Joseph Krawczyk
MICROCHIP TECHNOLOGYAbout Joseph Krawczyk
Joseph R. Krawczyk II is Senior Vice President, Worldwide Client Engagement at Microchip Technology (MCHP). He has been with Microchip since September 1995, was Vice President of Asia Client Engagement from 2006–2020, Vice President of Worldwide Client Engagement since May 2021, and was promoted to Senior Vice President in 2022; he is 65 years old as of April 30, 2025 and holds an MBA from St. Edward’s University and a B.S. in Computer Technology from the University of Southern Mississippi . Fiscal 2025 was a down-cycle year for Microchip with net sales of $4.40B and significant margin compression, which resulted in zero payout under the executive MICP; company pay-versus-performance disclosures show Microchip’s TSR index at 155.82 and non-GAAP operating income of $1,078.0M for FY25, framing a challenging backdrop for incentive payouts .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Microchip Technology | Senior Vice President, Worldwide Client Engagement | 2022–present | Leads global client engagement; elevated from VP to SVP during execution of customer/channel realignment . |
| Microchip Technology | Vice President, Worldwide Client Engagement | May 2021–2022 | Expanded global client engagement after Asia-focused leadership . |
| Microchip Technology | Vice President, Asia Client Engagement | 2006–2020 | Led Asia regional client strategy and sales execution . |
| Microchip Technology | Various marketing and geographical sales roles | 1995–2006 | Progressive commercial leadership since joining in 1995 . |
External Roles
- No public company board or external directorships disclosed for Mr. Krawczyk in company filings reviewed .
Fixed Compensation
| Item | FY2025 |
|---|---|
| Base Salary ($) | 241,308 |
| Target MICP Bonus (% of salary) | 36% |
| Actual MICP Paid ($) | 0 (no payouts in any quarter of FY25) |
| ECBP (broad employee bonus) Paid ($) | 0 (no ECBP bonus paid in FY25) |
| Notable Policy | 20% executive salary reduction in effect Feb 2024–Mar 31, 2025 |
Performance Compensation
Cash Incentive (MICP) – FY2025 Targets by Quarter
| Metric | Q1 Target | Q1 Weight | Q2 Target | Q2 Weight | Q3 Target | Q3 Weight | Q4 Target | Q4 Weight |
|---|---|---|---|---|---|---|---|---|
| Sequential net sales growth | 1.50% | 20% | 3.50% | 20% | 3.50% | 20% | 3.50% | 20% |
| Non-GAAP gross profit % | 65.50% | 15% | 63.50% | 15% | 63.50% | 15% | 63.50% | 15% |
| Non-GAAP opex % of sales | 23.00% | 15% | 25.50% | 15% | 25.50% | 15% | 25.50% | 15% |
| Non-GAAP op inc % of sales | 42.50% | 15% | 38.00% | 15% | 38.00% | 15% | 38.00% | 15% |
| Non-GAAP diluted EPS ($) | 0.52 | 15% | 0.43 | 15% | 0.30 | 15% | 0.10 | 15% |
| Discretionary (non-ESG) | N/A | 15% | N/A | 15% | N/A | 15% | N/A | 20% |
| Discretionary (ESG) | N/A | 5% | N/A | 5% | N/A | 5% | N/A | 0% |
Cash Incentive (MICP) – FY2025 Actuals and Payout
| Metric | Q1 Actual | Q1 Payout | Q2 Actual | Q2 Payout | Q3 Actual | Q3 Payout | Q4 Actual | Q4 Payout |
|---|---|---|---|---|---|---|---|---|
| Sequential net sales growth | -6.37% | 0% | -6.24% | 0% | -11.84% | 0% | -5.41% | 0% |
| Non-GAAP gross profit % | 59.90% | 0% | 59.54% | 0% | 55.44% | 0% | 51.99% | 0% |
| Non-GAAP opex % of sales | 28.43% | 0% | 30.25% | 0% | 34.91% | 0% | 37.97% | 0% |
| Non-GAAP op inc % of sales | 31.46% | 0% | 29.29% | 0% | 20.53% | 0% | 14.02% | 0% |
| Non-GAAP diluted EPS ($) | 0.53 | 0% | 0.46 | 0% | 0.20 | 0% | 0.11 | 0% |
| Discretionary (non-ESG) | N/A | 0% | N/A | 0% | N/A | 0% | N/A | 0% |
| Discretionary (ESG) | N/A | 0% | N/A | 0% | N/A | 0% | N/A | 0% |
Notes:
- Individual participation for Mr. Krawczyk under the MICP was set at 36% of salary for FY25; payouts were zero across all quarters due to underperformance vs targets .
