UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A
(RULE 14a-101)

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 

Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐	Preliminary Proxy Statement

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒	Definitive Proxy Statement

☐	Definitive Additional Materials

☐	Soliciting Material Pursuant to §240.14a-12

SolarEdge Technologies, Inc.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

 

April 7, 2020

 

To Our Stockholders:

 

You are cordially invited to attend the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) of SolarEdge Technologies, Inc. (the “Company”) at 9 am Pacific Time on May 18, 2020. Due to the public health impact of the COVID-19 pandemic, we have adopted a virtual meeting format for our Annual Meeting, conducted via a live audio webcast.  You will be able to attend the Annual Meeting online, listen to the meeting live and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/SEDG2020. You will also be able to vote your shares electronically during the Annual Meeting.  In light of the COVID-19 pandemic, we believe that a virtual meeting provides greater access to those who may want to attend the Annual Meeting. We have designed the format of the Annual Meeting to provide stockholders the same rights and opportunities to participate as they would at an in-person meeting. Our decision to hold the Annual Meeting in a virtual meeting format relates only to the 2020 Annual Meeting, and we intend to return to an in-person annual meeting next year.

 

The matters expected to be acted upon at the meeting are described in detail in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

 

We are providing access to our proxy materials over the Internet under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a result, we are mailing to many of our stockholders a notice of Internet availability of our proxy materials (the “Notice”) instead of a paper copy of this proxy statement and our 2019 Annual Report. The Notice contains instructions on how to access those documents over the Internet. The Notice also contains instructions on how each of those stockholders can receive a paper copy of our proxy materials, including this proxy statement, our 2019 Annual Report, and a form of proxy card or voting instruction card. All stockholders who do not receive the Notice, including stockholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy of the proxy materials by mail unless they have previously requested delivery of proxy materials electronically. By employing this distribution process, we will conserve natural resources and reduce the costs of printing and distributing our proxy materials.

 

Your vote is important. Regardless of whether you plan to participate in the virtual Annual Meeting, we hope you will vote as soon as possible to ensure that your shares are represented. You may vote by proxy over the Internet or by telephone, or, if you received paper copies of the proxy materials by mail, you may also vote by mail by following the instructions on the proxy card or voting instruction card. Voting over the Internet, by telephone, written proxy, or voting instruction card will ensure your representation at the Annual Meeting.

 

We look forward to speaking with you at the meeting.

 

Sincerely,

Zivi Lando
Chief Executive Officer and Member of the Board of Directors

 

 

SolarEdge Technologies, Inc.
1 HaMada Street
Herziliya Pituach, Israel

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

To Our Stockholders:

 

NOTICE IS HEREBY GIVEN that the 2020 Annual Meeting of Stockholders of SolarEdge Technologies, Inc. will be held virtually at www.virtualshareholdermeeting.com/SEDG2020 on May 18, 2020 at 9 am pacific time, for the following purposes:

 

1. To elect the three directors named in the Proxy Statement as Class II directors of SolarEdge Technologies, Inc., each to serve until the third annual meeting of stockholders following this Annual Meeting of Stockholders and until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal.

 

2. To ratify the appointment of EY, as our independent registered public accounting firm for the year ending December 31, 2020.

 

3. To approve, on an advisory and non-binding basis, the compensation of our named executive officers (commonly referred to as “Say-on-Pay” vote).

 

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

 

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

 

Only stockholders of record at the close of business on March 20, 2020 are entitled to notice of, and to vote at, the meeting or any adjournment or postponement thereof.

 

The Notice and the proxy materials are being made available to our stockholders on or about April 7, 2020.

 

By Order of the Board of Directors

Rachel Prishkolnik
Vice President
General Counsel & Corporate Secretary

1 HaMada Street
Herziliya Pituach, Israel
April 7, 2020

 

Whether or not you expect to attend the virtual meeting, we hope you will vote as soon as possible so that your shares may be represented at the meeting.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on May 18, 2020:

 

This Notice of Annual Meeting, this Proxy Statement and our 2019 Annual Report available on the Internet at www.proxyvote.com.

 

SolarEdge Technologies, Inc.
Proxy Statement
For the Annual Meeting of Stockholders
To Be Held on May 18, 2020

 

TABLE OF CONTENTS

 

 

SOLAREDGE TECHNOLOGIES, INC.
1 HAMADA STREET, HERZILIYA PITUACH, ISRAEL
PROXY STATEMENT
May 18, 2020

 

THE MEETING

 

The accompanying proxy is solicited on behalf of the board of directors (the “Board of Directors” or the “Board”) of SolarEdge Technologies, Inc., a Delaware corporation (the “Company”), for use at the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) to be held online at www.virtualshareholdermeeting.com/SEDG2020 on May 18, 2020 at 9 am pacific time. The Notice and the proxy materials, including this Proxy Statement, were first made available to stockholders on or about April 7, 2020. You can access the proxy materials by following instructions in the Notice and visiting www.proxyvote.com.  Electronic copies of this Proxy Statement and our 2019 Annual Report are also available at the Company’s website at http://investors.solaredge.com.

 

Voting Rights, Quorum and Required Vote

 

Only holders of record of our common stock at the close of business on March 20, 2020 (the “Record Date”), will be entitled to vote at the virtual Annual Meeting. At the close of business on March 20, 2020, we had 49,598,796 shares of common stock outstanding and entitled to vote. Holders of the Company’s common stock are entitled to one vote for each share held as of the Record Date. There is no cumulative voting. Each stockholder may appoint only one proxy holder or representative to attend the meeting on his or her behalf. A quorum is required for our stockholders to conduct business at the virtual Annual Meeting. The holders of a majority in voting power of all stock outstanding and entitled to vote at the annual meeting, present at the annual meeting or represented by proxy, will constitute a quorum for the transaction of business. Abstentions and “broker non-votes” (described below) will be counted in determining whether there is a quorum.

 

For Proposal No. 1 - Election of Directors, directors will be elected if the number of votes of the shares of common stock cast at the Annual Meeting for the nominee’s election exceeds the number of votes cast against the nominee’s election.  Abstentions and broker non-votes (as defined below) will have no effect on Proposal No. 1.

 

Proposal No. 2 - Ratification of Appointment of Independent Registered Public Accounting Firm - requires the affirmative vote of the holders of a majority in voting power of the stock entitled to vote at the Annual Meeting, present in person or represented by proxy. Abstentions will have the same effect as votes against this Proposal No. 2.  Broker discretionary voting on this Proposal is allowed and, therefore, there should be no “broker non-votes”.

 

Proposal No. 3 - Advisory Vote to Approve the Compensation of our Named Executive Officers (the “Say-on-Pay” vote) - requires the affirmative vote of the holders of a majority in voting power of the stock entitled to vote at the Annual Meeting, present in person or represented by proxy. Abstentions will have the same effect as votes against this Proposal No. 3. “Broker non-votes” will have no effect on this Proposal No. 3. This advisory vote is not binding on the Board. However, the Board of Directors and the Compensation Committee will review and consider the voting results when evaluating our executive compensation programs and making compensation decisions.

Notice of Internet Availability of Proxy Materials

 

Voting Your Shares

 

If you are a registered holder, meaning that you hold our stock directly (not through a bank, broker or other nominee), you may vote online at the virtual Annual Meeting or in advance of the Annual Meeting by telephone or electronically via the Internet by following the instructions included in the Notice or by completing, dating and signing the proxy card and promptly returning it in the enclosed envelope if you request and receive (or previously requested and received) a hard copy of the proxy materials. All signed, returned proxies that are not revoked will be voted in accordance with the instructions contained therein. Signed proxies that give no instructions as to how they should be voted on a particular proposal at the Annual Meeting will be counted as votes “for” each of the nominees in Proposal No. 1, “for” Proposal No. 2 and “for” Proposal No. 3.

 

 

If your shares are held through a bank, broker or other nominee, you are considered the beneficial owner of those shares. You may be able to vote by telephone or electronically through the Internet in accordance with the voting instructions provided by that nominee. If you do not provide voting instructions to your broker in advance of the Annual Meeting, applicable rules grant your broker discretionary authority to vote on “routine” proposals. The ratification of the appointment of the independent registered public accounting firm in Proposal No. 2 is the only item on the agenda for the Annual Meeting that is considered routine. Where a proposal is not “routine,” a broker who has received no instructions from its clients does not have discretion to vote its clients’ uninstructed shares on that proposal, and the un-voted shares are referred to as “broker non-votes.”

