UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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Analog Devices, Inc.
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Mission
The most exciting development in technology today is the dawning of the Intelligent Edge era, where pervasive sensing, AI-driven edge computing, and ubiquitous connectivity are combing in smart, connected systems that enable new capabilities, applications, and markets.
ADI is at the center of this new era, providing the intelligent sensing and connectivity on which it depends. Leveraging our strong position at the boundary between the physical and digital worlds, innovation capabilities, and domain expertise, ADI is working closely with customers to bring intelligence to the edge.
Letter from our CEO and Chair
Dear Fellow Shareholders,
I am extremely proud to share that ADI deftly navigated 2022’s turbulence to deliver record-breaking financial results once again. Our outstanding growth and profitability this year are an extension of the long-term market success we have achieved through an unyielding commitment to innovation, operational excellence, and our customers’ success. We continued investing in 2022 in the R&D, manufacturing capabilities, and partnerships that deepen our value to our customers and enable us to capture more of the emerging secular opportunities at the Intelligent Edge. As a result, we enter 2023 with strong momentum and believe we are as well-positioned for the future as we have ever been.
Fiscal 2022 Results and Strategic Progress
The combination of ADI’s unparalleled portfolio of high-performance analog, digital, and software solutions, world-class engineering and applications domain expertise, and customer-first mentality drove revenue and margins to new high-water marks in fiscal 2022. We delivered an exceptional $12 billion in revenue, operating cash flow of $4.5 billion, and free cash flow of $3.8 billion after investing a record $699 million in capital expenditures (CapEx). Further, we exceeded our commitment to return 100% of free cash flow, returning $4.6 billion through share repurchases and dividends.
We made tremendous progress integrating Maxim in 2022, surpassing our integration timeline goals and accelerating the pace at which we are securing the benefits of the acquisition. The combination of our organic R&D, complementary portfolios, and combined capabilities is enabling us to deliver everything from industry-leading components to sophisticated, software-defined platforms that solve higher-order challenges for our customers. We have simultaneously invested in our go-to-market capabilities to make it easier than ever before for our customers to access our components and solutions in the ways that make the most sense for their businesses and needs. Importantly, we are capturing the full, increasing value of our innovations.
Our CapEx investments have allowed us to further leverage the power of our internal/external hybrid manufacturing model to deliver solutions from 7 nanometers to 7 micrometers in a resilient and responsive supply chain. During a time of unprecedented supply constraints in our industry, we are proud that our foresight and efforts have further strengthened our customer relationships and created numerous new opportunities to grow our business.
ADI’s Vision 2030, which we launched at our Investor Day in April 2022, set more ambitious goals for growth and profitability, and we are well on the way to achieving them.
Vision 2030
Advances in pervasive sensing, AI-driven edge computing, and ubiquitous connectivity are coalescing in smarter and more connected systems in autonomous factories, cars, healthcare, and more. ADI’s investments over the past decade have built upon our foundation at the boundary between the physical and digital worlds to take maximum advantage of the emerging Intelligent Edge opportunity for our customers, large and small, across every market segment.
For example, we are delivering O-RAN-compliant radio units for superior 5G connectivity; wireless battery management systems that enable rapid battery configuration and extend the mileage and lifetimes of electric vehicle battery packs; vital sign monitoring solutions for clinical-grade healthcare outside of clinical settings; and factory automation solutions for next-generation, agile manufacturing environments important in emerging applications such as personalized medicine. Our Apollo software-defined, high-speed signal chain platform is enabling innumerable applications for our broad market customers and is the latest example of how we are accelerating our customers’ time to market by meeting them at their software application layer. By connecting humanity, addressing climate change, democratizing access to healthcare, and enabling a safer, more efficient future of manufacturing, we are living out our corporate purpose, and expanding the ESG ideal from risk management to market opportunity.
In closing, I thank our amazing employees, partners, and customers whose skill, creativity, and dedication during 2022 have set us up for another strong year of collaboration and growth. I also thank you, our shareholders, for your continued investment in and support of ADI on this journey. We look forward to capitalizing on our portfolio and people investments to capture the incredible Intelligent Edge opportunity and continue building an ADI franchise and brand synonymous with innovation, customer success, and superior shareholder return.
 |  VINCENT ROCHE Chief Executive Officer and Chair of the Board of Directors | ||||
| 2023 Proxy Statement | |||||
Notice of 2023 Annual Meeting of Shareholders
Items of Business The 2023 Annual Meeting of Shareholders of Analog Devices, Inc. (ADI), or Annual Meeting, will be held at our offices located at 125 Summer Street, Boston, Massachusetts 02110, on Wednesday, March 8, 2023 at 9:00 a.m. local time. At the Annual Meeting, shareholders will consider and vote on the following matters: 1.To elect the 11 director nominees named in this Proxy Statement to our Board of Directors, each to serve for a term expiring at the next annual meeting of shareholders; 2.To approve, by a non-binding “say-on-pay” vote, the compensation of our named executive officers, as described in the Compensation Discussion and Analysis, executive compensation tables and accompanying narrative disclosures in this Proxy Statement; 3.To hold a non-binding “say-on-frequency” vote regarding the frequency of future advisory votes on the compensation of our named executive officers; and 4.To ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending October 28, 2023. The shareholders will also act on any other business that may properly come before the Annual Meeting. Our Board of Directors recommends that you vote FOR each director nominee included in Proposal 1, FOR each of Proposals 2 and 4, and for an advisory vote every 1 YEAR in Proposal 3. The full text of these proposals is set forth in this Proxy Statement. Please note that we are furnishing proxy materials and access to our Proxy Statement to our shareholders via our website instead of mailing printed copies to each of our shareholders. By doing so, we save costs and reduce our impact on the environment. Beginning on January 20, 2023, we will mail to our shareholders a Notice of Internet Availability of Proxy Materials, or Notice, which contains instructions on how to access our proxy materials and vote online. The Notice also contains instructions on how each of our shareholders can receive a paper copy of our proxy materials, including this Proxy Statement, our 2022 Annual Report and a form of proxy card or voting instruction form. All shareholders who do not receive the Notice, including shareholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy of the proxy materials by mail unless they have previously requested delivery of proxy materials electronically. Shareholders of record at the close of business on the record date of January 3, 2023 are entitled to vote at the Annual Meeting. Your vote is important no matter how many shares you own, and we encourage you to vote promptly whether or not you plan to attend the Annual Meeting. By Order of the Board of Directors, | |||||||||||
DATE AND TIME Wednesday, March 8, 2023 9:00 a.m. local time PLACE 125 Summer Street Boston, MA 02110 RECORD DATE Tuesday, January 3, 2023 | |||||||||||
How to vote: Your vote is important VOTE BY INTERNET Go to www.proxyvote.com You will need the 16-digit control number that appears on your proxy card or the Notice. VOTE BY TELEPHONE Call 1-800-690-6903 You will need the 16-digit control number that appears on your proxy card or the Notice. VOTE BY MAIL Mark, sign, date, and mail your proxy card or your voting instruction form. No postage is required if mailed in the United States. | |||||||||||
 |  JANENE ASGEIRSSON Chief Legal Officer, Chief Risk Officer and Secretary January 20, 2023 | ||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on March 8, 2023: This Proxy Statement and the 2022 Annual Report are available for viewing, printing and downloading at https://investor.analog.com/financial-info/annual-reports. | |||||||||||
Forward-Looking Statements This Proxy Statement contains forward-looking statements regarding future events and our future results that are subject to the safe harbor created under the Private Securities Litigation Reform Act of 1995 and other safe harbors under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “could” and “will,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections regarding our future financial performance; our anticipated growth and trends in our businesses; new or improved innovative solutions, products, and technologies; the effects of business, economic, political, legal, and regulatory impacts or conflicts upon our global operations; manufacturing delays, product availability, and supply chain disruptions; recruiting or retaining our key personnel and making changes to our compensation programs; our future liquidity, capital needs and capital expenditures; our future market position, expected competitive changes in the marketplace and changes in demand and supply for our products; our ability to pay dividends or repurchase stock; our ability to service our outstanding debt; our expected tax rate; our ability to successfully integrate acquired businesses and technologies, including the acquired business, operations and employees of Maxim Integrated Products, Inc.; environment, social and governance related goals and commitments; and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified in Part I, Item 1A. “Risk Factors” and elsewhere in our most recent Annual Report on Form 10-K. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements, including to reflect events or circumstances occurring after the date of the filing of this Proxy Statement, except to the extent required by law. | |||||
DURING THE ANNUAL MEETING For details on voting your shares during the Annual Meeting, see Q&A About Annual Meeting and Voting on page 88. Web links throughout this document are provided for convenience only, and the content on the referenced websites does not constitute a part of this Proxy Statement. The sum and/or computation of individual numerical amounts or percentages disclosed in this Proxy Statement may not equal the total due to rounding. | |||||
| 2023 Proxy Statement | |||||
Table of Contents
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Highlights
About ADI
Analog Devices, Inc. is a global semiconductor leader that bridges the physical and digital worlds to enable breakthroughs at the Intelligent Edge. We combine analog, digital, and software technologies into solutions that help drive advancements in digitized factories, mobility, and digital healthcare, combat climate change, and reliably connect humans and the world.
ADI at a Glance
Background
Founded: | 1965 | ||||
Headquarters: | Wilmington, MA | ||||
Employees: | ~24,450 | ||||
Office Locations: | 31 Countries Worldwide sales, field applications, product development, design, service and technical support | ||||
Products: | ~75,000 SKUs | ||||
Customers: | 125,000+ | ||||
Publicly Listed – Nasdaq: | ADI | ||||
Design Centers: | ~80 | ||||
Global Manufacturing: | United States (Massachusetts, Oregon, Washington) | Ireland | Philippines | Malaysia | Thailand | ||||
Fiscal Year 2022 Revenue: $12B
The sum of the individual percentages may not equal 100% due to rounding.
ADI’s Extensive Hybrid Manufacturing
& Supply Chain Network
& Supply Chain Network
| 2023 Proxy Statement | 1 | ||||
Our Strategy
Our strategy is focused on our customers’ success. We dedicate our unparalleled technology portfolio, superior engineering and domain expertise, and exceptional end-to-end customer experience to achieve our goals. The end results are deeper, more strategic customer relationships, expanded business opportunities, and stronger and more sustainable growth.
In fiscal year 2022, we continued to make progress against our three strategic priorities:
Deploying Capital Efficiently | ÑAnnual R&D investment of $1.7B with 95% targeted on most attractive B2B opportunities ÑExtracting value from M&A to enhance scale and scope, creating a destination for the world’s best talent: Maxim in FY’21, Linear Technology in FY’17 and Hittite in FY’14 ÑDelivered on our commitment to return at least 100% of free cash flow returning $4.6B through share repurchases and dividends | ||||
Deepening Customer’s Centricity | ÑPartnering more deeply with customers to deliver complete solutions ÑStrengthening customer engagement: customers enhancing software focus, leaving more of the increasingly complex hardware challenges to ADI ÑAccelerating innovation engine to develop cutting-edge technologies. Opportunity pipeline value achieved record levels in FY’22 | ||||
Capitalizing on Secular Trends | ÑAutomotive: Electrification, In-Cabin Experience, Advanced Driver Assistance System (Autonomous Mobility) ÑIndustrial: Industry 4.0, Digital Health, Space, Sustainable Energy ÑCommunications: Next-Gen Wireless (5G), Cloud/Edge Computing | ||||
Fiscal Year 2022 Performance Highlights
$12B | 62.7% | 27.3% | $5.25 | $4.5B | ||||||||||
Revenue | Gross Margins | Operating Margins | Diluted Earnings per Share | Operating Cash Flow | ||||||||||
~87% | 73.6% | 49.4% | $9.57 | $3.8B | ||||||||||
Business-to-Business Revenue | Adjusted Gross Margins* | Adjusted Operating Margins* | Adjusted Diluted Earnings per Share* | Free Cash Flow* | ||||||||||
* See Appendix A for additional information regarding non-GAAP financial measures and reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures.
Environment, Social and Governance
Our Approach
At ADI, we have long held the belief that we can and should be a force for positive change in the world. We believe that our strategic growth over the past few years gives us the opportunity to take an even stronger leadership position in driving the changes that must take place to create a better society and a healthier planet. Environment, Social, and Governance (ESG) principles are at the heart of everything we do, because it’s the morally right thing to do and ESG is smart business. The efforts we take across ADI to operate with integrity, preserve the environment, slow down and remediate climate change, and inject greater diversity, equity, and inclusion (DE&I), both within our leadership and workforce, are key to our long-term growth and profitability. We believe sustainability means delivering holistic solutions that make a positive, demonstrable impact on the world.
2 | Highlights | ||||
ESG Oversight
Our CEO and Chair, our Leadership Team, as defined below, and appointed roles dedicated to ESG lead our ESG agenda. Our Nominating and Corporate Governance Committee has specific oversight responsibility for ADI’s ESG programs, initiatives, policies and goals, including reviewing our sustainability initiatives and goals, as well as our progress toward achieving those goals. Our Board of Directors is fully engaged and receives regular updates from senior management about our ESG programs, including updates on our sustainability as a business initiative, and on emerging issues. These ESG topics also include educational components to keep our Board of Directors abreast of the quickly changing ESG regulatory environment, as well as other evolving practices, risk oversight, mitigation strategies and other relevant ESG topics. Created in 2021, we have an ESG Executive Council that consists of in-house subject matter experts, such as Human Resources, Environment, Health and Safety, and Compliance and Ethics, that meets regularly and provides updates to the ESG Oversight Committee. The Nominating and Corporate Governance Committee receives quarterly reports on our progress against stated targets, as well as updates on topics such as stakeholder value, risks and opportunities, regulatory preparedness, ESG ratings and key ESG focus areas.
ADI Corporate & ESG Recognition
We are proud that our commitments are routinely recognized around the globe, including most recently with the following awards:
ÑForbes 2022 World’s Top Female Friendly Companies | ÑLinkedIn’s Top Companies 2022: Technology & Information | ÑInvestor Business Daily’s 100 Best ESG Companies | ||||||
Ñ2022 JUST Capital Workforce Equity and Mobility Ranking | Ñ50/50 Women on Boards-3+ Women on Company Boards 2022 | ÑNewsweek America’s Most Responsible Companies 2022 | ||||||
Ñ2023 JUST Capital 100 | ÑGlobal 100 Most Sustainable Corporations in the World by Corporate Knights 2022 | Ñ2022 Carbon Clean 200 | ||||||
2023 Proxy Statement | 3 | ||||
Fiscal Year 2022 Highlights
ÑTRANSPARENCY | ENVIRONMENT | SOCIAL | ||||||||||||||||||
ÑPublished our 2021 ESG Report ÑMapped our ESG Report to GRI (Core Option), SASB, TCFD and the U.N.’s Sustainable Development Goals ÑReported program updates to CDP Climate Change and Water Security, EcoVadis, and KnowTheChain ÑPublished online our most recent EEO-1 reports | ÑContinued to innovate and develop solutions with meaningful environmental benefits for our customers, including our Battery Management Solutions, Energy Storage Systems, precision monitoring for enabling industrial transformation, and leveraging our intelligent sensing systems to continue towards our environmental commitments ÑFolded our legacy Maxim partners into ADI’s strong environmental commitments, including to become carbon neutral by 2030 and achieve net zero emissions by 2050 or sooner, 50% manufacturing water recycling rate by 2025, and zero manufacturing waste to landfill by 2030 ÑRemained signatories to the U.N. Global Compact and their campaign, Business Ambition for 1.5°C | ÑDisclosed new DE&I goals to increase the number of women and people of color in leadership and engineering roles and more broadly ÑPartnered with an institution that is recognized as one of the Historically Black Colleges and Universities (HBCUs) to enhance its engineering curriculum and research efforts ÑContinued to support STEM education programs, including through our collaboration with University of Massachusetts Lowell to create an RF/Microwave Learning Lab ÑProvided community grants and matched employee donations to support 900+ unique organizations through the Analog Devices Foundation | ||||||||||||||||||
GOVERNANCE | ||||||||||||||||||||
ÑAppointed Vincent Roche, our CEO, as Chair of the Board of Directors to lead ADI’s ongoing transformation, with James Champy continuing to serve as Presiding Director ÑContinued to focus on active board refreshment by welcoming André Andonian, who brings significant industry, strategic and leadership experience to our Board of Directors | ÑExpanded the role of the Compensation and Talent Committee of the Board of Directors to oversee human capital and diversity initiatives ÑEngaged with shareholders representing nearly 30% of total shares outstanding, with a focus on ESG and compensation practices | ÑFormed a management-led cross-functional steering committee chaired by our Chief Information Security Officer that is charged with security governance, coordination and monitoring of cyber risks, potential cyber incidents and key mitigation initiatives ÑChief Information Officer began providing quarterly cyber and IT reports to the Audit Committee of the Board of Directors ÑEnhanced our global data privacy and compliance programs, including updating policies and procedures, publishing values, expanding data privacy trainings for employees, and centralizing privacy inquiries | ||||||||||||||||||
4 | Highlights | ||||
People and Culture
 We’ve learned much about our employees and how we work during the challenges of these past three years. As a company whose culture recognizes the importance of continuous learning, we also recognize that the company itself must continually learn and evolve. How we attract and retain innovative talent across the globe, leveraging industry and best practices, presents incredible opportunities for us to solidify our reputation as the destination for the best and brightest minds. | |||||
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 | MARIYA TRICKETT Chief People Officer | ||||
ADI’s talent strategy underscores our commitment to our employees. We believe that talent is our greatest asset and innovation thrives when people of different identities, cultures, backgrounds and experiences collaborate. We strive to ensure that all employees reach their ambitions, are critically focused on enhancing the infrastructure necessary to support employee engagement, accelerate growth and development, and promote equity among all employees.
Talent Priorities
We invest in our people so that we can develop the next generation of technology that betters our world. We care about our employees, offering competitive benefits and compensation, as well as fulfilling career opportunities. To this end, we continuously look for ways to evolve our programs and practices to enhance employee satisfaction.
Empower Innovation and Learning | Empowering our teams to innovate and learn across every level and function | Our pandemic-inspired ADI Ignite Network “innovates how we innovate” by engaging and gathering novel ideas from all employees. Development teams across departments come together to deliver experiences that quicken onboarding, build managerial skills and ready employees for more complex roles. We prioritize on-the-job experiences as a way to build skills and drive learning. | ||||||
Focus on Social Purpose | Fostering a workplace where the best minds can come together to engineer good | The Analog Devices Foundation is creating a more sustainable future through community grants, employee matching gifts for both direct donations and volunteer hours, and in-kind donations. In collaboration with employees, we are addressing inequities in STEM education through partnership with an institution that is recognized as one of the HBCUs. | ||||||
Drive Engagement through Employee Experience | Listening and responding to employee feedback | Throughout the year, we conduct employee surveys and listening activities to gain feedback and learn more about ADI’s strengths as a workplace and opportunities for improvement. This enables us to take action and provide employees the tools they need to grow and prosper. | ||||||
Foster Inclusion and Promote Equal Opportunity | Taking a global approach to equity and inclusion | We are evolving our mission to include global dimensions of diversity. This means working with our Global Diversity Council and Working Group to understand what marginalization looks like in countries outside the United States so we can customize efforts to address underrepresentation. We are committed to building leadership teams that reflect the diversity of our employees and the communities we serve. To support this ambition, we are tailoring development programs to meet the needs of our underrepresented populations. | ||||||
Build the Workforce of the Future | Evolving our workforce skills to drive innovation and sustain a competitive advantage | Our engineering team members continue to run a Software Engineering Reskilling Program, specifically designed to address ADI’s evolving talent needs by expanding the skills of our technical workforce in the software domain. We are committed to employee growth and development, as well as building high-performing teams. This includes providing essential training such as the Executive Leadership Program and Management Essentials curricula that prepare employees to lead teams today and grow the business tomorrow and offering programs including our Leading ADI Forward program designed to help our leaders build relationships and drive our strategic vision throughout the organization. | ||||||
2023 Proxy Statement | 5 | ||||
Diversity, Equity and Inclusion
We are committed to cultivating an inclusive culture, implementing business practices that counteract systemic inequities and engaging with the communities around us to create a better, more just world. Through structural and cultural change, we aim to ensure that employees of all identities and cultures have an equal opportunity to grow and succeed at ADI.
