United States
Securities and Exchange Commission

Washington, D.C. 20549

Schedule 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant þ
Filed by a Party other than the Registrant o

Check the appropriate box:

o		Preliminary Proxy Statement
o		Confidential, For Use of The Commission Only (as Permitted by Rule 14a-6(e)(2))
þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to Section 240.14a-12

Littelfuse, Inc.

Payment of Filing Fee (check the appropriate box):

þ		No fee required.
o		Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

	1)		Title of each class of securities to which transaction applies:
	2)		Aggregate number of securities to which transaction applies:
	3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
	4)		Proposed maximum aggregate value of transaction:
	5)		Total fee paid:

o		Fee paid previously with preliminary materials.
o		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	1)		Amount Previously Paid:
	2)		Form, Schedule or Registration Statement No.:
	3)		Filing Party:
	4)		Date Filed:

Persons who potentially are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

 

Littelfuse, Inc.

O’Hare Plaza

8755 West Higgins Road

Chicago, Illinois 60631

 

 

Notice of Annual Meeting of Stockholders

 

April 30, 2010

 

The 2010 annual meeting of the stockholders of Littelfuse, Inc. (the “Company”) will be held at Chicago Marriott O’Hare, 8535 West Higgins Road, Chicago, Illinois 60631, on Friday, April 30, 2010 at 9:00 a.m., local time, for the following purposes as described in the attached Proxy Statement:

 

1. To elect seven directors to serve a term of one year or until their successors are elected;

 

2. To approve and ratify the appointment by the Audit Committee of the Board of Directors of the Company of Ernst & Young LLP as the Company’s independent auditors for the fiscal year of the Company ending January 1, 2011;

 

3. To approve the adoption of the Littelfuse, Inc. Long-Term Incentive Plan; and

 

4. To transact such other business as may properly come before the annual meeting or any postponement or adjournment thereof.

 

Stockholders of record of the Company at the close of business on March 1, 2010 will be entitled to vote at the meeting.

 

Mary S. Muchoney

Secretary

 

March 17, 2010

 

 

 

 

Proxy Statement

for

Annual Meeting of Stockholders

To Be Held On

 

April 30, 2010

 

 

We are furnishing this Proxy Statement to the stockholders of Littelfuse, Inc. in connection with the solicitation by the Board of Directors of Littelfuse, Inc. (the “Board”) of proxies to be voted at our annual meeting of stockholders to be held on April 30, 2010. The annual meeting will be held at Chicago Marriott O’Hare, 8535 West Higgins Road, Chicago, Illinois 60631, at 9:00 a.m., local time, and at any postponements or adjournments of that meeting.

 

When used in this Proxy Statement, the terms “we,” “us,” “our,” “the Company” and “Littelfuse” refer to Littelfuse, Inc.

 

Any stockholder giving a proxy will have the right to revoke it at any time prior to the time it is voted. A proxy may be revoked by written notice to us sent to the attention of our Corporate Secretary at O’Hare Plaza, 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631, execution of a subsequent proxy, voting on the Internet or by telephone or attendance at the annual meeting and voting in person. Mere attendance at the annual meeting will not automatically revoke the proxy. All shares represented by effective proxies will be voted at the annual meeting or at any postponements or adjournment thereof.

 

We will bear the cost of soliciting proxies. In addition to solicitation by mail, our officers and employees may solicit proxies by telephone or in person.

 

Under Securities and Exchange Commission rules, this Proxy Statement, our 2009 Annual Report to Stockholders, including our Annual Report on Form 10-K for the fiscal year ended January 2, 2010, and other proxy materials are available online at www.proxyvote.com. We encourage you to access and review all of the important information in the proxy materials before voting. The Notice of Internet Availability of Proxy Materials is first being mailed to stockholders on or about March 17, 2010.

 

Forward-Looking Information

 

Statements in this Proxy Statement not based on historical facts are considered “forward-looking” and, accordingly, may involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions and financial performance. These statements are intended to constitute “forward-looking” statements in connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. We are providing this cautionary statement to disclose that there are important factors that could cause actual results to differ materially from those anticipated. See our Annual Report on Form 10-K for the year ended January 2, 2010 (the “2009 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) for a list of such factors in Item 1A. “Risk Factors.”

 

The Board of Directors recommends a vote FOR ALL the nominees for director named in Proposal 1, a vote FOR the approval and ratification of the appointment of Ernst & Young LLP as independent auditors as discussed in Proposal 2 and a vote FOR the approval of the Littelfuse, Inc. Long-Term Incentive Plan as discussed in Proposal 3.

 

Voting

 

Stockholders of record on the books of the Company at the close of business on March 1, 2010, the record date for the annual meeting, will be entitled to notice of and to vote at the meeting. A list of the stockholders entitled to vote at the meeting will be available for examination by any stockholder for any

purpose germane to the meeting during ordinary business hours for a period of at least ten days prior to the meeting at our headquarters located at O’Hare Plaza, 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631 and at Wells Fargo Bank, N.A., our transfer agent, at 161 North Concord Exchange South, St. Paul, Minnesota 55075. On March 1, 2010, we had outstanding 21,880,155 shares of our common stock, par value $.01 per share. Each outstanding share of common stock entitles the holder to one vote on each matter submitted to a vote at the meeting.

 

The shares represented by proxies will be voted as directed in the proxies. In the absence of specific direction, the shares represented by proxies will be voted FOR ALL of the nominees for director, FOR the approval and ratification of the appointment of Ernst & Young LLP as independent auditors and FOR the approval of the Littelfuse, Inc. Long-Term Incentive Plan (the “Long-Term Incentive Plan”). In the event any nominee for director is unable to serve, which is not now contemplated, the shares represented by proxies may be voted for a substitute nominated by the Board. If any matters are to be presented at the annual meeting other than the matters referred to in this Proxy Statement, the shares represented by proxies will be voted at the discretion of the named proxies.

 

Our bylaws provide that a majority of all of the shares of common stock entitled to vote, whether present in person or represented by proxy, constitutes a quorum for the transaction of business at the meeting. Votes for and against, abstentions and “broker non-votes” will each be counted as present for purposes of determining the presence of a quorum. To determine whether a specific proposal has received sufficient votes to be passed, for shares deemed present, an abstention will have the same effect as a vote “against” the proposal, while a broker non-vote will not be included in vote totals and will have no effect on the outcome of the vote. The affirmative vote by the holders of a majority of the shares present (whether in person or by proxy) at the meeting will be required for the ratification of Ernst & Young LLP as independent auditors and the approval of the Long-Term Incentive Plan. With respect to the election of directors, the seven nominees who receive the most votes at the meeting will be elected.

Ownership of Littelfuse, Inc. Common Stock

 

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 1, 2010, by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, by each director, by each executive officer named in the Summary Compensation Table and by all of our directors and executive officers as a group. Information concerning persons known to us to be beneficial owners of more than 5% of our common stock is based upon the most recently available reports furnished by such persons on Schedule 13G as filed with the SEC. Of the shares reported, none are subject to pledge or lien in a margin account or pursuant to a loan agreement.