 

In the event that sufficient votes in favor of the proposals are not received by the date of the Annual Meeting, the chairman of the meeting, or a majority of the voting power of the stock present at the Annual Meeting or represented by proxy at the Annual Meeting and entitled to vote thereon, shall have power to adjourn or recess the Annual Meeting to permit further solicitations of proxies.

 

The telephone and Internet voting procedures are designed to authenticate stockholders’ identities, to allow stockholders to give their voting instructions and to confirm that stockholders’ instructions have been recorded properly. Stockholders voting by telephone or Internet should understand that there may be costs associated with telephonic or electronic access, such as usage charges from telephone companies and Internet access providers, which must be borne by the stockholder.

 

Expenses of Solicitation

 

The expenses of soliciting proxies to be voted at the Annual Meeting will be paid by the Company. Following the original mailing of the Notices, the proxies and other soliciting materials, as applicable, proxies may be solicited on our behalf by directors, officers or employees of the Company, without additional remuneration, in person, by telephone or email. Following the original mailing of the Notice, the proxies and other soliciting materials, as applicable, the Company will request that banks, brokers and other nominees forward copies of the Notice, the proxy and other soliciting materials, as applicable, to persons for whom they hold shares of common stock and request authority for the exercise of proxies. We will reimburse banks, brokers and other nominees for reasonable charges and expenses incurred in forwarding soliciting materials to their clients.

 

Revocability of Proxies

 

Any person submitting a proxy has the power to revoke it at any time prior to voting being concluded at the Annual Meeting. A proxy may be revoked by a writing delivered to the Company stating that the proxy is revoked, by a subsequent vote or proxy that is submitted via telephone or Internet, or by attendance virtually at the Annual Meeting and voting online. In order for beneficial owners to change any of your previously provided voting instructions, you must contact your bank, broker or other nominee directly.

 

Delivery of Documents to Stockholders Sharing an Address

 

Some banks, brokers and other nominee record holders may have adopted a procedure approved by the Securities and Exchange Commission (“SEC”) called “householding” under which multiple stockholders who share the same address will receive only one copy of the Annual Report or Proxy Statement, as applicable. We will promptly deliver a separate copy of the Notice or the proxy materials, as applicable, to you if you notify us by telephone at 972 (9) 957-6620, by mail at SolarEdge Technologies, Inc. at, 1 HaMada Street, Herziliya Pituach 4673335, Israel, or by email at investors@solaredge.com. You also may request additional copies of the Notice or the proxy materials by notifying us in writing or by telephone at the same address, email address, or telephone number. Stockholders with shares registered in the name of a brokerage firm or bank should contact their brokerage firm or bank to request information about householding or to opt in or out of householding.

 

PROPOSAL NO. 1—ELECTION OF DIRECTORS

 

 

The Class II directors standing for reelection at the Annual Meeting are Tal Payne and Marcel Gani. Class I and Class III directors will stand for reelection or election at the 2022 and 2021 annual meetings of stockholders, respectively.

 

Each of the nominees for election to Class II is currently a director of the Company. If elected at the Annual Meeting, each of the nominees for election to Class II would serve until the third annual meeting of stockholders following this Annual Meeting and until his or her successor is duly elected and qualified, or until such director’s earlier death, resignation or removal. If any of the nominees is unable or unwilling to be a candidate for election by the time of the Annual Meeting (a contingency which the Board does not expect to occur), the stockholders may vote for a substitute nominee chosen by the present Board to fill the vacancy. In the alternative, the stockholders may vote for just the remaining nominees, leaving a vacancy that may be filled at a later date by the Board, or the Board may reduce the size of the Board of Directors.

 

The names of the nominees for reelection as Class II directors at the Annual Meeting and of the incumbent Class I and Class III directors, and certain information about them, including their ages as of March 20, 2020, are included below.

——————

 

Nominees for Reelection as Class II Directors

 

Marcel Gani has served as a member of our Board of Directors since 2015. From 2005 to 2009, Mr. Gani lectured at Santa Clara University, where he taught classes on accounting and finance. In 1997, Mr. Gani joined Juniper Networks, Inc. where he served as chief financial officer and executive vice president from December 1997 to December 2004, and as chief of staff from January 2005 to March 2006. Prior to joining Juniper, Mr. Gani served as chief financial officer at various companies, including NVIDIA Corporation, Grand Junction Networks, Primary Access Corporation and Next Computers. Mr. Gani served as corporate controller at Cypress Semiconductor from 1991 to 1992. Prior to joining Cypress Semiconductor, Mr. Gani worked at Intel Corporation from 1978 to 1991. Mr. Gani holds a B.A. in Applied Mathematics from Ecole Polytechnique Federal and an M.B.A. from University of Michigan, Ann Arbor. Mr. Gani serves on the board of directors of Infinera, where he is a member of the Audit Committee and the chairman of the Compensation Committee. Mr. Gani brings valuable financial and business experience to our Board through his years of experience as a chief financial officer with public companies and experience as a director of other public companies.

 

Tal Payne has served as a member of our Board of Directors since 2015. Tal Payne brings over 15 years of financial management experience, serving as Chief Financial Officer in Check Point Software Technologies Ltd. (“Check Point”), an Israeli multinational provider of software and combined hardware and software products for IT security, since joining the company in 2008 and as Chief Financial and Operations Officer since 2015. Ms. Payne oversees Check Point’s global operations and finance, including investor relations, legal, treasury, purchasing and facilities. Prior to joining Check Point, Ms. Payne served as Chief Financial Officer at Gilat Satellite Networks Ltd., where she held the role of Vice President of Finance for over five years. Ms. Payne began her career as a CPA in public accounting at PricewaterhouseCoopers. Ms. Payne holds a B.A. in Economics and Accounting and an Executive M.B.A., both from Tel Aviv University. Ms. Payne is a certified public accountant. Ms. Payne brings valuable financial and business experience to our Board through her years of experience as a chief financial officer with publicly traded companies.

 

Continuing Directors

 

Nadav Zafrir joined our Board of Directors in 2019 and serves as the Chairman. Bringing thirty years of experience in management, leadership, and technology innovation, Mr. Zafrir is a Co-Founder and the Chief Executive Officer of Team8, a company that creates and invests in technology companies. He previously served as the Commander of the Israel Defense Forces’ Technology Intelligence Unit. He holds an LLB from the Interdisciplinary Center Herzliya (IDC) and an Executive MBA from the Kellogg – Recanati program of the Kellogg Graduate School of Business at Northwestern University in Chicago and the Recanati School of Business at Tel Aviv University. Mr. Zafrir’s technological expertise and former work experience with some of our senior management provides our board and the management team with helpful and valuable contribution insights into the business and technology development discussions which further strengthens our executive management.

 

Avery More has served as a member of our Board of Directors since 2006. Mr. More was the sole seed investor in the Company through his fund, ORR Partners I, L.P., and participated in all successive rounds. Mr. More joined Menlo Ventures, a venture capital firm, in 2013 as a venture partner, and focuses on investments in technology companies. Prior to joining Menlo Ventures, Mr. More was the president and chief executive officer of CompuCom Systems Inc. from 1989 to 1993. Mr. More currently serves on the board of directors of Vidyo, Inc., Takipi, BuzzStream, AppDome, and HolistiCyber Ltd. Mr. More’s historical knowledge of our company and his experience as a director of other private and public technology companies provides a valuable perspective to our Board.

Zivi Lando joined SolarEdge in 2009 as our Vice President, Global Sales. We announced the appointment of Mr. Lando as our Acting Chief Executive Officer in August 2019 and as a director of our Board of Directors and permanent CEO on February 9 2020. Mr. Lando had previously spent 16 years at Applied Materials, a materials engineering company focused on the semiconductor, flat panel display and solar photovoltaic industries based in Santa Clara, California, where he held several positions, including process engineer for metal deposition and chemical vapor deposition systems, business manager for the Process Diagnostic and Control Group, vice president, and general manager of the Baccini Cell Systems Division in the Applied Materials Solar Business Group. His last position at Applied Materials was Vice President and General Manager of Baccini Cell Systems Division of the Solar Business Group, which he held from January, 2008 to March 2009. Mr. Lando holds a B.S. in Chemical Engineering from the Technion, Israel’s Institute of Technology in Haifa, and is the author of several publications in the field of chemical disposition.

