Edgar Filing: MICRON TECHNOLOGY INC

Document

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. )



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Micron Technology, Inc.
(Name of Registrant as Specified in Its Charter)

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Notice of Fiscal 2016 Annual Meeting of Shareholders

January 18, 2017

To the Shareholders:

NOTICE IS HEREBY GIVEN that the Fiscal 2016 Annual Meeting of Shareholders of Micron Technology, Inc., a Delaware corporation, will be held on January 18, 2017, at 9:00 a.m., Mountain Standard Time, at our headquarters located at 8000 South Federal Way, Boise, Idaho 83716-9632, for the purposes listed below. As used herein "we," "our," "us," "the Company" and similar terms refer to Micron Technology, Inc., unless the context indicates otherwise.


1.	To elect directors to serve for the ensuing year and until their successors are elected and qualified;


2.	To approve our Amended and Restated 2007 Equity Incentive Plan and increase the shares reserved for issuance thereunder by 30,000,000;


3.	To ratify the adoption of our Section 382 Rights Agreement;


4.	To ratify the appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending August 31, 2017;


5.	To approve a non-binding resolution to approve the compensation of our Named Executive Officers as described in the proxy statement; and


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

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.

Only shareholders of record at the close of business on November 21, 2016, are entitled to receive notice of and to vote at the meeting and any postponements or adjournments of the meeting. A complete list of shareholders entitled to vote at the meeting will be open to the examination of any shareholder, for any purpose germane to the business to be transacted at the meeting, during ordinary business hours for the ten-day period immediately preceding the date of the meeting, at our headquarters at 8000 South Federal Way, Boise, Idaho 83716-9632.

The Securities and Exchange Commission permits proxy materials to be furnished over the Internet rather than in paper form. Accordingly, we are sending most of our shareholders a notice regarding the availability of this proxy statement, our Annual Report on Form 10-K for fiscal 2016 and other proxy materials via the Internet (the "Notice"). This electronic process gives you fast, convenient access to the materials, reduces the impact on the environment and reduces our printing and mailing costs. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. The Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your vote over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice.

Attendance at the Annual Meeting will be limited to shareholders and our guests. Shareholders may be asked to furnish proof of ownership of our Common Stock before being admitted to the meeting.

To ensure your representation at the meeting, you are urged to vote. You may vote by telephone or electronically via the Internet. Alternatively, if you received a paper copy, you may sign, date and return the proxy card in the postage-prepaid envelope enclosed for that purpose. Please refer to the instructions included with the proxy card for additional details. Shareholders attending the meeting may vote in person even if they have already submitted their proxy, and any previous votes that were submitted by the shareholder, whether by Internet, telephone or mail, will be superseded by the vote that such shareholder casts at the meeting.



		By Order of the Board of Directors
Boise, Idaho December 8, 2016		Joel L. Poppen Vice President, Legal Affairs, General Counsel and Corporate Secretary

YOUR VOTE IS IMPORTANT. PLEASE SUBMIT YOUR PROXY PROMPTLY.

8000 South Federal Way

Boise, Idaho 83716-9632

____________________________

PROXY STATEMENT

FISCAL 2016 ANNUAL MEETING OF SHAREHOLDERS

January 18, 2017

9:00 a.m. Mountain Standard Time

____________________________

INFORMATION CONCERNING SOLICITATION AND VOTING

General

The proxy is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Micron Technology, Inc., for use at the Fiscal 2016 Annual Meeting of Shareholders to be held on January 18, 2017, at 9:00 a.m., Mountain Standard Time, or at any adjournment or postponement thereof (the "Annual Meeting"). The purpose of the Annual Meeting is set forth herein and in the accompanying Notice of Fiscal 2016 Annual Meeting of Shareholders. The Annual Meeting will be held at our headquarters located at 8000 South Federal Way, Boise, Idaho 83716-9632. Our telephone number is (208) 368-4000.

This Proxy Statement and related proxy card are first being distributed on or about December 8, 2016, to all shareholders entitled to vote at the meeting.

Shareholders can vote their shares using one of the following methods:


•	Vote through the Internet at www.proxypush.com/MU using the instructions included in the notice regarding the Internet availability of proxy materials, the proxy card or voting instruction card;


•	Vote by telephone using the instructions on the proxy card or voting instruction card if you received a paper copy of the proxy materials;


•	Complete and return a written proxy or voting instruction card using the proxy card or voting instruction card if you received a paper copy of the proxy materials; or


•	Attend and vote at the meeting.

Internet and telephone voting are available 24 hours a day, and if you use one of those methods, you do not need to return a paper proxy or voting instruction card. If you have questions on how to vote, you can call us at (877) 297-1746. Unless you are planning to vote at the meeting, your vote must be received by 11:59 p.m., Eastern Standard Time, on January 17, 2017.

Record Date

Shareholders of record at the close of business on November 21, 2016 (the "Record Date"), are entitled to receive notice of and to vote at the meeting.

Revocability of Proxy

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by attending the Annual Meeting and voting in person or by delivering to us a written notice of revocation or another duly executed proxy bearing a date later than the earlier given proxy but prior to the date of the Annual Meeting.

Solicitation

We will bear the cost of solicitation. In addition, we may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation materials to such beneficial owners. Proxies may be solicited by our directors, officers and employees, without additional compensation, personally or by telephone or Internet. We intend to use the services of D.F. King & Co., a proxy solicitation firm, in connection with the solicitation of proxies. Although the exact cost of the solicitation services is not known at this time, it is anticipated that the fees paid by us for these services will be approximately $12,500.

Outstanding Shares

We have one class of stock outstanding, common stock, $0.10 par value per share (the "Common Stock"). As of November 21, 2016, the Record Date, 1,044,096,391 shares of Common Stock were issued and outstanding and entitled to vote.

Voting Rights and Required Vote

Under the Delaware General Corporation Law and our Restated Certificate of Incorporation and our Amended and Restated Bylaws ("Bylaws"), each shareholder will be entitled to one vote for each share of Common Stock held at the Record Date for all matters, including the election of directors. The required quorum for the transaction of business at the Annual Meeting is a majority of the votes eligible to be cast by holders of shares of our Common Stock issued and outstanding on the Record Date. Shares that are voted "FOR," "AGAINST" or "ABSTAIN" are treated as being present at the Annual Meeting for the purposes of establishing a quorum and are tallied to determine the shareholders' decision with respect to the matter voted upon (the "Votes Cast"). Abstentions will have the same effect as voting against a proposal. Broker non-votes will be considered present and entitled to vote for purposes of determining the presence or absence of a quorum for the transaction of business, but such non-votes are not deemed to be Votes Cast and, therefore, will not be included in the tabulation of the voting results with respect to voting results for the election of directors or issues requiring the approval of a majority of Votes Cast.

Shares held in a brokerage account or by another nominee are considered held in "street name" by the shareholder or "beneficial owner." A broker or nominee holding shares for a beneficial owner may not vote on matters relating to the election of directors or advisory votes unless the broker or nominee receives specific voting instructions from the beneficial owner of the shares. As a result, absent specific instructions, brokers or nominees may not vote a beneficial owner's shares on Proposals 1, 2, 3, 5 and 6 and such shares will be considered "broker non-votes" for such proposals.

Directors will be elected if the number of votes "FOR" a particular director exceeds the number of votes "AGAINST" that same director. With respect to all other items of business, the "FOR" vote of a majority of the Votes Cast is required in order for such matter to be considered approved by the shareholders.

Voting of Proxies

The shares of Common Stock represented by all properly executed proxies received in time for the meeting will be voted in accordance with the directions given by the shareholders. If no instructions are given with respect to a properly executed proxy timely received by us, the shares of Common Stock represented thereby will be voted (i) FOR each of the nominees named herein as directors, or their respective substitutes as may be appointed by the Board of Directors, (ii) FOR the approval of our Amended and Restated 2007 Equity Incentive Plan and increase the shares reserved thereunder by 30,000,000; (iii) FOR the ratification of the adoption of our Section 382 Rights Agreement; (iv) FOR ratification of the appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending August 31, 2017, (v) FOR approval of a non-binding resolution to approve the compensation of our Named Executive Officers as described in the proxy statement; and (vi) in the discretion of the proxy holders for such business which may properly come before the Annual Meeting.

PROPOSAL 1 – ELECTION OF DIRECTORS

Nominees

A board of seven directors is to be elected at the Annual Meeting, all of whom have been recommended for nomination by a majority of the independent directors of the Board of Directors and all of whom are currently serving as directors. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the seven management nominees named below. If any management nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board of Directors to fill the vacancy. It is not expected that any nominee listed below will be unable or will decline to serve as a director. The term of office of each person elected as a director will continue until the next Annual Meeting of Shareholders or until such person's successor has been elected and qualified, except in the case of earlier resignation or removal. Executive officers are appointed annually by the Board of Directors and serve until their successors are duly appointed and qualified, except in the case of earlier resignation or removal. The names of the nominees and certain information about them are set forth below:

Served as a Director Since

Board Committees(1)

Name of Nominee

Age

Principal Occupation

Robert L. Bailey

Former Chairman of PMC-Sierra, Inc.

2007

Richard M. Beyer

Former Chairman and Chief Executive Officer of Freescale Semiconductor, Inc.

2013

Patrick J. Byrne

Senior Vice President of Fortive Corporation

2011

D. Mark Durcan

Chief Executive Officer of Micron Technology, Inc.

2012

Mercedes Johnson

Former Chief Financial Officer of Avago Technologies Limited

2005

Lawrence N. Mondry

President and Chief Executive Officer of Stream Gas & Electric, Ltd.

2005

Robert E. Switz

Chairman of the Board of Micron Technology, Inc.

2006

(1) A = Audit Committee, C = Compensation Committee, F = Finance Committee, G = Governance Committee

Set forth below are the principal occupations of the nominees for at least the past five years:

Robert L. Bailey was the Chairman of the Board of Directors of PMC-Sierra, Inc. ("PMC") from 2005 until May 2011 and also served as PMC's Chairman from February 2000 until February 2003. Mr. Bailey served as a director of PMC from October 1996 to May 2011. He also served as the Chief Executive Officer of PMC from July 1997 until May 2008. PMC was a leading provider of broadband communication and semiconductor storage solutions for the next-generation Internet. Since March 2015, Mr. Bailey has served as the Chairman of the Board of Blue Willow Systems, Inc. Within the past five years, Mr. Bailey also served on the Board of Directors of Entropic Communications. Mr. Bailey holds a BS in Electrical Engineering from the University of Bridgeport and an MBA from the University of Dallas.

Mr. Bailey's experience as Chief Executive Officer and Chairman of a leading technology company has given him expertise in the technology industry as well business operations, finance, corporate development, corporate governance and management.

Richard M. Beyer was Chairman and Chief Executive Officer of Freescale Semiconductor, Inc. ("Freescale") from 2008 through June 2012 and served as a director with Freescale until April 2013. Prior to Freescale, Mr. Beyer was President, Chief Executive Officer and a Director of Intersil Corporation from 2002 to 2008. He has also previously served in executive management roles at FVC.com, VLSI Technology, and National Semiconductor Corporation. Within the past five years, Mr. Beyer served on the Board of Directors of Freescale. He currently serves on the Board of Directors of Dialog Semiconductor and Analog Devices, Inc. Mr. Beyer served three years as an officer in the United States Marine Corps. He holds a BA and an MA in Russian from Georgetown University and an MBA in Marketing and International Business from Columbia University Graduate School of Business.

Mr. Beyer's experience as the Chief Executive Officer and a director at leading technology companies has given him expertise in the technology industry as well business operations, finance, corporate development, corporate governance and management.