 

 

 

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our executive officers, directors and holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Based solely on our review of the copies of these reports and on information provided by the reporting persons, we believe that during the fiscal year ended January 2, 2010, our directors, executive officers and owners of more than 10% of our common stock complied with all applicable filing requirements.

 

Proposal No. 1

 

Election of Directors

 

We are asking our stockholders to elect seven directors at the annual meeting to serve a term of one year or until their successors have been elected. The nominees for director, all of whom are now serving as directors, are listed below together with certain biographical information as of March 17, 2010.

 

The Board of Directors recommends that the stockholders vote FOR the election of all of the nominees listed below as directors.

 

Tzau-Jin (T. J.) Chung, age 47, has been a director of Littelfuse since July 2007. Mr. Chung is President and CEO of Navman Wireless, a market leader in fleet management solutions and GPS technologies. Mr. Chung assumed his position in early 2007 upon the acquisition of Navman Wireless from the New Technologies Division of Brunswick Corporation. Previously, Mr. Chung served as President of the New Technologies Division of Brunswick Corporation from 2002 to 2007. Prior to that, he served as Vice President — Strategy of Brunswick Corporation, where he was responsible for corporate-wide strategic planning, mergers and acquisition and information technology. Mr. Chung earned his bachelor’s degree in science, electrical and computer engineering from the University of Texas — Austin. He also holds a Master of Science degree in computer science from North Carolina State University and a Master of Business Administration degree from the Fuqua School of Business at Duke University. Mr. Chung has been determined by the Board to be “independent” under the listing standards of the Nasdaq Global Select Market (“NASDAQ”). In nominating Mr. Chung for election as a director, our Board focused on his past experience in developing new products and his experience with operations in Asia as important attributes for his continuing to serve as one of our directors.

 

John P. Driscoll, age 74, has been a director of Littelfuse since February 1998. Mr. Driscoll has been President of Jack Driscoll Enterprises, Inc., a management consulting firm, since 1998. In June 1998, Mr. Driscoll retired as Executive Vice President of Murata Electronics North America, Inc. where he was responsible for corporate policy and strategy and oversaw government and industry relations. Mr. Driscoll joined Murata Electronics in 1979 as Vice President of Marketing and Sales, was appointed Senior Vice President Marketing and Sales in 1985 and assumed the position of Executive Vice President in 1995. Mr. Driscoll is a former Vice President of the Components Group of the Electronic Industry Alliance, and a twenty-year member of its Board of Governors. He was also affiliated with the Electronics Component and Technology Conference and the Japan American Society. Mr. Driscoll has been determined by the Board to be “independent” under NASDAQ listing standards. In nominating Mr. Driscoll for election as a director, our Board focused on his past experience with sales and distribution in the electronics industry and the knowledge of the Company that he has gained and shared from serving as a director since 1998 as important attributes for his continuing to serve as one of our directors.

 

Anthony Grillo, age 54, has been a director of Littelfuse since December 1991. Mr. Grillo is the founder and Chief Executive Officer of American Securities Advisors, LLC, an advisory and investment firm established in 2005. From 2001 through 2004, Mr. Grillo was a Senior Managing Director of Evercore Partners, Inc., where he founded the restructuring practice for the firm. From 1999 through 2001, Mr. Grillo was a Senior Managing Director of Joseph Littlejohn & Levy, Inc., a private equity firm. From 1991 through 1999, Mr. Grillo was a Senior Managing Director of the Blackstone Group L.P., an investment banking firm. During those years, Mr. Grillo was the co-founder of Blackstone’s Restructuring and Reorganization Group, Chief Operating Officer of the firm’s mergers and acquisition practice and a member of its Investment Committee. Mr. Grillo served on the Board of Silicon Graphics, Inc. and as the Chairman of its Compensation Committee. Mr. Grillo has been determined by the Board to be “independent” under NASDAQ listing standards. In nominating Mr. Grillo for election as a director, our Board focused on his past experience in the financial markets, his experience with corporate acquisitions, his value as an audit committee financial expert and the knowledge of the Company that he has gained and shared from serving as a director since 1991 as important attributes for his continuing to serve as one of our directors.

Gordon Hunter, age 58, has been a director of Littelfuse since June 2002 and became our Chairman of the Board, President and Chief Executive Officer in January 2005. Mr. Hunter became our Chief Operating Officer in November 2003. Prior to joining Littelfuse, Mr. Hunter was Vice President, Intel Communications Group, and General Manager, Optical Products Group. Mr. Hunter was responsible for managing Intel’s access and optical communications business segments within the Intel Communications Group. Prior to joining Intel in February 2002, he served as President of Elo TouchSystems, a subsidiary of Raychem Corporation. Mr. Hunter also served in a variety of positions during a 20-year career at Raychem Corporation, including Vice President of Commercial Electronics and a variety of sales, marketing, engineering and management positions. Mr. Hunter currently serves on the Council of Advisors of Shure Incorporated and the Board of Directors of Rubicon Technology, Inc. In nominating Mr. Hunter for election as a director, our Board focused on his leadership, vision and execution as our Chief Executive Officer in growing and reshaping the Company and setting and communicating the proper cultural and behavioral tone as important attributes for his continuing to serve as one of our directors.

 

John E. Major, age 64, has been a director of Littelfuse since December 1991. Mr. Major has been President of MTSG, a strategic consulting and investments company, since 2003. From 2000 through 2003, he was Chairman and CEO of Novatel Wireless Inc., which provides wireless data access solutions for PDAs and notebook PCs. From 1998 through 1999, Mr. Major was Chief Executive Officer of Wireless Knowledge, a QUALCOMM and Microsoft joint venture. Before joining Wireless Knowledge in 1998, Mr. Major served as Corporate Executive Vice President of QUALCOMM, Inc. and President of its Wireless Infrastructure Division. Prior to joining QUALCOMM in 1996, Mr. Major served as Senior Vice President and Staff Chief Technical Officer at Motorola, Inc. Mr. Major serves as the Chairman of the Board of Directors of Broadcom Corporation and as a member of the Board of Directors of Lennox International Inc. and ORBCOMM, Inc., all SEC reporting companies. Mr. Major also previously served on the Board of Directors of Verilink Corporation until 2008. Mr. Major has been determined by the Board to be “independent” under NASDAQ listing standards. In nominating Mr. Major for election as a director, our Board focused on his seasoned experience from having served as an executive officer and on the boards and board committees of varied technology companies, his vision and expertise in matters of corporate governance, his expertise in technical development and the knowledge of the Company that he has gained and shared as a director since 1991 as important attributes for his continuing to serve as one of our directors.

