Fabrinet (NYSE:FN) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Fiscal 2018 Salaries

On August17, 2017, the Compensation Committee (the “Compensation Committee”) of the board of directors of Fabrinet (the “Company”) approved increases to the annual base salaries of the Company’s named executive officers as set forth below. Such salary increases are deemed effective as of July1, 2017, the first day of the Company’s fiscal year ending June29,2018 (“fiscal 2018”).

Fiscal 2018 Executive Incentive Plan

On August17, 2017, the Compensation Committee adopted an executive incentive plan (the “Cash Bonus Plan”) for fiscal 2018. The Cash Bonus Plan is an incentive program designed to motivate participants to achieve the Company’s financial objectives, and to reward them for their achievements when those objectives are met. All of the Company’s executive officers to Section16 of the Securities Exchange Act of 1934 are eligible to participate in the Cash Bonus Plan (individually, a “Participant,” and collectively, the “Participants”). The Cash Bonus Plan provides for a target bonus amount, as set forth in the table below. The maximum bonus that a Participant may receive under the Cash Bonus Plan is such Participant’s target bonus.

The amount of bonus actually paid to a Participant under the Cash Bonus Plan will be based 50% on achievement of a fiscal 2018 revenue target and 50% on achievement of a fiscal 2018 non-GAAP gross margin target. As achievement of each financial target is considered independently from the other, the Company must meet a threshold for each factor in order for a Participant to receive any credit for that factor. If the Company achieves 50% or more of a target financial metric, bonuses would be paid out at 50% of target with respect to that financial metric component. Achievement of the fiscal 2018 revenue target at a level between approximately 91.0% and 50% will result in a bonus amount for that metric that is scaled from 0% to 50% in a linear fashion. Achievement of the fiscal 2018 non-GAAP gross margin target at a level between approximately 94.1% and 50% will result in a bonus amount for that metric that is scaled from 0% to 50% in a linear fashion.

Equity Award Grants

On August17, 2017, the Compensation Committee approved the grant, effective as of August24, 2017 (the “Grant Date”), of the following dollar value of restricted share units (“RSUs”), performance share units (“PSUs”) and “stretch” PSUs (“Stretch PSUs”) to the Company’s named executive officers as a component of their fiscal 2018 compensation:

The RSUs will vest in equal annual installments over a period of three years on the anniversary date of the Grant Date, subject to the individual’s continued service with the Company through each such vesting date.

The PSUs will vest, if at all, following a 2-year performance period, on the date the Compensation Committee certifies achievement of the performance criteria set forth below, subject to the individual’s continued service with the Company through such vesting date. Vesting of the PSUs will be based 50% on achievement of a cumulative fiscal 2018 and fiscal 2019 revenue target (the “PSU Revenue Target”) and 50% on achievement of a cumulative fiscal 2018 and fiscal 2019 non-GAAP gross margin target (the “PSU GM Target”). As achievement of each financial target is considered independently from the other, the Company must meet a threshold for each factor in order for an individual to receive any credit for that factor. If the Company achieves 50% or more of a target financial metric, the PSUs will vest at 50% of target with respect to that financial metric component. Achievement of the PSU Revenue Target at a level between approximately 93.9% and 50% will result in a number of shares vesting for that metric that is scaled from 0% to 50% in a linear fashion. Achievement of the PSU GM Target at a level between approximately 98.0% and 50% will result in a number of shares vesting for that metric that is scaled from 0% to 50% in a linear fashion.

The Stretch PSUs will vest, if at all, following a 2-year performance period, on the date the Compensation Committee certifies achievement of the performance criteria set forth below, subject to the individual’s continued service with the Company through such vesting date. Vesting of the Stretch PSUs will be based 50% on achievement of a cumulative fiscal 2018 and fiscal 2019 revenue target that is higher than the PSU Revenue Target (the “Stretch PSU Revenue Target”) and 50% on achievement of a cumulative fiscal 2018 and fiscal 2019 non-GAAP gross margin target that is higher than the PSU GM Target (the “Stretch PSU GM Target”). As achievement of each financial target is considered independently from the other, the Company must meet a threshold for each factor in order for an individual to receive any credit for that factor. If the Company achieves 50% or more of a target financial metric, the Stretch PSUs will vest at 50% of target with respect to that financial metric component. Achievement of the Stretch PSU Revenue Target at a level between the PSU Revenue Target and 50% will result in a number of shares vesting for that metric that is scaled from 0% to 50% in a linear fashion. Achievement of the Stretch PSU GM Target at a level between the PSU GM Target and 50% will result in a number of shares vesting for that metric that is scaled from 0% to 50% in a linear fashion.

About Fabrinet (NYSE:FN)

Fabrinet provides optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers (OEMs) of products, such as optical communication components, modules and sub-systems, industrial lasers, medical devices and sensors. The Company offers a range of optical and electro-mechanical capabilities across the manufacturing process, including process design and engineering, supply chain management, manufacturing, complex printed circuit board assembly, advanced packaging, integration, final assembly and test. The Company’s customer base includes companies in industries that require precision manufacturing capabilities, such as optical communications, industrial lasers, automotive, medical and sensors. Its customers in these industries support end-markets, including automotive, biotechnology, communications, materials processing, medical devices, metrology and semiconductor processing.