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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-12.
Magnachip Semiconductor Corporation
(Name of Registrant as Specified in its Charter)
 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
No fee required.
Fee paid previously with preliminary materials.
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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c/o Magnachip Semiconductor, Ltd.
15F, 76 Jikji-daero 436beon-gil, Heungdeok-gu
Cheongju-si, Chungcheongbuk-do, Republic of Korea 28581
To Our Stockholders:
You are invited to attend the Annual Meeting of Stockholders of Magnachip Semiconductor Corporation to be held on May 18, 2023, at 8:00 p.m. Eastern Daylight Time.
We are pleased to announce that this year’s Annual Meeting will again be held completely virtually via live interactive webcast on the Internet. You will be able to attend, vote and submit your questions during the meeting at www.virtualshareholdermeeting.com/MX2023. We have enclosed the notice of our Annual Meeting of Stockholders, together with this Proxy Statement, a proxy and an envelope for returning the proxy.
You are asked to act upon proposals to:
(1)
elect the six director nominees named in the Proxy Statement to our Board of Directors;
(2)
conduct an advisory (non-binding) vote on the compensation of our named executive officers as described in this Proxy Statement;
(3)
ratify the appointment of Samil PricewaterhouseCoopers as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and
(4)
approve our Amended and Restated 2020 Equity and Incentive Compensation Plan.
Your Board of Directors unanimously recommends that you vote “FOR” each nominee for director that the Board of Directors has selected, “FOR” the approval of the compensation of our named executive officers as described in the Proxy Statement, “FOR” the appointment of Samil PricewaterhouseCoopers as our independent registered public accounting firm for the fiscal year ending December 31, 2023, and “FOR” the approval of our Amended and Restated 2020 Equity and Incentive Compensation Plan.
Please carefully review the Proxy Statement and then complete and sign your proxy and return it promptly. If you attend the virtual meeting and decide to vote during the meeting, you may withdraw your proxy by voting at the meeting.
Your time and attention to this letter and the accompanying Proxy Statement and proxy are appreciated. Your vote is important. Please take the time to read the enclosed Proxy Statement and cast your vote via proxy or at the Annual Meeting of Stockholders.
 
Sincerely,
 
 
 
/s/ Young-Joon Kim
 
Young-Joon Kim
 
Chief Executive Officer
 

 
April 17, 2023

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graphic
Magnachip Semiconductor Corporation
c/o Magnachip Semiconductor, Ltd.
15F, 76 Jikji-daero 436beon-gil, Heungdeok-gu
Cheongju-si, Chungcheongbuk-do, Republic of Korea 28581
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 18, 2023
The Annual Meeting of Stockholders of Magnachip Semiconductor Corporation, a Delaware corporation, will be held on Thursday, May 18, 2023, at 8:00 p.m. Eastern Daylight Time, via live interactive webcast on the Internet, for the following purposes:
(1)
to elect the six director nominees named in the Proxy Statement to our Board of Directors;
(2)
to conduct an advisory (non-binding) vote on the compensation of our named executive officers as described in the Proxy Statement;
(3)
to ratify the appointment of Samil PricewaterhouseCoopers as our independent registered public accounting firm for the fiscal year ending December 31, 2023;
(4)
to approve our Amended and Restated 2020 Equity and Incentive Compensation Plan; and
(5)
to transact such other business as may properly come before the meeting.
Holders of record of our common stock at the close of business on Thursday, April 6, 2023, are entitled to vote at the meeting. A list of stockholders entitled to vote will be available for inspection by stockholders of record for any purpose germane to the Annual Meeting during ordinary business hours at our corporate offices located at Magnachip Semiconductor Corporation, c/o Magnachip Semiconductor, Ltd., 15F, 76 Jikji-daero 436beon-gil, Heungdeok-gu, Cheongju-si, Chungcheongbuk-do, Republic of Korea 28581, for a period of ten days immediately prior to the Annual Meeting. If you are a stockholder of record and would like to view this stockholder list, please contact Investor Relations Department at investor.relations@magnachip.com and arrangements will be made to review the records in person during the ten days prior to the Annual Meeting. Additionally, such list of stockholders will be made available for viewing electronically during the Annual Meeting, and instructions to access such list will be available on the date of the Annual Meeting at www.virtualshareholdermeeting.com/MX2023.
 
By Order of the Board of Directors
 
 
 
/s/ Theodore Kim
 
Theodore Kim
 
Chief Compliance Officer, Executive Vice President, General Counsel and Secretary
April 17, 2023

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Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to Be Held on May 18, 2023
The 2023 Proxy Statement and 2022 Annual Report are available, free of charge, at www.proxyvote.com.
Magnachip Semiconductor Corporation’s Annual Report for the year ended December 31, 2022 is being mailed to stockholders concurrently with the 2023 Proxy Statement. The Annual Report contains financial and other information about Magnachip Semiconductor Corporation, but is not incorporated into the Proxy Statement and is not deemed to be a part of the proxy soliciting materials.
Even if you expect to attend the Annual Meeting, please promptly complete, sign, date and mail the enclosed proxy card. A self-addressed envelope is enclosed for your convenience. No postage is required if mailed in the United States. Alternatively, if you are a holder of record of our common stock on the record date, you may vote your shares electronically either over the internet at www.proxyvote.com or by touch-tone telephone at 1-800-690-6903. Stockholders who attend the Annual Meeting may revoke their proxies and vote during the meeting at www.virtualshareholdermeeting.com/MX2023 if they so desire.

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Magnachip Semiconductor Corporation
c/o Magnachip Semiconductor, Ltd.
15F, 76 Jikji-daero 436beon-gil, Heungdeok-gu
Cheongju-si, Chungcheongbuk-do, Republic of Korea 28581
PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 2023

GENERAL INFORMATION
Why am I receiving these materials?
We sent you these proxy materials because the Board of Directors (the “Board”) of Magnachip Semiconductor Corporation (the “Company,” “Magnachip,” “we,” “us” and “our”) is soliciting your proxy to vote at the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) and at any postponements or adjournments of the Annual Meeting. The Annual Meeting will be held virtually via live interactive webcast on the Internet on May 18, 2023, at 8:00 p.m. Eastern Daylight Time. If you held shares of our common stock, par value of $0.01 per share (the “Common Stock”), on April 6, 2023 (the “Record Date”), you are invited to attend the Annual Meeting at www.virtualshareholdermeeting.com/MX2023 and vote on the proposals described below under the heading “What am I voting on?” However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may complete, sign, date and return the enclosed proxy card. You may also vote over the Internet or by telephone.
The Notice of Annual Meeting of Stockholders, the Proxy Statement, the enclosed proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 are being mailed to stockholders commencing on or about April 17, 2023.
What am I voting on?
There are four proposals scheduled to be voted on at the Annual Meeting:
1.
Election of the six director nominees specified in this Proxy Statement to serve until the 2024 annual meeting of stockholders and until their respective successors are elected and qualified;
2.
Approval on an advisory (non-binding) basis of the compensation of our named executive officers as described in this Proxy Statement;
3.
Ratification of the appointment of Samil PricewaterhouseCoopers as our independent registered public accountants for the fiscal year ending December 31, 2023; and
4.
Approval of our Amended and Restated 2020 Equity and Incentive Compensation Plan.
How does the Board recommend that I vote?
Our Board recommends that you vote your shares:
“FOR” the election of each of the six director nominees named in this Proxy Statement to hold office until the 2024 annual meeting of stockholders and until their respective successors are elected and qualified;
“FOR” the approval on an advisory (non-binding) basis of the compensation of the named executive officers as described in this Proxy Statement;
“FOR” the ratification of the appointment of Samil PricewaterhouseCoopers as our independent registered public accountants for the fiscal year ending December 31, 2023; and
“FOR” the approval of our Amended and Restated 2020 Equity and Incentive Compensation Plan.
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Who can vote at the Annual Meeting?
If you were a holder of record of the Company’s Common Stock as of the close of business on April 6, 2023, the Record Date for the Annual Meeting, you may vote your shares at the Annual Meeting. As of the Record Date, there were 42,514,556 shares of Magnachip Common Stock outstanding, excluding treasury shares. Company treasury shares will not be voted. Each stockholder has one vote for each share of Common Stock held as of the Record Date.
If, on the Record Date, your shares were held in an account at a broker, bank, or other financial institution (we will refer to those organizations collectively as “broker”), then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that broker. The broker holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct your broker on how to vote the shares in your account. As a beneficial owner, you are invited to attend the Annual Meeting via the Internet at www.virtualshareholdermeeting.com/MX2023. However, since you are not a stockholder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid proxy from your broker.
How can I attend the Annual Meeting?
If you are a stockholder of record or a beneficial owner as of April 6, 2023, you are invited to attend the Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/MX2023. You must have your Control Number listed on the enclosed proxy card to enter the meeting. The webcast starts at 8:00 p.m. Eastern Daylight Time. You may vote and submit questions while attending the meeting on the Internet. Instructions on how to attend and participate in the Annual Meeting via the Internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/MX2023. The audio broadcast will be archived on that website for one year.
What if I return the proxy card to the Company but do not make specific choices?
If you return a signed, dated, proxy card to the Company without making any voting selections, the named proxies will vote your shares (1) “FOR” the election of each of the six director nominees named in this Proxy Statement to hold office until the 2024 annual meeting of stockholders and until their respective successors are elected and qualified; (2) “FOR” the approval on an advisory (non-binding) basis of the compensation of our named executive officers as disclosed in this Proxy Statement; (3) “FOR” the ratification of the appointment of Samil PricewaterhouseCoopers as our independent registered public accountants for the fiscal year ending December 31, 2023; and (4) “FOR” the approval of our Amended and Restated 2020 Equity and Incentive Compensation Plan.
The Company does not expect that any matters other than the election of directors and the other proposals described in this Proxy Statement will be brought before the Annual Meeting. The persons appointed as proxies will vote in their discretion on any other matters that may properly come before the Annual Meeting or any postponements or adjournments thereof, including any vote to postpone or adjourn the Annual Meeting.
How many shares must be present or represented to conduct business at the Annual Meeting?
A quorum of stockholders is necessary to hold a valid annual meeting. A quorum will be present if the holders of at least a majority of the total number of shares of Common Stock entitled to vote are present, in person or by proxy, at the Annual Meeting. There were 42,514,556 shares of our Common Stock outstanding and entitled to vote on the Record Date. Therefore, a quorum will be present if 21,257,279 shares of our Common Stock are present in person or represented by executed proxies timely received by us at the Annual Meeting. Abstentions and shares represented by broker non-votes are counted for the purpose of determining whether a quorum is present. If there are insufficient votes to constitute a quorum at the time of the Annual Meeting, we may adjourn the Annual Meeting to solicit additional proxies.
How are votes counted and what is a broker non-vote?
Votes will be counted by the inspector of election appointed for the Annual Meeting, who will separately count “FOR,” “AGAINST,” “WITHHOLD,” abstentions and broker non-votes. A “broker non-vote” occurs
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when your broker submits a proxy card for your shares of Common Stock held in street name, but does not vote on a particular proposal because the broker has not received voting instructions from you and does not have the authority to vote on that matter without instructions. Under the rules that govern brokers who are voting shares held in street name, brokers have the discretion to vote those shares on routine matters but not on non-routine matters. For purposes of these rules, the only routine matter in this Proxy Statement is Proposal Three—the ratification of our independent registered public accounting firm for the fiscal year ending December 31, 2023. Non-routine matters in this Proxy Statement are Proposal One—the election of directors, Proposal Two—the advisory (non-binding) vote on the compensation of our named executive officers as described in this Proxy Statement, and Proposal Four—the approval of our Amended and Restated 2020 Equity and Incentive Compensation Plan. Therefore, if you hold your shares in street name and do not provide voting instructions to your broker, your broker does not have discretion to vote your shares on any proposal at the Annual Meeting other than Proposal Three—the ratification of our independent registered public accounting firm for the fiscal year ending December 31, 2023. However, your shares will be considered present at the Annual Meeting for purposes of determining the existence of a quorum.
What is the voting requirement to approve each of the proposals?
Proposal One—Election of Directors
The election of director nominees requires a plurality vote of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote in the election of directors. The director nominees receiving the highest number of “FOR” votes cast by the holders of our Common Stock entitled to vote at the Annual Meeting will be elected. Accordingly, “WITHHOLD” votes and broker non-votes will have no effect on the outcome of the election of directors. Stockholders have no right to cumulative voting as to any matters, including the election of directors.
Proposal Two—Advisory (Non-Binding) Vote on the Compensation of our Named Executive Officers
The proposal to approve on an advisory (non-binding) basis the compensation of our named executive officers as described in this Proxy Statement requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions will be included in the number of shares present and entitled to vote and will therefore have the same effect as a vote “AGAINST” the proposal. Broker non-votes will not be included in calculating the number of votes entitled to vote on this proposal and will therefore have no effect on the outcome of this proposal.
Proposal Three—Ratification of the Appointment of our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2023
The proposal to ratify the appointment of Samil PricewaterhouseCoopers requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions will be included in the number of shares present and entitled to vote and will therefore have the same effect as a vote “AGAINST” this proposal. Brokers have discretionary authority to vote uninstructed shares on this proposal.
Proposal Four—Approval of our Amended and Restated 2020 Equity and Incentive Compensation Plan.
The proposal to approve our Amended and Restated 2020 Equity and Incentive Compensation Plan requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions will be included in the number of shares present and entitled to vote and will therefore have the same effect as a vote “AGAINST” this proposal. Broker non-votes will not be included in calculating the number of votes entitled to vote on this proposal and will therefore have no effect on the outcome of this proposal.
How do I vote my shares of Magnachip Common Stock?
Stockholders may vote shares of our Common Stock using any of the following means:
Voting by Proxy Cards. A registered stockholder may vote shares until voting is completed at the Annual Meeting by returning a duly completed and executed proxy card in the postage-paid envelope included. All proxy cards received by us that have been properly signed and have not been revoked will be voted in accordance with the instructions contained in the proxy cards. For your mailed proxy card to be counted, we must receive it prior to the close of business on May 17, 2023.
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Voting by Telephone or Internet. A registered stockholder may vote shares until 11:59 p.m. Eastern Daylight Time on May 17, 2023 by calling the toll-free number indicated on the proxy card and following the recorded instructions or by accessing the website indicated on the proxy card and following the instructions provided. When a stockholder votes by telephone or Internet, his, her or its vote is recorded immediately.
Voting by Internet During the Annual Meeting. Instructions on how to attend and vote at the meeting are described at www.virtualshareholdermeeting.com/MX2023. If a stockholder attends the Annual Meeting and votes his, her or its shares during the meeting via the voting instructions described at www.virtualshareholdermeeting.com/MX2023, then any previous votes that were submitted by the stockholder, whether by Internet, telephone or mail, will be superseded by the vote that such stockholder casts during the Annual Meeting. Further, if the shares are held of record by a broker and a stockholder wishes to vote at the Annual Meeting, he, she or it must obtain a proxy issued in his, her or its name from the record holder in accordance with the materials and instructions for voting provided by his, her or its broker.
Voting by “Street Name” Stockholders. If stockholders hold shares in “street name,” then those stockholders may vote in accordance with the materials and instructions for voting the shares provided by their broker. If “street name” stockholders wish to vote shares at the Annual Meeting, then they must obtain proxies from their broker in order to vote their shares at the Annual Meeting in accordance with the materials and instructions for voting provided by his, her or its broker. If a “street name” stockholder does not vote by proxy or otherwise give voting instructions to their broker, such shares will not be voted by the broker for Proposal One, Two or Four at the Annual Meeting.
Changing Votes. A stockholder may change his, her or its vote at any time before it is voted at the Annual Meeting by (1) delivering a proxy revocation or another duly executed proxy bearing a later date to Magnachip Semiconductor Corporation, c/o Magnachip Semiconductor, Ltd., 15F, 76 Jikji-daero 436beon-gil, Heungdeok-gu, Cheongju-si, Chungcheongbuk-do, Republic of Korea 28581, Attention: Secretary, which revocation or later-dated proxy is received by us prior to the close of business on May 17, 2023; (2) voting again by telephone or Internet in the manner described above prior to 11:59 p.m., Eastern Daylight Time, on May 17, 2023; or (3) attending the Annual Meeting and voting via the Internet during the meeting using the procedures described at www.virtualshareholdermeeting.com/MX2023. Attending the Annual Meeting via the Internet will not revoke a proxy unless the stockholder actually votes via the Internet during the meeting. “Street name” stockholders who wish to revoke or change their votes after returning voting instructions to their broker may do so in accordance with the materials and instructions provided by their broker or by contacting such broker to effect the revocation or change of vote.
How can I find out the results of the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. We will publish final results in a Current Report on Form 8-K that we expect to file with the Securities and Exchange Commission (the “SEC”) within four business days of the Annual Meeting. After the Form 8-K is filed, you may obtain a copy by visiting the investor relations section of our website or www.magnachip.com or by writing to Magnachip Semiconductor Corporation, c/o Magnachip Semiconductor, Ltd., 15F, 76 Jikji-daero 436beon-gil, Heungdeok-gu, Cheongju-si, Chungcheongbuk-do, Republic of Korea 28581, Attention: Secretary.
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PROPOSAL ONE

