in Control Arrangements” for a further description of certain terms relating to these awards.

(5)

The amounts reported do not reflect compensation actually realized by the NEO. All amounts reported reflect the grant date fair value of each equity award computed in accordance with ASC Topic 718, excluding estimated forfeitures. The grant date fair value of restricted stock unit awards represents their intrinsic values on the date of grant, calculated for each restricted stock unit award by multiplying the number of shares of our Class A Common Stock subject to such award by the grant date fair value on the date of grant. The grant date fair value of stock options was determined using the Black-Scholes option pricing model. The grant date fair value of performance stock unit awards was determined using a Monte Carlo simulation to determine the probability of achieving the underlying performance conditions and is reported at target. See Note 9 to our consolidated financial statements in our 2023 Annual Report on Form 10-K for more information about the assumptions used to calculate the value of the awards referenced in this footnote 5.

(6)

Stock options are held in the name of Kevin and Rachel Yeaman, Trustees of the Yeaman Family Trust dated May 14, 2009.

 

55


Outstanding Equity Awards at 2023 Fiscal Year-End Table

The following table presents information concerning all outstanding equity awards held by each of our NEOs as of the end of fiscal 2023.

 

    Option Awards     Stock Awards  

Name

  Grant
Date
    Number of
Securities
Subject to
Unexercised
Options (#)
Exercisable
    Number of
Securities
Subject to
Unexercised
Options (#)
Unexercisable(1)
    Equity
Incentive
Plan
Awards:
Number of
Securities
Subject to
Unexercised
Unearned
Options (#)
    Option
Exercise
Price
($)
    Option
Expiration
Date
    Market
Value of
Unexercised
Options,
Net of
Exercise
Price ($)(2)
    Grant
Date
    Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)(3)
    Market
Value of
Shares
or Units
of Stock
That

Have
Not
Vested
($)(2)
    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(4)
    Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That

Have Not
Vested
(#)(2)
 

Kevin Yeaman

    12/15/2022       —         98,200 (a)      —         71.07       12/15/2032       804,258            
    12/15/2021       39,832 (1)(a)      51,215 (a)      —         91.80       12/15/2031       —              
    12/15/2020       62,972 (1)(a)      28,625 (a)      —         92.08       12/15/2030       —              
    12/16/2019       181,101 (1)(a)      12,074 (a)      —         68.40       12/16/2029       2,097,881            
    12/17/2018       164,000 (1)(a)      —         —         64.60       12/17/2028       2,404,240            
    12/17/2018       61,500 (5)(a)      —         —         64.60       12/17/2025       901,590            
    12/15/2017       180,000 (1)(a)      —         —         62.32       12/15/2027       3,049,200            
    12/15/2017       86,400 (5)(a)      —         —         62.32       12/15/2024       1,463,616            
    12/15/2016       194,399 (1)(a)      —         —         45.50       12/15/2026       6,562,910            
    12/15/2014       72,486 (1)(a)      —         —         42.98       12/15/2024       2,629,792            
                  12/15/2022       54,546       4,323,316       —         —    
                  12/15/2022       —         —         54,546       4,323,316  
                  12/15/2021       32,991       2,614,867       —         —    
                  12/15/2021       —         —         43,986       3,486,330  
                  12/15/2020       21,395       1,695,768       —         —    
                  12/15/2020       —         —         21,394       1,695,688  
                  12/16/2019       10,625       842,138       —         —    

Robert Park

    12/15/2022       —         31,677       —         71.07       12/15/2032       259,435            
    10/15/2021       23,903 (1)      25,983       —         89.77       10/15/2031       —              
                  12/15/2022       17,595       1,394,580       —         —    
                  12/15/2022       —         —         17,594       1,394,500  
                  10/15/2021       25,143       1,992,834       —         —    

Andy Sherman

    12/15/2022       —         32,944       —         71.07       12/15/2032       269,811            
    12/15/2021       13,363 (1)      17,182       —         91.80       12/15/2031       —              
    12/15/2020       21,005 (1)      9,548       —         92.08       12/15/2030       —              
    12/16/2019       56,250 (1)      3,750       —         68.40       12/16/2029       651,600            
    12/17/2018       52,000 (1)      —         —         64.60       12/17/2028       762,320            
    12/17/2018       19,500 (5)      —         —         64.60       12/17/2025       285,870            
      12/15/2017       56,000 (1)      —         —         62.32       12/15/2027       948,640          
      12/15/2017       1,998 (5)      —         —         62.32       12/15/2024       33,846          
                  12/15/2022       18,299       1,450,379       —         —    
                  12/15/2022       —         —         18,298       1,450,299  
                  12/15/2021       11,068       877,250       —         —    
                  12/15/2021       —         —         14,756       1,169,561  
                  12/15/2020       7,136       565,599       —         —    
                  12/15/2020       —         —         7,136       565,599  
                  12/15/2019       3,300       261,558       —         —    