Addressing Inequity Through a Holistic and Global Approach | ÑWe continue to transform the way we operate so inclusion and equity remain an integrated part of how we do business. This means redesigning our talent practices to address systemic barriers and building a culture that confronts bias. ÑAt a high level, our focus is on programs that target societal and organizational practices. From a societal perspective, we are establishing new partnerships and launching programs that increase access to STEM education for communities that are historically denied access. From an organizational perspective, we are revising our processes to mitigate bias and customizing our training programs to accelerate the development of underrepresented communities. | ||||
Engaging and Empowering Employees | ÑWe have formed a Global Diversity Council that is made up of senior leaders from across our organization. Together, they represent a mix of business units, regions, genders and races. They meet quarterly to provide feedback on strategic priorities and help to champion organizational change. ÑWe have a growing list of Employee Networks that are the driving force behind our evolving culture. Comprised of over 2,500 members across eight networks and thirty-five chapters, they foster community, build allyship, accelerate professional development and impact organizational policy. Each network has a formalized leadership team and structure, which includes an executive sponsor and annual goals. | ||||
Building Educational and Professional Partnerships | ÑWe continue to expand our outreach and support higher education, including engagement with an HBCU which includes sponsoring a research project enabling students dedicated time to explore and innovate. ÑIn addition, we continue our outreach to professional associations that serve underrepresented communities. We host educational talks and focus on skill building as a way to increase candidate capabilities and foster greater brand and STEM awareness. | ||||
Enhancing and Supporting Diversity | ÑWe recognize that employees of different identities encounter different systemic and cultural challenges. Understanding these unique experiences allows us to create impactful learning programs that build community, drive performance and advance gender and racial equity. ÑOne example is Elevate, our flagship leadership development series for women. Employees in this program build new skills and expand their global networks through an exciting combination of action learning, mentorship and sponsorship. The program places an emphasis on enhancing business insight, increasing customer focus, developing strategic mindsets and improving situational adaptability. The program cohorts were thoughtfully assembled to include representation from technical, sales and corporate functions across Asia, Europe and North America. | ||||
Ensuring Governance and Oversight | ÑThe Nominating and Corporate Governance Committee oversees ADI’s ESG policies, goals and programs, including reviewing our sustainability initiatives and goals, as well as our progress towards achieving those goals. Management regularly reports to our full Board of Directors on ESG topics, providing an update on key metrics and progress. Our Board of Directors provides direct feedback on strategic approach and initiatives once a year. Our Leadership Team, which includes our executive officers and any Senior Vice President reporting to the CEO, is engaged collectively on a semi-annual basis, and individual leaders provide ongoing sponsorship of core initiatives, such as our HBCU partnership and secondary school outreach program. | ||||
6 | Highlights | ||||
Proxy Summary
This summary provides an overview of select information in this Proxy Statement. We encourage you to read the entire Proxy Statement before voting. Shareholders will be asked to vote on the following matters at the Annual Meeting:
Proposal | Items of Business | Board Recommendation | Where to Find Details | ||||||||
| 1 | Election of 11 directors | FOR each director nominee | 17 | ||||||||
| 2 | Advisory approval of the compensation of our named executive officers | FOR | 48 | ||||||||
| 3 | Non-binding “say-on-frequency” vote regarding the frequency of future advisory votes on the compensation of our named executive officers | Every 1 YEAR | 79 | ||||||||
| 4 | Ratification of the selection of Ernst & Young LLP as independent registered public accounting firm for ADI’s fiscal year ending October 28, 2023 | FOR | 80 | ||||||||
What’s New We continually review our corporate strategy and governance practices to ensure that ADI is in a position to consistently deliver on our commitment to sustaining a culture of innovation, collaboration, solid performance, and fiduciary responsibility. We believe providing a broader understanding of our perspectives on these items will be beneficial to you as you consider this year’s voting matters. Updated items for fiscal year 2022 include: ÑAppointed Vincent Roche, our CEO, as Chair to lead ADI’s ongoing transformation, with James Champy continuing to serve as Presiding Director ÑContinued to focus on active board refreshment by welcoming André Andonian, who brings significant industry, strategic and leadership experience to our Board of Directors ÑExpanded the role of the Compensation and Talent Committee to oversee human capital and diversity initiatives ÑEngaged with shareholders representing nearly 30% of total shares outstanding, with a focus on ESG and compensation practices ÑFormed a management-led cross-functional steering committee chaired by our Chief Information Security Officer that is charged with security governance, coordination and monitoring of cyber risks, potential cyber incidents and key mitigation initiatives ÑChief Information Officer began providing quarterly cyber and IT reports to the Audit Committee ÑEnhanced our global data privacy and compliance programs, including updating policies and procedures, publishing values, expanding data privacy trainings for employees, and centralizing privacy inquiries | ||
| 2023 Proxy Statement | 7 | ||||
PROPOSAL 1 Election of 11 Directors | |||||
The Board of Directors recommends a vote FOR each director nominee. | ÑSee page 17 | ||||
8 | Proxy Summary | ||||
Our Board of Directors
Director Nominees
ADI’s Board is composed of a diverse, experienced group of global thought, business, and academic leaders. On January 17, 2023, each of Messrs. Doluca and Evans informed our Board of Directors of their intent to retire from our Board of Directors and not stand for re-election. Consequently, each of Messrs. Doluca and Evans term as a director will expire at the Annual Meeting on March 8, 2023. Our Nominating and Corporate Governance Committee has recommended, and our Board of Directors has determined, to nominate all other members of our Board of Directors for re-election at the Annual Meeting. If the current nominees are elected, we will have eleven members serving on our Board of Directors and the size of our Board of Directors will decrease to eleven members at such time.
 | VINCENT ROCHE, 62 Director Since: 2013 Principal Occupation: Chief Executive Officer and Chair of the Board of Directors of Analog Devices, Inc. Committee Membership(s): CDC (Chair) |  | KAREN M. GOLZ, 68 Director Since: 2018 Principal Occupation: Former Global Vice Chair of Ernst & Young Other Public Company Board(s): 2 Committee Membership(s): AC (Chair) | ||||||||
 | JAMES A. CHAMPY, 80 Director Since: 2003 Principal Occupation: Former Vice President of the Dell/ Perot Systems business unit of Dell, Inc. Committee Membership(s): NCGC (Chair) |  | MERCEDES JOHNSON, 68 Director Since: 2021 Principal Occupation: Former Chief Financial Officer of Avago Technologies (now Broadcom Inc.) Other Public Company Board(s): 3 Committee Membership(s): AC | ||||||||
 | ANDRÉ ANDONIAN, 60 Director Since: 2022 Principal Occupation: Chief Executive Officer of Andonian Advisory Pte. Ltd. Other Public Company Board(s): 1 Committee Membership(s): NCGC, CDC |  | KENTON J. SICCHITANO, 78 Director Since: 2003 Principal Occupation: Former Global Managing Partner of PricewaterhouseCoopers LLP Committee Membership(s): NCGC | ||||||||
 | ANANTHA P. CHANDRAKASAN, 54 Director Since: 2019 Principal Occupation: Dean of MIT’s School of Engineering and Vannevar Bush Professor of Electrical Engineering and Computer Science Committee Membership(s): NCGC; CDC |  | RAY STATA, 88 Director Since: 1965 Principal Occupation: Co-Founder and Former Chair of the Board of Directors of Analog Devices, Inc. | ||||||||
 | EDWARD H. FRANK, 66 Director Since: 2014 Principal Occupation: Executive Chair of Gradient Technologies Other Public Company Board(s): 3 Committee Membership(s): CTC (Chair); CDC |  | SUSIE WEE, 53 Director Since: 2019 Principal Occupation: Vice President, Google Committee Membership(s): CTC | ||||||||
 | LAURIE H. GLIMCHER, 71 Director Since: 2020 Principal Occupation: Professor of Medicine at Harvard Medical School and President and Chief Executive Officer of the Dana-Farber Cancer Institute Committee Membership(s): CTC | ||||||||||
AC Audit Committee | NCGC Nominating and Corporate Governance Committee | |||||||
CTC Compensation and Talent Committee | CDC Corporate Development Committee | |||||||
| 2023 Proxy Statement | 9 | ||||
Board Composition
Our Board of Directors and Nominating and Corporate Governance Committee are committed to ensuring that our Board of Directors is comprised of a highly capable group of directors who collectively span a broad range of leadership skills and provide a significant breadth of experience, knowledge and abilities, relevant to ADI’s strategic vision, long-term objectives and business activities to effectively represent the interest of shareholders, drive shareholder value, exercise sound judgment and reflect our corporate values of integrity, honesty and adherence to high ethical standards.
| 54% | 99% | 39 | 9 of 11 | ||||||||
of director nominees added in the last 5 years | overall attendance of incumbent directors at Board of Directors and Committee meetings in fiscal year 2022 | Board of Directors and Committee meetings held in fiscal year 2022 | director nominees are independent | ||||||||
Strong Board Diversity
Our Board of Directors also believes that having directors with a mix of tenure helps transition the institutional knowledge of the more experienced directors while providing a broad, fresh set of perspectives. Our Board of Directors has continued to make progress in broadening the experience, gender and tenure of our director nominees.
| AGE* | INDEPENDENT DIRECTOR TENURE | DIVERSITY | ||||||
 |  |  | ||||||
| Average Age: 68 years | Average Independent Director Tenure: 7.3 years | |||||||
* The sum of the individual percentages may not equal 100% due to rounding.
10 | Proxy Summary | ||||
Board Profile
ADI’s directors contribute significant experience in the areas most relevant to overseeing our business and strategy. The below matrix provides a high-level summary of the experience and qualifications of our director nominees:
 | Executive Leadership: Experienced leadership of complex global businesses | 6/11 |  | ||||||||
 | Industry: Insight into key issues affecting ADI | 9/11 |  | ||||||||
 | Innovation and Emerging Technologies: Expertise and thought leadership relating to technological innovation in our industry and our end markets | 9/11 |  | ||||||||
 | Corporate Governance/Public Company Board: Knowledge of public company governance issues and policies to enhance Board practices | 7/11 |  | ||||||||
 | Financial, Accounting, Auditing: Oversight of ADI’s audit function and preparation of financial statements and capital market expertise | 3/11 |  | ||||||||
 | International, Large Scale Global Operations, Manufacturing: Insight into the many factors involved in overseeing management of ADI’s global footprint | 9/11 |  | ||||||||
 | Government Affairs, Public Policy: Expertise handling government affairs and public policy matters | 3/11 |  | ||||||||
 | Strategy: Oversight of management’s development and implementation of strategic priorities | 10/11 |  | ||||||||
 | Risk Management, Regulatory, Compliance: Oversight of risks facing ADI and a comprehensive approach to risk management | 2/11 |  | ||||||||
 | Cybersecurity, Information Systems: Oversight of our efforts to maintain our customers’ trust and protect the security of their data | 4/11 |  | ||||||||
 | Mergers and Acquisitions: Experience evaluating strategic transactions | 4/11 |  | ||||||||
 | ESG (Including Sustainability, Human Capital, and Diversity): Knowledge of ESG topics impacting ADI | 3/11 |  | ||||||||
| 2023 Proxy Statement | 11 | ||||
Board Refreshment
Our Board of Directors has been focused on refreshment, regularly bringing in new viewpoints and skills. As a result of ongoing Board refreshment, we have added 6 new directors in the last five years:
 |  |  |  |  |  | ||||||||||||
Karen M. Golz | Anantha P. Chandrakasan | Susie Wee | Laurie H. Glimcher | Mercedes Johnson | André Andonian | ||||||||||||
| 2018 | 2019 | 2019 | 2020 | 2021 | 2022 | ||||||||||||
Governance Highlights
| EFFECTIVE BOARD LEADERSHIP, INDEPENDENT OVERSIGHT AND STRONG CORPORATE GOVERNANCE | SHAREHOLDER RIGHTS AND ACCOUNTABILITY | ||||||||||
ÑMajority of directors are independent ÑAverage tenure of independent directors standing for re-election is approximately 7.3 years ÑRegular executive sessions of independent directors ÑClawback policy for our CEO and other named executive officers (NEOs) ÑActive engagement by our Board of Directors in overseeing talent and long-term succession planning for executives | ÑAnnual election of directors of a declassified Board of Directors ÑMajority voting for directors in uncontested director elections ÑProxy access bylaw ÑAnnual Board of Directors and Committee self-evaluations ÑNo dual class of stock or controlling shareholder | ||||||||||
Shareholder Engagement Highlights
We conduct extensive investor outreach throughout the year involving our senior management, investor relations, legal and human resources departments. This helps management and our Board of Directors understand and focus on the issues that matter most to our shareholders, so ADI can address them effectively.
ADI’s Year-Round Engagement Process
Since our inception as a public company, we have maintained an active engagement program with our shareholders, meeting with them extensively throughout the year as part of our investor outreach efforts.
HOW WE ENGAGE
 | Winter |  | Spring |  | Summer |  | Fall | ||||||||||||||||||||||||||||
 |  | ||||||||||||||||||||||||||||||||||
ÑPublish Annual Report and Proxy Statement ÑConduct active outreach with top investors to discuss items to be considered at the annual meeting, if needed, given matters to be considered ÑAnnual Meeting | ÑEvaluate proxy season outcome and trends, corporate governance best practices and regulatory developments ÑPublish annual ESG report to inform stakeholders, including investors, about recent developments relating to ESG matters | ÑConduct active outreach with top investors to understand their top priorities and solicit feedback on governance topics, including ESG and compensation ÑShare investor feedback with our Board of Directors | |||||||||||||||||||||||||||||||||
During fiscal year 2022, as part of our annual outreach program, we reached out to shareholders representing approximately 50% of our total shares outstanding, and engaged with shareholders representing nearly 30% of our total shares outstanding, as well as proxy advisory firms. Further, as a result of our 2022 say-on-pay vote, during our fall 2022 outreach, we focused on investors that voted against say-on-pay during fiscal year 2022.
12 | Proxy Summary | ||||
PROPOSAL 2 Advisory Approval of the Compensation of Our Named Executive Officers | |||||
The Board of Directors recommends a vote FOR this proposal. | ÑSee page 48 | ||||
Overview of Compensation
Our executive compensation program is designed to attract, retain and motivate top executive talent and align the interests of our executive officers and our shareholders.
Summary of Direct Compensation Elements
We provide a mix of compensation elements that support our goals of attracting and retaining top executive talent and incentivizing our key performance objectives in the short-and long-term.
| Pay Element | Purpose | Time Period | Performance Measures | |||||||||||
Base Salary | ÑAttract and retain executive talent | ÑAnnual | ||||||||||||
Variable Cash Incentive | ÑMotivate and reward our executive officers for achieving short-term company financial objectives aligned with value creation | ÑPaid semi-annually, with quarterly corporate financial targets tied to corporate strategy of profitable growth | Ñ50%: quarterly OPBT margin Ñ50%: year-over-year revenue growth (measured quarterly) ÑMinimum OPBT margin required for payout | |||||||||||
Annual Long-Term Incentives | TSR PRSUs  | ÑAlign executive officer and shareholder interest to drive superior relative TSR results | ÑCumulative three-year period | ÑRelative TSR compared to comparator group ÑPayouts capped at target if absolute TSR is negative | ||||||||||
Financial Metric PRSUs  | ÑAlign executive officer and shareholder interests with long-term profitability | ÑOne-year, two-year cumulative and three-year cumulative time periods | ÑNon-GAAP operating profit | |||||||||||
RSUs  | ÑAttract and retain key executives | ÑFour-year graded vesting | ÑNone | |||||||||||
OPBT = Operating Profit Before Taxes TSR = Total Shareholder Return
| 2023 Proxy Statement | 13 | ||||
Overview of CEO and Named Executive Officer Pay
Executive pay at ADI is strongly aligned with long-term company performance, with a significant portion of compensation delivered in long-term equity-based awards. The target pay mix shown below is based on target compensation consisting of the annual rate of base salary and short-term and long-term incentive targets approved by the Compensation and Talent Committee.
Target Comp for CEO(1)
Target Comp for Other NEOs(1)(2)
(1)The sum of the individual amounts may not equal the total due to rounding.
(2)Excludes new-hire equity awards granted to Mr. Bryant in connection with commencement of his employment with us in March 2022. See the Compensation Discussion and Analysis section below for a discussion of these awards.
Stock Performance Graph
Fiscal year 2022 compensation actions for our executive officers, including our NEOs, are supported by solid corporate performance and strong shareholder returns. The following graph compares cumulative total shareholder return on our common stock since October 28, 2017 with the cumulative total return of the Standard & Poor’s (S&P) 500 Index and the Nasdaq Composite Index.
2022 Share Price Appreciation(1)
(1)This graph assumes the investment of $100 on October 28, 2017 in our common stock, the S&P 500 Index and the Nasdaq Composite Index and assumes all dividends are reinvested. Measurement points are the last trading day for each respective fiscal year.
14 | Proxy Summary | ||||
Historical Say-on-Pay Votes
Our pay programs have a history of strong shareholder support, however, we saw a decrease in our say-on-pay support during fiscal year 2022.
Our Compensation and Talent Committee carefully considers the results of our “say-on-pay” votes. We believe that the results of the 2022 say-on-pay advisory vote was primarily due to a one-time award granted to our CEO and Chair as discussed in our 2022 Proxy Statement under the heading CEO Performance Stock Option Award. During our engagement meetings with shareholders during 2022, many shareholders indicated that they understood the rationale behind the special one-time award and were generally pleased with the overall design and framework of our executive compensation program. Considering the 2022 say-on-pay vote and the feedback we received from our shareholders, the Compensation and Talent Committee determined to not make significant changes to our executive compensation program as a result of the 2022 say-on-pay vote, however, the Compensation and Talent Committee confirms that it does not intend to make future special awards to our CEO and Chair outside of our ongoing annual incentive programs while the current grant remains outstanding.
For additional information about the feedback we received from shareholders and the actions we took in response, please see the Shareholder Engagement section beginning on page 38 of this Proxy Statement.
Please see the Compensation Discussion and Analysis section beginning on page 49 of this Proxy Statement for a more detailed description of our executive compensation program, philosophy and design.