ELECTION OF DIRECTORS
The members of our Board are elected to one-year terms, with each director to serve until such director’s successor is elected and qualified or until such director’s earlier resignation or removal. We have six authorized members on our Board. The number of directors may be changed by our Board from time to time by resolution of a majority of the authorized directors, or by amendment of our bylaws by the affirmative vote of 66-2/3% of the outstanding voting stock of the Company, voting together as a single class.
At the Annual Meeting, six directors are to be elected to hold office for a one-year term and until their successors are elected and qualified. The nominees to the Board are Mr. Camillo Martino, Ms. Kyo-Hwa Chung, Mr. Melvin L. Keating, Mr. Young-Joon Kim, Dr. Ilbok Lee and Mr. Gary Tanner.
Information regarding the nominees and each continuing director is set forth below. Each of the nominees listed in the Proxy Statement has agreed to serve as a director if elected. If for some unforeseen reason a nominee becomes unwilling or unable to serve, proxies will be voted for a substitute nominee selected by the Board.
The following table sets forth certain information regarding our director nominees:
Name
Age
Position
Camillo Martino
61
Director, Non-Executive Chairman of the Board, Chair of the Compensation Committee and Member of the Audit Committee and the Nominating and Corporate Governance Committee
Kyo-Hwa (Liz) Chung
50
Director, Member of the Compensation Committee
Melvin L. Keating
76
Director, Chair of the Audit Committee and Member of the Nominating and Corporate Governance Committee
Young-Joon (YJ) Kim
58
Director, Member of the Risk Committee and Chief Executive Officer
Ilbok Lee
77
Director, Chair of the Nominating and Corporate Governance Committee and Member of the Risk Committee
Gary Tanner
70
Director, Chair of the Risk Committee and Member of the Audit Committee and the Compensation Committee
Camillo Martino, Non-Executive Chairman of the Board, Chair of the Compensation Committee and Member of the Audit Committee and the Nominating and Corporate Governance Committee. Mr. Martino became our Non-Executive Chairman of the Board in June 2020 and director in August 2016. Mr. Martino currently also serves as a member of the board of directors for CXApp (formerly, KINS Technology Group) and Sensera Limited. Mr. Martino also serves as a member of the board of directors at multiple privately-held companies, including VVDN Technologies and Sakuu Corporation. Mr. Martino previously served as a director of Cypress Semiconductor from June 2017 through to April 2020 and was also the Chief Executive Officer of Silicon Image Inc. from January 2010 until the completion of its sale to Lattice Semiconductor Corporation in March 2015. From January 2008 to December 2009, Mr. Martino served as Chief Operating Officer of SAI Technology Inc., where he also served as a director from June 2006 to November 2010. From July 2005 to June 2007, Mr. Martino served as a director, the President and Chief Executive Officer of Cornice Inc. From August 2001 to July 2005, Mr. Martino served as the Executive Vice President and Chief Operating Officer at Zoran Corporation. Prior to that, Mr. Martino held multiple positions with National Semiconductor Corporation for a total of nearly 14 years, and in four different countries. Mr. Martino holds a Bachelor of Applied Science degree from the University of Melbourne and a Graduate Diploma from Monash University in Australia. Our Board has concluded that Mr. Martino should serve on the Board based upon his extensive experience advising technology companies.
Kyo-Hwa (Liz) Chung, Director, Member of the Compensation Committee. Ms. Chung was appointed as our director in July 2020 and to the Compensation Committee of the Board on January 5, 2022. Ms. Chung currently serves as the Director of Legal for Netflix Services Korea, a position she has held since April 2021. In March 2022, she was appointed as an outside director of NCSoft Corporation, a Korean video game developer and publisher listed on the Korea Exchange. Prior to Netflix Services Korea, Ms. Chung served as the Head of Corporate, External and Legal Affairs for Microsoft Korea from November 2018 until March 2021. Ms. Chung
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was with the Korean law firm Kim & Chang, from April 2003 until November 2018, most recently as a partner focusing on the areas of international disputes, government investigations and crisis management. During September 2008 to March 2009, Ms. Chung was engaged with the international law firm Skadden, Arps, Slate, Meagher & Flom LLP, as a visiting attorney at its New York office. Ms. Chung served as a judge on the Seoul Administrative Court from 2001 to 2003 and the Seoul Central District Court from 1999 to 2001. Ms. Chung received an LLM degree from Harvard Law School in 2008 and a Bachelor of Law degree from Korea University in 1996. Ms. Chung is licensed to practice law in Korea and New York. Our Board has concluded that Ms. Chung should serve on the Board based upon her extensive experience advising technology companies.
Melvin L. Keating, Director, Chair of the Audit Committee and Member of the Nominating and Corporate Governance Committee. Mr. Keating became our director in August 2016. Mr. Keating has served as a consultant, providing investment advice and other services to private equity firms and corporations, since November 2008. In addition, since September 2015, Mr. Keating serves as a director of Agilysys Inc., a leading technology company that provides innovative software for point-of-sale (POS), property management, inventory and procurement, workforce management, analytics, document management and mobile and wireless solutions and services to the hospitality industry. Previously, Mr. Keating served on the boards of directors of the following public companies: SPS Commerce, Inc. (2018-2019); Vitamin Shoppe, Inc. (2018-2019); Red Lion Hotels Corporation (2010-2017); and Harte Hanks, Inc. (2017-2020). Additionally, he also served on the boards of many other technology hardware companies, including, Tower Semiconductor; White Electronics; Integral Systems; and API Technologies. Mr. Keating holds a B.A. degree in Art History from Rutgers University (where he was a Henry Rutgers Scholar), an M.S. in Accounting (where he was a Shell Oil Fellow) and an M.B.A. in Finance (where he was a Benjamin Franklin Fellow) both from the Wharton School of the University of Pennsylvania. Our Board has concluded that Mr. Keating should serve on the Board based upon his extensive experience advising technology companies.
Young-Joon (YJ) Kim, Director, Member of the Risk Committee and Chief Executive Officer. Mr. YJ Kim became our Chief Executive Officer in May 2015 and has also served as a director on our Board since that time. In February 2020, Mr. Kim assumed the additional role of General Manager of the Display business to capitalize on attractive growth opportunities in OLED display and other relevant emerging markets. He also served as the acting General Manager of Foundry Services Group from January 2019 until the completion of the sale of the Foundry Services Group and the factory in Cheongju (“Fab 4”) on September 1, 2020. Mr. Kim joined our company in May 2013 and served as our Executive Vice President and General Manager, Display Solutions Division. He was promoted to Interim Chief Executive Officer in May 2014. Prior to joining our company, Mr. Kim held a variety of senior management roles at several global semiconductor firms. His past roles include marketing, engineering, product development and strategic planning, and his product expertise includes microprocessors, network processors, multi-core processors, FLASH, EPROM, analog, mixed-signal, sensors, 3G/4G/5G base stations, workstations and servers. Immediately before joining our company, Mr. Kim served as Vice President, Infrastructure Processor Division, and General Manager of the OCTEON Multi-Core Processor Group of Cavium, Inc., where he worked from 2006 to 2013. Prior to Cavium, Mr. Kim served as Core Team Lead and General Manager of the Tolapai Program at Intel Corporation from 2004 to 2006. In 1998, Mr. Kim co-founded API Networks, a joint venture between Samsung and Compaq, where he served as the head of product management, worldwide sales and business development for Alpha processors. Prior to API Networks, Mr. Kim served as Director of Marketing at Samsung Semiconductor, Inc. from 1996 to 1998. Mr. Kim began his career as a product engineer at Intel Corporation in 1988. Mr. Kim holds B.S. and M. Eng. degrees in Electrical Engineering from Cornell University. Our Board has concluded that Mr. YJ Kim is a valuable member of the Board based on his understanding of our company’s products and technology as our Chief Executive Officer and his deep knowledge of the semiconductor industry.
Ilbok Lee, Director, Chair of the Nominating and Corporate Governance Committee and Member of the Risk Committee. Dr. Lee has been our director since August 2011. Dr. Lee was an advisor/consultant to the Configurable Mixed-signal Business Unit of Dialog Semiconductor, Inc., which acquired Silego Technology Inc., a semiconductor company from October 2017 to December 2018. Dr. Lee served as Executive Chairman of Silego from August 2016 to October 2017. Dr. Lee served as Silego’s Chairman of the Board from March 2015 to August 2016 and as Silego’s Chief Executive Officer from Silego’s inception in October 2001 until August 2016. From April 1999 to September 2001, Dr. Lee served as Senior Vice President and General Manager of the Timing Division at Cypress Semiconductor Corp., a public semiconductor company, and from May 1992 to March 1999 served as President and Chief Executive Officer of IC Works, Inc., a semiconductor company he
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co-founded that was acquired by Cypress in 2001. Dr. Lee co-founded Samsung Semiconductor, Inc. (U.S.A.) in July 1983 and served in various positions at the Company, including President and Chief Executive Officer, until May 1992. Prior to Samsung, Dr. Lee served in various technical and managerial positions at Intel and National Semiconductor. Dr. Lee served as a member of the board of directors for Sierra Monolithic, a privately held semiconductor company, from 2002 through 2009. Dr. Lee also served on the board of directors of two public companies: ESS Technology and V3 Semiconductor. Dr. Lee received a Ph.D. and M.S.E.E. from the University of Minnesota and a B.S.E.E. from Seoul National University. Our Board has concluded that Dr. Lee should serve on our Board based upon his extensive experience in the semiconductor industry.
Gary Tanner, Director, Chair of the Risk Committee and Member of the Audit Committee and the Compensation Committee. Mr. Tanner became our director in August 2015. Mr. Tanner also served as our Non-Executive Chairman of the Board from September 2016 to November 2018. Mr. Tanner served as a director of Winstek Semiconductor Corp. which is listed on the Taiwan Stock Exchange (OTC) from September 2015 until November 2017 when majority ownership of Winstek Semiconductor was acquired by Siguard Corporation. Mr. Tanner served as Executive Vice President and Chief Operations Officer of International Rectifier Corporation from January 2013 to July 2015. Mr. Tanner also served as a director at STATS ChipPac Ltd. from July 2012 until August 2015. Prior to joining International Rectifier Corporation, Mr. Tanner was the principal in GWT Consulting and Investments LLC, a firm that provided consulting services to International Rectifier Corporation from January through December 2012. Mr. Tanner previously served as Chief Executive Officer at Zarlink Semiconductor, Inc. (“Zarlink”), from May 2011 to October 2011, at which point Zarlink was acquired by Microsemi Corporation. Prior to his role as Chief Executive Officer of Zarlink, from November 2009 to May 2011, Mr. Tanner served as Chief Operating Officer at that company. Mr. Tanner joined Zarlink in August 2007 as Senior Vice President of Worldwide Operations via the acquisition of Legerity, Inc., where Mr. Tanner served as the Vice President of Operations from November 2002 until August 2007. Before Legerity and Zarlink, Mr. Tanner worked for nine years at Intel Corporation, where he held various positions managing domestic and international manufacturing operations. Prior to Intel, Mr. Tanner held various management positions in fab operations at National Semiconductor, Texas Instruments and NCR Corporation. Our Board has concluded that Mr. Tanner should serve on the Board based upon his extensive experience in the semiconductor industry.
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THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Director Independence
The Board reviews the independence of each director annually. In determining the independence of our directors, our Board considered Section 303A of the NYSE listing standards and broadly considered the materiality of each director’s relationship with us. Based upon the foregoing criteria, our Board has determined that the following directors are independent: Mr. Martino, Ms. Chung, Mr. Keating, Dr. Lee and Mr. Tanner.
Board Meetings
The Board held 14 meetings during fiscal year 2022. None of the directors attended fewer than 92 percent of the aggregate number of Board meetings and meetings of committees of the Board on which each of them served.
Attendance at Annual Meeting
The Company’s Corporate Governance Guidelines as currently in effect provide that all directors shall make every effort to attend the Company’s annual meeting of stockholders. In 2022, all of our directors attended our Annual Meeting of Stockholders.
Committees
The Board has four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, and the Risk Committee. The Board establishes ad hoc committees from time to time on an as-needed basis. As announced in the Company’s Current Report on Form 8-K on August 8, 2022, the Board activated the Strategic Review Committee, consisting of Mr. Keating, as Chair, Dr. Lee, Mr. Martino and Mr. Tanner, to assist the Board in reviewing, considering, exploring and evaluating strategic alternatives that may be available to the Company to maximize shareholder value.
The Board has adopted written charters for the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Risk Committee. These charters, as well as our Code of Business Conduct and Ethics and our Corporate Governance Guidelines, are posted and available on our website at https://investors.magnachip.com/corporate-governance/highlights. The information on or accessible through our website is not a part of or incorporated by reference into this Proxy Statement.
Audit Committee
Our Audit Committee consists of Mr. Keating, as Chair, Mr. Martino and Mr. Tanner. Our Board has determined that Mr. Keating is an audit committee financial expert as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act of 1933, as amended. Our Board has also determined that each of Mr. Keating, Mr. Martino and Mr. Tanner is independent as that term is defined in Section 303A of the New York Stock Exchange (“NYSE”) listing standards and Rule 10A-3 promulgated under the Exchange Act of 1934, as amended (the “Exchange Act”).
The Audit Committee held 10 meetings in fiscal year 2022. The primary purpose of the Audit Committee is to assist our Board in fulfilling its oversight responsibilities by reviewing and reporting to the Board on the integrity of the financial reports and other financial information provided by the Company to the public, the SEC and any other governmental regulatory body, and on the Company’s compliance with other legal and regulatory requirements. The Audit Committee is responsible for the appointment, retention, review and oversight of the Company’s independent auditor, and the review and oversight of the Company’s internal financial reporting, policies and processes. The Audit Committee is also responsible for reviewing related party transactions, risk management, and legal and ethics compliance.
Compensation Committee
Our Compensation Committee consists of Mr. Martino, as Chair, Ms. Chung and Mr. Tanner. Our Board has determined that each of Mr. Martino, Ms. Chung and Mr. Tanner is independent under applicable NYSE listing standards.
The Compensation Committee held 7 meetings in 2022. The Compensation Committee has the overall responsibility for evaluating and approving our executive officer and director compensation plans, policies and
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programs, as well as all equity-based compensation plans and policies. In March 2016, the Board created the Employee Equity Committee and delegated to it the authority to determine the recipients, amounts and timing of awards under the Company’s equity-based compensation plans within the parameters established by the Board.
On April 13, 2023, the Board adopted the amended and restated Charter of the Compensation Committee, assigning to the Compensation Committee the responsibility of periodically reviewing and advising the Board concerning the Company’s human capital strategies, initiatives and programs with respect to the Company’s culture, talent, recruitment, retention, employee engagement, and employee diversity, equity and inclusion efforts.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee consists of Dr. Lee, as Chair, Mr. Keating and Mr. Martino. Our Board has determined that each of Dr. Lee, Mr. Keating and Mr. Martino is independent under applicable NYSE listing standards.
The Nominating and Corporate Governance Committee held 5 meetings in 2022. The Nominating and Corporate Governance Committee identifies individuals qualified to become Board members, recommends director nominees, recommends Board members for committee membership, develops and recommends corporate governance principles and practices and director orientation and continuing education, oversees the evaluation of our Board and its committees and formulates a description of the skills and attributes of desirable Board members. The Nominating and Corporate Governance Committee will also consider candidates recommended by our stockholders so long as the proper procedures are followed.
Our bylaws provide that stockholders seeking to nominate candidates for election as directors at an annual meeting must provide timely notice of such nominations in writing. To be timely, a stockholder’s notice generally must be received in writing at the Company’s offices at Magnachip Semiconductor Corporation, c/o Magnachip Semiconductor, Ltd., 15F, 76 Jikji-daero 436beon-gil, Heungdeok-gu, Cheongju-si, Chungcheongbuk-do, Republic of Korea 28581, Attention: Secretary, not earlier than the close of business on the 120th day, nor later than the close of business on the 90th day, prior to the first anniversary of the date of the preceding year’s annual meeting as first specified in the Company’s notice of meeting (without regard to any postponements or adjournments of such meeting after such notice was first sent), except that if no annual meeting was held in the previous year or the date of the annual meeting is more than 30 days earlier or later than such anniversary date, notice by the stockholders to be timely must be received not later than the close of business on the later of the 90th day prior to the annual meeting or the 10th day following the date on which public announcement of the date of such meeting is first made. A stockholder’s notice must set forth, among other things;
the name and address of the stockholder who intends to make the nomination, and the names and addresses of the beneficial owners, if any, on whose behalf the nomination is being made and of the person or persons to be nominated;