Dan Avida has served as a member of our Board of Directors since 2007. Mr. Avida is a partner at Opus Capital, a venture capital firm. Before joining Opus Capital in 2005, Mr. Avida served for four years as president and chief executive officer at Decru Inc., a pioneering storage security company that Mr. Avida co‑founded in 2001. Between 1989 and 1999 Mr. Avida was employed by Electronics for Imaging, Inc. (Nasdaq: EFII), where he held a number of positions and ultimately served as chairman and chief executive officer. Prior to Electronics for Imaging, Mr. Avida served as an officer in the Israel Defense Forces. Mr. Avida holds a B.Sc. in Computer Engineering (summa cum laude) from the Technion, the Israel Institute of Technology. Mr. Avida’s historical knowledge of our company and years of experience in working with innovative companies in the United States and Israel provide a valuable perspective to our Board.

 

Yoni Cheifetz has served as a member of our Board of Directors since 2010. Since 2006, Mr. Cheifetz has served as a Partner at Lightspeed Venture Partners, a venture capital firm, where he focuses on investment activity in Israel in areas of interest, including the Internet, general media, mobile, communications, software, semiconductors and cleantech. Prior to joining Lightspeed Venture Partners, Mr. Cheifetz was a partner with Star Ventures from 2003 to 2006. Before joining Star Ventures, Mr. Cheifetz was a serial entrepreneur and the founder, CEO and Chairman of several privately held software companies, most of which have been acquired. Mr. Chiefetz holds a B.Sc. in Applied Mathematics from Tel Aviv University and a M.Sc. in Applied Mathematics and Computer Science from the Weizmann Institute of Science. Mr. Cheifetz’s historical knowledge of our company and extensive experience in working with technology companies qualify him to serve as a member of our Board.

 

Doron Inbar has served as a member of our Board of Directors since 2010. Mr. Inbar has been a venture partner at Viola Ventures, an Israeli-based venture capital firm that invests primarily in early stage companies in the fields of Software, Communications, Semiconductors, Internet, Media, and Consumer Electronics, since 2006.  Previously, Mr. Inbar served as the President of ECI Telecom Ltd., a global telecom networking infrastructure provider, from November 1999 to December 2005 and as its Chief Executive Officer from February 2000 to December 2005.  Mr. Inbar joined ECI Telecom Ltd. in 1983 and during his first eleven years with the company, served in various positions at its wholly-owned U.S. subsidiary, ECI Telecom, Inc., in the U.S., including Executive Vice President and General Manager.  In July 1994, Mr. Inbar returned to Israel to become Vice President, Corporate Budget, Control and Subsidiaries of ECI Telecom Ltd.  In June 1996, Mr. Inbar was appointed Senior Vice President and Chief Financial Officer of ECI Telecom Ltd., and he became Executive Vice President of ECI Telecom Ltd. in January 1999. Mr. Inbar has served on the board of directors of Alvarion Ltd. (formerly Nasdaq: ALVR), a company that sells broadband wireless and Wi‑Fi products, from September 2009 until September 2013 and was a member of its audit and compensation committees and served as chairman of its nominating and governance committee. Mr. Inbar also served on the board of directors of Archimedes Global Ltd. from 2008 until 2018, a company which provides health insurance and health provision in Eastern Europe, and serves on the board of directors of MaccabiDent Ltd., the largest chain of dental service clinics in Israel. In 2012, Mr. Inbar joined the board of directors of Comverse Technology Inc. (formerly Nasdaq: CNSI), where he was a member of the audit committee and corporate governance committee until August 2016. Mr. Inbar served also as a board member and management consultant at Degania Medical Ltd., a medical device designer and manufacturer, and serves as a board member and management advisor to the board of Tzinorot Ltd. and Cellwize Wireless Technologies Ltd., a developer of innovative wireless solutions. Previously, Mr. Inbar served as chairman of the board of C‑nario Ltd., a global provider of digital signage software solutions, chairman of the board of Followap Ltd., which was sold to Neustar, Inc. in November 2006, and chairman of the board of Enure Networks Ltd. Mr. Inbar holds a B.A. in Economics and Business Administration from Bar-Ilan University, Israel. Mr. Inbar’s historical knowledge of our company and extensive experience in working with technology companies qualify him to serve as a member of our Board.

 

 

Directors and Corporate Governance

 

Board Composition

 

Our Board of Directors currently consists of eight members.

 

In accordance with the amended and restated certificate of incorporation and the amended and restated bylaws, our Board of Directors is divided into three classes with staggered terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve.

 

Directors for a particular class will be elected for terms expiring at the third annual meeting of stockholders following their election. As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective terms. Each director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation or removal.

 

Board Independence

 

 Under the listing requirements and Nasdaq rules, independent directors must comprise a majority of a listed company’s board of directors. Our Principles of Corporate Governance (the “Principles”) provide that an “independent” director is a director who meets the Nasdaq definition of independence. The Principles also provide that, under applicable Nasdaq rules, the members of each of the Audit and Compensation Committees are subject to additional, heightened independence criteria applicable to directors serving on these committees. Our Board of Directors has undertaken a review of its composition, the composition of its committees and the independence of each director (both generally, and, where applicable, under heightened independence criteria applicable to certain committees). Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our Board of Directors has determined, based on the recommendation of our Nominating and Corporate Governance Committee, that each of Messrs. Avida, Cheifetz, Gani, Inbar, More and Zafrir and Ms. Payne is “independent” under Nasdaq rules. In making the independence determinations, our Board of Directors assessed the current and prior relationships that each non-employee director has with us and all other relevant facts and circumstances, including the beneficial ownership of our capital stock by each non-employee director and affiliated persons and entities and any payments made to and from entities affiliated with the directors. Based on these assessments, for each director deemed to be independent, our Board of Directors made a determination that, because of the nature of the director’s relationships or the amounts involved, the director had no relationships with the Company or our management that, in the judgment of the Board, would impair the director’s independence.

 

Leadership Structure

 

 

 

 

Executive Sessions of Independent Directors

 

In order to promote open discussion among independent directors, our Board of Directors has a policy of conducting executive sessions of independent directors during each regularly scheduled meeting of the Board.

 

Principles of Corporate Governance

 

Our Principles of Corporate Governance are available under “Corporate Governance” on our website at http://investors.solaredge.com.

 

Code of Business Conduct and Ethics

 

We have adopted a code of business conduct and ethics that applies to all of our officers and employees, including our Chief Executive Officer and Chief Financial Officer and those officers and employees responsible for financial reporting. We have also adopted a code of business conduct and ethics that applies to our directors. Our codes of business conduct and ethics are posted on the investor relations section of our website at http://investors.solaredge.com. We intend to disclose future amendments to our codes of business conduct and ethics, and any waivers of their provisions that we grant to our executive officers and directors, on our website within four business days following the date of the amendment or waiver.

 

Board Meetings

 

During 2019, the Board of Directors held eight meetings. Each director attended 100% of the meetings of the Board of Directors held during the period such director served and each of our directors attended at least 75% of the aggregate of the total number of the meetings held by any of the committees of the Board of Directors on which such director served during such period.

 

The Board’s Role in Risk Oversight

 

The Board of Directors oversees the Company’s risk management process. The Board oversees a Company-wide approach to risk management, designed to enhance stockholder value, support the achievement of strategic objectives and improve long-term organizational performance. The Board determines the appropriate level of risk for the Company generally, assesses the specific risks faced by the Company and reviews the steps taken by management to manage those risks. The Board’s involvement in setting the Company’s business strategy facilitates these assessments and reviews, culminating in the development of a strategy that reflects both the Board’s and management’s consensus as to appropriate levels of risk and the appropriate measures to manage those risks. Pursuant to this structure, risk is assessed throughout the enterprise, focusing on risks arising out of various aspects of the Company’s strategy and the implementation of that strategy, including financial, legal/compliance, operational/strategic, health and safety, and compensation risks. The Board also considers risk when evaluating proposed transactions and other matters presented to the Board, including material acquisitions and financial matters.

 

While the Board maintains the ultimate oversight responsibility for the risk management process, its committees oversee risk in certain specified areas. In particular, the Audit Committee reviews and discusses the Company’s practices with respect to risk assessment and risk management. The Audit Committee also focuses on the adequacy and effectiveness of the Company’s internal controls. In addition, the Audit Committee oversees the Company’s compliance program with respect to legal and regulatory requirements, including the Company’s codes of conduct and policies and procedures for monitoring compliance. The Compensation Committee oversees the assessment of the risks related to the Company’s compensation policies and programs applicable to its officers and other employees. Management regularly reports on applicable risks to the relevant committee or the Board, as appropriate, including reports on significant Company projects, with additional review or reporting on risks being conducted as needed or as requested by the Board and its committees.

