Edgar Filing: FIRST SOLAR, INC.

2015 Bonus Plan Threshold Metric Results

Threshold Metric

Minimum Threshold Level (must be met for any bonus payout to occur)

2015 Result

Adjusted operating income

$170 Million

DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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First Solar, Inc.

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LOGO

First Solar, Inc.

350 West Washington Street

Suite 600

Tempe, Arizona 85281

April 6, 2016

Dear Stockholder:

You are cordially invited to attend our 2016 annual meeting of stockholders of First Solar, Inc. to be held on Wednesday, May 18, 2016 at 9:00 a.m., local time, at the Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040.

Details regarding admission to the meeting and the business to be conducted are described in the Notice of Internet Availability of Proxy Materials (the “Notice”) you received in the mail and in this proxy statement. We have also made available a copy of our 2015 Annual Report to Stockholders (the “2015 Annual Report”) with this proxy statement. We encourage you to read our 2015 Annual Report. It includes our audited financial statements and information about our operations, markets and products.

We have elected to provide access to our proxy materials on the Internet under the Securities and Exchange Commission’s “notice and access” rules. We are pleased to take advantage of these rules and believe that they enable us to provide you with the information you need, while making delivery more efficient and more environmentally friendly. In accordance with these rules, we have sent the Notice to each of our stockholders providing instructions on how to access our proxy materials and our 2015 Annual Report on the Internet.

Your vote is important. Whether or not you plan to attend the annual meeting, we hope you will vote as soon as possible. You may vote on the Internet, as well as by telephone or, if you requested to receive printed proxy materials, by mailing a proxy or voting instruction card. Please review the instructions on each of your voting options described in this proxy statement as well as in the Notice you received in the mail.

The executive team looks forward to greeting those of you who are able to attend the annual meeting in Phoenix.

Sincerely,

LOGO

James A. Hughes

Chief Executive Officer

First Solar, Inc.

350 West Washington Street

Suite 600

Tempe, Arizona 85281

Notice of Annual Meeting of Stockholders

The 2016 annual meeting of stockholders of First Solar, Inc. will be held on Wednesday, May 18, 2016 at 9:00 a.m., local time. The annual meeting will take place at the Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040.

The purposes of the annual meeting are as follows:

1. to elect eleven members of the board of directors to hold office until the next annual meeting of stockholders or until their respective successors have been elected and qualified;

2. to ratify the appointment of PricewaterhouseCoopers LLP as First Solar, Inc.’s independent registered public accounting firm for the year ending December 31, 2016; and

3. to transact such other business as may properly come before the annual meeting.

Any action may be taken on the foregoing proposals at the annual meeting on the date specified above or on any date or dates to which the annual meeting may be adjourned or postponed.

The close of business on March 29, 2016 is the record date for determining stockholders entitled to vote at the annual meeting. Only holders of common stock of First Solar, Inc. as of the record date are entitled to vote on some or all of the matters listed in this notice of annual meeting. A complete list of stockholders entitled to vote at the annual meeting will be available for inspection by stockholders during normal business hours at our corporate headquarters located at 350 West Washington Street, Suite 600, Tempe, Arizona 85281, during the ten days prior to the annual meeting as well as at the annual meeting.

BY ORDER OF THE BOARD OF DIRECTORS,

LOGO

Peter C. Bartolino

Secretary

April 6, 2016

Your vote is very important

Whether or not you plan to attend the annual meeting, we encourage you to read this proxy statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice you received in the mail, the section entitled Questions and Answers About the Annual Meeting beginning on page 1 of this proxy statement or, if you requested to receive printed proxy materials, your enclosed proxy card.

TABLE OF CONTENTS


	Page #
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING		1
CORPORATE GOVERNANCE		5
NON-ASSOCIATE DIRECTOR COMPENSATION		14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		16
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		18
PRINCIPAL ACCOUNTANT FEES AND SERVICES		19
COMPENSATION DISCUSSION AND ANALYSIS		20
COMPENSATION COMMITTEE REPORT		35
EXECUTIVE COMPENSATION		36
PROPOSAL NO. 1: ELECTION OF DIRECTORS		49
PROPOSAL NO. 2: RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP		50
OTHER MATTERS		51
STOCKHOLDER PROPOSALS		51
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS		52

First Solar, Inc.

350 West Washington Street

Suite 600

Tempe, Arizona 85281

PROXY STATEMENT

This proxy statement is being furnished in connection with the solicitation of proxies by the board of directors of First Solar, Inc., a Delaware corporation (“First Solar” or the “Company”), for use at the annual meeting of the Company’s stockholders to be held on Wednesday, May 18, 2016 at the Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040, commencing at 9:00 a.m., local time, and at any adjournment or postponement. The Notice of Internet Availability of Proxy Materials (the “Notice”) relating to the annual meeting is first being mailed to stockholders, and this proxy statement is first being made available to stockholders, on or about April 6, 2016.

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

What is the purpose of the annual meeting?

At the annual meeting, stockholders are being asked to consider and vote upon the following matters:

•

the election of eleven members of our board of directors to hold office until the next annual meeting of stockholders or until their respective successors have been elected and qualified; and

•

the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2016.

The stockholders will also transact any other business that may properly come before the annual meeting.

Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

In accordance with rules adopted by the Securities and Exchange Commission (the “Commission” or the “SEC”), we may furnish proxy materials, including this proxy statement and our 2015 Annual Report to Stockholders (the “2015 Annual Report”), to our stockholders by providing access to such documents on the Internet instead of mailing printed copies. You will not receive a printed copy of the proxy materials unless you specifically request one. Instead, the Notice instructs you as to how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice.

How do I get electronic access to the proxy materials?

The Notice provides you with instructions regarding how to:

•

view our proxy materials for the annual meeting on the Internet; and

•

instruct us to send our future proxy materials to you electronically by email.

Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the environmental impact of printing and mailing these materials. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.

How does the board of directors recommend that I vote?

Our board of directors recommends that you vote your shares (1) “FOR” each of the nominees to the board of directors and (2) “FOR” the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016.

Who is entitled to vote?

The record date for the annual meeting is March 29, 2016. Only stockholders of record at the close of business on that date are entitled to notice of and to vote at the annual meeting. Attendance at the meeting will be limited to such stockholders of record, their proxies, beneficial owners having evidence of ownership on that date and invited guests of the Company.

The Company’s sole outstanding capital stock is its common stock, with a par value of $0.001 per share. Each holder of the Company’s common stock is entitled to one vote per share on each matter submitted at the annual meeting. At the close of business on the record date there were 102,212,838 shares of the Company’s common stock outstanding and eligible to vote at the annual meeting.

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

Most First Solar stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

Stockholder of Record

If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record, and the Notice was sent directly to you by First Solar. As the stockholder of record, you have the right to grant your voting proxy directly to First Solar or to vote in person at the annual meeting. If you requested to receive printed proxy materials, First Solar has enclosed or sent a proxy card for your use. You may also vote on the Internet or by telephone, as described in the Notice and below under the heading “How can I vote my shares without attending the annual meeting?”

Beneficial Owner

If your shares are held in an account at a brokerage firm, bank, broker-dealer, trust or other similar organization, like the vast majority of our stockholders, you are considered the beneficial owner of shares held in street name, and the Notice was forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank, trustee or nominee how to vote your shares, and you are also invited to attend the annual meeting.

Since a beneficial owner is not the stockholder of record, you may not vote your shares in person at the annual meeting unless you obtain a “legal proxy” from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares at the meeting. If you do not wish to vote in person or you will not be attending the annual meeting, you may vote by proxy. You may vote by proxy over the Internet or by telephone, as described in the Notice and below under the heading “How can I vote my shares without attending the annual meeting?”

How can I vote my shares in person at the annual meeting?

Shares held in your name as the stockholder of record may be voted by you in person at the annual meeting. Shares held beneficially in street name may be voted by you in person at the annual meeting only if you obtain a legal proxy from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the annual meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the meeting.

How can I vote my shares without attending the annual meeting?

Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the annual meeting. If you are a stockholder of record, you may vote by proxy. You can vote by proxy over the Internet by following the instructions provided in the Notice, or, if you requested to receive printed proxy materials, you can also vote by mail or telephone pursuant to instructions provided on the proxy card. If you hold shares beneficially in street name, you may also vote by proxy over the Internet by following the instructions provided in the Notice, or, if you requested to receive printed proxy materials, you can also vote by telephone or mail by following the voting instruction card provided to you by your broker, bank, trustee or nominee.

Can I change my vote after I submit my proxy?

Yes, you may change your vote at any time prior to the vote at the annual meeting. If you are the stockholder of record, you may change your vote by granting a new proxy bearing a later date (which automatically revokes the earlier proxy), by providing a written notice of revocation to First Solar’s Corporate Secretary at 350 West Washington Street, Suite 600, Tempe, Arizona 85281 prior to your shares being voted, or by attending the annual meeting and voting in person. Attendance at the annual meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee following the instruction they provided, or, if you have obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending the annual meeting and voting in person.

How many shares must be present to hold the annual meeting?

A quorum must be present at the annual meeting for any business to be conducted. The presence at the annual meeting, in person or by proxy, of the holders of a majority of the shares of voting stock outstanding on the record date, determined by voting power, will constitute a quorum. Both abstentions and broker non-votes (described below) are counted for the purpose of determining the presence of a quorum. If a quorum is not present, the chairman of the annual meeting may adjourn the annual meeting until a quorum is present.

What is the voting requirement to approve each of the proposals?

In the election of directors, pursuant to our by-laws, each candidate is to be elected by the affirmative vote of a majority of the votes cast with respect to such candidate’s election. A person shall be considered to have received a majority of the votes cast with respect to such person’s election only if the number of votes cast “for” such person’s election exceeds the number of votes cast “against” such person’s election, with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” such person’s election. You may not accumulate your votes for the election of directors. If an incumbent director receives less than a majority of votes cast with respect to his or her election, such director shall promptly tender his or her resignation to the Chairman of the Board for consideration by the nominating and governance committee. See “Directors — Majority Vote Standard” below for more information regarding majority voting in uncontested director elections.

The proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2016 requires the affirmative vote of holders of a majority of the stock represented and voting on such question.

If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute “broker non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. Please note that brokers may not use discretionary authority to vote shares on the election of directors if they have not received specific instructions from their clients. For your vote to be counted on this matter, you will need to communicate your voting decisions to your bank, broker or other holder of record before the date of the annual meeting.

In tabulating the voting result for any particular proposal, shares that constitute broker non-votes and abstentions are not considered votes cast on that proposal. Thus, neither broker non-votes nor abstentions will affect the outcome of any matter being voted on at the meeting, assuming that a quorum is obtained.

What happens if a nominee is unable to stand for election?

If a nominee is unable to stand for election, the board of directors may either reduce the number of directors to be elected or cause a substitute nominee to be selected. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority.

Who pays for the costs of soliciting proxies?

The Company will pay the cost of soliciting proxies. The Company has retained Alliance Advisors LLC (“Alliance”) to act as a proxy solicitor in conjunction with the annual meeting. Alliance may assist us in soliciting proxies by telephone and by other means. We anticipate paying Alliance a fee not to exceed $10,500 plus reasonable out-of-pocket expenses for proxy solicitation services.

In addition, the Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of voting stock. In addition to solicitation by mail, directors, officers and associates (which is our term for employees and is used throughout this proxy statement to mean employees) of the Company may solicit proxies personally, by telephone or by electronic communication, without additional compensation.

How do I obtain more information about the Company?

A copy of our 2015 Annual Report is available on the website http://www.edocumentview.com/fslr. Our Annual Report on Form 10-K for the year ended December 31, 2015 is available on our investor relations website at http://investor.firstsolar.com under “SEC Filings.” You may also obtain, free of charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2015 by writing to Investor Relations, First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281; Email: investor@firstsolar.com.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR

THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 2016

This proxy statement and our 2015 Annual Report are available at http://www.edocumentview.com/fslr.

A Note About the Company Website

Although we include references to our website (www.firstsolar.com) throughout this proxy statement, information that is included on our website is not incorporated by reference into, and is not a part of, this proxy statement. Our website address is included as an inactive textual reference only.

We use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under the SEC’s Regulation FD. Such disclosures will typically be included within the Investor Relations section of our website. Accordingly, investors should monitor such portions of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.

CORPORATE GOVERNANCE

We have adopted corporate governance guidelines that address the governance activities of the board of directors and include criteria for determining the independence of the members of our board. These guidelines are in addition to the requirements of the Commission and The NASDAQ Stock Market (“NASDAQ”). The guidelines also include requirements for the standing committees of the board, responsibilities for board members and the annual evaluation of the board’s and its committees’ effectiveness. The corporate governance guidelines are available on our website at www.firstsolar.com under “Investors — Corporate Governance.” At any time that these guidelines are not available on our website, we will provide a copy upon written request made to Investor Relations, First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281.

Independence

The board of directors has determined that the following directors are “independent” as required by the Sarbanes-Oxley Act of 2002, SEC rules and regulations, the listing standards of NASDAQ and our corporate governance guidelines (collectively, the “Independence Criteria”): Sharon L. Allen, Richard D. Chapman, George A. (“Chip”) Hambro, Craig Kennedy, James F. Nolan, William J. Post, J. Thomas Presby, Paul H. Stebbins and Michael Sweeney. The board of directors has also concluded that the members of each of the audit, compensation and nominating and governance committees are “independent” in accordance with the Independence Criteria and such other laws and regulations as may be applicable to those committees in accordance with their charters.

Code of Business Conduct and Ethics

We have a code of business conduct and ethics that applies to all directors and associates, including our chairman, chief executive officer, chief financial officer, other directors and executive officers and all of our associates in the global organization. These standards are designed to deter wrongdoing and to promote the honest and ethical conduct of all directors and associates. The code of business conduct and ethics is posted on our website at www.firstsolar.com under “Investors — Corporate Governance.” Any substantive amendment to, or waiver from, any provision of the code of business conduct and ethics with respect to any director or executive officer will be posted on our website.

Board of Directors Composition

Our board of directors is currently composed of eleven directors: nine independent directors and two non-independent directors, our chairman of the board and our chief executive officer.

Board of Directors Leadership Structure

The board’s current leadership structure separates the positions of chairman and chief executive officer. Although the roles of chief executive officer and chairman of the board are currently separated, the board has not adopted a formal policy regarding leadership structure and instead believes that the right structure should be based on the needs and circumstances of the Company, its board and its stockholders at a given point in time, and that the board should remain adaptable to shaping the leadership structure as those needs change. With the appointment of James A. Hughes as chief executive officer in May 2012, the board determined that the current structure, with the role of chief executive officer and chairman of the board separated, is appropriate under Company-specific circumstances.

The Board’s Role in Risk Oversight

The Company has a comprehensive risk management process in which management is responsible for identifying and managing the Company’s risks, and the board and its committees provide oversight in connection with these efforts. Risks are identified, assessed and managed on an ongoing basis and communicated to management during periodic management meetings or otherwise as appropriate. Existing and potential material

risks are addressed during periodic senior management meetings, resulting in both board and committee discussions and public disclosure, as appropriate. Further, risk assessment is embedded in the Company’s business decision making, business planning and strategic planning.

The board is responsible for overseeing management in the execution of its risk management responsibilities and for assessing the Company’s approach to risk management. The board administers this risk oversight function either through the full board or through one of its five standing committees, each of which examines various components of the Company’s enterprise risks as part of its responsibilities. The full board reviews enterprise-wide strategic risks and certain other higher risk areas on a regular basis. An overall review of risk is inherent in the board’s consideration of the Company’s long-term strategies and in the transactions and other matters presented to the board, including capital expenditures, manufacturing capacity expansions, acquisitions and significant financial matters. The audit committee oversees financial risks (including risks associated with accounting, financial reporting, enterprise resource planning system implementation and foreign currencies), legal and compliance risks and other risk management functions. The compensation committee considers risks related to the attraction and retention of talent (including management succession planning) and risks relating to the design of compensation programs and arrangements, including a periodic review of such compensation programs to ensure that they do not encourage excessive risk-taking. The nominating and governance committee considers risks related to corporate governance practices. The project development committee considers risks related to our project development, project selling and related project finance activities. The technology committee considers risks related to our products (such as product warranties and product quality and reliability matters) and to our ability to achieve the targets in our product and technology roadmaps.

Management regularly reports on risk-related matters to the board or the relevant committee thereof. Management presentations containing information regarding risks and risk management initiatives are given throughout the year in connection with quarterly and special board and committee meetings as well as other communications as needed or as requested by the board or committees. In addition, the Company’s vice president of internal audit and risk management reports to the audit committee at least once per year and has open access to the chair of the audit committee.

Policy Regarding Hedging of Company Securities

The Company’s Insider Trading Policy prohibits its directors and all associates, including all named executive officers, from engaging in any short sales with respect to Company securities, buying or selling puts, calls or derivatives on Company securities and purchases of Company securities on margin.

Share Ownership Requirements

The Company remains committed to reviewing and tracking the implementation of share ownership guidelines pursuant to which the Company’s executive officers and non-associate directors are required to achieve share holdings equal to three times their annual base salary or annual retainer, as applicable, and six times annual base salary for the chief executive officer. Under the guidelines, executives and directors have five years to obtain the required ownership levels.

Committee Composition

We have five standing committees of the board: the audit committee, the compensation committee, the nominating and governance committee, the project development committee and the technology committee. The committee membership and meetings during 2015 and the function of each of the committees are described below.

During 2015, the board of directors held six board meetings. Each director attended at least 75% of the aggregate of all board of directors meetings and committee meetings for the committees on which he or she serves.

The following is a list of all directors and the committees on which the directors serve as of March 29, 2016:


Board of Directors Member	Audit Committee	Compensation Committee	Nominating and Governance Committee	Project Development Committee	Technology Committee
Michael J. Ahearn	—	—	—	—	Member
Sharon L. Allen	Chair	—	—	—	Member
Richard D. Chapman	—	Member	—	—	—
George A. (“Chip”) Hambro	—	—	—	—	Chair
James A. Hughes	—	—	—	—	—
Craig Kennedy	Member	—	—	Member	—
James F. Nolan	—	—	—	—	Member
William J. Post	—	Member	—	Chair	—
J. Thomas Presby	Vice Chair	—	Member	Member	—
Paul H. Stebbins	Member	Member	Chair	Member	—
Michael Sweeney	—	Chair	Member	—	—

Audit Committee

The audit committee oversees our financial reporting process on behalf of the board of directors and reports to the board of directors the results of these activities, including reviewing the systems of internal controls established by management, our audit and compliance process and financial reporting filings. The audit committee, among other duties, engages the independent registered public accounting firm, pre-approves all audit and non-audit services provided by the independent registered public accounting firm, reviews with the independent registered public accounting firm the plans and results of the audit engagement, considers whether any non-audit services provided by the independent registered public accounting firm conflict with the independence of such independent registered public accounting firm and reviews the independence of the independent registered public accounting firm. During 2015, the audit committee held eight meetings.

Sharon L. Allen (Chair), J. Thomas Presby (Vice Chair), Craig Kennedy and Paul H. Stebbins serve on our audit committee. Each member of the audit committee meets the standards for financial knowledge for companies listed on NASDAQ. In addition, the board of directors has determined that Ms. Allen and Mr. Presby are qualified as audit committee financial experts within the meaning of Commission regulations.