a representation that the stockholder is a holder of record of stock of the Company entitled to vote for the election of Directors on the date of such notice and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice;
certain information regarding the ownership and other interests of the stockholder or such other beneficial owner;
a description of all arrangements or understandings between the stockholder or such beneficial owner and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder;
a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and such other beneficial owner, if any, and their respective affiliates and associates and each proposed nominee;
certain other information regarding each nominee proposed by such stockholder as would be required to be included in a Proxy Statement filed pursuant to the proxy rules of the SEC; and
the consent of each nominee to serve as a director of the Company if so elected.
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A stockholder must also comply with all other applicable requirements of the Exchange Act and the rules and regulations under the Exchange Act with respect to matters relating to nominations of candidates for directors. The preceding is a summary of the stockholder nomination procedures set forth in our bylaws as currently in effect, and we refer our stockholders to the full text of Section 2.15 of our bylaws and such other applicable provisions of our bylaws as in effect from time to time for the specific requirements of such director nomination procedures by stockholders.
In addition to the formal procedures set forth in our bylaws for the nomination of directors by stockholders, the Nominating and Corporate Governance Committee has adopted a Policy Regarding Director Nominations pursuant to which it may from time to time evaluate candidates for nomination as director that come to its attention through incumbent directors, management, stockholders or third parties. Such informal recommendations by stockholders should be directed to the attention of the Nominating and Corporate Governance Committee as set forth below under “—Communications with Directors.” The Nominating and Corporate Governance Committee has and may in the future, if it deems appropriate under the circumstances, engage a third-party search firm to assist in identifying qualified candidates.
The Nominating and Corporate Governance Committee seeks director candidates who possess high quality business and professional experience, possess the highest personal and professional ethics, integrity and values, and who have an inquisitive and objective perspective and mature judgment. Director candidates must also be committed to representing the best interests of our stockholders and have sufficient time available in the judgment of the Nominating and Corporate Governance Committee to perform all Board and committee responsibilities. The Nominating and Corporate Governance Committee has no formal policy on diversity in identifying potential director candidates, but does regularly assess the needs of the Board for various skills, background and business experience in determining if the Board requires additional candidates for nomination.
Risk Committee
Our Risk Committee consists of Mr. Tanner, as Chair, Mr. YJ Kim and Dr. Lee. The Risk Committee held 5 meetings in 2022. The Risk Committee assists the Board in its oversight of the Company’s management of key risks, as well as the guidelines, policies and processes for monitoring and mitigating such risks. The Risk Committee’s primary responsibility is to oversee and approve the implementation of Company-wide risk and crisis management best practices. Other responsibilities of the Risk Committee include providing input to management in identifying, assessing, mitigating and monitoring enterprise-wide risks the Company faces, including cybersecurity risks, and reviewing the Company’s business practices, compliance activities and enterprise risk management and making recommendations to the Board related to such review.
On February 10, 2023, the Board adopted the amended and restated Charter of the Risk Committee, assigning to the Risk Committee the responsibility of overseeing the Company’s corporate objectives, goals, strategies and initiatives relating to, and attending risks associated with, environmental, social and governance (“ESG”) matters, including corporate social responsibility, sustainability, public policy and other related matters (“ESG Matters”). Accordingly, our Risk Committee has been engaged in reviewing and assessing our capabilities in compliance with ESG standards and regulations and working with the Company to improve disclosure and transparency relating to the Company’s ESG profile.
Board Leadership Structure
Separation of Chairperson and Chief Executive Officer
Our Corporate Governance Guidelines state that the Board shall elect its Chairperson and appoint the Company’s Chief Executive Officer according to its view of what is best for the Company at any given time. The Board does not believe there should be a fixed rule as to whether the offices of Chairperson and Chief Executive Officer should be vested in the same person or two different persons, or whether the Chairperson should be an employee of the Company or should be elected from among the non-employee directors. The needs of the Company and the individuals available to play these roles may dictate different outcomes at different times, and the Board believes that retaining flexibility in these decisions is in the best interest of the Company.
Currently, Mr. Martino serves as the Company’s Chairman of the Board, and Mr. YJ Kim serves as the Company’s Chief Executive Officer. The Board may, however, make changes to its leadership structure in the future as it deems appropriate.
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Lead Director
In the event that positions of Chairperson and Chief Executive Officer are held by the same person, on an annual basis the independent members of the Board will select a lead director from the independent directors then serving on the Board (the “Lead Director”). As a general matter, there will be no Lead Director if the positions of Chairperson and CEO are not held by the same person and the Chairperson is an independent director. The length of service as Lead Director is subject to the Board’s discretion, but will be a minimum of one year. The Lead Director has the authority to call meetings of the independent directors.
Executive Sessions of the Board
The Company’s non-management directors meet at regularly scheduled Board meetings in executive session without management present. In 2022, the Chairman of the Board presided over the meetings of the non-employee directors. In addition, in accordance with our Corporate Governance Guidelines, the independent members of the Board meet at least twice a year in executive session, with the Chairperson setting the agenda and presiding over such meetings.
Presiding Director
In accordance with our Corporate Governance Guidelines, the presiding director of the Board is the Chairman of the Board, if present, or in such person’s absence and if applicable, the Lead Director, or in such person’s absence, the Audit Committee Chairman, or in such person’s absence, the independent director present who has the most seniority on the Board. The presiding director presides at all meetings of the Board and is responsible for chairing the Board’s executive sessions.
Board Role in Risk Oversight
Our Board is responsible for overseeing our management of risk. The Board created a Risk Committee to assist in overseeing management’s identification and evaluation of key enterprise risks to the Company, as well as guidelines, policies and processes for monitoring and mitigating such risks. In particular, the Risk Committee focuses on strategic enterprise risks, including risks associated with intellectual property; business operations and disaster recovery capabilities; and data security, privacy, technology and information security policies, procedures, and internal controls, including those related to cybersecurity and cyber incident responses and reporting procedures.
Our Board also fully understands its duties to navigate the challenges presented by climate change, social injustice, inequality, and numerous other issues that are fundamental to the success and sustainability of the Company. We are committed to sustainable business practices to advance our long-term ambitions as well as to mitigate business risks. Our Risk Committee oversees the Company’s objectives, goals, strategies and initiatives relating to ESG Matters and the related impacts and risks related thereto.
Company management reports on a quarterly basis to the Risk Committee their assessment of key enterprise risks across multiple categories and mitigation plans for those that fail to meet relevant tolerance standards established from time to time. During quarterly Risk Committee meetings, the members of the Risk Committee review management’s assessment report and discuss with management measures to be implemented to better control against existing risks and identify emerging risks. For example, the Risk Committee may consider replacing specific existing risk categories, adding new risk categories, or adjusting the tolerance standards of risks to preemptively respond to changes in the Company’s business and the environment in which we operate.
The Risk Committee works closely with Theodore Kim, our Chief Compliance Officer, who was appointed by our Chief Executive Officer as the Company’s Risk Officer, with respect to the above-described oversight. In this capacity, Mr. Kim reports directly to the Risk Committee, the Board as a whole and the Company’s Chief Executive Officer. The Risk Committee may discuss certain risks with the Audit Committee or the Board if certain material disclosure issues arise. The Risk Committee and the Company have engaged outside experts from time to time to obtain assistance with the identification and mitigation of key risks.
Our Audit Committee also has certain statutory, regulatory and other responsibilities with respect to oversight of risk assessment and risk management. Specifically, the Audit Committee is responsible for overseeing policies with respect to financial risk assessment and those other items specifically set forth in our Audit Committee charter. The Risk Committee coordinates with the Audit Committee as necessary and appropriate to enable the Audit Committee to perform its responsibilities.
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The Board’s other independent committees also oversee risks associated with their respective areas of responsibility. For example, the Compensation Committee considers the risks to our business associated with our compensation policies and practices, with respect to both executive compensation and compensation generally.
Our Board believes that our compensation programs are designed such that they will not incentivize unnecessary risk taking. The base salary component of our compensation program is a fixed amount and does not depend on performance. Payout levels under our cash incentive program are generally capped and payout opportunities may generally be achieved on a straight-line interpolation basis between threshold and target levels, and between the target and maximum levels. Our equity awards are limited by the terms of our equity plans to not more than a fixed maximum amount specified in the plan, and are subject to vesting to align the long-term interests of our executive officers with those of our stockholders. Our Board adopted a clawback policy to provide for the recoupment of certain executive compensation in the event of an accounting restatement resulting from the Company’s material noncompliance with financial reporting requirements under the federal securities laws. See “Executive Compensation—Compensation Discussion and Analysis—Clawback Policy” contained elsewhere in this Proxy Statement.
Director Orientation and Continuing Education
Our Nominating and Corporate Governance Committee oversees the orientation process for new members of our Board to ensure that they are familiar with the Company’s operations, financial matters, corporate governance practices and other key policies and practices through the preparation and review of background material and management meetings as appropriate. In addition, our Nominating and Corporate Governance Committee seeks to identify and encourage training and continuing education opportunities for all directors in order to improve both our Board and its committees’ performance. Senior management assist in identifying and advising our directors about opportunities for continuing education, including conferences provided by independent third parties. In furtherance of these efforts, the Company maintains membership for each Company director in the National Association of Corporate Directors (NACD), which provides corporate governance resources, education, information, and research on leading Board practices.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. We will provide a copy of our Code of Business Conduct and Ethics without charge to any person upon written request made to our Secretary at Magnachip Semiconductor Corporation, c/o Magnachip Semiconductor, Ltd., 15F, 76 Jikji-daero 436beon-gil, Heungdeok-gu, Cheongju-si, Chungcheongbuk-do, Republic of Korea 28581. Our Code of Business Conduct and Ethics is also available on our website at https://investors.magnachip.com/corporate-governance/highlights. We will disclose any waivers or amendments to the provisions of our Code of Business Conduct and Ethics on our website.
Report of the Audit Committee
The Audit Committee has reviewed and discussed with our management and Samil PricewaterhouseCoopers, our independent registered public accounting firm, our audited financial statements contained in our Annual Report to Stockholders for the year ended December 31, 2022. The Audit Committee has also discussed with our independent registered public accounting firm the matters required to be discussed under Public Company Accounting Oversight Board standards.
The Audit Committee has received and reviewed the written disclosures and the letter from Samil PricewaterhouseCoopers required by applicable requirements of the Public Company Accounting Oversight Board regarding Samil PricewaterhouseCoopers’s communications with the Audit Committee concerning independence, and has discussed with Samil PricewaterhouseCoopers its independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board (and the Board subsequently approved the recommendation) that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 22, 2023.
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Audit Committee:
Melvin L. Keating, Chair
Camillo Martino
Gary Tanner
Communications with Directors
A stockholder or other interested party who wishes to communicate directly with the Board, a committee of the Board, the non-management or independent directors as a group, or with the Chairman of the Board or any other individual director, regarding matters related to the Company should send the communication to:
Board of Directors
or Chairman, individual director, committee or group of directors
Magnachip Semiconductor Corporation
c/o Magnachip Semiconductor, Ltd.
Corporate Secretary
15F, 76 Jikji-daero 436beon-gil, Heungdeok-gu
Cheongju-si, Chungcheongbuk-do, Republic of Korea 28581
We will forward all stockholder and other interested party correspondence about the Company to the Board, a committee of the Board, the non-management or independent directors as a group, or an individual director, as appropriate. Please note that we will not forward communications that are spam, junk mail or mass mailings, resumes and other forms of job inquiries, surveys and business solicitations or advertisements.
Human Capital Management
Our Company strives to accelerate the advancement of technology to empower the makers of tomorrow, and we recognize that it is our employees who make this happen. Our goal is to enable our employees to leverage their extensive expertise in engineering, design and process to accelerate the advancement of our technology, allowing us to compete globally and to be leaders in our industry. To that end, we are committed to fostering employee talent, cultivating a culture and environment that is open, productive and fair, in which all of our employees feel safe, valued, and respected and in which our employees are empowered to achieve their full potential.
We understand that our success across a broad range of human capital related areas of focus at all levels of our organization is important to serving the long-term interests of our stockholders, and we have been working to improve our disclosure and transparency on this topic, to ensure that our strategy and approach to human capital management is communicated to our stockholders effectively. In addition to the disclosure contained within this Proxy Statement, information regarding our approach to human capital management, including related policies and programs, is highlighted in the “Human Capital” section of our 2022 Annual Report, which accompanies this Proxy Statement, and the “About Us” section of our website.
As a global semiconductor company headquartered in Korea, our Company, including our Board and our employee workforce, is reflective of the broader population of the country in which we are based. Our worldwide workforce consisted of 897 employees (full- and part-time) as of December 31, 2022, of which 866 are located in Korea. Of our worldwide workforce, 202 were involved in sales, marketing, general and administrative, 222 in research and development (including 87 with advanced degrees), 44 in quality, reliability and assurance, and 429 in manufacturing (comprised of 46 in engineering and 383 in operations, maintenance and others). Because we are headquartered in Korea, we are not subject to EEO-1 (Equal Employment Opportunity) reporting.
As a global competitor, we believe that our success is tied to our ability to attract and retain talent at all levels of our organization, including our Board, that is reflective of our employees, our communities of operation and our customers. As a result, we place great importance on inclusion and diversity within the workplace, we aim to create a workplace where all employees feel valued and respected, and we promote the culture of more female voices. Currently, women represent approximately 22% of our executive management team, comprised of the CEO, the CFO, the CCO and the respective heads of Worldwide Sales, Display, Power, Manufacturing, Corporate Strategy and Human Resources.
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The market in which we compete is constantly evolving, which requires continuous innovation and agility to remain competitive, and requires us to attract and retain a highly skilled workforce. We compete based on design experience, manufacturing capabilities, the ability to satisfy customer needs from the design phase through the shipping of a completed product, length of design cycle and quality of technical support and sales personnel. Some of our human capital management related policies and programs supporting our workforce are highlighted below.
Competitive Compensation and Pay Equity
We periodically evaluate market practices for compensation and benefits, including with respect to job function, role and responsibility, job level and region, and regularly review whether our compensation levels and distribution methods are fair and equitable.
