SAN JOSE, Calif., June 18, 2012 /PRNewswire/ -- Monolithic Power Systems (MPS) (Nasdaq: MPWR), a leading fabless manufacturer of high-performance analog and mixed-signal semiconductors, today announced that on June 13, 2012, the United States District Court for the Northern District of California granted MPS' motion to dismiss a shareholder derivative lawsuit against MPS, its directors and its former compensation consultant. The plaintiff, a shareholder of MPS, had alleged that the directors breached their fiduciary duty of loyalty by approving increases in compensation for MPS' officers during 2010. The court ruled that the plaintiff failed to set forth specific facts to show that the board of directors of MPS either rejected or could not have objectively considered a demand made by the plaintiff. The court gave the plaintiff leave to amend the complaint on or before July 2, 2012.
MPS is represented in this case by William Freeman of Jones Day.
MPS also today announced that at the MPS 2012 annual meeting of stockholders held on June 14, 2012, the stockholders of MPS approved, on an advisory basis, the 2011 compensation of MPS' executive officers and reelected three current directors of the company. The vote in favor of the resolution to approve the 2011 compensation of the company's executive officers was approximately 93.6% of the votes cast on the resolution, and each of the three directors was re-elected with more than 97.6% of the shares present at the meeting. Michael Hsing, the CEO of MPS, was quoted as saying, "We are grateful for the vote of confidence from our stockholders that this vote represents, as well as the recognition of the steps that we have taken in the last twelve months to reinvent our organization, align our executive compensation with the interests of our stockholders and with current market practices."
Following the 2011 annual meeting of stockholders, MPS undertook an examination of its executive compensation program as a whole, and made certain changes to its compensation policies and decisions for the remainder of 2011 and 2012:
- MPS made significant adjustments to the CEO's compensation and as a result, more than 50% of the CEO's total compensation, including short term and long term incentives, are subject to performance vesting, and setting long-term performance goals that focus on the Company's growth and profitability.
- MPS imposed restrictions on the maximum cash bonus the Compensation Committee can award to the executives based on pre-established performance criteria. The Compensation Committee continues to have the ability to exercise its negative discretion, but does not have the upward discretion to award cash exceeding the maximum cash bonus.
- Beginning in 2012, 50% of the equity compensation payable to all of the company's named executive officers will be in the form of performance-based equity awards, rather than awards that vest based solely on the passage of time.
- Beginning in 2012, MPS adopted metrics that are used to determine the short term performance-based incentive that differ from the long term performance-based incentive.
- MPS adopted a Compensation Recoupment Policy, which MPS refers to as a "clawback policy," that permits the Company's Board to recoup any excess performance-based cash compensation paid to key members of the MPS executive team if the financial results on which the performance-based cash compensation awards were based are restated due to fraud or intentional misconduct by the executive;
- MPS adopted significant stock ownership guidelines that are applicable to the Company's named executive officers; and
- MPS adopted a policy prohibiting its directors and officers from engaging in certain hedging and monetization transactions with respect to the Company securities that they hold without prior approval. The policy also prohibits the Company's directors and officers from engaging in any short sales of the Company's securities.
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