Compensation Best Practices  Our annual cash incentives are based solely on our financial performance A significant portion of equity awards are contingent upon long-term performance achievement Incentive awards are tied to rigorous performance targets aligned with our corporate strategy Payout for relative TSR-based awards capped at target for instances of negative absolute TSR Clawback policy for our CEO and other named executive officers in the event of a material financial restatement due to fraud or willful misconduct Specific policy regarding the grant dates of equity awards for our directors, executive officers and employees Stock ownership guidelines for our Leadership Team and directors Prohibit hedging and pledging of ADI securities Annual “say-on-pay” vote | ||
| 2023 Proxy Statement | 15 | ||||
PROPOSAL 3 Non-binding “Say-on-Frequency” Vote Regarding the Frequency of Future Advisory Votes on the Compensation of Our Named Executive Officers | |||||
The Board of Directors recommends a vote for every 1 YEAR for this proposal | ÑSee page 79 | ||||
PROPOSAL 4 Ratification of the Selection of Ernst & Young LLP as Independent Registered Public Accounting Firm for the Fiscal Year Ending October 28, 2023 | |||||
The Board of Directors recommends a vote FOR this proposal | ÑSee page 80 | ||||
16 | Proxy Summary | ||||
Board of Directors
PROPOSAL 1 Election of Directors Our Board of Directors unanimously recommends that you vote FOR the election of each of the below director nominees. | ||
The following table sets forth our director nominees:
| Name | Position(s) with ADI | ||||
Vincent Roche | Chief Executive Officer and Chair of the Board of Directors | ||||
James A. Champy | Presiding Director | ||||
André Andonian | Director | ||||
| Anantha P. Chandrakasan | Director | ||||
| Edward H. Frank | Director | ||||
| Laurie H. Glimcher | Director | ||||
| Karen M. Golz | Director | ||||
| Mercedes Johnson | Director | ||||
| Kenton J. Sicchitano | Director | ||||
| Ray Stata | Director | ||||
| Susie Wee | Director | ||||
Election Process
All members of our Board of Directors are elected annually by our shareholders and currently consists of thirteen directors, of whom ten are deemed to be “independent directors” as defined and in accordance with the Nasdaq Stock Market, Inc. Marketplace Rules, or Nasdaq Rules. On June 24, 2022, our Board of Directors increased the size of our Board of Directors to thirteen members and elected Mr. Andonian as an independent director, effective June 27, 2022. On January 17, 2023, each of Messrs. Doluca and Evans informed our Board of Directors of their intent to retire from our Board of Directors and not stand for re-election. Consequently, each of Messrs. Doluca and Evans’ term as a director will expire at the Annual Meeting on March 8, 2023. Our Nominating and Corporate Governance Committee recommended, and our Board of Directors has determined, to nominate all other current directors for reelection in 2023. As such, at the Annual Meeting, our shareholders will have an opportunity to vote for each of the eleven nominees listed above. If the current nominees are elected, we will have eleven members serving on our Board of Directors, of whom nine are deemed to be “independent directors” in accordance with Nasdaq Rules, and the number of directors composing our Board of Directors will be reduced to eleven. The persons named in the proxy card, upon receipt of a properly executed proxy, will vote for each of these nominees, unless you instruct them to vote otherwise on the proxy card (whether executed by you or through Internet or telephonic voting). Each of the director nominees has indicated his or her willingness to serve, if elected. However, if any or all of the director nominees should be unable or unwilling to serve, the proxies may be voted for a substitute nominee designated by our Board of Directors or our Board of Directors may reduce the number of directors.
| 2023 Proxy Statement | 17 | ||||
Board Refreshment
Our Board of Directors has been focused on refreshment, regularly bringing in new viewpoints and skills. As a result of ongoing Board refreshment, we have added 6 new directors in the last five years.
| | | | | | | ||||||||||||
Karen M. Golz | Anantha P. Chandrakasan | Susie Wee | Laurie H. Glimcher | Mercedes Johnson | André Andonian | ||||||||||||
2018 | 2019 | 2019 | 2020 | 2021 | 2022 | ||||||||||||
Director Criteria, Qualifications and Experience
Our Board of Directors and Nominating and Corporate Governance Committee are committed to ensuring that our Board of Directors is composed of a highly capable group of directors who collectively span a broad range of leadership skills and provide a significant breadth of experience, knowledge and abilities, relevant to ADI’s strategic vision, long-term objectives and business activities to effectively represent the interests of shareholders, drive shareholder value, exercise sound judgment and reflect our corporate values of integrity, honesty and adherence to high ethical standards. Our Board of Directors and Nominating and Corporate Governance Committee consider the following factors, among others, when selecting director nominees:
| Diversity of Director Nominees | Independence of Director Nominees | ||||||||||||||||
 4 of 11 Directors identify as female, or 36% | While our Board of Directors does not have a specific diversity policy, our Corporate Governance Guidelines provide that gender, racial, and ethnic diversity, consistent with the requirement for relevant and diverse experience, skills, and industry familiarity, are important search criteria. Effective application of these criteria is reflected in the diverse composition of our Board of Directors. |  9 of 11 Directors are Independent, or 82% | Under Nasdaq Rules, a majority of the members of our Board of Directors must be independent directors. To be considered independent, a director must be independent as determined under applicable Nasdaq Rules, and in our Board of Directors’ judgment, the director must not have a relationship with ADI that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. | ||||||||||||||
 3 of 11 Directors identify as ethnically diverse, or 27% | |||||||||||||||||
18 | Board of Directors | ||||
Experience of our Director Nominees
 |  |  |  |  |  |  |  |  |  |  | ||||||||||||||||||||||||||||
| Executive Leadership | l | l | l | l | l | l | |||||||||||||||||||||||||||||||
| Industry | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||
| Innovation and Emerging Technologies | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||
| Corporate Governance/Public Company Board | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||||
| Financial, Accounting, Auditing | l | l | l | ||||||||||||||||||||||||||||||||||
| International, Large Scale Global Operations, Manufacturing | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||
| Government Affairs, Public Policy | l | l | l | ||||||||||||||||||||||||||||||||||
| Strategy | l | l | l | l | l | l | l | l | l | l | |||||||||||||||||||||||||||
| Risk Management, Regulatory, Compliance | l | l | |||||||||||||||||||||||||||||||||||
| Cybersecurity, Information Systems | l | l | l | l | |||||||||||||||||||||||||||||||||
| Mergers and Acquisitions | l | l | l | l | |||||||||||||||||||||||||||||||||
| ESG (including Sustainability, Human Capital, and Diversity) | l | l | l | ||||||||||||||||||||||||||||||||||
| 2023 Proxy Statement | 19 | ||||
Board Diversity Matrix (as of January 20, 2023)
TOTAL NUMBER OF DIRECTORS: 13
| Female | Male | Non-Binary | Did Not Disclose Gender | |||||||||||
| Part I: Gender Identity | ||||||||||||||
| Directors | 4 | 9 | - | - | ||||||||||
| Part II: Demographic Background | ||||||||||||||
| African American or Black | - | - | - | - | ||||||||||
| Alaskan Native or Native American | - | - | - | - | ||||||||||
| Asian | 1 | 1 | - | - | ||||||||||
| Hispanic or Latinx | 1 | - | - | - | ||||||||||
| Native Hawaiian or Pacific Islander | - | - | - | - | ||||||||||
| White | 2 | 8 | - | - | ||||||||||
| Two or More Races or Ethnicities | - | - | - | - | ||||||||||
| LGBTQ+ | - | - | - | - | ||||||||||
| Did Not Disclose Demographic Background | - | - | - | - | ||||||||||
Director Biographies
The following paragraphs provide information as of the date of this Proxy Statement about each director nominee. The information presented includes information each director nominee has given us about his or her age, all positions he or she holds, his or her principal occupation and business experience, and the names of other publicly-held companies of which he or she currently serves as a director or has served as a director during the past five years. In addition to the information presented below regarding each director nominee’s specific experience, qualifications, attributes and skills that led our Board of Directors to the conclusion that he or she should serve as a director, we also believe that all of our director nominees have a reputation for integrity, honesty and adherence to high ethical standards. Further, they each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to ADI and our Board of Directors. Finally, we value their significant experience on other public company boards of directors and board committees for providing our Board of Directors a range of views and a variety of best practices to consider.
Information about the number of shares of common stock beneficially owned by each director nominee appears below under the heading Security Ownership of Directors and Executive Officers. There are no family relationships among any of the directors and executive officers of ADI.
| Legend | ||||||||||||||
 |  | |  |  | ||||||||||
| Executive Leadership | Industry | Innovation and Emerging Technologies | Corporate Governance/Public Company Board | Financial, Accounting, Auditing | ||||||||||
 | |  |  |  | ||||||||||
| International, Large Scale Global Operations, Manufacturing | Government Affairs, Public Policy | Strategy | Risk Management, Regulatory, Compliance | Cybersecurity, Information Systems | ||||||||||
| | | |||||||||||||
| Mergers and Acquisitions | ESG | |||||||||||||
20 | Board of Directors | ||||
 Vincent Roche Chief Executive Officer and Chair of the Board of Directors | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Mr. Roche was elected as Chair of our Board of Directors in March 2022. Mr. Roche has served as our President since 2012, and was appointed CEO and elected as a director in May 2013. During Mr. Roche’s tenure as CEO, our total shareholder return is up 300% vs S&P 500 (up 190%) over that time as of the end of fiscal year 2022. Mr. Roche began his career with us in 1988 and has served in key positions spanning corporate leadership, worldwide sales, strategic marketing, business development, and product management over his more than 30-year tenure. Mr. Roche was recognized by Forbes in 2019 as one of America’s Most Innovative Leaders while also being a recipient of the 2021 SFI St. Patrick’s Day Science Medal for his contributions in support of the ecosystems in Ireland. KEY QUALIFICATIONS AND EXPERTISE Mr. Roche brings to our Board of Directors insights based on his leadership roles and his deep knowledge of our products, markets, customers, culture and organization. OTHER PUBLIC COMPANY BOARDS Current: None Past 5 Years: Acacia Communications, Inc. (until March 2021) | ||||||||||||||
Age: 62 | Director since: 2013 | Committee(s): Corporate Development |  | |||||||||||
 James A. Champy Presiding Director Independent | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Mr. Champy retired in 2010 as Vice President of the Dell/Perot Systems business unit of Dell, Inc., a computer and technology services company. Mr. Champy was previously a Vice President and the Chairman of Consulting at Perot Systems Corporation, an informational technology services company, from September 1996 to November 2009. He served as a member of the board of directors of Perot Systems Corporation from September 1996 to February 2004. KEY QUALIFICATIONS AND EXPERTISE Mr. Champy brings to our Board of Directors deep experience in the computer and technology services sectors and provides our Board of Directors with expertise in corporate strategy development and organizational acumen. OTHER PUBLIC COMPANY BOARDS Current: None Past 5 Years: None | ||||||||||||||
Age: 80 | Director since: 2003 | Committee(s): Nominating and Corporate Governance |  | |||||||||||
| 2023 Proxy Statement | 21 | ||||
 André Andonian Independent | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Mr. Andonian is Chief Executive Officer of Andonian Advisory Pte. Ltd., a consulting firm that he founded in March 2022. Mr. Andonian has served as Special Advisor - Senior Partner Emeritus at McKinsey & Company, a global management consulting company, since June 2022. Mr. Andonian was previously a Senior Partner at McKinsey & Company, most recently as managing partner of McKinsey Korea, advising clients across the firm’s Semiconductors, Advanced Electronics, Automotive & Assembly, Biotechnology, and Aerospace & Defense Practices from January 2021 until June 2022. He was previously managing partner of McKinsey Japan from January 2016 to December 2020. KEY QUALIFICATIONS AND EXPERTISE Mr. Andonian brings to our Board of Directors extensive experience in transforming companies into global leaders in the high-tech, advanced industries, aerospace, biotech and basic materials sectors, and in the assessment and development of talent. Mr. Andonian also has deep global executive leadership experience, previously holding executive leadership roles at McKinsey across Europe, the U.S. and Asia over a 30-year career. Further, Mr. Andonian brings significant experience working with senior leaders of companies around the world and across a multitude of industries on a broad range of strategic and operational issues, including driving board effectiveness. OTHER PUBLIC COMPANY BOARDS Current: AEM Holdings Ltd. (SGX:AWK) Past 5 Years: None | ||||||||||||||
Age: 60 | Director since: 2022 | Committee(s): Nominating and Corporate Governance; Corporate Development |  | |||||||||||
 Anantha P. Chandrakasan Independent | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Dr. Chandrakasan has served as the Dean of the School of Engineering at the Massachusetts Institute of Technology (MIT), a private research university since July 2017, and as Vannevar Bush Professor of Electrical Engineering and Computer Science. Dr. Chandrakasan has co-chaired the MIT-IBM Watson AI Lab, the MIT-Takeda Program, and the MIT and Accenture Convergence Initiative for Industry and Technology. Dr. Chandrakasan also currently serves on the board of directors of the Singapore-MIT Alliance for Research and Technology, or SMART. Dr. Chandrakasan was the director of the Microsystems Technology Laboratories from July 2006 until he became the head of the Department of Electrical Engineering and Computer Science in July 2011, a position that concluded with his appointment as Dean in July 2017. Dr. Chandrakasan joined the MIT faculty in 1994. Dr. Chandrakasan is an Institute of Electrical and Electronics Engineers (IEEE) fellow, and was elected to the National Academy of Engineering in 2015 and to the American Academy of Arts & Sciences in 2019. KEY QUALIFICATIONS AND EXPERTISE Dr. Chandrakasan brings to our Board of Directors a deep understanding of complex technologies and broad experience driving innovation. Dr. Chandrakasan has a deep understanding of the semiconductor industry having previously consulted for a number of semiconductor companies. Mr. Chandrakasan also has experience driving diversity initiatives and is involved with cybersecurity initiatives at MIT and brings these skills to our Board of Directors. OTHER PUBLIC COMPANY BOARDS Current: None Past 5 Years: None | ||||||||||||||
Age: 54 | Director since: 2019 | Committee(s): Nominating and Corporate Governance; Corporate Development |  | |||||||||||
22 | Board of Directors | ||||
 Edward H. Frank Independent | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Since September 2022, Dr. Frank has been the Executive Chair of Gradient Technologies, a security technologies startup, focused on identity and access management, and was recently co-founder and CEO of Cloud Parity Inc., a voice of the customer startup, from January 2014 through August 2016. From May 2009 to October 2013, Dr. Frank held the position of Vice President, Macintosh Hardware Systems Engineering at Apple Inc., a company that designs, manufactures and markets electronic devices. Prior to his tenure at Apple, Dr. Frank served as Corporate Vice President, Research and Development, of Broadcom Corp. Dr. Frank was founding CEO of Epigram, Inc., a developer of integrated circuits and software for home networking, which Broadcom acquired in 1999, and was a Distinguished Engineer at Sun Microsystems, Inc. Since 2000, Dr. Frank has been a Trustee of Carnegie Mellon University and served as vice-chair from 2015 through 2021. Dr. Frank has served on the board of directors of Metallica’s All Within My Hands Foundation since July 2017, where he also served as Executive Director (pro bono) from July 2017 through December 2021. He is a member of the National Academy of Engineering and a Fellow of the IEEE. KEY QUALIFICATIONS AND EXPERTISE Dr. Frank brings to our Board of Directors substantial experience in the design, manufacture, sale and marketing of semiconductors for a broad set of markets, including many of the markets we service and brings extensive executive leadership experience. Dr. Frank also brings significant cybersecurity experience to our Board of Directors. OTHER PUBLIC COMPANY BOARDS Current: Marvell Technology, Inc.; SiTime Corp.; Rocket Lab USA, Inc. Past 5 Years: Cavium, Inc. (until 2018); Amesite, Inc. (until 2020); Quantenna Communications, Inc. (until 2018) | ||||||||||||||
Age: 66 | Director since: 2014 | Committee(s): Compensation and Talent; Corporate Development |  | |||||||||||
 Laurie H. Glimcher Independent | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Dr. Glimcher has served as a Professor of Microbiology and Immunology at Harvard Medical School since May 2017, the Richard and Susan Smith Professor of Medicine at Harvard Medical School and Dana-Farber Cancer Institute since October 2016, an Attending Physician, Department of Cancer Immunology and Virology at Dana-Farber Cancer Institute since October 2016 and the President and Chief Executive Officer of the Dana-Farber Cancer Institute since September 2016. In addition to a number of senior leadership roles held at both Harvard Medical School and Harvard School of Public Health from 1984 to 2011 and from October 2016 to present, she also served as the Stephen and Suzanne Weiss Dean and Professor of Medicine of Weill Cornell Medicine and Provost for Medical Affairs of Cornell University from January 2012 to August 2016. She is a member of the board of trustees at the Dana-Farber Cancer Institute and a member of the U.S. National Academy of Sciences, the National Academy of Medicine, the American Academy of Arts and Sciences and the American Philosophical Society. KEY QUALIFICATIONS AND EXPERTISE Dr. Glimcher brings to our Board of Directors scientific and public health expertise, as well as diversity of technical skills and experience managing large, complex organizations, and as a physician, scientist and professor. OTHER PUBLIC COMPANY BOARDS Current: None Past 5 Years: Waters Corporation (until 2020); GlaxoSmithKline plc (until October 2022) | ||||||||||||||
Age: 71 | Director since: 2020 | Committee(s): Compensation and Talent |  | |||||||||||
| 2023 Proxy Statement | 23 | ||||
 Karen M. Golz Independent | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Ms. Golz is a retired Partner of Ernst & Young (EY), a public accounting firm, where she was Global Vice Chair, Japan from 2016 to 2017 and previously Global Vice Chair, Professional Practice from 2010 to 2016. Ms. Golz also served on EY’s Global Risk Management Executive Committee, which was charged with risk management across EY’s global network, from 2008 to 2016. Ms. Golz currently serves as Senior Advisor to The Boston Consulting Group’s Audit and Risk Committee, a role she has held since August 2017, and as a Principal for K.M. Golz Associates, LLC, a consulting services company, since August 2017. Ms. Golz also sits on the board of trustees of the University of Illinois Foundation. Ms. Golz is a National Association of Corporate Directors (NACD) Board Leadership Fellow. KEY QUALIFICATIONS AND EXPERTISE Ms. Golz brings to our Board of Directors accounting and audit expertise and extensive experience helping large organizations successfully navigate the complexities of international trade and regulation. OTHER PUBLIC COMPANY BOARDS Current: Aspen Technology, Inc.; iRobot Corporation Past 5 Years: None | ||||||||||||||
Age: 68 | Director since: 2018 | Committee(s): Audit |  | |||||||||||
 Mercedes Johnson Independent | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Ms. Johnson served as interim Chief Financial Officer of Intersil Corporation, a semiconductor company, from April 2013 to September 2013, as Vice President and Chief Financial Officer at Tri Alpha Energy, Inc. (now TAE Technologies, Inc.), a fusion power company, from 2010 to 2011, and as Senior Vice President and Chief Financial Officer of Avago Technologies Limited (now Broadcom Inc.), a semiconductor manufacturing company from December 2005 to August 2008. Prior to joining Avago, Ms. Johnson was Senior Vice President, Finance, of Lam Research Corporation, a supplier of wafer fabrication equipment and related services to the semiconductor industry from June 2004 to January 2005 and Chief Financial Officer of Lam from May 1997 to May 2004. KEY QUALIFICATIONS AND EXPERTISE Ms. Johnson brings to our Board of Directors extensive executive experience in finance, accounting, corporate development, corporate governance, management, and operations. Ms. Johnson provides our Board of Directors with valuable industry experience as a former senior financial executive at semiconductor and semiconductor equipment companies as well as numerous directorships at public global technology companies. OTHER PUBLIC COMPANY BOARDS Current: Teradyne, Inc.; Synopsys, Inc.; Millicom International Cellular SA Past 5 Years: Juniper Networks, Inc. (until 2019); Micron Technology, Inc. (until 2019); Maxim Integrated Products, Inc. (until 2021) | ||||||||||||||
Age: 68 | Director since: 2021 | Committee(s): Audit |  | |||||||||||
24 | Board of Directors | ||||
 Kenton J. Sicchitano Independent | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Mr. Sicchitano retired from PricewaterhouseCoopers LLP (PwC), a public accounting firm, in July 2001. At the time of his retirement, Mr. Sicchitano was the Global Managing Partner of Independence and Regulatory Matters for PwC. Mr. Sicchitano joined Price Waterhouse LLP, a predecessor firm of PwC, in 1970 and became a partner in 1979. During his 31-year tenure with PwC, Mr. Sicchitano held various positions, including Global Managing Partner of Audit/Business Advisory Services and Global Managing Partner responsible for Audit/Business Advisory, Tax and Financial Advisory Services. KEY QUALIFICATIONS AND EXPERTISE Mr. Sicchitano brings to our Board of Directors extensive experience with public and financial accounting matters for complex global organizations. OTHER PUBLIC COMPANY BOARDS Current: None Past 5 Years: None | ||||||||||||||
Age: 78 | Director since: 2003 | Committee(s): Nominating and Corporate Governance |  | |||||||||||
 Ray Stata | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Mr. Stata is our co-founder and served as an executive officer from our inception in 1965 until April 2012, including as our CEO from 1973 to November 1996 and as our President from 1971 to November 1991. Mr. Stata also served as the Chair of our Board of Directors from 1973 until March 2022 and continues to serve on our Board of Directors. KEY QUALIFICATIONS AND EXPERTISE Mr. Stata brings to our Board of Directors more than 50 years of experience and leadership in the semiconductor industry, including as our founder, our former Chair of the Board of Directors for 48 years and our former President for 20 years. OTHER PUBLIC COMPANY BOARDS Current: None Past 5 Years: None | ||||||||||||||
Age: 88 | Director since: 1965 | Committee(s): None |  | |||||||||||
| 2023 Proxy Statement | 25 | ||||
 Susie Wee Independent | ||||||||||||||
PROFESSIONAL EXPERIENCE AND BACKGROUND Dr. Wee has been a Vice President at Google, a multinational technology company, since April 2022. From November 2019 to August 2021, Dr. Wee served as Senior Vice President and General Manager of DevNet and CX Ecosystem Success at Cisco Systems Inc., a technology company. Dr. Wee founded and led DevNet, Cisco’s developer program, beginning in October 2013. Dr. Wee began working at Cisco in April 2011, and held leadership roles including Senior Vice President & Chief Technology Officer of DevNet from October 2018 to November 2019, Vice President & Chief Technology Officer of DevNet from October 2013 to October 2018, Vice President & Chief Technology Officer of Networked Experiences from October 2012 to October 2013, and Vice President & Chief Technology and Experience Officer of Cisco’s Collaboration Technology Group from April 2011 to October 2012. Previously, Dr. Wee had a 15-year career at Hewlett Packard Enterprise Company, a technology company, where she held a number of technical and leadership roles, including Vice President and General Manager of the HP Experience Software Business and Lab Director at HP Labs. Dr. Wee is an IEEE fellow and serves on the visiting committee of the MIT Electrical Engineering and Computer Science department. KEY QUALIFICATIONS AND EXPERTISE Dr. Wee brings to our Board of Directors extensive experience in information technology and application development, and an established track record of driving software innovation at global technology companies. OTHER PUBLIC COMPANY BOARDS Current: None Past 5 Years: None | ||||||||||||||
Age: 53 | Director since: 2019 | Committee(s): Compensation and Talent |  | |||||||||||
26 | Board of Directors | ||||
Determination of Independence
Under applicable Nasdaq Rules, a director of ADI will only qualify as an “independent director” if, in the opinion of our Board of Directors, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our Board of Directors has established guidelines (within our Corporate Governance Guidelines) to assist it in determining whether a director has a relationship with ADI that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. These guidelines are posted on our website under https://investor.analog.com/governance/governance-documents. For relationships not covered by the guidelines, the determination of whether such a relationship exists is made by the members of our Board of Directors who are independent directors (as defined above). Our Board of Directors has determined that none of Messrs. Andonian, Champy, Evans(1) and Sicchitano, Mses. Golz and Johnson, and Drs. Chandrakasan, Frank, Glimcher, and Wee has a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is an “independent director” as defined under Rule 5605(a)(2) of the Nasdaq Rules. Our Board of Directors has determined that Mr. Roche, our CEO and Chair, and Mr. Stata, our co-founder and former Chair, are not “independent” under the Nasdaq Rules because Mr. Roche is a current employee and Mr. Stata is our founder. Our Board of Directors also determined that Mr. Doluca(1) is not “independent” under the Nasdaq Rules given his prior role as the President and Chief Executive Officer of Maxim and the fact that integration efforts between Maxim and ADI are still ongoing. Our Board of Directors also determined that Dr. Mark Little, a former director, was an “independent director” prior to his retirement from our Board of Directors on March 9, 2022. Our Board of Directors considered our annual laboratory membership and sponsorship of university research projects with MIT, of which Dr. Chandrakasan is the Dean of the School of Engineering and Mr. Champy is a board member. Even though Dr. Chandrakasan is a senior leader at MIT, our Board of Directors determined that this donation does not impair his independence due to the lack of any benefit to him from the donation other than general benefits pertaining to any other academics of the school. Our Board of Directors also considered Ms. Golz’s former affiliation with Ernst & Young and Mr. Andonian’s former and current affiliation with McKinsey & Company, and determined that those relationships would not interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
(1)Messrs. Doluca and Evans are not standing for re-election and their terms on the Board of Directors will end at the Annual Meeting on March 8, 2023.