Patrick J. Byrne has served as Senior Vice President of Fortive Corporation since July 2016 when Danaher Corporation ("Danaher") completed the separation of its Test & Measurement and Industrial Technologies segments. Mr. Byrne was President of Tektronix, a subsidiary of Danaher, from July 2014 to July 2016. Previously, he was Vice President of Strategy and Business Development and Chief Technical Officer of Danaher from November 2012 to July 2014. Danaher designs, manufactures, and markets innovative products and services to professional, medical, industrial and commercial customers. Prior to that, Mr. Byrne served as Director, President and Chief Executive Officer of Intermec, Inc. from 2007 to May 2012. Within the past five years, Mr. Byrne served on the Board of Directors of Flow International and Intermec, Inc. Mr. Byrne holds a BS in Electrical Engineering from the University of California, Berkeley, and an MS in Electrical Engineering from Stanford University.

Mr. Byrne's experience in executive management at public companies has given him expertise in the technology industry as well as business operations, finance, corporate development, corporate governance and management.

D. Mark Durcan joined us in June 1984 and has served in various positions since that time. Mr. Durcan was appointed our Chief Operating Officer in February 2006, President in June 2007, and Director and Chief Executive Officer in February 2012. Mr. Durcan has been an officer since 1996. Within the past five years, Mr. Durcan served on the Board of Directors of Freescale Semiconductor, Inc. and MWI Veterinary Supply, Inc. Mr. Durcan is currently a member of the Board of Directors of AmerisourceBergen Corporation. Mr. Durcan holds a BS and MChE in Chemical Engineering from Rice University.

Mr. Durcan has been with us for over 30 years and his experiences have given him extensive expertise in our business and operations. He has developed expertise in the areas of finance, corporate development, corporate governance, business strategy and management.

Mercedes Johnson was the Senior Vice President and Chief Financial Officer of Avago Technologies Limited, a supplier of analog interface components for communications, industrial and consumer applications, from December 2005 to August 2008. She also served as the Senior Vice President, Finance, of Lam Research Corporation ("Lam") from June 2004 to January 2005 and as Lam's Chief Financial Officer from May 1997 to May 2004. Ms. Johnson holds a degree in Accounting from the University of Buenos Aires and currently serves on the Board of Directors for Intersil Corporation, Juniper Networks, Inc., and Teradyne, Inc. Ms. Johnson is the Chairman of the Board of Directors' Audit Committee and Finance Committee.

Ms. Johnson's experience as the Chief Financial Officer of several technology companies has given her expertise in finance, corporate development, corporate governance, management and operations.

Lawrence N. Mondry is the President and Chief Executive Officer of Stream Gas & Electric, Ltd. a provider of energy, mobile and protective services, a role he began February 2016. Mr. Mondry was the Chief Executive Officer of Apollo Brands, a consumer products portfolio company, from February 2014 to February 2015. Mr. Mondry was the Chief Executive Officer of Flexi Compras Corporation, a rent-to-own retailer, from June 2013 to February 2014. Mr. Mondry was the President and Chief Executive Officer of CSK Auto Corporation ("CSK"), a specialty retailer of automotive aftermarket parts, from August 2007 to July 2008. Prior to his appointment at CSK, Mr. Mondry served as the Chief Executive Officer of CompUSA Inc. from November 2003 to May 2006. Mr. Mondry is the Chairman of the Board of Directors' Compensation Committee and Governance Committee.

Mr. Mondry's experience as the Chief Executive Officer of various retailers has given him expertise in operations, management, finance and corporate development. Mr. Mondry's retail expertise is especially relevant to our Lexar and Crucial businesses.

Robert E. Switz was the Chairman, President and Chief Executive Officer of ADC Telecommunications, Inc. ("ADC"), a supplier of network infrastructure products and services from August 2003 until December 2010, when Tyco Electronics Ltd. acquired ADC. Mr. Switz joined ADC in 1994 and throughout his career there held numerous leadership positions. Within the past five years, Mr. Switz served on the Board of Directors of GT Advanced Technologies Inc., Broadcom Corporation, Cyan, Inc., Pulse Electronics Corporation, and Leap Wireless International, Inc. Mr. Switz currently serves on the Board of Directors for Marvell Technology Group Ltd. and Gigamon, Inc. Mr. Switz holds an MBA from the University of Bridgeport and a BS in Business Administration from Quinnipiac University. Mr. Switz was appointed Chairman of the Board of Directors in 2012.

Mr. Switz's experience as Chief Executive Officer and Chairman of a leading technology company has given him expertise in the technology industry as well business operations, finance, corporate development, corporate governance and management.

There are no family relationships between any of our directors or executive officers.

The Board of Directors recommends voting "FOR" approval of the nominees listed above.

CORPORATE GOVERNANCE

Code of Business Conduct and Ethics

The Board of Directors has adopted a Code of Business Conduct and Ethics that is applicable to all our directors, officers and employees. A copy of the Micron Code of Business Conduct and Ethics is available at www.micron.com and is also available in print upon request. Any amendments or waivers of the Code of Business Conduct and Ethics will also be posted on our website within four business days of the amendment or waiver as required by applicable rules and regulations of the Securities and Exchange Commission ("SEC") and the Listing Rules of NASDAQ.

Sustainability

We believe that a commitment to corporate sustainability and supporting our global community is a critical part of our mission to deliver innovative solutions that accelerate our customers’ success. Our Board of Directors considers sustainability issues an integral part of its business oversight, and has encouraged a proactive approach toward mitigating our impact on the environment, supporting our team members and the communities in which they live, driving transparency and accountability in our supply chain, and developing products that support a sustainable future, and we report annually on our progress.

Director Independence

The Board of Directors has determined that directors Bailey, Beyer, Byrne, Johnson, Mondry and Switz qualify as independent directors. In determining the independence of our directors, the Board of Directors has adopted independence standards that mirror the criteria specified by applicable laws and regulations of the SEC and the Listing Rules of NASDAQ. None of these directors have a relationship with us, other than any relationship that is categorically not material under the guidelines referenced above. See "Certain Relationships and Related Transactions."

Board of Directors Leadership Structure

Mr. Switz has served as our Chairman of the Board of Directors since February 2012. We do not have a fixed policy on whether the roles of chairman and Chief Executive Officer should be separate or combined. The decision is based on our and our shareholders' best interests under the circumstances existing at the time. In his role as Chairman, Mr. Switz oversees meetings of the independent directors and acts as a liaison between the independent directors and Chief Executive Officer.

Risk Assessment Role

The Board of Directors is responsible for overseeing the major risks we face and reviewing management's proposals for their mitigation. In addition, the Board of Directors has delegated oversight of certain categories of risk to the Audit, Compensation, Finance and Governance Committees. The Audit Committee reviews and discusses with management significant financial and nonfinancial risk exposures, including cyber security, and the steps management has taken to monitor, control, and report such exposures. The Compensation Committee oversees management of risks relating to our compensation plans and programs. The Finance Committee oversees the Company's strategies for management of significant financial risks and contingent liabilities. The Governance Committee manages risks associated with board of directors' governance and director independence. The Audit, Compensation, Finance and Governance Committees report to the Board of Directors regularly on matters relating to the specific areas of risk the committees oversee.

Compensation Risks

We have assessed our compensation programs and have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. We assessed our compensation programs to

determine if the programs' provisions and operations create undesired or unintentional risk of a material nature. We also reviewed the results of our findings with Mercer, our outside compensation consultant. This risk assessment process included a review of program policies and practices; program analysis to identify risk and risk-control related to the programs; and determinations as to the sufficiency of risk identification, the balance of potential risk-to-potential-reward and risk-control. Although we reviewed all compensation programs, we focused on the programs with variability of payout, with the ability of a participant to directly affect payout and the controls on participant action and payout. In most cases, our compensation policies and practices are centrally designed and administered and are substantially the same for each business unit. Certain internal groups have different or supplemental compensation programs tailored to their specific operations and goals, and programs may differ by country due to variations in local laws and customs.

Compensation Consultant

The Compensation Committee annually engages a compensation consultant, currently Mercer, to provide a comprehensive review of executive compensation matters. Mercer provides the Compensation Committee with information for all of our officers on cash and non-cash compensation elements and historical and trend payment data.

The Compensation Committee has established procedures that it considers adequate to ensure that Mercer's advice to the Compensation Committee remains objective and is not influenced by our management. These procedures include: a direct reporting relationship to the Compensation Committee; a provision in the Compensation Committee's engagement letter with Mercer specifying what information, data, and recommendations can be shared with management; and an annual update to the Compensation Committee on Mercer's relationship with us, including a summary of the work performed for us during the preceding 12 months. The specific activities that Mercer undertakes for us include:


•	review non-employee director compensation;


•	review the Compensation Peer Group (as defined in the Compensation Discussion and Analysis) and recommend any changes to its members;


•	benchmark total direct compensation and its components (salary, short-term incentives and long-term incentives) of our officers using several data sources;


•	evaluate our historical pay-for-performance relationship;


•	review the metrics and targets associated with the annual short-term incentives and long-term incentive plans;


•	review the proposed equity grants for executives, along with vesting recommendations;


•	assist with a risk assessment of our compensation practices;


•	review a draft of the compensation discussion and analysis component of proxy disclosure; and


•	attend the Compensation Committee meetings in which executive compensation matters are discussed.

We paid Mercer a total of $599,229 in fiscal 2016 for services provided. Of this amount, $145,304 was paid as a result of the executive and non-employee director compensation consulting work Mercer performed for the Compensation Committee and Governance Committee and $453,925 was paid as a result of the work Mercer performed related to our 401(k) Plan and other human resource functions. The decision to use Mercer for services other than those provided to the Compensation Committee and Governance Committee was made by our management and not the Compensation Committee. Mercer is a wholly-owned subsidiary of Marsh & McLennan Companies Inc. ("MMC"). The Company paid MMC $2,443,240 in fiscal 2016 for insurance services.

In addition, the Compensation Committee considered the independence of Mercer in light of SEC rules and the Listing Rules of NASDAQ. The Compensation Committee received a letter from Mercer addressing its independence, including the following factors: (i) other services provided to us by Mercer; (ii) fees paid by us as a percentage of Mercer's total revenue; (iii) policies or procedures maintained by Mercer that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the individual consultants involved in the engagement and any member of the Compensation Committee; (v) any of our stock owned by the individual consultants involved in the engagement; and (vi) any business or personal relationships between our executive officers and Mercer or the individual consultants involved in the engagement. The Compensation Committee concluded that there were no conflicts of interest with Mercer.

Board of Directors Meetings and Committees

Our Board of Directors held six meetings during fiscal 2016. The Board of Directors met in Executive Session (meetings in which only non-employee directors are present) six times during fiscal 2016. In fiscal 2016, the Board of Directors had a standing Audit Committee, Compensation Committee, Finance Committee and Governance Committee. During fiscal 2016, the Audit Committee met ten times, the Compensation Committee met six times, the Finance Committee met six times, and the Governance Committee met four times. In addition to formal committee meetings, the chairmen of each committee engaged in regular discussions with management regarding various issues relevant to their respective committees. All incumbent directors attended 75% or more of the total number of meetings of the Board of Directors during fiscal 2016. All incumbent directors who served on the Audit, Compensation, Finance and Governance Committees attended 75% or more of the total number of committee meetings during fiscal 2016. With the exception of Mr. Byrne, all members of our Board of Directors were present at the Fiscal 2015 Annual Meeting of Shareholders. We encourage director attendance at the Annual Meeting of Shareholders.

The Audit Committee, the Compensation Committee, the Finance Committee and the Governance Committee each have written charters that comply with SEC and NASDAQ rules relating to corporate governance matters. Copies of the committee charters as well as our Corporate Governance Guidelines are available at www.micron.com and are also available in print upon request to corporatesecretary@micron.com. The Board of Directors has determined that all the members of the Audit Committee, the Compensation Committee, the Finance Committee and the Governance Committee satisfy the independence requirements of applicable SEC laws and the Listing Rules of NASDAQ for such committees.

Our Corporate Governance Guidelines specify a mandatory retirement age of 75 for members of our Board of Directors and provide that committee chairman serve for no more than five years, but give the Board of Directors the discretion in each case to waive the requirement on an annual basis. The Board of Directors has waived the five-year chair limit for Ms. Johnson on the Audit Committee and Mr. Mondry on the Governance Committee.