 

William P. Noglows, age 52, has been a director of Littelfuse since February 2007. Mr. Noglows is Chairman, President and Chief Executive Officer of Cabot Microelectronics Corporation (NASDAQ:CCMP), a leading worldwide supplier of consumable products used in the semiconductor manufacturing process. Mr. Noglows assumed his current position at Cabot Microelectronics Corporation in 2003. Prior to that, he was an Executive Vice President and General Manager at Cabot Corporation. Mr. Noglows was a primary founder of Cabot Microelectronics, which has been a fully independent, publicly-traded entity since 2000. He received a bachelor’s degree in chemical engineering from the Georgia Institute of Technology. Mr. Noglows has been determined by the Board to be “independent” under NASDAQ listing standards. In nominating Mr. Noglows for election as a director, our Board focused on his experience as chief executive officer of a leading public company and his expertise in developing technology as important attributes for his continuing to serve as one of our directors.

 

Ronald L. Schubel, age 66, has been a director of Littelfuse since June 2002. In September 2007, Mr. Schubel retired as Corporate Executive Vice President and President of the Americas Region for Molex Incorporated, a global manufacturer of interconnect systems. He began his career with Molex in 1981, spending four years in Singapore as President of the Far East South Region. Prior to joining Molex, Mr. Schubel worked for General Motors for 15 years. His last position with General Motors was Director of Operations for the Packard Electronics Division. Mr. Schubel has been determined by the Board to be “independent” under NASDAQ listing standards. In nominating Mr. Schubel for election as a director, our Board focused on his knowledge of managing manufacturing operations and his experience with operations in Asia as important attributes for his continuing to serve as one of our directors.

 

Information Concerning the Board of Directors and Its Committees

 

Compensation of Directors.  Directors who are not our employees are paid an annual director’s fee of $40,000, $1,500 for each committee meeting attended in person and $1,000 for each committee meeting attended by teleconference, plus reimbursement of reasonable expenses relating to attendance at meetings. In addition, our Lead Director is paid an additional annual retainer of $7,500, the chairperson of the Audit Committee and the Compensation Committee are each paid an additional annual retainer of $10,000, and the chairperson of the Nominating and Governance Committee and the Technology Committee are each paid an annual retainer of $5,000. No additional fees are paid to directors who are also our full-time employees.

 

In addition to cash compensation, each non-employee director receives a grant of equity comprised of options and restricted stock units upon his or her election or reelection to the Board at the Company’s Annual Meeting of Stockholders. In light of the difficult economic environment in 2009 and our company-wide efforts to reduce costs, the Board unanimously voted in January 2009 to reduce the value of the annual option and restricted stock unit awards for 2009 by approximately 25% from $90,000 to $67,500. It is anticipated that the directors will receive a full value equity award in the 2010 fiscal year.

 

Under the Littelfuse Deferred Compensation Plan for Non-employee Directors (the “Non-employee Directors Plan”), a non-employee director, at his election, may defer receipt of his cash director’s fees. Such deferred fees are used to purchase shares of our common stock, and such shares and any distributions on those shares are deposited with a third party trustee for the benefit of the director until the director ceases to be a director of Littelfuse. In 2009, only Mr. Chung and Mr. Schubel elected to defer receipt of cash directors fees and be compensated in common stock under the Non-employee Directors Plan.

 

On April 27, 2007, the stockholders approved the amendment and restatement of the Littelfuse Outside Directors’ Stock Option Plan (the “Outside Directors’ Plan”), which changes the name of the Plan to the Littelfuse, Inc. Outside Directors’ Equity Plan and allows more discretion in the number and types or awards that could be granted. The Outside Directors’ Plan, as restated, allows awards of stock options, stock appreciation rights, restricted stock and restricted stock units. The Compensation Committee has determined that it will normally provide an annual grant in the form of stock options and restricted stock units under the Outside Directors’ Plan to our non-employee directors with an estimated value of $90,000, but as mentioned above, the Board reduced the value to $67,500 for 2009. The stock options and restricted stock units vest ratably over three years. The stock options have an exercise price equal to the fair market value of our common stock on the date of grant and have a seven-year term. The restricted stock units entitle the director to receive one share of common stock per unit upon vesting. The Outside Directors’ Plan was further amended effective as of July 28, 2008 to simplify the award grant process by eliminating the requirement that award agreements be executed by the Company and the recipient (unless the Board or Compensation Committee determines otherwise). On April 24, 2009, Messrs. Chung, Driscoll, Grillo, Major, Noglows and Schubel were each granted options to purchase 4,213 shares of common stock and 3,242 restricted stock units.

The following table sets forth compensation paid to all persons who were non-employee directors at any time during 2009:

 

2009 Director Compensation Table

 

 

 

 

Attendance at Meetings.  The Board held six meetings during fiscal year 2009. All of the directors attended 100% of the meetings of the Board and the committees on which they served. It is our policy that all of the directors attend our annual meeting of stockholders, and all directors attended the 2009 annual meeting.

 

Independent members of our Board regularly meet in executive session without management present. Stockholders wishing to communicate directly with the Board or individual directors should communicate in writing to our Corporate Secretary at our principal executive offices. Our Corporate Secretary will in turn promptly forward such communication to the directors.

 

Board Leadership Structure and Role in Risk Oversight.  Our Chief Executive Officer, Gordon Hunter, also serves as the Chairman of the Board of Directors. Additionally, Ronald L. Schubel serves as the

independent Lead Director. Among other things, the Lead Director convenes and chairs regular and special executive sessions of the independent directors and serves as liaison between the independent directors and our CEO and Chairman of the Board. We believe that our leadership structure allows the Board to have better control of the direction of management, while still retaining independent oversight. In understanding our structure, it is important to remember that Mr. Hunter served as a director of Littelfuse before serving as an executive officer.

 

The Board’s role in our risk oversight process includes receiving regular reports from members of management on areas of material risk to the Company, including operational, financial, legal and regulatory, and strategic risks. The full Board or the appropriate committee receives these reports from management to enable it to understand our risk identification, risk management and risk mitigation strategies. When a committee receives the report, the chairman of the relevant committee reports on the discussion to the full Board during the committee reports portion of the next Board meeting. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

 

Audit Committee.  The Audit Committee of the Board (the “Audit Committee”) is responsible for, among other things, the appointment, compensation, retention and oversight of the work of the independent registered public accounting firm engaged (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company. It is also the responsibility of the Audit Committee to (1) review the adequacy and effectiveness of the accounting and financial controls and procedures of the Company and (2) review transactions posing a potential conflict of interest between us and our directors, officers and affiliates. A copy of the Audit Committee Charter is available on our website at www.littelfuse.com. The Audit Committee met seven times in 2009. Members of the Audit Committee are Anthony Grillo, the Chairman of the Audit Committee, John E. Major and Ronald L. Schubel, each of whom has been deemed by the Board to be “independent” and meet the enhanced standard requirements for audit committee members under the NASDAQ rules and listing standards and the rules and regulations of the SEC. The Board has determined that Anthony Grillo is an “audit committee financial expert” as defined by the SEC based on his experience as a certified public accountant, investment banker and private equity investor.