The audit committee operates pursuant to a written charter and is of the view that it has complied with its charter. A copy of the audit committee’s charter is available on our website at www.firstsolar.com under “Investors — Corporate Governance.”

Compensation Committee

The compensation committee reviews and recommends compensation and benefit plans for the Company’s officers and directors, including non-associate directors, reviews the base salary and incentive compensation for each executive officer, reviews and approves corporate goals and objectives relevant to compensation for each executive officer, including our chief executive officer, administers our incentive compensation program for key executive and management associates and reviews at least annually the benefits strategy related to benefits for all associates. During 2015, the compensation committee held seven meetings. In 2015, as in prior years, the compensation committee directly engaged Compensation Strategies, Inc. (“Compensation Strategies”), an independent compensation consulting firm, to provide data related to the compensation practices of our peer group and comparative analysis of our compensation practices as compared to our peer group companies. The compensation committee reviews the information provided by Compensation Strategies and analyzes overall compensation to ensure that subjective factors such as responsibilities, positions, individual performance and other similar conditions are recognized, and also considers information and recommendations from management regarding past, present and future compensation of our named executive officers under various payment scenarios.

For further discussion of the nature and scope of the independent compensation consultant’s assignment, see “Compensation Discussion and Analysis — Compensation Committee Practices — Review of Peer Company Data.” The aggregate fees paid to Compensation Strategies were $291,379 and related solely to consulting services for executive and director compensation.

Pursuant to its charter, the compensation committee has implemented a number of safeguards to ensure that Compensation Strategies provides the compensation committee with independent and objective advice, including through directly retaining Compensation Strategies, having the sole authority to terminate Compensation Strategies and determining the terms and conditions of Compensation Strategies’ engagement, including the fees charged. The compensation committee also considers the independence of its advisors, including Compensation Strategies, annually on the basis of the following six independence factors under the listing standards of NASDAQ and in accordance with Rule 10C-1(b)(4) promulgated under the Securities Exchange Act of 1934, as amended, and solicits information on these factors in annual certifications from its advisors:

•

whether the advisor provides other services to the Company;

•

the amount of fees received from the Company as a percentage of the advisor’s total revenue;

•

whether the advisor has policies and procedures designed to prevent a conflict of interest;

•

whether a business relationship exists between the advisor and any member of the compensation committee or management;

•

whether a personal relationship exists between the advisor and any member of the compensation committee or management; and

•

whether the advisor owns Company stock.

During 2015, the compensation committee conducted an independence analysis of the relationship of Compensation Strategies to the Company, including a review of potential conflicts of interest, and concluded that Compensation Strategies is independent and no such conflicts existed.

Michael Sweeney (Chair), Richard D. Chapman, William J. Post and Paul H. Stebbins serve on our compensation committee.

The compensation committee operates pursuant to a written charter and is of the view that it has complied with its charter. A copy of the compensation committee’s charter is available on our website at www.firstsolar.com under “Investors — Corporate Governance.”

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee has been an executive officer or associate of the Company during our last completed fiscal year. During our last completed fiscal year, none of our executive officers served as a member of the compensation committee of any entity that has one or more executive officers serving on our compensation committee.

Nominating and Governance Committee

The nominating and governance committee reviews the composition and performance of the board and its committees and leads the process to assess their performance, assesses candidates for appointment to the board and recommends to the board whether such candidates should stand for election at the next meeting of stockholders. During 2015, the nominating and governance committee held five meetings.

Paul H. Stebbins (Chair), J. Thomas Presby and Michael Sweeney serve on our nominating and governance committee.

The nominating and governance committee operates pursuant to a written charter and is of the view that it has complied with its charter. A copy of the nominating and governance committee’s charter is available on our website at www.firstsolar.com under “Investors — Corporate Governance.”

Nomination Procedures

Director nominees are recommended by the nominating and governance committee for selection by the board of directors. In considering new nominees for the board of directors, the nominating and governance committee considers qualified and diverse individuals who, if added to the board of directors, would provide the mix of director characteristics, experience, perspectives and skills appropriate for the Company. In accordance with the corporate governance guidelines adopted by the board and the nominating and governance committee charter, criteria for selection of candidates include, but are not limited to: (i) roles and contributions valuable to the business community; (ii) personal qualities of leadership, character, judgment and whether the candidate possesses and maintains a reputation in the community at large of integrity, trust, respect, competence and adherence to the highest ethical standards; (iii) relevant knowledge and diversity of background and experience in such areas as business, technology, finance and accounting, marketing, government relations and other disciplines relevant to the Company’s business; and (iv) whether the candidate is free of conflicts and has the time required for preparation, participation and attendance at all meetings.

As indicated by these criteria, the board and the nominating and governance committee seek a diversity of background and experience among board members. The nominating and governance committee does not follow any ratio or formula to determine the appropriate mix. Rather, it uses its judgment to identify nominees whose backgrounds, attributes and experiences, taken as a whole, will contribute to the high standards of board service at the Company. The effectiveness of this approach is evidenced by the directors’ participation in the insightful and robust deliberation that occurs at board and committee meetings and in shaping the agendas for those meetings.

The board of directors does not have a specific policy for consideration of nominees recommended by security holders due to the fact that, as of March 29, 2016, JCL FSLR Holdings, LLC and its affiliates control approximately 26% of our outstanding common stock and their vote has a significant influence on whether any director nominee recommended by the board of directors or a security holder is elected to the board of directors. However, security holders can recommend a prospective nominee for the board of directors as described below. There have been no recommended nominees from security holders.

Our bylaws require that a stockholder who wishes to nominate an individual for election as a director at our annual meeting must give us advance written notice. The notice must be delivered to or mailed and received by the Corporate Secretary of the Company not later than 90 days or earlier than 120 days prior to the first anniversary of the preceding year’s annual meeting. If the annual meeting for which the recommendation is submitted is more than 30 days before or more than 60 days after the first anniversary of the preceding year’s annual meeting, such recommendation must be received by the Corporate Secretary of the Company not earlier than 120 days prior to the annual meeting and not later than 90 days prior to such annual meeting or the 10th day following the day on which public announcement of the annual meeting date is first made by the Company.

Stockholders may contact our Corporate Secretary at First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281 for a copy of the relevant bylaw provisions regarding the requirements for nominating director candidates and making stockholder proposals.

Project Development Committee

The project development committee oversees the Company’s project development, project selling and related project finance activities. During 2015, the project development committee held five meetings.

William J. Post (Chair), Craig Kennedy, J. Thomas Presby and Paul H. Stebbins serve on our project development committee.

The project development committee operates pursuant to a written charter and is of the view that it has complied with its charter. A copy of the project development committee’s charter is available on our website at www.firstsolar.com under “Investors — Corporate Governance.”

Technology Committee

The technology committee oversees the Company’s product and technology-related strategies, processes and programs. During 2015, the technology committee held six meetings.

George A. (“Chip”) Hambro (Chair), Michael J. Ahearn, Sharon L. Allen and James F. Nolan serve on our technology committee.

The technology committee operates pursuant to a written charter and is of the view that it has complied with its charter. A copy of the technology committee’s charter is available on our website at www.firstsolar.com under “Investors — Corporate Governance.”

Stockholder Communications with Directors

A stockholder who wishes to communicate directly with the board, a committee of the board or with an individual director regarding matters related to First Solar should send the communication to:

First Solar, Inc.

Attn: Corporate Secretary

350 West Washington Street

Suite 600

Tempe, Arizona 85281

We will forward stockholder correspondence about First Solar to the board, committee or individual director, as appropriate. Please note that we will not forward communications that are spam, junk mail and mass mailings, resumes and other forms of job inquiries, surveys and business solicitations or advertisements.

Attendance at Stockholder Meetings

The Company does not have a policy on directors attending the annual stockholders’ meetings. Last year’s annual stockholders’ meeting was held on May 20, 2015 in Phoenix, Arizona and was attended by one director.

DIRECTORS

Members of the board of directors of the Company are elected at each annual meeting of stockholders and serve until the next annual meeting or until their respective successors have been elected and qualified. The following information provided with respect to the principal occupation, affiliations and business experience during the last five years for each of the members of the board of directors has been furnished to us by such members.

The name and certain information regarding each director of the Company are set forth below as of March 29, 2016. There are no family relationships among directors or executive officers of the Company. Each of the following persons has been nominated by the board of directors for election at the annual meeting. In concluding that each of the following individuals should continue to serve as a director, the board considered such person’s qualifications as described below and determined that each such person would continue to provide the contributions to the board as specified below.


Name	Age		Current Position with First Solar	Director Since
Michael J. Ahearn		59	Chairman of the Board		2000
Sharon L. Allen		64	Director		2013
Richard D. Chapman		62	Director		2012
George A. (“Chip”) Hambro		52	Director		2012
James A. Hughes		53	Chief Executive Officer and Director		2012
Craig Kennedy		64	Director		2007
James F. Nolan		84	Director		2003
William J. Post		65	Director		2010
J. Thomas Presby		76	Director		2006
Paul H. Stebbins		59	Director		2006
Michael Sweeney		58	Director		2003

Michael J. Ahearn, Chairman of the Boar;, Technology Committee. Mr. Ahearn previously served as the Company’s chief executive officer from August 2000 to September 2009; interim chief executive officer from October 2011 to May 2012; executive chairman from October 2009 to December 2010 and May 2012 to July 2012; and non-executive chairman from January 2011 to October 2011 and July 2012 to present. Mr. Ahearn is currently Chairman and Managing Partner of True North Venture Partners, L.P., a venture capital firm he launched in 2011 to invest primarily in early stage companies in the energy, water, agriculture and waste sectors. Prior to First Solar, he was partner and president of an equity investment firm, JWMA (formerly True North Partners, L.L.C.). Prior to joining JWMA, Mr. Ahearn practiced law as a partner in the firm of Gallagher & Kennedy. Mr. Ahearn currently serves as a member of the Board of Directors of Cox Enterprises, Inc.; a member of the Board of Directors of Endeavor Global, Inc.; and a member of the Global Advisory Board of Beijing Climate Policy Initiative. Mr. Ahearn holds a B.A. in Finance and a J.D. from Arizona State University. During his tenure as chief executive officer of First Solar, Mr. Ahearn led the development and expansion of First Solar from a small privately-held company to a successful multinational industry-leading public company; his experience and insights are critical assets to the board of directors.

Sharon L. Allen, Chair, Audit Committee; Technology Committee, was elected a director of First Solar in July 2013. Ms. Allen served as U.S. Chairman of Deloitte LLP from 2003 to 2011, retiring from that position in May 2011. Ms. Allen was also a member of the Global Board of Directors, Chair of the Global Risk Committee and U.S. Representative of the Global Governance Committee of Deloitte Touche Tohmatsu Limited from 2003 to May 2011. Ms. Allen worked at Deloitte for nearly 40 years in various leadership roles, including partner and regional managing partner, and was previously responsible for audit and consulting services for a number of Fortune 500 and large private companies. Ms. Allen is currently an independent director of Bank of America Corporation, serving as Chair of the Audit Committee and a member of the Corporate Governance Committee. Ms. Allen serves on the board of a food and drug retailer seeking to become a public company under the name Albertsons Companies, Inc. A Certified Public Accountant (inactive), Ms. Allen holds a B.S. in accounting and received an honorary doctorate in administrative sciences from the University of Idaho. Ms. Allen’s deep accounting experience and overall leadership experience from a nearly 40-year career with Deloitte, together with her public company audit committee experience, are valuable resources for the Company, particularly in her roles as chair of the audit committee and audit committee financial expert and in the areas of financial reporting, corporate governance, risk management and overall management of large, complex businesses.

Richard D. Chapman, Compensation Committee, was elected a director of First Solar in May 2012. Mr. Chapman serves as the Chief Financial Officer of Walton Enterprises, Inc., where he has worked since 1983. In this capacity, Mr. Chapman oversees all aspects of the Walton Family Office in Arkansas. Mr. Chapman currently serves on the boards of directors of the Arvest Bank Group, the holding company for a diversified financial services company; the University of Arkansas Foundation Board, where he serves on the Executive and Finance Committees; the Razorback Foundation, where he is a member of the Executive Committee and Chair of the Investment Committee; and the Fayetteville Campus Foundation of the University of Arkansas. Mr. Chapman also serves on the boards of directors of the Crystal Bridges Museum of American Art, where he sits on the Executive and Investment Committees; and the Walton Family Charitable Support Foundation. Mr. Chapman was previously a member of the Board of Managers of First Solar Holdings, LLC prior to the Company going public and JWMA (formerly True North Partners, L.L.C.), an equity investment firm. Prior to joining Walton Enterprises, Mr. Chapman worked from 1976 to 1983 in London, England and Little Rock, Arkansas, for the accounting firm PricewaterhouseCoopers LLP. A Certified Public Accountant (inactive), Mr. Chapman holds a B.S.B.A. in Accounting from the University of Arkansas. Mr. Chapman’s background in accounting and finance, as well as his many years of experience as a corporate officer, are valuable resources to the board and the Company.

George A. (“Chip”) Hambro, Chair, Technology Committee, was elected a director of First Solar in May 2012. Mr. Hambro previously held various positions at First Solar from June 2001 through June 2009, including serving as Chief Operating Officer from February 2005 through May 2007. Prior to joining First Solar, he held the positions of Vice President of Engineering & Business Development for Goodrich Aerospace from May 1999 to June 2001 and Vice President of Operations for ITT Industries from February 1997 to May 1999. In previous years, Mr. Hambro has been a director of both the Toledo Zoo and Imagination Station, Toledo’s children’s science museum. Mr. Hambro currently serves on the Board of Directors of View, Inc., a developer of next-generation

green building solutions designed to improve energy efficiency, and Aquahydrex, which is developing and commercializing low cost hydrogen production technologies. Mr. Hambro graduated from the University of California at Berkeley with a B.A. in Physical Science (Applied Physics). Mr. Hambro provides the board with substantial experience in research and development, engineering, manufacturing and general business matters, obtained through his work at First Solar and other companies throughout his career.

James A. Hughes, Chief Executive Officer, Director, joined First Solar in March 2012 as Chief Commercial Officer and was appointed Chief Executive Officer in May 2012. Prior to joining First Solar, Mr. Hughes served, from October 2007 until April 2011, as Chief Executive Officer and Director of AEI Services LLC, which owned and operated power distribution, power generation (both thermal and renewable), natural gas transportation and services, and natural gas distribution businesses in emerging markets worldwide. From 2004 to 2007, he engaged in principal investing with a privately held company based in Houston, Texas that focused on micro-cap investments in North American distressed manufacturing assets. Previously, he served, from 2002 until March 2004, as President and Chief Operating Officer of Prisma Energy International, which was formed out of former Enron interests in international electric and natural gas utilities. Prior to that role, Mr. Hughes spent almost a decade with Enron Corporation in positions that included President and Chief Operating Officer of Enron Global Assets, President and Chief Operating Officer of Enron Asia Pacific, Africa and China and as Assistant General Counsel of Enron International. Mr. Hughes is a Director of TPI Composites, Inc., a leading manufacturer of composite wind blades for the wind energy market. He is Chairman of the Board of Directors of the Los Angeles branch of the Federal Reserve Bank of San Francisco. Mr. Hughes holds a juris doctor degree from the University of Texas at Austin School of Law, a Certificate of Completion in international business law from Queen Mary’s College, University of London, and a bachelor’s degree in business administration from Southern Methodist University. As an experienced energy executive and chief executive officer of First Solar, Mr. Hughes plays an essential role at the board level in providing CEO-level visibility into the management and operations of First Solar.

Craig Kennedy, Audit Committee, Project Development Committee, was elected a director of First Solar in September 2007. From 1995 to 2014, Mr. Kennedy was president of the German Marshall Fund, an independent American organization created in 1972 as a permanent memorial to the Marshall Plan. The German Marshall Fund sponsors a wide range of programs related to foreign, economic, immigration and environmental policy, and it operates a number of political exchanges between the United States and Europe with a special emphasis on Germany. Mr. Kennedy began his career in 1980 as a program officer at the Joyce Foundation in Chicago. Mr. Kennedy was president of the Joyce Foundation between 1986 and 1992, where he built the Foundation’s environmental program and launched a new program on U.S. immigration policy. Mr. Kennedy left the Joyce Foundation to work for Richard J. Dennis, a Chicago investor and philanthropist. During this same period, Mr. Kennedy created a consulting firm working with nonprofit and public sector clients. Mr. Kennedy was audit committee chair of the Invesco Van Kampen Closed-End-Funds from 1999 to 2014. He also serves on the Advisory Board of True North Venture Partners, L.P. Mr. Kennedy holds a B.A., an M.A. and an MBA from the University of Chicago. Mr. Kennedy’s deep public policy experience and global perspective are valuable resources to the Company, as our business is impacted by public policy issues on a global scale.

James F. Nolan, Technology Committee, was elected a director of First Solar in February 2003. Mr. Nolan served as the vice president of operations of Solar Cells, Inc., the predecessor to First Solar, and was responsible for research, development and manufacturing operations. He designed and built early prototype equipment for First Solar’s pilot manufacturing line and led the team that developed the process for producing large area thin film cadmium telluride solar modules. Mr. Nolan worked as a part-time consultant for First Solar from November 2000 until March 2007. Mr. Nolan has over 35 years of experience in physics, engineering, research and development, manufacturing and process design with companies such as Westinghouse, Owens Illinois, Glasstech and Photonics Systems. Mr. Nolan holds more than 10 patents in areas of flat panel electronic displays and photovoltaic devices and processes. Mr. Nolan earned his B.S. in Physics from the University of Scranton (Pennsylvania) and a PhD in Physics from the University of Pittsburgh. Mr. Nolan provides the board with extensive experience in engineering, research and development, manufacturing and process design, obtained through his work at the predecessor to First Solar and other companies throughout his career.

William J. Post, Chair, Project Development Committee; Compensation Committee, was elected a director of First Solar in June 2010. Mr. Post retired as chairman and chief executive officer of Pinnacle West Capital

Corporation (“Pinnacle West”) in April 2009, and he retired from the Board of Directors of Pinnacle West in May 2010. He joined Arizona Public Service (the largest subsidiary of Pinnacle West and the largest electric utility in Arizona) in 1973 and held various officer positions at Arizona Public Service beginning in 1982 including: vice president and controller, vice president of finance and regulation, chief operating officer, president and chief executive officer. He became president of Pinnacle West in 1997, chief executive officer in 1999 and chairman of the board in 2001. Mr. Post joined the board of Arizona Public Service in 1995 and the board of Pinnacle West in 1997. Mr. Post is chairman of the Translational Genomics Research Institute and chairman of the Arizona State University Foundation, where he received a Bachelor of Science Degree in 1973. He also serves as a director of Blue Cross Blue Shield of Arizona. He has served in the past as chairman of Swift Transportation Company, Suncor Development Company, Stagg Information Systems, Nuclear Assurance Corporation, Nuclear Electric Insurance Limited, the Institute of Nuclear Power, and El Dorado Investment Company. He also served as a Director of Phelps Dodge Corporation from 2001 to 2007 and U.S. Airways from 2011 to 2013. Mr. Post brings to the board executive-level utility-sector experience, including a deep understanding of the utility sector within the southwestern United States, a key market for the Company’s systems business.

