2020 Annual Report Notice of 2021 Annual Meeting and Proxy Statement www.skyworksinc.com Connecting Everyone and Everything, All the Time Executive Management Transfer Agent and Registrar Autonomous Vehicles Connected Home Wearables Emergency Response Industrial Automation Location-Based Services Infrastructure Telemedicine Artificial Intelligence Smart Cities Vice President and General Manager, Diversified Analog about Skyworks at: Liam K. Griffin President, Chief Executive Officer and Director Carlos S. Bori Senior Vice President, Sales and Marketing Kari A. Durham Senior Vice President, Human Resources Senior Vice President, Technology and Manufacturing Senior Vice President and General Manager, Mobile Solutions Senior Vice President and Chief Financial Officer Reza Kasnavi Joel R. King Kris Sennesael David Stasey Solutions Robert J. Terry Senior Vice President, General Counsel and Secretary Board of Directors David J. Aldrich Chairman of the Board, Skyworks Solutions, Inc. Alan S. Batey Retired Executive Vice President and President of North America, General Motors Kevin L. Beebe President and Chief Executive Officer, 2BPartners, LLC Timothy R. Furey Chief Executive Officer, Integrated Smart Solutions President and Chief Executive Officer, Skyworks Solutions, Inc. Liam K. Griffin Christine King Lead Independent Director, Skyworks Solutions, Inc. Retired Executive Chairman, QLogic Corporation David P. McGlade Chairman of the Board, Intelsat S.A. Robert A. Schriesheim Chairman, Truax Partners LLC Kimberly S. Stevenson American Stock Transfer & Trust Company 6201 15th Avenue Brooklyn, NY 11219 (800) 937-5449 (United States and Canada) (718) 921-8124 (outside United States) www.astfinancial.com Our transfer agent can help you with a variety of stockholder- related services including change of address, lost stock certificates, stock transfers, account status and other administrative matters. Investor Relations You can contact Skyworks’ Investor Relations team directly to order an Investor’s Kit or to ask investment-oriented questions Skyworks Solutions, Inc. 5260 California Avenue Irvine, CA 92617 (949) 231-3433 investor.relations@skyworksinc.com You can also view this annual report along with other financial- related information and other public filings with the U.S. Securities and Exchange Commission at: www.skyworksinc.com. Independent Registered Public Accountants KPMG LLP Executive Offices Skyworks Solutions, Inc. 5260 California Avenue Irvine, CA 92617 (949) 231-3000 Common Stock Skyworks common stock is traded on the Nasdaq Global Select Market® under the symbol SWKS. Annual Meeting Senior Vice President and General Manager, NetApp, Inc. The annual meeting of stockholders will be held virtually on May 12, 2021, at www.virtualshareholdermeeting.com/SWKS2021 Dear Stockholders, The events of the past year were truly unprecedented for all of us. The COVID-19 pandemic has underscored the importance of our critical mission of Connecting Everyone and Everything, All the Time. The work, learn, shop and play from anywhere trends, accelerated by the health crisis, are fueling demand for the speed, capacity, reliability and security that our technologies uniquely provide. Though still in its early stages, the 5G transition is well underway, and Skyworks (cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:192)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) strategic investments we have made over the past two decades. Addressing Global Challenges Through Connectivity In the face of the pandemic, we have worked to protect the health and safety of our employees, implementing preventative measures at our facilities worldwide, including increased reliance on technology-enabled collaboration. Like Skyworks, individuals, families, businesses, schools and governments across the globe have adapted by embracing digital connectivity. As many essential daily interactions have moved online—including remote work, virtual education and touchless commerce—Skyworks’ technologies remain (cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:73)(cid:85)(cid:82)(cid:81)(cid:87)(cid:15)(cid:3)(cid:73)(cid:88)(cid:79)(cid:192)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:91)(cid:87)(cid:85)(cid:68)(cid:82)(cid:85)(cid:71)(cid:76)(cid:81)(cid:68)(cid:85)(cid:92)(cid:3) need for greater speed and bandwidth, ensuring seamless, reliable, safe and secure wireless connections. While we eagerly await a return to environments with more in-person (cid:72)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:89)(cid:76)(cid:85)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:88)(cid:81)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) infrastructures are here to stay. As an (cid:72)(cid:91)(cid:68)(cid:80)(cid:83)(cid:79)(cid:72)(cid:15)(cid:3)(cid:83)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:75)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:70)(cid:68)(cid:85)(cid:72)(cid:179)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3) telemedicine and continuous monitoring via “For years, Skyworks has been preparing for this massive rise in device complexity, investing in factories, human capital and innovative technologies that position us uniquely for the outsized opportunities ahead.” 