 

Nominating and Governance Committee.  It is the responsibility of the Nominating and Governance Committee of the Board (the “Nominating and Governance Committee”) to identify individuals qualified to serve on our Board and to recommend those individuals the Board should nominate for election at our annual meeting of stockholders. The Board has adopted a charter for the Nominating and Governance Committee. A copy of that charter is available on our website at www.littelfuse.com. The Nominating and Governance Committee met three times during 2009. The Nominating and Governance Committee reviewed the performance of all of the current members of the Board and determined and recommended to the Board that all of the current directors should be nominated for re-election. In making this recommendation, consideration was given to matters such as attendance at meetings, preparation for meetings, input at meetings, interaction with other Board members, and other tangible and intangible benefits their service as directors brought to us. No other candidates were recommended or evaluated. Members of the Nominating and Governance Committee are John E. Major, the Chairman of the Nominating and Governance Committee, John P. Driscoll and William P. Noglows, each of whom has been deemed by the Board to be independent under NASDAQ listing standards.

 

Director Qualification Standards.

 

The Nominating and Governance Committee, in considering a person for a nominee as a director, takes into consideration such factors as it deems appropriate, including the following:

 

 

 

The Nominating and Governance Committee will consider nominees for the Board recommended by stockholders, using the same evaluation process as for any other candidate. Recommendations should be submitted to the Corporate Secretary at our principal executive offices or directly to any member of the Nominating and Governance Committee. Any recommendation must include:

 

 

To be considered by the Nominating and Corporate Governance Committee for nomination and inclusion in our proxy statement for the 2011 Annual Meeting, stockholder recommendations for director must be received by us no later than November 17, 2010. Each stockholder recommendation must include the name and address of the nominating stockholder and the number of shares owned beneficially and of record by such stockholder.

 

Technology Committee.  It is the responsibility of the Technology Committee of the Board (the “Technology Committee”) to review our research and development activities and ensure we maximize the use of appropriate technology throughout the organization. The Board has adopted a charter for the Technology Committee, which is available on our website at www.littelfuse.com. The Technology Committee met four times in 2009. Members of the Technology Committee are Gordon Hunter, the Chairman of the Technology Committee, T. J. Chung, John E. Major and Ronald L. Schubel.

 

Compensation Committee.  The charter for the Compensation Committee of the Board (the “Compensation Committee”) is posted on our website at www.littelfuse.com.  The Compensation Committee is charged in the charter with the authority to review our compensation practices and policies, review and recommend to the Board for its consideration and determination the compensation for the directors, Chief Executive Officer and the other executive officers, evaluate Chief Executive Officer performance, and annually review and report on our compensation discussion and analysis and recommend its inclusion in our Form 10-K and Proxy Statement. The Compensation Committee held six meetings in 2009. The members of the Compensation Committee are John P. Driscoll, the Chairman of the Compensation Committee, and William P. Noglows, each of whom has been deemed by the Board to be independent under NASDAQ listing standards. See the “Compensation Committee Report” below.

 

Processes and Procedures.

 

The Compensation Committee focuses on good governance practices and procedures in its operation. In 2009, this included:

 

 

 

Delegation of Authority.

 

The Compensation Committee charter does not provide authority to the Compensation Committee to delegate its role and responsibilities to any persons.

 

Role of Executive Officers.

 

A discussion of the role of management in determining compensation levels can be found in this Proxy Statement under “Executive Compensation — Compensation Discussion and Analysis.”

 

Role of Compensation Consultant.

 

The Compensation Committee continued to engage Compensation Strategies, Inc. during the 2009 fiscal year to assist it with compiling a comprehensive analysis of market data and analyzing its implications for executive compensation at the Company, as well as various other executive compensation issues. Compensation Strategies, which was first engaged by the Compensation Committee in August 2007, was previously instructed to work with management to obtain the necessary information for the following: (1) to undertake a competitive review of executive compensation levels for 2008; (2) to review our annual bonus and long-term incentive programs; (3) to review the benefit programs available to our executives versus the competitive market; and (4) to review the executive compensation philosophy. In January 2009, the Compensation Committee asked Compensation Strategies to present information regarding the trends in reductions or eliminations of forms and amounts of executive compensation of competitors as a result of the poor general economic conditions at that time. Compensation Strategies continued to work with the Compensation Committee throughout the year with respect to these issues and as requested by the Compensation Committee.

 

Compensation Committee Interlocks and Insider Participation

 

William P. Noglows and John P. Driscoll served on the Compensation Committee during fiscal year 2009. None of our executive officers served as a member of the Compensation Committee, or on a board of directors performing equivalent functions, of any entity that had one or more of its executive officers serving as a director or member of our Compensation Committee.

 

Executive Compensation

 

Compensation Discussion and Analysis

 

This section provides information regarding the compensation and benefit programs in place for our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers (collectively, the “named executive officers”) for the 2009 fiscal year, namely:

 

1. Mr. Gordon Hunter, Chairman of the Board, President and Chief Executive Officer, has six years of service with Littelfuse.

 

2. Mr. Philip G. Franklin, Vice President, Operations Support, Chief Financial Officer and Treasurer, has 11 years of service with Littelfuse.

 

3. Mr. Dal Ferbert, Vice President and General Manager of our Electrical Business Unit, has 33 years of service with Littelfuse.

 

4. Mr. Ryan K. Stafford, General Counsel and Vice President, Human Resources, has three years of service with Littelfuse.

5. Mr. David W. Heinzmann, Vice President of Global Operations, has 25 years of service with Littelfuse.

 

Total Rewards Philosophy

 

The Compensation Committee is responsible for guiding and overseeing the formulation and application of the compensation and benefit programs for our named executive officers. Our Total Rewards Philosophy for executive compensation is designed to drive performance in the form of global business growth and success by fully leveraging our investment in our human capital to create stockholder value. To achieve our goals, we must attract and retain individuals with the appropriate expertise and leadership ability, and we must motivate and reward them to build long-term stockholder value.

 

The Compensation Committee has worked with our management and the Compensation Committee’s compensation consultant to design compensation programs with the following primary objectives:

 

 

The design of our specific programs is based on the following guiding principles:

 

Performance

 

We believe that the best way to accomplish alignment of compensation with the interests of our stockholders is to link a significant portion of total compensation directly to meeting and exceeding individual, business unit and overall Company performance goals. When performance exceeds expectations, total pay levels are expected to be above the competitive median. When performance falls below expectations, total pay levels are expected to be below competitive levels.