We offer cash and equity-based compensation programs to incentivize achievement of our short-term financial, operational and strategic goals, as well as long-term value creation, and to attract and retain the highly skilled workforce necessary for our success.
We offer various employee benefits under the company philosophy that ensuring employees enjoy a happier life with their families is as critical as promoting their own health and well-being. Consistent with local practice, all employees have access to annual health examination programs. Employees also have access to other benefits, as applicable, such as health examination for spouse, personal pensions, housing assistance, medical reimbursement plans and educational assistance programs.
Growth and Development
Talent pipeline development strategy: We have adopted a structured approach to identifying, training, mentoring and developing talented individuals within the organization, with the goal of ensuring a steady supply of skilled and competent employees to fill key roles now and in the future, in order to achieve our long-term strategic goals and drive long-term stockholder value.
Graduate traineeship/apprenticeship program: Designed for recent university graduates who are looking to gain practical work experience in their chosen field, our program involves a combination of classroom training and on-the-job learning, where trainees work alongside experienced professionals to gain hands-on experience.
Specialized staff training programs: We offer step-by-step training courses specifically designed for the semiconductor industry to help employees build their job expertise through partnership with educational institutions focused on education and research in semiconductors, with the goal of training future experts in the industry. We also offer soft skills training for non-technical competencies that are essential for job success, including communication, teamwork and problem-solving.
Regular performance appraisal and feedback: Performance appraisal and feedback processes are conducted annually using the MBO (Management by Objectives) method for employees' development, growth and performance improvement.
As part of our strategy for employee retention, training and advancement at all levels, through our annual performance review process we evaluate all employees with the intent to capture employee potential, based on considerations related to three primary factors:
Aspiration (advancement, training and development and overall job satisfaction);
Engagement (retention and emotional commitment to the organization); and
Ability (including job performance, emotional intelligence and interpersonal skills).
Managers are also encouraged to deliver informal feedback throughout the year, to ensure that employees have an opportunity to improve their performance and are aware of training or development opportunities.
R&D reward program: To ensure R&D technical professionals continue to advance their skills and knowledge, we have technology committees that attend regular seminars and conduct periodic research. We have a reward program for exemplary research.
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Culture and Employee Engagement
Engagement and satisfaction surveys: Employee surveys are conducted regularly to gain valuable insight into how employees feel about their job, their work environment and the Company as a whole. Areas surveyed include opportunities for employee engagement, job satisfaction, communication, work-life balance and compensation. Survey results are communicated to both management and employees, and we develop action plans to address any areas identified as needing improvement.
Grievance reporting and escalation procedures: We are committed to promoting open and honest lines of communication, and we strive to provide a work environment where every employee believes that they can raise concerns without fear of retaliation. To ensure that each employee feels comfortable raising questions and concerns, we provide an online reporting tool, which can be found in the Ethics and Compliance section of our website. Reporting and escalation procedures have been adopted to address and resolve complaints or grievances raised by employees in a structured and systematic manner. Procedures are followed in a predetermined sequence to ensure that each grievance is addressed in a fair, consistent and timely manner, and that all parties involved are treated with respect. We do not tolerate retaliation against anyone who discloses actual or suspected ethical, legal or regulatory violations in good faith. Our hotline is available to anyone, including employees, contractors, customers, suppliers, who wishes to report potential misconduct. All submissions will be treated confidentially, and may be provided anonymously where permitted by law.
Safety
We appreciate the fact that our employees constitute one of the most critical assets of Magnachip, and therefore, their safety and wellness are key factors to our success. We have a dedicated Environmental Health & Safety (“EHS”) team that establishes and reviews internal EHS regulations based on international agreements as well as local laws and regulations. Our EHS team is also responsible for identifying, evaluating and improving EHS issues within the overall manufacturing process to ensure a safe and comfortable work environment. Magnachip has implemented and maintains an Occupational Health and Safety Management System as well as an Environmental Management System. Our sites are certified to the internationally recognized ISO 45001 and ISO 14001 standards.
In January 2021, the Korean legislature enacted the Serious Accident Punishment Act (“SAPA”), which imposes criminal liability on individuals and entities responsible for “serious accidents,” including industrial accidents that cause death, serious injury or occupational illness. SAPA essentially requires enterprises to establish relevant standards and measures to ensure a certain level of operational safety, including the health and safety of all employees. SAPA went into effect in January 2022, and in connection therewith, we appointed Mr. Seunghoon Lee as the Chief Safety Officer of our Korean operating subsidiary, who then formed a dedicated team to evaluate, improve and monitor the policies, practices, standards and systems relating to health and safety to ensure compliance with SAPA. Mr. Lee, who has over 35 years of manufacturing and industrial EHS experience at Magnachip, concurrently serves as the Chief of Manufacturing of our Korean operating subsidiary.
Policy Statement
Magnachip adheres to human rights and labor standards of international labor organizations, such as the United Nations and the International Labor Organization. Magnachip prohibits all forms of discrimination based on gender, race, nationality, religion and age to ensure that all employees work in a safe and fair environment. These values are embedded in our policies:
Labor and Ethical Management
Equal Employment Policy
Training and Education Policy
Code of Business Conduct and Ethics
2022 Director Compensation
Each of our non-employee directors was eligible to earn a quarterly cash retainer, additional fees based on committee service and equity awards in 2022 pursuant to our director compensation policy, which is described in further detail below. All such cash fees are paid quarterly in advance. A non-employee director who joins the
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Board after the beginning of a quarter receives a prorated cash retainer reflecting his or her actual period of Board and committee service for such quarter and a non-employee director who joins the Board after the beginning of the Company’s annual director service period receives a pro-rated equity award reflecting his or her actual period of Board and committee service during such annual service period.
Cash Compensation
In 2022, our non-employee directors were eligible to receive the following types of cash compensation for their services on the Board.
Quarterly Board Service Retainer (all non-employee directors): $18,750
Quarterly Chair Service Fees:
-
Chairperson of the Board: $18,750
-
Chair of our Audit Committee: $6,250
-
Chair of our Compensation Committee: $3,750
-
Chair of our Nominating and Corporate Governance Committee: $2,500
-
Chair of our Risk Committee: $2,500
Quarterly Committee Member (non-Chair) Service Fees:
-
Audit Committee: $3,750
-
Compensation Committee: $2,500
-
Nominating and Corporate Governance Committee: $1,250
-
Risk Committee: $1,250.
Our director compensation policy also provides that the Lead Director of the Board, if any, would receive an additional cash fee of $11,250 per quarter. No Lead Director was appointed for 2022.
Equity Compensation
In 2022, our non-employee directors were also eligible to receive the following types of equity awards for their service on the Board:
Annual Equity Awards: Each non-employee director was eligible to receive a restricted stock unit (“RSU”) award having a grant date fair value equal to $165,000. In addition, each non-employee director was eligible to receive an RSU award having a grant date fair value equal to $20,000 for such director’s service as the Chair of the Board’s Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee or Risk Committee, as applicable; and an RSU award having a grant date fair value equal to $10,000 for such director’s service as a non-Chair member of the Board’s Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee or Risk Committee, as applicable. Each RSU award vests in full on the earlier of (x) the first anniversary of the date of grant, and (y) the meeting date of the Annual Meeting of Stockholders that occurs in the year following the year in which the RSU is granted, with such grants being made on the earlier of (A) the meeting date of the Company’s Annual Meeting of Stockholders for such year and (B) August 31 of such year. Vested RSUs settle as soon as administratively practicable following the date the non-employee director’s service terminates for any reason.
Initial Equity Awards: If a non-employee director’s initial appointment to the Board or a Board committee occurs other than at an Annual Meeting of Stockholders, such director will be granted pro-rated RSU awards having an aggregate grant date fair value equal to (x) the applicable grant date fair value amount for applicable Board or committee membership described above, multiplied by (y) the quotient obtained by dividing the number of days elapsed from the date of initial appointment to the date of the Company’s next Annual Meeting of Stockholders (or, if earlier, August 31 of such year), by 365, with such grants to vest in full on the date of the Company’s next Annual Meeting of Stockholders (or, if earlier, August 31 of such year).
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All non-employee director equity awards will be granted under the Company’s equity incentive plan in effect at the time of such grants. Non-employee directors are subject to our Stock Ownership Policy, as described under the heading “Stock Ownership Guidelines”.
The following table sets forth the total compensation earned by our non-employee directors during the year ended December 31, 2022. Mr. YJ Kim, our Chief Executive Officer, does not earn any fees for his service on the Board.
2022 Director Compensation Table
Name
Fees
Earned
or Paid
in Cash
($)(1)
Stock
Awards
($)(2)(3)
All Other
Compensation
($)
Total
($)
Liz Chung
84,889
171,253
256,142
Melvin Keating
105,000
183,500
288,500
Ilbok Lee
90,000
183,500
273,500
Camillo Martino
185,000
192,920
377,920
Gary Tanner
110,000
192,920
302,920
(1)
Consists of the amount of cash compensation earned in 2022 for Board service and committee service as described in the table below.
Name
Board
Retainer
($)
Chair
Service
Fees ($)
Committee
Service
Fees ($)
Total ($)
Liz Chung
75,000
9,889
84,889
Melvin Keating
75,000
25,000
5,000
105,000
Ilbok Lee
75,000
10,000
5,000
90,000
Camillo Martino
75,000
90,000
20,000
185,000
Gary Tanner
75,000
10,000
25,000
110,000
(2)
The amounts reported represent the aggregate grant date fair value of the RSUs awarded to the directors, calculated in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service vesting conditions. The amounts reported in this column reflect the accounting cost for these RSUs and do not correspond to the actual economic value that may be received by the directors upon vesting and/or settlement of the RSUs.
(3)
As of December 31, 2022, the number of outstanding stock options and RSU awards held by our non-employee directors who served during 2022 were as follows:
Name
RSUs (#)
Stock Options (#)
Liz Chung
25,236
Melvin Keating
93,688
49,737
Ilbok Lee
100,002
179,593
Camillo Martino
94,998
49,737
Gary Tanner
103,884
93,117
As of December 31, 2022, the following number of RSUs included in the table above were vested but not yet settled under the terms of the applicable RSU agreements: Ms. Chung—12,946 RSUs; Mr. Keating—79,994 RSUs; Dr. Lee—86,308 RSUs; Mr. Martino—80,601 RSUs; and Mr. Tanner—89,487 RSUs. Stock options were last granted to our non-employee directors under our director compensation policy in effect in 2017. Please see the section entitled “Security Ownership of Certain Beneficial Owners and Management” for additional information regarding all shares of Common Stock beneficially owned by our non-employee directors.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee has been an officer or employee of our Company during the last fiscal year. During 2022, decisions regarding executive officer compensation were made by our Compensation Committee. Mr. YJ Kim, our Chief Executive Officer, participated in the deliberations of our Compensation Committee regarding the determination of the compensation of our executive officers other than himself for 2022 and prior periods. None of our executive officers currently serves, or in the past has served, as a member of the Board or the compensation committee of another entity that has one or more executive officers serving on our Board.
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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis describes and analyzes our executive compensation program for the following executive officers who served the Company in 2022 (collectively, our “named executive officers”):
Young-Joon Kim, our Chief Executive Officer (“CEO”);
Shin Young Park, our Chief Financial Officer (“CFO”);
Theodore Kim, our Chief Compliance Officer, Executive Vice President, General Counsel and Secretary (“CCO”);
Woung Moo Lee, our Executive Vice President and General Manager of Display Solutions and Worldwide Sales (“GM of Display and WW Sales”); and
Chan Ho Park, our General Manager of Power Solutions (“GM of Power”).
Compensation Philosophy and Objectives
The Compensation Committee of our Board has primary responsibility for developing and maintaining a compensation program for our senior management, including our named executive officers.
The Compensation Committee believes that our executive compensation program should play a key role in our operating and financial success, and has worked with outside legal counsel and Compensia Inc. (“Compensia”), a national compensation consulting firm, to develop a comprehensive executive compensation program that is intended to attract and retain talent with competitive compensation, and further align the interests of our executive officers with our stockholders by linking a significant component of executive compensation to variable cash-based compensation tied to the achievement of our short-term financial, operational and strategic goals, as well as equity-based compensation tied to the achievement of our long-term strategic goals that in turn lead to stockholder value creation. As part of our “Pay for Performance” philosophy described below, the Committee believes it is important to maintain a compensation program that includes significant “at risk” compensation and performance-focused equity awards. In 2022 approximately 89% of our CEO’s target total direct compensation and approximately 73% of the average target total direct compensation of our other named executive officers was delivered in the form of variable or “at risk” compensation tied to Company or stock price performance.
In light of the highly competitive market in which we compete for business, and our dependence on the highly skilled workforce that is necessary in order to innovate and compete in that market, the Compensation Committee believes that our ability to attract and retain talent at all levels of the Company is critical to our long-term success. In view of our unique situation in that all of our senior executives live and work in South Korea (herein referred to as “Korea”), we offer competitive expatriate benefits intended to minimize adverse tax and financial impacts associated with our CEO’s and CCO’s expatriate assignments, because they are subject to taxation in both the U.S. and Korea. More information about our human capital management strategy and approach can be found under the heading “Human Capital Management” on page 13.
Key 2022 Compensation Decisions
The Compensation Committee made the following key compensation decisions in respect of fiscal year 2022:
Entered into an executive service agreement with Ms. Park in connection with her appointment as CFO effective January 1, 2022;
Increased the annual base salary of our named executive officers effective January 1, 2022. The increases ranged from 0.5% to 6.1% with a view toward remaining competitive with our peers, except our CFO’s salary was increased by 14.2% to reflect her increased responsibilities in connection with her promotion to CFO;
Awarded retention bonuses to ensure the continued retention of key executives and employees in what remains a tight market for talent and to reward substantial individual contributions in connection with the previously contemplated merger with an affiliate of Wise Road Capital LTD; and
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Granted annual equity awards to our key executives using a combination of performance-based stock units (“PSUs”) (based on both relative total stockholder return (“TSR”) and financial performance goals) and RSUs, consistent with our practice in prior years.
“Pay for Performance” Philosophy
As illustrated below, our target total direct compensation, which is the sum of base salary, target short-term cash incentive bonus opportunity and the aggregated target value of long-term equity awards granted under our 2020 Equity and Incentive Compensation Plan, was weighted heavily towards variable performance-based compensation.
graphic
Approximately 89% of our Chief Executive Officer’s target total direct compensation and approximately 73% of the average target total direct compensation of our other named executive officers was delivered in the form of variable or “at risk” compensation tied to Company, individual, or stock price performance;
Long-term equity awards (the ultimate value of which depends on our stock price) continued to be the largest element of compensation, representing approximately 78% of our Chief Executive Officer’s target total direct compensation and approximately 57% of the average target total direct compensation of our other named executive officers; and
The target annual (short-term) cash incentives payable to our named executive officers were tied to the pre-established performance goals and/or criteria under our short-term incentive program.
Executive Compensation-Related Policies and Practices
We endeavor to maintain sound executive compensation policies and practices, including compensation-related corporate governance standards, consistent with our pay for performance philosophy. The following summarizes our executive compensation and related governance policies and practices:
 