| 2023 Proxy Statement | 27 | ||||
Director Candidates
Recommendation | In considering whether to recommend any candidate for inclusion in the Board of Directors’ slate of recommended director nominees, including candidates recommended by shareholders, the Nominating and Corporate Governance Committee will apply the criteria set forth in our Corporate Governance Guidelines. These criteria include the candidate’s integrity, business acumen, experience, commitment, and diligence; the presence of any conflicts of interest; and the ability of the candidate to act in the interests of all shareholders. | ||||
Diversity | The Nominating and Corporate Governance Committee seeks nominees with a broad diversity of experience, professions, skills, geographic representation and backgrounds. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. ADI believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow our Board of Directors to fulfill its responsibilities. While we do not have a policy regarding diversity of our Board members, the Nominating and Corporate Governance Committee includes gender, racial and ethnic diversity as part of its search criteria, consistent with the requirement for relevant and diverse experience, skills and industry familiarity. Effective application of these criteria is reflected in the diverse composition of our Board of Directors. | ||||
Evaluation | The process followed by the Nominating and Corporate Governance Committee to identify and evaluate candidates includes requests to members of our Board of Directors and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the Nominating and Corporate Governance Committee and the Board of Directors. From time to time, the Nominating and Corporate Governance Committee may also seek input from director search firms for identification and evaluation of candidates. Assuming that appropriate biographical and background material is provided for candidates recommended by shareholders on a timely basis, the Nominating and Corporate Governance Committee will evaluate director candidates recommended by shareholders by following substantially the same process, and applying substantially the same criteria, as it follows for director candidates submitted by members of our Board of Directors. Mr. Andonian was introduced by a director and, with the recommendation of the Nominating and Corporate Governance Committee, was elected to our Board of Directors effective June 27, 2022 and is included in the slate of director nominees nominated by the Board of Directors for election as a director at the Annual Meeting. | ||||
Shareholder Recommendations and Nominations of Director Candidates
Shareholders of record of ADI may recommend director candidates for inclusion by our Board of Directors in the slate of nominees that the Board of Directors recommends to our shareholders for election. The qualifications of recommended candidates will be reviewed by the Nominating and Corporate Governance Committee. If our Board of Directors determines to nominate a shareholder-recommended candidate and recommends his or her election as a director by the shareholders, the name will be included in ADI’s proxy card for the shareholders’ meeting at which his or her election is recommended.
Shareholders may recommend individuals for the Nominating and Corporate Governance Committee to consider as potential director candidates by submitting their name and background and a statement as to whether the shareholder or group of shareholders making the recommendation has beneficially owned more than 5% of ADI’s common stock for at least one year as of the date the recommendation is made, to the Nominating and Corporate Governance Committee, c/o Janene Asgeirsson, Secretary, Analog Devices, Inc., One Analog Way, Wilmington, Massachusetts 01887. Our Nominating and Corporate Governance Committee will consider a recommendation only if appropriate biographical information and background material is provided on a timely basis.
Shareholders also have the right to directly nominate director candidates, without any action or recommendation on the part of the Nominating and Corporate Governance Committee or the Board of Directors, by following the procedures set forth in our amended and restated bylaws and described in the response to the question “How and when may I submit a shareholder proposal, including a shareholder nomination for director, for the 2024 annual meeting of shareholders?” below.
28 | Board of Directors | ||||
Corporate Governance
Board Policies and Practices
We periodically review our corporate governance policies and practices and compare them to those suggested by various authorities in corporate governance and the practices of other public companies.
We have long believed that good corporate governance is important to ensure that ADI is managed for the long-term benefit of our shareholders. As a result, we have adopted the following policies and procedures that we believe are in the best interests of ADI and our shareholders:
Policy/Practice | Summary | ||||
Corporate Governance Guidelines | Our Board of Directors has adopted Corporate Governance Guidelines for ADI that establish a common set of expectations to assist our Board of Directors and its committees in performing their duties. Our Board of Directors reviews these guidelines at least annually, and updates them as necessary to reflect changing regulatory requirements and evolving practices. | ||||
Declassified Board of Directors | We have a declassified Board of Directors and our bylaws provide that each director will serve for a term ending on the date of the annual meeting following the one at which such director was elected. | ||||
Majority Voting for Election of Directors | Our bylaws provide for a majority voting standard in uncontested director elections, so a director nominee is elected to our Board of Directors if the votes “for” that director exceed the votes “against” (with abstentions and broker non-votes not counted as for or against the election). If a director nominee does not receive more for votes than against votes, the director must offer his or her resignation, which our Board of Directors must determine whether to accept and publicly disclose that determination. | ||||
Executive Sessions | At least twice per year, our Board of Directors holds executive sessions with our independent, non-employee directors, as defined under the Nasdaq Rules. Our Presiding Director, Mr. Champy, presides at these independent director executive sessions. In addition, the committees of our Board of Directors also regularly hold executive sessions without management present and with their advisors. | ||||
No Hedging and No Pledging Policy | We prohibit all hedging transactions or short sales involving ADI securities by our directors and employees, including our executive officers. Since January 2013, we have prohibited our directors and executive officers from holding any ADI securities in a margin account, and from any future pledging of their ADI securities as collateral for a loan. | ||||
Equity Award Grant Date Policy | We do not time or select the grant dates of any stock options or stock-based awards in coordination with our release of material non-public information, nor do we have any program, plan or practice to do so. In addition, our Compensation and Talent Committee has adopted specific written policies regarding the grant dates of equity awards made to our directors, executive officers and employees. See Director Compensation and Equity Award Grant Date Policy below for more information. | ||||
Executive Stock Ownership Guidelines | Under our guidelines, the target stock ownership levels are five times annual base salary for the CEO and three times annual base salary for other executive officers and any Senior Vice President reporting to the CEO, which we collectively refer to as, the Leadership Team. The CEO has four years from the date of his appointment as CEO to achieve his targeted level. Members of the Leadership Team other than the CEO have five years from the date he or she becomes part of the Leadership Team to achieve their targeted level. Shares subject to unexercised options, whether or not vested, and unvested performance-based RSUs whose performance have not yet been certified by the Compensation and Talent Committee will not be counted for purposes of satisfying these guidelines. RSUs and restricted stock (whether or not vested) and unvested performance-based RSUs whose performance has been certified by the Compensation and Talent Committee are counted for purposes of satisfying these guidelines. All members of the Leadership Team, other than Ms. Asgeirsson, who first joined ADI in fiscal year 2021, were in compliance with our stock ownership guidelines as of the end of fiscal year 2022. Ms. Asgeirsson is expected to be in compliance with our stock ownership guidelines within the first five years of her appointment to the Leadership Team. | ||||
Clawback Policy | Our clawback policy provides that in the event of a material restatement of our financial results, the Compensation and Talent Committee may, as appropriate, seek to recover from our CEO and other named executive officers whose fraud or willful misconduct caused or partially caused such restatement, all or a portion of the performance-based compensation awarded to such named executive officer that was in excess of the amount that would have been awarded based on the restated financial results. We will amend our compensation clawback policy so that it is compliant with the regulations mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act when corresponding listing standards become effective. | ||||
| 2023 Proxy Statement | 29 | ||||
| Policy/Practice | Summary | ||||
Adoption of Proxy Access Right | Our Board of Directors approved a bylaw amendment implementing proxy access, which allows shareholders that meet standard eligibility requirements to nominate and include in our Proxy Statement director candidates for election. | ||||
Code of Business Conduct and Ethics | We have a Code of Business Conduct and Ethics, which details our commitment to conducting business ethically, in compliance with the law, and in a way that reflects our deeper values. Our Code of Business Conduct and Ethics details our commitment to safeguarding personal data, explains our whistleblower reporting process, and is designed to be consistent with best practices. Our Code of Business Conduct and Ethics provides transparency on our enhanced whistleblower process. Specifically, we affirm our commitment to a consistent and transparent review process, prompt and thorough investigations, assignment of neutral investigators, communication about investigation outcomes, and implementation of appropriate corrective actions. | ||||
Code of Corporate Social Responsibility | Our Code of Corporate Social Responsibility details ADI’s policies for itself and its suppliers in the areas of labor and human rights, health and safety, environment, ethics, management systems and data privacy. | ||||
Director Education | We encourage our directors to attend director education programs and provide educational opportunities to our directors through a variety of platforms. We reimburse the costs of attending such programs. We also provide members of our Board of Directors a membership to the National Association of Corporate Directors. Further, we include educational topics regularly at our scheduled Board of Directors’ meetings. During such sessions, an outside party presents on a topic that is relevant to our business and strategic objectives, and of interest to our Board of Directors. | ||||
You can access our bylaws, the current charters for our Audit Committee, Compensation and Talent Committee, Nominating and Corporate Governance Committee and Corporate Development Committee, our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and other governance documents and corporate policies at https://investor.analog.com/governance/governance-documents and https://www.analog.com/en/about-adi/legal-and-risk-oversight.html or by writing to:
Investor Relations Department
Analog Devices, Inc.
One Analog Way
Wilmington, Massachusetts 01887
Phone: 781-461-3282
Email: investor.relations@analog.com
Analog Devices, Inc.
One Analog Way
Wilmington, Massachusetts 01887
Phone: 781-461-3282
Email: investor.relations@analog.com
Board and Committee Structure
Board Leadership Structure
Our Board of Directors is responsible for broad corporate policy and overall performance of ADI through oversight of management. Among other duties, our Board of Directors appoints ADI’s executive officers, assigns to them responsibility for management of our operations, and reviews their performance. Our Board of Directors regularly reviews our Board leadership structure and it is recognized that the combination or separation of the CEO and Chair roles are driven by the needs of ADI at a particular time. Since March 2022, Mr. Roche has been serving as the CEO and Chair. The Board of Directors determined that having Mr. Roche serve in this combined role strengthens his ability to provide leadership as ADI continues to transition in response to customer demand for more complete solutions. Mr. Champy has served as our independent Presiding Director since 2010.
30 | Corporate Governance | ||||
In accordance with best practices, the Presiding Director has significant responsibilities, including: ÑLeadership of executive sessions of the independent directors or other meetings at which the Chair is not present; ÑAuthority to call meetings of the independent directors; ÑCoordinating with the Chair to call Board of Directors’ meetings; ÑOverseeing the annual Board of Directors’ evaluation process; ÑServing as a liaison between the Chair and the independent directors, as required; ÑCoordinating with the Chair to set and approve the Board of Directors’ meeting schedule and agenda to assure sufficient time for discussion of all agenda items; ÑDetermining the appropriate materials to be provided to the Board of Directors; ÑServing as the focal point for shareholder communications with the independent directors and requests for consultation addressed to independent members of the Board of Directors; ÑThe ability to retain outside professionals on behalf of our Board of Directors as our Board of Directors may determine is necessary or appropriate; and ÑSuch other functions as our Board of Directors may direct from time to time. | ||
| 2023 Proxy Statement | 31 | ||||
Board Committees
Our Board of Directors has standing Audit, Compensation and Talent, Nominating and Corporate Governance, and Corporate Development Committees. With the exception of the Corporate Development Committee, of which Mr. Roche is Chair, the members of all three other committees are comprised of independent, non-employee directors. Each committee has a charter that has been approved by the Board of Directors and is reviewed annually. In addition, each committee conducts an annual self-evaluation of its own performance and the performance of its members in accordance with its respective committee charter. Each director also undertakes an evaluation of our Board of Directors more generally. Our Presiding Director, working with our Chief Legal Officer, also has conversations with each director designed to assess the competencies and skills each director brings to our Board of Directors. Summaries of the evaluations are presented to the Board of Directors. Mr. Roche is the only current director who is, or has been in the past three years, an employee of ADI. Mr. Stata does not serve on any standing committee and Messrs. Roche and Stata do not participate in the portion of any Board or committee meeting during which their compensation is evaluated or in sessions comprised solely of independent directors.
Audit Committee Members Karen M. Golz (Chair) Bruce R. Evans(1) Mercedes Johnson  Meetings in 2022: 9 | PRINCIPAL RESPONSIBILITIES The primary purpose of the Audit Committee is to assist our Board of Directors’ oversight of: ÑThe integrity of our financial statements, including regulatory requirements to the extent they pertain to financial matters; ÑThe qualifications and independence of our independent registered public accounting firm; ÑThe performance of our internal audit function and independent registered public accounting firm; ÑThe process relating to internal enterprise risk management, control systems, and review of related person transactions; ÑEvaluating capital allocation and structure, including potential issuance of debt and equity securities, credit agreements, letters of credit, guarantees and other financial instruments, investment policy, dividends, stock splits and stock repurchases; ÑEvaluating our significant financial exposures and liabilities; and ÑReviewing our financial outlook and plans for financing our working and long-term capital requirements. Our Board of Directors has determined that each of Mses. Golz and Johnson and Mr. Evans qualifies as an “audit committee financial expert” under the rules of the U.S. Securities and Exchange Commission, or SEC, each is independent as defined under the Nasdaq Rules and the independence requirements under Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, or Exchange Act. In addition, our Board of Directors has determined that each member of the Audit Committee is able to read and understand financial statements, including ADI’s consolidated balance sheet and its consolidated statements of income, comprehensive income, shareholders’ equity and cash flows and related notes as required under the Nasdaq Rules. Our Board of Directors has certified that it has at least one member of the Audit Committee who has past employment experience in finance or accounting as required by the Nasdaq Rules. The responsibilities of our Audit Committee and its activities during fiscal year 2022 are described in the Report of the Audit Committee below. | ||||
(1)Mr. Evans is not standing for re-election and his term on the Board of Directors will end at the Annual Meeting on March 8, 2023.
Our Audit Committee charter provides that no member of the Audit Committee may serve on the audit committee of more than two other public companies in addition to ADI, unless approved by the Board of Directors. Ms. Johnson, who first joined our Board of Directors in August 2021, is a member of our Audit Committee and is also a member of the audit committees of three other public companies, serving as the audit committee chair for two of those public companies. Our Audit Committee considered Ms. Johnson’s additional board and audit committee service and whether or not such service created an actual or potential conflict with her service on our Board of Directors and Audit Committee. Having determined that no such conflict existed, our Audit Committee recommended that our Board of Directors approve, and our Board of Directors did approve, Ms. Johnson’s service on up to four public company boards, inclusive of ADI’s Board of Directors. Neither Ms. Golz nor Mr. Evans serve on the audit committees of more than two other public companies in addition to ADI.
The Audit Committee has the authority to engage independent legal, accounting and other advisors that it deems necessary or appropriate to carry out its responsibilities. These independent advisors may be the regular advisors to ADI. The Audit Committee is empowered to pre-approve all audit services to be provided to ADI and all other services to be provided to ADI by our independent auditor. The Audit Committee has delegated authority to the Chair of the Audit Committee to pre-approve any audit or non-audit services to be provided to ADI by the independent registered public accounting firm for which the cost is less than $100,000. The Audit Committee selected and appointed Ernst & Young LLP, our independent registered public accounting firm, and did not retain any other advisors during fiscal year 2022.
32 | Corporate Governance | ||||
Compensation and Talent Committee Members(1) Edward H. Frank (Chair) Laurie H. Glimcher Susie Wee  Meetings in 2022: 10 | PRINCIPAL RESPONSIBILITIES The primary responsibilities of the Compensation and Talent Committee are to: ÑEvaluate and set the compensation of our CEO, our other executive officers and any senior executive reporting to our CEO; ÑMake recommendations to our Board of Directors regarding the compensation of our directors; ÑReview, and make recommendations to our Board of Directors with respect to, incentive compensation plans and equity-based plans, and exercise all rights, authority and functions with respect to such plans; ÑOversee our policies, strategies and programs relating to human capital management; ÑOversee management of the risks associated with our compensation practices and policies; and ÑOversee the evaluation and succession planning and development programs for senior executives. Our Board of Directors has determined that each of Drs. Frank, Glimcher, and Wee is independent as defined under the Nasdaq Rules and the independence requirements under Rule 10C-1 of the Exchange Act. | ||||
(1)Dr. Little also served on the Compensation and Talent Committee during fiscal year 2022 until his retirement from our Board of Directors in March 2022.