Equity Awards (RSUs/PSUs) – Grants in FY2025
| Grant Date | Type | Target (#) | Max (#) | All Other Stock Awards (RSUs) (#) | Grant Date Fair Value ($) |
|---|---|---|---|---|---|
| 4/3/2024 | PSUs | 815 | 1,630 | — | 75,320 |
| 7/1/2024 | PSUs | 799 | 1,598 | — | 77,347 |
| 10/1/2024 | PSUs | 508 | 1,016 | — | 2,128 |
| 10/1/2024 | PSUs | 1,452 | 2,904 | — | 45,899 |
| 1/2/2025 | PSUs | 692 | 1,384 | — | 71,539 |
| 1/2/2025 | PSUs | 1,978 | 3,956 | — | 198,077 |
| 4/3/2024 | RSUs | — | — | 85 | 7,192 |
| 4/3/2024 | RSUs | — | — | 815 | 66,186 |
| 7/1/2024 | RSUs | — | — | 167 | 14,703 |
| 7/1/2024 | RSUs | — | — | 798 | 67,527 |
| 10/1/2024 | RSUs | — | — | 231 | 17,080 |
| 10/1/2024 | RSUs | — | — | 508 | 36,693 |
| 10/1/2024 | RSUs | — | — | 1,452 | 102,453 |
| 1/2/2025 | RSUs | — | — | 269 | 14,357 |
| 1/2/2025 | RSUs | — | — | 692 | 35,769 |
| 1/2/2025 | RSUs | — | — | 1,978 | 99,038 |
Equity design and vesting:
- Since late FY2020, 50% of evergreen grants are PSUs tied to non-GAAP operating income as a percentage of net sales measured over 12 quarters; the remaining 50% are time-based RSUs that generally vest approximately four years from grant, subject to continued service .
- No stock options outstanding for NEOs in FY2025; company has not granted options broadly in many years and does not reprice options .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (as of June 20, 2025) | 16,908 shares; includes 1,639 RSUs vesting within 60 days; <1% of outstanding shares . |
| Shares Outstanding (reference) | 539,674,554 shares at June 20, 2025 . |
| Stock Vested in FY2025 | 4,922 shares vested; $375,762 value realized (based on closing prices on vesting dates) . |
| Outstanding Equity Awards (FYE 3/31/2025) – PSUs | Unearned PSUs and values at $48.41/share: 1,514 ($73,293); 1,002 ($48,507); 923 ($44,682); 884 ($42,794); 692 ($33,500); 1,978 ($95,755) . |
| Outstanding Equity Awards (FYE 3/31/2025) – RSUs | Multiple unvested RSU lots with market values at FYE; examples include 685 ($33,161); 624 ($30,208); 678 ($32,822); 786 ($38,050); 682 ($33,016); 2,034 ($98,466); 1,452 ($70,291); 1,978 ($95,755), etc. . |
| Ownership Guidelines | Section 16(b) executive officers must hold the lesser of 2x salary or 12,000 shares; all executives were in compliance in FY2025 . |
| Pledging/Hedging | Company policy prohibits hedging and pledging company stock; short sales and derivatives trading are also prohibited . |
Employment Terms
| Topic | Key Terms |
|---|---|
| Employment Agreement | No individual employment contract disclosed; executives other than CEO have change-of-control agreements . |
| Change-of-Control (CoC) Agreement | Double-trigger within CoC period (3 months prior to CoC to 2 years post): if terminated without cause or resigns for good reason, benefits include (i) 18 months of current base salary (lump sum), (ii) 150% of highest annual incentive compensation paid in prior 3 full plan years (lump sum), (iii) 18 months COBRA premiums, and (iv) accelerated vesting of time-based equity and performance awards at greater of target or award terms . |
| 280G Treatment | Best-net cutback (no excise tax gross-up) to maximize after-tax proceeds; reductions ordered as specified (cash, contingent awards, accelerated equity, benefits) . |