 
What We Do
Pay-for-Performance Philosophy
A significant portion of our named executive officers’ compensation is directly linked to corporate performance. We structure target total direct compensation with a significant long-term equity component in the form of RSUs and PSUs, thereby making a vast majority of each named executive officer’s target total direct compensation dependent upon our corporate performance, stock price and/or total shareholder return.
Performance-Based Equity Awards
Our CEO and our other named executive officers receive performance-based equity awards in the form of PSUs that vest based on the achievement of financial goals and relative TSR performance.
 
 
 
“Double Trigger” Change in Control Arrangements
With the exception of our PSU awards that vest at target level upon a change in control, our change in control compensation arrangements include a “double trigger” provision that requires both a change in control of the Company plus a qualifying termination of employment before payments and benefits are paid. It is our expectation that all future RSUs and PSUs will be structured with the same format.
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What We Do
 
 
 
Human Capital Management and Succession Planning
We provide opportunities for training and advancement to all employees as part of our human capital management program. Furthermore, we conduct succession planning and executive assessments for all key employees to ensure orderly succession plans are in place.
 
 
 
Independent Compensation Committee
The Compensation Committee consists solely of independent directors.
 
 
 
Compensation Recovery (“Clawback”) Policy
We have a policy providing for the recovery of certain cash incentive compensation and equity or equity-based awards from our CEO and other executive officers (including our other named executive officers).
 
 
 
Stock Ownership Guidelines
We maintain stock ownership guidelines for our CEO, our other executive officers (including our other named executive officers) and the non-employee members of our Board.
 
 
 
Equity Award Grant Policy
Equity awards are granted in accordance with our Equity Award Grant Policy. We do not have any program, practice or plan to time equity awards in coordination with the release of material non-public information.
 
 
 
Retain an Independent Compensation Advisor
The Compensation Committee has engaged its own independent compensation advisor to provide information, analysis and other advice on executive compensation independent of management.
 
 
 
Annual Executive Compensation Review
The Compensation Committee conducts an annual review of our compensation strategy, including a review of our compensation used for comparative purposes.
 
 
 
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What We Do
Balanced Time Horizon for Incentive Compensation
We have a balance of time horizons for our incentive awards, including an annual cash incentive plan, a three-year performance period for our TSR PSUs and a three-year vesting period for our RSUs and Financial PSUs.
 
 
What We Don’t Do
No Special Retirement Plans
We do not currently offer pension arrangements or retirement plans to our executive officers other than statutory severance benefits required under the Employee Retirement Benefit Security Act of Korea.
 
 
 
No Stock Option Re-Pricing
Our equity compensation plan does not permit stock options or stock appreciation rights (“SARs”) to be repriced to a lower exercise or strike price without the approval of our stockholders.
 
 
 
No Excise Tax Payments on Future Post-Employment Compensation Arrangements
We do not provide any excise tax reimbursement payments (including “gross-ups”) with respect to payments or benefits contingent upon a change in control of the Company. The Company does, however, have the obligation to provide tax equalization to the CEO and the CCO with respect to such payments and benefits, as a part of their expatriate benefit package because they are subject to taxation in both the U.S. and Korea.
 
 
 
No Hedging or Pledging
We prohibit our employees, including our executive officers, and the non-employee members of our Board from pledging, engaging in short sales and certain derivative transactions relating to our securities.
 
 
 
No Special Welfare or Health Benefits
We do not provide our executive officers with any welfare or health benefit programs, other than participation on the same basis as our full-time employees in the employee programs that are standard in our industry sector. The Company does provide customary international health insurance to the CEO, the CCO and the GM of Power as a part of their expatriate benefit package.
 