 

Competitiveness

 

Compensation and benefit programs are designed to be competitive with those provided by companies with whom we compete for talent. Generally, we target the 50th percentile of the total compensation programs of competitor companies, adjusted for an executive’s operating responsibilities, management level and tenure and performance in the position. In order to help us analyze the competitiveness of our compensation programs, we developed a reference group in October 2007, as discussed in more detail below in “Total Rewards Philosophy — Competitive Analysis.” Our welfare benefit programs are designed to provide competitive levels of protection and financial security but are not based on performance.

 

Cost

 

Compensation and benefit programs are designed to be cost effective, ensuring that the interests of our stockholders are considered.

 

Compensation in the 2009 Fiscal Year

 

Our ability to adhere to our guiding compensation principles was tested by the economic environment in 2009. Facing the worst global economic crisis since the Great Depression spurred us to accelerate or implement several cost-savings measures. We implemented certain changes on a temporary basis to enable us to limit short-term costs so as to be able to take advantage of the expected economic rebound; other changes were intended to be long-term restructuring to improve functionality of our overall compensation program. In 2009, the Compensation Committee implemented a one-year freeze on base salaries, suspended for one year our annual incentive bonus program under the Littelfuse, Inc. 2008 Annual Incentive Plan (the “Annual Incentive Plan”), and reduced the value of long-term equity grants by approximately 25% below standard

amounts. These changes were intended to be temporary and we have returned or expect to return to standard practices in 2010 with regards to these elements of compensation. We also made certain changes that are intended to be long-term, including the decision to permanently freeze the Littelfuse, Inc. Retirement Plan (the “Pension Plan”), terminating the Littelfuse, Inc. Supplemental Executive Retirement Plan (“SERP”), amending the Littelfuse, Inc. 401(k) Retirement and Savings Plan and creating the Littelfuse, Inc. Supplemental Retirement and Savings Plan. These temporary and long-term changes are discussed in more detail in the applicable sections under “Components of Total Compensation” below.

 

The Annual Compensation Process

 

The Compensation Committee reviews industry data and performance results presented by its compensation consultant in determining the appropriate aggregate and individual compensation levels for the performance year. In conducting its review, the Compensation Committee considers quantitative performance results, the overall need of the organization to attract, retain and motivate the executive team, and the total cost of compensation programs. The Compensation Committee also reviews information showing the executive’s total target and actual compensation during the year. The amount of compensation already realized or potentially realizable, however, does not directly impact the level at which future pay opportunities may be set.

 

Starting in 2006, the Compensation Committee established a process of reviewing base salaries in the fall, with any changes to be effective February 1 of the following year. This process aligns the timing of annual executive salary adjustments with the timing of adjustments for all other employees. The benefits payable under the Annual Incentive Plan for the preceding year, if any, and the terms of the program for the current year generally are established in January or February of each year. Before 2008, stock options and performance share/unit awards were granted in April or May of each year at the regularly scheduled meetings of the Compensation Committee and the full Board held in connection with our Annual Meeting of Stockholders. In 2008, however, performance share/unit awards were granted before the end of March so that they could qualify as “performance-based compensation” within the meaning of Section 162(m) (“Section 162(m)”) of the Internal Revenue Code of 1986, as amended (the “Code”). Stock options and restricted stock (please see discussion below in the section entitled “Equity Compensation”) continue to be granted at the meetings of the Compensation Committee and the full Board held in connection with our Annual Meeting of Stockholders. Since we establish the meeting schedule and agenda for our grants well in advance, there is no opportunity for manipulation of exercise prices on option grants if we are in possession of non-public information at the time of the meetings. Approval of grants for any newly-hired or promoted executives during the course of the year generally occurs at the Compensation Committee meeting immediately following the hiring or promotion, as applicable.

 

For our officers and executive officers in certain jurisdictions, we grant restricted stock units in lieu of restricted stock for tax reasons. These restricted stock units are settled for shares of common stock and are subject to the same vesting requirements as our restricted stock. No named executive officer received restricted stock units in the 2009 fiscal year.

 

This established process, however, was temporarily interrupted in 2009. As part of company-wide cost-saving measures, the Compensation Committee decided to freeze base salaries and not to adopt performance objectives under the Annual Incentive Plan in 2009 so that no bonuses could become payable for 2009. In addition, the Compensation Committee determined to suspend performance share/unit awards in 2009 due to the complexity of managing the program and the difficulty in setting three-year targets during the economic downturn. In 2010, we have resumed our normal compensation process.

 

Competitive Analysis

 

Competitive compensation levels for our Chief Executive Officer and other named executive officers are established through the use of data obtained from the Compensation Committee’s compensation consultant. These analyses include base salary, annual incentive opportunities and long-term incentive opportunities for comparable companies. In October 2007, we adopted an industry reference group as a source to evaluate compensation levels. The reference group consists of 17 publicly-traded companies of reasonably similar size

to us in the electronic equipment/electronic manufacturing services industry, the electronic components and equipment industry and the semiconductor/semiconductor equipment and manufacturing industry, representing different segments of our business. The companies included in the reference group are set forth below:

 

 

The raw data derived from each company in the reference group is size-adjusted to approximate our revenues for the corresponding fiscal year. The total compensation for our named executive officers is generally targeted at the 50th percentile of the adjusted data specific to each position. In some instances, however, we provide compensation above or below the 50th percentile for a particular element and/or for a particular position, based on internal factors, including the executive’s operating responsibilities, management level, possible differences in compensation standards in the representative industries, the focus of our Total Rewards Philosophy, and tenure and performance in the position.

 

Allocation Between Cash and Non-Cash Compensation and Current and Long-Term Compensation

 

We believe that both cash components and non-cash components are appropriate mechanisms for delivering compensation. Cash compensation is used as current compensation (i.e., base salary and annual incentive awards), while non-cash compensation (i.e., stock options, performance shares/units, restricted stock and restricted stock units) is generally used for long-term compensation. The allocation between cash and non-cash compensation is an outcome of our targeted competitiveness for individual program elements, including salary, annual incentive compensation and long-term incentive grants, and our practice with respect to allocating between the different types of long-term incentive grants. The mix of compensation ultimately realized by the executives is determined by a combination of individual, team and Company-wide performance over time.

 

The allocation between current and long-term compensation is based primarily on competitive market practices relative to base salaries, annual incentive awards and long-term incentive values, as opposed to a targeted allocation between current and long-term pay. We also consider certain internal factors that may cause us to target a particular element of an executive’s compensation differently. These internal factors may include the executive’s operating responsibilities, management level and tenure and performance in the position. We consider the total compensation to be delivered to individual executives, and as such exercise discretion in determining the portion allocated to annual and long-term incentive opportunity. We believe that this “total compensation” approach provides the ability to align pay decisions with the short-term and long-term needs of

the business and the interests of our stockholders. It also allows for the flexibility needed to recognize differences in performance by providing differentiated pay.