J. Thomas Presby, Vice Chair, Audit Committee; Nominating & Governance Committee, Project Development Committee, was elected a director of First Solar in August 2006. Mr. Presby retired in 2002 after a 30-year career as a partner at Deloitte Touche Tohmatsu. At Deloitte, he held many positions in the United States and abroad, including Global Deputy Chairman and Chief Operating Officer. Currently, Mr. Presby is a board member and chairs the audit committee of Exam Works Group, Inc. He is a director of World Fuel Services Corporation, where, after previously chairing the audit committee for over ten years, he serves as Lead Director. He is also a board member of the New York Chapter of the National Association of Corporate Directors (“NACD”). In addition, Mr. Presby previously served as director and audit committee chair of Invesco Ltd., Tiffany & Co., Practice Works Inc., TurboChef Technologies, American Eagle Outfitters and Greenpoint Financial Corp. He previously served as a trustee of Rutgers University and Montclair State University (N.J.), and as a director and chairman of the audit committee of the German Marshall Fund. Mr. Presby received a B.S. in electrical engineering from Rutgers University and an MBA degree from the Carnegie Mellon University Graduate School of Business. Mr. Presby is a certified public accountant in New York and Ohio, and a holder of the NACD Certificate of Director Education. He was named by the NACD as one of the “Top 100” directors of 2011. Mr. Presby’s experience as an audit committee chair for multiple public companies, together with his 30-year career with Deloitte, provide a strong background for his roles as vice chair of the audit committee and audit committee financial expert.

Paul H. Stebbins, Chair, Nominating & Governance Committee; Audit Committee, Compensation Committee, Project Development Committee, was elected a director of First Solar in December 2006. Mr. Stebbins has served as chairman emeritus and as a non-employee director of World Fuel Services Corporation (“World Fuel”) since January 2015. Previously, Mr. Stebbins served as the chairman and chief executive officer of World Fuel from July 2002 to January 2012 and as executive chairman from January 2012 to May 2014. He has served as a director of World Fuel since June 1995. Between July 2000 and 2002, Mr. Stebbins also served as president and chief operating officer of World Fuel. In 1985, Mr. Stebbins co-founded Trans-Tec Services, a global marine fuel service company acquired by World Fuel in 1995. Mr. Stebbins served for many years as a member of the Business Round Table, an influential association of chief executive officers of leading U.S. companies, and currently serves as a member of the Energy Security Leadership Council of S.A.F.E. (Securing America’s Future Energy) and as a member of the Leadership Council of the Fix the Debt Campaign founded by Erskine Bowles and Sen. Alan Simpson. Mr. Stebbins brings to the board significant CEO-level experience in managing a large global energy-related publicly traded company.

Michael T. Sweeney, Chair, Compensation Committee; Nominating & Governance Committee, was elected a director of First Solar in July 2003. Mr. Sweeney has served as President and Chief Executive Officer of Steinway Musical Instruments, Inc. since October 2011, director since April 2011, and chairman of the board from July 2011 through September 2013. Mr. Sweeney served as chairman of the board of Star Tribune Media Holdings, the holding company for the Minneapolis Star Tribune, from September 2009 to September 2014, and has served as a director of Carlson Companies, Inc. Mr. Sweeney served as managing partner in Goldner Hawn Johnson & Morrison, Inc., a private equity firm, from 2001 through 2008. He had previously served as president of Starbucks Coffee Company (UK) Ltd. in London and held various operating management and corporate finance roles.

Mr. Sweeney’s background in investment banking and private equity, as well as his operating company business acumen, are valuable resources to the board and the Company, particularly with respect to the board’s consideration of compensation and financial matters and strategic investments.

Majority Vote Standard

Our Board adopted in February 2016 a majority vote standard in connection with uncontested elections of directors, as set forth in the Company’s Amended and Restated Bylaws.

In an uncontested election of directors, each candidate is to be elected by a majority of the votes cast with respect to such candidate’s election. With respect to any candidate in an uncontested election who is an incumbent director, such director shall promptly tender his or her resignation to the Chairman of the Board for consideration by the nominating and governance committee if he or she receives less than a majority of votes cast with respect to his or her election. No later than 90 days following the receipt of any such tendered resignation, (A) the Board shall, taking into account any recommendation by the nominating and governance committee, take formal action with respect thereto (which action may include accepting or rejecting such tendered resignation, or taking other action considered appropriate) and (B) the Company shall publicly disclose the Board’s decision and, in the event that the Board does not accept such tendered resignation, the rationale for such decision. The nominating and governance committee and the Board, in making any recommendation or decision, respectively, relating hereto may consider any factors or other information they consider appropriate or relevant. As used herein, an “uncontested election of directors” is an election in which the number of nominees is not greater than the number of Board seats open for election, and a person shall be considered to have received a majority of the votes cast with respect to such person’s election only if the number of votes cast “for” such person’s election exceeds the number of votes cast “against” such person’s election, with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” such person’s election.

NON-ASSOCIATE DIRECTOR COMPENSATION

We use a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on our board of directors. When reviewing non-associate director compensation we are guided by three goals, as provided in our Corporate Governance Guidelines: (i) compensation should fairly pay directors for work required for a company of our size and scope; (ii) compensation should align directors’ interests with the long-term interests of our stockholders; and (iii) the structure of the compensation should be clearly disclosed to our stockholders. The table below summarizes the 2015 non-associate director compensation.


2015 Non-Associate Director Compensation (paid in equal quarterly installments)
Annual Retainer		$225,000 (consisting of $125,000 stock and $100,000 cash)
		Additional Chair Retainers
Non-Executive Board Chair		+$50,000 cash and $75,000 stock
Audit Committee Chair		+$35,000 cash
Other Committee Chairs		+$10,000 cash

Cash Compensation

The annual cash compensation for our non-associate directors is $100,000 (payable quarterly in four equal installments) plus an additional $50,000 (payable quarterly in four equal installments) for the non-executive chairman of the board, an additional $35,000 annual cash retainer (payable quarterly in four equal installments) for the chairman of our audit committee and an additional $10,000 annual cash retainer (payable quarterly in four equal installments) for the other four committee chairs.

Equity Compensation

The annual equity compensation for our non-associate directors is a $125,000 stock grant (granted quarterly in four equal installments), plus an additional annual $75,000 (granted quarterly in four equal installments) for the non-executive chairman of the board. With respect to such quarterly stock grants, our practice is to issue the stock to our non-associate directors at the end of the quarter. Our practice is not to time the grant date of these awards to take advantage of announcements of undisclosed material facts, and we do not take into account any internal “black outs,” during which associates and directors are prohibited by our Insider Trading Policy from trading in our securities, without regard to whether they are in possession of undisclosed material facts or whether any undisclosed material facts could be perceived as potentially positive or negative.

Other

We reimburse all non-associate directors for reasonable and necessary expenses they incur in performing their duties as non-associate directors of the Company. We do not provide our non-associate directors with perquisites.

While no changes were made to board of director compensation for 2015, in July 2015, Compensation Strategies presented a market study for our non-associate director compensation. The study showed that current non-associate director compensation was below typical market levels. Based on the results of the study and in consultation with Compensation Strategies, the board of directors approved revised director compensation on July 29, 2015. Effective January 1, 2016, the annual stock portion of the non-associate director retainer increased from $125,000 to $160,000 and the annual additional cash retainer for the compensation committee chair increased from $10,000 to $25,000, in each case, payable on the same terms as described above. The annual cash retainer for all non-associate directors, including the additional retainer for the non-executive board chair and all other committee chairs, did not change.

Non-Associate Director Compensation Table

The following table sets forth information with respect to compensation earned by our non-associate directors for the year ended December 31, 2015:


Name	Fees Earned or Paid in Cash ($)			Stock Awards ($)(1)(2)		Total ($)
Michael J. Ahearn		150,000			200,116		350,116
Sharon L. Allen		114,837	(4)		125,088		239,925
Richard D. Chapman		100,000			125,088		225,088
George A. (“Chip”) Hambro		110,000	(3)		125,088		235,088
Craig Kennedy		100,000			125,088		225,088
James F. Nolan		100,000			125,088		225,088
William J. Post		110,000	(3)		125,088		235,088
J. Thomas Presby		120,163	(4)		125,088		245,251
Paul H. Stebbins		110,000	(3)		125,088		235,088
Michael Sweeney		110,000	(3)		125,088		235,088

(1)

The amounts in this column represent the aggregate grant date fair value of fully vested common stock granted during the fiscal year ended December 31, 2015, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 — Stock Compensation (“ASC Topic 718”).

(2)

The following describes the shares issued to each non-associate director for service during the quarters ended on March 31, June 30, September 30 and December 31, 2015. On March 31, 2015, 523 shares were issued to each non-associate director (other than Mr. Ahearn) and 837 shares were issued to Mr. Ahearn, in each case at a market price of $59.79 per share as of that date. The grant date fair value of these shares was $31,270 and

$50,044 respectively. On June 30, 2015, 666 shares were issued to each non-associate director (other than Mr. Ahearn) and 1,065 shares were issued to Mr. Ahearn, in each case at a market price of $46.98 per share as of that date. The grant date fair value of these shares was $31,289 and $50,034 respectively. On September 30, 2015, 731 shares were issued to each non-associate director (other than Mr. Ahearn) and 1,170 to Mr. Ahearn in each case at a market price of $42.75 per share as of that date. The grant date fair value of these shares was $31,250 and $50,018 respectively. On December 31, 2015, 474 shares were issued to each non-associate director (other than Mr. Ahearn), and 758 shares were issued to Mr. Ahearn, in each case at a market price of $65.99 per share as that date. The grant date fair value of these shares was $31,279 and $50,020 respectively. The dollar values of the stock awards do not equal exactly $31,250 or $50,000 per quarter due to the fact that we issue whole shares and not fractional shares to our non-associate directors.

(3)	The chairs of the compensation, nominating and governance, project development and technology committees receive an additional annual cash retainer of $10,000 in respect of their roles.

(4)

Mr. Presby received $20,163 as a pro rata portion of his additional annual cash retainer of $35,000 in respect of his role as audit committee chair through July 28, 2015. Ms. Allen received $14,837 as a pro rata portion of her additional cash retainer of $35,000 in respect of her role as audit committee chair starting July 29, 2015.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information regarding the beneficial ownership of our common stock as of March 29, 2016 by:

•

each person or group who is known by us to beneficially own more than 5% of our common stock;

•

each member of our board of directors and each of our named executive officers; and

•

all members of our board of directors and our executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the Commission and generally includes any shares over which a person exercises sole or shared voting or investment power.

Unless otherwise indicated, each of the stockholders listed below has sole voting and investment power (or shares such powers) with respect to the shares beneficially owned. Except as indicated below, the address for each stockholder, director or named executive officer is c/o First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281.

This table assumes 102,212,838 shares of common stock outstanding as of March 29, 2016.


Name of Beneficial Owner	Shares Beneficially Owned		Percentage Beneficially Owned
*Beneficial Owners of 5% or More*
S. Robson Walton (1)		24,957,907		24.4	%
Jim C. Walton (2)		26,557,907		26.0	%
Alice L. Walton (3)		26,557,907		26.0	%
JCL FSLR Holdings, LLC (4)		24,957,907		24.4	%
JTW Trust No. 1 UAD 9/19/02 (5)		1,600,000		1.6	%
Wellington Management Group LLP (6)		5,566,514		5.4	%
The Vanguard Group (7)		6,234,408		6.1	%
*Directors and Named Executive Officers*
Michael J. Ahearn		116,980		0.1	%
Sharon L. Allen		5,554		*
Georges J. Antoun		—		*
Richard D. Chapman		12,317		*
Raffi Garabedian		4,474		*
George A. (“Chip”) Hambro		12,317		*
James A. Hughes		35,980		*
Craig Kennedy		15,526		*
Joseph G. Kishkill		30,082		*
James F. Nolan		36,645		*
William J. Post		14,170		*
J. Thomas Presby		13,262		*
Paul H. Stebbins		16,235		*
Michael Sweeney		20,110		*
Mark R. Widmar		31,676		*
All directors and executive officers as a group (15 persons)		365,328		0.4	%

*	Less than one percent.

(1)

The number and percentage of shares of common stock shown in the table as beneficially owned by S. Robson Walton represent 24,957,907 shares held by JCL FSLR Holdings, LLC, as to which S. Robson Walton, as a manager thereof, shares voting and dispositive power with Jim C. Walton and Alice L. Walton, as managers. With respect to JCL FSLR Holdings, LLC, dispositive and voting power over all of the shares held thereby is exercised by the managers thereof. The shares held by JCL FSLR Holdings, LLC are for the benefit of John T. Walton’s wife and his descendants and for that reason, S. Robson Walton disclaims beneficial ownership of the shares listed above. The address of S. Robson Walton is P.O. Box 1860, Bentonville, Arkansas 72712.

(2)

The number and percentage of shares of common stock shown in the table as beneficially owned by Jim C. Walton represent (a) 24,957,907 shares held by JCL FSLR Holdings, LLC, as to which Jim C. Walton, as a manager thereof, shares voting and dispositive power with S. Robson Walton and Alice L. Walton, as managers, and (b) 1,600,000 shares held by the JTW Trust No. 1 UAD 9/19/02, as to which Jim C. Walton and Alice L. Walton, as co-trustees, share voting and dispositive power. With respect to JCL FSLR Holdings, LLC, dispositive and voting power over all of the shares held thereby is exercised by the managers thereof. The shares held by JCL FSLR Holdings, LLC are for the benefit of John T. Walton’s wife and his descendants. The shares held by the JTW Trust No. 1 UAD 9/19/02 are for the benefit of charitable interests and John T. Walton’s descendants. For those reasons, Jim C. Walton disclaims beneficial ownership of the shares listed in (a) and (b) above. The address of Jim C. Walton is P.O. Box 1860, Bentonville, Arkansas 72712.

(3)

The number and percentage of shares of common stock shown in the table as beneficially owned by Alice L. Walton represent (a) 24,957,907 shares held by JCL FSLR Holdings, LLC, as to which Alice L. Walton, as a manager thereof, shares voting and dispositive power with S. Robson Walton and Jim C. Walton, as managers, and (b) 1,600,000 shares held by the JTW Trust No. 1 UAD 9/19/02, as to which Jim C. Walton and Alice L. Walton, as co-trustees, share voting and dispositive power. With respect to JCL FSLR Holdings, LLC, dispositive and voting power over all of the shares held thereby is exercised by the managers thereof. The shares held by JCL FSLR Holdings, LLC are for the benefit of John T. Walton’s wife and his descendants. The shares held by the JTW Trust No. 1 UAD 9/19/02 are for the benefit of charitable interests and John T. Walton’s descendants. For those reasons, Alice L. Walton disclaims beneficial ownership of the shares listed in (a) and (b) above. The address of Alice L. Walton is P.O. Box 1860, Bentonville, Arkansas 72712.

(4)

The number and percentage of shares of common stock shown in the table as beneficially owned by JCL FSLR Holdings, LLC represent 24,957,907 shares held directly by JCL FSLR Holdings, LLC, as to which S. Robson Walton, Jim C. Walton and Alice L. Walton, as managers of JCL FSLR Holdings, LLC, share voting and dispositive power. The shares held by JCL FSLR Holdings, LLC are held for the benefit of John T. Walton’s wife and his descendants and for that reason, S. Robson Walton, Jim C. Walton and Alice L. Walton disclaim beneficial ownership of such shares. The address of JCL FSLR Holdings, LLC is P.O. Box 1860, Bentonville, Arkansas 72712.

(5)

The number and percentage of shares of common stock shown above as beneficially owned by JTW Trust No. 1 UAD 9/19/02 represent 1,600,000 shares held directly by JTW Trust No. 1 UAD 9/19/02, as to which Jim C. Walton and Alice L. Walton, as co-trustees of such trust, share voting and dispositive power. The shares held by JTW Trust No. 1 UAD 9/19/02 are held in a trust principally for the benefit of charitable interests and John T. Walton’s descendants. Jim C. Walton and Alice L. Walton therefore disclaim beneficial ownership of such shares. The address of JTW Trust No. 1 UAD 9/19/02 is P.O. Box 1860, Bentonville, Arkansas 72712.

(6)

Based on information provided by Wellington Management Group LLP, 280 Congress Street, Boston, Massachusetts 02210, in a Schedule 13G filed with the SEC on February 11, 2016 reporting beneficial ownership as of December 31, 2015. According to such Schedule 13G, Wellington Management Group LLP has shared voting power with respect to 3,293,422 shares and shared dispositive power with respect to 5,566,514 shares.

(7)

Based on information provided by The Vanguard Group, 100 Vanguard Boulevard, Malvern, Pennsylvania 19355, in a Schedule 13G filed with the SEC on February 10, 2016 reporting beneficial ownership as of December 31, 2015. According to such Schedule 13G, The Vanguard Group has sole voting power with respect to 121,312 shares, shared voting power with respect to 4,100 shares, sole dispositive power with respect to 6,113,496 shares and shared dispositive power with respect to 120,912 shares.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Since December 31, 2014, we have not been a party to any transaction or series of similar transactions in which the amount involved exceeded or will exceed $120,000 and in which any current director, executive officer, holder of more than five percent of our capital stock or any member of the immediate family of any of the foregoing had or will have a material interest, other than in connection with the transactions described below. We had no related party debt outstanding at December 31, 2015 and did not pay any interest to related parties during the year ended December 31, 2015.

Registration Rights

We entered into a registration rights agreement with the Estate of John T. Walton, JCL Holdings, LLC and Michael J. Ahearn. The associated registration rights previously held by JCL Holdings, LLC and Estate of John T. Walton are now held by JCL FSLR Holdings, LLC. The registration rights agreement provides for piggyback registration rights if we register equity securities under the Securities Act of 1933, as amended (the “Securities Act”), subject to certain lock-up provisions and exceptions. In addition, subject to certain lock-up provisions and exceptions, Michael J. Ahearn has three demand rights and JCL FSLR Holdings, LLC has unlimited demand rights, provided that JCL FSLR Holdings, LLC may only exercise one such demand right within any 365-day period.

Review and Approval of Related Party Transactions

The Company’s audit committee charter requires the review and approval by the audit committee of related party transactions, to ensure that they are on such terms, which, in the judgment of the audit committee, are no less favorable to the Company than could be obtained from unaffiliated parties. If a member of the audit committee has an interest in the proposed transaction, our corporate governance guidelines require the formation of a committee consisting entirely of independent directors without an interest in the proposed transaction to review and, if appropriate, approve such transaction.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the aggregate fees billed to us for audit and other services provided by PricewaterhouseCoopers LLP during the years ended December 31, 2015 and 2014:


	2015		2014
Audit Fees (1)	$	3,209,855	$	3,252,917
Audit-Related Fees (2)		666,000		758,057
Tax Fees (3)		177,333		138,134
All Other Fees (4)		2,767		173,970

Total	$	4,055,955	$	4,323,078

(1)	Represents the aggregate service fees billed for the audit of the Company’s financial statements in connection with statutory and regulatory filings or engagements for 2015 and 2014.

