Michael Slessor
FORMFACTORAbout Michael Slessor
Michael D. Slessor, 55, is President, CEO, and Director of FormFactor (FORM). He joined FormFactor via the October 2012 acquisition of MicroProbe, became President in October 2013, and CEO on December 28, 2014. He holds a Ph.D. in Aeronautics and Physics from Caltech and a B.A.Sc. in Engineering Physics from the University of British Columbia . Under his leadership in 2024, revenue grew 15.2% to $764 million and GAAP gross margin expanded 130 bps to 40.3%; GAAP operating income was $64.8 million and total shareholder return (TSR) for 2024 was 10.1% . A 3-year TSR cycle ending June 30, 2024 ranked at the 73rd percentile of the S&P Semiconductors Select Industry Index, resulting in a 146% PRSU payout and a 65% stock price increase (from $34.54 to $56.92) over the period .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| FormFactor, Inc. | President (Oct 2013–present); CEO (Dec 2014–present) | 2013–present | Led diversification “Lab to Fab” strategy, AI/HBM tailwinds, margin improvement |
| MicroProbe Inc. | President & CEO | 2008–2012 | Steered growth to acquisition by FormFactor (Oct 2012) |
| KLA‑Tencor | Management, product marketing, applications engineering (various) | Pre‑2008 | Semiconductor equipment domain expertise |
External Roles
- No other public-company directorships disclosed in the 2025 proxy for Dr. Slessor beyond FormFactor’s board .
Fixed Compensation
- 2024 target pay mix change: base salary increased, target bonus rate reduced to maintain competitive total direct comp and retention . CEO target bonus rate set at 100% of base (from 120% in 2023) .
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 555,769 | 550,000 | 592,308 (paid) |
| Target Bonus % of Salary | n/a | 120% | 100% |
| Non-Equity Incentive Plan (NEIP) Paid ($) | 287,589 | 187,872 | 739,118 |
| Total ($) | 5,111,932 | 6,727,849 | 5,303,605 |
Notes:
- The company also reports the 2024 actual bonus under the Employee Incentive Plan as $840,239 for the CEO; the proxy notes methodology differences can create discrepancies between target and actual earnings used in calculations .
Performance Compensation
Annual Cash Incentive (Employee Incentive Plan – 2024)
- Metric: Adjusted Operating Income (single-company metric; minimum achievement 40% for any payout; capped at 200%) .
- 2024 payout: 128.2% of target on full-year basis .
| Period | Adjusted Operating Income Result ($000) | Target ($000) | % Payout Achieved |
|---|---|---|---|
| Q1 2024 | 15,001 | 26,941 | 26.1% |
| Q2 2024 | 42,802 | 26,941 | 198.1% |
| Q3 2024 | 38,826 | 26,941 | 173.5% |
| Q4 2024 | 29,381 | 26,941 | 115.1% |
2025 plan changes: Financial Performance (70%, quarterly, adjusted operating income) + Corporate Goals (30%, annual, factored by financial component); 40% minimum threshold, 200% cap maintained .
Long-Term Equity Incentives
- Structure: 50% time-based RSUs (quarterly vest over 3 years), 50% PRSUs tied to 3-year relative TSR vs. S&P Semiconductors Select Industry Index (0–200% payout; threshold 25th percentile = 50%; target 50th = 100%; max 75th = 200%) .
| Grant | Grant Date | Type | Shares (#) | Vesting / Performance | Grant Date Fair Value ($) |
|---|---|---|---|---|---|
| FY2024 LTI | 08/05/2024 | Time-based RSU | 43,728 | 8.33% quarterly over 3 years | 1,803,780 |
| FY2024 LTI | 08/05/2024 | PRSU (relative TSR) | 43,728 (target) | 3-year TSR 07/01/2024–06/30/2027; 0–200% payout | 2,156,665 |
Recent PRSU outcome: 2021 grant cycle (07/01/2021–06/30/2024) paid at 146% (TSR 73rd percentile); 60,915 target units → 88,902 earned for CEO .
Equity Ownership & Alignment
- Beneficial ownership (as of 03/17/2025): 528,202 shares (<1% of outstanding) .
- Stock ownership guidelines: CEO must hold ≥ the greater of 10,000 shares or 3x base salary; executives are in compliance as of April 2, 2025 .
- Anti-hedging/pledging: Strict prohibition on hedging and pledging under insider trading policy; no dividend equivalents on unvested equity; no repricing without shareholder approval .
- Clawback: Dodd-Frank compliant policy (effective Oct 2, 2023) mandates recovery of incentive comp for three prior years if a restatement is required .
Outstanding equity detail (12/28/2024):
| Category | Unvested/Unearned (#) | Market Value ($) |
|---|---|---|
| Time-based RSUs (CEO): 14,426; 41,356; 40,084 tranches | 14,426 ; 41,356 ; 40,084 | 662,442 ; 1,899,068 ; 1,840,657 |
| PRSUs (CEO): 2022 cycle at 95% as-of; 2023 cycle at 195%; 2024 cycle at 0% as-of | 64,919 ; 141,792 ; 21,864 | 2,981,080 ; 6,511,089 ; 1,003,995 |
Tax and vesting activity; trading plans (insider selling pressure):
- Jan 2, 2025: 4,000 shares sold at $44.38–$45.01 under a Rule 10b5‑1 plan adopted 11/20/2023; post-sale holding disclosure 522,531 shares .
- Mar 3, 2025: 4,000 shares sold for ~$132,200 (Form 4) .
- Jul 1, 2025: Additional sales pursuant to the same 10b5‑1 plan disclosed in a Form 4 .
- Aug 1, 2025: 49,935 PRSUs vested upon certification for the 2022–2025 TSR cycle (Form 4) .