 

Management’s Role

 

The key elements of management’s role in determining compensation levels for the named executive officers are as follows:

 

 

The Independent Consultant

 

The Compensation Committee has the authority under its charter to engage the services of outside advisors to assist in carrying out its duties. Under this authority, the Compensation Committee retained Compensation Strategies, Inc. in August 2007 to assist in the structuring of executive compensation for 2008. The Compensation Committee has continued to use Compensation Strategies, Inc. for assistance and reference with regards to executive compensation through 2008 and 2009 and into 2010. Compensation Strategies does not provide any other service to us.

 

Impact of Accounting and Tax Issues on Executive Compensation

 

In setting each executive’s compensation levels, we do not have a stated policy that all compensation must be deductible. The Compensation Committee will consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent reasonably practicable and to the extent consistent with our other compensation goals. The Compensation Committee and the Board analyze the overall expense arising from aggregate executive compensation levels and awards and the components of our pay programs. Section 162(m) places a limit of $1,000,000 on the amount of compensation that we may deduct in any one year with respect to our Chief Executive Officer and our three other most highly compensated officers, other than the principal financial officer. Compensation that qualifies as “performance-based compensation” under Section 162(m), including compensation pursuant to plans or arrangements approved by our stockholders, is not subject to the deduction limit. The Littelfuse, Inc. Equity Incentive Compensation Plan (the “Equity Plan”) and the Annual Incentive Plan have been approved by our stockholders and the Long-Term Incentive Plan is being proposed for stockholder approval; as a result (and assuming the new plan is approved), stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and annual cash incentive awards under all of these plans that qualify as “performance-based compensation” will not be subject to the deductibility limit imposed by Section 162(m).

Employment Contracts

 

As of December 31, 2007, we entered into an amended and restated employment agreement with Mr. Gordon Hunter, our Chairman of the Board, President and Chief Executive Officer, which replaced his employment agreement dated as of May 1, 2006. The employment agreement was amended and restated in order to comply with the requirements of Section 409A of the Code and the formal guidance issued thereunder (“Section 409A”). The term of the employment agreement runs until death, disability, or such time as terminated by us or Mr. Hunter. We may terminate Mr. Hunter’s employment at will or upon 60 days notice subject to certain payments as further discussed below in the section entitled, “Gordon Hunter’s Employment Agreement Post-Employment Provisions.” The employment agreement requires us to provide Mr. Hunter with a base salary of at least $525,000 per year, provisions for a home office, an automobile, and up to $15,000 in annual financial planning and tax counseling services. The employment agreement also contains non-disclosure, non-competition, non-solicitation and non-hire provisions for Mr. Hunter upon cessation of his employment with us. The foregoing description of the terms of the employment agreement is qualified in its entirety by reference to the employment agreement as set forth on Exhibit 10.2 to our Annual Report on Form 10-K for the fiscal year ended December 27, 2008.

 

Please see additional discussion regarding the terms of Mr. Hunter’s employment agreement below in the section entitled “Post-Employment Compensation.” Other than the change of control agreements also discussed below under “Post-Employment Compensation,” none of the other named executive officers have employment agreements.

 

Components of Total Compensation

 

The compensation of our named executive officers usually consists of five components:

 

 

Each component is designed to help achieve our compensation objectives and to contribute to a total package that is competitive, appropriately performance-based and valued by our executives.

 

 

Purpose:  The determination of each executive officer’s base salary is designed to attract, retain and motivate highly qualified executives by paying a competitive salary.

 

Administration:  Our Chief Executive Officer and our General Counsel and Vice President, Human Resources recommend officer salary levels (other than for the Chief Executive Officer) to the Compensation Committee for approval. The Compensation Committee reviews these recommendations along with the reference group information and other information and advice of the compensation consultant, if any, and makes its recommendations to the full Board for approval. The Compensation Committee determines and makes Chief Executive Officer salary recommendations to the full Board for approval by the independent directors.

 

Determination of amounts:  Base salary generally is targeted at the 50th percentile of the reference group, adjusted to compensate for individual scope of responsibility, years of experience, past and future contributions to our success and possible differences in compensation standards in the electronics industry. We strive to be market competitive in an effort to attract, retain and motivate talented executive officers. The named executive officers’ salaries are determined by market salary data and each individual’s position, responsibility and longevity within our company and performance in that position.

In light of the difficult business environment caused by the worldwide economic slowdown, the credit crisis and their ongoing effects on our results of operations in 2009, we emphasized and implemented cost-cutting measures at all levels to promote the long-term strength of the Company. In connection with these cost cutting measures, the base salaries of our named executive officers were not increased for the 2009 fiscal year. Consequently, named executive officer base salaries in 2009 were based on the established 2008 base salary. The 2008 base salaries were determined based on our historical compensation for our named executive officers and an analysis from October 2007 regarding the comparison of our named executive officer compensation with the size-adjusted data from our reference group. The Compensation Committee increased base salaries for all named executive officers by 4% effective February 1, 2008, taking into account the compensation consultant’s advice and broad-based published surveys that the average annual salary increase for named executive officers in 2008 was 4%. Consequently, on February 1, 2008, the base salary amounts for the named executive officers were increased to the following:

 

 

In February 2010, the Committee recommended to the Board and the Board approved an increase of 2% in base salary for the 2010 fiscal year for all executive officers as a cost-of-living adjustment. The new base salaries for 2010 are as follows:

 

 

 

Purpose:  The Annual Incentive Plan is designed to provide a performance based cash reward to the named executive officers (among other executives and key employees of the Company) for contributing to the achievement of our corporate goals and driving stockholder value, thereby addressing the objectives of our executive compensation policies.

 

Administration:  The Compensation Committee, after (1) consulting with our Chief Executive Officer and our General Counsel and Vice President, Human Resources, (2) reviewing the reference group information and other information and advice of the compensation consultant, if any, and (3) discussing the financial goals and targets of the Company for the next fiscal year with our Chief Executive Officer and our Vice President, Operations Support, Chief Financial Officer and Treasurer, establishes a threshold, target and a maximum amount that may be awarded as an annual incentive compensation award to each named executive officer for the calendar year. The threshold, target and maximum amounts are set as percentages of each named executive officer’s base salary.

 

Awards are granted based on an explicit formula approved by the Compensation Committee and recommended to the full Board for approval, typically in February of each year. At the end of each year, the amount of the total award payable to each of the other executive officers is calculated by the Compensation Committee based on Company and individual performance measures using a mathematical formula weighting each of the factors. The Compensation Committee then recommends the awards to the full Board for approval.

The Compensation Committee retains the discretion to adjust any awards determined by the formula to make adjustments for extraordinary events, except that no adjustment will be made if it would cause an award subject to Section 162(m) to fail to qualify as “performance-based compensation” within the meaning of Section 162(m). In the past, these adjustments have included severance charges and extreme commodity price changes.

 

Determination of amounts:  Incentive amounts are earned based on the achievement of established objectives on a sliding scale from 0% to 200% of the target amount, which is set as a percentage of the recipients base salary. While we generally attempt to benchmark the 50th percentile of the total compensation of our reference group, we do not necessarily benchmark our annual incentive awards against a certain percentile of the reference group. We determine to set the threshold, target and maximum amounts so that, if earned, we pay sufficient total annual compensation to remain competitive.