 

Board Committees

 

Audit Committee

 

Our Board of Directors has established an Audit Committee, which operates under a written charter that is available on our website at http://investors.solaredge.com and that satisfies the applicable standards of the SEC and the listing requirements of Nasdaq. The Audit Committee’s responsibilities include, but are not limited to:

 

 

 Our Audit Committee, which met seven times in the year ended December 31, 2019, consists of Marcel Gani, Tal Payne and Doron Inbar, with Marcel Gani serving as chairman. The composition of our Audit Committee complies with all applicable requirements of the SEC and the listing requirements of Nasdaq. All of our Audit Committee members meet the additional, heightened independence criteria applicable to directors serving on the Audit Committee under the Nasdaq rules and SEC rules. Our Board of Directors has determined that Marcel Gani and Tal Payne each qualify as an “Audit Committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable Nasdaq rules and regulations.

 

Compensation Committee

 

Our Board of Directors has established a Compensation Committee, which operates under a written charter that is available on our website at http://investors.solaredge.com and that satisfies the applicable standards of the SEC and the listing requirements of Nasdaq. The Compensation Committee’s responsibilities include, but are not limited to:

 

 

 Our Compensation Committee, which met five times during the year ended December 31, 2019, consists of Avery More, Dan Avida and Doron Inbar, with Avery More serving as chairman. The composition of our Compensation Committee meets the requirements for independence under the applicable rules and regulations of the SEC and the Nasdaq Global Select Market. Each member of the Compensation Committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act.

 

Compensation Committee Interlocks and Insider Participation

 

None of the members of our Compensation Committee is, or was during the year ended December 31, 2019, an officer or employee of the Company. None of our executive officers currently serves, or in the past year has served, as a member of the Board of Directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee.

 

Nominating and Corporate Governance Committee

 

Policy Regarding Stockholder Recommendations

 

Stockholder Engagement and Communication Policy

Understanding the issues that are important to our stockholders is critical in ensuring that we address their interests in a meaningful and effective way. The Company engages with our stockholders on a regular basis to discuss a range of topics, including our performance, strategy, risk management, executive compensation, and corporate governance. We recognize the value of taking our stockholders’ views into account. Dialogue and engagement with our stockholders helps us understand how they view us and set goals and expectations for our performance.

We further communicate with stockholders and other stakeholders through various media, including our annual report and SEC filings, proxy statement, press releases, and through our website. We hold conference calls for our quarterly earnings releases, which are open to all. These calls are available in real-time and as archived webcasts on our website. In November 2019, we held an Investor Analyst Day with presentations from our Chairman of the Board, CEO, Chief Financial Officer and additional senior executives.

Any stockholder of the Company or any other interested party wishing to communicate with the Board may write to the Board at Board of Directors, c/o Corporate Secretary, 1 HaMada Street, Herziliya Pituach 4673335, Israel, or by email at investors@solaredge.com. The Corporate Secretary will maintain a log of such communications and transmit as soon as practicable such communications to the identified director addressees, unless there are safety or security concerns that mitigate against further transmission of the communication, as determined by the Corporate Secretary. The Board or individual directors so addressed will be advised of any communication withheld for safety or security reasons as soon as practicable.

 

In addition, any person wishing to communicate with the Company’s independent directors may do so by writing to them, c/o Corporate Secretary, 1 HaMada Street, Herziliya Pituach 4673335, Israel, or by email at investors@solaredge.com.

 

Director Qualifications

 

The Nominating and Corporate Governance Committee and the Board have identified particular  qualifications, attributes, skills and experiences that are important to be represented on the Board as a whole, in light of the Company’s current needs and business priorities:

 

•              Leadership and Executive Experience in Public Companies- We believe that directors who have significant practical experience, demonstrated business acumen and leadership, and high levels of accomplishment will possess the ability to exercise sound business judgment and to provide insight and practical wisdom to help us analyze, shape, and oversee the execution of important operational and policy issues while understanding the legal and regulatory demands required from a public company;

 

•             Extensive Knowledge of the Company’s Business – We design and manufacture both hardware and software technological solutions for the smart energy market while constantly developing and growing our business. Our director’s commitment to understanding the Company and its business, industry, and strategic objectives is significant for their contribution to our strategic planning and business discussions.

 

•             High Level of Financial Expertise - Accurate financial reporting, robust auditing and familiarity with new accounting principles and practices are important for us as a public traded company. We therefore seek to have a number of directors who qualify as Audit Committee financial experts. We further expect all of our directors to be financially knowledgeable in order to understand and advise on our financial reporting, internal control and investment activities. 

 

•             Broad International Exposure- We currently have a presence in  28 countries around the world. Our products have been installed in 133 countries around the world. Due to the global nature of our business, we deem it critical for our directors to be able to provide valuable business and cultural perspective on our international operations.

 

•             Innovation and Technology – Our products reflect a focus on innovation and we are continuously searching to improve and enhance the capabilities of our technology departments. It is important for us to have directors who share the desire for technological innovation, who have themselves led technology companies and who want to be a part of leading the path for continuous innovation in the area of smart energy.

 

•              Independence - For non-employee directors, independence under Nasdaq listing standards and other applicable rules and regulations.

The Company values diversity on a company-wide basis and seeks to achieve a diversity of occupational and personal backgrounds on the Board of Directors, but has not adopted a specific policy regarding Board diversity. The Board evaluates its diversity of occupational and personal backgrounds as part of its annual re-nomination process. In future searches the Board will seek out women and minority candidates to include in the pool of candidates from which new director nominees are chosen. Each of our director nominees has achieved an extremely high level of success in his career, including extensive experience in technology companies and venture capital firms, as well as historical knowledge of our company from their many years serving on our Board.  In these positions, each has been directly involved in the challenges relating to setting the strategic direction and managing the financial performance, personnel, and processes of large, complex organizations.  Each has had exposure to effective leaders and has developed the ability to judge leadership qualities.  The Nominating and Corporate Governance Committee consults with other members of the Board and management in identifying and evaluating candidates for director.

 

PROPOSAL NO. 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019

 

The Audit Committee of the Board of Directors has selected EY to be the Company’s independent registered public accounting firm for the year ending December 31, 2020, and recommends that the stockholders vote for ratification of such appointment. EY has been engaged as our independent registered public accounting firm since 2007. As a matter of good corporate governance, the Audit Committee has requested the Board of Directors to submit the selection of EY as the Company’s independent registered public accounting firm for 2020 to the stockholders for ratification. In the event of a negative vote on such ratification, the Audit Committee will reconsider its selection. They will have the opportunity to make a statement at the Annual Meeting if they desire to do so, and will be available to respond to appropriate questions.

Audit and Related Fees

The following table sets forth the aggregate fees for professional services rendered by EY for the audit of our financial statements for the year ended December 31, 2018 and the year ended December 31, 2019, and the aggregate fees for other services rendered by EY during those periods:

 

Our Board of Directors adopted a written policy for the pre-approval of certain audit and non-audit services which EY provides. The policy balances the need to ensure the independence of EY while recognizing that in certain situations EY may possess both the technical expertise and knowledge of the Company to best advise the Company on issues and matters in addition to accounting and auditing. In general, the Company’s independent registered public accounting firm cannot be engaged to provide any audit or non-audit services unless the engagement is pre-approved by the Audit Committee. Certain services may also be pre-approved by the Chairman of the Audit Committee under the policy. All of the fees identified in the table above were approved in accordance with SEC requirements and, following our initial public offering, pursuant to the policies and procedures described above.

All of the services of EY, described above, for year ended December 31, 2018 and the year ended December 31, 2019, were pre-approved by the Audit Committee.

 

PROPOSAL NO. 3—SAY–ON-PAY

 

In accordance with Section 14A of the Exchange Act, we are providing our stockholders with the opportunity to vote, on an advisory (non-binding) basis, to approve the compensation of our named executive officers as disclosed in this Proxy Statement (referred to as “Say-on-Pay” vote). As described below in the "Compensation Discussion and Analysis" section of this Proxy Statement, the Compensation Committee's goals in setting executive compensation are to motivate our executives to maximize stockholder value, provide compensation that varies based on performance, and attract and retain managerial talent, without promoting unreasonable risk-taking. To achieve these goals, our executive compensation structure emphasizes performance-based compensation, including annual incentive compensation and stock-based awards.