Audit Committee

Ms. Johnson and Messrs. Bailey and Switz currently serve on the Audit Committee. Ms. Johnson has served as the Chairman of the Audit Committee since October 2010. The Board of Directors has determined that Ms. Johnson and Messrs. Bailey and Switz each qualify as an "audit committee financial expert" for purposes of the rules and regulations of the SEC and that each of these members are sufficiently proficient in reading and understanding our financial statements to serve on the Audit Committee. The purpose of the Audit Committee is to assist the Board of Directors in overseeing and monitoring:


•	the integrity of our financial statements;


•	the performance of our internal audit function;


•	the performance of our Independent Registered Public Accounting Firm;


•	the qualifications and independence of our Independent Registered Public Accounting Firm; and


•	our compliance with legal and regulatory requirements.

The Audit Committee is also responsible for preparing the Audit Committee report that is included in our annual Proxy Statement. See "Report of the Audit Committee of the Board of Directors." The complete duties and responsibilities of the Audit Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.

Compensation Committee

Messrs. Beyer, Byrne and Mondry currently serve on the Compensation Committee of the Board of Directors. Mr. Warren East, who resigned from the Board of Directors following the expiration of his term, served as a member of the Compensation Committee for a portion of fiscal 2016. Mr. Mondry has served as the Chairman of the Compensation Committee since January 2012. The Compensation Committee is responsible for reviewing and approving the compensation of our executive officers. See the "Compensation Discussion and Analysis" and the "Compensation Committee Report" for information regarding how the Compensation Committee sets executive compensation levels. The Compensation Committee has authority to delegate any of its responsibilities to a subcommittee as it may deem appropriate in its judgment. The

complete duties of the Compensation Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.

Finance Committee

In fiscal 2016, we established a standing Finance Committee of the Board of Directors. Ms. Johnson and Messrs. Durcan and Mondry currently serve on the Finance Committee. Ms. Johnson serves as the Chairman of the Finance Committee. The Finance Committee represents and assists the Board of Directors in discharging its responsibilities with respect to our financial policies, financial strategies and capital structure. The complete duties of the Finance Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.

Governance Committee

Ms. Johnson and Messrs. Bailey, Beyer, Byrne, Mondry and Switz currently serve on the Governance Committee. Mr. Mondry has served as Chairman of the Governance Committee since October 2009. The responsibilities of the Governance Committee include assisting the Board of Directors in discharging its duties with respect to the following:


•	the identification and selection of nominees to our Board of Directors;


•	director compensation;


•	the development of our Corporate Governance Guidelines; and


•	the annual evaluations of the Board of Directors and its committees.

The complete duties and responsibilities of the Governance Committee are set forth in its written charter, which is available at www.micron.com and is also available in print upon request to corporatesecretary@micron.com.

The Governance Committee is responsible for identifying nominees for our Board of Directors. While we do not have a list of minimum qualifications that nominees must possess or a specific policy regarding diversity, the following factors are strongly considered by the Governance Committee in making its recommendations:

•substantial experience in the semiconductor industry or related industries;

•strong business acumen and judgment;

•excellent interpersonal skills;


•	business relationships with key individuals in industry, government and education that may be of significant assistance to us and our operations;


•	familiarity with accounting rules and practices; and


•	"independence" as defined and required by the Listing Rules of NASDAQ and relevant rules and regulations of the SEC.

In the event the Board of Directors has determined that it would be advisable to add additional members to the Board of Directors, the Governance Committee works with a third party executive search firm to assist them in the identification and evaluation of potential candidates to our Board of Directors.

The Governance Committee will consider director nominee recommendations from shareholders. Shareholder recommendations for directors are subject to the same criteria used to evaluate other candidates. Shareholders wishing to recommend a prospective nominee should submit the candidate's name and qualifications to our Corporate Secretary at corporatesecretary@micron.com. Our Bylaws contain the provisions that address the process by which a shareholder may nominate an individual to stand for election to our Board of Directors. A copy of our Bylaws can be found on the Corporate Governance page of our website at www.micron.com and is available in print upon request to corporatesecretary@micron.com.

Executive Sessions and Communications with the Board of Directors

Mr. Switz has been the Chairman of our Board of Directors since February 2012. As part of his duties as Chairman, Mr. Switz chairs Executive Session meetings of our Board of Directors. Shareholders and interested parties wishing to communicate with our Board of Directors may contact Mr. Switz at chairman@micron.com.

COMPENSATION OF DIRECTORS

The Governance Committee of the Board of Directors oversees the setting of compensation for our non-employee members of the Board of Directors. At the end of fiscal 2015, the Governance Committee engaged Mercer to review and evaluate director compensation for fiscal 2016, in light of prevailing market conditions. Mercer gathered and reviewed market data for non-employee directors from the same Compensation Peer Group used to evaluate officer compensation. For a discussion of peer group companies please see "Executive Compensation and Related Information – Compensation Discussion and Analysis." Upon completion of its review and evaluation, the Governance Committee recommended that the Board of Directors make no changes to the director's compensation.

Elements of Director Compensation

Annual Retainer

Non-employee directors are entitled to receive an annual retainer of $100,000. Pursuant to our 2008 Director's Compensation Plan (the "DCP"), which operates as a sub-plan of the Amended and Restated 2007 Equity Incentive Plan (the 2007 Plan"), non-employee directors may elect to take some or their entire annual retainer in the form of cash, shares of Common Stock or deferred rights to receive Common Stock upon termination as a director. Employee directors receive no additional or special remuneration for their service as directors.

Set forth below are the amounts received by directors for their service as committee chair or Chairman of the Board of Directors:



	2016
Audit Committee Chair	$	30,000
Compensation Committee Chair	20,000
Finance Committee Chair	15,000
Governance Committee Chair	15,000
Chairman of the Board of Directors	150,000

Except for the foregoing, directors do not receive any additional or special cash remuneration for their service on any of the committees established by the Board of Directors. We reimburse directors for travel and lodging expenses, if any, incurred in connection with attendance at Board of Directors' meetings.

Equity Award

Non-employee directors receive an annual equity award. Since fiscal 2007, the equity award has been exclusively in the form of restricted stock. The "targeted value" for the annual non-employee director equity award is established each year by the Board of Directors following discussions with Mercer and has been set at $250,000 since fiscal 2015. The number of restricted shares awarded to each non-employee director is determined by dividing the applicable targeted value by the Fair Market Value of a share of our Common Stock, as defined under our equity plans. For purposes of our equity plans, "Fair Market Value" is the closing price of our Common Stock on the last market-trading day prior to the date of grant. The restrictions on the shares awarded in fiscal 2016 lapse for 100% of such shares on the first anniversary of the date of grant (the "Vesting Period"). Notwithstanding the foregoing, the restrictions will lapse for 100% of such shares in the event a director either reaches the mandatory retirement age or retires from the Board of Directors during the Vesting Period having achieved a minimum of three years of service with the Board of Directors prior to the effective date of his or her retirement.

As part of our commitment to sound corporate governance practices, at the Annual Meeting we are seeking shareholder approval of an amendment to our 2007 Plan, to set a limit of $750,000 on the value of shares that may be granted to any non-employee director in a single fiscal year. See Proposal 2 for additional information related to our 2007 Plan.

Fiscal 2016 Director Compensation

The following table details the total compensation earned by our non-employee directors in fiscal 2016.



Name	Fees Earned or Paid in Cash		Stock Awards(1)		Total
Robert L. Bailey	$	100,000	$	250,011	$	350,011
Richard M. Beyer	100,000		250,011		350,011
Patrick J. Byrne	100,000		250,011		350,011
D. Warren A. East(2)	40,591		250,011		290,602
Mercedes Johnson	143,185		250,011		393,196
Lawrence N. Mondry	135,000		250,011		385,011
Robert E. Switz	250,000		250,011		500,011

(1)

On October 14, 2015, each director who was not an employee was granted 13,752 shares of restricted stock with a grant date fair value of $250,011 ($18.18 per share). The shares received by Mr. East were forfeited upon his resignation from the Board of Directors as the restrictions related to the shares had not lapsed. For information on the restrictions associated with these awards, see "Elements of Director Compensation – Equity Award" above. Any dividends payable with respect to our Common Stock will be payable with respect to all awards of restricted stock. As of September 1, 2016, each serving non-employee director held 13,752 shares of restricted stock.


(2)	Mr. East served as a member of our Board of Directors through January 27, 2016.

Stock Ownership Guidelines

We have established stock ownership guidelines for our directors. The minimum ownership guideline for directors is to hold shares with a value equal to five times their $100,000 annual retainer. The minimum ownership guideline for our CEO is to hold shares with a value equal to five times his base salary. Directors are given five years to meet the ownership guidelines. The Governance Committee reviews the Ownership Guidelines annually and monitors each persons progress toward, and continued compliance with, the guidelines. In October 2016, the Governance Committee increased the stock ownership requirement for directors from four times the amount of the annual retainer to five times. Stock sales restrictions may be imposed upon directors if the stock ownership guidelines are not met. All our directors are in compliance with the guidelines.

The following table shows non-employee director compliance with the guidelines as of the Record Date (November 21, 2016):



Director	Guideline Multiplier	Guideline Amount		Compliance with Guideline
Robert L. Bailey	5	$	500,000	Yes
Richard M. Beyer	5	500,000		Yes
Patrick J. Byrne	5	500,000		Yes
Mercedes Johnson	5	500,000		Yes
Lawrence N. Mondry	5	500,000		Yes
Robert E. Switz	5	500,000		Yes

Please refer to page 26 for information on the stock ownership guidelines for our Named Executive Offices, including Mr. Durcan.

PRINCIPAL SHAREHOLDERS

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth security beneficial ownership information of our Common Stock as of the Record Date (November 21, 2016), based on the most current information provided to us by the beneficial owners, available to us from our own records or provided in SEC filings made by the beneficial owners, for (i) persons known by us to own beneficially more than 5% of our Common Stock, (ii) each director, (iii) each Named Executive Officer listed in the "Summary Compensation Table" set forth herein and (iv) all directors and executive officers as a group:



Name of Beneficial Owner	Number of Shares Owned(1)	Right to Acquire(2)	Total Beneficial Ownership	Percent of Class(3)
BlackRock, Inc.(4)	70,292,946		70,292,946	6.7	%
The Vanguard Group, Inc.(5)	63,769,649		63,769,649	6.1	%
PRIMECAP Management Company(6)	55,658,616		55,658,616	5.3	%
FMR LLC(7)	55,557,175		55,557,175	5.3	%
Robert L. Bailey	126,284		126,284	*
Richard M. Beyer	69,060		69,060	*
Patrick J. Byrne	137,586		137,586	*
Scott J. DeBoer	200,232	130,394	330,626	*
D. Mark Durcan(8)	2,215,251	1,824,342	4,039,593	*
Mercedes Johnson	81,775		81,775	*
Ernest E. Maddock	191,931	46,674	238,605	*
Lawrence N. Mondry	202,367		202,367	*
Brian M. Shirley	339,122	392,062	731,184	*
Robert E. Switz	139,242		139,242	*
Steven L. Thorsen, Jr.	295,690	200,894	496,584	*
Mark W. Adams	144,198	43,350	187,548	*
All directors and executive officers as a group (14 persons)	4,383,003	2,846,068	7,229,071	*


*	Represents less than 1% of shares outstanding


(1)	Excludes shares that may be acquired through the exercise of outstanding stock options.


(2)	Represents shares that an individual has a right to acquire within 60 days of the Record Date.


(3)	For purposes of calculating the Percent of Class, shares that the person or entity had a Right to Acquire are deemed to be outstanding when calculating the Percent of Class of such person or entity.


(4)	As of December 31, 2015, BlackRock, Inc. had sole voting power as to 60,420,532 shares and sole dispositive power as to 70,292,946 shares. This information was taken from Schedule 13G filed on February 10, 2016. BlackRock's business address is 55 East 52nd Street, New York, NY 10055.