 

56


    Option Awards     Stock Awards  

Name

  Grant
Date
    Number of
Securities
Subject to
Unexercised
Options (#)
Exercisable
    Number of
Securities
Subject to
Unexercised
Options (#)
Unexercisable(1)
    Equity
Incentive
Plan
Awards:
Number of
Securities
Subject to
Unexercised
Unearned
Options (#)
    Option
Exercise
Price
($)
    Option
Expiration
Date
    Market
Value of
Unexercised
Options,
Net of
Exercise
Price ($)(2)
    Grant
Date
    Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)(3)
    Market
Value of
Shares
or Units
of Stock
That

Have
Not
Vested
($)(2)
    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(4)
    Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That

Have Not
Vested
(#)(2)
 

John Couling

    12/15/2022       —         38,013       —         71.07       12/15/2032       311,326            
    12/15/2021       15,419 (1)      19,825       —         91.80       12/15/2031       —              
    12/15/2020       19,870 (1)      9,033       —         92.08       12/15/2030       —              
    12/16/2019       51,140 (1)      3,410       —         68.40       12/16/2029       592,413            
    12/17/2018       40,000 (1)      —         —         64.60       12/17/2028       586,400            
    12/17/2018       15,000 (5)      —         —         64.60       12/17/2025       219,900            
    12/15/2017       44,000 (1)      —         —         62.32       12/15/2027       745,360            
    12/15/2017       21,120 (5)      —         —         62.32       12/15/2024       357,773            
    12/15/2016       46,000 (1)      —         —         45.50       12/15/2026       1,552,960            
    12/15/2015       40,000 (1)      —         —         33.15       12/15/2025       1,844,400            
    12/15/2014       62,440 (1)      —         —         42.98       12/15/2024       2,265,323            
                  12/15/2022       21,114       1,673,496       —         —    
                  12/15/2022       —         —         21,114       1,673,496  
                  12/15/2021       12,771       1,012,229       —         —    
                  12/15/2021       —         —         17,026       1,349,481  
                  12/15/2020       6,751       535,084       —         —    
                  12/15/2020       —         —         6,750       535,005  
                  12/16/2019       3,000       237,780       —         —    

Todd Pendleton

    12/15/2022       —         29,143       —         71.07       12/15/2032       238,681            
    12/15/2021       11,821 (1)      15,199       —         91.80       12/15/2031       —              
    12/15/2020       18,736 (1)      8,517       —         92.08       12/15/2030       —              
    12/16/2019       880 (1)      2,643       —         68.40       12/16/2029       38,260            
                  12/15/2022       16,188       1,283,061       —         —    
                  12/15/2022       —         —         16,188       1,283,061  
                  12/15/2021       9,791       776,035       —         —    
                  12/15/2021       —         —         13,054       1,034,660  
                  12/15/2020       6,366       504,569       —         —    
                  12/15/2020       —         —         6,365       504,490  
                  12/16/2019       2,325       184,280       —         —    

 

(1)

Stock options have a term of ten years and represent the right to purchase shares of our Class A Common Stock. A quarter of the total number of shares issuable under the stock option vests on the first anniversary of the grant date and the balance of the shares vests in equal monthly installments over the next 36 months, with vesting generally dependent on continued service to the company. Vesting of the stock options is subject to acceleration under the circumstances described under “—Potential Payments upon Termination or Change in Control—Termination and Change in Control Arrangements.”

  a.

Stock options are held in the name of Kevin and Rachel Yeaman, Trustees of the Yeaman Family Trust dated May 14, 2009.

 

(2)

The amounts reported in this column are based on (i) in the case of a stock option, the excess, if any, of the closing price of our Class A Common Stock on September 29, 2023 ($79.26 per share) over the per share exercise price of the stock option, multiplied by the number of shares (vested or unvested) subject to the stock option, (ii) in the case of a restricted stock unit award, the closing price of our Class A Common Stock on September 29, 2023 ($79.26 per share) multiplied by the number of unvested shares subject to the restricted stock unit award, and (iii) in the case of a performance stock unit award, the closing price of our Class A Common Stock on September 29, 2023 ($79.26 per share) multiplied by the number of shares subject to the performance stock unit award deemed to be earned assuming the performance level indicated in footnote 4.