 

Annual incentive awards paid to individual named executive officers are based on both the actual financial results in relation to the target goals under the plan and an evaluation of the named executive officer’s performance in relation to his or her individual performance objectives. In prior calendar years, except for Mr. Hunter, approximately 80% of the award was tied to the actual financial results, such as sales, earnings per share and cash from operations, as well as performance measurements of the areas within the scope of authority of the named executive officer, in relation to the target goals under the plan and approximately 20% was based on individual performance objectives, some of which were qualitative in nature and might have required subjective determinations by the Committee in its discretion. Since Section 162(m) allows payout amounts to be reduced (but not increased) at the discretion of the Compensation Committee, the 20% portion of the award based on the achievement of performance objectives that was previously included for Mr. Hunter was replaced with a 20% portion that would be fully-earned at a maximum level based on meeting a minimum amount of earnings per share. The Compensation Committee or the Board could then use its negative discretion to reduce this portion of the award to appropriate levels based on performance against his stated goals.

 

In light of the worldwide economic slowdown and the difficulty in setting effective and meaningful financial objectives in 2009, the Compensation Committee implemented a one-year suspension of the Annual Incentive Plan and as a result the Company did not grant incentive awards or discretionary bonuses to our named executive officers under the Annual Incentive Plan for 2009.

 

At its February 2010 meeting, the Compensation Committee established the threshold, target and maximum amounts to be awarded under the Annual Incentive Plan for 2010 for the named executive officers, subject to achievement of financial objectives of the Company and individual performance objectives set by the Compensation Committee for 2010. The following table summarizes Annual Incentive Plan target percentages for the named executive officers for 2010:

 

 

 

Purpose:  In 2009, the Compensation Committee awarded a combination of two types of equity awards under the Equity Plan to our named executive officers: stock option awards and restricted stock. The restructuring of the equity compensation program to exclude awards of performance shares/units, which had previously been provided, was in response to the complexity of managing the program and the difficulty in setting three-year targets during the economic downturn. The Compensation Committee felt that the two award types continued to emphasize the goals of our equity compensation: (1) to align each named executive officer’s financial interests with driving stockholder value, (2) to focus the named executive officers efforts on long-term financial performance of the Company and (3) to assist in the retention of our named executive officers.

Since we believe that our current equity compensation practices appropriately align the interests of named executive officers with those of the stockholders, we do not currently have a formal policy regarding equity or other security ownership requirements for our named executive officers.

 

Administration:  The Compensation Committee approves the awards of stock options and restricted stock based upon (1) the recommendations of our Chief Executive Officer and our General Counsel and Vice President, Human Resources with respect to the named executive officers other than the Chief Executive Officer and on its own with respect to the Chief Executive Officer and (2) reviewing the reference group information and other information and advice of the compensation consultant, if any. The overall funding levels for our equity awards, however, are ultimately subject to the judgment and approval of the Compensation Committee to ensure appropriate alignment with the interest of our stockholders. Stock options are typically granted with a four-year vesting period and an exercise price equal to the fair market value of our common stock on the date of grant. The Equity Plan does not permit grants of stock options with exercise prices below the fair market value of the stock at the time of the grant. Grants of restricted stock typically vest at the rate of 25% per year on each of the first four anniversaries of the grant date.

 

Previously, the Compensation Committee calculated the performance share/unit awards to be paid out based on the achievement of performance factors determined at the end of the three-year performance period. For the awards granted prior to 2008, the performance shares/units earned after the three-year performance period vested ratably over a subsequent three-year period, with half of the vested amount paid in shares and half in cash. Beginning with the 2008 awards, the performance share/unit awards are paid out entirely in shares at the end of the three-year performance period. The Compensation Committee made these changes to the performance share/unit awards because it determined that the previous six-year payout structure was too long and did not have an adequate motivational value for the named executive officers. While the Compensation Committee has determined to no longer grant performance share/unit awards, previously granted awards may be earned or vest, as the case may be, through 2011.

 

Determination of Amounts:  While the total equity compensation awards generally are targeted to the 50^th percentile of our reference group, the Compensation Committee determined in 2009 to reduce the value of the equity awards by approximately 25% as part of the overall effort to reduce costs. The Committee anticipates returning to the normal value of equity awards in 2010. The allocation by the Committee between the types of equity compensation is based primarily on a combination of market practice, internal equity considerations, individual performance and relative importance of the objectives behind each of the programs (i.e., provide value tied to stock price appreciation, long-term financial performance, and retention). In 2009, the Committee determined that approximately 50% of the value of the equity awards should be made in stock options, with the remaining 50% of the value of the equity awards to be made in restricted stock. Even with an overall reduction in the value of the equity grants in 2009, the number of stock options and restricted stock granted increased from 2008 because of the relative decline in the price of our common stock. The restricted stock awards and stock options granted in 2009 to the named executive officers are set forth in the Grants of Plan-Based Awards in 2009 Table below.

 

If approved by stockholders at our 2010 Annual Meeting of Stockholders, the Long-Term Incentive Plan will supersede and replace the Equity Plan and the Outside Directors’ Plan, except that these plans will remain in effect with respect to outstanding awards under the plans until the awards have been exercised, forfeited, canceled, expired or otherwise terminated in accordance with the terms of such awards. Please see the further discussion in Proposal 3 below regarding the Long-Term Incentive Plan.

 

 

Perquisites

 

The Chief Executive Officer and other named executive officers are provided with the opportunity to receive financial planning services and executive physicals on an annual basis. Each named executive officer is entitled to financial planning services at a maximum of $10,000 in the first year and $5,000 per year thereafter, except for Mr. Hunter, who, pursuant to his employment agreement, is entitled to $15,000 per year of financial planning, and approximately $5,000 per year for an executive physical. We provide these benefits

to help our named executive officers efficiently manage their time and financial affairs and to allow them to stay focused on business issues and minimize distractions of this type. Additionally, Mr. Hunter is provided with a Company automobile as required by his employment agreement, the terms of which were established to remain competitive against our peers.

 

Health and Welfare Programs

 

We offer our executives the opportunity to participate in certain health and welfare programs. The named executive officers participate in the same programs designed for all of our full-time U.S. employees. We believe these programs are expected attributes of a total compensation system, and we provide them to remain competitive. The core insurance package includes health, dental, disability and basic group life insurance coverage. The named executive officers are also provided with a supplemental life insurance plan in order to provide a targeted level of coverage equal to three times salary. We provide this benefit to remain competitive with those companies with whom we compete for executive talent.

 

 

Retirement Plans

 

In 2009, the Compensation Committee restructured the retirement benefits we provide to our employees, including our named executive officers. Effective April 1, 2009, we amended the Pension Plan to freeze benefit accruals such that participants’ accrued benefits are frozen at April 1, 2009 levels. As a result of the amendment, no new participants are permitted to join the Pension Plan after the freeze date.