(5)	As of December 31, 2015, The Vanguard Group, Inc. had sole voting power as to 1,992,241 shares, sole dispositive power as to 61,645,234 shares, shared voting power as to 104,700 shares, and shared dispositive power as to 2,124,415 shares. This information was taken from Schedule 13G filed on February 10, 2016. The Vanguard Group's business address is 100 Vanguard Blvd., Malvern, PA 19355.


(6)	As of January 31, 2016, PRIMECAP Management Company had sole voting power as to 13,285,633 shares and sole dispositive power as to 55,658,616 shares. This information was taken from Schedule 13G filed on February 4, 2016. PRIMECAP Management Company's business address is 225 South Lake Ave., #400, Pasadena, CA 91101.


(7)	As of December 31, 2015, FMR LLC had sole voting power as to 2,166,767 shares and sole dispositive power as to 55,557,175 shares. This information was taken from Schedule 13G filed on February 12, 2016. FMR's business address is 245 Summer Street, Boston, MA 02210.


(8)	Includes 284,653 shares beneficially owned by C&E Partners L.P. and 1,298 shares beneficially owned by Mr. Durcan's spouse.

EXECUTIVE COMPENSATION AND RELATED INFORMATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis presents material information helpful or necessary to understand the objectives and policies of our compensation program for executive officers and the compensation reported in the tables that follow. This discussion focuses on the compensation awarded to, earned by, and paid to the following individuals:


•	Scott J. DeBoer, our Vice President, Technology Development;


•	D. Mark Durcan, our Chief Executive Officer;


•	Ernest E. Maddock, our Chief Financial Officer and Vice President, Finance;


•	Brian M. Shirley, our Vice President, Memory Solutions; and


•	Steven L. Thorsen, Jr., our Vice President, Worldwide Sales.

In addition, we have included information related to Mark W. Adams, who served as our President for a portion of fiscal 2016 until his resignation effective February 1, 2016.

Throughout this discussion, the foregoing individuals who are also named in the "Fiscal 2016 Summary Compensation Table," are referred to as our "Named Executive Officers" and the Compensation Committee of the Board of Directors is referred to as the "Committee."

Executive Summary

Fiscal 2016 Highlights


•	We generated $12.4 billion in revenue and $3.2 billion in operating cash flow.


•	We entered into agreements to acquire the remaining 67% interest in our Inotera Memories, Inc. joint venture for approximately $4.1 billion. The Inotera acquisition closed on December 6, 2016.


•	We began production of 3D XPoint memory products and continue to work on enabling the technology in the market.


•	In the third quarter of fiscal 2016, we achieved 20nm DRAM crossover; i.e., 20nm DRAM represented a majority of our DRAM bit output.


•	We continued our ramp of 3D NAND, and at the end of fiscal 2016, we were ahead of our original ramp schedule and now expect 3D NAND bit output to exceed 2D NAND bit output in the first quarter of fiscal 2017.


•	We completed key mobile customer qualifications on 20nm DRAM and 3D NAND.


•	We implemented a Company-wide restructuring plan, which we believe will save more than $300 million in fiscal 2017 as compared to our previously planned spending levels.

Total Shareholder Return ("TSR")

The following chart shows our relative TSR data as compared to the median of our Compensation Peer Group.

The information presented is based on closing prices on or nearest September 1 for each period presented above and represents annualized rates of return reflecting price appreciation plus reinvestment of dividends and the compounding effect of dividends paid, if any, on reinvested dividends. This table does not include our peer, Broadcom Corporation, as it merged with Avago Technologies in 2016.

Objective of our Executive Compensation Program

Our primary long-term corporate objective is to create superior value for our shareholders. The objective of the executive compensation program is to attract, motivate, reward, and retain highly qualified executive officers who are able to achieve the corporate objective of superior value for our shareholders. The executive compensation program is designed to provide a foundation of fixed compensation (base salary and time-based restricted shares) and a significant portion of performance-based compensation (short-term and long-term incentive opportunities, such as cash bonuses and performance-based restricted stock units), that align the interests of executives with those of our shareholders. We also use time-based stock options, the value of which is directly tied to stock price performance.

Compensation Highlights


•	CEO Compensation


◦	In fiscal 2016 Mr. Durcan requested a voluntary and temporary pay reduction to align his salary with the Company's expense reduction initiatives. As a result of Mr. Durcan's request, the Compensation Committee reduced his annual base salary by 50% to $525,000 and his long-term incentive opportunity from $8,000,000 to $5,000,000. Mr. Durcan's short-term incentive target percentage did not change.


◦	For fiscal 2016, Mr. Durcan's base salary, short-term incentive target, and long-term incentive opportunity were at or below the market median.


•	In October 2015, the Committee set compensation levels and performance goals for fiscal 2016 based on a review of financial results, projections, individual contributions, strategic objectives, Market Data (as defined below), and market conditions.


◦	As a result of this review, fiscal 2015 compensation levels for our Named Executive Officers were adjusted for fiscal 2016 as follows:



Executive Officer	Base Salary	Short-term Incentive(1)	Long-term Incentive
Scott J. DeBoer	Unchanged	Unchanged	Unchanged
D. Mark Durcan(2)	Decreased	Unchanged	Decreased
Ernest E. Maddock	Unchanged	Unchanged	Increased
Brian M. Shirley	Unchanged	Unchanged	Unchanged
Steven L. Thorsen, Jr.	Unchanged	Unchanged	Unchanged
Mark W. Adams	Unchanged	Unchanged	Increased


(1)	As a percentage of base salary.


(2)	See above for a discussion of Mr. Durcan's compensation.


◦	In light of prevailing market conditions, in May 2016 the Committee suspended the Executive Officer Performance Incentive Plan ("EIP") for fiscal 2016. As a result, while our Named Executive Officers met some of their performance goals in fiscal 2016, no payouts were awarded.

◦

Despite the suspension of the EIP, in order to guide the performance of our executive officers and continue to promote our long-term success and shareholder value, the Committee set performance goals for the Company's executive officers. The performance goals were selected due to their correlation to the creation of shareholder value and their alignment with our strategic objectives. For fiscal 2016, our corporate goals were tied to profitability, technology enablement, product qualifications, customer business review scores and manufacturing milestones related to our DRAM and NAND products.


◦	The following pay mix, based on target amounts, was established for our Named Executive Officers for fiscal 2016:


◦	For our long-term equity incentives, we use a mix of 25% stock options, 45% time-based restricted stock and 30% performance-based restricted stock units.


◦	The metrics for our performance-based restricted stock units include a return on assets ("ROA") metric and a relative total shareholder return ("TSR") metric, both with a three-year measurement period. We believe a three-year period better measures our performance because of the volatility in our business and stock price.

Corporate Governance and Compensation Practices Highlights


•	The EIP is performance-based and we have no history of changing performance metrics mid-cycle.


•	We offer limited perquisites to our Named Executive Officers and we do not offer any special retirement benefits for our Named Executive Officers other than participation in our retirement plans on the same basis as other employees.


•	We do not have agreements with our officers that provide tax gross-up protection for change in control excise taxes.


•	Our equity incentive plans prohibit repricing of options or stock appreciation rights ("SARs") (directly or indirectly) without prior shareholder approval.


•	Our equity incentive plans were amended in August 2016 to replace "single-trigger" vesting provisions with "double-trigger" vesting provisions in the event of a change in control.


•	Our insider trading policy prohibits our officers and directors from engaging in pledging or hedging activities involving our stock.


•	We have an independent Chairman of the Board of Directors.


•	We have a compensation recoupment ("clawback") policy that provides for recoupment of incentive compensation paid to current and former officers in the event of an accounting restatement due to material noncompliance.


•	Our executive officers and directors were in compliance with our stock ownership guidelines for fiscal 2016.

Consideration of the Fiscal 2015 Advisory Vote on Executive Compensation

At the Fiscal 2015 Annual Meeting of Shareholders on January 28, 2016, in our annual advisory vote on executive compensation, over 93% of the shares voted in support of the compensation of our named executive officers. The Committee appreciates and values the views of our shareholders. In considering the results of the fiscal 2015 advisory vote on executive compensation, the Committee concluded that the compensation paid to our executive officers and our overall executive pay practices have strong shareholder support and have been effective in implementing our stated compensation philosophy and objectives. The Committee recognizes that executive pay practices and notions of sound governance principles continue to evolve. Consequently, the Committee intends to continue to seek the advice and counsel of its compensation advisors. Our shareholders may communicate any concerns or opinions on executive pay directly to the Committee or the Board of Directors. Please refer to "Executive Sessions and Communications with the Board of Directors" on page 9 for information about communicating with the Board of Directors.

Oversight of the Executive Compensation Program

Our executive compensation program is administered by the Committee. The Committee assists the Board of Directors in discharging its responsibilities with respect to the compensation of our officers. The Committee has direct responsibility to review and approve corporate goals and objectives used to determine the CEO's compensation, evaluate his performance in light of such goals and objectives, and determine and approve his compensation level based on that evaluation. The Committee also reviews the evaluation process and compensation structure for our Named Executive Officers and approves their compensation.

The Committee annually engages an outside compensation consultant, currently Mercer. The Committee also works closely with our CEO with respect to the determination of compensation of other officers. A more complete description of the Committee's responsibilities is provided in the Committee's Charter approved by the Board of Directors, which can be found on our website, www.micron.com. A more complete description of the role of the CEO and Mercer in the compensation process is described later in this Compensation Discussion and Analysis. Additional information regarding Mercer, the specific activities that Mercer undertakes for us and related fees can be found under "Corporate Governance – Compensation Consultant" on page 6.

Guiding Principles

We believe we have the best opportunity to attract, motivate, reward and retain qualified individuals, and thus meet our overall objective of increasing shareholder value, by offering a compensation package that is "reasonable" and "competitive"

with what our executives could otherwise obtain in the market, and especially from companies within our Compensation Peer Group. Our Compensation Peer Group consists of companies that we believe are especially likely to be our competitors for executive talent and is discussed further in "Market Data Defined" below. What is "reasonable" and "competitive" is gauged against the Market Data and reviewed by the Committee for each of the primary elements of compensation.

Reasonable

As an indication of reasonableness, the Committee typically targets the Market Data median. We believe it is important to retain flexibility in determining the compensation of our officers and, when appropriate, to deviate from the Market Data median due to factors such as:


•	differences in position and level of responsibility among officers, both in absolute terms and relative to our other officers and as compared to similarly situated officers within the Compensation Peer Group,


•	past and anticipated contributions,


•	technical expertise,


•	Company performance,


•	applicable business unit performance, and


•	length of service and/or experience both in absolute terms and relative to our other officers and as compared to officers within the Compensation Peer Group.

The semiconductor industry is highly volatile and Market Data, which is a compilation of data from many companies, may change dramatically from year to year. Market Data can change as compensation practices change, executives retire or are replaced with less experienced and lower-paid executives, goals are achieved or not achieved resulting in varying payouts, participants in proprietary surveys change, and the completeness or accuracy of compensation data improves or deteriorates. Accordingly, what may have been the "median" or within a reasonable range of competitiveness in one year, may be higher or lower for the next. For this reason, even though the Committee manages compensation in accordance with such guiding principles, officer compensation may vary, above or below the median, or a range from the median, year over year.

Competitive

Given our experience, as well as advice we have received from Mercer, we believe a competitive compensation package will consider and measure compensation practices for executive positions with respect to three primary elements of compensation:


•	base compensation (salary),


•	short-term incentive compensation (cash bonus programs), and


•	long-term incentive compensation (stock options, time-based restricted stock and performance-based restricted stock units).

We do not require that a particular element comprise a set portion of the total compensation mix. We do believe, however, that a significant portion of the compensation should be variable (such as performance-based incentives) as compared to fixed (such as base salary and time-based restricted shares) and that such variable compensation aligns executives' interests with those of our shareholders. Additionally, although the Committee reviews total direct compensation (which is the sum of base salary, short-term incentive and long-term incentive compensation) for each of our Named Executive Officers, it does not have a fixed objective with respect to such total direct compensation. For fiscal 2016, the total direct compensation approved by the Committee was below the 75th percentile of Market Data values for Messrs. Adams and DeBoer, below the 50th percentile of Market Data values for Messrs. Maddock, Shirley and Thorsen and below the 25th percentile of Market Data values for Mr. Durcan.