In connection with its oversight and administration of ADI’s cash and equity incentive plans, the Compensation and Talent Committee authorizes the granting of stock options, RSUs and other stock incentives (within guidelines established by our Board of Directors and in accordance with our Equity Award Grant Date Policy) to our Leadership Team, including our NEOs. In accordance with the terms of our Amended and Restated 1996 Stock Incentive Plan (which we refer to as the 1996 Plan and which we assumed in the Maxim acquisition), and our 2020 Equity Incentive Plan, which we refer to as the 2020 Plan, the Compensation and Talent Committee has delegated to a standing committee composed of our CEO, Chief Financial Officer, Chief People Officer and Chief Legal Officer the power to grant options, RSUs and other stock awards to employees who are not (i) executive officers, (ii) other senior vice presidents who report to the CEO or (iii) directors, subject to specified thresholds, parameters and applicable law. The same standing committee also has the ability to accelerate outstanding awards under the 1996 Plan, the 2020 Plan, our Amended and Restated 2006 Stock Incentive Plan, which we refer to as the 2006 Plan, and our Amended and Restated 2010 Equity Incentive Plan, which we refer to as the 2010 Plan (which we assumed when we acquired Linear Technology Corporation) granted to employees who are not (i) executive officers, (ii) other senior vice presidents who report to the CEO or (iii) directors, subject to specified thresholds, parameters and applicable law. Additionally, the Compensation and Talent Committee oversees our clawback policy, as well as any clawback policy ADI may adopt in the future.
The Compensation and Talent Committee has the authority to engage independent compensation consultants, legal counsel, and other advisors that it deems necessary or appropriate to carry out its responsibilities, taking into account the independence of those advisors. The Compensation and Talent Committee is empowered, without further action by our Board of Directors, to cause ADI to pay the compensation of those advisors as established by the Compensation and Talent Committee.
In December 2022, the Compensation and Talent Committee amended its charter to further expand its role to include oversight for ADI’s enterprise-level strategies and programs relating to human capital management and diversity. ADI’s approach to human capital management is wide-reaching and encompasses many facets of our business including those with respect to diversity, equity and inclusion, talent recruitment and development, retention, employee engagement, pay equity practices, workplace health and safety and cultural initiatives. Further, in December 2022, the Compensation Committee changed its name to the Compensation and Talent Committee to reflect its expanded role.
| 2023 Proxy Statement | 33 | ||||
Nominating and Corporate Governance Committee Members James A. Champy (Chair) André Andonian Anantha P. Chandrakasan Kenton J. Sicchitano  Meetings in 2022: 5 | PRINCIPAL RESPONSIBILITIES The primary responsibilities of the Nominating and Corporate Governance Committee are to: ÑIdentify individuals qualified to become members of our Board of Directors consistent with criteria approved by the Board of Directors; ÑRecommend to the Board of Directors the persons to be nominated by the Board of Directors for election as directors at any meeting of shareholders and the persons to be elected by the Board of Directors to fill any vacancies on the Board of Directors; ÑIn connection with Board of Director succession and refreshment practices, review with the Board of Directors, on an annual basis, the requisite skills and criteria for new directors as well as the composition of the Board of Directors as a whole; ÑRecommend to the Board of Directors the directors to be appointed to each committee of the Board of Directors; ÑDevelop and recommend to the Board of Directors a set of corporate governance principles; ÑOversee the evaluation, background, vetting, orientation, and training of the members of the Board of Directors; ÑOversee our Code of Business Conduct and Ethics; ÑOversee and periodically review ADI’s ESG policies, goals and programs; and ÑOversee risks associated with its areas of responsibility. Our Board of Directors has determined that each of Messrs. Champy, Andonian, and Sicchitano and Dr. Chandrakasan is independent as defined under the Nasdaq Rules. | ||||
The Nominating and Corporate Governance Committee has the authority to engage any independent legal and other advisors it deems necessary or appropriate to carry out its responsibilities. These independent advisors may be the regular advisors to ADI. The Nominating and Corporate Governance Committee is empowered, without further action by the Board of Directors, to cause ADI to pay the compensation of these advisors as established by the Nominating and Corporate Governance Committee. For information relating to nominations of directors by our shareholders, see Director Candidates above.
Corporate Development Committee Members Vincent Roche (Chair) André Andonian Anantha P. Chandrakasan Bruce R. Evans(1) Edward H. Frank  Meetings in 2022: 6 | PRINCIPAL RESPONSIBILITIES The primary responsibility of the Corporate Development Committee is to review and make recommendations to the Board of Directors at each full meeting of the Board of Directors, with respect to: ÑStrategic plans, transactions and investments, including mergers, acquisitions and divestitures; and ÑThe results, performance and financial impact of material transactions. All matters approved by the Corporate Development Committee are recommended to and also approved by our Board of Directors. | ||||
(1)Mr. Evans is not standing for re-election and his term on the Board of Directors will end at the Annual Meeting on March 8, 2023.
The Corporate Development Committee was established by our Board of Directors in June 2021 to assist the Board of Directors in evaluating mergers, acquisitions, divestitures, and other strategic transactions and investments.
34 | Corporate Governance | ||||
The Corporate Development Committee has the authority to engage any independent legal and other advisors it deems necessary or appropriate to carry out its responsibilities. These independent advisors may be the regular advisors to ADI. The Corporate Development Committee is empowered, without further action by the Board of Directors, to cause ADI to pay the compensation of these advisors as established by the Corporate Development Committee.
Meetings and Attendance; Executive Sessions
Our Board of Directors met nine times and its committees collectively held thirty meetings in fiscal year 2022 (including by telephone and video conference). During fiscal year 2022, overall attendance by incumbent directors at Board of Directors and committee meetings was 99% and each of our incumbent directors attended 96% or more of the total number of meetings of the Board of Directors and the committees on which he or she served. The independent directors met in executive session without Messrs. Roche, Doluca or Stata at three Board of Directors meetings during fiscal year 2022. Our Corporate Governance Guidelines set forth our policy that directors are expected to attend annual meetings of shareholders. Eleven directors attended our 2022 Annual Meeting of Shareholders. |  | ||||
Director Education and Orientation Program
We encourage our directors to attend director education programs and provide educational opportunities to our directors through a variety of platforms. We reimburse the costs of attending such programs. We also provide members of our Board of Directors a membership to the National Association of Corporate Directors. Further, we include educational topics regularly at our scheduled Board of Directors’ meetings. During such sessions, an outside party presents on a topic that is relevant to our business and strategic objectives, and of interest to our Board of Directors.
Also, all new directors participate in our director orientation program, which we significantly enhanced in fiscal year 2022 in connection with our onboarding of Mr. Andonian. This orientation program is designed to familiarize new directors with ADI and our Board of Directors, through a review of background material, meetings with senior management and facilities tours. This orientation allows new directors to become familiar with our business and strategic plan, products, technologies and end markets, corporate governance practices, compensation practices, and other key policies and practices.
Board Evaluations
Development of Annual Evaluation Process Each December, our Presiding Director along with our CEO and Chair and our Chief Legal Officer discuss the Board of Directors’ evaluation process for the year, considering evolving best practices. |  | Written Questionnaires Each director undertakes an evaluation of the Board of Directors. | | One-on-One Discussions Our Presiding Director, working with our Chief Legal Officer, also has conversations with each member of our Board of Directors designed to assess the effectiveness of our Board of Directors, as well as competencies and skills each director brings to the Board of Directors. | | Evaluation of Results In March of each year, our Presiding Director provides summaries of the evaluations to the Board of Directors and engages in a robust discussion with Board members on Board effectiveness and engagement. | ||||||||||||||||||||
| 2023 Proxy Statement | 35 | ||||
Oversight by Our Board
Strategic Oversight
The Board of Directors reviews our overall performance, and its primary responsibility is to oversee the management of ADI and, in doing so, serve the best interests of ADI and its shareholders. The Board of Directors provides for the succession of the CEO, nominates for election at annual shareholder meetings individuals to serve as directors of ADI, and elects individuals to fill any vacancies on the Board of Directors. Our Board of Directors reviews corporate objectives and strategies, and evaluates and approves significant policies and proposed major commitments of corporate resources. It oversees ADI’s risk management programs and participates in decisions that have a potential major economic impact on ADI. Management keeps the directors informed through regular written reports and presentations at Board of Directors’ and committee meetings.
Risk Oversight
The following table summarizes management’s and the Board of Directors’ role in risk management and oversight. Each committee of our Board of Directors assesses risks associated with their respective areas of oversight as described under Board Committees above and in the table below.
 | BOARD OF DIRECTORS ÑReceives regular reports from members of senior management on areas of material risk to ADI. Specifically, our Chief Risk Officer, who oversees internal enterprise risk management programs and chairs our Enterprise Risk Management Committee, provides regular reports to our full Board of Directors regarding our management of all enterprise and operational risks and our enterprise risk management program, with periodic updates on focus areas, such as cybersecurity. ÑReceives regular updates from our Audit Committee, Compensation and Talent Committee, Corporate Development Committee and Nominating and Corporate Governance Committee, which provide our Board of Directors with thorough insight about how ADI manages risk. |  | ||||||||||||
| AUDIT COMMITTEE ÑHas oversight responsibility with respect to ADI’s risk assessment and risk management programs, especially as they apply to ADI’s financial statement integrity and reporting and internal controls. ÑReceives regular reports from our Director of Internal Audit on internal audit matters and from our Chief Risk Officer on risk management matters. ÑReceives quarterly reports from our Chief Information Officer on information security and technology and from our head of compliance regarding data privacy and protection. ÑEvaluates capital allocation and structure, including potential issuance of debt and equity securities, credit agreements, other financial instruments, investment policy, dividends, stock splits and stock repurchases. | | ||||||||||||
| COMPENSATION AND TALENT COMMITTEE ÑOversees ADI’s executive compensation program and non-executive director compensation practices. ÑOversees ADI’s policies, strategies and programs relating to human capital management. ÑOversees the evaluation and succession planning and development programs for senior executives. | | ||||||||||||
| NOMINATING AND CORPORATE GOVERNANCE COMMITTEE ÑLeads the Board of Directors with respect to the adequacy of ADI’s governance structure and process of succession planning for our Board of Directors. ÑOversees ADI’s ESG programs, including reviewing ADI’s sustainability initiatives and goals as well as our progress toward achieving those goals. | | ||||||||||||
| | CORPORATE DEVELOPMENT COMMITTEE ÑEvaluates strategic plans, transactions, and investments, including mergers, acquisitions and divestitures. | | ||||||||||||
| | LEADERSHIP TEAM AND MANAGEMENT ÑOur Leadership Team and our CEO and Chair have ownership for risk management and risk governance is managed by our Enterprise Risk Management Committee, a management-led, cross-functional committee, which is chaired by our Chief Risk Officer. ÑOur Enterprise Risk Management Committee works closely with our Leadership Team, including our CEO and Chair, to identify and mitigate identified risks. ÑOur Chief Risk Officer, and other members of management, report to the Board of Directors (or the appropriate committee as appropriate) regarding risk identification, management and mitigation strategies. | | ||||||||||||
36 | Corporate Governance | ||||
Enterprise Risk Management Process
Our Enterprise Risk Management Program defines how we identify, manage and govern risk throughout our organization to promote the achievement of our financial and operational goals in a compliant manner. It assigns accountability for risk management to every business unit, based on the risks they encounter as part of their day-to-day operations. Our CEO and Chair and Leadership Team has ultimate responsibility for our Enterprise Risk Management Process and output.
 | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
BOARD OF DIRECTORS | AUDIT COMMITTEE | COMPENSATION AND TALENT COMMITTEE | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | CORPORATE DEVELOPMENT COMMITTEE | ENTERPRISE RISK MANAGEMENT COMMITTEE Chaired by our Chief Risk Officer | |||||||||||||||||||||||||||||||||||||||||||||
 | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
Enterprise Risk Management is a company-wide initiative that involves ADI management, including our Chief Legal Officer and Chief Risk Officer and our internal audit function, including our Senior Director, Internal Audit, working together to (1) identify, assess, prioritize and monitor a broad range of risks and (2) formulate and execute plans to monitor and, to the extent possible, mitigate the effect of those risks.
Cybersecurity Oversight
In order to minimize the likelihood and impact of a cybersecurity incident, we have deployed cybersecurity protections to protect ADI’s networks, devices and data from external and internal threats. These protections are consistent with global data privacy requirements.
Four of our director nominees have cybersecurity expertise to assist the Board of Directors in its oversight of ADI’s information security program. ADI leadership and Internal Audit regularly provide the Audit Committee with updates on the performance of our cyber and information security program. Our Chief Information Officer provides quarterly updates to the Audit Committee covering key information technology (IT) projects, enterprise cybersecurity programs and data protection risks and mitigation related to such risks. At least annually, our Chief Information Officer updates the full Board of Directors on information security matters and risk, including cybersecurity.
During fiscal year 2022, we created a management-led cross-functional steering committee, led by our Chief Information Security Officer, that is charged with security governance and key mitigation initiatives. Any relevant findings of this committee are shared in quarterly reports to the Audit Committee and annual reports to the Board of Directors.
ESG Oversight
The Nominating and Corporate Governance Committee oversees ADI’s ESG policies, goals and programs, including reviewing our sustainability initiatives and goals, as well as our progress towards achieving those goals. Management regularly reports to the full Board of Directors on ESG topics, providing an update on key metrics and progress. Our Board of Directors provides direct feedback on strategic approach and initiatives once a year. Our Leadership Team is engaged collectively on a semi-annual basis and individual leaders provide ongoing sponsorship of core initiatives, such as our partnership with an HBCU and secondary school outreach program.
Our CEO, our Leadership Team and appointed roles dedicated to ESG lead our ESG agenda. Our Nominating and Corporate Governance Committee has specific oversight responsibility for ADI’s ESG programs, initiatives, policies and goals, including reviewing our sustainability initiatives and goals as well as our progress toward achieving those goals.
Our Board of Directors is fully engaged and receives regular updates from senior management about our ESG programs, including updates on our sustainability as a business initiative, and on emerging issues. These ESG topics also include educational components to keep our Board of Directors abreast of the quickly changing ESG regulatory environment, as well as other evolving practices, risk oversight, mitigation strategies and other relevant ESG topics.
Created in 2021, our ESG Executive Council comprised of in-house subject matter experts, such as Human Resources, Environment, Health and Safety, and Compliance and Ethics, meets regularly and provides updates to the ESG Oversight Committee. The Nominating and Corporate Governance Committee receives quarterly reports on our progress against stated targets, as well as updates on topics such as stakeholder value, risks and opportunities, regulatory preparedness, ESG ratings and key ESG focus areas.
| 2023 Proxy Statement | 37 | ||||
Human Capital Management Oversight
In December 2022, our Compensation and Talent Committee expanded its responsibilities to include oversight for ADI’s enterprise-level strategies and programs relating to human capital management and diversity. ADI’s approach to human capital management is wide-reaching and encompasses many facets of our business, including those with respect to diversity, equity and inclusion, talent recruitment and development, retention, employee engagement, pay equity practices, workplace health and safety and cultural initiatives. Our Chief People Officer provides regular updates to our Compensation and Talent Committee and the Board of Directors regarding human capital initiatives, risks and mitigation efforts related to identified risks.
Succession Planning
As reflected in our Corporate Governance Guidelines, one of our Board of Directors’ primary responsibilities includes reviewing Leadership Team succession plans. The Board of Directors is responsible for evaluating potential successors to the CEO and, based on recommendations from the CEO, other members of the Leadership Team.
The Compensation and Talent Committee periodically reviews our strategies and programs related to succession planning and talent development, which includes transitional leadership planning in the event of an unplanned vacancy for any Leadership Team role.
Succession planning is discussed regularly in Board of Directors and/or Compensation and Talent Committee executive sessions. The Compensation and Talent Committee is also updated regularly throughout the year on key talent indicators for the overall workforce.
Shareholder Engagement
We conduct extensive investor outreach throughout the year involving our senior management, investor relations, legal and human resources departments. This helps management and our Board of Directors understand and focus on the issues that matter most to our shareholders, so ADI can address them effectively.
Since our inception as a public company, we have maintained an active engagement program with our shareholders, meeting with them extensively throughout the year as part of our investor outreach efforts.
HOW WE ENGAGE
| Winter | | Spring | | Summer | | Fall | ||||||||||||||||||||||||||||
| | ||||||||||||||||||||||||||||||||||
ÑPublish Annual Report and Proxy Statement ÑConduct active outreach with top investors to discuss items to be considered at the annual meeting, if needed, given matters to be considered ÑAnnual Meeting | ÑEvaluate proxy season outcome and trends, corporate governance best practices and regulatory developments ÑPublish annual ESG report to inform stakeholders, including investors, about recent developments relating to ESG matters | ÑConduct active outreach with top investors to understand their top priorities and solicit feedback on governance topics, including ESG and compensation ÑShare investor feedback with our Board of Directors | |||||||||||||||||||||||||||||||||
| WHO WE CONTACTED | WHAT WE DISCUSSED | |||||||
 | During fiscal year 2022, as part of our annual outreach program, we reached out to our top 20 shareholders and additional shareholders that voted against say-on-pay in 2022, collectively representing nearly 50% of our total shares outstanding, with an invitation to have discussions with their corporate governance teams. Shareholders representing approximately 30% of our outstanding shares accepted our engagement invitation. | Topics covered in these meetings included: ÑExecutive compensation, including one-time awards ÑCorporate governance matters, including Board structure and refreshment ÑOther ESG topics, including supply chain, human rights, risk management, sustainability programs, DE&I and human capital management | ||||||
38 | Corporate Governance | ||||
We reviewed the key takeaways from these meetings with our shareholders with our Board of Directors, with the goal of continuing to evolve our corporate governance practices to best meet the needs of ADI and our shareholders. While some of the feedback received has led to enhancements to our practices and disclosure, we also received positive feedback regarding certain practices that reconfirmed that our programs continue to be effective from our shareholders’ perspective. For example:
| WHAT WE HEARD | WHAT WE DID | |||||||
| Topic | Feedback | Changes for Fiscal Year 2022 and Beyond | ||||||
EXECUTIVE COMPENSATION | ||||||||
Design of Program Generally | Shareholders were generally pleased with the overall design and framework of our executive compensation program | ÑThe Compensation and Talent Committee did not significantly revise the design of our executive compensation program for fiscal year 2022, other than as noted under Notable Compensation Decisions for Fiscal Year 2022, and does not plan to significantly revise the program in fiscal year 2023 based on the feedback received | ||||||
Special One-Time Award to CEO | While some shareholders expressed a concern with the granting of a one-time special award during fiscal year 2021 to our CEO, most shareholders understood the rationale behind the special one-time award and appreciated the disclosure in our 2022 Proxy Statement | ÑThe Compensation and Talent Committee confirms that it does not intend to make future special awards to our CEO and Chair outside of our ongoing annual incentive program while the current grant remains outstanding | ||||||
CORPORATE GOVERNANCE | ||||||||
Combined CEO and Chair Role | Shareholders appreciated that our Board of Directors enhanced the responsibilities of the Presiding Director under our Corporate Governance Guidelines | ÑOur Board of Directors believes the combined CEO and Chair role is the appropriate structure given our strategic objectives | ||||||
Board Refreshment and Tenure | Shareholders were interested in our Board of Directors’ refreshment practices | ÑOur Board of Directors continues its focus on refreshment practices to align with our strategic visions and objectives, including welcoming André Andonian to the Board of Directors in June 2022. Mr. Andonian brings significant industry, strategic and leadership experience to our Board of Directors | ||||||
ESG MATTERS | ||||||||
ESG Report and Targets | Shareholders commended our ESG practices and reporting, including enhanced governance structure and ambitious environmental targets | ÑContinued to enhance our disclosure in our 2021 ESG Report issued in June 2022 and plan to continue to provide robust disclosure in our 2022 ESG Report | ||||||
Human Capital Matters | Shareholders inquired about attrition, DE&I objectives and human capital topics, and noted that we have robust DE&I practices | ÑOur Board of Directors enhanced the purview of the Compensation and Talent Committee to specifically include oversight of human capital management and diversity | ||||||
We intend to continue our shareholder outreach efforts on an on-going basis and look forward to continuing to engage with our valued shareholders.
| 2023 Proxy Statement | 39 | ||||
Communications from Shareholders and Other Interested Parties
The Board of Directors will give appropriate attention to written communications on issues that are submitted by shareholders and other interested parties, and will respond if and as appropriate. Absent unusual circumstances or as contemplated by committee charters, the Chair of the Nominating and Corporate Governance Committee will, with the assistance of ADI’s internal legal counsel, (1) be primarily responsible for monitoring communications from shareholders and other interested parties and (2) provide copies or summaries of such communications to the other directors as he or she considers appropriate.