(3)

A quarter of the total number of shares issuable under the restricted stock unit award vests on each of the first four anniversaries of the restricted stock unit award grant date, with vesting generally dependent on continued service to the company. Vesting of the restricted stock unit awards is subject to acceleration under the circumstances described under “—Potential Payments upon Termination or Change in Control—Termination and Change in Control Arrangements.”

(4)

Share numbers are shown at target performance for performance stock unit awards granted in December 2020, and at maximum performance for performance stock unit awards granted in December 2021 and December 2022, respectively. The shares issuable under a performance stock unit award may be earned contingent on our achievement of annualized relative total stockholder return levels for Dolby over a three-year performance period beginning on the date of grant and ending on the third anniversary thereof, measured against a comparator index, the S&P Midcap 400 Index (^MID). From 0% to 200% of the target number of shares subject to the performance stock unit awards may be earned, depending on our level of achievement of these performance conditions. Vesting of earned shares (if any) will occur following completion of the performance period, upon certification of achievement of the performance conditions by the Compensation Committee, with vesting generally dependent on continued service to the company through the date of such certification. Vesting of performance stock unit awards is subject to acceleration under the circumstances described under “—Potential Payments upon Termination or Change in Control—Termination and Change in Control Arrangements.”

 

57


(5)

Represents shares subject to performance stock options that have been earned and vested, at 96% and 75% of target performance for performance stock options granted on December 15, 2017, and December 17, 2018, respectively. Performance stock options have a term of seven years and represent the right to purchase shares of our Class A Common Stock. The shares issuable under a performance stock option were earned contingent on our achievement of pre-established annualized relative total stockholder return levels for Dolby measured over a three-year performance period beginning on the date of grant and ending on the third anniversary thereof.

  a.

Stock options are held in the name of Kevin and Rachel Yeaman, Trustees of the Yeaman Family Trust dated May 14, 2009.

Option Exercises and Stock Vested at 2023 Fiscal Year-End Table

The following table presents information concerning the aggregate number of shares of our Class A Common Stock for which stock options were exercised and which were acquired upon the vesting of restricted stock unit awards during fiscal 2023 by each of our NEOs.

 

     Option Awards      Stock Awards  

Name

   Number of
Shares
Acquired on
Exercise
(#)
     Value Realized
on Exercise
($)(1)
     Number of
Shares Earned
on Vesting
(#)
     Value Realized
on Vesting
($)(2)
 

Kevin Yeaman

     191,669        7,764,591        59,766        4,291,068  

Robert Park

     —          —          8,380        538,666  

Andy Sherman

     48,000        1,540,399        19,151        1,375,424  

John Couling

     141,303        5,778,795        17,989        1,293,828  

Todd Pendleton

     23,671        391,630        14,786        1,063,770  

 

(1)

The value realized on the exercise of each stock option is equal to the difference between the market price of our Class A Common Stock on the date of exercise and the per share exercise price, multiplied by the number of shares exercised.

(2)

The value realized on the vesting of each restricted stock unit award is based on the market price of our Class A Common Stock on the date of vesting multiplied by the number of shares vested.

Pension Benefits and Nonqualified Deferred Compensation

We did not sponsor any pension or other nonqualified deferred compensation plan for our NEOs during fiscal 2023.

Potential Payments upon Termination or Change in Control

Termination and Change in Control Arrangements

2020 Stock Plan

Our 2020 Stock Plan provides that in the event of a “change in control” of Dolby, the successor corporation may assume, substitute an equivalent award, or replace with a cash incentive program, each outstanding award granted under the plan. If there is no assumption, substitution or replacement with a cash incentive program of outstanding awards, such awards will become fully vested and exercisable immediately prior to the change in control unless otherwise determined by the plan administrator, and the administrator will provide notice to the award recipient that he or she has the right to exercise such outstanding awards for a period of 15 days from the date of the notice. The awards will terminate upon the expiration of the 15-day period.