Compensation-setting Process and the Determination of Compensation Levels

The Committee reviews the compensation of our executive officers on an annual basis and sets compensation levels at the beginning of each fiscal year. As part of this process, the Committee reviews our financial results for the year just ended, projections for future periods, our strategic business plan and the Market Data provided by Mercer. The Committee also works with our CEO to establish performance goals that further our strategic objectives.

Mercer reviews the most recent available data and identifies the Market Data values for the 25th, 50th (i.e. median) and 75th percentile with respect to each position or rank. Mercer compares our compensation data, both as to elements and amounts to be paid or potential value to be delivered, with that of the Market Data and reports its findings to the CEO and the Committee. Our CEO works with Mercer by providing our financial data with respect to the most-recently completed fiscal year. The CEO also reviews projected financial results for the current fiscal year and our strategic business plan. The CEO makes suggestions as to base salary, recommends a potential set of company-wide and/or business unit metrics and targets for the current fiscal year with respect to short-term incentives and offers suggestions as to long-term incentive compensation for the executive officers other than himself. He makes no recommendations as to his own level of compensation. The Committee reviews the Market Data, discusses the Market Data with the CEO and with Mercer, discusses individual officer performance based on input from the CEO and, without the CEO present, discusses the CEO's own performance for the most-recently completed fiscal year and anticipated performance for the current year. The Committee uses the Market Data and the deliberations to determine whether our compensation is competitive and reasonable as described above and whether, and to what extent, the Committee believes it would be appropriate to deviate from the Market Data and competitive practices. Following this deliberation, the Committee exercises its business judgment to certify the payment of compensation based on the financial results for the most-recently completed fiscal year, and approves the compensation for the current fiscal year, including the metrics and targets for the current year.

Components of the Executive Compensation Program

Fiscal 2016 base salaries

The purpose of a competitive base salary is to compensate executives for performing their day-to-day job responsibilities. Base salaries are generally targeted to approximate the Market Data median but may be above or below depending upon an executive's contributions, experience, performance and length of service. At the completion of fiscal 2015, the Market Data showed that the base salaries of our Named Executive Officers were below the 50th percentile for their positions or ranks. At Mr. Durcan's request, the Committee decreased Mr. Durcan's base salary for fiscal 2016 to align his salary with the Company's expense reduction initiatives. The following table shows our Named Executive Officers' fiscal 2016 salaries as compared to the 50th percentile of the Market Data.



Executive Officer	Fiscal 2016 Base Salary		Above (Below) 50th Percentile		Base Salary % Change From Fiscal 2015
Scott J. DeBoer	$	470,000	(6	)%	—	%
D. Mark Durcan	525,000		(56	)%	(50	)%
Ernest E. Maddock	550,000		(16	)%	—	%
Brian M. Shirley	630,000		(14	)%	—	%
Steven L. Thorsen, Jr.	485,000		(2	)%	—	%
Mark W. Adams	775,000		(9	)%	—	%

Fiscal 2016 short-term incentive awards

With respect to short-term incentive compensation, we pay for achievement of financial, operational and strategic objectives approved by the Committee at the beginning of each fiscal year. The short-term incentive opportunities are set to be competitive with market practices but actual incentive payouts are commensurate with achievement. Thus, we have adopted a "pay for performance" approach as it relates to short-term incentives.

Historically, we provided annual short-term incentive cash awards to our executive officers pursuant to the EIP. The EIP was last approved by our shareholders in January 2015. The purpose of the EIP is to attract, retain and reward qualified executives, who are important to our success, by providing performance-based, incentive cash awards for outstanding performance at the individual, business-unit and/or company-wide level. However, in light of prevailing market conditions, in

May 2016 the Committee suspended the EIP for fiscal 2016. The Committee nonetheless established performance goals for fiscal 2016 in order to help guide the performance of our executive officers and continue to promote our long-term success and shareholder value. Accordingly, the discussion below describes how the EIP would have operated but for its suspension for fiscal 2016.

The short-term incentive "opportunity" ("Target Award") for each officer is stated in terms of a specified percentage of such officer's base salary and is designed to reward participants for the achievement of specified short-term company-wide and/or business unit financial, operational or strategic goals. The Committee believes the pre-determined goals, regardless of whether tied to company-wide or business unit performance, promote our long-term success and shareholder value.

The Committee established the following goals for fiscal 2016:


•	Profitability – achieving targeted levels of net income,


•	Technology Enablement – executing on DRAM & NAND technology road maps,


•	Product Qualifications – achieving targeted product milestones,


•	Customer Review – achieving customer feedback targets,


•	20nm DRAM – achieving manufacturing targets, and


•	3D NAND – achieving manufacturing targets.

The target incentive amounts payable under the EIP for achievement of the fiscal 2016 goals are shown in the columns "Estimated Future Payouts under Non-Equity Incentive Plan Awards" of the "Grants of Plan-Based Awards in Fiscal 2016" table. All goals were established with threshold (50%), target (100%) and maximum (200%) payout levels, with the threshold, target and maximum payouts requiring a significant level of execution and effort and no assurance of goal achievement.

The Target Awards established for fiscal 2016 for our Named Executive Officers were measured against the Market Data median. However, opportunities are not necessarily limited to the Market Data median, but are considered within the factors described under the section labeled "Reasonable" above. For fiscal 2016, the following Target Awards were established, and were unchanged from fiscal 2015:



Executive Officer	% of Base Salary
Scott J. DeBoer	80	%
D. Mark Durcan	150	%
Ernest E. Maddock	100	%
Brian M. Shirley	100	%
Steven L. Thorsen, Jr.	90	%
Mark W. Adams	130	%

The following table shows the Target Award weightings and levels of achievement of the EIP goals for our Named Executive Officers. The weightings reflect each Named Executive Officer's responsibilities and ability to affect the attainment of the goal.

EIP Weightings (as Percentage of Target Incentive)



Goals	Weighting		% of Target Achieved
Profitability	50	%	—	%
Technology Enablement	10	%	50	%
Product Qualifications	10	%	200	%
Customer Review	10	%	—	%
20nm DRAM	10	%	—	%
3D NAND	10	%	—	%
Overall weighted-average achievement			25	%

The levels of achievement were reviewed by the Committee based on fiscal 2016 results. As a result of the suspension of the EIP, no fiscal 2016 bonuses were paid under the EIP to our Named Executive Officers. Had the EIP not been suspended for fiscal 2016, the Named Executive Officers would have received bonuses in the following amounts:



Executive Officer	% of Target Achieved		Bonus Amount		Bonus Paid
Scott J. DeBoer	25	%	$	94,000	$	0
D. Mark Durcan	25	%	196,875		0
Ernest E. Maddock	25	%	137,500		0
Brian M. Shirley	25	%	157,500		0
Steven L. Thorsen, Jr.	25	%	109,125		0
Mark W. Adams	25	%	251,875		0

The EIP calls for certain performance goals to be modified with respect to major corporate transactions if permitted by Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"). These events are more fully described in the EIP. Additionally, the Committee has the discretion to modify performance goals with respect to Target Awards that are not intended to satisfy Section 162(m) if the Committee determines that due to changes in our business, operations, corporate or capital structure, the existing performance goals are rendered unsuitable for a given performance period. Upon the occurrence of a "change in control" (as defined in the EIP), performance periods are deemed to have ended and the Committee will determine whether performance goals were achieved. Finally, the Committee always retains the ability to exercise "negative discretion" and reduce an amount otherwise earned pursuant to the EIP.

Fiscal 2016 long-term equity incentives

We believe long-term incentive compensation should be tied to our success and increase in shareholder value. Accordingly, stock options and performance-based restricted stock unit awards are significant components of our executive compensation program. We believe these types of awards are especially aligned with shareholders' interests as their value is dependent upon stock price performance or the achievement of certain milestones. To ensure our long-term incentive program helps retain executives, we also grant time-based restricted stock awards. The Committee reviews peer data related to mix and works with Mercer to determine the allocation and type of performance- and time-based awards to grant each fiscal year. In setting fiscal 2016 compensation, the Committee did not change the mix of long-term equity incentives for each of our Named Executive Officers from the 25% stock options, 45% time-based restricted stock and 30% performance-based restricted stock unit mix established last year.

With respect to time-based restricted stock awards for fiscal 2016, restrictions lapse as to one-fourth of the shares on each anniversary of the grant date. With respect to stock option awards for fiscal 2016, one-fourth of the shares vest on each anniversary of the grant date. With respect to the performance-based restricted stock unit awards for fiscal 2016, our Named Executive Officers received awards related to two different performance goals; half of the performance shares are tied to achieving a specified ROA over a three fiscal year period and the other half are tied to achieving a specified level of TSR relative to the S&P 500 over a three fiscal year period (the three fiscal year period for both the ROA and relative TSR goal is referred to herein as the "Share Performance Period"). The number of shares that will be received at the end of the Share Performance Period varies between 0% and 200% of the targeted share amount and is dependent upon the level of achievement. All threshold, target and maximum amounts require significant execution and effort with no assurance of

achievement guaranteed. In the absence of at least the threshold ROA or relative TSR amount being achieved, the restrictions will not lapse and the shares will be forfeited.

In determining the amount of the long-term equity incentive awards for our Named Executive Officers, the Committee reviewed the Market Data and information provided by Mr. Durcan related to the other officer's performance and his recommendation as to the amount of their awards. For fiscal 2016, the long-term equity incentive awards approved by the Committee for Mr. Durcan was below the 25th percentile of the Market Data for his position or rank. Messrs. Shirley and Thorsen were below the 50th percentile of the Market Data for their position or rank. Messrs. DeBoer, Maddock and Adams were between the 50th and 75th percentile. For information on Mr. Durcan's long-term equity incentive, please see the discussion below on CEO compensation.

We have not and do not plan to time the granting of long-term incentive awards (or the payment of any other compensation) with the release of material, non-public information. Historically, long-term incentive awards have been made in the first quarter of the fiscal year with the exact grant date corresponding with the date of the meeting of the Committee. Historically, long-term incentive grants to the Named Executive Officers are approved by the Committee on the same day as the grants to other executive officers and the exercise price of stock options is equal to the fair market value of our Common Stock as defined by the equity plan pursuant to which the award is granted. For purposes of our equity plans, fair market value is defined as the closing price as quoted on NASDAQ for the last market-trading day prior to the date of grant.

Other fiscal 2016 employee benefits

We provide a competitive level of time off, health, life, disability, and retirement benefits to substantially all employees. The Named Executive Officers participate in the same plans as our other employees. Executive perquisites, which for us are minor in scope and amount, are not considered to be material elements of compensation.

CEO Compensation

The following charts show 1-year relative TSR data and CEO compensation for us and our Compensation Peer Group. The information presented in the chart below is based on closing prices on September 1, 2015 and September 1, 2016 and represents the rates of return reflecting price appreciation plus reinvestment of any dividends and the compounding effect of any dividends paid on reinvested dividends. This table does not include our peer, Broadcom Corporation, as it merged with Avago Technologies in 2016.

CEO pay information presented represents peer compensation data via proxies presented to the Committee in October 2015. The 50^th percentile presented in the chart represent total target direct compensation (the sum of base salary, short-term incentive and long-term incentive compensation). This data was considered by the Committee in their decision when reviewing Mr. Durcan’s total target direct compensation for fiscal 2016. The table below does not include our peer, Broadcom Corporation, nor does it include Danaher, where the total direct compensation was not available for the Committee's review.

Mr. Durcan's compensation is comprised of the following elements:

Base Salary

At Mr. Durcan's request, Mr. Durcan's base salary for fiscal 2016 was decreased from $1,050,000 to $525,000. Market Data showed that Mr. Durcan's reduced base salary as CEO was approximately 56% below the median.