Communications will be forwarded to all directors if they relate to substantive matters and include suggestions or comments that the Chair of the Nominating and Corporate Governance Committee considers to be important for the directors to review. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to personal grievances, commercial solicitations and matters as to which ADI tends to receive repetitive or duplicative communications.
Shareholders and other interested parties who wish to send communications on any topic to our Board of Directors (including the Presiding Director or the independent directors as a group) should address such communications to James A. Champy, Presiding Director, c/o Secretary, Analog Devices, Inc., One Analog Way, Wilmington, Massachusetts 01887.
Other Governance Matters
Governance Documents
Visit our website at https://investor.analog.com/governance/governance-documents to view our corporate governance documents and policies, including:
ÑCorporate Governance Guidelines
ÑCommittee Charters
ÑCode of Business Conduct and Ethics
ÑPolitical Contributions and Expenditures
40 | Corporate Governance | ||||
Certain Relationships and Related Transactions
Transactions with Related Persons
There were no related-person transactions that would require disclosure under Item 404 of Regulation S-K under the Exchange Act since the beginning of fiscal year 2022 through the date of this Proxy Statement.
Policies and Procedures for Related Person Transactions
Our Board of Directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which ADI is a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% shareholders (or their immediate family members), each of whom we refer to as a related person, has a direct or indirect material interest.
If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a related person transaction, the related person must report the proposed related person transaction to our Chief Legal Officer. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by the Audit Committee. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If our Chief Legal Officer determines that advance review and approval is not practicable, the Audit Committee will review, and, in its discretion, may ratify the related person transaction at the next meeting of the Audit Committee. The policy also permits the Chair of the Audit Committee to review and, if deemed appropriate, approve proposed related person transactions that arise between committee meetings, subject to ratification by the Audit Committee at its next meeting. Any related person transactions that are ongoing in nature will be reviewed annually.
A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the Audit Committee after full disclosure of the related person’s interest in the transaction. As appropriate for the circumstances, the Audit Committee will review and consider:
ÑThe related person’s interest in the related person transaction;
ÑThe approximate dollar value of the amount involved in the related person transaction;
ÑThe approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;
ÑWhether the transaction was undertaken in the ordinary course of our business;
ÑWhether the terms of the transaction are no less favorable to us than the terms that could have been reached with an unrelated third party;
ÑThe purpose of, and the potential benefits to us of, the transaction; and
ÑAny other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.
The Audit Committee may approve or ratify the related person transaction only if the Audit Committee determines that, under all of the circumstances, the transaction is in ADI’s best interests. The Audit Committee may, in its sole discretion, impose any conditions on ADI or the related person in connection with the approval of the related person transaction.
In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, our Board of Directors has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:
ÑInterests arising solely from the related person’s position as an executive officer of another entity (whether or not the person is also a director of that entity), that is a participant in a transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in the entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction, and (c) the amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual gross revenues of the company receiving payment under the transaction; or
ÑThe transactions that are specifically contemplated by provisions of ADI’s charter or bylaws.
The policy provides that the related person transactions involving compensation of executive officers shall be reviewed and approved by the Compensation and Talent Committee in the manner specified in its charter.
| 2023 Proxy Statement | 41 | ||||
Director Compensation
Our non-employee director compensation program is designed to attract and retain experienced and knowledgeable directors and to provide equity-based compensation to align the interests of our directors with those of our shareholders. Each non-employee director receives an annual cash retainer and an annual equity award in the form of RSUs. To reflect their additional responsibilities, the Chairs and members of all committees receive an additional cash retainer. The Presiding Director also receives an additional cash retainer. Mr. Roche, as an employee director, does not receive any additional compensation for his services as director, as Chair of the Board of Directors, or as Chair of the Corporate Development Committee.
Our Board of Directors has delegated to the Compensation and Talent Committee the responsibility to review and recommend to the Board of Directors any proposed changes to non-employee director compensation. Annually, the Compensation and Talent Committee reviews with Pearl Meyer, the Compensation and Talent Committee’s independent compensation consultant, non-employee director compensation information for our peer group to check the alignment of our non-employee director compensation package with market practice and current trends. The Compensation and Talent Committee then makes recommendations to the full Board of Directors with respect to compensation of our non-employee directors, and the full Board of Directors reviews these recommendations and makes a final determination. In fiscal year 2022, we (i) increased the annual retainer for each member of the Board of Directors from $80,000 to $90,000, (ii) increased the Presiding Director Retainer from $25,000 to $40,000, and (iii) increased the value of the annual equity award from an equivalent of $210,000 to an equivalent of $225,000. In fiscal year 2022, we granted 100% of the value of the annual equity award to each of our non-employee directors in the form of time-based RSUs. These RSUs vest in full on the earlier of the first anniversary of the date of grant or the date of ADI’s next annual meeting of shareholders. On March 9, 2022, we granted each non-employee director 1,495 RSUs for services to be provided from that date until the earlier of the first anniversary of the date of the grant or ADI’s next annual meeting of shareholders. On July 15, 2022, Mr. Andonian, who joined our Board of Directors in June 2022, was granted 1,015 RSUs for services to be provided from the date of his initial election as a director through the Annual Meeting.
Annual Director Compensation
Board Retainers:
| Compensation Element | Annual Cash Compensation | |||||||
Board Chair Retainer | $250,000 | (1) | ||||||
Board Member Retainer | $90,000 | (2) | ||||||
Presiding Director Retainer | $40,000 | (3) | ||||||
Committee Retainers: (4)
| Annual Cash Compensation | |||||||||||||||||
| Committee | Chair | Member | |||||||||||||||
| Audit Committee | $30,000 | $15,000 | |||||||||||||||
| Compensation and Talent Committee | $20,000 | $10,000 | |||||||||||||||
| Nominating and Corporate Governance Committee | $20,000 | $10,000 | |||||||||||||||
Corporate Development Committee | $15,000 | (1) | $10,000 | ||||||||||||||
Equity Compensation:
| Annual Equity Grant | $ Value of Annual Equity Grant | |||||||
Restricted Stock Unit Grant | $225,000 | (5) | ||||||
(1)Mr. Roche, as an employee director, does not receive any additional compensation for his service as a director, as Chair of the Board of Directors or as Chair of the Corporate Development Committee.
(2)The annual retainer for each Board Member increased from $80,000 to $90,000 effective January 30, 2022.
(3)The annual retainer for the Presiding Director is in addition to the annual board member retainer. The annual retainer for the Presiding Director increased from $25,000 to $40,000 effective January 30, 2022.
(4)Committee retainers are cash compensation paid in addition to Board retainer cash compensation.
(5)The value of the annual equity grant increased from the equivalent of $210,000 to the equivalent of $225,000 for grants made to directors after January 30, 2022.
42 | Director Compensation | ||||
Fiscal Year 2022 Director Compensation
The following table details the total compensation earned by our non-employee directors in fiscal year 2022.
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | All Other Compensation ($) | Total ($) | |||||||||||||
| James A. Champy | 143,750 | 221,111 | — | 364,861 | |||||||||||||
André Andonian(4) | 37,775 | 157,315 | 195,090 | ||||||||||||||
| Anantha P. Chandrakasan | 107,500 | 221,111 | — | 328,611 | |||||||||||||
Tunç Doluca | 87,500 | 221,111 | — | 308,611 | |||||||||||||
| Bruce R. Evans | 112,500 | 221,111 | — | 333,611 | |||||||||||||
Edward H. Frank | 117,500 | 221,111 | $2,696 | (5) | 341,307 | ||||||||||||
| Laurie H. Glimcher | 97,500 | 221,111 | — | 318,611 | |||||||||||||
| Karen M. Golz | 117,500 | 221,111 | — | 338,611 | |||||||||||||
Mercedes Johnson | 102,500 | 221,111 | — | 323,611 | |||||||||||||
Mark Little(6) | 33,489 | — | — | 33,489 | |||||||||||||
| Kenton J. Sicchitano | 97,500 | 221,111 | — | 318,611 | |||||||||||||
Ray Stata(7) | 142,489 | 221,111 | $14,846 | (8) | 378,446 | ||||||||||||
| Susie Wee | 97,500 | 221,111 | — | 318,611 | |||||||||||||
(1)All cash retainers are paid in quarterly installments on the 15th day of December, March, June and September of each fiscal year and are pro-rated for a partial year of service. Each director can elect to defer receipt of his or her fees under our Deferred Compensation Plan, or DCP. For more information relating to our DCP, see Information About Executive Compensation—Non-Qualified Deferred Compensation Plan below. Drs. Frank and Glimcher elected to defer receipt of their fees under the DCP in fiscal year 2022.
(2)These amounts represent the aggregate grant date fair value of awards for grants of RSUs to each listed director in fiscal year 2022. These amounts do not represent the actual amounts paid to or realized by the directors during fiscal year 2022.
(3)The aggregate number of stock options and RSUs outstanding held by each non-employee director (representing unexercised stock options and unvested RSUs) at October 29, 2022 is as follows:
| Name | Number of Shares Subject to Option Awards Held as of October 29, 2022 | Number of RSUs that have not Vested as of October 29, 2022 | ||||||
| James A. Champy | 25,760 | 1,495 | ||||||
André Andonian(a) | 1,015 | |||||||
| Anantha P. Chandrakasan | — | 1,495 | ||||||
| Tunç Doluca | — | 1,495 | ||||||
| Bruce R. Evans | — | 1,495 | ||||||
| Edward H. Frank | — | 1,495 | ||||||
| Laurie H. Glimcher | — | 1,495 | ||||||
| Karen M. Golz | — | 1,495 | ||||||
| Mercedes Johnson | — | 1,495 | ||||||
Mark Little(b) | — | — | ||||||
| Kenton J. Sicchitano | 16,100 | 1,495 | ||||||
| Ray Stata | 37,620 | 1,495 | ||||||
| Susie Wee | — | 1,495 | ||||||
(a)Mr. Andonian joined our Board of Directors on June 27, 2022 and in accordance with our Equity Award Grant Date Policy, was granted an RSU award pro-rated for his service from June 27, 2022 through our Annual Meeting.
(b)Dr. Little served on our Board of Directors until his retirement on March 9, 2022.
For the grants of RSUs made to our non-employee directors on March 9, 2022, the risk free rate was 1.28%, the dividend yield was 2.01% and the grant date fair value per share was $147.90. For the grants of RSUs made to our non-employee director on July 15, 2022 the risk free rate was 3.12%, the dividend yield was 1.92% and the grant date fair value per share was $154.99. The grant date fair value of RSUs represents the value of our common stock on the date of grant, reduced by the present value of dividends expected to be paid on our common stock prior to vesting. For a more detailed description of the assumptions used for purposes of
| 2023 Proxy Statement | 43 | ||||
determining grant date fair value, see Note 3 to the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Stock-Based Compensation, included in our Annual Report on Form 10-K for the year ended October 29, 2022.
(4)Mr. Andonian joined our Board of Directors on June 27, 2022.
(5)The amount represents payment of flights and meals for Mr. Frank’s spouse in connection with a Board of Directors’ meeting.
(6)Dr. Little served on our Board of Directors until his retirement on March 9, 2022.
(7)During fiscal year 2022, Mr. Stata, as Chair of the Board of Directors, received a total annual retainer of $250,000, pro-rated from the beginning of fiscal year 2022 until Mr. Roche was appointed Chair of the Board on March 9, 2022.
(8)The amount represents payment of medical and dental insurance premiums on behalf of Mr. Stata and his spouse.
(9)Mr. Andonian joined our Board of Directors on June 27, 2022 and in accordance with our Equity Award Grant Date Policy, was granted an RSU award pro-rated for his service from June 27, 2022 through our Annual Meeting.
We also reimbursed our directors for travel to Board of Directors’ meetings and other related expenses.
Stock Ownership Guidelines for Non-Employee Directors
Under our stock ownership guidelines, the target share ownership level for non-employee directors is at least four times the directors’ annual cash retainer. Directors have four years to achieve their targeted level.
| What Counts as Ownership | What Does Not Count as Ownership | ||||
ÑTime-based RSUs (whether or not vested) | ÑShares subject to unexercised options, whether or not vested | ||||
ÑUnvested PRSUs whose performance has been certified by the Compensation and Talent Committee | ÑUnvested PRSUs whose performance has not yet been certified by the Compensation and Talent Committee | ||||
ÑRestricted stock (whether or not vested) | ÑAny shares that have been pledged as collateral for a loan | ||||
All of our non-employee directors, other than Mr. Andonian who was appointed to the Board of Directors in fiscal year 2022, were in compliance with our stock ownership guidelines as of the end of fiscal year 2022. Mr. Andonian is expected to be in compliance with our stock ownership guidelines within the first four years of his appointment to the Board of Directors.
44 | Director Compensation | ||||
Equity Award Grant Date Policy for
Non-Employee Directors
Non-Employee Directors
During fiscal year 2022, our Equity Award Grant Date Policy for non-employee directors provided for the following:
ÑEach newly elected non-employee director elected other than at an annual meeting of shareholders is granted under the 2020 Plan an RSU award for a number of shares of our common stock approved by the Board of Directors, on the 15th day of the month following the month of the date of initial election as a director, or if Nasdaq is closed on that day, the next succeeding business day that Nasdaq is open.
ÑOn an annual basis, each non-employee director elected or re-elected at an annual meeting of shareholders is granted under the 2020 Plan an RSU award for a number of shares of our common stock approved by the Board of Directors, on the date of our annual meeting of shareholders, or if Nasdaq is closed on that day, the next succeeding business day that Nasdaq is open.
For fiscal year 2022, RSUs granted to our non-employee directors under the 2020 Plan vest on the earlier of the date of the Annual Meeting and the first anniversary of the date of grant, subject to acceleration as described below.
The RSU awards vest in full upon the occurrence of a Change in Control Event (as defined in the 2020 Plan) or the director’s death. If the director ceases to serve as a director by reason of his or her disability, as determined by the Board of Directors, each outstanding and unvested RSU will vest in full at the time he or she ceases to be a director. In addition, upon the occurrence of a Change in Control Event or in the event of the director’s death, disability or retirement after age 60, each vested option will continue to be exercisable for the balance of its term.
| 2023 Proxy Statement | 45 | ||||
Leadership Team
The following table sets forth (i) the name, age and position of our CEO and other members of our Leadership Team as of January 20, 2023 and (ii) the business experience of each person named in the table during at least the past five years. There is no family relationship among any of our executive officers.