48025_SKY-0321 AR 2020 6pg Color Section.indd 1 3/24/21 6:51 PM smart devices—will increasingly complement, and in some cases replace, the traditional once- (cid:68)(cid:16)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:76)(cid:81)(cid:16)(cid:82)(cid:3516)(cid:70)(cid:72)(cid:3)(cid:80)(cid:72)(cid:71)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:70)(cid:75)(cid:72)(cid:70)(cid:78)(cid:88)(cid:83)(cid:17) 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(cid:75)(cid:88)(cid:80)(cid:68)(cid:81)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:81)(cid:73)(cid:85)(cid:82)(cid:81)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:85)(cid:76)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:82)(cid:80)(cid:82)(cid:85)(cid:85)(cid:82)(cid:90)(cid:17)(cid:3) Fiscal 2020 Financial Highlights (cid:40)(cid:81)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:87)(cid:85)(cid:68)(cid:71)(cid:72)(cid:3)(cid:75)(cid:72)(cid:68)(cid:71)(cid:90)(cid:76)(cid:81)(cid:71)(cid:86)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3) 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(cid:89)(cid:76)(cid:74)(cid:76)(cid:79)(cid:68)(cid:81)(cid:87)(cid:3)(cid:73)(cid:82)(cid:70)(cid:88)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:72)(cid:91)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3)(cid:192)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) (cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:81)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:7)(cid:20)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:81)(cid:82)(cid:3)(cid:71)(cid:72)(cid:69)(cid:87)(cid:17) (cid:48)(cid:82)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:3)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:72)(cid:71)(cid:3) (cid:87)(cid:82)(cid:3)(cid:72)(cid:3516)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:3)(cid:74)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:92)(cid:3) (cid:70)(cid:75)(cid:68)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:87)(cid:85)(cid:68)(cid:76)(cid:81)(cid:87)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:82)(cid:90)(cid:81)(cid:3) (cid:80)(cid:68)(cid:81)(cid:88)(cid:73)(cid:68)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:76)(cid:87)(cid:72)(cid:86)(cid:179)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:16)(cid:75)(cid:82)(cid:88)(cid:86)(cid:72)(cid:3) (cid:73)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:83)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:68)(cid:80)(cid:83)(cid:79)(cid:76)(cid:192)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:3) Fiscal 2020 Business Highlights $3.4 billion total revenue $6.13 total non-GAAP EPS* >117% FCF* returned to stockholders ~3,950 patents >3,200 customers ~2,000 unique products shipped ~10,000 employees 15 countries in which Skyworks has employees 6-year average employee tenure 11-year average executive tenure (cid:39)(cid:53)(cid:38)(cid:3)(cid:70)(cid:82)(cid:81)(cid:193)(cid:76)(cid:70)(cid:87)(cid:16)(cid:73)(cid:85)(cid:72)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3) (cid:192)(cid:73)(cid:87)(cid:75)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85) * Please see table on page 79 for a full reconciliation of non-GAAP results to GAAP results. 48025_SKY-0321 AR 2020 6pg Color Section.indd 2 3/25/21 3:04 PM Total Stockholder Return vs. S&P 500 679% (cid:54)(cid:78)(cid:92)(cid:90)(cid:82)(cid:85)(cid:78)(cid:86)(cid:3)(cid:54)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:3) (cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:11)(cid:54)(cid:58)(cid:46)(cid:54)(cid:12) (cid:54)(cid:9)(cid:51)(cid:3)(cid:24)(cid:19)(cid:19) 260% 93% 52% 41% 15% 1 Year (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:12) 3 Year (cid:11)(cid:41)(cid:60)(cid:20)(cid:27)(cid:16)(cid:41)(cid:60)(cid:21)(cid:19)(cid:12) 10 Year (cid:11)(cid:41)(cid:60)(cid:20)(cid:20)(cid:16)(cid:41)(cid:60)(cid:21)(cid:19)(cid:12) (cid:55)(cid:38)(cid:16)(cid:54)(cid:36)(cid:58)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:37)(cid:36)(cid:58)(cid:3)(cid:192)(cid:79)(cid:87)(cid:72)(cid:85)(cid:86)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:16) (cid:70)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:80)(cid:69)(cid:79)(cid:92)(cid:15)(cid:3)(cid:87)(cid:72)(cid:86)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:68)(cid:70)(cid:78)(cid:68)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:179)(cid:68)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:192)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:68)(cid:71)(cid:89)(cid:68)(cid:81)(cid:87)(cid:68)(cid:74)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:54)(cid:78)(cid:92)(cid:90)(cid:82)(cid:85)(cid:78)(cid:86)(cid:17) Complexity Driving Opportunity (cid:55)(cid:75)(cid:72)(cid:3)(cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:69)(cid:68)(cid:85)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:81)(cid:72)(cid:89)(cid:72)(cid:85)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:75)(cid:76)(cid:74)(cid:75)(cid:72)(cid:85)(cid:17)(cid:3)(cid:55)(cid:82)(cid:71)(cid:68)(cid:92)(cid:183)(cid:86)(cid:3) (cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:72)(cid:91)(cid:70)(cid:76)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:86)(cid:68)(cid:74)(cid:72)(cid:3)(cid:70)(cid:68)(cid:86)(cid:72)(cid:86)(cid:179)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:81)(cid:72)(cid:90)(cid:79)(cid:92)(cid:3)(cid:88)(cid:81)(cid:90)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3) (cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:3)(cid:36)(cid:53)(cid:18)(cid:57)(cid:53)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:85)(cid:68)(cid:81)(cid:71)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3) (cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:86)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:3)(cid:68)(cid:88)(cid:87)(cid:82)(cid:81)(cid:82)(cid:80)(cid:82)(cid:88)(cid:86)(cid:3)(cid:70)(cid:68)(cid:85)(cid:86)(cid:179)(cid:85)(cid:72)(cid:79)(cid:92)(cid:3)(cid:82)(cid:81)(cid:3)(cid:85)(cid:68)(cid:71)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3) increases(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:83)(cid:72)(cid:72)(cid:71)(cid:15)(cid:3)(cid:85)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:86)(cid:76)(cid:80)(cid:88)(cid:79)(cid:87)(cid:68)(cid:81)(cid:72)(cid:82)(cid:88)(cid:86)(cid:3)decreases(cid:3)(cid:76)(cid:81)(cid:3)(cid:83)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3) 