Employment Terms
CEO Change of Control and Severance Agreement (updated Nov 15, 2024) :
- Non‑Change‑of‑Control Termination: Lump sum = 12 months base salary + target bonus; 12 months COBRA; 12 months additional vesting credit (with PRSU handling if initial vest would occur within 12 months); 12 months post‑separation option exercise window .
- Double‑Trigger Change of Control: Lump sum = 12 months base + the greater of target bonus or 2‑year average bonus pacing; 12 months COBRA; full vesting/forfeiture conditions lapse at CoC .
Illustrative potential payments as of 12/28/2024:
| Scenario | Base ($) | Bonus ($) | Equity Acceleration ($) | COBRA ($) | Total ($) |
|---|---|---|---|---|---|
| Non‑CoC Termination | 650,000 | 650,000 | 5,248,980 | 41,770 | 6,428,250 |
| CoC + Qualifying Termination | 650,000 | 650,000 (or greater of target vs. avg formula) | 15,739,548 | 41,770 | 17,081,318 |
Definitions aligned with 409A and company Severance Plan; “cause” and “good reason” materially consistent with market norms; no excise tax gross‑ups (benefits may be cut only if doing so yields higher after‑tax outcome) .
Board Governance
- Role: CEO and Director since October 2013; not independent .
- Board structure: Independent Chair separated from CEO role; 7 of 8 directors independent .
- Committees: CEO does not sit on Audit, Compensation, or Governance and Nominating committees; committee chairs are independent (Audit: Brian White; Compensation: Kelley Steven‑Waiss; Governance & Nominating: Jorge Titinger) .
- Attendance: In 2024, Board held five meetings; all directors attended ≥75% of meetings/committees served .
Director Service Details (for dual-role considerations)
| Attribute | Detail |
|---|---|
| Board service start | October 2013 |
| Independence | Not independent (as CEO) |
| Chair/Lead | Independent Chairperson; policy to separate Chair and CEO |
| Committees | None (CEO is not on any committee) |
Implication: Dual CEO/Director role is mitigated by an independent chair, majority‑independent board, and fully independent key committees .
Compensation Structure Analysis
- Mix: ~90% of CEO total target direct compensation is variable (short-term and long-term) to emphasize pay-for-performance .
- Shift in 2024: Increased base salary to $650,000 and reduced target bonus % to 100% (from 120%) to balance market competitiveness and retention without materially increasing total cost; CEO LTI target value set at ~$4.9M in 2024 (down ~$100k vs 2023) .
- LTI Design: 50% PRSU (relative TSR), 50% time-based RSU; no stock options granted in 2024 .
- Governance: No tax gross‑ups, prohibition on option repricing, robust clawback, strong ownership guidelines, and anti-hedging/pledging policy .
Compensation & Incentives – Multi‑Year Summary (CEO)
| Year | Salary ($) | Stock Awards ($) | NEIP ($) | Total ($) |
|---|---|---|---|---|
| 2022 | 555,769 | 4,258,926 | 287,589 | 5,111,932 |
| 2023 | 550,000 | 5,980,078 | 187,872 | 6,727,849 |
| 2024 | 592,308 | 3,960,445 | 739,118 | 5,303,605 |
Say‑on‑Pay support: >97% approval at 2024 Annual Meeting; company maintained philosophy and structure into 2024/2025 .
Performance & Track Record (selected indicators)
- 2024 revenue: $764M (+15.2% YoY) .
- 2024 GAAP gross margin: 40.3% (from 39.0% in 2023) .
- 2024 GAAP operating income: $64.8M (noted non-core gains affected YoY; excluding divestiture gains, operating income would have grown significantly) .
- 2024 TSR: 10.1% .
- PRSU cycle ending 6/30/2024: 146% payout (73rd percentile TSR rank vs. index peers) .
Related Party Transactions and Controls
- No related-person transactions requiring disclosure for 2024–present .
- Section 16(a) reporting: One minor delay (Forms 4 for Aug 5, 2024 RSU awards filed Aug 8, 2024) .
Equity Ownership & Alignment (additional governance)
| Item | Policy/Status |
|---|---|
| Ownership guidelines | CEO ≥ the greater of 10,000 shares or 3x salary |
| Compliance (as of 04/02/2025) | All executives compliant |
| Hedging/Pledging | Prohibited |
| Clawback | Dodd-Frank compliant (3-year lookback for restatements) |
Compensation Committee & Peer Group
- Compensation Committee: All independent; chaired by Kelley Steven‑Waiss; uses Aon as independent consultant; targets market median (50th percentile) .
- 2024 peer group spans semiconductor and semi‑equipment companies with revenue $200M–$2B and market cap $750M–$7.5B; mix updated to maintain comparability .
Investment Implications
- Alignment: High at‑risk pay, TSR‑based PRSUs, and meaningful ownership guidelines align CEO incentives with long‑term value creation; strong anti‑hedging/pledging and clawback mitigate governance risks .
- Retention/overhang: Multi‑year RSU/PRSU grants and sizable unvested equity create ongoing vesting supply; recent 10b5‑1‑plan sales appear programmatic and small relative to holdings, but quarterly vesting cadence can create periodic supply .
- Downside protections: Double‑trigger CoC, no excise tax gross‑ups, and no option repricing support shareholder-friendly pay practices; however, potential CoC equity acceleration is material (illustrative $15.7M) and should be monitored alongside M&A optionality .
- Execution risk: Pay-versus-performance linkage emphasizes adjusted operating income and multi-year relative TSR; sustained outperformance depends on continued share gains in AI/HBM, Foundry/Logic probe cards, and advanced packaging amid semi cycles .
Shareholder sentiment toward pay practices is supportive (97%+ say-on-pay in 2024), and governance structures (independent chair; independent committees) mitigate dual-role concerns .