 

We urge stockholders to read the "Compensation Discussion and Analysis" below, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative following the Compensation Discussion and Analysis, which provide detailed information on the compensation of our named executive officers. The Board of Directors and the Compensation Committee believe that the policies and procedures articulated in the "Compensation Discussion and Analysis" are effective in achieving our goals and that the compensation of our named executive officers reported in this Proxy Statement reflects and supports these compensation policies and procedures.

 

In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, stockholders will be asked at the Annual Meeting to approve the following advisory resolution:

 

RESOLVED, that the stockholders of the Company approve, on an advisory basis, the compensation of the Company’s named executive officers described in the Compensation Discussion and Analysis and disclosed in the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2020 Annual Meeting of Stockholders.

 

This advisory Say-on-Pay vote is non-binding; however, our Board of Directors and Compensation Committee will review and consider the voting results carefully when making future decisions regarding our executive compensation programs.

 

After careful consideration, the Board of Directors has adopted a policy of providing for annual “Say-on-Pay” advisory votes. Unless the Board of Directors modifies its policy on the frequency of holding “Say-on-Pay” votes, the next “Say-on-Pay” advisory vote will be included in our 2021 proxy statement.

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 20, 2020 (unless indicated otherwise below), for:

 

 

 

 

 

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock that they beneficially own, subject to applicable community property laws.

 

Applicable percentage ownership in the following table is based on 49,598,796 shares of common stock outstanding as of March 20, 2020, unless otherwise indicated in the footnotes below. In computing the number of shares of common stock beneficially owned by a person or entity and the percentage ownership of that person or entity, we deemed to be outstanding all shares of common stock subject to options or other convertible securities held by that person or entity that are currently exercisable or exercisable within 60 days of March 20, 2020. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o SolarEdge Technologies, Inc., 1 HaMada Street, Herziliya Pituach 4673335, Israel.

——————

(1)

Based solely on a Schedule 13G/A filed with the SEC by Blackrock Inc., on February 5, 2020. Schedule 13G/A contains information as of December 31, 2019.  Blackrock Inc. reports having power to dispose or to direct the disposition of over all of the shares reported above. The address of the reporting persons is 55 East 52nd Street New York, NY 10055.

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(2)

Based solely on a Schedule 13G/A filed with the SEC by Swedbank Robur Fonder AB., on February 13, 2020. Schedule 13G/A contains information as of December 31, 2019.  Swedbank Robur Fonder AB. reports having power to dispose or to direct the disposition of over all of the shares reported above. The address of the reporting persons is SE-105 34, Stockholm, Sweden.

(3)	Consists of 13,496 shares of common stock owned of record by Mr. Lando, and 23,426 shares of common stock issuable upon exercise of options exercisable within 60 days of March 20, 2020.

(4)	Consists of 48,835 shares of common stock owned of record by Mr. Faier, and 90,581 shares of common stock issuable upon exercise of options exercisable within 60 days of March 20, 2020.

(5)	Consists of 132,857 shares of common stock owned of record by Mr. Galin, and 82,532 shares of common stock issuable upon exercise of options exercisable within 60 days of March 20, 2020.

(6)	Consists of 9,888 shares of common stock owned of record by Ms. Prishkolnik, and 8,918 shares of common stock issuable upon exercise of options exercisable within 60 days of March 20, 2020.

(7)	Consists of 1,359 shares of common stock issuable to Mr. Nadav Zafrir, upon settlement of restricted stock units which will vest and settle within 60 days of March 20, 2020.

(8)

Consists of 22,902 shares of common stock owned of record by Mr. Avida, 2,810 shares of common stock issuable upon settlement of restricted stock units which will vest and settle within 60 days of March 20, 2020,  50,000 shares of common stock held by Opus Capital Venture Partners L.P.’s investment committee consists of Carl Showalter, Dan Avida, Gill Cogan and Joseph Cutts and 20,630 shares of common stock held by The Zarbu Revocable Trust, c/o Dan Avida.

(9)	Consists of 44,021 shares of common stock owned of record by Mr. Cheifetz, and 2,810 shares of common stock issuable upon settlement of restricted stock units which will vest and settle within 60 days of March 20, 2020.

(10)

Consists of 22,902 shares of common stock owned of record by Mr. Gani, 2,810 shares of common stock issuable upon settlement of restricted stock units which will vest and settle within 60 days of March 20, 2020, 5,555 shares of common stock held directly by Marcel Gani 2002 Living Trust and 5,555 shares of common stock held directly by ALGA Partners LLC. Mr. Gani, in his capacity as trustee, has voting and investment power over the shares owned by the Marcel Gani 2002 Living Trust. Mr. Gani, in his capacity as manager, has voting and investment power over the shares owned by ALGA Partners LLC.

(11)

Consists of 22,902 shares of common stock owned of record by Mr. Inbar, 100,666 shares of common stock issuable upon exercise of options exercisable within 60 days of March 20, 2020, and 2,810 shares of common stock issuable upon settlement of restricted stock units which will vest and settle within 60 days of March 20, 2020.

(12)

Consists of 176,181 shares of common stock owned of record by Mr. More, 2,810 shares of common stock issuable upon settlement of restricted stock units which will vest and settle within 60 days of March 20, 2020, and 7,841 shares held by Avery More's wife, Jerralyn Smith More, as to which Avery More disclaims any ownership interest.

(13)	Consists of 22,902 shares of common stock owned of record by Ms. Payne, and 2,810 shares of common stock issuable upon settlement of restricted stock units which will vest and settle within 60 days of March 20, 2020.

(14)

Consists of 939,380 shares of common stock, 473,589 shares of common stock issuable upon exercise of options exercisable within 60 days of March 20, 2020, and 18,219 shares of common stock issuable upon settlement of restricted stock units which will vest and settle within 60 days of March 20, 2020.

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Our Company has grown significantly in 2019, following strong growth in 2018.  Our growth was both organic and acquisition-related, and has significantly increased the management complexity involved in operating our business.  Meanwhile, our executive officer compensation increased at a more moderate rate than our Company’s growth, averaging an increase of 24% in 2019 vs. 2018 for those who were in the same role for both years (reported in our Summary Compensation Table on page 35).

Compensation Strategy

The main objectives of our executive pay-for-performance compensation program are to:

 

 

 

These guiding principles apply to all of our executive pay practices discussed. Achievement of the minimum financial parameters set forth in our annual cash incentive compensation plan is required before any compensation is payable under the plan. Specifically, if the minimum levels of achievement for the parameters set out in the “Financials MBO” quadrant is not achieved at a level of at least 70% and profitability is not reached, no compensation under the plan is payable.

Compensation Governance Highlights

In addition to aligning pay with performance of the Company, our executive compensation program is intended to be consistent with corporate governance best practices. This is demonstrated by the following elements in our executive officer compensation arrangements:

 

 

 

Compensation awarded to our named executive officers (“NEOs”) for 2019 was in line with our pay-for-performance objectives. Most NEO pay was “at-risk”, meaning that it was contingent upon the achievement of certain financial results as detailed herein. The increases in compensation were in line with the growth of the Company, increased responsibilities relating to acquisitions and commensurate compensation packages of executives at peer companies.

Compensation Objectives and Guiding Principles

The primary objectives of our senior executive compensation program are as follows:

 

 

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Elements of Compensation

The following table describes each element of our senior executive compensation program and how these elements help us to achieve our compensation objectives:

 

 

Implementing Compensation Objectives

Determining Compensation

In making compensation decisions, we review the performance of the Company and each senior executive. We also consider the senior executive’s level of responsibility, the importance of the senior executive’s role in achieving our corporate objectives, and the senior executive’s long-term potential, while taking into account his or her current target compensation, value of outstanding equity awards, and stock ownership levels, and our stock selling restrictions for senior executives. Finally, we weigh competitive practices, relevant business and organizational changes, retention needs, and internal pay equity.

Compensation Peer Group

In order to attract, retain, and motivate the best management talent, we believe that we must provide a target compensation package that is competitive relative to our peers. Therefore, the Compensation Committee considers practices of specific companies that we identified as our peers for executive compensation in 2019 (the “2019 Peer Group”), as well as size-appropriate technology industry survey data.