 | VINCENT ROCHE, 62, Chief Executive Officer and Chair of the Board of Directors Mr. Roche was elected as Chair of our Board of Directors in March 2022 and has served as our President and Chief Executive Officer since May 2013 and as our President since November 2012. Mr. Roche began his career at ADI in 1988, progressively gaining responsibility over his tenure. Prior to November 2012, Mr. Roche served as Vice President, Strategic Segments Group and Global Sales from October 2009 to November 2012; Vice President, Worldwide Sales from March 2001 to October 2009; Vice President and General Manager, Silicon Valley Business Units and Computer & Networking from 1999 to March 2001; Product Line Director from 1995 to 1999; and Product Marketing Manager from 1988 to 1995. Mr. Roche serves on the boards of the Semiconductor Industry Association, the MIT Presidential CEO Advisory Board, and is a member of the Massachusetts High Tech Leadership Council. Mr. Roche holds a Bachelor’s degree in Electronic Systems and an honorary Doctor of Science (Eng.) from the University of Limerick in Ireland. | ||||
 | JANENE ASGEIRSSON, 52, Senior Vice President, Chief Legal Officer, Chief Risk Officer and Secretary Ms. Asgeirsson has served as our Senior Vice President, Chief Legal Officer, Chief Risk Officer and Secretary since August 2021. Ms. Asgeirsson leads our worldwide legal, governance, trade, and compliance functions, including mergers and acquisitions, litigation, intellectual property, and other corporate matters and acts as a strategic advisor to ADI’s executive leadership team and Board of Directors. Additionally, Ms. Asgeirsson is responsible for our internal audit and risk functions in her capacity as Chief Risk Officer and is responsible for the governance of our ESG programs. Ms. Asgeirsson has over two decades of combined experience in private practice at American Lawyer-ranked international law firms and in senior and executive level roles at publicly traded technology companies. Prior to joining ADI, Ms. Asgeirsson worked at Acacia Communications, an optical networking and strategy technology company, from April 2015 to August 2021, as its Vice President, General Counsel and Secretary from April 2015 to January 2019, and then as its Chief Legal Officer, Chief Compliance Officer and Secretary, from February 2019 to August 2021, leading global teams with diverse responsibilities. During her tenure at Acacia, she accomplished several significant transactions, including Acacia’s initial public offering (IPO), the best-performing U.S. IPO of 2016, and Acacia’s multi-billion-dollar sale to Cisco Systems. While in private practice, Ms. Asgeirsson provided strategic and legal counsel to several companies across multiple industries, ranging in size from start-ups to multi-billion-dollar, complex global organizations. Ms. Asgeirsson holds a Bachelors in Accountancy, summa cum laude, from the University of San Diego and a Juris Doctor from Northeastern University School of Law. | ||||
 | GREGORY BRYANT, 54, Executive Vice President and President of Business Units Mr. Bryant has served as our Executive Vice President and President of Business Units since March 2022. In this role, Mr. Bryant is responsible for growing the business and ensuring close alignment between long-term strategic goals and the evolving technology trends, market needs, and customer priorities. Mr. Bryant has three decades of experience leading and scaling large organizations to deliver profitable growth. Most recently, Mr. Bryant was Executive Vice President and General Manager, Client Computing Group at Intel Corporation, a semiconductor and technology company, from September 2019 to January 2022, where he was responsible for setting Intel’s PC vision and strategy, delivering six consecutive years of growth in its global PC ecosystem, and collaborating across its global ecosystem to co-engineer and deliver leading consumer and commercial PC platforms that empower people and organizations. Mr. Bryant served as Intel’s Senior Vice President, Client Computing Group from June 2017 to September 2019 and previously held a variety of leadership positions at Intel, including General Manager of Asia Pacific and Japan and General Manager of the Business Client Platform Division. Mr. Bryant holds a Bachelor of Science degree in Electrical Engineering from the University of Kansas and a Master’s degree in Program and Systems Management from Golden Gate University. | ||||
 | JOHN HASSETT, 64, Senior Vice President and Chief Operating Officer, Maxim Business Mr. Hassett has served as our Senior Vice President and Chief Operating Officer for the Maxim business since August 2021 where he leads our strategic and operational efforts to integrate Maxim. Mr. Hassett brings extensive experience as a business leader having run our largest revenue-generating business group, operational expertise leveraging his previous Global Operations & Technology leadership, in addition to his various engineering management roles with us. Previously, Mr. Hassett was Senior Vice President, Corporate Integration Management where he led significant efforts in M&A transactions and was responsible for developing strategies that drove the integration of multi-billion-dollar transactions from due diligence to fully integrated entities from December 2020 to July 2021. Previously, Mr. Hassett was Senior Vice President of Industrial and Consumer Group from November 2019 to December 2020 where he led growth initiatives which leverage our extensive franchise capability in measurement, sensing and testing and was Senior Vice President of Global Operations & Technology from May 2015 to November 2019, where he was instrumental in setting and executing our manufacturing strategy and creating a world-class, scalable supply chain to deliver outstanding quality for our customers. Mr. Hassett joined ADI in 1982 after graduating from the University of Limerick where he earned a Bachelor of Science degree in Manufacturing Engineering. Mr. Hassett also holds a Master of Business Administration from the University of Limerick. | ||||
46 | Leadership Team | ||||
 | VIVEK JAIN, 63, Executive Vice President of Global Operations and Technology Mr. Jain has served as our Executive Vice President of Global Operations & Technology since May 2022, where he is responsible for global manufacturing and supply chain operation, and previously served as our Senior Vice President of Global Operations and Technology from August 2021 to May 2022. Mr. Jain assumed this position following our acquisition of Maxim, where he served in a similar capacity as the Senior Vice President of the Technology and Manufacturing Group from June 2009 to August 2021. After joining Maxim in 2007 as Vice President of Fab Operations, Mr. Jain led the transformation of many aspects of Maxim’s manufacturing supply chain to make it more flexible, nimble, and resilient. Mr. Jain’s additional experience includes serving as a Plant Manager at Intel's Technology Development and Manufacturing facility, where he oversaw the process technology development and high-volume manufacturing of deep sub-micron logic and Flash memory technologies. Mr. Jain holds a Bachelor of Science degree in Chemical Engineering from the Indian Institute of Technology Delhi, a Master of Science degree in Chemical Engineering from Penn State University, and a Master’s degree in Electrical Engineering from Stanford University. He is also a 2014 graduate of the Stanford Graduate School of Business Executive Program. | ||||
 | PRASHANTH MAHENDRA-RAJAH, 52, Executive Vice President, Finance and Chief Financial Officer Mr. Mahendra-Rajah has served as our Executive Vice President, Finance and Chief Financial Officer since June 2022 and as our Senior Vice President, Finance and Chief Financial Officer from 2017 to June 2022. Mr. Mahendra-Rajah sets our financial strategy and oversees ADI’s global finance organization, with responsibility for financial management, planning, controls, and reporting. Mr. Mahendra-Rajah has been recognized by Institutional Investor magazine as a Top CFO in Semiconductors in 2020, 2021 and 2022 by equity research analysts. Mr. Mahendra-Rajah is also a member of CNBC’s Global CFO Council. Prior to joining ADI, Mr. Mahendra-Rajah was Chief Financial Officer of WABCO Holdings Inc., a global supplier of commercial vehicle technologies, from June 2014 to September 2017. He previously served as Division CFO and in other financial leadership roles at Applied Materials, Visa, and United Technologies. Mr. Mahendra-Rajah is a member of the board of directors of the Goodyear Tire & Rubber Company, where he serves on the audit committee and committee on corporate responsibility and compliance. Mr. Mahendra-Rajah holds a Bachelor of Science degree in Chemical Engineering from the University of Michigan, a Master of Science degree in Engineering from Johns Hopkins University, and a Master of Business Administration degree from the Krannert School of Management at Purdue University. | ||||
 | ANELISE SACKS, 44, Senior Vice President and Chief Customer Officer Ms. Sacks has served as our Senior Vice President and Chief Customer Officer since March 2021 where she is responsible for our customer strategy, enabling frictionless delivery of cutting-edge solutions to a diverse, global customer base, and delivering and capturing value for our technology. Ms. Sacks oversees our global sales, solutions and ecosystems, marketing, and digital transformation, with a focus on delivering a superior end-to-end customer experience and expanding our go-to-market strategies across channels and ecosystems. Previously, Ms. Sacks worked for Texas Instruments, a semiconductor company, where she held a variety of leadership roles over 15 years where she grew their portfolio of analog, digital and software technologies, most recently as Vice President and General Manager, DLP Products for Texas Instruments from December 2017 to December 2020. During her 15-year tenure at Texas Instruments, Ms. Sacks was responsible for investment strategy, product roadmap definition, new product and technology development, marketing, systems, and application engineering. Ms. Sacks brings a diverse blend of expertise across geographies, technologies, and functions including sales and business unit leadership, has lived on three continents and speaks five languages. Ms. Sacks holds an Electric and Electronic Engineering degree from the Federal University in Rio de Janeiro. She also holds a Master of Business Administration degree with merit from the Open University Business School in the U.K. and has executive education from Harvard Business School and INSEAD. | ||||
 | MARIYA TRICKETT, 40, Senior Vice President and Chief People Officer Ms. Trickett has served as our Senior Vice President and Chief People Officer since May 2022. Ms. Trickett is responsible for supporting ADI’s growth and evolution, driving best practices across all aspects of human resources. In this role, she leads the human resources and talent functions, including employee engagement, talent acquisition, talent management, learning and development, total rewards, succession planning, and organizational development. For nearly 20 years, Ms. Trickett has successfully led business and cultural transformations across a wide range of organizations. She has extensive experience building global high-performance companies focused on innovation, agility, and customer-centricity across technology, software, R&D, manufacturing, and services. From September 2018 to April 2022, Ms. Trickett was Senior Vice President and Chief Human Resources Officer at Aptiv, PLC, an industrial-tech company with over 180,000 employees, spanning 44 countries and 221 sites. Prior to Aptiv, she was Senior Vice President of Human Resources at Dana Incorporated, a drive train and EV supplier with more than 35,000 employees. Ms. Trickett holds a Bachelor of Science degree in history and law from Kirovograd State University in Ukraine and a Master of Science degree in Human Resource Management from Temple University in Philadelphia. She is also a graduate of the Advanced Management Program at the University of Navarra’s IESE Business School in Barcelona. | ||||
| 2023 Proxy Statement | 47 | ||||
Executive Compensation
PROPOSAL 2 Advisory Approval of the Compensation of ADI’s Named Executive Officers We are requesting shareholder approval of the compensation of the executive officers named in our Summary Compensation Table below, who we refer to as our NEOs. We are required to provide our shareholders with the opportunity to vote to approve, on an advisory (non-binding) basis, the compensation of our NEOs as disclosed in this Proxy Statement in accordance with the SEC’s rules. At the 2017 annual meeting of shareholders, our shareholders voted in favor of holding future “say-on-pay” votes every year. In accordance with the results of that vote, our Board of Directors determined to submit “say-on-pay” proposals to our shareholders every year until the next vote on the preferred frequency of advisory votes on the compensation of our NEOs, which will occur at the Annual Meeting and is the subject of the non-binding advisory vote in Proposal 3. Our Board of Directors is asking shareholders to approve the following non-binding advisory vote: VOTED, that the compensation paid to the company’s NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and accompanying narrative disclosures in this Proxy Statement, is hereby approved. As required by the Dodd-Frank Act, this is an advisory vote, which means that this proposal is not binding on us. Our Compensation and Talent Committee, however, values the opinions expressed by our shareholders and will carefully consider the outcome of the vote when making future compensation decisions for our NEOs. You may vote for, against or abstain from voting on this matter. At our 2022 annual meeting of shareholders, our compensation program for our NEOs received the support of 77.3% of the total votes cast. In light of the support received and additional feedback received from our shareholders, our Compensation and Talent Committee did not make significant changes to our executive compensation program. As described in detail in the Compensation Discussion and Analysis section of this Proxy Statement, ADI’s executive compensation program is significantly performance-based and designed to attract, retain and motivate strong executives to lead our complex, global organization and to align their interests with those of our shareholders. We seek to provide total compensation to our executive officers, including our NEOs, that is competitive with our peers, and we believe that our executive compensation program is designed to encourage the most talented individuals to grow their careers at ADI. ADI has a longstanding philosophy and practice of paying executives for performance. In order to align our pay practices with shareholder interests, we tie a significant percentage of each executive’s compensation to ADI’s performance, in the form of executive performance incentive plan payments, and equity awards that are subject to performance vesting and rise in value only if our stock price increases. In fiscal year 2022 we delivered record financial results for both revenue and operating profit. As a result aggregate payments under our executive performance incentive plan were made at 293% of target in fiscal year 2022, compared to 253% in fiscal year 2021 and 77% in fiscal year 2020. We believe that our executive compensation program is working as intended and appropriately aligns executive pay with company performance and shareholder value creation. Our Board of Directors unanimously recommends that you vote FOR approval of the compensation of our Named Executive Officers as disclosed in this Proxy Statement. | ||
48 | Executive Compensation | ||||
Compensation Discussion and Analysis
This Compensation Discussion and Analysis, or CD&A, describes our fiscal year 2022 executive compensation philosophies, goals and program design, including the Compensation and Talent Committee’s process for determining compensation, the various components of pay, and how our fiscal year 2022 financial results affected performance-based compensation. As used in this Proxy Statement, NEOs refers to the following individuals who served as executive officers during fiscal year 2022:
 | |  |  |  | ||||||||||
VINCENT ROCHE Chief Executive Officer and Chair of the Board of Directors | PRASHANTH MAHENDRA-RAJAH Executive Vice President, Finance and Chief Financial Officer | GREGORY BRYANT Executive Vice President and President of Business Units | VIVEK JAIN Executive Vice President of Global Operations and Technology | ANELISE SACKS Senior Vice President and Chief Customer Officer | ||||||||||
Executive Summary
Fiscal Year 2022 Performance and Key Pay Decisions
Fiscal year 2022 was an important year for ADI. We delivered record financial results against a backdrop of challenging conditions, including an uncertain and slowing macroeconomic environment. In fiscal year 2022, we delivered sequential revenue growth every quarter, leading to all-time high annual revenue of $12 billion and industry-leading gross and operating margins. Importantly, we made progress positioning ADI for continued long-term success through deepening our customer engagements, continuing to invest in our business to drive innovation, extracting value from recent acquisitions and capitalizing on secular trends to drive addressable markets and diversified growth. We also demonstrated our commitment to deliver strong shareholder returns during fiscal year 2022, returning approximately $4.6 billion to our shareholders in the form of dividends and share buybacks. ADI’s total shareholder return over its last three fiscal years, ending October 29, 2022, was 40%, which is ~1.2x the S&P 500 return of 34% over that same time period.
Fiscal Year 2022 Performance Highlights*
$12B | 62.7% | 27.3% | $5.25 | $4.5B | ||||||||||
Revenue | Gross Margins | Operating Margins | Diluted Earnings per Share | Operating Cash Flow | ||||||||||
~87% | 73.6% | 49.4% | $9.57 | $3.8B | ||||||||||
Business-to-Business Revenue | Adjusted Gross Margins* | Adjusted Operating Margins* | Adjusted Diluted Earnings per Share* | Free Cash Flow* | ||||||||||
* See Appendix A for additional information regarding non-GAAP financial measures and reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures.
| 2023 Proxy Statement | 49 | ||||
Welcoming New Leaders
As we announced in January 2022, our Board of Directors appointed Mr. Roche, ADI’s CEO, as Chair of the Board of Directors effective March 9, 2022. Mr. Roche has earned the respect and confidence of our employees, our customers and the investment community — as well as our Board of Directors. The appointment of Mr. Roche as Chair of our Board of Directors ensures continuity and alignment of focus between the Board’s oversight and management’s direction of ADI’s vision, strategy, people and culture, and operational execution.
Also, during fiscal year 2022, we strengthened our Leadership Team with the appointment of two new key leaders to critical roles. Gregory Bryant, a proven global business leader with three decades of experience and a track record of driving growth, joined ADI in March 2022 as Executive Vice President and President of Business Units. In this role, Mr. Bryant is responsible for growing the business and ensuring close alignment between
ADI’s long-term strategic goals and the evolving technology trends, market needs and customer priorities. Also, in May 2022, Mariya Trickett joined as our Senior Vice President and Chief People Officer. In this role, Ms. Trickett is responsible for driving best practices across all aspects of human resources by leading all of our human resources and talent functions, including employee engagement, talent acquisition, talent management, learning and development, total rewards, succession planning and organizational development. Both Mr. Bryant and Ms. Trickett bring fresh perspectives to our Leadership Team.
ADI’s long-term strategic goals and the evolving technology trends, market needs and customer priorities. Also, in May 2022, Mariya Trickett joined as our Senior Vice President and Chief People Officer. In this role, Ms. Trickett is responsible for driving best practices across all aspects of human resources by leading all of our human resources and talent functions, including employee engagement, talent acquisition, talent management, learning and development, total rewards, succession planning and organizational development. Both Mr. Bryant and Ms. Trickett bring fresh perspectives to our Leadership Team.
Notable Compensation Changes for Fiscal Year 2022
Departure from Stock Options
Beginning with fiscal year 2022, the Compensation and Talent Committee determined that ADI would no longer grant stock options. The elimination of stock options is intended to simplify our long-term incentive program and to shift more of the equity mix to performance-based equity awards. With the elimination of stock options, the equity mix for executive officers beginning with fiscal year 2022 is 65% PRSUs and 35% RSUs, increasing from 50% PRSUs and 25% RSUs in fiscal year 2021.
| 2021 | 2022 | ||||
 |  | ||||
Change in Comparator Group for Relative TSR PRSUs
For the TSR PRSUs granted to our NEOs in fiscal year 2022, the relative TSR comparator group changed from the Philadelphia Semiconductor Index (SOX Index) to the S&P 500 Index. The Compensation and Talent Committee made this change for several reasons. First, the Compensation and Talent Committee believed there are meaningful differences between ADI and other companies in the SOX Index based on our products, customers and end-markets to make the comparison to this index less relevant. Second, the SOX Index contains a small peer group, which was continually shifting due to consolidation over the three-year performance period making the comparison less practical. Finally, the Compensation and Talent Committee believes that the S&P 500 Index better represents ADI’s customers and end-markets, and provides a more relevant benchmark for ADI performance and shareholder value creation. For additional information on our Relative TSR PRSUs, including the payout percentages, please see Equity Vehicle Structure beginning on page 61.
50 | Executive Compensation | ||||
Compensation Philosophy and Objectives
Our business is based on innovation and helping our customers solve some of the world’s most complex problems. As a knowledge-based business, we believe that the skills, expertise, and experience of our employees, including our NEOs, are unique and critical factors in our overall success. The competition for talent in the technology sector is fierce. To drive continued successful operational and financial performance, we must attract, motivate, reward, and retain top executive talent. Accordingly, our executive compensation program is designed to:
ÑCreate alignment between executive and shareholder interests | ÑPay for performance by ensuring incentives are tied to multiple business performance metrics | ÑProvide market competitive compensation to attract and retain top executive talent | ||||||
Pay for Performance
A significant portion of the total target compensation for our executive officers, including our NEOs, is in the form of variable, performance-based incentive compensation, with only a small portion of the total target compensation provided in the form of “fixed” compensation. We believe this provides our executive officers an opportunity to earn above average compensation, as compared to our peer group companies, if we deliver stronger results. Conversely, if we deliver weaker results, our executive officers will earn less compensation. The target pay mix for our NEOs for fiscal year 2022 is shown below:
Performance-Based Incentives | ||||||||||||||||||||
| Base Salary | Cash Bonus | Time-Based RSUs | Relative TSR Performance-Based RSUs | Financial Metric Performance-Based RSUs |  | TARGET COMP VALUE | ||||||||||||||
| Short-term | Long-term | |||||||||||||||||||
Target Comp for CEO(1)
Target Comp for Other NEOs(1) (2)
(1)The sum of the individual amounts may not equal the total due to rounding.
(2)In order to best illustrate the underlying structure of our annual executive compensation program, the pay mix chart above excludes new-hire equity awards made to Mr. Bryant in March 2022. For more information about the components of the performance-based incentive compensation for our NEOs, see Compensation Discussion and Analysis—Components of Executive Compensation.
| 2023 Proxy Statement | 51 | ||||
Summary of Direct Compensation Elements
We provide a mix of compensation elements that support our goals of attracting and retaining top executive talent and incentivizing our key performance objectives in the short- and long-term.
Pay Element | Purpose | Time Period | Performance Measures | |||||||||||
Base Salary | ÑAttract and retain executive talent | ÑAnnual | ||||||||||||
| Variable Cash Incentive | ÑMotivate and reward our executive officers for achieving short-term company financial objectives aligned with value creation | ÑPaid semi-annually, with quarterly corporate financial targets tied to corporate strategy of profitable growth | Ñ50%: quarterly OPBT margin Ñ50%: year-over-year revenue growth (measured quarterly) ÑMinimum OPBT margin required for payout | |||||||||||
Annual Long-Term Incentives | TSR PRSUs | ÑAlign executive officer and shareholder interests to drive superior relative TSR results | ÑCumulative three-year period | ÑRelative TSR compared to comparator group ÑPayouts capped at target if absolute TSR is negative | ||||||||||
Financial Metric PRSUs | ÑAlign executive officer and shareholder interests with long-term profitability | ÑOne-year, two-year cumulative and three-year cumulative time periods | ÑNon-GAAP operating profit | |||||||||||
RSUs | ÑAttract and retain key executives | ÑFour-year graded vesting | ÑNone | |||||||||||
OPBT = Operating Profit Before Taxes TSR = Total Shareholder Return
Pay and Governance Best Practices
Our pay and governance practices are designed to align our executive officers’ interests with those of our shareholders. For example:
| WHAT WE DO | WHAT WE DON’T DO | ||||||||||
ÑReview compensation practices of peers aligned with ADI’s business ÑProvide for annual cash incentives that are based solely on our financial performance ÑDesign compensation programs to align a significant portion of equity awards to long-term performance achievement ÑTie Incentive awards to rigorous performance targets aligned with our corporate strategy ÑCap payouts for relative TSR-based awards for instances of negative absolute TSR ÑProvide for compensation clawbacks pursuant to a clawback policy for our CEO and other named executive officers in the event of a material financial restatement due to fraud or willful misconduct ÑRequire significant share ownership by executive officers pursuant to stock ownership guidelines ÑConduct an annual “say-on-pay” vote | ÑNo hedging and pledging of ADI securities ÑNo excessive perquisites to our executive officers ÑNo gross-ups or compensation paid to officers or directors for any income tax owed for approved travel | ||||||||||
52 | Executive Compensation | ||||
Process for Determining Compensation
Roles and Responsibilities
As part of its annual review of our executive compensation program, including NEO compensation, our Compensation and Talent Committee solicits the input of Mr. Roche and their independent compensation consultant, Pearl Meyer and Partners. Pearl Meyer reports directly to our Compensation and Talent Committee. The roles of our Compensation and Talent Committee, Pearl Meyer and management in setting our fiscal year 2022 executive compensation program are summarized below.
Role of the Compensation Consultant | ÑIn June 2021, Pearl Meyer and management recommended a peer group of companies for the purpose of assessing our executive compensation program, which was approved by the Compensation and Talent Committee. | ||||
Role of Management | ÑManagement then gathered data from these companies, which was considered by Pearl Meyer in its analysis of Mr. Roche’s compensation. Further, Mr. Roche considered this information, in addition to data from the Radford Global Technology Survey, in his recommendations on our other executive officers’ compensation. | ||||
Role of the Compensation and Talent Committee | ÑThe Compensation and Talent Committee considered Pearl Meyer’s advice, Mr. Roche’s recommendations for those executive officers reporting to him, and management’s proposed fiscal year 2022 performance goals prior to making its final and sole decision on all fiscal year 2022 executive compensation. At the Compensation and Talent Committee’s direction, Pearl Meyer provided a risk analysis of our executive compensation program. Finally, the Compensation and Talent Committee also certified performance-based compensation payouts for the applicable periods ended fiscal year 2022. | ||||
Compensation and Talent Committee Consultants
The Compensation and Talent Committee has the authority, in its sole discretion, to retain or obtain the advice of any independent legal, accounting or other advisors it deems necessary or appropriate to carry out its responsibilities. The Compensation and Talent Committee is empowered, without further action by the Board of Directors, to cause ADI to pay the compensation of these advisors as established by the Compensation and Talent Committee. The Compensation and Talent Committee continued to use Pearl Meyer as its independent compensation consultant for fiscal year 2022 because of Pearl Meyer’s experience working with our Compensation and Talent Committee and with compensation committees at other technology companies.