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(cid:72)(cid:89)(cid:72)(cid:85)(cid:16)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:69)(cid:85)(cid:82)(cid:68)(cid:71)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3)(cid:79)(cid:68)(cid:81)(cid:71)(cid:86)(cid:70)(cid:68)(cid:83)(cid:72)(cid:17)(cid:3) 48025_SKY-0321 AR 2020 6pg Color Section.indd 3 3/24/21 6:52 PM 5G: A Transition in its Infancy The adoption of 5G has catalyzed the emergence of new applications and use cases. This vital technology now forms the backbone of a revolution in communication networks, entire industries and the future of innovation. In fact, 5G subscriptions are projected to grow from 200 million to (cid:22)(cid:17)(cid:24)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:72)(cid:91)(cid:87)(cid:3)(cid:192)(cid:89)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:15)(cid:3)(cid:85)(cid:72)(cid:193)(cid:72)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:71)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:87)(cid:90)(cid:76)(cid:70)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:68)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:23)(cid:42)(cid:183)(cid:86)(cid:3) successful deployment. Capitalizing on our decades-long experience, operational scale and coveted customer relationships, Skyworks is uniquely positioned to lead the multi-year secular 5G opportunity, enabling the future of ubiquitous high-speed, wireless connectivity. The Path Ahead As we look to a bright future, we remain focused on commanding and maintaining leadership in key technologies supporting new and existing customers across a rapidly expanding set of end markets, from mobile to IoT, cognitive audio, automotive and wireless infrastructure. Powered by the strength of our balance sheet and our cash generation capabilities, we are funding the (cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:71)(cid:85)(cid:76)(cid:89)(cid:72)(cid:3)(cid:86)(cid:88)(cid:86)(cid:87)(cid:68)(cid:76)(cid:81)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:179)(cid:71)(cid:76)(cid:3515)(cid:72)(cid:85)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:54)(cid:78)(cid:92)(cid:90)(cid:82)(cid:85)(cid:78)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:82)(cid:85)(cid:3) and a consistent provider of cash returns to our stockholders. The successes of the past year would not have been possible without the dedication and tenacity (cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:87)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:82)(cid:85)(cid:78)(cid:73)(cid:82)(cid:85)(cid:70)(cid:72)(cid:15)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:83)(cid:88)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:72)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:3)(cid:81)(cid:72)(cid:89)(cid:72)(cid:85)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:17)(cid:3)(cid:44)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:73)(cid:88)(cid:79)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:192)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:87)(cid:72)(cid:68)(cid:80)(cid:183)(cid:86)(cid:3)(cid:71)(cid:72)(cid:80)(cid:82)(cid:81)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:85)(cid:72)(cid:86)(cid:76)(cid:79)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:74)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:83)(cid:85)(cid:82)(cid:83)(cid:72)(cid:79)(cid:3)(cid:54)(cid:78)(cid:92)(cid:90)(cid:82)(cid:85)(cid:78)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:89)(cid:72)(cid:81)(cid:3)(cid:75)(cid:76)(cid:74)(cid:75)(cid:72)(cid:85)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:79)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3) outperformance in the years to come. We appreciate your trust and look forward to sharing this journey with you. (cid:47)(cid:76)(cid:68)(cid:80)(cid:3)(cid:46)(cid:17)(cid:3)(cid:42)(cid:85)(cid:76)(cid:3528)(cid:81) (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:2814)(cid:70)(cid:72)(cid:85) 48025_SKY-0321 AR 2020 6pg Color Section.indd 4 3/24/21 6:52 PM Executive Management Team Liam K. Griffin President, Chief Executive Officer and Director Carlos S. Bori Senior Vice President, Sales and Marketing Kari A. Durham Senior Vice President, Human Resources Reza Kasnavi Senior Vice President, Technology and Manufacturing Joel R. King Senior Vice President and General Manager, Mobile Solutions Kris Sennesael Senior Vice President and Chief Financial Officer David Stasey Vice President and General Manager, Diversified Analog Solutions Robert J. Terry Senior Vice President, General Counsel and Secretary 48025_SKY-0321 AR 2020 6pg Color Section.indd 5 3/24/21 6:52 PM 48025_SKY-0321 AR 2020 6pg Color Section.indd 6 3/24/21 6:52 PM 