 

In the months prior to the start of each new year, the Compensation Committee reviews the market data with the assistance of its external compensation consultant and makes changes, as appropriate, in order to ensure it continues to appropriately reflect the Company’s size, industry, and scope of operations when considering the appropriate compensation for our executives.

 

Our substantial growth in 2018, in terms of revenues (over 50% growth year-over-year) as well as in terms of geographical expansion, product offering and non-organic expansion following the acquisition of our UPS (or uninterrupted power supply) and battery businesses prompted us to adjust our peer group substantially when we considered compensation for 2019. This growth led the Compensation Committee to direct a full review of the composition of the Company’s peer group for 2019.

 

With the assistance of Frederic W. Cook & Co., Inc. (“FW Cook”), an independent consultant retained by the Compensation Committee, the Compensation Committee approved 16 comparably sized companies in relevant industries to be included in the 2019 Peer Group for purposes of evaluating our executive compensation program. Based on the above, the 2019 Peer Group used for establishing 2019 senior executive target compensation was as follows: 3D Systems Corporation; Advanced Energy Industries Inc.; Brooks Automation, Inc.; Cree, Inc.; Finisar Corporation; Generac Holdings Inc.; Infinera Corporation; Mellanox Technologies Ltd.;, MKS Instruments Inc.; Netgear Inc.; Ormat Technologies Ltd.; Pattern Energy Group LP; Power Integrations, Inc.; Silicon Laboratories Inc.; Veeco Instruments, Inc. and Verint Systems Inc. All companies in the 2019 Peer Group had revenues in a 0.5x to 2.3x range of our 2018 revenue ($937 million), and had market capitalization in a 0.3x to 2.4x range of our market capitalization at the time the peer group was developed ($1.915 billion).  Our 2018 revenue and operating income were above the peer median, balanced by our market capitalization, which was modestly below the peer group’s market capitalization at the time the peer group was developed.

 

This peer group reflected removal of two companies that had been acquired and were therefore no longer relevant (Gigamon Inc. and Silver Spring Networks, Inc.) and five companies that were determined to be relatively small in terms of revenues and/or market cap compared to our financial performance in 2018 (Cray Inc., Photronics Inc., Powell Industries Inc., Vicor Corporation and Xperi Corporation).  Two other companies were determined to be not appropriate in terms of the scope of business and their operating losses and a third company (Stratasys Ltd.) was removed because it did not produce U.S. compensation filings with the SEC. Companies were then evaluated to be added to the peer group taking into account the significant growth of the Company, in terms of revenues, net income and business scope and seven new companies were added (Brooks Automation, Inc. Cree, Inc., Finisar Corporation, Netgear Inc., Pattern Energy Group LP, Power Integrations, Inc., and Silicon Laboratories, Inc.).

 

Specifically, the criteria for adding companies was based on (i) being publicly traded on a major U.S. stock exchange based in the U.S. or Israel in the Semiconductor Industry (as SolarEdge is categorized by Standard & Poor’s) or one of the industries represented in the 2018 Peer Group; (ii) companies with broadly comparable financial profiles: revenue, market capitalization, enterprise value, and growth profiles;  and (iii) a market cap range which approximates to 0.33 times to 3 times that of SolarEdge which was $2.4 billion as of July 31, 2018. Companies that went public in 2017 and 2018 were excluded for lack of relevant compensation data.

 

2019 Pay Positioning

 

In general for 2019, the Compensation Committee set base salary and short- and long-term incentive compensation opportunities for our senior executives, including the NEOs, at or near the median of the peer group proxy and survey data. As described below, individual levels varied from the targeted position for each of the elements of target total direct compensation based on the Compensation Committee’s overall subjective evaluation of individual performance, senior executive responsibilities relative to benchmark position responsibilities, and individual skill set and experience.

 

 

Role of Compensation Committee and Management

The Compensation Committee has primary responsibility for overseeing the design and implementation of our senior executive compensation programs. The Compensation Committee, with input from the other independent directors, evaluates the performance of the CEO. The Compensation Committee then recommends CEO compensation to the independent directors for approval. The CEO and the Compensation Committee together review the performance of our other senior executives, and the Compensation Committee determines their compensation based on recommendations from the CEO. The executives do not play a role in their own individual compensation determinations.

 

Role of Compensation Consultants

With respect to decisions for 2019 target compensation of the NEOs, competitive review of senior executive and non-employee director compensation programs and peer group review for 2019, the Compensation Committee retained FW Cook to review market trends and advise the Compensation Committee. FW Cook is the sole compensation consultant for the Compensation Committee.

Our Compensation Committee has concluded that no conflicts of interest exist with respect to FW Cook’s provision of services after considering the following six factors: (i) the provision of other services to us by FW Cook; (ii) the amount of fees FW Cook received from us as a percentage of its total revenue; (iii) the policies and procedures of FW Cook that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the FW Cook consultants with a member of the Compensation Committee; (v) any of our stock owned by the FW Cook consultants; and (vi) any business or personal relationship of the FW Cook consultants or FW Cook with any of our executive officers.

The Compensation Committee is directly responsible for the appointment, compensation, and oversight of FW Cook. FW Cook reported directly to the Compensation Committee, although the Compensation Committee instructed FW Cook to work with management to compile information and to gain an understanding of the Company and any Company-related issues for consideration by the Compensation Committee, including market trends.

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Compensation-Related Governance Policies

 

Stock Ownership and Holding Guidelines

All of our employees, including the NEOs, are subject to our Insider Trading Policy which forbids employees to trade in the Company’s stock, or any derivatives thereof, while holding non-public material information or during the Company’s set “black-out periods”. In addition, the Company’s board of directors has adopted Stock Ownership and Holding Guidelines that apply to the Company’s board of directors, the CEO, and his direct reports. As per the current guidelines, the CEO and his direct reports are required to attain and maintain stock equal to four times the annualized base salary for the CEO and two times the annualized base salary for all CEO direct reports.  Non-employee members of the Board are required to attain and maintain stock equal to five times their annualized cash retainer. Executives and directors who are covered by the policy are required to hold 50% of the “net profit shares” resulting from stock option exercises and/or vesting of other stock-based awards until they reach their applicable stock ownership level. “Net profit shares” refers to the number of shares actually held by the executive or director after covering withholding tax requirements and/or stock option exercise costs with a portion of the shares resulting from such exercise or vesting event. Once covered by the policy, executives and members of the Board are expected to continuously accumulate qualifying equity until they meet the minimum stock ownership requirement. Once an individual has achieved the required stock ownership level, he/she must maintain stock ownership at or above the required level.  As of the Record Date, all of the executives and directors subject to this policy are in compliance.

Compensation of the Named Executive Officers

In determining target total compensation for our NEOs for 2019, we evaluated the financial and operational performance of the Company and considered each senior executive’s contributions relative to that performance. As part of the annual senior executive compensation review, the Compensation Committee reviewed independent market data as well as then-current pay levels of the Company’s senior executives, the Company’s pay philosophy and corporate performance, and the individual performance of the Company’s senior executives.

 

For a discussion of the Company’s performance for the year ended December 31, 2019, see “Executive Compensation — 2019 Results and Key Events and Impact on Compensation” above.

Base Salary

When determining base salaries for 2019, the Compensation Committee began by reviewing updated market data from FW Cook. The updated market data included larger companies than at the time our 2018 base salaries were set, but the growth in our 2019 Peer Group’s median revenue size compared to the prior year’s peer group median revenue was less than the growth in our revenues from 2018 to 2019. The Committee also took into account the Company’s increasing global presence, ongoing development of two new businesses (UPS and batteries), and the related increases in management responsibilities. Furthermore, the Committee recognized that base salaries had not been increased since August 2016, and that they had fallen materially below competitive market levels, especially considering our Company’s rapid growth. Mr. Lando’s base salary was adjusted effective when he transitioned from his role as our VP Global Sales and assumed the role of Acting CEO.

 

The base salaries of our NEOs were approved by the Compensation Committee in U.S. Dollars. As per such approval, payments are actually made in New Israeli Shekel based on the exchange rate used at the time of the approval.  The following table sets forth the 2018-2019 base salaries for the NEOs:

* Effective August 21, 2019, following the death of Mr. Guy Sella, Mr. Lando was appointed Acting CEO of the Company. Mr. Lando’s base salary was adjusted by the Compensation Committee effective September 1, 2019 to reflect this new position.