Short-Term Incentive

Mr. Durcan's short-term incentive target remained at 150% of his base salary for fiscal 2016. Market Data showed that a short-term incentive of 150% of base salary was the median for CEOs. Based on his salary, the dollar amount of Mr. Durcan's short-term incentive Target Award as CEO was approximately 56% below the median. Mr. Durcan did not receive a bonus in fiscal 2016 as a result of the suspension of the EIP.

Long-Term Equity Incentive

Mr. Durcan's long-term equity incentive opportunity for fiscal 2016 was decreased from $8,000,000 to $5,000,000. Mr. Durcan's long-term equity incentive opportunity, based on value, was approximately 43% below the market median in fiscal 2016.

Mr. Durcan's long-term incentive was comprised of 25% options, 45% time-based restricted shares and 30% performance-based restricted shares. The following table sets forth the elements and aggregate amounts of Mr. Durcan's long-term incentive award for fiscal 2016:



Award Type	Number of Options/Shares(1)	Grant Date Fair Value(1)
Options	155,268	$	1,250,003
Time-based Restricted Stock	123,762	2,249,993
Performance-based Restricted Stock Units	72,793	1,499,995
	351,823	$	4,999,991

(1)

Information related to Mr. Durcan's long-term incentive award is also included in the "Grants of Plan-Based Awards in Fiscal 2016" table. The stock options are listed in the column "Option Awards: Number of Securities Underlying Options," the time-based share amounts are listed in the column "Stock Awards: Number of Shares of Stock or Units," and the performance-based share amounts are listed in the column "Estimated Future Payouts under Equity Incentive Plan Awards Target." The values included in those tables reflect the grant-date fair value under ASC 718.

Severance and Change in Control Arrangements

Severance Agreements

Each of our Named Executive Officers has a similar severance agreement in place (the "Severance Agreements"). We believe severance agreements for certain of our officers are in the best interests of us and our shareholders. The Severance Agreements help us attract and retain qualified executive talent, promote candid discussion among our officers, help provide for a smooth transition when there is a change in management, provide the officer with benefits in consideration of a promise not to compete with us after termination of employment, and release us, and our officers, directors, employees and agents from any and all claims.

The Severance Agreements provide for severance payments upon termination of employment for any reason, including death and voluntary or involuntary termination. The Severance Agreements provide for a "Transition Period," which begins upon a "separation of service" as defined in Section 409A of the Code, regardless of when a termination of employment or loss of officer status occurs, and ends after a period of one year.

Provided an officer complies with post-employment obligations and restrictions described below and all other terms of the Severance Agreement, the officer is entitled to receive compensation during the Transition Period equivalent to the compensation and benefits customarily provided to such officer while employed including, but not limited to, salary, executive bonus, and continued vesting of any granted stock options and restricted shares. With respect to cash and equity awards that are performance-based, the officer is entitled to receive such awards only if the goals are achieved before or during the applicable Transition Period. Such terminated officers are not entitled to receive any new awards under our equity plans or the EIP or to the payment of any compensation that would be deferred past the Transition Period due to payment criteria of an incentive program, as those criteria exist as of the Termination Date.

Terminated officers are subject to the following obligations and restrictions:


•	a one-year non-competition obligation,


•	confidentiality obligations related to our proprietary and confidential information that last indefinitely,


•	a non-disparagement and confidentiality obligation surrounding the reasons for, and circumstances of, the officer's termination of employment or change in officer status that lasts indefinitely. However, we may disclose such information if we determine, in our sole discretion, it is either required by law to be disclosed or necessary to be disclosed to serve a valid business purpose, and


•	non-solicitation and non-interference provisions relating to our employees and business partners that last at least one year.

Upon receipt of all benefits under the Severance Agreement, we and the officer are considered to have settled, waived, and voluntarily released any and all claims each has or may have against the other, inclusive of any of our affiliates, officers, directors, employees or agents, both individually and in their official capacities, which claims are accruing prior to the end of the Transition Period.

Estimated Severance Payments

See "Severance Agreements" on page 34 for a description of the (1) estimated severance amounts as of the end of fiscal 2016 for Messrs. DeBoer, Durcan, Maddock, Shirley and Thorsen, and (2) estimated severance amounts for Mr. Adams, based on his separation from service on February 1, 2016.

Change in Control Arrangements

We do not have separate change in control agreements for our executive officers and directors. The Severance Agreements referenced above provide for transitional benefits in the event of termination of employment, including following a change in control. In addition, under the terms of our EIP and our equity compensation plans, awards may be substituted, assumed or accelerated upon a change in control, depending upon the circumstances. In August 2016 the Committee amended our equity plans to replace "single-trigger" vesting provisions with "double-trigger" vesting provisions in the event of a change in control. As a result, if awards granted after August 25, 2016, are assumed by a successor in connection with a change in control, such awards will not automatically vest and pay out solely as a result of the change in control. Instead, such awards will only vest if within one year after the effective date of the change in control, the participant’s employment is terminated without cause or, in the case of certain participants including our Named Executive Officers, if the participant resigns for good reason. The compensation that executive officers could receive if a change of control occurs is intended to allow them to evaluate objectively whether a potential change in control is in the best interest of us and our shareholders. Estimated value that the Named Executive Officers could receive from our change in control provisions can be found in "Change in Control" on page 35.

Consideration of Tax Consequences when Making Compensation Decisions

Section 162(m) of the Code generally disallows a tax deduction to public companies for compensation over $1,000,000 paid to certain of our Named Executive Officers. Qualifying performance-based compensation is not subject to the deduction limit if certain requirements are met. The key components of our long-term incentives in the form of stock option grants and performance-based restricted stock unit awards are designed to comply with the statute. Awards under the EIP also are generally designed to comply with the statute. A number of requirements must be met for particular compensation to so qualify, however, so there can be no assurance that such compensation will be fully deductible under all circumstances. Although the Committee believes it is important to preserve the deductibility of compensation under Section 162(m) whenever practicable, it reserves the right to grant or approve compensation or awards that may be non-deductible when it believes such compensation or awards are in our and our shareholders' best interests.

"Market Data" Defined

Compensation data is gathered by Mercer from proxy statements of the Compensation Peer Group and from published compensation surveys. The relevant survey and Compensation Peer Group data for fiscal 2016, each as discussed below, were weighted equally by the Committee and are collectively referred to throughout this discussion as the "Market Data."

Compensation Peer Group Data

Data is gathered from proxy statements and other documents that are filed with the SEC to develop the Compensation Peer Group data.

Mercer works with the Committee and our management team, including our CEO, to identify peer companies for compensation comparison purposes. The peer companies are primarily selected based on their industry, degree of business match (i.e., semiconductor or electronics manufacturing), and comparability of revenue size. All the peer companies have a Global Industry Classification Standard economic sector classification of Information Technology and an industry classification related to semiconductor or other electronic equipment. The companies selected generally fall within a revenue range of approximately 50% to 200% of the size of Micron and have a high degree of business match. We believe our custom peer group is comprised of companies that are likely to be our competitors for executive talent.

Each year the Committee reevaluates the composition of our Compensation Peer Group to ensure that it reflects industry or economic changes that may have occurred during the fiscal year, such as changes in business strategies, operations, revenues, product lines or availability of information. For fiscal 2016, the composition of our Compensation Peer Group changed with the removal of Agilent Technologies, Inc., Motorola Solutions, Inc., and Symantec Corporation and the addition of Danaher Corp., Eaton Corp., and TE Connectivity Ltd, and is comprised of:



Applied Materials, Inc.		Jabil Circuit, Inc.
Broadcom Corporation		Medtronic Inc.
Corning Incorporated		QUALCOMM Incorporated
Danaher Corporation		Seagate Technology Plc.
Eaton Corporation, Plc.		TE Connectivity Ltd.
EMC Corporation		Texas Instruments Incorporated
Emerson Electric Co.		Thermo Fisher Scientific Inc.
Flextronics International		Western Digital Corp.

These companies are referred to in the compensation discussion and analysis as the "Compensation Peer Group."

When collecting and assessing market compensation data we collect data based on job descriptions first. This permits the Committee to "match" positions held by our executives with those of other companies and, as described more fully below, deviate from benchmarked data based on the factors described earlier. If we are not able to match positions to a reasonable number of companies within the Compensation Peer Group, we look to the rank of the person involved and match ranks, e.g., our highest paid officer is ranked to the highest paid officer at each company within the Compensation Peer Group.

Survey Data

Survey data may vary from year to year. For fiscal 2016, Mercer used the Radford Global Technology Survey and Towers Watson CDB High-Tech Executive Compensation Survey as well as information obtained from public filings by the Compensation Peer Group. We believe these surveys are particularly relevant for high-technology companies given the high level of participation by such companies in the survey.

Stock Ownership Guidelines

We have established stock ownership guidelines for our executive officers. The Committee believes that officers will more effectively manage a company in the best interests of the shareholders if they are also shareholders. The minimum ownership guideline for our CEO is to hold shares with a value equal to five times his base salary. Messrs. DeBoer, Maddock, Shirley, and Thorsen are required to hold shares with a value equal to three times their base salary. Executive officers are given five years to meet the ownership guidelines. The Governance Committee reviews the Ownership Guidelines annually and monitors each covered executive's progress toward, and continued compliance with, the guidelines. Stock sales restrictions may be imposed upon executive officers if the stock ownership guidelines are not met. All our executive officers are in compliance with the guidelines.

The following table shows compliance with the guidelines as of the Record Date (November 21, 2016):



Executive Officer(1)	Guideline Multiplier	Guideline Amount(2)		Compliance with Guideline
Scott J. DeBoer	3	$	1,410,000	Yes
D. Mark Durcan	5	5,250,000		Yes
Ernest E. Maddock	3	1,860,000		Yes
Brian M. Shirley	3	1,890,000		Yes
Steven L. Thorsen, Jr.	3	1,455,000		Yes

(1) This guideline no longer applies to Mr. Adams.


(2)	Based on current salary amounts as of the record date.

Please see page 11 for information on stock ownership guidelines for our directors.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis section of this Proxy Statement. Based upon this review and our discussions, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.



	The Compensation Committee
	Richard M. Beyer
	Patrick J. Byrne
	Lawrence N. Mondry

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee (Messrs. Beyer, Byrne and Mondry) is or has been one of our officers or employees or an officer or employee of any of our subsidiaries. During fiscal 2016, none of our executive officers served on the compensation committee (or equivalent) or the board of directors of another entity whose executive officer(s) served on our Compensation Committee or Board of Directors.

FISCAL 2016 SUMMARY COMPENSATION TABLE

The following table details the total compensation earned by our Named Executive Officers in fiscal 2016, 2015 and 2014.



Name and Principal Position	Year	Salary(1)		Bonus(2)		Stock Awards(3)		Option Awards(3)		Non-Equity Incentive Plan Compensation(4)		All Other Compensation(5)		Total
Scott J. DeBoer	2016	$	470,000	$	—	$	1,322,985	$	440,996	$	—	$	14,250	$	2,248,231
Vice President, Technology	2015	474,154		—		1,324,286		440,089		75,200		13,250		2,326,979
Development
D. Mark Durcan	2016	587,596		—		3,749,988		1,250,003		—		14,250		5,601,837
CEO (Principal Executive	2015	1,062,308		—		6,006,740		2,000,523		315,000		13,250		9,397,821
Officer)	2014	1,005,289		—		6,167,388		1,833,340		2,447,654		25,437		11,479,108
Ernest E. Maddock	2016	550,000		—		1,949,981		686,347		—		59,188		3,245,516
Chief Financial Officer	2015	145,966		100,000		901,401		1,063,652		28,167		16,333		2,255,519
and Vice President, Finance
(Principal Financial Officer)
Brian M. Shirley	2016	630,000		—		2,440,513		813,498		—		13,250		3,897,261
Vice President, Memory	2015	635,077		—		2,441,520		812,672		126,000		13,250		4,028,519
Solutions	2014	581,708		—		2,436,480		813,414		955,182		13,698		4,800,482
Steven L. Thorsen, Jr.	2016	485,000		—		1,322,985		440,996		—		—		2,248,981
Vice President,	2015	492,462		—		1,324,286		440,089		87,300		—		2,344,137
Worldwide Sales	2014	471,596		—		1,319,760		440,288		694,895		565		2,927,104
Mark W. Adams	2016	318,942		—		3,674,989		1,224,997		—		922,264		6,141,192
Former President	2015	783,077		—		3,376,142		1,125,538		201,500		13,250		5,499,507
	2014	726,346		—		3,180,960		1,059,677		1,552,171		13,873		6,533,027


(1)	In fiscal 2016, Mr. Durcan requested a voluntary and temporary pay reduction to align his salary with the Company's expense reduction initiatives. As a result of Mr. Durcan's request, the Compensation Committee reduced his annual base salary by 50% to $525,000. Fiscal 2016 amount for Mr. Adams represents salary earned up to his resignation from the Company in February 2016.