(2)

Represents the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “audit fees,” and represents approximately 17% and 18% of the total fees in 2015 and 2014, respectively. This category consists primarily of services related to special projects.

(3)	Represents the aggregate fees billed for tax compliance and tax consulting services, or approximately 5% and 3% of the total fees in 2015 and 2014, respectively.

(4)

Represents the aggregate fees billed for all products and services provided that are not included under “audit fees,” “audit-related fees” or “tax fees,” and represents less than 1% and 4% of the total fees in 2015 and 2014, respectively. These services include certain business process reviews and a subscription to PricewaterhouseCoopers LLP proprietary accounting research databases.

Audit Committee’s Pre Approval Policies and Procedures

The audit committee has policies and procedures that require the pre-approval by the audit committee of all fees paid to, and all services performed by, the Company’s independent registered public accounting firm, subject to de minimis exceptions for non-audit services set forth in the applicable rules of the Commission. Each year, the audit committee pre-approves the proposed services, including the nature, type and scope of services to be performed by the independent registered public accounting firm during the fiscal year and the related fees. Audit committee pre-approval is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the audit committee.

The services related to “audit-related fees”, “tax fees” and “all other fees” presented in the above table were approved by the audit committee pursuant to pre-approval provisions set forth in the applicable rules of the Commission without resort to a waiver of such pre-approval provisions.

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

First Solar is a leading global provider of comprehensive photovoltaic (“PV”) solar energy solutions. We are implementing a long-term strategic plan (“Long Term Strategic Plan”) that focuses on providing utility-scale PV solar energy solutions to key geographic markets. We endeavor to align our compensation decisions with our operating and strategic plans. As in prior years, the core philosophy underlying our compensation decisions remains unchanged: we pay executives for performance and seek to align their interests with those of our stockholders. The individuals in the Summary Compensation Table below are referred to in this Compensation Discussion and Analysis as the “named executive officers.” Highlighted below are a number of key compensation-related decisions we made or advanced in 2015:

•

Commitment to Best Practices. Consistent with regulatory requirements and evolving best compensation practices, our compensation committee has determined to evaluate periodically, and not less than annually, the independence of its consultants. In 2015, the compensation committee again analyzed its consultant, Compensation Strategies, including the relationship of Compensation Strategies to the Company, and concluded that Compensation Strategies is independent. Further, in the context of the total compensation review and the adoption of our 2015 incentive programs, the compensation committee considered whether our compensation structure and programs encourage excessive or inappropriate risk taking and concluded that they did not do so.

•

Executive Perquisites. Consistent with our compensation philosophy, we do not typically provide our named executive officers with any perquisites not available to our associates generally.

•

2015 Omnibus Incentive Compensation Plan. In 2015, our board of directors adopted and our stockholders approved the 2015 Omnibus Incentive Compensation Plan (the “2015 Omnibus Plan”) with approximately 85% of votes cast on the proposal to adopt the plan voting in favor. The 2015 Omnibus Plan replaced the predecessor 2010 Omnibus Incentive Compensation Plan (the “2010 Omnibus Plan”) and reflects current compensation and governance best practices and changes in the law, including an increased percentage threshold for triggering a change in control, the elimination of certain types of share recycling for purposes of determining the shares available for issuance under the plan and a refined list of metrics that may be applicable to performance-based awards granted under the 2015 Omnibus Plan.

•

Shareholder Engagement and Outreach. In 2015, we engaged with our larger shareholders and sought input on a variety of topics, including our governance and compensation practices. Our outreach efforts were aimed at creating a mutually informative and beneficial discussion with our shareholders. We remain committed to fostering further ongoing shareholder dialogue.

•

Clawback Policy. Since 2012, we have included clawback provisions with respect to compensation awards and newly-entered employment agreements and change in control severance agreements (the “CIC Agreements”), which would allow us to recoup, to the extent required by applicable law, incentive and separation payments made to our named executive officers if we later determine that the basis on which such compensation was earned was erroneous. All incentive and equity awards and agreements with our named executive officers are subject to clawback in accordance with all applicable laws.

•

Hedging Policy. The Company’s hedging policy prohibits our directors and associates, including all named executive officers, from (i) engaging in any short sales with respect to any Company securities, (ii) buying or selling puts, calls or derivatives on any Company securities and (iii) purchasing any Company securities on margin.

•

Share Holding/Ownership Guidelines. To better align the interests of executives with those of our stockholders, the Company remains committed to reviewing and tracking our share ownership guidelines. First Solar and our independent compensation consultant routinely review the share ownership guidelines against evolving market practice and in 2015 our share ownership guidelines remained unchanged. Under these guidelines the chief executive officer’s share ownership requirement is six times base pay and the share ownership requirement of all other named executive officers is three times base pay. Executives have five

years from the date they become senior executives to obtain the required ownership levels. Currently, all executives are either meeting the share ownership requirements or are on track to meet the requirements within the allowable timeframe. In addition, our practice is generally to call for each of our executive officers to hold shares through at least the time that he or she meets the share ownership guidelines.

•

Double-Trigger Equity Vesting. In July 2013, our compensation committee determined that the CIC Agreements which we enter into with newly hired executives will no longer provide for full vesting of unvested time-vested equity-based compensation upon a change in control of the Company and will instead provide for vesting of such equity-based compensation only upon a termination without “cause” or resignation for “good reason” within two years following a change in control of the Company. All CIC Agreements entered into since July 2013 provide for such double-trigger equity vesting.

•

Elimination of Tax Gross-ups. In 2011, we determined not to provide any newly hired executives with 280G tax gross-ups, and, consistent with that decision, our employment agreements with executives hired thereafter do not provide this benefit. Since 2014, none of our named executive officers have been entitled to excise tax gross-ups.

•

KSTEPP Partial Condition Vesting. On November 9, 2015, the compensation committee certified achievement as of September 30, 2015 of the partial vesting condition. From October 1, 2014 through September 30, 2015, and in line with our Long Term Strategic Plan, the Company achieved at least 1.35 gigawatts DC of modules sold in sustainable markets and 13% cash adjusted return on invested capital, and therefore KSTEPP participants, including all named executive officers, became vested in one-third of their KSTEPP awards (subject to proration for KSTEPP participants who had a qualifying separation from service prior to such vesting date).

Overview

Our named executive officers for 2015 were:

•

Mr. James A. Hughes, Chief Executive Officer;

•

Mr. Mark R. Widmar, Chief Financial Officer;

•

Mr. Georges J. Antoun, President — U.S.;

•

Mr. Joseph G. Kishkill, President — International; and

•

Mr. Raffi Garabedian, Chief Technology Officer.

The solar industry continues to be characterized by intense pricing competition, both at the module and system levels. In light of such market realities, we are executing our Long Term Strategic Plan, under which we are focusing on our competitive strengths. Such strengths include our advanced module and system technologies as well as our differentiated, vertically-integrated business model that enables us to provide utility-scale PV solar energy solutions to key geographic markets with immediate electricity needs. Execution of our Long Term Strategic Plan entails a prioritization of market opportunities worldwide relative to our core strengths and a corresponding allocation of resources around the globe. The ultimate aim of our Long Term Strategic Plan is to increase business growth, improve profitability and enhance liquidity.

In an effort to best align executive talent with our Long Term Strategic Plan, on July 1, 2015 the Company revised its management structure and Mr. Antoun moved to a role of president, United States, having responsibility for all U.S. business and project development, and Mr. Kishkill became president, international, having responsibility for all international business and project development. Mr. Widmar remained chief financial officer, and Mr. Garabedian remained chief technology officer. No compensation changes, beyond those made in the annual pay cycle in the first quarter of the year as described below, were made as part of this new structure.

Our Long Term Strategic Plan represents a comprehensive strategy for the Company, and, in order to ensure leadership alignment with that strategy, required us to reevaluate our approach to compensation beginning in 2012 to ensure that it reflected the elements needed to effectively compensate and retain the senior leadership team as well as recruit exceptional new talent. We continued to evaluate our approach to compensation in 2015, ultimately

concluding that few changes to our revised compensation structure from 2012 were necessary to continue aligning our compensation structure with our Long Term Strategic Plan and stockholders’ objectives. However, where such changes were made, they are noted below. We will continue to evaluate our approach to compensation to ensure it is fully aligned with our Long Term Strategic Plan, evolving market practices and legal requirements.

Context and Overview

Calibrating Performance Metrics and Compensation Components in Light of our Long Term Strategic Plan. The compensation committee has adopted plans and programs that are consistent with the Company’s compensation philosophy in order to best align our compensation practices with our Long Term Strategic Plan.

We Consider our Stockholders’ Feedback Regarding our Compensation Practices. At the 2014 annual meeting, the stockholder advisory vote on the Company’s executive compensation (“say on pay”) was approved by 97.6% of our stockholders voting. At the 2011 annual meeting, a triennial cycle for our executive compensation advisory votes was selected by 69.5% of the stockholders voting on the timing of such votes (“say when on pay”). The compensation committee, taking these results into account, adopted a triennial vote cycle and, for 2015, continued with its executive compensation philosophy. The next say on pay and say when on pay advisory votes will be held at the 2017 annual meeting. In addition, the Company routinely meets with investors to solicit feedback and recommendations to the Company, including feedback on our compensation practices, though concerns with regards to our compensation practices and programs have not been raised in such meetings.

First Solar Compensation Philosophy

First Solar’s compensation philosophy rests on foundational principles that inform the way we design our compensation programs and pay our named executive officers. This philosophy can be understood in the following ways:

First Solar Pay Is Simple and Is Designed to Align the Interests of Executive Management and Stockholders. The Company’s approach to compensation is straightforward, and this is reflected in the components of our executives’ aggregate annual pay. The three primary components of First Solar executive compensation are: (1) base salary, (2) cash incentive compensation (short-term incentive) and (3) equity compensation (long-term incentive). Our named executive officers have the largest percentage of total compensation at risk (i.e., the portion of compensation that is not payable to such executives unless certain performance targets are achieved) with a heavy weighting towards equity compensation to align their interests with stockholders. There are no supplemental executive retirement programs or other deferred compensation arrangements and generally no perquisites that are available solely for the named executive officers.

Our Compensation Levels Are Consistent with Market Levels, and We Apply Discretion to Conform to, or Reward, Actual Performance. We believe that our named executive officers should be compensated at a level that ensures their continued dedication to the Company and creates potential rewards for extraordinary results when advancing the goals and strategy of the Company, particularly with respect to the furtherance of our Long Term Strategic Plan. The Company works with an independent compensation consultant, Compensation Strategies, who regularly compiles and analyzes market data to determine the pay practices of our peer group, which we use in determining the level of our named executive officers’ pay (generally targeted at the 50th percentile, with deviations possible when warranted by role, skill set, performance or other extraordinary considerations). See “Compensation Committee Practices — 2015 Compensation Decisions.” Similarly, our choice of metrics (both financial and operating) related to our annual incentive plan and Key Senior Talent Equity Performance Program (“KSTEPP”), and the compensation committee’s discretion to reduce awards granted under the annual incentive plan, are meant to ensure that our named executive officers are not rewarded unless performance goals are achieved and that operational metrics are not achieved at the expense of financial performance.

Executive Compensation Principles

The compensation committee has responsibility for establishing and overseeing our compensation program as it applies to our named executive officers. The compensation committee bases its executive compensation programs on the principles set forth below, which have generally remained constant from prior years:


*Pay to Market*		Compensation should be based on the level of job responsibility, individual performance and Company performance. Compensation should also reflect the value of the job in the marketplace. To attract and retain a highly skilled workforce, we must provide pay that remains competitive with the pay of other employers who compete with us for talent.

*More Responsibility, More Pay at Risk; We Pay for Performance*		As associates progress to higher levels in the organization, an increasing proportion of their pay should be linked to Company performance and stockholder returns; our senior executives are better able, relative to other associates, to affect the Company’s results.

*Metrics Should Motivate Associates to Achieve the Mission*		To be effective, performance-based compensation programs should enable participants to easily understand how their efforts can affect their pay through contributions to the Company’s achievement of its strategic and operational goals.

Evaluating the Market. Although our determination of the amount and mix of compensation elements for our named executive officers is generally not influenced by short-term market shifts, when extraordinary business changes occur, we believe that our compensation practices should include the requisite flexibility to respond to those changes while remaining consistent with our compensation philosophy.

When setting compensation, we review compensation paid by other companies of comparable size in the same or similar industries, as well as where our compensation falls within our peer group. Our objective is to generally pay median compensation while providing an opportunity to increase compensation further through successful performance in our incentive compensation programs. Depending on the role, the experience an individual brings to the role, and individual performance, we broadly aim to set our executive total cash targets (base salary and incentive targets) at the 50th percentile of our peer group, and continued our efforts in this regard in 2015, favoring performance bonus opportunities as the means by which our executives may earn higher pay.

We do not exclusively rely on market data to determine executive compensation. Instead, we incorporate flexibility into our compensation program and in our assessment process to respond to and adjust for the dynamic business environment in which we operate. As the solar industry and our operating initiatives evolve, we will continue to evaluate our approach to compensation to ensure it is fully aligned with both the business environment and any future updates to our strategic plans.

Equity Policies. To better align the interests of executives with those of our stockholders, we previously adopted share ownership guidelines that cover our officers, including the named executive officers, and certain other members of senior management. In addition, our practice is generally to call for each of our named executive officers to hold shares through at least the time that he or she meets the share ownership guidelines. We also prohibit our associates from engaging in hedging transactions with respect to our shares. We continue to periodically assess our policies in order to ensure that they are consistent with our philosophies and best practices in the market

Components of 2015 Executive Compensation

For 2015, the compensation of named executive officers consisted primarily of three components: base salary, short-term cash incentive compensation (i.e., an annual bonus) and long-term equity-based compensation (i.e., a multi-year equity award). These components are described in the chart below, including how each fits into our overall executive compensation package (i.e., the particular objectives and the specific elements that our compensation programs are designed to address).



Component		Objective		Focus


Base Salary	ü ü	Provides fixed portion of compensation Paid in cash	ü	Compensates based on market value for position, individual performance, level of experience and critical nature of role to the Company
Base Salary	ü ü	Provides fixed portion of compensation Paid in cash

Cash Incentive Compensation	ü	Provides at-risk variable compensation linked to short-term corporate, organizational and strategic goals without sacrificing long-term Company performance	ü	Compensates based on performance on shorter-term objectives
Cash Incentive Compensation	ü	Paid in cash

Equity-Based Compensation	ü	Provides at-risk variable pay compensation linked to long-term performance of the Company, individual performance and critical nature of role	ü	Aligns the long-term interests of our stockholders and our named executive officers
	ü	Paid in restricted stock units and KSTEPP performance units	ü	Assists in attracting and retaining qualified executives
		Paid in restricted stock units and KSTEPP performance units	ü	Compensates for overall Company performance

Each of our named executive officers is party to an employment agreement and a CIC Agreement that protect him or her in the event of certain employment terminations, as well as agreements related to restrictive covenants including confidentiality, non-competition and director and officer indemnification agreements. The employment and CIC Agreements provide severance in exchange for a release of claims and equity vesting acceleration under certain circumstances. Since July 2013, employment agreements and CIC Agreements entered into with newly hired executives have provided for equity vesting acceleration only upon a termination without “cause” or resignation for “good reason” following a change in control of the Company, as described in more detail in “Employment Agreements and Related Arrangements” and “Change in Control Severance Agreements.”

Generally, the types of compensation and benefits provided to the named executive officers are similar to those provided to other members of our senior executive team.

Compensation Committee Practices

Selection of Peer Companies

In 2015, the compensation committee retained Compensation Strategies as a consultant to provide data and analysis regarding the selection of companies in our executive compensation peer group, the pay practices of such companies and results of a comparison of each of the components of the compensation of our named executive officers against the compensation paid to executives in similarly-situated positions at our peer group companies. Compensation Strategies also advised the compensation committee on such matters in prior years. The consultant’s benchmarking services in 2015 were limited to comparing each element of compensation for a particular position against similar elements provided by members of the peer group.

The compensation committee routinely analyzes our peer group to determine if it accurately reflects our competitors in the industry, and we have made certain changes to our peer group makeup over the last two years in order to conform the group to include companies comparable in size and revenue to us, and with whom we compete for talent. Our peer group is comprised of U.S.-based public companies with 2015 estimated annual revenues generally greater than $1 billion that are (i) engaged in the solar, energy, semiconductor, high-tech, engineering, construction, independent power production or energy service sectors, (ii) our vendors or suppliers falling within the above parameters whose business has some comparability to ours, (iii) companies with whom we compete for executive talent and/or (iv) the companies who comprise the peer groups of the companies with whom we compete for executive talent, if relevant.

The current peer group includes thirty-five (35) companies that are generally reflective of a company of our size. We include some larger engineering and construction firms (e.g., Chicago Bridge & Iron Company N.V., Jacobs Engineering Group Inc. and Fluor Corporation) to align with this key piece of our business. Similarly, larger independent power producers (e.g., NRG Energy, Inc. and Public Service Enterprise Group Incorporated) and component manufacturers (e.g. Micron Technology, Inc.) are also included to ensure that these critical and relevant elements of our business are also captured. Regression is used to adjust for these peers’ larger sizes. Our 2015 peer group had median and average annual 2014 revenues of $3.2 billion and $5.8 billion respectively. While the range of 2014 revenues was broad ($0.4 billion to $21.5 billion), the median and average revenues of the group (excluding certain larger yet key comparison companies) were comparable to that of the full group: $2.9 billion and $3.8 billion, respectively. Similarly, the median and average April 30, 2015 market capitalization for the full group were $7.2 billion and $9.5 billion, respectively, closely approximating the range for the group minus certain larger comparison companies ($6.9 billion and $8.7 billion). We believe including certain larger key comparison companies in our peer group is important in order to fully reflect the various aspects of our business and, through our focus on 50th percentile pay practices and the use of statistical regression to adjust for size differences among the peers, the inclusion of such companies in the peer group of thirty-five companies does not result in the upward biasing of compensation levels.

The 2015 peer group consisted of:


Advanced Micro Devices, Inc.	Agilent Technologies, Inc.	Altera Corporation
Analog Devices, Inc.	Applied Materials, Inc.	Broadcom Corporation
Calpine Corporation	Chicago Bridge & Iron Company N.V.	Corning Incorporated
Dynegy Inc.	Exterran Holdings, Inc.	Fairchild Semiconductor International, Inc.
FLIR Systems, Inc.	Fluor Corporation	FMC Technologies, Inc.
Jacobs Engineering Group Inc.	JDS Uniphase Corporation	KLA-Tencor Corporation
Lam Research Corporation	Linear Technology Corporation	Marvell Technology Group Ltd.
Maxim Integrated Products, Inc.	McDermott International, Inc.	Micron Technology, Inc.
NRG Energy, Inc.	NVIDIA Corporation	Oceaneering International, Inc.
ON Semiconductor Corporation	Public Service Enterprise Group Incorporated	RPC, Inc.
SunEdison, Inc.	SunPower Corporation	Teradyne, Inc.
Veeco Instruments Inc.	Willbros Group, Inc.