In the event of assumption or substitution, awards granted to our employees (including our executive officers) and consultants are subject to a “double trigger” accelerated vesting schedule that provides for one year of additional vesting for each year of service the employee or consultant provided to us, if his or her employment is terminated by us or a successor to us without “cause” or if he or she resigns for “good reason,” provided that the termination or resignation occurs within the 12 months following a change in control of Dolby.

 

58


For purposes of the 2020 Stock Plan, “cause” means the termination by Dolby of a participant’s service based on such participant’s: (i) refusal or failure to act in accordance with any lawful company orders, (ii) unfitness or unavailability for service or unsatisfactory performance (other than as a result of disability), (iii) the performance or failure to perform any act in bad faith and to the detriment of the company, (iv) dishonesty, intentional misconduct or material breach of any agreement with the company, or (v) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person.

For purposes of the 2020 Stock Plan, “good reason” means the occurrence following a change in control of Dolby of any of the following events or conditions unless consented to by the participant: (a) certain reductions in the participant’s base salary; or (b) requiring the participant to be based at any place outside a 50-mile radius from the participant’s job location or residence prior to the change in control except for reasonably required business travel.

Performance Stock Unit Awards

The form of performance stock unit award agreement approved by the Compensation Committee provides that in the event of a change in control of Dolby, the performance period will be deemed to have ended on the closing date of such transaction, and the per share consideration for our Class A Common Stock in such transaction will be used (in lieu of the average closing price of our Class A Common Stock for the 30 trading days ending on the last trading day of the performance period) for purposes of determining the number of shares earned against achievement of the annualized relative total stockholder return performance conditions.

Further, if the successor corporation assumes, substitutes or replaces the performance stock unit award, any shares so earned will vest on a pro-rata basis based on the portion of the performance period elapsed since the grant date and any unvested earned shares will vest monthly thereafter through the remainder of the performance period (subject to any acceleration of vesting as provided in executive change in control agreements, as applicable), subject to continued service with Dolby or the successor corporation. If there is no assumption, substitution or replacement of the performance stock unit award, then, consistent with the treatment of equity awards described in “—2020 Stock Plan” above, any shares earned upon deemed achievement of the performance conditions will fully vest immediately prior to the merger or change in control transaction.

Consistent with the treatment of equity awards described in “—2020 Stock Plan,” performance stock unit awards are subject to an accelerated vesting schedule that provides for one year of additional vesting for each year of service the employee or consultant provided to us, if his or her employment is terminated by us or a successor to us without “cause” or if he or she resigns for “good reason,” provided that the termination or resignation occurs within the 12 months following a change in control of Dolby.

Employment Agreement with Mr. Yeaman

In connection with Mr. Yeaman’s appointment as our President and CEO, we entered into an employment agreement with him, which provides, among other things, that in the event of his termination of employment without “cause” or his resignation for “good reason” other than in connection with a change in control of Dolby (as such terms are defined in the employment agreement), and subject to his signing and not revoking a release of claims in favor of Dolby, Mr. Yeaman will receive:

 

   

a lump-sum payment equal to 150% of his annual base salary,

 

   

a lump-sum payment equal to a prorated amount of his annual incentive compensation target,

 

   

accelerated vesting of 50% of his outstanding and unvested equity awards, and

 

   

reimbursement for premiums paid for continued health benefits until the earlier of 18 months from the date of termination or when he becomes covered under similar plans.

 

59


In the event of his termination of employment without “cause” or his resignation for “good reason” in connection with a change in control of Dolby, and subject to his signing and not revoking a release of claims in favor of Dolby, Mr. Yeaman will receive:

 

   

a lump-sum payment equal to 200% of his annual base salary,

 

   

a lump-sum payment equal to 100% of his annual incentive compensation target for the year of termination,

 

   

accelerated vesting of 100% of his outstanding and unvested equity awards, and

 

   

reimbursement for premiums paid for continued health benefits until the earlier of 24 months from the date of termination or when he becomes covered under similar plans.

Mr. Yeaman’s annual base salary at the end of fiscal 2023 was $935,000.

Estimated Payments upon Termination or Change in Control

The following table provides information concerning the estimated payments and benefits that would be provided in the circumstances described above for each of our NEOs. Payments and benefits are estimated assuming that the triggering event took place on the last day of fiscal 2023 (September 29, 2023), and the price per share of our Class A Common Stock was the closing price on the NYSE on that date ($79.26 per share).

These payments and benefits are in addition to benefits available generally to our salaried employees, such as distributions under Dolby’s 401(k) plan, medical benefits, disability benefits, and accrued vacation pay.