 

We terminated the SERP, effective December 31, 2009. No new benefits can be earned under the SERP on or after this date, other than certain change in control benefits and annual interest which is credited at the 5-year Treasury constant maturity rate until accounts are distributed. The SERP was a legacy plan with only two active participants, including one named executive officer. The changes to the Pension Plan and the SERP were undertaken as a cost-savings measure, but the Compensation Committee also believed that a modern mobile workforce does not value traditional defined benefit pension plans, such as the Pension Plan, and to remain competitive the Company should offer additional contributions to the Company’s 401(k) plan.

 

We now provide retirement benefits to our employees and named executive officers through the following plans:

 

Littelfuse, Inc. 401(k) Retirement and Savings Plan

 

On October 9, 2009, the Company amended and restated the Littelfuse, Inc. 401(k) Savings Plan, and changed its name to the Littelfuse, Inc. 401(k) Retirement and Savings Plan (the “401(k) Plan”). Effective January 1, 2010, the 401(k) Plan provides employees the opportunity to save for retirement on a tax-favored basis. Executives may elect to participate in the 401(k) Plan on the same basis as all our other employees. The 401(k) Plan provides fully vested matching contributions equal to 100% of the first 4% of a participant’s annual pay (subject to IRS compensation limits) contributed to the 401(k) Plan and the Company intends to make fully vested non-elective contributions equal to 5% of a participant’s annual pay (subject to IRS compensation limits) to those participants who are participants in the Pension Plan and have a combined age and years of service of at least 60 as of January 1, 2010 (the “60 Point Group”).

 

Littelfuse, Inc. Supplemental Retirement and Savings Plan

 

On October 9, 2009, the Company adopted the Littelfuse, Inc. Supplemental Retirement and Savings Plan, effective January 1, 2010 (the “Supplemental Plan”), for certain management employees, including the named executive officers. The Supplemental Plan is a non-qualified retirement plan that allows participants to plan for retirement by deferring up to 90% of their annual pay to the Supplemental Plan. The Supplemental Plan provides (1) fully vested matching contributions to participants who also are participants in the 401(k) Plan and who earn annual pay in excess of the IRS compensation limit applicable to the 401(k) Plan ($245,000 for 2009) in an amount equal to up to 4% of a participant’s annual pay in excess of the IRS

compensation limit that is deferred to the 401(k) Plan or the Supplemental Plan less the amount we contribute for the participant as a match to the 401(k) Plan, and (2) fully vested non-elective contributions equal to 5% of a participant’s annual pay in excess of the IRS compensation limit to those participants who are part of the 60 Point Group.

 

Post-Employment Compensation

 

On January 22, 2009, we entered into new change of control agreements, effective as of January 1, 2009, with each of our named executive officers. These new change of control agreements were adopted because the previous change of control agreements expired on January 1, 2009. The new change of control agreements contain substantially the same material terms and conditions as the prior agreements, but the minimum threshold to trigger a change of control was increased and certain changes were made to guarantee the agreements were consistent with the requirements of Section 162(m) and Section 409A. If, within the two-year period following a change of control, the named executive officer terminates his employment for good reason or is terminated other than for cause, the named executive officer will be entitled to receive certain compensation and benefits. Provisions under these change of control agreements are based on competitive practice and are designed to ensure that the named executive officers’ interests remain aligned with the interests of the stockholders should a potential change of control arise. A change of control situation may undermine our named executive officers’ job security, and it is to our benefit to encourage the named executive officers to seek out beneficial business transactions and to remain with us through the closing of the transaction, even though their futures may be uncertain as a result. As such, we structured the change of control provisions in the named executive officers’ agreements with a “double trigger,” which requires termination of the executive without cause or by the executive for good reason in connection with or shortly following a change of control. This structure essentially places the decision of whether to trigger change of control benefits largely in the hands of the acquiring company, since the consummation of the transaction alone would not trigger the benefit.

 

Pursuant to his employment agreement, in the event Mr. Hunter terminates his employment for good reason or is terminated other than for cause, he will be entitled to receive certain compensation and benefits. These additional termination-related payments are provided for under his employment agreement, the provisions of which are based on competitive practice.

 

Please see the section above entitled “Post-Employment Compensation” later in this Proxy Statement for further discussion of these agreements.

 

Compensation Risk Assessment

 

We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and programs are not reasonably likely to have a material adverse effect on the Company. Our programs reflect sound risk management practices including:

 

 

Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate other filings with the SEC, including this Proxy Statement, in whole or in part, the following Compensation Committee Report shall not be deemed to be incorporated by reference into any such filings.

 

Compensation Committee Report

 

To the Board of Directors of Littelfuse, Inc.:

 

We have reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement.

 

Based on the review and discussion referred to above, we recommend to the Board of Directors that the Compensation Discussion and Analysis referred to above be included in this Proxy Statement and in our Annual Report on Form 10-K for the year ended January 2, 2010.

 

Compensation Committee:

 

John P. Driscoll (Chairman)

William P. Noglows

 

Compensation Tables and Narrative Disclosures

 

The following table sets forth compensation information for our Named Executive Officers for services rendered in all capacities to us and our subsidiaries in fiscal years 2009, 2008 and 2007.

 

Summary Compensation Table

 

 

 

 

The following table provides additional information with respect to options and stock-based awards granted in 2009, the value of which was provided in the Stock Awards and Options Awards columns of the Summary Compensation Table, and the potential range of payouts associated with the Annual Incentive Plan.

 

Grants of Plan-Based Awards in 2009 Table

 

 

 

 

 

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2009 Table

 

Annual Incentive Plan

 

In light of the worldwide economic slowdown and the difficulty in establishing effective and meaningful personal and financial objectives, the Compensation Committee implemented a one-year suspension of the Annual Incentive Plan and did not set Threshold, Target and Maximum awards for 2009. No incentive awards or discretionary bonuses were made under the Annual Incentive Plan with respect to 2009.

 

Option Awards and Restricted Stock Awards

 

The stock option awards granted in 2009 vest over four years in 25% increments and have a seven-year term. The restricted stock awards granted to named executive officers in 2009 are held by us until they vest, which occurs at a rate of 25% per year over each of the next four years. The unvested shares of restricted stock will continue to rise and fall in value with our common stock price during the restricted period.

 

See “Compensation Discussion and Analysis” for a discussion of the proportion of salary and bonus in relation to total compensation, which is discussed under “Allocation Between Cash and Non-Cash Compensation and Current and Long-Term Compensation,” and other material terms of our named executive officers’ compensation and the related amounts included in the foregoing tables.

 

The following table provides information regarding the outstanding equity awards held by each of the Named Executive Officers as of January 2, 2010.

 

Outstanding Equity Awards at 2009 Fiscal Year-End Table