 

Annual Cash Incentive Compensation

For 2019, each NEO was eligible to receive an annual incentive compensation payment based on achievement of pre‑established performance goals. For all of the NEOs, the entitlement to cash compensation under the annual cash incentive compensation program is contingent upon the Company achieving a minimum level of performance with respect to certain pre-established financial parameters. If the general score for the financial parameters is not at least 70% and profitability is not achieved, no annual cash incentive compensation is awarded to the NEOs. For 2019, the performance goals established for Guy Sella our CEO at the time were set based entirely upon Company‑related financial, operational, and strategic objectives, and were 65% comprised of  “Financial Goals” – Solar Revenue Targets, Non-solar Revenues Targets, Net Income and Solar Business Gross Margin targets. The remaining 35% of  Guy Sella’s target bonus was based on goals related to  Operations (11%),  Strategy (14%), and  Scalability and Infrastructure (10%). Specifically, the minimum achievement level required for bonus payments was contingent upon the Company meeting at least 70% of its Financial Goals and having a positive net income.

 

 

The 2019 bonus structure and achievement against the Company‑related financial, operational, and strategic objectives is summarized as follows:

 

In addition to the aforementioned performance goals detailed above which were weighted 50% (other than for the former CEO), each NEO had additional individual pre-determined performance goals relating to their respective specific areas of responsibility and contribution to the Company, which comprised the remaining 50% of their 2019 bonus determination. The individual performance goals are specific goals predetermined for each NEO and relate to the goals for the success and growth of the Company for the forthcoming year. Individual performance goals may be expressed in terms of overall Company performance or the performance of a division, a business unit or an individual, or in any other manner determined appropriate by the Compensation Committee. For example, for our Vice President of Research and Development individual performance goals included (but were not limited to) the development of certain new products,  for our Vice President of Global Sales, the individual performance goals included (but were not limited to) the penetration of sales in certain new geographic regions. Each of the NEOs received a bonus under the compensation plan that had been preapproved by the Compensation Committee and after review by the Compensation Committee of the specific performance goals and determination of their level of achievement. Each NEO has a certain target bonus that is preapproved by the Compensation Committee and is equal to eight months of such NEO’s monthly base salary. NEOs can achieve beyond their target bonus if the performance goals are exceeded and at the discretion of the Compensation Committee.

 

**Mr. Lando was appointed CEO of the Company following the death of Mr. Guy Sella. The Compensation Committee pro-rated his bonus for the period in which he served as VP Sales and Acting CEO.

Equity Compensation

 

Employment Agreements

Other Compensation

Tax Deductibility of Compensation

For 2017 and prior years, Section 162(m) of the Internal Revenue Code (the Code) generally limited the deductibility of compensation to $1 million per year per person for certain of our NEOs, unless compensation in excess of the limit qualified as “performance based compensation.” Following the changes to the tax laws effective as of January 1, 2018 that eliminated the exception for “performance based compensation”, we are unable to deduct compensation payable to NEOs in excess of $1,000,000 per year per NEO under US corporate income tax law.

 

While our Compensation Committee considers the impact of this tax treatment, the primary factor influencing program design is the support of our business objectives. Generally, whether incentive compensation will be deductible under Section 162(m) of the Code will be a consideration, but not the decisive consideration, with respect to our Compensation Committee’s compensation determinations. Accordingly, our Compensation Committee retains flexibility to structure our compensation programs in a manner that is not tax deductible in order to achieve a strategic result that our Compensation Committee determines to be more appropriate.

This report shall not be deemed incorporated by reference or by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this report by reference, and shall not otherwise be deemed filed under such Acts.

The Compensation Committee has reviewed and discussed with management and its independent consultant, the Compensation Discussion and Analysis below, and based on the review and discussions, recommended to our board that this Compensation Discussion and Analysis be included in this Proxy Statement.

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COMPENSATION RISK

Our compensation programs are designed to balance risk and reward in relation to the Company’s overall business strategy. Management assessed, and the Compensation Committee reviewed, our senior executive and broad-based compensation and benefits programs. Based on this assessment, we have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. Among the program attributes that discourage inappropriate risk-taking are:

The following table summarizes the compensation of our NEOs for the year ended December 31, 2019, the year ended December 31, 2018, and the year ended December 31, 2017.

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(1)	We paid the amounts reported for each NEO in New Israeli Shekels. We have translated amounts paid in New Israeli Shekels into U.S. dollars at the foreign exchange rate published by the Bank of Israel as of the date of payment.

(2)	Represents the cash payment for sign on bonus earned as part of the employment agreement. For more information, see the discussion in the CD&A under the caption Annual Cash Incentive.

(3)

The amounts in this column represent the aggregate grant date fair value of the equity-based awards granted to our NEOs, computed in accordance with FASB ASC Topic 718. We provide information regarding the assumptions used to calculate the value of the equity-based awards in Note 2w to the audited consolidated financial statements included in our Annual Report on Form 10-K filed on February 27, 2020. There can be no assurance that these awards will vest or will be exercised (in which case no value will be realized by the individual), or that the value upon exercise will approximate the aggregate grant date fair value.

(4)	Represents the cash bonuses earned pursuant to our annual cash incentive program. For more information, see the discussion in the CD&A under the caption Annual Cash Incentive.

(5)

Includes: (i) base salary paid to Mr. Sella’s estate for the period September to December 2019 in the amount of $261,669; (ii) a bonus paid to Mr. Sella’s estate for 2019 in the amount of $758,465; (iii) an accrual of $1,500,000 for base salary and bonus payment to be made to Mr. Sella’s estate in 2020; (iv) 119,298 RSUs and 214,650 options which vested upon Mr. Sella’s death with a fair value at the grant date of $6,241,979; and (v) a $36,394 contribution by the Company to Mr. Sella’s severance fund and $39,962 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(6)	Includes a $49,586 contribution by the Company to Mr. Sella’s severance fund and $45,387 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(7)	Includes a $49,996 contribution by the Company to Mr. Sella’s severance fund and $44,265 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(8)	Includes a $42,149 contribution by the Company to Mr. Lando’s severance fund and $36,852 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(9)	Includes a $28,399 contribution by the Company to Mr. Lando’s severance fund and $27,738 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(10)	Includes a $28,633 contribution by the Company to Mr. Lando’severance fund and $27,669 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance

(11)	Includes a $35,185 contribution by the Company to Mr. Faier’s severance fund and $34,684 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance

(12)	Includes a $27,179 contribution by the Company to Mr. Faier’s severance fund and $26,511 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(13)	Includes a $27,404 contribution by the Company to Mr. Faier’s severance fund and $26,321 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(14)	Includes a $32,110 contribution by the Company to Ms. Prishkolnik’s severance fund and $28,697 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(15)	Includes a $22,608 contribution by the Company to Ms. Prishkolnik’s severance fund and $24,110 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(16)	Includes a $34,409 contribution by the Company to Mr. Galin’s severance fund and $33,348 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(17)	Includes a $26,145 contribution by the Company to Mr. Galin’s severance fund and $26,158 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(18)	Includes a $26,363 contribution by the Company to Mr. Galin’s severance fund and $25,832 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

(19)	Includes a $10,959 contribution by the Company to Mr. Bechor’s severance fund and $12,141 in aggregate Company contributions to pension and Israeli recreational funds and a recuperation allowance.

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(1)

The amounts in this column represent the aggregate grant date fair value of the equity based awards granted to our NEOs, computed in accordance with FASB ASC Topic 718. We provide information regarding the assumptions used to calculate the value of these equity based awards in Note 2w to the audited consolidated financial statements included in our Annual Report on Form 10-K filed on February 27, 2020. There can be no assurance that these awards will vest or will be exercised (in which case no value will be realized by the individual), or that the value upon exercise will approximate the aggregate grant date fair value.

(2)	The Non-Equity Incentive Plan does not include any thresholds or a maximum cap for the Non-Equity Incentive Awards; provided, however, that the Named Executive Officers would not be entitled to any payment if the Financial Goals under the plan were not achieved at 70%.