There can be no assurance that a triggering event would produce the same or similar results as those estimated below if such event occurs on any other date or at any other price, or if any other assumption used to estimate the potential payments and benefits is different.

 

    Potential Payments Upon:  
    Type of Benefit   Change in Control
without

Assumption of
Outstanding
Equity Awards
($)
    Voluntary
Termination
Not for Good
Reason
or Termination
for Cause
($)
    Involuntary
Termination Other
Than for Cause
    Voluntary
Termination for
Good Reason
 

Name

  Prior to
Change in
Control
($)
    Within 12
Months of
Change in
Control
($)
    Prior to
Change in
Control
($)
    Within 12
Months of
Change in
Control
($)
 

Kevin Yeaman

  Cash Severance Payments     —         —         2,334,938       2,805,000       2,334,938       2,805,000  
  Vesting Acceleration(1)     15,903,395       —         7,951,579       15,903,395       7,951,579       15,903,395  
  Continued Coverage of
Employee Benefits(2)
    —         —         65,605       87,474       65,605       87,474  
  Total Termination Benefits     15,903,395       —         10,352,122       18,795,869       10,352,122       18,795,869  

Robert Park

  Cash Severance Payments     —         —         —         —         —         —    
  Vesting Acceleration(1)     4,428,590       —         —         1,468,472       —         1,468,472  
  Total Termination Benefits     4,428,590       —         —         1,468,472       —         1,468,472  

Andy Sherman

  Cash Severance Payments     —         —         —         —         —         —    
  Vesting Acceleration(1)     5,305,185       —         —         5,305,185       —         5,305,185  
  Total Termination Benefits     5,305,185       —         —         5,305,185       —         5,305,185  

John Couling

  Cash Severance Payments     —         —         —         —         —         —    
  Vesting Acceleration(1)     5,841,315       —         —         5,841,315       —         5,841,315  
  Total Termination Benefits     5,841,315       —         —         5,841,315       —         5,841,315  

Todd Pendleton

  Cash Severance Payments     —         —         —         —         —         —    
  Vesting Acceleration(1)     4,646,024       —         —         4,646,024       —         4,646,024  
  Total Termination Benefits     4,646,024       —         —         4,646,024       —         4,646,024  

 

(1)

The values reported in the table are based on (i) in the case of stock options, the excess of the closing price of our Class A Common Stock on September 29, 2023 ($79.26 per share, or the “FY23 Closing Price”) over the per share exercise price with respect to unvested

 

60


  shares, multiplied by the number of shares accelerated, (ii) in the case of restricted stock unit awards, the FY23 Closing Price multiplied by the number of shares accelerated, and (iii) in the case of performance stock unit awards, the FY23 Closing Price multiplied by the number of shares subject to acceleration that are deemed to be earned due to satisfaction of performance conditions.
(2)

Assumes continued coverage of health benefits at the same level of coverage provided for at the end of fiscal 2023.

Pay Ratio Disclosure

We are providing below the ratio of the annual total compensation of our CEO, Kevin Yeaman, to the median of the annual total compensation of all our employees (excluding our CEO). For fiscal 2023:

 

   

Mr. Yeaman’s annual total compensation, as reported in the Fiscal 2023 Summary Compensation Table included elsewhere in this Proxy Statement, was $9,504,201;

 

   

The annual total compensation of our median employee was $149,421; and

 

   

The ratio of Mr. Yeaman’s annual total compensation to the median of the annual total compensation of all our employees was 64 to 1.

To identify our median employee, we took the following steps:

 

   

We selected September 29, 2023 as the determination date for purposes of identifying our median employee.

 

   

We selected our median employee based on 2,356 full-time, part-time, and temporary workers who were employed as of the determination date.

 

   

We selected our median employee using a compensation measure that consists of cash compensation earned for fiscal 2023 (base salary, hourly wages, overtime pay, and quarterly and annual incentive compensation) and the grant date fair value of equity awards for fiscal 2023. We excluded for this purpose any one-time or special awards, such as “spot” or sign-on bonuses, new-hire or promotion/retention equity awards.

 

   

We did not rely on the data privacy, de minimis or acquired company exceptions allowed by SEC rules. We also did not annualize compensation for any employees that were only employed for part of fiscal 2023, nor did we use any cost-of-living adjustment.

 

   

We converted amounts paid to employees in foreign currencies to U.S. dollars using foreign exchange rates in effect in our employee data system as of September 29, 2023.

 

   

All employees except for our CEO were ranked from lowest to highest with the median determined from this list.

Once we identified our median employee, we determined that employee’s annual total compensation in the same manner that we calculate the total compensation of our CEO and other NEOs for purposes of the Fiscal 2023 Summary Compensation Table. This annual total compensation amount for our median employee was then compared to the amount reported in the “Total” column for our CEO in the Fiscal 2023 Summary Compensation Table to determine the pay ratio.

The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology described above. Because SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.

 

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Pay Versus Performance
As required by Item 402(v) of Regulation S-K, the following table provides certain information about the compensation for our Principal Executive Officer (“PEO”) and other individuals constituting our NEOs (“Non-PEO NEOs”) for our fiscal years 2023, 2022 and 2021. The table also provides information about certain financial performance measures of the company for the same fiscal years. For more information on our executive compensation program and decisions for our 2023 fiscal year, including our pay-for-performance orientation and how the Compensation Committee aligns executive compensation with the company’s performance, see “Compensation Discussion and Analysis” above.
Pay Versus Performance Table
 
                           
Value of Initial Fixed
$100 Investment
Based on:
(4)
             
Fiscal Year
 
Summary
Compensation
Table Total
for PEO
(1)

($)
   
Compensation
Actually Paid
to PEO
(2)

($)
   
Average
Summary
Compensation
Table Total
for Non-PEO
NEOs
(3)

($)
   
Average
Compensation
Actually Paid
to Non-PEO
NEOs
(2)

($)
   
Company
Total
Shareholder
Return
(“TSR”)

($)
   
Peer
Group
TSR
(5)

($)
   
Net
Income
(6)

($millions)
   
Company
Selected
Measure:
Revenue
(7)

($millions)
 
   
(a)
   
(b)
   
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
 
2023
    9,504,201       13,698,921       3,471,341       4,718,848       126.43       144.14       201       1,300  
2022
    9,407,217       27,520       3,559,881       971,483       102.50       124.78       184       1,254  
2021
    9,629,118       23,634,184       3,427,478       7,471,656       143.65       150.45       310       1,281  
 
(1)
Our PEO for each of the fiscal years shown in the table is Kevin Yeaman, our Chief Executive Officer. Amount reflects the amount of compensation reported in the “Total” column of the Summary Compensation Table for our PEO for the corresponding fiscal year.
 
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(2)
Amounts reflect the “compensation actually paid” (“CAP”) of our PEO, or the average of the CAP of our Non-PEO NEOs, for each fiscal year. CAP does not necessarily reflect amounts of compensation actually earned, realized, or received by our PEO or Non-PEO NEOs in each fiscal year. Rather, CAP is calculated starting with the amount of compensation reported in the “Total” column of the Summary Compensation Table for our PEO or Non-PEO NEOs, as applicable, for each fiscal year (and averaged for our Non-PEO NEOs), as adjusted in accordance with the requirements of Item 402(v) of Regulation S-K. The following adjustments were made to the amount of compensation reported in the “Total” column of the Summary Compensation Table for our PEO and the average of the amounts of compensation reported in the “Total” column of the Summary Compensation Table for our Non-PEO NEOs:
 
   
Fiscal 2021
   
Fiscal 2022
   
Fiscal 2023
 
   
PEO

($)
   
Average
Non-PEO
NEOs

($)
   
PEO

($)
   
Average
Non-PEO
NEOs

($)
   
PEO

($)
   
Average
Non-PEO
NEOs

($)
 
Summary Compensation Table Total
    9,629,118       3,427,478       9,407,217       3,559,881       9,504,201       3,471,341  
– grant date fair value of awards granted in fiscal year
    (7,714,820     (2,469,032     (8,118,208     (2,952,358     (7,623,406     (2,557,474
+ fair value of outstanding and unvested awards at fiscal year-end that were granted in fiscal year
    7,481,207       2,394,270       5,269,996       2,143,892       9,139,203       3,065,988  
+/– change, from prior fiscal year-end, in fair value of awards granted in any prior fiscal year outstanding and unvested at fiscal year-end
    7,006,852       2,116,349       (5,222,155     (640,264     1,935,106       566,566  
+/– change, from prior fiscal year-end, in fair value at vesting date of any awards granted in any prior fiscal year for which all applicable vesting conditions were satisfied at end of or during fiscal year
    7,231,826       2,002,591       (1,309,330     (176,698