 
 
No Dividends or Dividend Equivalents Payable on Unvested Equity Awards
We do not pay dividends or dividend equivalents on unvested equity awards.
Say on Pay Vote and Stockholder Input
The Compensation Committee has responsibility to ensure that the compensation paid to our executive officers aligns with the interests of our stockholders and the Company’s compensation philosophy. Approximately 94.2% of the stockholders at the 2022 Annual Meeting voted to approve the compensation of the Company’s named executive officers as disclosed in the Company’s 2022 proxy statement. With the result of the advisory votes, the Compensation Committee determined that the Company’s executive compensation program continues to be appropriate. Nevertheless, in response to stockholder input regarding topics of concern from our investors, we made changes aimed at increasing the quality and transparency of the disclosures in our Compensation Discussion and Analysis (“CD&A”) this year, with a particular emphasis on disclosures related to variable, performance-based compensation and human capital management. We remain committed to listening to stockholder feedback as we continue to evaluate and refine our compensation programs.
Timing of Compensation Decisions
Generally, at the end of each annual evaluation period, our CEO reviews the performance of the other executive officers and presents his conclusions and recommendations to the Compensation Committee. At that time and
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throughout the year, the Compensation Committee also evaluates the performance of our CEO, which is measured in substantial part against our consolidated financial performance.
Equity awards are made in accordance with our Equity Award Grant Policy described below. We do not have any program, plan or practice to time equity award grants in coordination with the release of material non-public information.
Role of the Compensation Committee in Compensation Decisions
The Compensation Committee’s responsibilities include evaluating, approving and monitoring our named executive officer and director compensation plans, policies and programs, as well as each of our equity-based compensation plans and policies. In addition, the Compensation Committee has the responsibility of periodically reviewing and advising the Board concerning our human capital strategies, initiatives and programs with respect to our culture, talent, recruitment, retention, employee engagement, and employee diversity, equity and inclusion efforts.
Consistent with our compensation philosophy and objectives, the Compensation Committee evaluates our executive officer compensation packages annually to ensure that:
We maintain our ability to attract and retain superior executives in critical positions;
Our executives are incentivized and rewarded for corporate growth, achievement of long-term corporate objectives and individual performance that meet or exceed our expectations without encouraging unnecessary risk-taking; and
Compensation provided to critical executives remains competitive relative to the compensation paid to similarly situated executives of companies in the semiconductor industry.
In addition to the annual reviews, the Compensation Committee also typically considers compensation changes upon a named executive officer’s promotion or other change in job responsibility.
Role of CEO in Compensation Decisions
For named executive officers other than our CEO, we have historically sought and considered input from our CEO and our independent compensation consultant as described below, in making determinations regarding executive compensation.
Our CEO annually reviews the performance of our other named executive officers. Thereafter, he presents conclusions and recommendations regarding the compensation of such officers, including proposed salary adjustments and incentive amounts, to the Compensation Committee. The Compensation Committee then takes this information into account when it makes final decisions regarding any adjustments or awards.
The review of performance by the Compensation Committee and our CEO of our other named executive officers is both an objective and subjective assessment of each named executive officer’s contribution to our performance, leadership qualities, strengths and weaknesses and performance relative to goals set by the Compensation Committee or our CEO, as applicable. The Compensation Committee and our CEO do not systematically assign a weight to the factors, and may, in their discretion, consider or disregard any one factor which, in their sole discretion, is important to or irrelevant for a particular executive.
Role of Compensation Consultant
The Compensation Committee engages an external compensation consultant to assist it by providing information, analysis and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review. For 2022, the Compensation Committee retained Compensia, a national compensation consulting firm, to serve as its independent compensation consultant. This compensation consultant serves at the discretion of the Compensation Committee.
During 2022, Compensia attended some of the meetings of the Compensation Committee (both with and without management present) during the period of its engagement and provided the following services:
Consulting with the Compensation Committee Chair and other members between Compensation Committee meetings on compensation matters as needed;
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Assisting in the drafting of the Compensation Discussion and Analysis and Pay Versus Performance disclosures;
Reviewing and updating the compensation peer group used to assess executive compensation;
Providing market data for selected executive officer positions covering target total direct compensation levels and design to help the Compensation Committee determine how to competitively set compensation for the selected executive officer positions;
Updates on compensation trends and regulatory developments; and
Assistance with the design of the PSUs.
In 2022, Compensia did not provide any services to us other than the consulting services to the Compensation Committee. The Compensation Committee regularly reviews the objectivity and independence of the advice provided by its compensation consultant on executive compensation. In 2022, the Compensation Committee considered the six specific independence factors adopted by the SEC and reflected in the NYSE listing standards and determined that the work performed by Compensia did not raise any conflicts of interest.
Elements of Compensation
In making decisions regarding the pay of the named executive officers, the Compensation Committee looks to set a total compensation package for each officer that will retain high-quality talent and motivate the officer to achieve the goals set by our Board. Our executive compensation package is generally comprised of the following elements:
Element
Purpose
Description
Annual base salary
Provides a fixed source of annual cash compensation for our named executive officers.
Based upon each individual’s skills, experience and performance as well as the criticality of the role.
 
 
 
Short-term cash incentives
Incentivizes achievement of key annual financial, operational and strategic goals.
Variable cash compensation based on performance.
 
 
 
Long-term equity incentives
Aligns the interests of our named executive officers with those of our stockholders by increasing stock ownership, incentivizing increases in stockholder value and strengthening retention.
Variable equity compensation delivered through three vehicles:
- Service-based RSUs with a three-year vesting period;
- PSUs with a one-year performance period and subsequent three-year vesting period; and
- Relative total shareholder return PSUs (TSR PSUs) with a three-year performance period.
 
 
 
Expatriate and other executive benefits
Allows us to remain competitive with peer and market practices and to retain key personnel on expatriate assignments by minimizing adverse financial impacts associated with such assignments.
Benefits include housing allowances, relocation and repatriation allowances, insurance premiums, reimbursement for the use of a car, home leave flights, tax equalization payments and tax advisory services.
Our executives also participate in a health and welfare benefits package that is generally available to all of our employees and are each party to an employment agreement that provides for limited post-employment and change in control payments and benefits.
Sources of Market Data
For purposes of comparing our executive compensation against the competitive market, the Compensation
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Committee reviews and considers the compensation levels and practices of a group of comparable technology companies. The companies in this compensation peer group were selected on the basis of their similarity to us in size, industry focus and being based in the U.S. We focused on U.S.-based companies because our highest ranking executives are U.S. expatriates who have opportunities to work with U.S.-based technology companies.
Compensia provided the Compensation Committee with an analysis of the prior compensation peers with a recommendation of ten companies to exclude based on the companies being acquired or being outside the financial ranges noted below. Compensia also provided eight potential additions based on the selection criteria noted below. The Compensation Committee reviewed the proposed changes to our compensation peer group and adopted the final group to be used for this year’s analysis. The companies in this compensation peer group were selected on the basis of their similarity to us, based on the following criteria:
Industry — semiconductors; semiconductor equipment, electronic equipment and instruments and electronic components;
Company type — Public companies primarily headquartered in the U.S. and traded on a major stock exchange;
Similar revenue size — 0.25x – 2.5x Magnachip’s revenue of $505 million ($126 million to $1.3 billion);
Market capitalization — $50 million to $4 billion;
Executive positions similar in breadth, complexity and/or scope of responsibility; and
Competitors for executive talent.
The Compensation Committee approved the use of market data from the following group of peer companies, which was reviewed and approved in November 2021, for our 2022 executive compensation market assessment:
Alpha and Omega Semiconductor
MaxLinear
Ambarella
NeoPhotonics
Axcelis Technologies
Photronics
Cohu
Rambus
Diodes
SkyWater Technology
DSP Group
Veeco Instruments
Ichor Holdings
Vishay Precision Group
Impinj
 
The Compensation Committee seeks to establish a total cash compensation package for our named executive officers that is competitive with the compensation for similarly situated executives in this compensation peer group, while also considering each executive’s experience and performance. Accordingly, the Compensation Committee used the market data from this peer group as a reference point in its 2022 executive compensation process.
Elements of Compensation and Weighting
The Compensation Committee does not apply a formula or assign relative weight in apportioning compensation among the various elements used. Instead, it makes a subjective determination after considering all information collectively for each element of compensation.
Annual Base Salary
The Compensation Committee seeks to set the base salaries of our named executive officers at competitive levels as compared to similarly situated executives in our select peer group, but also takes into account the named executive officer’s experience, skill set and the value of that skill set and performance. The Compensation Committee makes a subjective decision regarding any changes in base salary based on these factors and the data from our select peer group. The Compensation Committee does not systematically assign weights to any of the factors it considers, and may, in its discretion, ignore any factors or deem any one factor to have greater importance for a particular executive officer. Base salary adjustments, if applicable, generally take effect in the middle of our fiscal year. In 2022, the Compensation Committee increased the annual base salary of our named
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executive officers effective January 1, 2022. Those increases ranged from 0.5% to 6.1%, except our CFO’s salary was increased by 14.2% to reflect her increased responsibilities in connection with her promotion to CFO. The 2022 base salary for each named executive officer is set forth below:
Named Executive Officer
2022 Base Salary
Young-Joon Kim
$560,100
Shin Young Park
$310,000
Theodore Kim
$350,000
Woung Moo Lee
$275,633
Chan Ho Park
$336,600
Short-Term Cash Incentives
We have been providing short-term cash incentive opportunities to encourage our named executive officers to achieve certain short-term corporate performance goals. The employment agreement that each of our named executive officers has entered into includes a target bonus amount, which is expressed as a percentage of base salary.
The Compensation Committee typically makes annual determinations regarding short-term cash incentive compensation based on various performance-related factors, including our annual operating plan, which is generally adopted in the December preceding each fiscal year. The Compensation Committee also considers for each year the cash bonus payout percentage earned by our non-executive employees pursuant to the terms of the collective bargaining agreement entered into by our Korean operating subsidiary, Magnachip Semiconductor, Ltd. (“MSK”), which typically takes into account a myriad of factors, including the Company’s financial performance in the applicable year. The Compensation Committee’s annual determination regarding short-term cash incentive compensation for our executives, including our named executives officers, is conducted generally with a view toward applying a payout percentage (applicable to the target bonus amount) to our executives that is similar to, or commensurate with, that determined under the applicable collective bargaining agreement.
For 2022, the Compensation Committee determined that the payout percentage of short-term cash incentive compensation for our executives would be 0%. This determination was based on a variety of relevant factors, including the Company’s performance relative to its 2022 annual operating plan, as well as its general financial performance in 2022.
Target bonus as a percentage of base salary, the target bonus amount and the actual amount of 2022 bonus award for each of our named executive officers are set forth below.
Named Executive Officer
Target Bonus
(% of Base Salary)
Target Bonus
Amount
Actual
Amount
Young-Joon Kim
100%
$560,100
$0
Shin Young Park
50%
$155,000
$0
Theodore Kim
75%
$262,500
$0
Woung Moo Lee
60%
$165,380
$0
Chan Ho Park
50%
$168,300
$0
On April 25, 2022, we awarded a one-time cash award (the “Retention Awards”) to certain executives and employees of the Company, including our named executive officers, to ensure continued retention of key executive officers and employees in what remains a tight market for executive talent as well as to reward those individuals for their substantial contributions in connection with the previously contemplated merger with an affiliate of Wise Road Capital LTD. The Retention Awards paid to our named executive officers are as set forth adjacent to their respective names in the table below.
Named Executive Officer
Retention Awards
Young-Joon Kim
$605,538
Shin Young Park
$330,274
Theodore Kim
$528,439
Woung Moo Lee
$178,248
Chan Ho Park
$132,110
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Long-Term Equity Incentives
Equity awards are not tied to base salary or cash incentive amounts and constitute lesser or greater proportions of total compensation depending on market practices and the Compensation Committee’s determination of target grant values. The Compensation Committee, relying on the professional and market experience of our Compensation Committee members, as well as information provided by our compensation consultant, generally seeks to set equity awards at competitive levels based on both U.S. and Korean market practices and taking into account our equity plan share pool and projected dilution of our shares outstanding. The Compensation Committee does not target a specific percentile within our peer group with respect to equity-based compensation.
Consistent with the Compensation Committee’s desire to provide compensation that is largely “at risk” while still competitive with our peers with whom we compete for talent, our equity compensation program for our named executive officers includes PSUs each year along with RSUs. The Compensation Committee believes that the inclusion of PSUs in our executive compensation program is consistent with, explicitly linked to, and supports our strategic objective of enhancing stockholder value.
In 2022, consistent with aligning our named executive officers’ interests with sustained value creation, the Compensation Committee determined that it was appropriate to switch from one-year vesting to three year vesting with respect to our annual Financial PSU awards. This switch would have caused a “lag” in the realizable value of the Financial PSUs that could be recognized by the grantees in the first two years the 2022 award was to be outstanding. To avoid that lag, the Compensation Committee determined that each 2022 Financial PSU award should include a special grant of “make-whole” Financial PSUs, with a shorter one-year vesting period (“Make-Whole Financial PSUs”), in addition to the Financial PSUs vesting over a three year period. As a result, in 2022 each grantee was granted Make-Whole Financial PSUs as part of each Financial PSU award, with the number of the Make-Whole Financial PSUs equal to two thirds (2/3) of the total number of Financial PSUs that were originally intended for that grantee.
In order for any PSUs to be earned and vest, the performance must meet or exceed a threshold level of performance during the applicable performance period, and the level of achievement of the applicable performance milestones will be determined by the Compensation Committee within 60 days following the end of the applicable performance period.
In the event a named executive officer is terminated without cause or resigns for good reason in each case not in connection with a “change in control” prior to the settlement of the award, the named executive officer will remain eligible to vest in a pro-rata portion of the award on the Certification Date, based on the number of full months the executive officer provided continuous service through the applicable performance period (the “Continued Service Condition”).
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The general terms of the equity awards contemplated by our 2022 executive compensation program are summarized in the table below.
Service-Based RSUs
Financial PSUs
TSR PSUs
• Vest over three years in three equal annual installments, subject to the executive’s continued employment through each applicable vesting date.
• Annual grants with one-year performance period.

• Vesting is based on (i) the achievement of financial goals that measure our performance against our business strategy, with specific performance goals established by the Compensation Committee annually, and (ii) satisfaction of the Continued Service Condition through each applicable date in the following vesting schedule: 1/3 of Vestable Units on the Certification Date; 1/3 of Vestable Units on December 31, 2023; and 1/3 of Vestable Units on December 31, 2024(1).