12MAR202122383233 NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS 3MAR202115122153 9MAR202108412301 Date and Time May 12, 2021 11:00 a.m. PDT 7MAR202120475286 Location www.virtualshareholdermeeting.com/ SWKS2021 12MAR202122382367 Record Date March 18, 2021 Items of Business 1. To elect eight individuals nominated to serve as directors of the Company with terms expiring at the 2022 Annual Meeting of Stockholders and named in the Proxy Statement; 2. To ratify the selection by the Company’s Audit Committee of KPMG LLP as the independent registered public accounting firm for the Company for fiscal year 2021; 3. To approve, on an advisory basis, the compensation of the Company’s named executive officers; 4. To approve the Company’s Amended and Restated 2015 Long-Term Incentive Plan; 5. To consider one stockholder proposal, if properly presented at the Annual Meeting; and 6. To transact such other business as may properly come before the Annual Meeting. Your Vote is Important. To ensure your representation at the Annual Meeting, please submit your proxy or voting instructions as soon as possible by using any of the following methods, as described in greater detail on your proxy card or voter instruction form. 9MAR202112432073 Internet 9MAR202112424700 Phone 9MAR202112434752 Mail The accompanying Proxy Statement includes further information about how to attend the Annual Meeting online, vote your shares online during the Annual Meeting, and submit questions online during the Annual Meeting. A complete list of registered stockholders will be available for examination during the Annual Meeting at www.virtualshareholdermeeting.com/SWKS2021 . By Order of the Board of Directors, 9MAR202120563114 Robert J. Terry Senior Vice President, General Counsel and Secretary Irvine, California (cid:127) March 26, 2021 3MAR202115122153 PROXY STATEMENT 2021 PROXY STATEMENT 2021 Table of Contents Proxy Statement Summary . . . . . . . . . . . . . General Information . . . . . . . . . . . . . . . . . Proposal 1: Election of Directors . . . . . . . . Nominees for Election . . . . . . . . . . . . . . . . . . Corporate Governance . . . . . . . . . . . . . . . . . . Committees of the Board of Directors . . . . . . . Role of the Board of Directors in Risk Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . Certain Relationships and Related Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . Proposal 2: Ratification of Independent Registered Public Accounting Firm . . . . . . Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . Report of the Audit Committee . . . . . . . . . Proposal 3: Advisory Vote on the Compensation of Our Named Executive Officers (‘‘Say-on-Pay’’ Vote) . . . . . . . . . . . Information About Executive and Director Compensation . . . . . . . . . . . . . . . Summary and Highlights . . . . . . . . . . . . . . . . 1 2 8 10 14 18 22 23 23 24 25 26 27 28 28 Compensation Discussion and Analysis . . . 31 Compensation Tables for Named Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . Director Compensation . . . . . . . . . . . . . . Compensation Committee Report . . . . . . . Proposal 4: Approval of the Company’s Amended and Restated 2015 Long-Term Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . Description of the Amended and Restated Plan Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . Equity Compensation Plan Information . . . . . . 44 56 58 59 63 71 72 Proposal 5: Stockholder Proposal Regarding Simple Majority Voting . . . . . . . 73 Statement by the Board of Directors on the Stockholder Proposal . . . . . . . . . . . . . . . . . . . Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . Other Proposed Action . . . . . . . . . . . . . . . Other Matters . . . . . . . . . . . . . . . . . . . . . . . Appendix A: Unaudited Reconciliations of . . . . . . . . . Non-GAAP Financial Measures Discussion Regarding the Use of Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . 74 75 77 77 79 80 3MAR202115122153 PROXY STATEMENT SUMMARY This summary highlights information generally contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider in advance of the 2021 Annual Meeting of Stockholders, and we encourage you to read the entire Proxy Statement before voting your shares. 2021 Annual Meeting of Stockholders 9MAR202108412301 Date and Time May 12, 2021 11:00 a.m. PDT 7MAR202120475286 Location www.virtualshareholdermeeting.com/ SWKS2021 12MAR202122382367 Record Date March 18, 2021 Matters to be Voted Upon Your vote is very important to us. Please cast your vote on all of the proposals to ensure that your shares are represented. Proposal Required Vote for Approval Board Recommendation See Page Election of Directors Ratification of Appointment of KPMG LLP For each director, majority of votes cast FOR Each Nominee 7MAR202120475595 Majority of votes present and entitled to vote Advisory Vote to Approve Compensation of Named Executive Officers Majority of votes present and entitled to vote Approve Amended and Restated 2015 Long- Term Incentive Plan Majority of votes present and entitled to vote One stockholder proposal, if properly presented at the Annual Meeting Majority of votes present and entitled to vote Neutral 7MAR202120475951 FOR 7MAR202120475595 FOR 7MAR202120475595 FOR 7MAR202120475595 8 24 27 59 73 1. 2. 3. 4. 5. 