Review of Peer Company Data

On at least a biennial basis, but typically annually, the compensation committee evaluates the compensation payable to our named executive officers against data regarding the pay practices of companies in our peer group, looking at individual components of pay, including total amount paid or payable. In addition, the compensation committee annually reviews any payments to our named executive officers that would be required under various severance scenarios. When conducting this review, the compensation committee also considers information and recommendations from management regarding past, present and future compensation of our named executive officers under various payment scenarios.

Based on its review and analysis of the pay practices of our peers, Compensation Strategies concluded, and our compensation committee agreed, that the compensation paid to our named executive officers was consistent with our stated compensation objectives regarding our target pay as compared to our peer group, and was thus reasonable in the aggregate as compared to the peer group above. See “Executive Compensation Principles—Evaluating the Market.”

Consultant Fees and Independence Review

The aggregate fees paid to Compensation Strategies in 2015 were $291,379 and related solely to consulting services for executive and director compensation. During 2015, the compensation committee conducted an independence analysis of the relationship of Compensation Strategies to the Company, including a review of potential conflicts of interest, and concluded that Compensation Strategies is independent and no such conflicts existed.

Individual Compensation Review

The individual performance of each of our named executive officers has been, and continues to be, a major factor in the compensation committee’s decision regarding such executive’s level of compensation. Absent unusual circumstances, our process for review of individual compensation of our named executive officers is generally as follows. After the completion of each year, our independent directors (meeting in executive session under the direction of the chair of the compensation committee) review the performance of our chief executive officer for the prior year, evaluating his achievement against individual and Company objectives (which objectives were agreed upon between him and the compensation committee early in the prior year), his contributions to the Company’s performance and other leadership accomplishments.

Our chief executive officer provides the compensation committee with an assessment of prior year performance of, and a recommendation for compensation changes with respect to, our other named executive officers, evaluating each executive based on achievement of objectives by the executive and his or her organization, his or her contribution to the Company’s performance and other leadership accomplishments. Based on these considerations, and following an exercise of its independent judgment on the board’s interactions with the named executive officers, the compensation committee (i) sets base salary and target bonus percentages for the current year, (ii) determines the appropriate level, if any, of cash-incentive compensation for the prior year and (iii) determines the appropriate equity incentive compensation for the named executive officer.

Consistent with its approach in prior years, the compensation committee’s decision regarding pay increases and awards in 2015 was influenced in part by prospective considerations regarding the measures that would most effectively ensure the uninterrupted focus of our named executive officers during this key growth period for the Company.

Compensation Risk Analysis

In the context of the total compensation review and the adoption of our 2015 incentive programs, the compensation committee considered whether our compensation structure and programs encourage excessive or inappropriate risk taking and concluded that they did not do so.

2015 Compensation Decisions

The following is a discussion of the considerations taken into account in establishing compensation for our named executive officers in 2015.

Base Salary

Base salary is the fixed element of our named executive officers’ annual cash compensation. The value of base salary for each named executive officer reflects the requirements of such executive’s employment agreement and his or her individual performance and skill set, including the market value of that skill set. The Company seeks to maintain base salary levels for our executives at the 50th percentile of our peer group (with the expectation that generally any compensation paid at a level above the 50th percentile is warranted only due to extraordinary performance, critical skill sets or similar considerations). The base salaries for our named executive officers, including our chief executive officer, are generally positioned at or below the 50th percentile.

The compensation committee evaluates market data and the individual performance of executives during our regular annual salary review process, which we refer to as our “annual pay cycle.” At the beginning of 2015, the base salaries of our named executive officers were as follows: Mr. Hughes ($750,000 which was subsequently increased to $850,000); Mr. Widmar ($550,000); Mr. Antoun ($550,000); Mr. Kishkill ($400,000 which was subsequently increased to $440,000); and Mr. Garabedian ($420,250 which was subsequently increased to $440,000).

Cash Incentive Compensation

Our cash incentive compensation consists primarily of our annual bonus program, which for 2015 was designed under our 2010 Omnibus Plan, and cash sign-on bonuses that we use to create incentives for individuals to join our Company, including to compensate such individuals for payments forfeited upon leaving their prior employment to join us or to offset relocation costs.

Annual Bonus Program. We use our annual bonus program to encourage achievement of specified strategic and operational objectives and focus on those objectives to help us achieve our mission of enabling a world powered by clean, affordable solar energy. On February 19, 2015, the compensation committee adopted a 2015 bonus program (the “2015 Bonus Plan”) for executives, including our named executive officers, with a single threshold operating income metric as well as various performance metrics, each of which is weighted equally, to strengthen

the connection between executive performance and incentive pay, which is one of our core executive compensation principles. The compensation committee selected the metrics and weighting applicable to the 2015 Bonus Plan with the Long Term Strategic Plan in mind, believing that these metrics correlated directly with the current year milestones set under the Long Term Strategic Plan. Upon achievement of the threshold operating income metric, the maximum bonus pool may be funded, but the amount of each participant’s actual bonus will be determined based on the achievement of the various performance metrics, which will result in actual payouts less than the maximum bonus pool. Allocation of the bonus pool among various regions and among the individual named executive officers will additionally be subject to the discretion of our chief executive officer (and the compensation committee, in the case of our chief executive officer), but will not result in payment to any of the named executive officers of a bonus amount greater than the maximum bonus amount approved by the compensation committee with respect to each of our named executive officers. Furthermore, the compensation committee retains discretion to reduce any award achieved under the program to the extent appropriate. All bonus payments will be subject to clawback to the extent required by applicable law.

Bonus Program Targets, Objective and Calculation. The 2015 Bonus Plan, as applicable to our named executive officers, had a $170 million adjusted operating income¹ minimum threshold level and a matrix of the following four performance metrics, which were established based on the goals set forth in our confidential annual operating plan for 2015: (i) operating cash flow, (ii) cost per watt, at both the module and balance of system levels, (iii) stabilized efficiency and (iv) sales metrics (i.e., bookings and gross margins on bookings; operations and maintenance (“O&M”) bookings, and O&M margins). We believe that these four metrics are key drivers of the Company’s long-term success by aligning directly with our Long Term Strategic Plan, and are critical measures of success with respect to our annual operating plan. The relative achievement of these performance metrics is linked to enhancing our competitive position in the marketplace by improving our liquidity, reducing our variable costs, reducing manufacturing and fixed spending and increasing our product efficiency. We also established sales metrics that would ensure we were selling the right mix of product at a reasonable gross margin profile, which increases the Company’s future profitability and sustainability while acknowledging the pricing pressure of the current environment. By recognizing achievement of these performance metrics, we align bonuses with our overall Company goals.

Each performance metric was weighted equally because each was equally important in achieving the goals laid out in our confidential annual operating plan. Additionally, the compensation committee considered how these metrics, taken together, would provide proper incentives supplemental to the KSTEPP awards and further concluded that the 2015 Bonus Plan did not involve unnecessary risk for the Company. Performance levels were set for each performance metric ranging from a threshold level of 0.5 in cases of weaker performance to 2.0 in cases of stronger performance. A 0.5 multiplier was assigned to performance at a level that, while not certain at the time targets were set, we considered likely that such performance would be achieved by the end of the year. A 1.0 multiplier was assigned to performance at a level that, while not certain at the time targets were set, aligned with the goals in our confidential annual operating plan, and thus was a level that we expected we could achieve by the end of the year. A 2.0 multiplier was assigned to a performance level that was substantially more uncertain (i.e., that we expected we would have approximately a 50% chance of achieving by year end). If the minimum threshold level of performance was not achieved for a specific metric, the multiplier for that metric would be zero. The maximum bonus percentage payable under this formula in the 2015 Bonus Plan was approximately 200% of target.

In order to determine “adjusted operating income,” we take the Company’s operating income (as defined by U.S. GAAP and described in the Company’s 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “Financial Statements”)) and adjust for (i) stock-based compensation expense, (ii) bonus expense and (iii) foreign currency gains or losses.

Based on an assessment of the 2015 Company results against the criteria described above, the 2015 Bonus Plan results were:


2015 Bonus Plan Performance Metric Results

Metric	Weighting	Main Focus	2015 Payout Factor
Adjusted operating cash flow	25%	Liquidity	1.32
Cost per watt	25%	Profitability	1.32
Stabilized efficiency	25%	Profitability	1.2
Sales metrics (bookings and gross margins on bookings; O&M bookings and O&M margins)	25%	Growth/Profitability	1.36
2015 Bonus Plan Payout Level	1.3

2015 Bonus Payout Results. The 2015 Bonus Plan yielded a 130% payout level. See “Summary Compensation Table — Non-Equity Incentive Plan Compensation” for specific payout levels for each named executive officer.

Target Bonus Percentage. Target bonus percentages are established based on job responsibilities, internal equity and peer group data. Our objective is to generally set bonus targets to be consistent with total cash payments at the 50th percentile of our peer group. The target bonus percentage is evaluated during our annual pay cycle on the same basis as annual base salary (as discussed above in “2015 Compensation Decisions — Base Salary”). As of early 2015, the target bonus percentages of our named executive officers were as follows: Mr. Hughes (145%, subsequently raised to 150%); Mr. Widmar (90%, subsequently raised to 100%); Mr. Antoun (90%, subsequently raised to 100%); Mr. Kishkill (70%, subsequently raised to 75%); and Mr. Garabedian (75%).

These target bonus percentages represent, for each of Messrs. Hughes, Widmar, Antoun and Kishkill an increase of 5, 10, 10 and 5 percentage points, respectively, from the target bonus percentages applicable to each such executive during the 2014 pay cycle, consistent with our objective to set bonus targets in recognition of the key roles and responsibilities of each such named executive officer.

Equity-Based Compensation

We have always been a firm proponent of equity-based compensation. With the transition of our Company from hi-tech growth to a sustainable provider of solar energy solutions, we adjusted our historical broad-based granting practices to those that are more consistent with our evolving business model. Notably, we (i) continue to grant time-based restricted stock units with longer vesting schedules to address retention concerns, while tying realizable compensation to the returns of our stockholders and (ii) granted, on a one-time basis, performance-based share units under the KSTEPP program, which we adopted in 2012 to incentivize performance over a long performance period, based on metrics tied to our Long Term Strategic Plan. In 2015, we granted restricted stock units with time-based vesting criteria to each of our named executive officers and made no additional KSTEPP grants. The compensation committee continues to believe that granting restricted stock units, in addition to the outstanding KSTEPP grants, furthers the Company’s goal of aligning executive and stockholder interests and mitigating any distractions that our executives may feel regarding KSTEPP’s potential for full vesting as a result of the ongoing volatility in the solar industry.

Our practice is to grant our equity awards relatively early in the year. We do not time our grants specifically to avoid any internal “blackouts” or other periods during which our executives and directors may be prohibited by our Insider Trading Policy or applicable law from trading in our securities, or otherwise to provide any preferential benefit to our executives and directors. Equity grants to our named executive officers are described in greater detail in the “Grants of Plan Based Awards” table and the “Outstanding Equity Awards at Fiscal Year-End” table.

Long-Term Incentive Program. We believe that a long-term incentive program provides significant benefit to the Company and routinely reevaluate the components of our long-term incentive program. Awards under the long-term incentive program (i) represent the largest component of executives’ compensation (see “Components of 2015 Executive Compensation”), (ii) serve as a retention tool and (iii) ensure that our executives’ compensation is linked to the long-term interests of our stockholders and our Company performance, consistent with our compensation philosophy. Currently, our long-term incentive program is comprised of a one-time grant of KSTEPP awards, which reward our named executive officers’ contributions toward key elements of our Long Term Strategic Plan, and annual awards of time-based restricted stock units, which are intended to provide some certainty to our named executive officers, to ensure, during their employment, their focus on our Long Term Strategic Plan, as a complement to the performance-based character of the KSTEPP awards. While the KSTEPP awards remain outstanding, the number of restricted stock units with time-based vesting criteria granted annually will vary, based in part on the compensation committee’s view of the annualized value of outstanding KSTEPP units, with the aggregate annual equity award for named executive officers targeted at the 50th percentile of our peer group (with some flexibility to increase that target based on extraordinary contributions by the executive).

The Company did not grant KSTEPP awards to our named executive officers in 2015, consistent with the atypically long vesting and overall term applicable to the KSTEPP awards, described in greater detail below. Unlike a typical performance-based equity compensation program in which awards are made each year, we expect that once we have granted our named executive officers a KSTEPP award (which, for Messrs. Hughes, Widmar, Antoun and Garabedian, occurred in 2012, and for Mr. Kishkill, occurred upon his hire in 2013), no additional performance-based awards will be granted until the outstanding KSTEPP awards vest or are forfeited during the performance period (which varies based on the date of grant, but generally begins on the first day of the quarter in which the award was granted and ends in 2020).

In determining the 2015 grants of time-vested restricted stock units, the compensation committee considered the value of each named executive officer’s outstanding KSTEPP awards and determined to grant each named executive officer an award of time-vested restricted stock units with a value that, in the aggregate, was at or near the 50th percentile.

Annual Equity Grant. For 2015, the compensation committee granted our named executive officers restricted stock units that vest 25% per year, beginning on the first anniversary of the grant date.

The grant value for our named executive officers was: Mr. Hughes ($2,000,000); Mr. Widmar ($873,000); Mr. Antoun ($863,000); Mr. Kishkill ($738,000); and Mr. Garabedian ($718,000).

KSTEPP. In May 2012, the compensation committee approved and adopted the KSTEPP, a performance unit program under the 2010 Omnibus Plan. This program is intended to link the compensation of the Company’s senior executives with the success of our Long Term Strategic Plan by rewarding achievement of key performance objectives over an extended period of time. The goals of our Long Term Strategic Plan are to increase the Company’s growth, profitability and liquidity, which results in greater return to our stockholders. Consistent with our compensation philosophy, the KSTEPP metrics were derived from our Long Term Strategic Plan in order to align the interests of our executives with those of our stockholders, and the compensation committee believes that the use of rigorous performance objectives over a relatively long performance period encourages sustained focus on our long-term strategy. The provisions allowing for partial vesting described below provide our executives with some benefit for partial achievement of performance goals made during this extended period, given the uncertainty of full vesting of the KSTEPP awards, and mitigate anxiety that could otherwise distract from focus on our Long Term Strategic Plan. Because the KSTEPP awards vest over an extended period, as further described below, the value of such awards is considered annually during the period they are outstanding in determining overall compensation for our named executive officers. The compensation committee certified that the conditions required for partial vesting of the KSTEPP awards were achieved in late 2015.

Each KSTEPP award (or portion thereof) was initially subject to a threshold performance goal. The awards would not vest unless and until the compensation committee certified that the Company had achieved the applicable

level of KSTEPP adjusted operating income² within a rolling annual period during the performance period applicable to such award (which for Messrs. Hughes, Widmar, Antoun and Garabedian, is at least $400 million, and for Mr. Kishkill is $350 million). In 2014, the compensation committee certified achievement of this threshold goal for Messrs. Hughes, Widmar, Antoun, Kishkill and Garabedian.

A named executive officer will receive one share of Company common stock for each performance unit that vests. The threshold performance goal and the partial vesting condition have been achieved. The remaining KSTEPP awards may vest (reduced by any previously vested portion), upon the Company’s achievement in any 12-month period beginning and ending on a calendar quarter (which we refer to as “rolling annual period”) that occurs within the performance period specified for each grant (which we refer to as the “performance period,” and which varies based on the date of grant, but generally begins on the first day of the quarter in which the award was granted and ends in 2020) of at least 2.8 gigawatts DC of modules sold in sustainable markets and 15% cash adjusted return on invested capital³ (which we refer to as the “full vesting condition”). In 2015, as noted above, one-third of each KSTEPP award vested sooner, since the vesting condition that required the Company’s achievement in any rolling annual period during the performance period of at least 1.35 gigawatts DC of modules sold in sustainable markets and 13% cash adjusted return on invested capital (which we refer to as the “partial vesting condition”) was achieved.

The remaining unvested two-thirds portion of each KSTEPP award is subject to the named executive officer being continuously employed by the Company or an affiliate through the applicable vesting date, except if the named executive officer is eligible for a pro-rata settlement as described below. Although the KSTEPP units partially vested in 2015, our named executive officers still have the potential to realize vesting of the remaining outstanding portion. Additionally, KSTEPP awards are forfeited upon termination of employment, unless employment is terminated due to death, disability, retirement or termination without cause, and thereafter the applicable vesting condition is achieved, in which case the named executive officers are eligible for a full settlement of their vested award, otherwise they will be eligible for a pro-rata settlement of their non-vested awards. The pro-rata settlement will be based on the length of the named executive officer’s tenure with the Company during the performance period. Additionally, KSTEPP awards will expire and be forfeited with respect to the unvested portion thereof if the vesting conditions are not satisfied and the Company has not achieved in any rolling annual period during the performance period the applicable KSTEPP adjusted operating income goal, in each case, as of the last day of the performance period.

Notwithstanding the foregoing, in the event of a “change of control” (as defined in the 2010 Omnibus Plan) that occurs during the performance period, regardless of whether the Company has achieved in any rolling annual period during the performance period the applicable KSTEPP adjusted operating income goal, 25% of the then-unvested and outstanding portion of the award will accelerate and become vested, in order to allow our executives to share in the gains that would, at such time, be realized by our stockholders. The 25% vesting provision supersedes the change of control provisions in the CIC Agreements between the Company and the named executive officers, which would otherwise provide for, in the case of the named executive officers whose employment with the Company commenced prior to 2013, full acceleration of the award in the event of a change of control. See “Change in Control Severance Agreements.”

In addition, the compensation committee has discretion to further accelerate the vesting of the award in connection with a change of control, including to amend the award to increase the vested percentage payable upon the occurrence of a change of control, which discretion is expected to be exercised based on the Company’s actual

In order to determine “KSTEPP adjusted operating income” applicable to a given award, we take the Company’s operating income (as defined by U.S. GAAP and described in the Financial Statements) for a rolling annual period during the KSTEPP performance period and adjust for (i) extraordinary, unusual and nonrecurring items including restructuring expenses and (ii) KSTEPP related stock-based compensation expense.

“Cash adjusted return on invested capital” for the Company is calculated as follows: (i) “KSTEPP adjusted operating income” as defined above minus income tax expense for such “KSTEPP adjusted operating income” plus depreciation and amortization expense divided by (ii) stockholders’ equity plus debt plus accumulated depreciation minus cash and cash equivalents and marketable securities.

performance tracking relative to the vesting conditions, providing some flexibility to reward our named executive officers at a level that is consistent with our stockholders if the Company is performing well in advance of any such change. Periodically throughout the performance period and at any time when a change of control is anticipated, the compensation committee will review the Company’s progress towards achievement of the full vesting condition and evaluate whether it is appropriate to amend the award to provide accelerated vesting of the award, effective in all cases only upon an actual change of control.

