FEI COMPANY 5350 NE Dawson Creek Drive Hillsboro, Oregon 97124-5793
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FEI COMPANY 5350 NE Dawson Creek Drive Hillsboro, Oregon 97124-5793 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held On May 7, 2015 To the Shareholders of FEI Company: Notice is hereby given that the Annual Meeting of Shareholders of FEI Company, an Oregon corporation, will be held on Thursday, May 7, 2015, at 9:00 a.m. local time, at our corporate headquarters located at 5350 NE Dawson Creek Drive, Hillsboro, Oregon 97124-5793. The purposes of the annual meeting will be: 1. To elect members of FEI's Board of Directors to serve for the following year and until their successors are duly elected and qualified; 2. To consider and vote on a proposal to amend FEI's 1995 Stock Incentive Plan to increase the number of shares of our common stock reserved for issuance under the plan by 250,000 shares; 3. To consider and vote on a proposal to amend FEI's Employee Share Purchase Plan to increase the number of shares of our common stock reserved for issuance under the plan by 250,000 shares; 4. To approve, on an advisory basis, the appointment of KPMG LLP as FEI's independent registered public accounting firm for the year ending December 31, 2015; 5. To approve, on an advisory basis, FEI's executive compensation; and 6. To transact such other business as may properly come before the meeting or at any and all postponements or adjournments of the meeting. Only shareholders of record at the close of business on March 2, 2015 and their proxies will be entitled to vote at the annual meeting and any adjournment or postponement of the meeting. A proxy statement containing more detailed information about the matters to be considered at the annual meeting accompanies this notice. We encourage you to read and consider the proxy statement carefully and vote your shares. We are providing access to our proxy materials over the Internet under the rules adopted by the Securities and Exchange Commission. We are also making available voting by telephone, Internet or paper proxy card. Please read the accompanying proxy statement for more information. We believe that electronic availability of proxy materials allows us to provide shareholders with the information they need while lowering delivery costs and reducing the environmental impact of our annual meeting. By Order of the Board of Directors: BRADLEY J. THIES Hillsboro, Oregon Secretary March 23, 2015 Your vote is important. To vote your shares, please follow the instructions in the Notice Regarding the Availability of Proxy Materials, which is being mailed to you on or about March 23, 2015. 2015 ANNUAL MEETING OF SHAREHOLDERS NOTICE OF ANNUAL MEETING AND PROXY STATEMENT TABLE OF CONTENTS QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING ................ 1 GOVERNANCE .................................................................................................................................................. 7 Code of Conduct ............................................................................................................................................. 7 Director Independence .................................................................................................................................... 7 Board Leadership Structure and Role in Risk Oversight ................................................................................. 8 Executive Sessions ......................................................................................................................................... 8 Policy on Majority Voting for Directors ............................................................................................................ 8 Board Nominee Diversity ................................................................................................................................ 9 Qualification and Recommendation of Directors ............................................................................................. 9 Shareholder Recommendations for Directors ................................................................................................. 9 Shareholder Nominations for Directors ........................................................................................................... 10 Other Corporate Governance Policies ............................................................................................................ 10 Communications with the Board ..................................................................................................................... 11 PROPOSAL NO. 1 ELECTION OF DIRECTORS .............................................................................................. 12 MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS ............................................................ 15 DIRECTOR COMPENSATION ....................................................................................................................... 16 PROPOSAL NO. 2 AMENDMENT TO 1995 STOCK INCENTIVE PLAN .......................................................... 18 PROPOSAL NO. 3 AMENDMENT TO EMPLOYEE SHARE PURCHASE PLAN ............................................. 25 PROPOSAL NO. 4 ADVISORY APPROVAL OF THE APPOINTMENT OF PUBLIC ACCOUNTING FIRM ..... 28 PROPOSAL NO. 5 ADVISORY APPROVAL OF FEI'S EXECUTIVE COMPENSATION .................................. 29 EXECUTIVE OFFICERS .................................................................................................................................... 31 EXECUTIVE COMPENSATION ......................................................................................................................... 32 COMPENSATION DISCUSSION AND ANALYSIS ............................................................................................ 32 COMPENSATION COMMITTEE REPORT ........................................................................................................ 45 SUMMARY COMPENSATION TABLE ............................................................................................................... 46 GRANTS OF PLAN-BASED AWARDS FOR FISCAL YEAR ENDED 2014 ...................................................... 47 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END FOR FISCAL YEAR ENDED 2014 .................... 48 OPTION EXERCISES AND STOCK VESTED FOR FISCAL YEAR ENDED 2014 ........................................... 50 NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR ENDED 2014 ...................................... 50 POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT .............................................................. 51 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ................................. 52 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS........................... 54 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION ............................................ 54 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...................................................................... 54 OTHER TRANSACTIONS ................................................................................................................................. 54 AUDIT COMMITTEE REPORT .......................................................................................................................... 55 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ..................................................... 56 TRANSACTION OF OTHER BUSINESS ........................................................................................................... 56 FEI COMPANY _____________________________________________ PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS To Be Held On May 7, 2015 _____________________________________________ This document is being furnished to the shareholders of FEI Company (“FEI”) as part of the solicitation of proxies by FEI's Board of Directors (the “Board”) for use at the Annual Meeting of Shareholders to be held on Thursday, May 7, 2015 at 9:00 a.m. local time, at our corporate headquarters located at 5350 NE Dawson Creek Drive, Hillsboro, Oregon 97124-5793. We are mailing a Notice Regarding the Availability of Proxy Materials (a “Notice”) and are making this proxy statement available to shareholders of record entitled to vote at the annual meeting on or about March 23, 2015. Record Date and Shares Outstanding The Board fixed the close of business on March 2, 2015 as the record date (the “Record Date”) to determine the shareholders entitled to receive notice of, and to vote at, the annual meeting. Each holder of common stock on the Record Date is entitled to one vote per share held on all matters properly presented at the annual meeting. Common stock is our only outstanding voting security and it does not have cumulative voting rights. As of the close of business on the Record Date, there were 41,843,898 shares of common stock outstanding and entitled to vote, held by 61 holders of record. All votes on the proposals set forth below will be taken by ballot. QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING Although we encourage you to read this proxy statement in its entirety, we include this question and answer section to provide some background information and brief answers to several questions you might have about the annual meeting. Q: Why am I receiving these materials? A: Our Board has made these materials available to you in connection with our 2015 Annual Meeting of Shareholders, which will take place on May 7, 2015. We have made them available on the Internet