• For 2022, performance goals are based on revenue (1/3 weighting), gross profit margin (1/3 weighting) and Adjusted EBITDA (1/3 weighting).(2)
• Annual grants with three-year performance period.

• Performance is measured within 60 days of the end of the three-year performance period.

• Vesting is based on three-year TSR of the Company relative to other entities in the S&P Semiconductor Index, determined by the percentile rank of the Company’s TSR relative to the TSR of each other entity in such index, subject to the satisfaction of the Continued Service Condition.
(1)
As described above, Make-Whole Financial PSUs have a one-year vesting period, with the entire amount vesting on the Certification Date, provided that the other conditions of vesting have been met. As a result, including the Make-Whole Financial PSUs, 60% of the 2022 Financial PSUs were eligible to vest on the Certification Date.
(2)
“Adjusted EBITDA” means EBITDA (as defined below) adjusted to exclude (i) equity-based compensation expense, (ii) foreign currency loss (gain), net, (iii) derivative valuation loss (gain), net, and (iv) various non-recurring expense (income), net. “EBITDA” is defined as the Company’s net income (loss) before interest income, interest expense, income tax expense, and depreciation and amortization.
The below tables summarize the RSUs, Financial PSUs, and TSR PSUs granted to each of the named executive officers of the Company in 2022.
 
 
 
RSUs
Name
Grant Date
FV of
Grant Date
RSUs
Granted
(#)
Aggregate fair value
of grant date ($)
Young-Joon Kim
2/28/2022
$18.20
43,000
782,600
Shin Young Park
2/28/2022
$18.20
15,000
273,000
Theodore Kim
2/28/2022
$18.20
25,000
455,000
Woung Moo Lee
2/28/2022
$18.20
11,747
213,795
Chan Ho Park
2/28/2022
$18.20
10,000
182,000
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Financial PSUs
Name
Grant Date
FV of Grant
Date ($) (at
Target)
Threshold
Shares (#)
Target
Shares (#)
Maximum
Shares (#)
Young-Joon Kim
2/28/2022
2,711,800
74,500
149,000
223,500
Shin Young Park
2/28/2022
318,500
8,750
17,500
26,250
Theodore Kim
2/28/2022
531,440
14,600
29,200
43,800
Woung Moo Lee
2/28/2022
249,431
6,853
13,705
20,558
Chan Ho Park
2/28/2022
212,339
5,834
11,667
17,501
 
 
 
TSR PSUs
Name
Grant Date
FV of Grant
Date ($) (at
Target)
Threshold
Shares (#)
Target
Shares (#)
Maximum
Shares (#)
Supermaximum
Shares (#)
Young-Joon Kim
2/28/2022
717,080
19,700
39,400
59,100
78,800
Shin Young Park
2/28/2022
81,900
2,250
4,500
6,750
9,000
Theodore Kim
2/28/2022
136,500
3,750
7,500
11,250
15,000
Woung Moo Lee
2/28/2022
64,137
1,762
3,524
5,286
7,048
Chan Ho Park
2/28/2022
54,600
1,500
3,000
4,500
6,000
Vesting of the Financial PSUs granted in 2022 was based on the actual level of achievement for three corporate financial performance metrics—revenue, gross profit margin and Adjusted EBITDA. Achievement at or above the maximum level of achievement for each performance goal would result in a maximum payout of 150% of the portion of the named executive officer’s target level award attributable to that performance goal, while achievement below the threshold level of achievement for each performance goal would result in no payout for the portion of the named executive officer’s target level award attributable to that performance goal.
In February 2023, the Compensation Committee determined that the 2022 Financial PSUs were to be forfeited, as the Company did not achieve the threshold level of achievement for any of the three performance goals. As a result, Financial PSUs granted in 2022 covering the following number of shares of our Common Stock were forfeited by our named executive officers: Mr. YJ Kim, 149,000; Ms. SY Park 17,500, Mr. T. Kim 29,200, Mr. WM Lee 13,705 and Mr. CH Park 11,667.
The applicable goals and weighting, and the level of achievement for the Financial PSUs granted in 2022 are as follows:
Performance Metrics
Goal
Weighting
Threshold
Target
Maximum
2022
Achievement
Vesting Ratio
by Category
Weighed
Vesting Ratio
Revenue (in millions)
33.33%
$450.0
$459.0
$485.0
$301.9
0.0%
0.0%
Gross Profit Margin (as % of revenue)
33.33%
33.5%
35.0%
37.2%
33.0%
0.0%
0.0%
Adjusted EBITDA (in millions)
33.33%
$72.2
$78.6
$88.0
$19.5
0.0%
0.0%
 
 
 
 
 
 
 
0.0%
The performance metric of the 2022 TSR PSUs is the three-year TSR relative to the S&P Semiconductor Index. In structuring the relative TSR calculation and selecting the index, the Compensation Committee wanted to compare our stock price performance to that of a large, steady-state sampling of semiconductor companies on a basis designed to eliminate any short-term aberrations in stock price at the start or at the end of the performance period. The TSR payout percentage is represented by four performance levels: “Threshold,” “Target,” “Maximum” and “Supermaximum.” Supermaximum is achieved only if Magnachip ranks first in the S&P Semiconductor Index.
As of December 31, 2022, the performance period applicable to the TSR PSUs granted in 2020 (the “2020 TSR PSUs”) ended. The performance metric applicable to the 2020 TSR PSUs was the same as that described above with respect to the 2022 TSR PSUs. In February 2023, based on such performance metric, the Compensation Committee determined that the vesting percentage of the 2020 TSR PSUs to be 0%, as the Company recorded a TSR of -20.46% for the performance period, placing it at the 9th percentile within the S&P
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Semiconductor Index, which was below the achievement threshold of the 35th percentile. As a result, TSR PSUs covering the following number of shares of our Common Stock were forfeited by our named executive officers: Mr. YJ Kim, 29,040; Ms. SY Park, 1,500; Mr. T. Kim 6,000; and Mr. WM Lee 5,250.
Health and Welfare Benefits
Our named executive officers are eligible to participate in our employee benefit plans that are generally provided to all full-time employees, and on the same basis as all of our full-time employees in the country in which they are resident. For Messrs. YJ Kim, T. Kim and CH Park, these benefits included individual health insurance (medical, dental and vision).
Perquisites and Other Benefits
We provide the named executive officers with perquisites and other benefits, including expatriate benefits, which the Compensation Committee believes are reasonable and consistent with our overall compensation program to better enable us to attract and retain superior employees for key positions. Generally, perquisites are determined based upon what the Compensation Committee considers to be customary perquisites offered by our select peer group and are not based upon a median cost for specific perquisites or for the perquisites in aggregate. The Compensation Committee determines the level and types of expatriate benefits for the named executive officers based on local market surveys taken by our human resources group. These surveys are not limited to our select peer group, but include a broad range of companies based outside of Korea but with significant operations in Korea. Attributed costs of the personal benefits for the named executive officers are set forth in the Summary Compensation Table below. Consistent with the industry practice of hiring key expatriate executives and relocating such executives to a foreign country, like Korea, the provision of expatriate benefits to key expatriate executives allows us to retain key personnel on expatriate assignments and minimize any financial impacts associated with such assignments.
Mr. YJ Kim and Mr. T. Kim were expatriates during 2022 and received expatriate benefits commensurate with market practice in Korea. The Compensation Committee determined the appropriate benefits for each expatriate in accordance with internal policies approved by our Board from time to time, which generally included housing allowances, relocation and repatriation allowances, insurance premiums (including, in addition to health and welfare benefits described above, group personal accident and business travel insurance), reimbursement for the use of a car, home leave flights, tax equalization payments and tax advisory services.
Employment Agreements and Post-Employment Severance Benefits
Each of our named executive officers is party to an employment agreement or executive service agreement that provides for certain payments upon termination of the executive’s employment and/or a change in control of the Company and that is intended to align the interests of the executive and stockholders if a transaction were to occur. Please see the section below entitled “Potential Payments Upon Termination or Change in Control” for further discussion of those benefits. We believe that the use of severance arrangements appropriately mitigates some of the risk that exists for executives working in our highly competitive industry and allows the executives to focus on our business objectives. We entered into an executive services agreement with Ms. Park in connection with her appointment as CFO consistent with the existing agreements with our other named executive officers.
Pursuant to the Employee Retirement Benefit Security Act, certain executive officers residing in Korea with one or more years of service are entitled to severance benefits upon the termination of their employment for any reason. For purposes of this section, we call this benefit “statutory severance.” The base statutory severance is approximately one month of base salary per year of service. Each of our named executive officers accrued statutory severance in 2022.
Clawback Policy
The Company has adopted a clawback policy that applies to incentive compensation approved, awarded or granted to our current and former executive officers, including our named executive officers, following the adoption of the policy in 2017. Under the clawback policy, if we are required to prepare an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under U.S. federal securities laws and the Board determines that a covered executive officer has willfully committed an act
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of fraud, dishonesty or recklessness in the performance of his or her duties as an executive officer of the Company that contributed to the noncompliance, the Board may require reimbursement or forfeiture of any excess incentive compensation that is received by any covered executive officer during the three completed fiscal years preceding the date on which the Company is required to prepare such accounting restatement. We intend to amend this policy to be consistent with the listing standards of the New York Stock Exchange once it adopts and SEC-approved listing standard that complies with Exchange Act Rule 10D-1.
Anti-Hedging and Pledging Policy
The Company has adopted the Securities Trading Policy which applies to all of the directors, officers and employees of the Company, to describe the standards concerning the handling of non-public information relating to the Company and the buying and selling of securities of the Company. The policy prohibits engaging in pledging, short sales and buying or selling puts, calls, options or other derivatives in respect of securities of the Company. The policy also strongly discourages speculative hedging transactions where even long-term hedging transactions that are designed to protect an individual’s investment in Company securities (i.e., the hedge must be for at least twelve (12) months and relate to stock or options held by the individual) are only permitted after being pre-cleared with the Chairman of the Board and the Company’s General Counsel.
Equity Award Grant Policy
Effective September 1, 2022, the Company adopted an Equity Award Grant Policy. The policy provides that equity awards made in connection with the hiring of a new employee or the promotion of an existing employee will generally be made on a bi-monthly basis, and that, unless the Board, the Compensation Committee, or its delegate determines otherwise, will be effective on the earlier of the 1st or the 15th day of the month during which such grant is approved, or the month immediately following the date on which such grant is approved, as appropriate. In addition, new hire grants will generally become effective at least fourteen days after the date on which an employee’s employment begins. Annual and other equity awards to continuing employees, if made, will generally be made at a meeting of the Board or the Compensation Committee, or its delegate established in advance, and will generally become effective on the earlier of the 1st or the 15th day of the month during which such grant is approved, or of the month immediately following the date on which such grant is approved, as appropriate.
Equity awards denominated in a number of shares will be priced in accordance with the terms of the Company’s 2020 Equity and Incentive Compensation Plan. If a grant of restricted stock or RSUs is denominated in dollars, the number of shares of restricted stock or RSUs subject to such grant will be calculated by dividing the dollar value of the approved award by the volume-weighted average closing market price on the NYSE (or such other market on which the Company’s stock is then principally listed) of one share of the Company’s stock over the trailing 30-day period ending on the last day immediately prior to the grant date.
Stock Ownership Guidelines
The Company has adopted our Stock Ownership Policy (the “Stock Ownership Policy”), that is applicable to our non-employee directors and our executive officers. The Stock Ownership Policy requires that:
The Chairman of the Board hold equity in the Company with a value equal to the lesser of (i) three times his or her then current annual Board and Chairman cash retainer and (ii) three times his or her initial annual Board and Chairman cash retainer paid at the time he or she became subject to the Stock Ownership Policy as the Chairman of the Board;
Non-employee directors hold equity in the Company with a value equal to the lesser of (i) three times the non-employee director’s annual Board cash retainer and (ii) three times his or her initial annual Board cash retainer paid at the time he or she became subject to the Stock Ownership Policy as a director of the Company;
The Chief Executive Officer owns equity in the Company equal to the lesser of (i) five times his or her then current annual base salary and (ii) five times his or her annual base salary paid at the time he or she became subject to the Stock Ownership Policy as the Chief Executive Officer of the Company; and
All other covered executives own equity in the Company equal to the lesser of (i) two times his or her annual base salary and (ii) two times his or her annual base salary as of the date such individual’s entered into their role that made them subject to the Stock Ownership Policy.
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The Stock Ownership Policy provides that an individual subject to the policy is required to be in compliance with the minimum equity ownership requirement by the later of the five-year anniversary of the implementation date of the Stock Ownership Policy and the five-year anniversary of such individual’s entrance into their role that made them subject to the Stock Ownership Policy.
The Stock Ownership Policy provides that shares of our Common Stock directly owned by covered executives and directors, vested, but not settled, RSUs, 50% of any vested unexercised options, shares owned jointly with a spouse and shares of our Common Stock held in a trust established by a covered executive or director for the benefit of the such covered executive or director and/or family members will count towards satisfying the minimum equity ownership requirement of the Stock Ownership Policy.
Accounting Considerations
The Compensation Committee considers the accounting impact of equity awards when designing compensation plans and arrangements for our executive officers and other employees. Chief among these is Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”), the standard which governs the accounting treatment of stock-based compensation awards. However, accounting cost is just one factor considered when designing such compensation plans and arrangements for our executive officers and other employees.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis as set forth above under “Compensation Discussion and Analysis” with our management and, based on such review and discussion, has recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
The foregoing report was submitted by the Compensation Committee and shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A promulgated by the SEC or Section 18 of the Exchange Act and shall not be incorporated by reference in any of our other filings under the Securities Act or Exchange Act except to the extent we specifically incorporate this report therein.
Members of the Compensation Committee:
Camillo Martino, Chair
Kyo-Hwa (Liz) Chung
Gary Tanner
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Summary Compensation Table
The following table sets forth certain information concerning the compensation earned during the years ended December 31, 2022, 2021 and 2020, of our named executive officers:
Name and Principal Position
Year
Salary
($)(1)
Bonus
($)(2)
Option
Awards
($)
Stock
Awards
($)(3)
Non-Equity
Incentive Plan
Compensation
($)
Change in
Pension
Value
and Non-
qualified
Deferred
Compensation
Earnings
($)(4)
All Other
Compensation
($)
Total
($)
Young-Joon Kim
Chief Executive Officer
2022
560,420
605,538
4,211,480
100,280
1,565,327(5)
7,043,045
2021
557,136
1,576,245
2,335,967
68,656
1,034,781
5,572,785
2020
556,399
125,000
1,486,335
26,089
757,844
2,951,667
 
 
 
 
 
 
 
 
 
 
Shin Young Park(6)
Chief Financial Officer
2022
312,048
330,274
673,400
51,264
41,548(7)
1,408,534
2021
2020
 
 
 
 
 
 
 
 
 
 
Theodore Kim
Chief Compliance Officer, General Counsel and Secretary
2022
350,259
528,439
1,122,940
72,468
644,107(8)
2,718,213
2021
329,846
801,724
875,709
40,016
443,141
2,490,436
2020
329,410
74,250
539,350
16,096
333,954
1,293,060
 
 
 
 
 
 
 
 
 
 
Woung Moo Lee
General Manager of Display Solutions and Worldwide Sales
2022
275,633
178,248
527,363
25,691
47,783(9)
1,054,718
2021
306,158
127,203
471,760
25,827
47,360
978,307
2020
296,913
57,527
406,210
24,350
38,645
823,644
 
 
 
 
 
 
 
 
 
 
Chan Ho Park
General Manager of Power Solutions
2022
336,808
132,110
448,939
35,470
168,030(10)
1,121,358
2021
329,846
118,306
202,186
29,353
165,052
844,743
2020
192,203
28,943
166,350
15,344
189,747
592,586
Note: A monthly average exchange rate was used to convert amounts in the above table that were originally paid in Korean won.
(1)
The base salary amounts for Mr. YJ Kim, Ms. SY Park, Mr. T. Kim and Mr. CH Park in this table differ from the contractual base salary amounts described in the section above subtitled “Compensation Discussion and Analysis—Annual Base Salary” due to fluctuation in the exchange rate between U.S. dollars and Korean won during the year. The increase in base salary amounts between 2020 and 2021 is also a result of fluctuation in the exchange rate between 2020 and 2021. Mr. WM Lee’s annual base salary in USD appears to have decreased between 2021 and 2022, but is the result of fluctuation in the exchange rate. Mr. CH Park’s base salary in 2020 was calculated based on his service with the Company from his date of hire on June 1, 2020 through December 31, 2020.
(2)
Represents retention bonuses earned by the applicable named executive officer in 2022. See the section subtitled “Compensation Discussion and Analysis” for a description of the short-term cash incentive amounts paid in 2022.
(3)
The amount reported represents the aggregate grant date fair value of RSUs and PSUs granted to our named executive officers in 2022, 2021 and 2020, determined in accordance with FASB ASC 718. Such grant date fair value does not take into account any estimated forfeitures. The amount reported in this column reflects the accounting cost for these RSUs and PSUs and does not correspond to the actual economic value that may be received by the applicable NEO upon the vesting/settlement of the RSUs or any sale of the underlying shares of Common Stock. The Financial PSUs and the TSR PSUs are reported here at the target performance level based on the probable outcome of such performance conditions. When calculated at the maximum performance level (which is referred to as “supermaximum” with respect to the TSR PSUs), the amount of the PSUs in 2022 would be $5,501,860 for Mr. YJ Kim, $641,550 for Ms. SY Park, $1,070,160 for Mr. T. Kim, $502,420 for Mr. WM Lee and $427,709 for Mr. CH Park. Payout percentages for the 2020 TSR PSUs and the 2022 Financial PSUs were determined by the Compensation Committee on February 24, 2023, and as a result of actual performance over the performance period, these awards were forfeited. See the section subtitled “Compensation Discussion and Analysis—Long-Term Equity Incentives” for further information.
(4)
Consists of statutory severance accrued for each of the years ended December 31, 2022, 2021 and 2020, as applicable. See the section below subtitled “Pension Benefits for the Fiscal Year Ended December 31, 2022” for a description of the statutory severance benefit.
(5)
Includes the following personal benefits paid to Mr. YJ Kim for 2022: (a) $195,183 for Mr. YJ Kim’s housing lease; (b) $11,051 for Mr. YJ Kim’s home leave flights; (c) $9,767 for reimbursement of tuition expenses for Mr. YJ Kim’s child; (d) $76,975 for health insurance premiums; (e) $6,060 for accident insurance and business travel insurance premiums; (f) $26,907 for annual cash special allowance (the amount reported in this table differs from the $27,000 contractual annual cash special allowance due to fluctuation in the exchange rate between U.S. dollars and Korean won during the year); (g) $13,559 for car and driver expense (including personal
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use of a car service provided by the Company); (h) $18,607 for tax consulting expense; (i) $19,273 for living expense; (j) $1,543 for annual health examination for spouse, (k) $921 for fitness allowance; (l) $893 for meal allowance, welfare points and similar benefits; (m) $86,093 of reimbursement for the difference between the actual tax Mr. YJ Kim already paid and the hypothetical tax he had to pay for the fiscal year 2022; (n) $1,445 of additional reimbursement for the difference between the actual tax Mr. YJ Kim already paid and the hypothetical tax he had to pay for the fiscal year 2021; and (o) $1,097,050 for reimbursement of Korean tax.
(6)
Ms. Park became a named executive officer effective January 1, 2022.
(7)
Includes the following personal benefits paid to Ms. SY Park for 2022: (a) $34,567 for health insurance premiums; (b) $2,181 for personal use of a car service provided by the Company; (c) $1,810 for fitness allowance; (d) $1,006 for meal allowance; and (e) $1,984 for family allowance, medical expense support, welfare points and similar benefits.
(8)
Includes the following personal benefits paid to Mr. T. Kim for 2022: (a) $55,025 for Mr. T. Kim’s housing lease; (b) $23,069 for Mr. T. Kim’s home leave flights; (c) $54,559 for health insurance premiums; (d) $1,691 for accident insurance and business travel insurance premiums; (e) $3,157 for reimbursement of tuition expense for Mr. T. Kim’s child; (f) $4,063 for personal use of a car service provided by the Company; (g) $12,251 for tax consulting expense; (h) $5,323 for living expense; (i) $705 for fitness allowance; (j) $1,351 for meal allowance, welfare points and similar benefits; (k) $46,349 of reimbursement for the difference between the actual tax Mr. T. Kim already paid and the hypothetical tax he had to pay for the fiscal year 2022; and (l) $436,564 for reimbursement of Korean tax.
(9)
Includes the following personal benefits paid to Mr. WM Lee for 2022: (a) $39,185 for health insurance premiums; (b) $3,148 for personal use of a car service provided by the Company; (c) $1,850 for private pension; (d) $1,157 for annual health examination for spouse; (e) $866 for fitness allowance; and (f) $1,577 for meal allowance, family allowance, welfare points and similar benefits.
(10)
Includes the following personal benefits paid to Mr. CH Park for 2022: (a) $76,975 for health insurance premiums; (b) $2,369 for personal use of a car service provided by the Company; (c) $80,045 for special bonus (the amount reported in this table differs from the $80,000 contractual special bonus due to fluctuation in the exchange rate between U.S. dollars and Korean won during the year); (d) $4,785 for tax consulting expense; (e) $1,157 for annual health examination for spouse; (f) $790 for fitness allowance; and (g) $1,909 for meal allowance, family allowance, welfare points and similar benefits.
Grants of Plan-Based Awards Table for Fiscal Year 2022
The following table sets forth information regarding grants of plan-based awards made to our named executive officers during 2022. The vesting schedule applicable to each award is set forth in the “Outstanding Equity Awards as of Fiscal Year End 2022” table. See the section subtitled “Compensation Discussion and Analysis—Long-Term Equity Incentives” for further information regarding grants made to our named executive officers during 2022.
 
 
Estimated Future
Payouts Under
Equity Incentive Plan Awards (#)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(1)
Grant Date
Fair Value
of Stock
and
Option
Awards
($)(5)
Name
Grant Date
Threshold
Target
Maximum
Young-Joon Kim
2/28/2022(1)
43,000
782,600
2/28/2022(2)
74,500
149,000
223,500
2,711,800
2/28/2022(3)
19,700
39,400
78,800(4)
717,080
 
 
 
 
 
 
 
Shin Young Park
2/28/2022(1)
15,000
273,000
2/28/2022(2)
8,750
17,500
26,250
318,500
2/28/2022(3)
2,250
4,500
9,000(4)
81,900
 
 
 
 
 
 
 
Theodore Kim
2/28/2022(1)
25,000
455,000
2/28/2022(2)
14,600
29,200
43,800
531,440
2/28/2022(3)
3,750
7,500
15,000(4)
136,500
 
 
 
 
 
 
 
Woung Moo Lee
2/28/2022(1)
11,747
213,795
2/28/2022(2)
6,853
13,705
20,558
249,431
2/28/2022(3)
1,762
3,524
7,048(4)
64,137
 
 
 
 
 
 
 
Chan Ho Park
2/28/2022(1)
10,000
182,000
2/28/2022(2)
5,834
11,667
17,501
212,339
2/28/2022(3)
1,500
3,000
6,000(4)
54,600
(1)
Represents the RSUs granted during fiscal year 2022 to our named executive officers. Further information on the RSU awards can be found in the “Compensation Discussion & Analysis” section above.
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(2)
Represents the Financial PSUs granted during fiscal year 2022 to our named executive officers. The Compensation Committee is required to certify the actual amount earned for each performance goal for the performance period, within 60 days following the end of the performance period. Upon such determination, the portion of the award structured as Make-Whole Financial PSUs vests, and the remainder of the 2022 Financial PSU award corresponding to the payout percentage vests, subject to the satisfaction of the Continued Service Condition. Further information on the Financial PSUs, including the portion structured as Make-Whole Financial PSUs can be found in the “Compensation Discussion & Analysis” section above.
(3)
Represents the TSR PSUs granted during fiscal year 2022 to our named executive officers. The Compensation Committee is required to certify the actual amount earned for each performance goal, within 60 days following the end of the performance period. Upon such determination, the applicable portion of the units corresponding to the payout percentage vests, subject to the satisfaction of the Continued Service Condition. Further information on the Financial PSUs can be found in the “Compensation Discussion & Analysis” section above.
(4)
Represents in the “Supermaximum” performance level. The TSR payout percentage is represented by four performance levels: “Threshold,” “Target,” “Maximum” and “Supermaximum.” Supermaximum is achieved only if Magnachip ranks first in the TSR Index and the applicable payout percentage is 200%. The payout percentage is 150% for “Maximum” performance.
(5)
Represents the grant date fair value of each equity-based award as determined in accordance with FASB ASC 718. For the performance-based equity awards, the amounts are reported at the target performance level based on the probable outcome of the applicable performance conditions.
Outstanding Equity Awards at Fiscal Year End 2022
The following table sets forth all outstanding equity awards held by our named executive officers as of December 31, 2022. Please see the section below entitled “Potential Payments Upon Termination or Change in Control” for information regarding the impact of certain employment termination scenarios on outstanding equity awards.
 
Option Awards
Name
Grant
Date
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Option
Exercise
Price($)
Option
Expiration
Date
Young-Joon Kim
5/6/2013
200,000
15.96
5/6/2023
6/9/2015
90,610
7.64
6/9/2025
3/11/2016
45,305
5.53
3/11/2026

 
 
 
 
 
Shin Young Park
8/11/2015
1,000
8.45
8/11/2025
3/11/2016
1,500
5.53
3/11/2026

Theodore Kim
10/26/2013
50,000
21.79
10/26/2023
6/9/2015
51,740
7.64
6/9/2025
3/11/2016
25,870
5.53
3/11/2026

Woung Moo Lee
11/1/2013
50,000
19.56
11/1/2023
6/9/2015
43,940
7.64
6/9/2025
3/11/2016
25,870
5.53
3/11/2026

Chan Ho Park
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Stock Awards
Name
Grant
Date
Number of Shares or
Units of Stock
That Have Not Vested
(#)
Market Value of
Shares or Units
of Stock
That Have
Not Vested
($)(1)
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That
Have Not
Vested (#)(2)
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned
Shares,
Units or Other
Rights That
Have
Not Vested ($)(3)
Young-Joon Kim
5/7/2020
29,040(4)
272,686
2/19/2021
9,749(5)
91,543
26,126
245,323
2/28/2022
28,667(6)
269,183
188,400(4)
1,769,076

 
 
 
 
 
Shin Young Park
5/7/2020
1,500(4)
14,085
3/12/2020
3,333(7)
31,297
2/19/2021
2,238(5)
21,015
2,013
18,902
2/28/2022
10,000(6)
93,900
22,000(4)
206,580