Double-Trigger Equity Vesting. Prior to 2013, the CIC Agreements entered into with newly hired executives provided for full vesting of unvested equity-based compensation (other than KSTEPP awards) upon a change in control of the Company. As of July 2013, our compensation committee determined that the CIC Agreements entered into with newly hired executives will instead provide for vesting of equity-based compensation (other than KSTEPP awards, which have separate CIC vesting provisions described above) only upon a termination without “cause” or resignation for “good reason” within two years following a change in control of the Company. Consistent with that decision, the CIC Agreement entered into with Mr. Kishkill effective September 2013, provides for such double-trigger equity vesting.

Other Executive Compensation Information

Broad-based Benefit Programs and Other Compensation

Our named executive officers are entitled to participate in the various benefit programs we offer to all of our associates, including a 401(k) plan, medical plan, dental plan, vision plan, life insurance plan and long-term and short-term disability plans. In addition, Mr. Kishkill received reimbursement from the Company for premiums paid in 2015 under an Argentinian family medical plan. Under our 401(k) plan, we make a matching contribution equal to 100% of our associates’ contributions to the plan up to a maximum of 4% of an associate’s plan-eligible compensation. In 2015, each of Messrs. Hughes, Widmar, Antoun, Kishkill and Garabedian received the maximum matching contribution of $10,600. Our named executive officers each have vacation entitlements of four weeks per year.

Employment Agreements and Related Arrangements

We have entered into employment, confidentiality, non-competition, non-solicitation and director and officer indemnification agreements with each of our named executive officers. The compensation committee believes these contracts are fair, reasonable, appropriate and necessary to attract and retain the executives who are party to these agreements.

The employment agreements generally provide that if the executive’s employment is terminated without “cause” (as defined therein) (or, in the case of Messrs. Hughes and Antoun if they resign for “good reason” (as defined therein)), then the executive shall be eligible for (i) salary continuation for a severance period subject to the execution of a release of claims in favor of the Company and subject to a reduction based on earnings during the severance period, (ii) health benefit coverage for the severance period, subject to certain contingencies and (iii) an additional 12 months’ service credit for purposes of determining vesting of equity-based compensation awards (this service credit will not have an effect on KSTEPP awards). The employment agreements also provide for an additional 12 months’ service credit for purposes of determining vesting of equity-based compensation in the event employment terminates due to the executives’ death or disability (as defined therein).

Severance benefits, by their nature, require compensation payments without the receipt of corresponding services. We believe that our employment agreements set a proper balance between providing sufficient protection on employment termination and ensuring the executive has sufficient personal investment with respect to his or her employment with the Company and generally provide severance benefits consistent with market practice.

We consistently review the employment agreements we enter into with our named executive officers to address market changes and, in July 2013, our compensation committee adopted a number of changes to be applied prospectively when entering into agreements with newly hired executives to more closely align with market practice. Included among such changes is the elimination of severance benefits upon a resignation for “good reason”

(except in connection with a change in control of the Company), the addition of provisions that make clear that all payments to our executives under such agreements other than base salary are subject to the Company’s clawback policy, all severance payments and benefits are subject to the execution of an irrevocable release of claims in favor of the Company and sign-on bonuses are subject to recoupment in the event of a termination for “cause” within one year of the executive’s start date.

The confidentiality agreements describe the Company’s expectations of the executives regarding the Company’s proprietary and confidential information. The non-competition and non-solicitation agreements establish a “protected period” that generally matches the severance period. During the protected period, the senior executives are subject to restrictive covenants as described in the agreement.

For more details on these employment agreements and the compensation and benefits payable or to be provided in the event of a termination of employment, see “Executive Compensation — Employment Agreements and Arrangements” and “Executive Compensation — Potential Payments Upon Termination or Change in Control — Potential Payments Upon Termination of Employment (Other Than in the Context of a Change in Control).”

Change in Control Severance Agreements

We have entered into CIC Agreements with each of our named executive officers. These agreements are intended to align the interests of the executives with our stockholders in a potential change in control situation by mitigating the uncertainty and questions a potential change in control may raise among such executives, allowing them to focus their continued attention and dedication to their assigned duties.

Equity Vesting. The CIC Agreements with Messrs. Hughes, Widmar, Antoun and Garabedian, entered into prior to July 2013, provide for full vesting of unvested equity-based compensation upon a change in control of the Company. While such vesting ensures that the executives are fairly compensated for the lost opportunity to realize the value of awards that is typically precipitated by a change in control, which is particularly salient for our named executive officers who receive a substantial portion of their income in equity-based compensation that vests over time (see “Components of 2015 Executive Compensation”), the compensation committee determined that the CIC Agreements entered into with newly hired executives on or after July 2013 should provide for vesting only upon a termination without “cause” (as defined therein) or a resignation for “good reason” (as defined therein) within two years following a change in control of the Company, which is reflected in our agreement with Mr. Kishkill. While our equity plans also contemplate vesting of equity if such equity is not assumed by a successor entity (see “Executive Compensation — Potential Payments Upon Termination or Change in Control — Potential Payments Upon a Change in Control — Consequences of Change in Control Under Equity-Based Compensation Plans”), the CIC Agreements address vesting whether or not the equity-based awards are assumed for executives with these arrangements; however, the provisions of the award agreements for KSTEPP awards supersede the change of control provisions in the CIC Agreements. See “Compensation Discussion and Analysis — 2015 Compensation Decisions — Equity-Based Compensation — KSTEPP.”

Severance Benefits. The CIC Agreements provide a double-trigger severance package for all of our named executive officers in the event their employment is terminated without “cause” or they resign for “good reason” within two years following a change in control. A resignation for “good reason” includes any material reduction in the authority, duties or responsibilities held by the executive immediately prior to the CIC date, any material reduction in the annual base salary or annual incentive opportunity of the executive as in effect immediately prior to the CIC date or any change of the executive’s principal place of employment to a location more than fifty miles from the executive’s principal place of employment immediately prior to the CIC date. We believe this standard benefit reinforces the notion that in a change in control situation, all of the executives are similarly situated and must remain focused. The standard benefit is two times their base salary; two times a bonus amount (which is defined as the greater of (i) the executive’s target annual bonus for the year of termination and (ii) the average of the annual cash bonuses payable to the executive in respect of the three full calendar years immediately preceding the calendar year that includes the termination date or, if the executive has not been employed for three full calendar years preceding the calendar year that includes the termination date, the average of the annual cash bonuses payable to the executive for the number of full calendar years prior to the termination date that he or she has been

employed); a pro-rated target bonus; 18 months’ health benefit continuation and outplacement benefits (maximum of $20,000). Severance benefits are subject to the executive’s execution of a release in favor of the Company.

Tax Gross-Ups. None of the CIC Agreements in effect with our named executive officers provide a parachute tax gross-up, and gross-ups with respect to taxes related to legal fees or expenses incurred in connection with disputes related to the CIC Agreements are not provided in agreements with executives hired on or after July 2013.

Evaluation by the Compensation Committee. The compensation committee reviews the terms of the CIC Agreements in consultation with its independent compensation consultant, assesses the impact of possible payouts under the CIC Agreements in the event of a change in control and confirms that the CIC Agreements are fair and reasonable to both the executive and the Company. Estimates of change in control payments are presented to, and reviewed by, the compensation committee when compensation is evaluated. Based on its most recent annual review of the CIC Agreements, the compensation committee continues to believe the payments are fair and reasonable. For a further description of compensation provided in the event of a change in control, see “Executive Compensation — Potential Payments Upon Termination or Change in Control — Potential Payments Upon a Change in Control.”

Tax and Accounting Implications

Section 162(m) of the Code. With certain material exceptions, Section 162(m) of the Internal Revenue Code (the “Code”) limits the deductibility of compensation paid by a public company in any year to $1 million to each of the chief executive officer and the next three most highly paid executive officers other than the chief financial officer.

The 2010 and 2015 Omnibus Plans are designed to enable most executive compensation to be deductible by the Company under Section 162(m) of the Code; however, the compensation committee has not adopted a policy that all compensation must be deductible, particularly where additional compensation may be needed to attract or retain executives for key leadership positions in the Company.

Accounting for Equity-Based Compensation. The Company uses ASC Topic 718 for purposes of determining the fair value of its equity-based compensation. The assumptions used in the calculations of these amounts are included in Note 18, “Share-Based Compensation,” to the Company’s audited financial statements for the fiscal year ended December 31, 2015, included in the Company’s Annual Report on Form 10-K filed with the Commission on February 24, 2016. The fair value of awards made to each named executive officer in 2015 is set forth under “Summary Compensation Table.”

COMPENSATION COMMITTEE REPORT

The following report of the compensation committee is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference into any other of the Company’s filings under the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent we specifically incorporate this report by reference therein.

Since the formation of the compensation committee in October 2006, Michael Sweeney has served as chair of the compensation committee. Paul H. Stebbins has served on the compensation committee since his appointment to the board of directors on December 19, 2006. William J. Post has served on the compensation committee since July 26, 2010. Richard D. Chapman has served on the compensation committee since July 31, 2012.

The compensation committee is comprised solely of non-associate directors who are each: (i) independent as defined under the NASDAQ listing standards, (ii) a non-associate director for purposes of Rule 16b-3 of the Exchange Act and (iii) an outside director for purposes of Section 162(m) of the Code.

With a keen sense of awareness of its fiduciary obligations, the compensation committee actively engages management and reviews data on (i) the relationship between the Company’s incentive compensation programs and the Company’s long-term strategic goals, (ii) the impact of any individual compensation changes on total compensation (including reviewing executive tally sheets) and (iii) the possibility that any particular program or arrangement could incentivize inappropriate risk-taking behaviors. The compensation committee believes that the Company’s compensation philosophy is appropriate and that the Company’s incentive compensation programs are important tools that allow all associates, including management, to successfully focus on matters critical to the Company’s long-term success.

The compensation committee has reviewed and discussed the “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the compensation committee recommended to the board of directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement on Schedule 14A and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Submitted by the Members of the Compensation
Committee

Michael Sweeney (Chair)

Richard D. Chapman

William J. Post

Paul H. Stebbins

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information with respect to compensation earned for the fiscal years ended December 31, 2015, 2014 and 2013, respectively, by each of our chief executive officer, our chief financial officer and our three other most highly compensated executive officers.


Name and Principal Position	Year		Salary ($)(1)		Bonus ($)		Stock Awards ($)(2)		Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)(4)		Total ($)
James A. Hughes		2015		859,615		—		2,000,004		1,657,500		10,600		4,527,719
Chief Executive Officer		2014		750,000		—		2,000,011		1,015,725		10,400		3,776,136
		2013		750,000		—		2,000,015		928,125		12,132		3,690,272

Mark R. Widmar		2015		571,154		—		873,044		715,000		10,600		2,169,798
Chief Financial Officer		2014		550,000		—		800,028		485,100		10,400		1,845,528
		2013		550,000		—		900,020		490,050		11,100		1,951,170

Georges J. Antoun		2015		571,154		—		863,055		715,000		10,600		2,159,809
President — U.S.		2014		550,000		—		800,028		485,100		10,400		1,845,528
		2013		550,000		—		1,500,025		462,825		11,580		2,524,430

Joseph G. Kishkill (5)		2015		447,692		—		738,009		429,000		25,418		1,640,119
President — International		2014		400,000		—		610,052		274,400		10,400		1,294,852
		2013		115,385		100,000		5,230,008		86,486		15,284		5,547,163

Raffi Garabedian		2015		452,365		—		718,031		429,000		10,600		1,609,996
Chief Technology Officer		2014		417,490		—		500,032		311,973		10,400		1,239,895
		2013		400,577		500		1,000,008		304,425		10,831		1,716,341

(1)	Salary represents actual salary earned during each applicable year, and includes base salary and actual payments for vacation and holidays.

(2)

The amounts reported in these columns reflect the aggregate grant date fair value of these awards computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions and methodologies used in the calculations of these amounts for 2015 are set forth in Note 18, “Share-Based Compensation,” to the Company’s audited financial statements for the fiscal year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. Under generally accepted accounting principles, compensation expense with respect to stock awards granted to our executive officers is generally recognized over the vesting periods applicable to the awards. The Securities and Exchange Commission disclosure rules require that we present the stock award amounts in the applicable column of the table above using the grant date fair value of the awards granted during the corresponding year (regardless of the period over which the awards are scheduled to vest). For a discussion of specific stock awards granted during 2015, see also “Grants of Plan-Based Equity Awards” below and the narrative discussion that follows.

(3)	For a description of Non-Equity Incentive Plan Compensation, see “Compensation Discussion and Analysis — Components of 2015 Executive Compensation” and “Compensation Discussion and Analysis — 2015 Compensation Decisions — Cash Incentive Compensation.”

(4)	The components of All Other Compensation are provided in the table below for fiscal years 2015, 2014 and 2013.


Name	Year		Relocation Benefits ($)		401(k) Matching Contribution ($)		Insurance Benefits ($)			Other ($)		Total All Other Compensation ($)(6)
James A. Hughes		2015		—		10,600		—			—		10,600
		2014		—		10,400		—			—		10,400
		2013		—		10,200		—			—		12,132
Mark R. Widmar		2015		—		10,600		—			—		10,600
		2014		—		10,400		—			—		10,400
		2013		—		10,200		—			—		11,100
George J. Antoun		2015		—		10,600		—			—		10,600
		2014		—		10,400		—			—		10,400
		2013		—		10,200		—			—		11,580
Joseph G. Kishkill		2015		—		10,600		14,818	(7)		—		25,418
		2014		—		10,400		—			—		10,400
		2013		12,086		3,077		—			—		15,824
Raffi Garabedian		2015		—		10,600		—			—		10,600
		2014		—		10,400		—			—		10,400
		2013		—		10,200		—			—		10,831

(5)	Mr. Kishkill’s employment commenced on September 9, 2013.

(6)

In 2013, we voluntarily included in “Total All Other Compensation” amounts paid for insurance premiums relating to a group life insurance scheme sponsored by the Company. Because we provide benefits under this scheme to our named executives on generally the same basis as provided to all of our associates, disclosure of such amounts is not required by SEC rules. As of 2014, we have determined not to include these amounts. For Messrs. Hughes, Widmar, Antoun and Kishkill, “Total All Compensation” above still includes such premiums paid in 2013 as follows: Mr. Hughes, $1,932; Mr. Widmar, $900; Mr. Antoun, $1,380; Mr. Kishkill, $121; and Mr. Garabedian. $631.

(7)	Mr. Kishkill received reimbursement from the Company for premiums paid in 2015 under an Argentinian family medical plan.

Grants of Plan-Based Equity Awards

The following table sets forth summary information regarding all grants of plan-based awards made to our named executive officers during the year ended December 31, 2015. Unless otherwise noted in the table below, the restricted stock units granted in 2015 vest over four years at a rate of 25% per year, commencing on the first anniversary of the grant date. No stock options were granted in 2015. The minimum award (below threshold performance) under the cash and equity plan-based award programs was $0.


				Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)						All Other Stock Awards: Number of Shares of Stock or Units (#)		Market Price on Grant Date ($/Sh)		Grant Date Fair Value of Stock Awards ($)(2)
	Award Type	Grant Date		Threshold ($)		Target ($)		Maximum ($)				Market Price on Grant Date ($/Sh)		Grant Date Fair Value of Stock Awards ($)(2)
James A. Hughes	RSU		3/5/15								32,436		61.66		2,000,004
	Annual Cash				637,500		1,275,000		2,550,000
Mark R. Widmar	RSU		3/5/15								14,159		61.66		873,044
	Annual Cash				275,000		550,000		1,100,000
Georges J. Antoun	RSU		3/5/15								13,997		61.66		863,055
	Annual Cash				275,000		550,000		1,100,000
Joseph G. Kishkill	RSU		3/5/15								11,969		61.66		738,009
	Annual Cash				165,000		330,000		660,000
Raffi Garabedian	RSU		3/5/15								11,645		61.66		718,031
	Annual Cash				165,000		330,000		660,000

(1)	For a description of Non-Equity Incentive Plan Compensation, see “Compensation Discussion and Analysis — Components of 2015 Executive Compensation” and “Compensation Discussion and Analysis — 2015 Compensation Decisions — Cash Incentive Compensation — Annual Bonus Program.”

(2)

The grant date fair value of the stock awards was determined in accordance with ASC Topic 718. The assumptions used in the calculation of these amounts are included in Note 18, “Share-Based Compensation” to the Company’s audited financial statements for the fiscal year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the Commission on February 24, 2016.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information with respect to outstanding stock awards held by our named executive officers at December 31, 2015.


			Stock Awards (1)					Equity Incentive Plan 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 ($)(2)		Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)(2)
James A. Hughes		3/19/12		10,464			690,519
		3/13/13		37,174			2,453,112
		3/5/14		25,795			1,702,212
		3/5/15		32,436			2,140,452
		5/7/12							333,333	(3)		21,996,645

Total				105,869			6,986,295		333,333			21,996,645
Mark R. Widmar		4/4/12		14,461			954,281
		4/4/12		9,940	(4)		655,941
		3/13/13		16,728			1,103,881
		3/5/14		10,318			680,885
		3/5/15		14,159			934,352
		5/7/12							176,667	(3)		11,658,255

Total				65,606			4,329,340		176,667			11,658,255
Georges J. Antoun		7/2/12		16,361			1,079,662
		3/13/13		27,881			1,839,867
		3/5/14		10,318			680,885
		3/5/15		13,997			923,662
		7/2/12							176,667	(3)		11,658,255

Total				68,557			4,524,076		176,667			11,658,255
Joseph G. Kishkill		9/9/13		5,884			388,285
		3/5/14		7,868			519,209
		3/5/15		11,969			789,834
		9/9/13							83,333	(3)		5,499,145

Total				25,721			1,697,328		83,333			5,499,145
Raffi Garabedian		3/21/12		4,513			297,813
		3/13/13		18,587			1,226,556
		3/5/14		6,449			425,570
		3/5/15		11,645			768,454
		5/7/12							90,000	(3)		5,939,100

Total				41,194			2,718,393		90,000			5,939,100

(1)	Unless otherwise noted, the restricted stock units vest 25% annually, subject to the named executive officer’s continued employment.

(2)	The market value was calculated using the closing market price on December 31, 2015 of $65.99.

(3)

This plan-based award vests in two separate tranches, each contingent upon the achievement of a threshold performance goal as well as pre-established performance criteria within a defined performance period. The vesting of the first such tranche was certified on November 9, 2015 for the rolling annual period ended September 30, 2015. For a description of this award see “Compensation Discussion and Analysis — Components of 2015 Executive Compensation” and “Compensation Discussion and Analysis — 2015 Compensation Decisions — Equity-Based Compensation — KSTEPP.” The amounts shown above assume full vesting of the second tranche as of December 31, 2015. These amounts are not necessarily indicative of actual payouts for the second tranche of the KSTEPP awards, which are not now known but will ultimately be determined based on our certification of performance through the entire performance period (and actual payout may range from $0 to the maximum payout).

(4)	The restricted stock units for this grant vest 40% on the first anniversary of the grant date, and ratably for the remaining three years at 20%.

Stock Vested

The following table provides information, on an aggregate basis, about stock awards that vested during the fiscal year ended December 31, 2015 for each of the named executive officers.