We or SolarEdge Technologies, Ltd., our Israeli subsidiary, are party to the following employment agreements:  (1) an employment agreement with Mr. Lando effective as of May 17, 2009, pursuant to which he was appointed to serve as SolarEdge Technologies Ltd.’s Global Vice President of Sales. Beginning August 26, 2019, Mr. Lando has taken over as Acting  CEO of the Company and the Compensation Committee has approved an increase in his base salary but no other amendments were made to his Employment Agreement; (2) an employment agreement with Mr. Faier, effective as of December 1, 2010, pursuant to which he serves as SolarEdge Technologies Ltd.’s Chief Financial Officer; (3) an employment agreement with Ms. Prishkolnik, effective November 1, 2010, pursuant to which she serves as our VP General Counsel and Corporate Secretary; (4) an employment agreement with Mr. Galin effective as of June 1, 2006 pursuant to which he serves as our Vice President, Research and Development; and (5) an employment agreement with Mr. Bechor effective as of September 1, 2019, pursuant to which he serves as our Chief Operating Officer. We also were party to an employment agreement with Mr. Sella, which was in effect from September 1, 2007 until his passing in August 2019, pursuant to which he served as our (and SolarEdge Technologies Ltd.’s) Chief Executive Officer and Chairman of the Board.

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*	The market value of shares or units of stock that have not vested is based on the number of shares or units of stock that have not vested multiplied by the closing price of our common stock on the last trading day of the year ended December 31, 2019 ($95.09).

 

(1)	The shares subject to the stock option vest over a four‑year period commencing August 31, 2016, with 1/16 of the shares vesting quarterly thereafter.

(2)	The shares subject to the stock option vest over a four‑year period commencing February 28, 2017, with 1/16 of the shares vesting quarterly thereafter.

(3)	The shares subject to the stock option vest over a four‑year period commencing February 28, 2018 with 1/16 of the shares vesting quarterly thereafter.

(4)	The shares subject to the stock option vest over a four‑year period commencing February 28, 2019 with 1/16 of the shares vesting quarterly thereafter.

(5)	The shares subject to the RSU vest over a four-year period commencing on August 31, 2016, with 1/16 of the shares vesting quarterly thereafter.

(6)	The shares subject to the RSU vest over a four-year period commencing on February 28, 2017, with 1/16 of the shares vesting quarterly thereafter.

(7)	The shares subject to the RSU vest over a four-year period commencing on February 28, 2018, with 1/16 of the shares vesting quarterly thereafter.

(8)	The shares subject to the RSU vest over a four-year period commencing on February 28, 2019, with 1/16 of the shares vesting quarterly thereafter.

(9)	The shares subject to the RSU vest over a four-year period commencing on November 30, 2018, with 1/16 of the shares vesting quarterly thereafter.

(10)	The shares subject to the RSU vest over a four-year period commencing on November 30, 2019, with 1/16 of the shares vesting quarterly thereafter.

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The following tables show the value of the potential payments and benefits our named executive officers would receive in various scenarios involving a termination of their employment or a change in control or other qualifying corporate transaction, assuming a December 31, 2019 triggering date and, where applicable, using a price per share for our common stock of $95.09 (the closing price of a share of our common stock as of the last trading day of the year ended December 31, 2019)¹.

 

 

(1)

The value realized is based on the difference between the exercise price of the stock options and the closing price of our common stock on the last trading day of the year ended December 31, 2019, and, in the case of RSUs, the number of RSUs that would have vested multiplied by the closing price of our common stock on the last trading day of the year ended December 31, 2019.

¹ The potential payments detailed in the tables below are displayed in USD, whereas the Company pays its NEOs’ salaries in New Israeli Shekels (NIS), and therefore, actual payments may change due to exchange rate fluctuations.

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(1)

The value realized is based on the difference between the exercise price of the stock options and the closing price of our common stock on the last trading day of the year ended December 31, 2019, and, in the case of RSUs, the number of RSUs that would have vested multiplied by the closing price of our common stock on the last trading day of the year ended December 31, 2019.

(1)

The value realized is based on the difference between the exercise price of the stock options and the closing price of our common stock on the last trading day of the year ended December 31, 2019, and, in the case of RSUs, the number of RSUs that would have vested multiplied by the closing price of our common stock on the last trading day of the year ended December 31, 2019.

(1)

The value realized is based on the difference between the exercise price of the stock options and the closing price of our common stock on the last trading day of the year ended December 31, 2019, and, in the case of RSUs, the number of RSUs that would have vested multiplied by the closing price of our common stock on the last trading day of the year ended December 31, 2019.

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(1)

The value realized is based on the difference between the exercise price of the stock options and the closing price of our common stock on the last trading day of the year ended December 31, 2019, and, in the case of RSUs, the number of RSUs that would have vested multiplied by the closing price of our common stock on the last trading day of the year ended December 31, 2019.

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(1)

Represents a prorated cash retainer for the appointment as chairman of the board, an initial equity award in the form of restricted stock units, granted upon the initial appointment to our Board of Directors, with a grant date value of $150,000, and a pro-rated annual equity award in the form of restricted stock units with a grant date value of $115,080 for 2019. The grant date fair value is based on $84.69 per share, the closing price of our share on the grant date. As of December 31, 2019, the chairman of the board held 3,130 unvested restricted stock units.

(2)

Represents the grant date fair value of 2,810 restricted stock units granted to each director on June 5, 2019, calculated in accordance with U.S. GAAP. All units will become fully vested on May 20, 2020. The grant date fair value is based on $55.16 per share, the closing price of our share on the grant date. As of December 31, 2019, each director held 2,810 unvested restricted stock units.

2019 CEO Pay Ratio

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the annual total compensation of our median employee, the annual total compensation of our CEO, Mr. Zivi  Lando, and the ratio of these two amounts. The 2019 annual total compensation of the median compensated of all our employees who were employed as of December 31, 2019, other than Mr. Lando, was $87,193. Mr. Lando’s 2019 annual total compensation was $2,081,364, and the ratio of these two amounts was 23.9 to 1. Our pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below.

 

To identify the “median employee,” we utilized the 2019 base salary earned during the year and target annual cash incentive for the 2019 performance year, which we annualized for any permanent employee who did not work for the entire year.

 

Earnings of our employees outside the U.S. were converted to U.S. dollars using annual average currency exchange rates.

 

Using the measure described above, we identified a “median employee” who is a full-time employee located in Israel and calculated the median employee’s annual total compensation for our pay ratio in accordance with applicable SEC rules for calculating Summary Compensation Table compensation.

 

SolarEdge is a global company, with operations worldwide and with its executive officers and a majority of its employees located in Israel, the country in which our headquarters office is located. Because the SEC rules for identifying our median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio for our Company, as other companies have headquarter offices in different countries, have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.

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Stockholder proposals for inclusion under Rule 14a-8 in the Company’s 2021 proxy statement for the proxy relating to our 2021 annual meeting of stockholders must be received by the Company at the principal executive offices of the Company no later than the close of business on December 8, 2020. Such proposals also must comply with the other rules of the Securities and Exchange Commission relating to Rule 14a-8 stockholders’ proposals.

 

In addition, any stockholder seeking to bring business before the 2021 Annual Meeting outside of Rule 14a-8 of the Exchange Act or to nominate a director under the advance notice provisions of our Amended and Restated Bylaws (the “Bylaws”) must provide timely notice of such proposal of business or nomination to the Company’s Corporate Secretary. Specifically, written notice of any such proposed business or nomination must be received by the Company’s Corporate Secretary at our principal executive offices no earlier than the close of business on January 18, 2021 and no later than the close of business February 17, 2021. 

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		Reconciliation of GAAP to Non-GAAP Net income attributable to Solaredge Technologies Inc.
		Three months ended												Year ended
		December 31, 2019				September 30, 2019				December 31, 2018				December 31, 2019				December 31, 2018
Net income attributable to Solaredge Technologies Inc. (GAAP)			52,778				41,627				12,936				146,549				128,833
Cost of product adjustment			448				107				398				1,556				606
Stock-based compensation			9,446				11,367				8,691				41,889				30,618
Amortization and depreciation of acquired assets			2,093				3,409				225				10,764				557
Acquisition related expenses			-				----				2,140				949				2,140
Assets disposal			56				14				435				622				435
Non recurring opearting expenses			22,391				8,305				----				30,696				----
Non cash interest			1,055				955				769				3,645				2,489
Currency fluctuation due to new lease standard adoption			266				800				----				2,591				----
Deferred tax realized (asset)			(1,114	)			(2,963	)			(2,304	)			(6,037	)			(7,093	)
Transition tax of foreign earnings			-				----				8,189				----				(1,296	)
Net income attributable to Solaredge Technologies Inc. (Non-GAAP)			87,419				63,621				31,479				233,224				157,289