(2)	Mr. Maddock received a cash signing bonus upon joining the Company.

(3)

Assumptions used in determining the grant-date fair values of option awards are set forth in the "Equity Plans" note to the financial statements included in our annual reports on Form 10-K for fiscal years 2016, 2015 and 2014, which note is incorporated herein by reference. The grant-date fair values for the stock awards are based on the closing price on the last market-trading day prior to the date of grant. The grant date fair value of the performance-based awards granted in fiscal 2016, 2015 and 2014 was computed by multiplying (i) the target number of restricted shares or units awarded to each Named Executive Officer, which was the assumed probable outcome as of the grant date, by (ii) the closing price on the last market-trading day prior to the date of grant. Although the assumed probable outcome as of the grant date was achievement at the target level, the terms of the awards for performance-based restricted stock unit awards granted in 2016 and 2015 also provide for achievement of up to 200% of the target amount ("maximum"), which would have resulted in compensation for stock awards as follows:



Executive Officer	2016		2015
Scott J. DeBoer	$	1,587,577	$	1,588,924
D. Mark Durcan	4,499,986		7,209,117
Ernest E. Maddock	2,339,979		—
Brian M. Shirley	2,928,610		2,930,525
Steven L. Thorsen, Jr.	1,587,577		1,588,924
Mark W. Adams	4,409,988		4,052,119


(4)	Amounts shown for each of the Named Executive Officers were paid pursuant to the EIP and relate to the achievement of certain performance milestones. The EIP was suspended for fiscal 2016 and despite some performance milestones being met, no bonuses were paid.


(5)	Includes matching contributions paid by us pursuant to our 401(k) plan. For fiscal 2016, $13,250 was contributed for each of Messrs. DeBoer, Durcan, Shirley and Adams, and $21,210 for Mr. Maddock. Mr. Thorsen did not participate in the plan. All Other Compensation for fiscal 2016 also included the following for each of the Named Executive Officers:


•	Amount for each of Messrs. DeBoer and Durcan includes $1,000 in matching contributions paid by us pursuant to our Health Savings Account (HSA).

•

Amount for Mr. Maddock includes $37,978 in expenses related to his use of the Company plane, other travel costs, and communication services. Compensation for personal aircraft usage was determined based on the aggregate incremental cost to the Company, including fuel, crew, landing fees, ramp/parking fees and other variable costs of operating the airplane. Since the Company's aircrafts are primarily used for business travel, fixed costs that do not change based on usage, such as pilots' salaries, depreciation of the aircraft, and the cost of general maintenance, are excluded.


•	Amount for Mr. Adams includes $536,790 in severance benefits pursuant to Mr. Adams Severance Agreement (see the "Potential Payments Upon Termination or Change in Control" table.) At the time of his resignation Mr. Adams also received $372,224 for accumulated unused time-off.

GRANTS OF PLAN-BASED AWARDS IN FISCAL 2016

The table below sets forth the plan-based award grants to our Named Executive Officers in fiscal 2016.



Name	Grant Date		Estimated Future Payouts under Non-Equity Incentive Plan Awards(1)						Estimated Future Payouts under Equity Incentive Plan Awards(2)			All Other Stock Awards: Number of Shares of Stock or Units(3)	All Other Option Awards: Number of Securities Underlying Options(4)	Exercise Price of Options(5)		Close Price on Grant Date(5)		Grant Date Fair Value of Stock (or Units) and Options(6)
			Threshold		Target		Max		Threshold	Target	Max
Scott J. DeBoer	10/14/15								12,841	25,681	51,362							$	529,192
	10/14/15											43,663						793,793
	10/14/15												54,778	$	18.18	$	18.82	440,996
			$	188,000	$	376,000	$	752,000
D. Mark Durcan	10/14/15								36,397	72,793	145,586							1,499,995
	10/14/15											123,762						2,249,993
	10/14/15												155,268	18.18		18.82		1,250,003
			393,750		787,500		1,575,000
Ernest E. Maddock	10/14/15								18,926	37,852	75,704							779,989
	10/14/15											64,356						1,169,992
	10/14/15												80,739	18.18		18.82		649,998
	12/11/15	(7)											5,662	14.66		14.04		36,349
			275,000		550,000		1,100,000
Brian M. Shirley	10/14/15								23,687	47,374	94,748							976,205
	10/14/15											80,545						1,464,308
	10/14/15												101,048	18.18		18.82		813,498
			315,000		630,000		1,260,000
Steven L. Thorsen, Jr.	10/14/15								12,841	25,681	51,362							529,192
	10/14/15											43,663						793,793
	10/14/15												54,778	18.18		18.82		440,996
			218,250		436,500		873,000
Mark W. Adams	10/14/15								35,669	71,337	142,674							1,469,991
	10/14/15											121,287						2,204,998
	10/14/15												152,162	18.18		18.82		1,224,997
			503,750		1,007,500		2,015,000


(1)	Represents estimated payouts for fiscal 2016 under the EIP. Payment of bonuses under the EIP is dependent upon meeting specified performance goals. The EIP was suspended in fiscal 2016 and no bonuses were paid. A description of the performance milestones associated with such bonuses is included in the "Compensation Discussion and Analysis."


(2)	Represents restricted stock units awarded in fiscal 2016 under the Amended and Restated 2004 Equity Incentive Plan (the "2004 Plan") with performance-based and market-based restrictions. Information related to the performance-based and market-based restrictions associated with these shares is contained in "Compensation Discussion and Analysis."


(3)	Represents restricted stock awarded in fiscal 2016 under the 2004 Plan with time-based restrictions. Time-based restrictions lapse in four equal installments over a four-year period from the date of the award.


(4)	Represents options awarded in fiscal 2016 under the 2004 Plan. All options vest in equal installments over a four-year period and have a term of eight years.


(5)	Under the 2004 Plan, options are required to have an exercise price equal to the fair market value. Fair market value is defined as the closing price on the last market-trading day prior to the date of grant.


(6)	The value shown is based on the fair value as of the date of grant. Assumptions used in determining the fair values of these option awards are set forth in the "Equity Plans" note to our financial statements included in our annual report on Form

10-K for fiscal 2016. The value shown for performance-based awards is determined based on payout at the target level.


(7)	In December 2015, the Committee was informed that the value of the stock options awarded to Mr. Maddock in June 2015, was $1,063,652 instead of the approved amount of $1,100,000; as a result, in December 2015, Mr. Maddock received an additional award valued at $36,349.

Plan Information

Fiscal 2016 compensatory awards to the Named Executive Officers were made pursuant to the 2004 Plan. The purpose of the 2004 Plan is to promote our success by linking the personal interests of our employees, officers and consultants to those of our shareholders, and by providing participants with an incentive for outstanding performance. Permissible awards under the 2004 Plan include: options, restricted stock, restricted stock units, stock appreciation rights, deferred stock units and dividend equivalent rights. We have issued options, restricted stock and restricted stock units under the 2004 Plan. Options granted under the 2004 Plan have an exercise price equal to the fair market value (as defined by the 2004 Plan) on the date of grant and, since March 2014, a term of eight years. For purposes of share counting, each restricted stock unit or share of restricted stock issued under the 2004 Plan reduces the number of shares available for issuance by two.

Historically, we have provided annual bonuses to our executive officers pursuant to the EIP. As discussed above, the Compensation Committee suspended the EIP for 2016.

Lapsing of Restrictions Associated with Restricted Stock and Restricted Stock Unit Awards

The restrictions associated with the restricted stock and restricted stock units granted to the Named Executive Officers include both time-based restrictions and performance-based restrictions. Time-based restrictions lapse in four equal installments over a four-year period. The restrictions associated with performance-based awards are described below.

Issuance and Vesting of Performance-based Awards

Restricted Stock Units

Our executive officers received awards related to two different performance goals; half of the performance shares are tied to achieving a specified ROA over a three fiscal year period and the other half are tied to achieving a specified level of relative TSR over a three fiscal year period (the three fiscal year period for both the ROA and relative TSR goal is referred to herein as the "Share Performance Period"). The number of shares that will be received at the end of the Share Performance Period varies between 0% and 200% of the targeted share amount and is dependent upon the level of achievement. All threshold, target and maximum amounts require significant execution and effort with no assurance of achievement guaranteed. In the absence of at least the threshold ROA or relative TSR amount being achieved, the restrictions will not lapse and the shares will be forfeited.

Cash Awards

No bonuses were paid to the Named Executive Officers in fiscal 2016 as a result of suspension of EIP regardless of the achievement of certain goals. See the "Components of the Executive Compensation Program" section of the "Compensation Discussion and Analysis."

Stock Option Vesting

Options generally vest in four equal installments over a four-year period from the grant date. Since March 2014, options granted have a term of eight years.

Determination of Stock-based Compensation

The fair values of option awards were estimated as of the dates of grant using the Black-Scholes option valuation model in accordance with ASC 718. The Black-Scholes model requires the input of assumptions, including the expected stock-price volatility and estimated option life. The expected volatilities utilized were based on implied volatilities from traded options on our stock and on historical volatility. The expected lives of options granted were based, in part, on historical experience and on the terms and conditions of the options. The risk-free interest rates utilized were based on the U.S. Treasury yield in effect at each grant date. No dividends were assumed in estimated option values.

OUTSTANDING EQUITY AWARDS AT 2016 FISCAL YEAR-END

The following table provides information with respect to outstanding stock options, restricted stock and restricted stock units held as of September 1, 2016 by our Named Executive Officers.