As part of its annual process, the Compensation and Talent Committee considered the independence factors that are identified in the Nasdaq Rules when selecting and retaining its advisors. Specifically, with respect to Pearl Meyer, when our Compensation and Talent Committee appointed Pearl Meyer for fiscal year 2022, it analyzed whether Pearl Meyer’s role raised any conflicts of interest by considering the following factors: (i) Pearl Meyer does not provide any services directly to ADI (although we pay Pearl Meyer on the Compensation and Talent Committee’s behalf), (ii) the percentage of Pearl Meyer’s total revenue resulting from fees paid by us on the Compensation and Talent Committee’s behalf, (iii) Pearl Meyer’s conflict of interest policies and procedures, (iv) any business or personal relationship between Pearl Meyer and an executive officer, or between Pearl Meyer’s individual compensation advisors and an executive officer or any member of our Compensation and Talent Committee, and (v) any ADI stock owned by Pearl Meyer or its individual compensation advisors. After considering these factors, the Compensation and Talent Committee determined that Pearl Meyer’s work did not create any conflicts of interest.
Pearl Meyer reports directly to the Compensation and Talent Committee and assists the Compensation and Talent Committee in evaluating and designing our executive and director compensation program and policies. In connection with its work for the Compensation and Talent Committee, Pearl Meyer is invited to attend the Compensation and Talent Committee’s meetings and, upon request of the Compensation and Talent Committee, attends executive sessions of the Compensation and Talent Committee. For fiscal year 2022, Pearl Meyer assisted the Compensation and Talent Committee with matters, including:
ÑDefining a peer group of companies;
ÑReviewing and validating the appropriateness of executive incentive plan goals;
ÑProviding market data and advice regarding executive and director compensation plan design, design of the executive performance incentive plan and equity incentive mix and design;
ÑConducting a detailed analysis of the competitiveness and appropriateness of ADI’s total executive compensation opportunity and total director compensation opportunity in comparison to our defined peer group;
ÑConducting a risk assessment of our executive compensation program; and
ÑAdvising on regulatory changes and their potential impact on our executive compensation programs along with any other aspects of our compensation programs.
| 2023 Proxy Statement | 53 | ||||
Market Compensation Data
The Compensation and Talent Committee has sought to select peer group companies that are publicly traded, are headquartered in the United States, compete with us for talent, and are similar to ADI in their product and services offerings, business model, revenue size and market capitalization.
As a result of rapid consolidation in the semiconductor industry over the last several years, in addition to companies that meet the criteria outlined above, the peer group also includes companies outside of the semiconductor industry. These additional companies are similar in size and have similar gross margins and research and development expenditures as ADI, include peers of peers and peers of other companies in our sector, and often compete with ADI for talent. Further, at the time the fiscal year 2022 peer group was selected, ADI was in the process of acquiring Maxim. Accordingly, the Compensation and Talent Committee considered the expected transaction when determining peer companies for fiscal year 2022. Based on review and consultation with Pearl Meyer, for fiscal year 2022, the Compensation and Talent Committee added Intel Corporation, Micron Technology, Inc., NXP Semiconductors N.V. and QUALCOMM Incorporated based on the companies’ industry-relevance, operating profile, and business comparison to ADI. The Compensation and Talent Committee determined to remove Maxim Integrated Products, Inc., NetApp, Inc. and Xilinx, Inc. due to acquisitions of the companies or because they no longer met our peer group criteria.
In fiscal year 2022, the peer group companies used by the Compensation and Talent Committee to evaluate executive compensation consisted of the following companies:
| Additions: + | 2022 Peer Group | |||||||
Intel Corporation Micron Technology, Inc. NXP Semiconductors N.V. QUALCOMM Incorporated | Advanced Micro Devices, Inc. Agilent Technologies, Inc. Applied Materials, Inc. Boston Scientific Corporation Broadcom Inc. Intel Corporation KLA Corporation Lam Research Corporation | Marvell Technology, Inc. Microchip Technology Incorporated Micron Technology, Inc. NVIDIA Corporation NXP Semiconductors N.V. QUALCOMM Incorporated Skyworks Solutions, Inc. Texas Instruments Incorporated | ||||||
Removals: - | ||||||||
Maxim Integrated Products, Inc. NetApp, Inc. Xilinx, Inc. | ||||||||
For executive officers in positions for which the fiscal year 2022 peer group companies do not publicly disclose compensation data, the Compensation and Talent Committee reviewed data collected from Radford’s Global Technology Survey. This survey depicts executive compensation levels across a wide spectrum of technology sector companies comparable to ADI in annual revenue and market capitalization.
54 | Executive Compensation | ||||
Risk Considerations in Our Compensation Program
In fiscal year 2022, our Compensation and Talent Committee reviewed our incentive compensation programs, discussed the concept of risk as it relates to our compensation program, considered various mitigating factors and reviewed these items with its independent consultant, Pearl Meyer. In addition, our Compensation and Talent Committee asked Pearl Meyer to conduct an independent risk assessment of our executive compensation program. Based on these reviews and discussions, the Compensation and Talent Committee does not believe that any risks arising from our employee compensation policies and practices are reasonably likely to have a material adverse effect on ADI. Our Compensation and Talent Committee believes that any such risks are mitigated by the following factors, among others:
 | Pay Mix /Structure | We structure our pay to consist of both fixed and variable compensation with short- and long-term horizons. We believe that the variable elements of compensation, which represented 94% and 91% of the total target compensation for our CEO and other NEOs, respectively, excluding new-hire equity awards, for fiscal year 2022, are a sufficient percentage of overall compensation to motivate executives to produce superior short- and long-term corporate results and to achieve company goals, while the fixed element is also sufficiently high that the executives are not encouraged to take unnecessary or excessive risks in doing so. | ||||||
 | Metrics | We believe that our focus on both OPBT margin and year-over-year revenue growth through our executive performance incentive plan, and non-GAAP operating profit and stock price performance through our equity compensation program, provides a check on excessive short-term risk taking. That is, even if our executives could inappropriately increase OPBT margin or revenue by excessively reducing expenses or adding new revenue sources that are inconsistent with our business model, this could ultimately harm our stock price and the value of their equity awards. Conversely, if our executives were to add revenue sources at low margins in order to generate a higher growth multiple and increased stock prices, it could decrease OPBT margin and the value of their cash bonus payments. Our OPBT margin and year-over-year revenue growth targets are applicable to our executives and employees alike, which we believe encourages consistent behavior across the organization, and reflects goals that are challenging, but not so high that they require performance outside of what the Compensation and Talent Committee believes is reasonable for us or could motivate our executives and employees to take actions in which we assume unreasonable levels of risk. | ||||||
 | Driving Profitability | We cap our bonus payout factors. Even if we dramatically exceed our OPBT margin or year-over-year revenue growth targets, bonus payments are limited. In fiscal year 2022, the bonus payment factor cap was 300% of target. Conversely, we also have a floor on the OPBT margin target so that profitability at or below a certain level will result in no bonus payments for that performance period, regardless of revenue growth levels. We believe this avoids incentivizing management to drive revenue levels without regard to profitability. | ||||||
 | Stock Ownership Guidelines | Our stock ownership guidelines provide an incentive for management to consider ADI’s long-term interests because a portion of their personal investment portfolio consists of ADI stock. | ||||||
Consideration of 2022 Say-on-Pay Vote
Our pay programs have a history of strong shareholder support, however, we saw a decrease in our say-on-pay support during fiscal year 2022.
| ||
| 2023 Proxy Statement | 55 | ||||
Our Compensation and Talent Committee carefully considers the results of our “say-on-pay” votes. We believe that the results of the 2022 say-on-pay advisory vote was primarily due to a one-time award granted to our CEO and Chair as discussed in our 2022 Proxy Statement under the heading CEO Performance Stock Option Award. During fiscal year 2022, as part of our annual outreach program, we reached out to our top 20 shareholders and additional shareholders that voted against say-on-pay in 2022, collectively representing nearly 50% of our total shares outstanding, with an invitation to have discussions with their corporate governance teams. Shareholders representing approximately 30% of our outstanding shares accepted our engagement invitation. During these engagement meetings with shareholders during 2022, many shareholders indicated that they understood the rationale behind the special one-time award and were generally pleased with the overall design and framework of our executive compensation program. Considering the 2022 say-on-pay vote and the feedback we received from our shareholders, the Compensation and Talent Committee determined to not make significant changes to our executive compensation program as a result of the 2022 say-on-pay vote, however, the Compensation and Talent Committee confirms that it does not intend to make future special awards to our CEO and Chair outside of our ongoing annual incentive programs while the current grant remains outstanding.
For more information about our shareholder engagement program, please see Shareholder Engagement beginning on page 38.
Compensation Best Practices Our annual cash incentives are based solely on our financial performance A significant portion of equity awards are contingent upon long-term performance achievement Incentive awards are tied to rigorous performance targets aligned with our corporate strategy Payout for relative TSR-based awards are capped at target for instances of negative absolute TSR Clawback policy for our CEO and other named executive officers in the event of a material financial restatement due to fraud or willful misconduct Specific policy regarding the grant dates of equity awards for our directors, executive officers and employees Stock ownership guidelines for our Leadership Team and directors Prohibit hedging and pledging of ADI securities Annual “say-on-pay” vote | ||
Determining Fiscal Year 2022 Target Compensation Levels
Our executive compensation program is designed to attract and retain top executive talent and align the interests of our executive officers, including our NEOs, and shareholders. The level of compensation for our executive officers is determined through the following steps:
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First, we ensure our executive compensation is competitive and attracts and retains top executive talent by understanding how the total target compensation (consisting of base salary, variable cash incentive target, and annual long-term incentive compensation) of each of our executive officers compares to the total target compensation of those in similar positions within our peer group. | We then consider a variety of factors, including the scope of the role, tenure in the position, and the performance and experience of the individual when deciding how to position each executive officer’s total target compensation to the total target compensation of those in similar positions within our peer group. | We structure our compensation package to align our executive officers’ interests with those of our shareholders by tying a significant portion of their total compensation directly to ADI’s short- and long-term performance. For executive officers, this is measured by OPBT, OPBT margin, year-over-year revenue growth, absolute stock price appreciation, and relative TSR, which all drive shareholder value. | ||||||||||||||||||||||||
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Factors Considered in Determining Fiscal Year 2022 Target Compensation Levels
Chief Executive Officer Pay Determination. Mr. Roche has served as our President since 2012, was appointed CEO and elected as a director in May 2013, and was elected as Chair of the Board of Directors in March 2022. Under his leadership, ADI has experienced significant growth and transformation, including successfully completing the acquisition of Maxim in 2021. In determining Mr. Roche’s compensation as CEO and Chair for fiscal year 2022, the Compensation and Talent Committee considered all elements of Mr. Roche’s compensation and compared his total target compensation to the median chief executive officer compensation of our peer group companies. The Compensation and Talent Committee also considered Mr. Roche’s experience, tenure, and performance developing and executing ADI’s strategy and driving long-term shareholder value. The design of Mr. Roche’s fiscal year 2022 compensation provided incentives that linked realized compensation with ADI’s performance.
Pay Determination for Other Executive Officers: In determining fiscal year 2022 compensation for our NEOs, other than Mr. Bryant, including base salary levels, annual incentive plan payout targets, and fiscal year 2022 equity grants, the Compensation and Talent Committee considered the executive’s individual responsibilities and other factors including their performance, experience, tenure, and market data and benchmark information from our peer group companies.
Mr. Bryant joined ADI in March 2022. In determining Mr. Bryant’s new-hire compensation package, the Compensation and Talent Committee, in consultation with Pearl Meyer, considered benchmark information from our peer group companies as well as the responsibilities that Mr. Bryant would have upon joining ADI. For Mr. Bryant’s new-hire equity awards, the Compensation and Talent Committee considered market practices for such awards, the amount of equity that Mr. Bryant was forfeiting as a result of leaving his former employer and the importance of retaining an individual of the caliber and with the experience and skills that Mr. Bryant would bring to ADI. Accordingly, the Compensation and Talent Committee set Mr. Bryant’s annual salary at $750,000 and his annual incentive bonus target at 150% of his base salary. Further, on March 15, 2022, the Compensation and Talent Committee granted Mr. Bryant (1) a time-based RSU award with a target grant value of $5 million, which vests in equal annual installments over a four-year period; (2) a time-based RSU award with a target grant value of $5 million, which vests in full on the third anniversary of the grant date; and (3) a PRSU award with a target grant value of $14 million, which vests subject to the attainment of target share price thresholds during a four-year performance period following the grant date. For more information about Mr. Bryant’s new-hire equity awards see the Equity Vehicle Structure - New-Hire Equity Awards section below in this Compensation Discussion and Analysis.
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Components of Executive Compensation
For fiscal year 2022, compensation for our executive officers, including our NEOs, consisted of the following principal elements:
| BASE SALARY |  | ANNUAL CASH INCENTIVE | | LONG-TERM EQUITY COMPENSATION | | RETIREMENT AND OTHER EMPLOYEE BENEFITS | ||||||||||||||
ÑAttract and retain executive talent ÑProvide stable source of income | ÑLink pay and short-term company performance ÑMotivate and reward executives for achieving short-term company financial objectives aligned with value creation | ÑLink pay and long-term company performance ÑAlign the interests of executives with shareholders by rewarding long-term stock price appreciation | ÑRetain executive talent by providing financial protection and security | |||||||||||||||||
Base Salary
We use salaries for similar positions within our peer group companies as an important factor in setting the base salaries of our executive officers at a level designed to attract and retain talent. When setting the fiscal year 2022 base salary for each individual executive officer, the Compensation and Talent Committee also considered other factors, including the scope of the role and the performance and experience of the individual.
Executive Performance Incentive Plan
The Compensation and Talent Committee approved the terms of our executive performance incentive plan for the first half of fiscal year 2022 on September 8, 2021, and for the second half of fiscal year 2022 on April 4, 2022. The plans are designed to be variable, depending on ADI’s operating results.
All executive officers, including our NEOs, participated in our fiscal year 2022 executive performance incentive plan.
We calculated and paid bonuses under the plans as follows:
| BASE SALARY |  | INDIVIDUAL TARGET BONUS PERCENTAGE | | BONUS PAYOUT FACTOR |  | BONUS PAYOUT | ||||||||||||||
Individual Target Bonus Percentage
For fiscal year 2022, the Compensation and Talent Committee set target percentages of 200% of base salary for our CEO and ranging from 125% to 150% for each of our NEOs other than our CEO, as part of our fiscal year 2022 compensation cycle. The Compensation and Talent Committee selected these target bonus percentages to ensure that a substantial portion of each executive officer’s cash compensation is performance-based and linked directly to our business performance, and to ensure that total compensation is competitive with those in similar positions within our peer group companies. Setting our CEO’s target at 200% also ties the majority of his cash compensation directly to company performance.
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Bonus Payout Factor
For fiscal year 2022, we based the bonus payout factor for the applicable quarterly bonus period on our OPBT margin and year-over-year revenue growth compared to the same quarter in the prior year. While our executive performance incentive plan contains quarterly performance targets, the Compensation and Talent Committee designed this plan to drive long-term performance. The targets are directly linked to our long-term corporate strategy of profitable growth, which drives shareholder value. We believe this combination ensures that we encourage a long-term focus on our business objectives, while measuring and rewarding progress against those objectives on a quarterly basis.
The Compensation and Talent Committee reviews and approves our performance targets, and historically these targets have not been re-set during the performance period, regardless of company performance or economic conditions. We believe that this approach fosters accountability for our business results and is in keeping with our core belief that variable compensation expense, which increases when our performance is good and contracts when it is poor, gives us maximum flexibility to operate our business. While the OPBT margin and year-over-year revenue growth targets are typically set annually, we measure performance against those targets on a quarterly basis, applying the corresponding bonus payout factor to base salary for that quarter, and pay the bonus amounts to our executive officers on a semi-annual basis following the end of the second and fourth fiscal quarters.
In setting performance targets for our executive performance incentive plan, multiple factors are considered including our actual past business results, estimates of multi-year performance from our long-term strategic planning, and the performance of market competitors. The Compensation and Talent Committee strives to set challenging growth targets that will remain in place for more than one year and are aligned with our long-term strategy. As part of our continued integration of ADI and Maxim compensation programs, at the beginning of the second half of fiscal 2022, we transitioned legacy ADI and Maxim employees onto a common bonus plan. To facilitate this transition, the Compensation and Talent Committee determined the first half of fiscal year 2022 OPBT margin and year-over-year revenue growth targets for the executive performance incentive plan would remain the same as fiscal year 2021 representing legacy ADI quarterly performance targets, which were consistent with the company’s long-term strategy at the time. Accordingly, the financial results for Maxim were also excluded when determining the bonus payout factors for the first and second quarters of fiscal 2022. For the second half of fiscal year 2022, the Compensation and Talent Committee increased both the OPBT margin and revenue growth targets to set new challenging targets to align with the updated financial profile and business strategy of the combined company and to incentivize employees to achieve industry-leading profit margins and long-term growth.
The Compensation and Talent Committee implemented the following targets for the executive performance incentive plan for the first half of fiscal year 2022 and second half of fiscal year 2022:
1H FY22 ADI Bonus Plan Targets (1) | 2H FY22 ADI Bonus Plan Targets (1) | |||||||||||||||||||||||||||||||
| OPBT Margin | Revenue | OPBT Margin | Revenue | |||||||||||||||||||||||||||||
OPBT Margin by Qtr. | Bonus Payout Factor | YTY Growth by Qtr. | Bonus Payout Factor | OPBT Margin by Qtr. | Bonus Payout Factor | YTY Growth by Qtr. | Bonus Payout Factor | |||||||||||||||||||||||||
| ≤ 36.0% | 0 | ≤ 0% | 0 | ≤ 40.0% | 0 | ≤ 0% | 0 | |||||||||||||||||||||||||
| 39.0% | 1.0x | 5.0% | 1.0x | 42.0% | 1.0x | 8.0% | 1.0x | |||||||||||||||||||||||||
| 42.0% | 2.0x | 10.0% | 2.0x | 45.0% | 2.0x | 15.0% | 2.0x | |||||||||||||||||||||||||
| ≥ 45.0% | 3.0x | ≥ 15% | 3.0x | ≥ 50.0% | 3.0x | ≥ 22% | 3.0x | |||||||||||||||||||||||||
| If OPBT margin <=36% the entire bonus will pay at 0% regardless of revenue attainment | If OPBT margin <=40% the entire bonus will pay at 0% regardless of revenue attainment | |||||||||||||||||||||||||||||||
(1)OPBT margin is equivalent to our Adjusted Operating Margin as reported in our annual and quarterly earnings releases excluding the financial results for Maxim when determining the bonus payout factors for the first and second quarters of fiscal year 2022. For the first and second quarters of fiscal year 2022, the financial results of Maxim were excluded when determining the bonus payout factors. The Compensation and Talent Committee may adjust the OPBT margin and year-over-year revenue growth metrics in its sole discretion to exclude special items such as (but not limited to) restructuring-related expense, acquisition-related expense, amortization of intangibles, gain or loss on disposition of businesses, non-recurring royalty payments, and other similar non-cash or non-recurring items. The Compensation and Talent Committee may, in its discretion, exclude these items in order to prevent payments under the plan from being adversely or advantageously affected by special items. For purposes of determining the bonus payout factor for each quarter of fiscal year 2022, OPBT margin was adjusted to exclude acquisition-related expenses, acquisition-related transaction costs, and special charges, consistent with the non-GAAP adjustments included in our quarterly earnings releases.
We have a floor on the OPBT margin target so that profitability at or below the minimum listed OPBT margin will result in no bonus payments for that performance period, regardless of revenue growth levels. The bonus payout factor is determined using linear interpolation between the values specified in the tables above.
For fiscal year 2022, the calculated OPBT margin, year-over-year revenue growth and bonus payout factor under our executive performance incentive plan for each quarter were as follows: