01—Abstract
Summary
Summary of the 10-K/A filed January 29, 2021. Cited figures are marked; the original filing is the authoritative source.
Skyworks Solutions, Inc. (SWKS) filed Part III of its Form 10-K for fiscal year 2020, which ended October 2, 2020, covering directors, executive officers, governance, executive compensation, security ownership, related transactions, and auditor fees.
The filing reports that the company had 164,900,017 shares of common stock outstanding as of January 22, 2021. Liam K. Griffin, President and Chief Executive Officer, had total fiscal 2020 compensation of $21,800,439a.
The filing estimates his pay at approximately 1,271 times that of the median employee, whose total compensation was $17,148b. The company reported approximately 10,000 total headcount, about 7,900 of whom are located outside the United States. The filing reports fiscal 2020 performance metrics that drove incentive payouts.
Revenue was $1,662 millionc in the first half and $1,694 million in the second half, with non-GAAP EBITDA of $729 million and $728 million, respectively. Key product-category revenue reached $442 million, representing emerging revenue growth of 122% against $199 million in fiscal 2019. Design wins with a key customer exceeded the maximum performance level.
The company's fiscal 2018 performance share awards were cancelled after total shareholder return ranked at the 28th percentile against peers, below the threshold. Say-on-pay support was approximately 89% of votes cast at the 2020 annual meeting, up from approximately 72% at the 2019 meeting. KPMG LLP served as independent auditor, billing total fees of $2,552,265d for fiscal 2020, of which $2,437,150 was for audit services and $115,115 for tax services.
The filing identifies David P. McGlade, Christine King, and Robert A. Schriesheim as audit committee members meeting the financial expert criteria.
Seven of the nine directors were determined to be independent. Vanguard Group, Inc. (11.47%) and BlackRock, Inc. (8.31%) were the largest reported beneficial owners.
02—Key points
Key Highlights
- Fiscal 2020 (ended October 2, 2020) incentive plan payouts reached the maximum level for the first half and 200% of target for the second half, based on revenue of $1,662 million and $1,694 million and non-GAAP EBITDA of $729 million and $728 million.
- CEO Liam K. Griffin's total fiscal 2020 compensation was $21,800,439, approximately 1,271 times the $17,148 total compensation of the median employee.
- Emerging revenue growth of 122% in key product categories ($442 million versus $199 million in fiscal 2019) and design wins exceeded maximum performance levels for fiscal 2020 performance share awards.
- The fiscal 2018 performance share awards for TSR were cancelled after the company's TSR reached 44%, ranking at the 28th percentile against peers, below the threshold.
- Stockholder say-on-pay approval rose to approximately 89% of votes cast at the 2020 annual meeting, from approximately 72% in 2019.
- KPMG LLP fees totaled $2,552,265 for fiscal 2020, with audit fees of $2,437,150 representing 95.5% of the total.
- As of January 22, 2021, 164,900,017 shares were outstanding; Vanguard held 11.47% and BlackRock held 8.31%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Skyworks Solutions kept $0.24.
- Revenue$3.36B100.0%
- Cost of revenue−$1.74B51.9%
- Gross profit$1.61B48.1%
- Operating costs−$721.1M21.5%
- Operating income$891.8M26.6%
- Interest, other & tax−$77.0M2.3%
- Net income$814.8M24.3%
Where FY2020 revenue went
$3.36B- Cost of revenue: $1.74B, 52% of revenue
- Net income: $814.8M, 24% of revenue
- R&D: $464.1M, 14% of revenue
- SG&A: $231.4M, 6.9% of revenue
- Other operating costs: $25.6M, 0.8% of revenue
- Interest, other & tax: $77.0M, 2.3% of revenue
Kept 24% as net incomeOther operating costs $25.6M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2020filed January 29, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $3.36B$3.38B | −0.6% |
| Cost of Revenue | $1.74B$1.77B | −1.7% |
| Gross Profit | $1.61B$1.60B | +0.6% |
| R&D Expenses | $464.10M$424.10M | +9.4% |
| SG&A Expenses | $231.40M$198.30M | +16.7% |
| Operating Expenses | $721.10M$651.80M | +10.6% |
| Operating Income | $891.80M$952.00M | −6.3% |
| Interest Expense | $0$0 | — |
| Net Income | $814.80M$853.60M | −4.5% |
| EPS (Basic) | $4.84$4.92 | −1.6% |
| EPS (Diluted) | $4.80$4.89 | −1.8% |
| Shares Outstanding (Basic) | 168.50M173.50M | −2.9% |
| Shares Outstanding (Diluted) | 169.90M174.50M | −2.6% |
05—Questions
Frequently Asked Questions
How is the company's board structured and who leads it?
David J. Aldrich serves as Chairman of the Board and Christine King serves as Lead Independent Director. The filing states that seven directors, namely Alan S. Batey, Kevin L. Beebe, Timothy R. Furey, Christine King, David P. McGlade, Robert A. Schriesheim, and Kimberly S. Stevenson, were determined to be independent. Griffin is the only director who is also an employee. Each director serves until the 2021 Annual Meeting of Stockholders.
How much did the CEO earn and how were incentive payments structured?
Liam K. Griffin's fiscal 2020 total compensation was $21,800,439, including a stock award of $17,430,589 and a non-equity incentive plan payment of $3,292,800. Short-term incentives were tied to revenue and non-GAAP EBITDA goals split into two six-month performance periods, with a full-year non-GAAP operating income threshold of $500 million. Long-term awards were 60% performance share awards and 40% restricted stock units, and a one-time retention award was also granted to Griffin.
What compensation-related risks or shareholder concerns did the filing disclose?
The filing states that payouts under the long-term incentive program had lagged peer companies in recent years, which the Compensation Committee cited as a reason for one-time, non-recurring stock-based awards to executives in November 2019. Following the 2019 say-on-pay vote, which received approximately 72% support, the company expanded its disclosure of performance metrics. After outreach to institutional stockholders representing approximately 38% of shares outstanding, the Compensation Committee determined its existing policies remained appropriate.
Who are the largest shareholders and how much do insiders own?
The Vanguard Group, Inc. beneficially owned 18,909,311 shares (11.47%) and BlackRock, Inc. beneficially owned 13,702,500 shares (8.31%) as of January 22, 2021. All current directors and executive officers as a group, comprising 13 persons, beneficially owned 602,384 shares, which the table indicates is less than 1% of outstanding shares.
06—Continue