	Stock Awards
Name	Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)(1)
James A. Hughes		204,318		12,019,312
Mark R. Widmar		128,284		7,599,047
Georges J. Antoun		122,075		6,953,725
Joseph G. Kishkill		47,232		2,735,092
Raffi Garabedian		62,251		3,673,265

(1)	For a description of vesting of restricted stock units see “Compensation Discussion and Analysis — Components of 2015 Executive Compensation” and “Compensation Discussion and Analysis — 2015 Compensation Decisions — Equity-Based Compensation.”

Pensions and Nonqualified Deferred Compensation

We do not currently provide our named executive officers with pension benefits (other than a tax-qualified 401(k) plan benefit) or other nonqualified deferred compensation arrangements that could be characterized as nonqualified deferred compensation arrangements under Section 409A of the Code.

Employment Agreements and Arrangements

Although some of our employment agreements include specific provisions subjecting only certain payments thereunder to clawback to the extent required by law, as a result of the Company’s adoption of a broadly applicable clawback policy, certain payments to our executives under each of the agreements below are subject to clawback to the extent required by applicable law.

James A. Hughes

Effective as of May 3, 2012, we entered into an amended and restated employment agreement with Mr. James A. Hughes in light of our appointment of Mr. Hughes as our chief executive officer. Under the terms of his employment agreement, during 2015 Mr. Hughes was entitled to an annual base salary as described under “2015 Compensation Decisions — Base Salary,” the opportunity to participate in the Company’s annual bonus program with a target annual bonus of 145% (which was subsequently increased to 150% and is subject to such clawbacks as may be required by law), as described under “Compensation Discussion and Analysis — 2015 Compensation Decisions — Cash Incentive Compensation,” other senior level incentive programs (subject to such clawbacks as may be required by law), standard employee benefits and four weeks of vacation.

Our employment agreement with Mr. Hughes provides that, in the event Mr. Hughes’ employment is terminated by us without “cause” or by Mr. Hughes for “good reason,” Mr. Hughes is eligible to receive the following: (i) severance equal to two years of his annual base salary, payable over the 24 months following termination, (ii) continued medical benefits until the earlier of two years following termination or his coverage under the medical benefit plan of another employer and (iii) an additional one year of service credit for purposes of determining vesting of time-based equity compensation awards. The additional vesting credit described in (iii) above also applies if Mr. Hughes’ employment terminates due to his death or disability. In the event of termination of Mr. Hughes’ employment for any reason, he is entitled to payment of his earned and unused (and unforfeited) vacation. The severance benefits described in clause (i) above are conditioned upon Mr. Hughes timely delivering a valid and irrevocable release of claims in favor of the Company.

Mr. Hughes is also subject to a separate confidentiality and intellectual property agreement and a separate non-competition and non-solicitation agreement, the latter of which provides that Mr. Hughes will not compete with the Company or solicit Company associates during the two-year period after termination of his employment for any reason (the period after the respective termination date of an employee by the Company, such employee’s “Restricted Period”).

Mr. Hughes has also entered into a separate CIC Agreement with the Company, the terms of which are described in “Potential Payments Upon Termination or Change in Control — Potential Payments Upon a Change in Control — Change in Control Severance Agreements.”

Mark R. Widmar

Effective as of April 4, 2011, we entered into an employment agreement with Mr. Mark R. Widmar, our chief financial officer. Under the terms of his employment agreement, during 2015 Mr. Widmar was entitled to an annual base salary as described under “Compensation Discussion and Analysis — 2015 Compensation Decisions — Base Salary,” the opportunity to participate in the Company’s annual bonus program with a target annual bonus of 90% (which was subsequently increased to 100% and is subject to such clawbacks as may be required by law), as described under “Compensation Discussion and Analysis — 2015 Compensation Decisions — Cash Incentive Compensation,” other senior level incentive programs (subject to such clawbacks as may be required by law), standard employee benefits and four weeks of vacation.

Our employment agreement with Mr. Widmar provides that, in the event Mr. Widmar’s employment is terminated by us without “cause,” Mr. Widmar is eligible to receive the following: (i) severance equal to one year of his annual base salary, payable over the 12 months following termination, (ii) continued medical benefits until the earlier of one year following termination or his coverage under the medical benefit plan of another employer and (iii) an additional one year of service credit for purposes of determining vesting of time-based equity compensation awards. The additional vesting described in (iii) above also applies if Mr. Widmar’s employment terminates due to his death or disability. In the event of termination of Mr. Widmar’s employment for any reason, he is entitled to payment of his earned and unused (and unforfeited) vacation. The severance benefits described in clause (i) above are conditioned upon Mr. Widmar timely delivering a valid and irrevocable release of claims in favor of the Company.

Mr. Widmar is also subject to a separate confidentiality and intellectual property agreement and a separate non-competition and non-solicitation agreement, the latter of which provides that Mr. Widmar will not compete with the Company or solicit Company associates during a one-year Restricted Period.

Mr. Widmar has also entered into a separate CIC Agreement with the Company, the terms of which are described in “Potential Payments Upon Termination or Change in Control — Potential Payments Upon a Change in Control — Change in Control Severance Agreements.”

Georges J. Antoun

Effective as of July 1, 2012, we entered into an employment agreement with Mr. Georges J. Antoun to serve as our chief operating officer. Effective July 1, 2015, Mr. Antoun was appointed to President — United States. Under the terms of his employment agreement, during 2015 Mr. Antoun was entitled to an annual base salary as described

under “Compensation Discussion and Analysis — 2015 Compensation Decisions — Base Salary,” the opportunity to participate in the Company’s annual bonus program with a target annual bonus of 90% (which was subsequently increased to 100% and is subject to such clawbacks as may be required by law), as described under “Compensation Discussion and Analysis — 2015 Compensation Decisions — Cash Incentive Compensation,” other senior level incentive programs (subject to such clawbacks as may be required by law), standard employee benefits and four weeks of vacation.

Our employment agreement with Mr. Antoun provides that, in the event Mr. Antoun’s employment is terminated by us without “cause” or by Mr. Antoun for “good reason,” Mr. Antoun is eligible to receive the following: (i) severance equal to one year of his annual base salary, payable over the 12 months following termination, (ii) continued medical benefits until the earlier of one year following termination or his coverage under the medical benefit plan of another employer and (iii) an additional one year of service credit for purposes of determining vesting of time-based equity compensation awards. The additional vesting described in (iii) above also applies if Mr. Antoun’s employment terminates due to his death or disability. In the event of termination of Mr. Antoun’s employment for any reason, he is entitled to payment of his earned and unused (and unforfeited) vacation. The severance benefits described in clause (i) above are conditioned upon Mr. Antoun timely delivering a valid and irrevocable release of claims in favor of the Company.

Mr. Antoun is also subject to a separate confidentiality and intellectual property agreement and a separate non-competition and non-solicitation agreement, the latter of which provides that Mr. Antoun will not compete with the Company or solicit Company associates during a one-year Restricted Period.

Mr. Antoun has also entered into a separate CIC Agreement with the Company, the terms of which are described in “Potential Payments Upon Termination or Change in Control — Potential Payments Upon a Change in Control — Change in Control Severance Agreements.”

Joseph G. Kishkill

Effective as of September 9, 2013, we entered into an employment agreement with Mr. Joseph G. Kishkill to serve as our chief commercial officer. Effective July 1, 2015 Mr. Kishkill was appointed president — international. Under the terms of his employment agreement, during 2015 Mr. Kishkill was entitled to an annual base salary as described under “Compensation Discussion and Analysis — 2015 Compensation Decisions — Base Salary,” the opportunity to participate in the Company’s annual bonus program with a target annual bonus of 70% (which was subsequently increased to 75% and is subject to such clawbacks as may be required by law), as described under “Compensation Discussion and Analysis — 2015 Compensation Decisions — Cash Incentive Compensation,” other senior level incentive programs (subject to such clawbacks as may be required by law), standard employee benefits and four weeks of vacation.

Our employment agreement with Mr. Kishkill provides that, in the event Mr. Kishkill’s employment is terminated by us without “cause” Mr. Kishkill is eligible to receive the following: (i) severance equal to one year of his annual base salary, payable over the 12 months following termination, (ii) continued medical benefits until the earlier of one year following termination or his coverage under the medical benefit plan of another employer and (iii) an additional one year of service credit for purposes of determining vesting of time-based equity compensation awards. The additional vesting described in (iii) above also applies if Mr. Kishkill’s employment terminates due to his death or disability. In the event of termination of Mr. Kishkill’s employment for any reason, he is entitled to payment of his earned and unused (and unforfeited) vacation. The severance and accelerated vesting benefits described in clauses (i) and, in the case of termination without “cause,” (iii) above are conditioned upon Mr. Kishkill timely delivering a valid and irrevocable release of claims in favor of the Company.

Mr. Kishkill is also subject to a separate confidentiality and intellectual property agreement and a separate non-competition and non-solicitation agreement, the latter of which provides that Mr. Kishkill will not compete with the Company or solicit Company associates during a one-year Restricted Period.

Mr. Kishkill has also entered into a separate CIC Agreement with the Company, the terms of which are described in “Potential Payments Upon Termination or Change in Control — Potential Payments Upon a Change in Control — Change in Control Severance Agreements.”

Raffi Garabedian

Effective as of May 1, 2012, we entered into an employment agreement with Mr. Raffi Garabedian, to reflect his promotion to chief technology officer. Under the terms of his employment agreement, during 2015 Mr. Garabedian was entitled to an annual base salary as described under “Compensation Discussion and Analysis — 2015 Compensation Decisions — Base Salary,” the opportunity to participate in the Company’s annual bonus program with a target annual bonus of 75% (subject to such clawbacks as may be required by law), as described under “Compensation Discussion and Analysis — 2015 Compensation Decisions — Cash Incentive Compensation,” other senior level incentive programs, standard employee benefits and four weeks of vacation.

Our employment agreement with Mr. Garabedian provides that, in the event Mr. Garabedian’s employment is terminated by us without “cause” Mr. Garabedian is eligible to receive the following: (i) severance equal to one year of his annual base salary, payable over the 12 months following termination, (ii) continued medical benefits until the earlier of one year following termination and his coverage under the medical benefit plan of another employer and (iii) an additional one year of service credit for purposes of determining vesting of time-based equity compensation awards. The additional vesting described in (iii) above also applies if Mr. Garabedian’s employment terminates due to his death or disability. In the event of termination of Mr. Garabedian’s employment for any reason, he is entitled to payment of his earned and unused (and unforfeited) vacation. The severance benefits described in clause (i) above are conditioned upon Mr. Garabedian’s timely delivering a valid and irrevocable release of claims in favor of the Company.

Mr. Garabedian is also subject to an intellectual property agreement that includes confidentiality, non-competition and non-solicitation provisions, which provide that Mr. Garabedian will not compete with the Company or solicit Company associates during a one-year Restricted Period.

Mr. Garabedian has also entered into a separate CIC Agreement with the Company, the terms of which are described in “Potential Payments Upon Termination or Change in Control — Potential Payments Upon a Change in Control — Change in Control Severance Agreements.”

Potential Payments Upon Termination or Change in Control

Potential Payments Upon Termination of Employment (Other Than in the Context of a Change in Control)

The table below reflects the estimated amount of compensation payable to each of the named executive officers in the event of termination of such executive’s employment as of December 31, 2015. The amount of compensation payable to each named executive officer upon involuntary termination without “cause” (or, for Messrs. Hughes and Antoun, a resignation for “good reason”) and termination due to disability or death of the executive, in each case, other than in connection with a change in control, is shown below. The amounts shown assume that such termination was effective as of December 31, 2015, and thus include amounts earned through such time and are estimates of the amounts that would be paid out to the executives upon their termination. The actual amounts to be paid out can only be determined at the time of the executive’s separation from the Company. As noted above, KSTEPP awards may remain outstanding and eligible to vest upon achievement of the performance criteria following a qualifying termination (i.e., due to disability, death of the executive, involuntary termination without “cause” or “retirement”); however, any payout to terminated participants would be pro-rated, taking into account the portion of the performance period during which such executive was employed. See “Compensation Discussion and Analysis — 2015 Compensation Decisions — Equity-Based Compensation — KSTEPP.” Because it is not possible at this time to estimate whether the remaining tranche of such awards will vest, for the purposes of this table, the remaining tranche of the awards is assumed to vest in full on December 31, 2015. Moreover, because the SEC rules require us to assume that the named executive officers were terminated on such date, no proration has been applied to such assumed payouts. These amounts are not necessarily indicative of actual payouts for the remaining KSTEPP awards, which are not now known but will ultimately be determined based on our certification of performance through the entire performance period (and actual payout may range from $0 to the maximum payout). Unless noted below, for purposes of the calculations below, we have used a share value of $65.99 per share, which was the closing price of our common stock on December 31, 2015, the last trading day in 2015. None of the named executive officers are entitled to compensation upon a termination for “cause” (except for the value of any earned and unused (and unforfeited) vacation).

For descriptions relating to these payments and benefits, including any release, non-competition, non-solicitation or similar requirements, see “Employment Agreements and Arrangements.” The amounts do not include amounts payable pursuant to the Company’s contracts, agreements, plans or arrangements to the extent they do not discriminate in scope, terms or operation, in favor of executive officers of the Company and that are available generally to all salaried associates, including payment of accrued rights such as payment for accrued and unpaid vacation.


Name	Involuntary Not for Cause Termination ($)(1)			Termination Due to Death or Disability ($)
James A. Hughes
Cash Severance		1,700,000	(2)		1,275,000	(5)
Health Coverage		33,336	(3)		—
Equity Treatment		25,016,215	(4)		25,016,215	(4)

Total		26,749,551			26,291,215
Mark R. Widmar
Cash Severance		550,000	(2)		550,000	(5)
Health Coverage		16,668	(3)		—
Equity Treatment		14,281,028	(4)		14,281,028	(4)

Total		14,847,696			14,831,028
Georges J. Antoun
Cash Severance		550,000	(2)		550,000	(5)
Health Coverage		18,295	(3)		—
Equity Treatment		14,115,855	(4)		14,115,855	(4)

Total		14,684,150			14,665,855
Joseph G. Kishkill
Cash Severance		440,000	(2)		440,000	(5)
Health Coverage		16,954	(3)		—
Equity Treatment		6,063,887	(4)		6,063,887	(4)

Total		6,520,841			6,503,887
Raffi Garabedian
Cash Severance		440,000	(2)		440,000	(5)
Health Coverage		16,586	(3)		—
Equity Treatment		7,184,265	(4)		7,184,265	(4)

Total		7,640,851			7,624,265

(1)	For Messrs. Hughes and Antoun, amounts reflected in these columns would also be payable upon a resignation for “good reason.”

(2)	Estimates based on aggregate payments made over the severance period, which period for Mr. Hughes is 24 months and for all other executives is 12 months.

(3)	Represents maximum aggregate value of continued health benefit coverage based on 2016 costs for this benefit, to be provided over the health benefit continuation period, which is 24 months for Mr. Hughes and 12 months for all other named executive officers.

(4)

Amounts are estimates, based on the aggregate value of 12 months’ acceleration of the vesting of equity-based awards outstanding on December 31, 2015, as provided under the terms of each named executive officer’s employment agreement. As noted above, for the purposes of this calculation, outstanding KSTEPP awards (i.e., the second tranche) are assumed to have vested on December 31, 2015. The amounts shown for the KSTEPP

awards are not necessarily indicative of actual payouts, which are not now known but will ultimately be determined based on our certification of performance through the performance period (and actual payout may range from $0 to the maximum payout). KSTEPP awards may remain outstanding and eligible to vest upon achievement of the performance criteria following a qualifying termination (i.e., due to disability, death of the executive, involuntary termination without “cause” or “retirement”); however, any payout to terminated participants would be prorated, taking into account the portion of the performance period during which the executive was employed. See “Compensation Discussion and Analysis — 2015 Compensation Decisions — Equity-Based Compensation — KSTEPP.”

(5)

Our 2015 annual cash incentive compensation plan requires that all associates be employed on the bonus payout date with the following exceptions: retirement, death and long-term disability. These exceptions allow eligibility for a pro-rated award based on days of service completed during the performance year. Calculation is shown as target payout of 1X assuming employment through the bonus payout date.

Potential Payments Upon a Change in Control

Consequences of Change in Control Under Equity-Based Compensation Plans. The 2015 Omnibus Plan (and its predecessor, the 2010 Omnibus Plan) provide that, unless otherwise provided in an award agreement, or unless provision is made in connection with the change of control (as defined below) for assumption of, or substitution for, awards previously granted, in the event of a change of control, any equity awards outstanding as of the date the change of control shall be treated as follows as of the date immediately prior to the change of control: (i) awards subject only to time-based vesting criteria would become (or would be deemed) fully vested and/or exercisable, and all restrictions and forfeiture provisions related thereto would lapse, as applicable, and (ii) all performance units, cash incentive awards and other awards designated as performance compensation awards would be paid out as if the date of the change of control were the last day of the applicable performance period and “target” performance levels had been attained.

The term “change of control” in the 2010 Omnibus Plan is defined generally as the occurrence of any of the following events:

•

during any period of 24 consecutive months, a change in the composition of a majority of our board of directors that is not supported by a majority of the incumbent board of directors;

•

the consummation of a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the total gross fair market value (determined without regard to liabilities) of our assets, subject to certain exceptions for transactions that would not constitute a change in control; or

•

the approval by our stockholders of a plan of our complete liquidation or dissolution; or an acquisition by any individual, entity or group of beneficial ownership of a percentage of the combined voting power of our then outstanding voting securities entitled to vote generally in the election of directors that is equal to or greater than the greater of (a) 20% and (b) the percentage of the combined voting power of the outstanding voting securities owned by certain specified stockholders, with exceptions for certain acquisitions.

The term “change of control” in the 2015 Omnibus Plan is defined generally as the occurrence of any of the following events:

•

During any period of 24 consecutive months, individuals who were members of the board of directors at the beginning of such period cease at any time during such period for any reason to constitute at least a majority of the board of directors;

•

The consummation of (i) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) the Company or (y) any of its subsidiaries, (but in the case of this clause (y) only if voting securities of the Company are issued or issuable in connection with such transaction) or (ii) a sale or other disposition of all or substantially all the assets of the Company, in each case, unless following which (A) the stockholders of the Company as of just prior to such consummation continue to own in substantially the same proportions more than 50% of the combined voting power of the surviving entity (disregarding any interests in the surviving entity that such stockholders owned before such

consummation), (B) no person (excluding employee benefit plans or related trusts and specified shareholders (defined below)) owns 20% or more of the combined voting power of the surviving entity and (C) a majority of the members of the board of directors of the surviving entity were members of the Company’s board of directors as of the time such transaction was agreed upon or approved;

•

The approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company, unless such liquidation or dissolution is part of a transaction or series of transactions described in the preceding bullet that does not otherwise constitute a change of control; or

•

The date that any legal person, corporation or other entity or group (as defined) other than any “specified shareholder” becomes the beneficial owner, directly or indirectly, of securities of the Company representing a percentage of the combined voting power of that is equal to or greater than 30%. For this purpose, the “specified shareholders” are (i) JCL FSLR Holdings, LLC and its beneficiaries, (ii) JTW Trust No. 1 UAD 9/19/02 and its beneficiaries, (iii) any legal person directly or indirectly controlled by any of the foregoing and (iv) any trust for the direct or indirect benefit of any of the foregoing.

KSTEPP

In the event of a change of control (as defined in the 2010 Omnibus Plan) that occurs during the performance period for our KSTEPP awards granted under the 2010 Omnibus Plan, 25% of the then-unvested portion of each award will accelerate and become vested without regard to achievement of the performance goal as of such time, in order to allow our executives to share in the gains that would, at such time, be realized by our stockholders. The 25% vesting provision supersedes the change of control provisions in the CIC Agreements between the Company and the named executive officers (described below). For more detail about our KSTEPP program, see “Compensation Discussion and Analysis — 2015 Compensation Decisions — Equity-Based Compensation — KSTEPP.”

In addition, the compensation committee has discretion to further accelerate the vesting of the KSTEPP awards in connection with a change of control, including to amend an award to increase the vested percentage payable upon the occurrence of a change of control, which discretion is expected to be exercised based on the Company’s actual performance relative to the vesting conditions. Periodically (and at any time when a change of control is anticipated), the compensation committee will review the Company’s progress towards achievement of either the partial or the full vesting condition and evaluate whether it is appropriate to amend the award (or, if a change of control is expected, to exercise its discretion) to provide accelerated vesting of a higher portion of the award, effective in all cases only upon an actual change of control.

Change in Control Severance Agreements

The Company has entered into CIC Agreements with its executive officers and certain senior management, including each of its named executive officers. As of July 2013, our compensation committee determined that such CIC Agreements will no longer provide for full vesting of unvested time-vested equity-based compensation upon a change in control of the Company and will instead provide for vesting of such equity-based compensation only upon a termination without “cause” or resignation for “good reason” within two years following a change in control of the Company. Consistent with the decision, pursuant to the CIC Agreement entered into with Mr. Kishkill, if a change in control occurs (substantially as defined in the 2015 Omnibus Plan, except that a change in control will only be deemed to have occurred if such change in control constitutes a change in the ownership or effective control of the Company or a change in the ownership or a substantial portion of the assets of the Company within the meaning of Section 409A of the Code), Mr. Kishkill will only become entitled to accelerated vesting of all equity-based, long-term incentive awards (other than awards which by their express terms do not accelerate under the CIC Agreements) upon termination without “cause” or resignation for “good reason” within two years following a change in control of the Company. Under the legacy CIC Agreements with Messrs. Hughes, Widmar, Antoun and Garabedian, if a change in control occurs (substantially as defined in the 2010 Omnibus Plan, except that, pursuant to an August 2013 amendment to such CIC Agreements, a change in control will only be deemed to have occurred if such change in control constitutes a change in the ownership or effective control of the Company or a change in

the ownership or a substantial portion of the assets of the Company within the meaning of Section 409A of the Code), the executive would become immediately entitled to accelerated vesting of all equity-based, long-term incentive awards (other than awards which by their express terms do not accelerate under the CIC Agreements).

Named executive officers who are party to a CIC Agreement will also be entitled to severance payments and benefits if, in the case of each named executive officer other than Mr. Kishkill, the executive’s employment with the Company is terminated in anticipation of a change in control or if, with respect to each named executive officer, during the two-year period after a change in control, the executive’s employment is terminated without “cause” or the executive resigns for “good reason” (which includes material changes in an executive’s duties, responsibilities or reporting relationships, failure to provide equivalent compensation and benefits and being required to relocate 50 or more miles) (such termination, a “qualifying termination”). If terminated or separated from the Company under those circumstances, the executive would be entitled to the following additional benefits under the CIC Agreement:

•

a lump-sum cash severance payment equal to two times the sum of (i) the executive’s annual base salary (without regard to any reduction giving rise to “good reason”) and (ii) the greater of -

•

the executive’s target annual bonus for the year of termination; or

•

the average of the annual cash bonuses payable to the executive in respect of the three full calendar years immediately preceding the calendar year that includes the termination date or, if the executive has not been employed for three full calendar years preceding the calendar year that includes the termination date, the average of the annual cash bonuses payable to the executive for the number of full calendar years prior to the termination date that he or she has been employed;

•

a pro-rated target annual bonus;

•

the continuation of, or reimbursement for, medical and dental benefits for 18 months after termination of employment; and

•

reimbursement for the cost of executive-level outplacement services (subject to a $20,000 limit).

Pursuant to Mr. Kishkill’s CIC Agreement as well as the August 2013 amendment to the legacy CIC Agreements, the lump-sum cash severance payment and the 18-month medical and dental reimbursement period will be reduced by the severance payments payable and the period of time in which each executive receives benefits following termination, as applicable, pursuant to each executive’s employment agreement.

To obtain severance benefits under a CIC Agreement, an executive must first execute a separation agreement with the Company that includes a waiver and release of any and all claims against the Company. For terminations other than a qualifying termination following a change in control, the executive is entitled to accrued rights only.

As a result of our compensation committee’s decision in 2011 to no longer provide any newly hired executives with 280G tax gross-up payments, we no longer have any legacy employment agreements with our named executive officers that allow for 280G tax gross-up payments.

The table below shows the amounts that would be payable to each of the named executive officers who is party to a CIC Agreement in the event of a qualifying termination following a change in control, if a change in control and the qualifying termination had occurred on December 31, 2015, using a share value of $65.99 per share, which was the closing price of our common stock on December 31, 2015, the last trading day in 2015.

The amounts do not include amounts payable pursuant to the Company’s contracts, agreements, plans or arrangements to the extent they do not discriminate in scope, terms or operation, in favor of executive officers of the Company and that are available generally to all salaried associates, including payment of accrued rights such as payment for accrued and unpaid vacation.


Name	Cash Severance Payment Amount ($)(1)		Value of Accelerated Equity Awards ($)(2)		Estimated Value of Medical and Welfare Benefits ($)(3)		Estimated Value of Outplacement Assistance ($)(4)		Total ($)
James A. Hughes		5,525,000		12,485,555		25,002		20,000		18,055,557
Mark R. Widmar		2,750,000		7,243,937		25,002		20,000		10,038,939
Georges J. Antoun		2,750,000		7,438,624		27,442		20,000		10,236,066
Joseph G. Kishkill		1,870,000		3,072,131		25,431		20,000		4,987,562
Raffi Garabedian		1,870,000		4,203,167		24,879		20,000		6,118,046

(1)

The Company will pay the executive an amount equal to two times the sum of (a) the executive’s annual base salary (without regard to any reduction giving rise to “good reason”) and (b) the greater of (i) the annual bonus or (ii) the average annual cash bonuses payable to the executive in respect of the three calendar years immediately preceding the calendar year that includes the termination date, or if the executive has not been employed for three full calendar years preceding the calendar year that includes the termination date, the average of the annual cash bonuses payable to the executive for the number of full calendar years prior to the termination date that he/she has been employed. In addition, the Company will pay the executive a prorated bonus based on the number of days the Executive was employed by the Company in the fiscal year containing the termination date.

(2)

All time-based equity awards for Messrs. Hughes, Widmar, Antoun and Garabedian vest upon a change in control. The vesting of all time-based equity awards for Mr. Kishkill is a “double-trigger” benefit; the time-based equity awards vest upon a termination without “cause” or for resignation for “good reason” within two years following a change in control (without regard to any qualifying termination) of the Company. The remaining unvested portion of each KSTEPP performance grant (two-thirds) would vest at 25% upon a change in control assumed to occur on December 31, 2015 with additional vesting subject to compensation committee discretion. Because the compensation committee has not applied discretion to date, KSTEPP vesting is reflected at 25%. For information about full vesting of the KSTEPP awards upon termination, see “Potential Payments Upon Termination of Employment (Other Than in the Context of a Change in Control).”

(3)	Estimated value of 18 months continued health benefits based on 2016 costs for these benefits.

(4)	Assumes a maximum payment of $20,000 which may be made for outplacement assistance.

PROPOSAL NO. 1:

ELECTION OF DIRECTORS

Upon the recommendation of the nominating and governance committee of the board of directors, the board of directors has nominated for election at the annual meeting the following slate of eleven nominees. Information about these nominees is provided above under the heading “Directors.” Each of the nominees is currently serving as a director of the Company. The persons appointed in the enclosed proxy intend to vote such proxy for the election of each of the eleven nominees named below, unless the stockholder indicates otherwise on the proxy. The Company expects each nominee for election as a director at the annual meeting to be able to accept such nomination. If any nominee is unable to accept the nomination, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees.

Nominees

The Board of Directors has nominated for election to the Board of Directors the following eleven nominees:

Michael J. Ahearn

Sharon L. Allen

Richard D. Chapman

George A. Hambro

James A. Hughes

Craig Kennedy

James F. Nolan

William J. Post

J. Thomas Presby

Paul H. Stebbins

Michael Sweeney

Required Vote

The affirmative vote of a majority of the votes cast is required to elect each of the eleven nominees as directors. A person shall be considered to have received a majority of the votes cast with respect to such person’s election only if the number of votes cast “for” such person’s election exceeds the number of votes cast “against” such person’s election, with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” such person’s election. You may not accumulate your votes for the election of directors. If an incumbant director receives less than a majority of votes cast with respect to his or her election, such director shall promptly tender his or her resignation to the Chairman of the Board for consideration by the nominating and governance committee. See “Directors — Majority Vote Standard.”

Unless marked to the contrary, proxies received will be voted “FOR” each of these nominees.

Recommendation

Our board of directors recommends a vote “FOR” the election to the board of directors of each of the foregoing nominees.

PROPOSAL NO. 2:

RATIFICATION OF THE APPOINTMENT OF

PRICEWATERHOUSECOOPERS LLP

The audit committee of the board of directors has appointed PricewaterhouseCoopers LLP as the independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2016. During fiscal years 2015, 2014 and 2013, PricewaterhouseCoopers LLP served as our independent registered public accounting firm and also provided certain tax and other audit-related services. See “Principal Accountant Fees and Services.” Representatives of PricewaterhouseCoopers LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.

Required Vote

Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2016 requires the affirmative vote of holders of a majority of the stock represented and voting on such question.

Unless marked to the contrary, proxies received will be voted “FOR” ratification of the appointment of PricewaterhouseCoopers LLP.

Recommendation

Our board of directors recommends a vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2016.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act, requires our directors, executive officers and holders of more than 10% of our common stock to file with the Commission reports regarding their ownership and changes in ownership of our securities. We believe that, during the fiscal year ended December 31, 2015, our directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements.

In making these statements, we have relied upon examination of the copies of Forms 3, 4 and 5 provided to us and the written representations of our directors, executive officers and 10% stockholders.

OTHER MATTERS

It is not anticipated that any matters other than those described in this proxy statement will be brought before the annual meeting. If any other matters are presented, however, it is the intention of the persons named in the proxy to vote the proxy in accordance with the discretion of the persons named in the proxy.

HOUSEHOLDING

The Commission permits companies to send a single set of certain disclosure documents to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if the Company provides advance notice and follows certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. This householding process reduces the volume of duplicate information and reduces printing and mailing expenses. We will promptly deliver a separate copy of the proxy materials to each stockholder who has been “householded” if he or she requests the Company to do so. If you desire to receive separate copies of any of our future proxy materials, or if you are receiving multiple copies of such proxy materials and would like to receive only one copy for your household, you should contact your brokerage firm, bank, broker-dealer, trust or other similar organization, or you may contact us by telephone at (602) 414-9300 or by mail at First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281, Attn: Investor Relations. Our proxy materials are also available on the Internet free of charge at http://www.edocumentview.com/fslr.

STOCKHOLDER PROPOSALS

A stockholder who would like to have a proposal considered for inclusion in our 2017 proxy statement must submit the proposal so that it is received by us no later than December 7, 2016. Commission rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholder proposals should be addressed to the Corporate Secretary, First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281.

If a stockholder does not submit a proposal for inclusion in next year’s proxy statement, but instead wishes to present it directly at next year’s annual meeting of stockholders, our bylaws require that the stockholder notify us in writing on or before February 17, 2017, but no earlier than January 18, 2017, to be included in our materials relating to that meeting. Proposals received after February 17, 2017 will not be voted on at the annual meeting. In addition, such proposal must also include, among other things, a brief description of the business desired to be brought before the annual meeting; the text of the proposal or business (including the text of any resolutions proposed for consideration) and the reasons for conducting such business at the annual meeting; the name and address, as they appear on the Company’s books, of the stockholder proposing such business or nomination and the name and address of the beneficial owner, if any, on whose behalf the nomination or proposal is being made; the class or series and number of shares of the Company which are beneficially owned or owned of record by the stockholder and the beneficial owner; any material interest of the stockholder in such business; and a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such annual meeting and intends to appear in person or by proxy at such meeting to propose such business. If the stockholder wishes to nominate one or more persons for election as a director, such stockholder’s notice must comply with additional provisions as set forth in our bylaws, including certain information with respect to the persons nominated for election as directors and any information relating to the stockholder that would need to be disclosed in a proxy filing. Any such proposals should be directed to the Corporate Secretary, First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281.

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The following report of the audit committee is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference into any other of the Company’s filings under the Securities Act or the Exchange Act, except to the extent we specifically incorporate this report by reference therein.

The Audit Committee is comprised of four non-management directors, each of whom is independent as that term is defined in the NASDAQ Marketplace Rules and satisfies the audit committee independence standard under Rule 10A-3(b)(1) of the Exchange Act.

The Audit Committee was formed by a resolution of the board of directors on October 3, 2006 and held eight meetings during 2015.

The Audit Committee operates under a written Audit Committee Charter that was approved by the Audit Committee and approved by the board.

The Audit Committee has reviewed and discussed with management of the Company and PricewaterhouseCoopers LLP, the independent registered public accounting firm for the Company, the audited financial statements of the Company for the fiscal year ended December 31, 2015 (the “Audited Financial Statements”). The Audit Committee has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by Statement on Auditing Standards No. 61 (as amended by SAS 89 and SAS 90), as in effect on the date of this proxy statement.

PricewaterhouseCoopers LLP provided to the Audit Committee the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communication with the Audit Committee concerning independence, and the Audit Committee discussed with PricewaterhouseCoopers LLP the latter’s independence, including whether its provision of non-audit services compromised such independence.

Based on the reviews and discussions described above, the Audit Committee recommended to the board of directors of the Company that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for filing with the Securities and Exchange Commission.

Submitted by the Members of the Audit Committee

Sharon L. Allen (Chair)

J. Thomas Presby (Vice Chair)

Craig Kennedy

Paul H. Stebbins

DIRECTIONS TO THE 2016 ANNUAL MEETING OF STOCKHOLDERS

Desert Willow Conference Center

4340 East Cotton Center Boulevard

Phoenix, AZ 85040

LOGO

From North

Take I-17 South towards Tucson. Merge onto I-10 East via the exit on the left towards Globe/Tucson. Exit at 40th Street. Turn right onto South 40th Street and left onto East Cotton Center Boulevard. Desert Willow will be on your left.

From Tuscon (South)

Take I-10 West towards Phoenix and exit at Broadway Road. Turn left onto Broadway Road and left onto South 48th Street. Turn right onto East Cotton Center Boulevard, pass through 1 roundabout and Desert Willow will be on your right.

From East Valley

Take US 60 West, merge onto I-10 West and exit at Broadway Road. Turn left onto Broadway Road and left onto South 48th Street. Turn right onto East Cotton Center Boulevard, pass through 1 roundabout and Desert Willow will be on your right.

From West

Take I-10 East to 40th Street. Turn right onto 40th Street and turn left onto East Cotton Center Boulevard. Desert Willow will be on your left.

From Airport

Go East on East Sky Harbor Boulevard and merge onto AZ-153 South towards AZ-143/I-10. Take the University Drive exit on the left and bear left onto East University Drive. Merge onto AZ-143 South. Stay straight towards South 48th Street for 0.2 miles and turn right onto East Cotton Center Boulevard. Desert Willow will be on your right.

LOGO

IMPORTANT ANNUAL MEETING INFORMATION 000004

ENDORSEMENT_LINE______________ SACKPACK_____________

MR A SAMPLE

DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4

MMMMMMMMM ADD 5

ADD 6

Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.

MMMMMMMMMMMM

MMMMMMMMMMMMMMM C123456789

000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext

Electronic Voting Instructions

You can vote by Internet or telephone! Available 24 hours a day, 7 days a week!

Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.

VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.

Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on May 18, 2016.

Vote by Internet

Go to www.envisionreports.com/FSLR

Or scan the QR code with your smartphone

Follow the steps outlined on the secure website

Vote by telephone

Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone

• Follow the instructions provided by the recorded message

Annual Meeting Proxy Card

1234 5678 9012 345

IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.

A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2.

1. Election of Directors:

01 - Michael J. Ahearn

04 - George A. Hambro

07 - James F. Nolan

10 - Paul H. Stebbins

For Against Abstain

02 - Sharon L. Allen

05 - James A. Hughes

08 - William J. Post

11 - Michael Sweeney

For Against Abstain

03 - Richard D. Chapman

06 - Craig Kennedy

09 - J. Thomas Presby

For Against Abstain

2. Ratification of the appointment of PricewaterhouseCoopers LLP as the Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2016.

For Against Abstain

B Non-Voting Items

Change of Address — Please print new address below.

C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below

Date (mm/dd/yyyy) — Please print date below.

Signature 1 — Please keep signature within the box.

Signature 2 — Please keep signature within the box.

C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND

MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND

MMMMMMM1UP X 2746841 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND +

02AITA

LOGO

IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.

Proxy — First Solar, Inc.

Solicited on Behalf of the Board of Directors for the Annual Meeting, May 18, 2016, Phoenix, Arizona

2016 Annual Meeting of First Solar, Inc. Stockholders May 18, 2016, 9:00 a.m. (Local Time)

Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040

The undersigned hereby appoints James A. Hughes, Paul J. Kaleta and Peter C. Bartolino (the “proxies”), or any of them, with full power of substitution, to represent and to vote the Common Stock of the undersigned at the annual meeting of stockholders of First Solar, Inc., to be held at the Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040, on May 18, 2016, at 9:00 a.m., or at any adjournment thereof as stated on the reverse side.

You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors’ recommendations. The proxies cannot vote your shares unless you sign and return this card.

LOGO

IMPORTANT ANNUAL MEETING INFORMATION

Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.

Annual Meeting Proxy Card

PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.

A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2.

1. Election of Directors:

01 - Michael J. Ahearn

04 - George A. Hambro

07 - James F. Nolan

10 - Paul H. Stebbins

For Against Abstain

02 - Sharon L. Allen

05 - James A. Hughes

08 - William J. Post

11 - Michael Sweeney

For Against Abstain

03 - Richard D. Chapman

06 - Craig Kennedy

09 - J. Thomas Presby

For Against Abstain

2. Ratification of the appointment of PricewaterhouseCoopers LLP as the Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2016.

B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below

Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.

1UP X 2746842 +

02AIUA

LOGO

PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.

Proxy — First Solar, Inc.

Solicited on Behalf of the Board of Directors for the Annual Meeting, May 18, 2016, Phoenix, Arizona

2016 Annual Meeting of First Solar, Inc. Stockholders May 18, 2016, 9:00 a.m. (Local Time)

Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040