	Option Awards						Stock Awards
	Number of Securities Underlying Unexercised Options			Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1)($)
Name	Exercisable (#)	Unexercisable (#)		Option Exercise Price ($)		Option Expiration Date	Number (#)		Market Value(1)($)
Scott J. DeBoer	38,750			$	5.16	10/11/2017	16,500	(2)	$	274,560	9,200	(3)	$	153,088
		31,500	(4)	5.72		10/16/2018	23,500	(5)	391,040		7,400	(6)	123,136
	14,750	29,500	(7)	16.92		10/16/2019	20,700	(8)	344,448		14,554	(9)	242,179
	8,475	25,425	(10)	28.77		10/20/2022	43,663	(11)	726,552		11,127	(12)	185,153
		54,778	(13)	18.18		10/14/2023
D. Mark Durcan	391,000			7.59		10/11/2016	98,250	(2)	1,634,880		41,800	(3)	695,552
	777,000			5.16		10/11/2017	100,000	(5)	1,664,000		33,500	(6)	557,440
	566,250	188,750	(4)	5.72		10/16/2018	5,150	(5)	85,696		41,254	(9)	686,467
	111,000	111,000	(7)	16.92		10/16/2019	93,900	(8)	1,562,496		31,539	(12)	524,809
	6,650	6,650	(7)	30.99		6/12/2022	123,762	(11)	2,059,400
	38,525	115,575	(10)	28.77		10/20/2022
		155,268	(13)	18.18		10/14/2023
Ernest E. Maddock	25,075	75,225	(14)	27.79		6/3/2023	25,425	(15)	423,072		21,452	(9)	356,961
		80,739	(13)	18.18		10/14/2023	64,356	(11)	1,070,884		16,400	(12)	272,896
	1,415	4,247	(14)	14.66		12/11/2023
Brian M. Shirley	129,500			5.16		10/11/2017	32,750	(2)	544,960		17,000	(3)	282,880
	189,000	63,000	(4)	5.72		10/16/2018	43,000	(5)	715,520		13,600	(6)	226,304
	54,500	54,500	(7)	16.92		10/16/2019	38,175	(8)	635,232		26,848	(9)	446,751
	15,650	46,950	(10)	28.77		10/20/2022	80,545	(11)	1,340,269		20,526	(12)	341,553
		101,048	(13)	18.18		10/14/2023
Steven L. Thorsen, Jr.	63,000			5.16		10/11/2017	16,500	(2)	274,560		9,200	(3)	153,088
	94,500	31,500	(4)	5.72		10/16/2018	23,500	(5)	391,040		7,400	(6)	123,136
	29,500	29,500	(7)	16.92		10/16/2019	20,700	(8)	344,448		14,554	(9)	242,179
	8,475	25,425	(10)	28.77		10/20/2022	43,663	(11)	726,552		11,127	(12)	185,153
		54,778	(13)	18.18		10/14/2023
Mark W. Adams(16)		110,000	(4)	5.72		2/3/2017	57,250	(2)	952,640		23,500	(3)	391,040
	35,500	71,000	(7)	16.92		2/3/2017	56,500	(5)	940,160		18,800	(6)	312,832
	21,675	65,025	(10)	28.77		2/3/2017	52,800	(8)	878,592		40,429	(9)	672,739
		152,162	(13)	18.18		2/3/2017	121,287	(11)	2,018,216		30,908	(12)	514,309


(1)	Calculated by multiplying the number of shares of restricted stock or restricted stock units by $16.64, the closing price of our Common Stock on September 1, 2016.


(2)	Restrictions on shares lapse on October 16, 2016.


(3)	Represents the target number of restricted stock units. Performance-based restrictions on stock units lapse upon the achievement of a ROA goal through the fourth quarter of fiscal 2017.


(4)	Options vest on October 16, 2016.


(5)	Restrictions on shares lapse in equal installments on October 16, 2016 and October 16, 2017.


(6)	Represents the target number of restricted stock units. Performance-based restrictions on stock units lapse upon the achievement of a relative TSR goal through the fourth fiscal quarter of 2017.


(7)	Options vest in equal installments on October 16, 2016 and October 16, 2017.


(8)	Restrictions on shares lapse in equal installments on October 20, 2016, October 20, 2017 and October 20, 2018.


(9)	Represents the target number of restricted stock units. Performance-based restrictions on stock units lapse upon the achievement of a ROA goal through the fourth quarter of fiscal 2018.


(10)	Options vest in equal installments on October 20, 2016, October 20, 2017 and October 20, 2018.


(11)	Restrictions on shares lapse in equal installments on October 14, 2016, October 14, 2017, October 14, 2018 and October 14, 2019.


(12)	Represents the target number of restricted stock units. Performance-based restrictions on stock units lapse upon the achievement of a relative TSR goal through the fourth quarter of fiscal 2018.


(13)	Options vest in equal installments on October 14, 2016, October 14, 2017, October 14, 2018 and October 14, 2019.


(14)	Options vest in equal installments on June 3, 2017, June 3, 2018 and June 3, 2019.


(15)	Restrictions on shares lapse in equal installments on June 3, 2017, June 3, 2018 and June 3, 2019.

(16)

Unexercisable option and unvested share numbers reported include awards that were outstanding on September 1, 2016 but will not vest prior to January 4, 2017, the end of Mr. Adams' transition period. All of his unvested options, restricted stock and restricted stock units as of January 4, 2017 will be forfeited. Vested stock options for Mr. Adams which do not expire earlier pursuant to their terms will expire if not exercised on or before February 3, 2017, which is 30 days following the end of his severance agreement. For more information regarding severance agreements see "Potential Payments upon Termination or Change in Control."

OPTION EXERCISES AND STOCK VESTED IN FISCAL 2016

The following table sets forth information related to the number of options and restricted awards held by each of the Named Executive Officers that were exercised or vested in fiscal 2016 and the value realized.



	Option Awards			Stock Awards
Name	Number of Shares Acquired on Exercise	Value Realized on Exercise(1)		Number of Shares Acquired on Vesting	Value Realized on Vesting(2)
Scott J. DeBoer	31,500	$	356,867	46,150	$	859,109
D. Mark Durcan	—	—		236,625	4,403,823
Ernest E. Maddock	—	—		8,475	111,107
Brian M. Shirley	48,750	233,035		85,225	1,587,536
Steven L. Thorsen, Jr.	—	—		44,900	836,409
Mark W. Adams	684,000	5,057,997		121,350	2,264,066


(1)	Value calculated by subtracting the exercise price from the fair market value of the shares at the time of exercise multiplied by the number of options exercised.


(2)	Value calculated by multiplying number of shares by the market value per share on the vesting date.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The following tables quantify the estimated payments and benefits for each of the Named Executive Officers pursuant to the Severance Agreements and in the event of a change of control as described in the "Severance and Change in Control Arrangements" section of the "Compensation Discussion and Analysis." The amounts listed for the currently-employed Named Executive Officers are estimated amounts that were calculated as if a Change in Control occurred on September 1, 2016 or the Named Executive Officers separated from service on September 1, 2016, the last day of fiscal 2016. The amounts listed for Mr. Adams reflect the estimated amounts to be paid in connection with his resignation.

Severance Agreements

The "Salary" portion of severance payments are paid on our regular bi-weekly payroll schedule during the officer's one-year Transition Period subject to the possibility of a six-month delay that may be required by Section 409A of the Code. If Section 409A imposes a six-month delay, payments during the delay would be accumulated and paid to the officer on the first day of the seventh month following the Named Executive Officer's separation from service. The remaining payments would then be paid according to our regular payroll schedule.

The "Bonus" portion of the severance payments is paid only if the applicable performance goals are achieved before or during the applicable Transition Period. Such payments are made at the same time that the other officers participating in the applicable bonus plan receive their payments, if any, and typically would occur during our first fiscal quarter.

The "Cash in Lieu of Benefits" portion of the severance payments is calculated based on the difference between the amount of premiums the Named Executive Officer paid each month for benefits coverage as our employee and the estimated premiums the Named Executive Officer would need to pay each month for the same or similar coverage as a former employee. This monthly amount is multiplied by the number of months in the Named Executive Officer's Transition Period and is grossed-up for taxes. All gross-up calculations and payments are based on the standard supplemental withholding rates provided by federal and state guidelines. We do not use the Named Executive Officer's actual tax rate for these calculations. The "Cash in Lieu of Benefits" payment is made within 30 days after the Named Executive Officer's separation from service, subject to the possibility of a six-month delay that may be required by Section 409A of the Code. If Section 409A imposes a six-month delay, the payment would be made to the Named Executive Officer on the first day of the seventh month following the officer's separation from service.



Name	Salary(1)		Bonus(2)		Cash in Lieu of Benefits Payment(3)		Total Value of Options Exercisable During the Transition Period(4)		Value of Extended Restricted Stock Vesting(5)		Value of Unearned Performance -Based Stock Awards(6)		Total
Scott J. DeBoer	$	470,000	$	—	$	76,739	$	928,330	$	766,522	$	138,112	$	2,379,703
D. Mark Durcan	1,050,000		—		93,574		21,597,938		3,545,402		626,496		26,913,410
Ernest E. Maddock	550,000		—		54,364		79,805		408,745		—		1,092,914
Brian M. Shirley	630,000		—		53,389		4,626,797		1,449,527		254,592		7,014,305
Steven L. Thorsen, Jr.	485,000		—		46,484		2,306,189		766,522		138,112		3,742,307
Mark W. Adams	775,000		—		80,732		7,126,011		1,911,923		—		9,893,666


(1)	Represents one year of the Named Executive Officer's salary as of September 1, 2016, exclusive of any temporary pay reductions, except for Mr. Adams, whose annual salary is presented as of January 4, 2016, the date of his separation from service.


(2)	The EIP was suspended for fiscal 2016 and, despite performance milestones being met, no bonuses were paid.


(3)	Represents a cash payment in an amount estimated to allow the Named Executive Officer to purchase during the Transition Period benefits similar to those received while an employee. The amount listed includes a gross-up calculation for the tax impact of the payment.

(4)

Represents the total value of stock options that are exercisable as of September 1, 2016 and that are expected to vest during the Named Executive Officer's Transition Period. The fair value of each option award is estimated as of September 1, 2016 (January 4, 2016 for Mr. Adams) using the Black-Scholes option valuation model. The expected volatilities utilized are based on implied volatility from traded options on our stock. The expected lives are based on the shorter of the length of the Transition Period plus thirty days or the remaining life of the option. The risk-free interest rates utilized are based on the U.S. Treasury yield on September 1, 2016 (January 4, 2016 for Mr. Adams).


(5)	Represents the value resulting from the additional vesting of restricted shares during the Named Executive Officer's Transition Period. The amount shown is calculated as the number of additional shares that would vest during the Transition Period multiplied by $16.64, our closing stock price on September 1, 2016 (for Mr. Adams, $14.33, our closing stock price on January 4, 2016).

(6)

Our performance-based and market-based stock awards have a measurement period of 3 years over which performance is assessed in order to vest in the awards. The amount shown is calculated as the number of such shares granted in fiscal 2015 that would have been achieved at the threshold level during the Named Executive Officer's Transition Period multiplied by $16.64, our closing stock price on September 1, 2016 (except for such awards granted to Mr. Adams, which will not vest during his Transition Period ending on January 4, 2017). The performance conditions for awards granted in fiscal 2016 would not have been achieved during the Named Executive Officer's Transition Period and, as a result, the restrictions would not have lapsed on such awards. Accordingly, no amount is assumed in the table above for such awards granted in fiscal 2016. There can be no assurance that the performance-based and market-based goals will be met during the Transition Period as such is dependent on a number of factors including our operating results and market condition.

Change in Control

We do not have change in control agreements with our Named Executive Officers. However, our equity plans, grant agreements, and EIP have change in control provisions. A change in control is generally defined as a change in the majority of the members of the Board of Directors within a specified time period or the acquisition of 35% or more of our outstanding Common Stock.

In August 2016 the Compensation Committee amended our equity plans to replace "single-trigger" vesting provisions with "double-trigger" vesting provisions in the event of a change in control. As a result, if awards granted after August 25, 2016, are assumed by a successor in connection with a change in control, such awards will not automatically vest and pay out solely as a result of the change in control. Instead, such awards will only vest if within one year after the effective date of the

change in control, the participant’s employment is terminated without cause or, in the case of certain participants including our Named Executive Officers, if the participant resigns for good reason.

The compensation that executive officers could receive if a change of control occurs is intended to allow them to evaluate objectively whether a potential change in control is in the best interest of us and our shareholders.

For equity awards, the impact of a change in control differs for outstanding time-based and performance-based awards. Outstanding time-based awards would automatically become fully vested or the applicable restrictions would lapse upon occurrence of the single- or double-trigger event (depending on when the award was granted). Upon the occurrence of a double-trigger, outstanding performance-based awards are treated as if all required performance goals were satisfied at the target level on the date of the change in control and are vested or have their restrictions lapse on a pro-rata basis based on the amount of the performance period completed as of the date of the change in control.

Under the EIP, a change in control results in an early payout of awards, to the extent earned. Upon a change in control, performance achievement is measured as of the last day of the month preceding the change in control.

The following table sets forth the estimated benefits payable to the continuing Named Executive Officers pursuant to the various change in control provisions, assuming a change in control occurred on September 1, 2016.



Name	Bonus(1)		Value of Options(2)		Value of Stock Awards(3)		Total
Scott J. DeBoer	$	—	$	788,830	$	2,063,194	$	2,852,024
D. Mar