| Illustrative CoC Economics (as of 3/31/2025) | Salary: $452,453; Bonus: $472,869; Equity acceleration: $1,626,893; Benefits: $30,635 (based on $48.41 share price) . |
| Clawback Policy | Adopted Oct 2023; recovery of incentive-based compensation upon financial restatement per Nasdaq standards . |
| Non-Compete/Non-Solicit | Not disclosed in filings reviewed (beyond standard policies) . |
Compensation Structure Analysis
- Mix and philosophy: Executive pay program balances base salary, quarterly cash incentives (MICP), and equity (50% PSUs/50% RSUs since late FY2020), emphasizing performance-based pay and stock ownership alignment; no option repricing; minimum one-year vesting on 95%+ of awards .
- FY2025 adjustments: 20% temporary salary reduction for executives amid weak business conditions; MICP design used non-GAAP financial metrics each quarter but paid 0% due to underperformance, aligning payouts with results .
- Peer benchmarking: Committee uses Compensia’s proprietary market data set (semis/hardware) but does not maintain a specific peer group; consultant independence affirmed .
- Say-on-pay: Strong shareholder support (94.22% “For” at August 20, 2024 meeting) .
Performance & Track Record (Context)
| Measure | FY2025 Outcome |
|---|---|
| Net Sales | $4.40B |
| Non-GAAP Operating Income | $1,078.0M (Pay vs Performance table) |
| Total Shareholder Return Index | 155.82 (fixed $100 from 3/31/2020) |
| MICP Payouts | 0% in all quarters due to revenue contraction and margin deterioration vs targets |
Management commentary highlighted a 9-point plan (manufacturing footprint optimization, inventory reduction, portfolio realignment toward AI/connectivity, and customer/channel repair) to restore margins and growth through the next upcycle .
Compensation Committee & Governance
- FY2025 Comp Committee members (through March 31, 2025): Karen M. Rapp (Chair), Ellen L. Barker; both independent .
- Current composition (Proxy 2025): Rapp (Chair), Rick Cassidy, Victor Peng; all independent .
- Policies: Anti-hedging/pledging; stock ownership guidelines; no option repricing; limited perquisites; clawback policy .
Investment Implications
- Alignment and downside sensitivity: Zero MICP payouts in FY2025 and 50% PSU mix tie Mr. Krawczyk’s realized pay to recovery in sales, margins, and non-GAAP EPS, indicating strong performance linkage; equity acceleration is only upon double-trigger CoC, limiting misalignment risk .
- Retention risk and selling pressure: Significant unvested RSUs/PSUs outstanding with four-year time-based and 12-quarter performance vesting create multi-year retention hooks; FY2025 vesting of only 4,922 shares (~$376K) and compliance with anti-hedging/pledging policies suggest limited near-term forced-selling risk from policy-driven pledging or option exercises (no options) .
- Change-of-control economics: Best-net cutback, no gross-ups, and double-trigger structure are shareholder-friendly; contingent value from equity acceleration at target could be meaningful in a CoC, but cash severance (18 months salary + 150% of highest annual incentive) is moderate vs market norms .
- Execution leverage: As head of worldwide client engagement, Mr. Krawczyk’s incentives (36% salary target MICP; heavy PSU mix) are geared to reaccelerating demand, repairing customer relationships, and restoring gross/operating margins—key drivers for Microchip’s TSR in the next cycle .