1 Proxy Statement Page 1 GENERAL INFORMATION Q. How do we refer to Skyworks in this Proxy Statement? The terms ‘‘Skyworks,’’ ‘‘the Company,’’ ‘‘we,’’ ‘‘us,’’ and ‘‘our’’ refer to Skyworks Solutions, Inc., a Delaware corporation, and its consolidated subsidiaries. Q. When and where is our Annual Meeting? . The Annual Meeting will be held on Wednesday, May 12, 2021, at 11:00 a.m. Pacific Daylight Time. The Annual Meeting will be held in a virtual format. You will be able to attend and participate in the Annual Meeting online by visiting www.virtualshareholdermeeting.com/SWKS2021 We believe that hosting a virtual meeting will facilitate stockholder attendance and participation at our Annual Meeting by enabling stockholders to participate remotely from any location around the world. We have designed the virtual Annual Meeting to provide the same rights and opportunities to participate as stockholders would have at an in-person meeting, including the right to vote and ask questions through the virtual meeting platform. Q. What is the purpose of the Annual Meeting? At the Annual Meeting, stockholders will consider and vote on the following matters: (cid:127) Proposal 1: The election of the eight nominees named in this Proxy Statement to our Board of Directors to serve until the 2022 Annual Meeting of Stockholders. (cid:127) Proposal 2: The ratification of the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending October 1, 2021 (‘‘fiscal year 2021’’). (cid:127) Proposal 3: The approval, on a non-binding basis, of the compensation of our Named Executive Officers, as described below under Page 2 Proxy Statement 2 ‘‘Compensation Discussion and Analysis,’’ and in the executive compensation tables and accompanying narrative disclosures in this Proxy Statement. (cid:127) Proposal 4: The approval of the Company’s Amended and Restated 2015 Long-Term Incentive Plan. (cid:127) Proposal 5: A non-binding stockholder proposal regarding supermajority voting provisions, if properly presented at the Annual Meeting. The stockholders will also act on any other business that may properly come before the meeting. Q. What is included in our proxy materials? The Company’s Annual Report, which includes financial statements and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operation’’ for the fiscal year ended October 2, 2020 (‘‘fiscal year 2020’’), accompanies this Proxy Statement. This Proxy Statement and form of proxy, and/or notice of access thereto, are being first mailed to stockholders on or about March 26, 2021. The Proxy Statement and the Company’s Annual Report are available at www.skyworksinc.com/annualreport . Q. Who can vote at our Annual Meeting? Only stockholders of record at the close of business on March 18, 2021 (the ‘‘Record Date’’), are entitled to notice of and to vote at the Annual Meeting. As of the Record Date, there were 165,088,091 shares of Skyworks’ common stock issued and outstanding. Pursuant to Skyworks’ Restated Certificate of Incorporation and By-laws, and applicable Delaware law, each share of common stock entitles the holder of record at the close of business on the Record Date to one vote on each matter considered at the Annual Meeting. Q. Is my vote important? Yes. Your vote is important no matter how many shares you own. Please take the time to vote in the way that is easiest and most convenient for you, and cast your vote as soon as possible. regarding how to instruct your broker (or other nominee) as to the voting of your ‘‘street name’’ shares. Q. How do I vote if I am a participant in the Skyworks 401(k) Savings and Investment Plan? Q. How do I vote if I am a stockholder of record? As a stockholder of record, you may vote in one of the following three ways whether or not you plan to attend the Annual Meeting online: (a) by completing and submitting your proxy via the Internet at the website address listed on the proxy card, (b) by completing and submitting your proxy using the toll-free telephone number listed on the proxy card, or (c) by completing, signing, and dating the proxy card and returning it in the postage-prepaid envelope provided for that purpose. If you attend the Annual Meeting online, you may vote online at the Annual Meeting even if you have previously submitted your proxy by mail or telephone, or via the Internet (and your vote at the Annual Meeting will automatically revoke your previously submitted proxy, although mere virtual attendance at the meeting without voting will not have that result). Q. How do I vote if I am a beneficial owner of shares held in ‘‘street name’’? If your shares are held on your behalf by a third party such as your broker or another person or entity who holds shares of the Company on your behalf and for your benefit, which person or entity we refer to as a ‘‘nominee,’’ and your broker (or other nominee) is the stockholder of record of such shares, then you are the beneficial owner of such shares and we refer to those shares as being held in ‘‘street name.’’ As the beneficial owner of your ‘‘street name’’ shares, you are entitled to instruct your broker (or other nominee) as to how to vote your shares. Your broker (or other nominee) will provide you with information If you are a participant in the Skyworks 401(k) Savings and Investment Plan (the ‘‘401(k) Plan’’), you will receive an instruction card for the Skyworks shares you own through the 401(k) Plan. That instruction card will serve as a voting instruction card for the trustee of the 401(k) Plan, and your 401(k) Plan shares will be voted as you instruct. Q. Can I change my vote after I have voted? Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted at the Annual Meeting. Proxies may be revoked by (a) delivering to the Secretary of the Company, before the taking of the vote at the Annual Meeting, a written notice of revocation bearing a later date than the proxy, (b) duly completing a later-dated proxy relating to the same shares and delivering it to the Secretary of the Company before the taking of the vote at the Annual Meeting, or (c) attending the Annual Meeting online and voting (although virtual attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy). Any written notice of revocation or subsequent proxy should be delivered to the Company’s executive offices at Skyworks Solutions, Inc., 5260 California Avenue, Irvine, CA 92617, Attention: Secretary, before the taking of the vote at the Annual Meeting. If you vote your shares over the Internet prior to the Annual Meeting, only your latest Internet vote submitted prior to the Annual Meeting will be counted at the Annual Meeting. Q. How do I virtually attend the Annual Meeting? You are invited to attend the Annual Meeting online by visiting www.virtualshareholdermeeting.com/SWKS2021 , 3 Proxy Statement Page 3 where you will be able to listen to the meeting live, submit questions, and vote. The meeting will begin at 11:00 a.m. Pacific Daylight Time. In order to participate in the meeting, you will need the multi-digit number included in your proxy card, voter instruction form, or notice. Instructions on how to attend and participate online, including how to demonstrate proof of stock ownership, will be posted at www.virtualshareholdermeeting.com/ SWKS2021. Online check-in will begin at 10:45 a.m. Pacific Daylight Time on May 12, 2021, and you should allow ample time for the online check-in proceedings. We will have technicians standing by and ready to assist you with any technical difficulties you may have accessing the virtual meeting starting at 10:45 a.m. Pacific Daylight Time on May 12, 2021. If you encounter any difficulties accessing the virtual meeting during the check-in time or meeting time, please call the phone number that will be listed at that time at www.virtualshareholdermeeting.com/SWKS2021. Q. If I vote by proxy, how will my vote be cast? The persons named as attorneys-in-fact in this Proxy Statement, Liam K. Griffin and Robert J. Terry, were selected by the Board of Directors and are officers of the Company. As attorneys-in-fact, Messrs. Griffin and Terry will vote any shares represented at the meeting by proxy. Each executed proxy card returned by a stockholder of record or proxy vote recorded via telephone or the Internet by a stockholder of record in the manner provided on the proxy card prior to the taking of the vote at the Annual Meeting will be voted. Where a choice has been specified in an executed proxy with respect to the matters to be acted upon at the Annual Meeting, the shares represented by the proxy will be voted in accordance with the choices specified. Q. How will my shares be voted if I do not give specific voting instructions when I deliver my proxy? If you are a stockholder of record and deliver a proxy but do not give specific voting instructions, then the proxy holders will vote your shares as recommended by the Board of Directors. If your shares are held in ‘‘street name,’’ your broker (or other nominee) is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker (or other nominee), your broker (or other nominee) will only be entitled to vote your shares with respect to ‘‘discretionary’’ matters, as described below, but will not be permitted to vote the shares with respect to ‘‘non-discretionary’’ matters. If you beneficially own shares that are held in ‘‘street name’’ by your broker (or other nominee), we strongly encourage you to provide instructions to your broker (or other nominee) as to how to vote on the election of directors and all of the Proposals by signing, dating, and returning to your broker (or other nominee) the instruction card provided by your broker (or other nominee). If you are a participant in the 401(k) Plan, the trustee of the 401(k) Plan will not vote your 401(k) Plan shares if the trustee does not receive voting instructions from you by 11:59 p.m. Eastern Daylight Time on May 7, 2021, unless otherwise required by law. Page 4 Proxy Statement 4 Q. What is a ‘‘broker non-vote’’? A ‘‘broker non-vote’’ occurs when your broker (or other nominee) submits a proxy for your shares (because the broker (or other nominee) has either received instructions from you on one or more proposals, but not all, or has not received instructions from you but is entitled to vote on a particular ‘‘discretionary’’ matter) but does not indicate a vote ‘‘FOR’’ a particular proposal because the broker (or other nominee) either does not have authority to vote on that proposal and has not received voting instructions from you or has ‘‘discretionary’’ authority on the proposal but chooses not to exercise it. ‘‘Broker non-votes’’ are not counted to determine the number of votes present for the particular proposal, nor are they counted as votes ‘‘FOR’’ or ‘‘AGAINST’’ the proposal in question or as abstentions. We count ‘‘broker non-votes’’ for the purpose of determining a quorum for the Annual Meeting. If your shares are held in ‘‘street name’’ by your broker (or other nominee), please check the instruction card provided by your broker (or other nominee) or contact your broker (or other nominee) to determine whether you will be able to vote by telephone or via the Internet. Q. What vote is required for each matter? Election of Directors. Pursuant to the Company’s By-laws, a nominee will be elected to the Board of Directors if the votes cast ‘‘FOR’’ the nominee’s election at the Annual Meeting exceed the votes cast ‘‘AGAINST’’ the nominee’s election (as long as the only director nominees are those individuals set forth in this Proxy Statement). Abstentions and ‘‘broker non-votes’’ will not count as votes ‘‘FOR’’ or ‘‘AGAINST.’’ If the shares you own are held in ‘‘street name,’’ your broker (or other nominee), as the record holder of your shares, is required to vote your shares according to your instructions. Proposal 1 is not considered to be a ‘‘discretionary’’ matter for certain brokers. If you do not instruct your broker how to vote with respect to this item, your broker may not vote your shares with respect to the election of directors. In such case, a ‘‘broker non-vote’’ may occur, which will have no effect on the outcome of Proposal 1. Ratification of Independent Registered Public Accounting Firm. The affirmative vote of a majority of the shares present, or represented by proxy, at the Annual Meeting, and entitled to vote on such matter at the Annual Meeting, is required to approve Proposal 2. Proposal 2 involves a matter on which a broker (or other nominee) does have ‘‘discretionary’’ authority to vote. If you do not instruct your broker how to vote with respect to this item, your broker may still vote your shares with respect to this proposal in its discretion. With respect to Proposal 2, a vote of ‘‘ABSTAIN’’ will have the same effect as a vote of ‘‘AGAINST.’’ Say-on-Pay Vote; Approval of Amended and Restated 2015 Long-Term Incentive Plan; Stockholder Proposal. The affirmative vote of a majority of the shares present online, or represented by proxy at the Annual Meeting, and entitled to vote on such matter at the Annual Meeting, is required to approve Proposals 3, 4, and 5. Proposals 3, 4, and 5 are not considered to be ‘‘discretionary’’ matters for certain brokers. If you do not instruct your broker how to vote with respect to these items, your broker may not vote your shares with respect to these proposals. In such case, a ‘‘broker non-vote’’ may occur, which will have no effect on the outcome of Proposals 3, 4, and 5. Votes that are marked ‘‘ABSTAIN’’ are counted as present and entitled to vote with respect to Proposals 3, 4, and 5 and will have the same impact as a vote that is marked ‘‘AGAINST’’ for purposes of Proposals 3, 4, and 5. 5 Proxy Statement Page 5 Q. How does the Board of Directors Q. Will my vote be kept confidential? recommend that I vote? The Board of Directors recommends that you vote: FOR the election of each of the eight director nominees (Proposal 1). FOR the ratification of the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2021 (Proposal 2). FOR the approval, on a non-binding basis, of the compensation of our Named Executive Officers, as described below under ‘‘Compensation Discussion and Analysis,’’ and in the executive compensation tables and accompanying narrative disclosures (Proposal 3). FOR the approval of the Company’s Amended and Restated 2015 Long-Term Incentive Plan (Proposal 4). The Board of Directors makes no recommendation regarding how you vote on the approval, on a non-binding basis, of a stockholder proposal regarding supermajority voting provisions (Proposal 5). Q. How will the votes cast at our Annual Meeting be counted? Broadridge Financial Solutions, Inc., and our independent inspector of elections will tabulate the votes at the Annual Meeting. The vote on each matter submitted to stockholders will be tabulated separately. Q. Where can I find the voting results of our Annual Meeting? We expect to announce the preliminary voting results at our Annual Meeting. The final voting results will be reported in a Current Report on Form 8-K that will be filed with the Securities and Exchange Commission (the ‘‘SEC’’) within four business days after the end of our Annual Meeting and will be posted on our website. Yes. We will keep your vote confidential unless (1) we are required by law to disclose your vote (including in connection with the pursuit or defense of a legal or administrative action or proceeding), or (2) there is a contested election for the Board of Directors. The inspector of elections will forward any written comments that you make on the proxy card to management without providing your name, unless you expressly request on your proxy card that your name be disclosed. Q. What is the quorum requirement for our Annual Meeting? The holders of a majority of the issued and outstanding stock of the Company present either in person or by proxy at the Annual Meeting constitute a quorum for the transaction of business at the Annual Meeting. Shares present virtually during the Annual Meeting will be considered shares of common stock represented in person at the meeting. Shares that abstain from voting on any proposal and ‘‘broker non-votes’’ will be counted as shares that are present for purposes of determining whether a quorum exists at the Annual Meeting. If a ‘‘broker non-vote’’ occurs with respect to any shares of the Company’s common stock on any matter, then those shares will be treated as not present and not entitled to vote with respect to that matter (even though those shares are considered entitled to vote for purposes of determining whether a quorum exists because they are entitled to vote on other matters) and will not be voted. Q. How do I submit a question at the Annual Meeting? If you wish to submit a question, beginning at 10:45 a.m. Pacific Daylight Time on May 12, 2021, you may log into the virtual meeting platform at www.virtualshareholdermeeting.com/SWKS2021 , type your question into the ‘‘Submit a Question’’ field, and click ‘‘Submit.’’ Our virtual meeting will Page 6 Proxy Statement 6 be governed by our Annual Meeting Rules of Conduct which will include rules on permissible topics for stockholder questions and will be posted at . www.virtualshareholdermeeting.com/SWKS2021 Questions received from stockholders during the virtual Annual Meeting that are deemed appropriate under our Annual Meeting Rules of Conduct will be posted, along with the Company’s responses, on the Investor Relations portion of the Company’s website at soon as practicable following the Annual Meeting. www.skyworksinc.com as Q. When will Skyworks next hold an advisory vote on the frequency of ‘‘say-on-pay’’ votes? Skyworks currently conducts an annual ‘‘say-on-pay’’ vote. The next advisory vote on the frequency of ‘‘say-on-pay’’ votes is expected to be held at our 2023 Annual Meeting of Stockholders. Q. What is ‘‘householding’’? Some brokers (or other nominees) may be participating in the practice of ‘‘householding’’ proxy statements and annual reports. This means that only one copy of this Proxy Statement and our Annual Report may have been sent to multiple stockholders in your household. If you are a stockholder and your household or address has received only one Annual Report and one Proxy Statement, the Company will promptly deliver a separate copy of the Annual Report and the Proxy Statement to you, upon your written request to Skyworks Solutions, Inc., 5260 California Avenue, Irvine, CA 92617, Attention: Investor Relations, or oral request to Investor Relations at (949) 231-3433. If you would like to receive separate copies of our Annual Report and Proxy Statement in the future, you should direct such request to your broker (or other nominee). Even if your household or address has received only one Annual Report and one Proxy Statement, a separate proxy card should have been provided for each stockholder account. Each individual proxy card should be signed, dated, and returned in the postage-prepaid envelope (or completed and submitted by telephone or via the Internet, as described on the proxy card). If your household has received multiple copies of our Annual Report and Proxy Statement, you can request the delivery of single copies in the future by contacting your broker (or other nominee), or the Company at the address or telephone number above. 7 Proxy Statement Page 7 PROPOSAL 1: ELECTION OF DIRECTORS Under this Proposal 1, you are being asked to consider eight nominees for election to our Board of Directors to serve until the 2022 Annual Meeting of Stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Each nominee for election has agreed to serve if elected, and the Board of Directors knows of no reason why any nominee should be unable or unwilling to serve. If a nominee is unable or unwilling to serve, the attorneys-in-fact named in this Proxy Statement will vote any shares represented at the meeting by proxy for the election of another individual nominated by the Board of Directors, if any. No nominee or executive officer is related by blood, marriage, or adoption to any other director, nominee, or executive officer. No arrangements or understandings exist between any director or person nominated for election as a director and any other Name Alan S. Batey Kevin L. Beebe Timothy R. Furey Liam K. Griffin Christine King David P. McGlade Robert A. Schriesheim Kimberly S. Stevenson Number of Meetings Director Since 2019 2004 1998 2016 2014 2005 2006 2018 person pursuant to which such person is to be selected as a director or nominee for election as a director. David J. Aldrich, age 64, the current Chairman of the Board, has served as a director since 2000 and is not a director nominee up for reelection at the Annual Meeting. As a result, the number of directors constituting the Board of Directors will be reduced from nine (9) to eight (8) effective upon the election of directors at the Annual Meeting. Proxies cannot be voted for a greater number of individuals than the number of nominees named in this Proxy Statement. The following table lists the eight nominees for election as directors, the year such nominees were first elected as directors of the Company, and their Board committee memberships as of March 18, 2021. The table also lists the number of meetings held by each committee during fiscal year 2020. Committee Memberships Independent ● AC CC NCGC ● ● ● ● ● ● ● ● ● C ● 7 C ● ● 5 C ● ● 3 ‘‘AC’’ indicates Audit Committee, ‘‘CC’’ indicates Compensation Committee, ‘‘NCGC’’ indicates Nominating and Corporate Governance Committee, and ‘‘C’’ indicates Committee Chair Page 8 Proxy Statement 8 Immediately below this proposal is biographical information about each of the director nominees, including information regarding each nominee’s business experience for the past five years, and the names of other public companies for which each nominee has served as a director during the past five years. In addition to the information presented below regarding each nominee’s specific experience, qualifications, attributes, and skills that led our Nominating and Corporate Governance Committee and our Board of Directors to conclude that he or she should serve as a director, we also believe that each of our directors has a reputation for integrity, honesty, and adherence to high ethical standards. They have each demonstrated business acumen, an ability to exercise sound judgment, knowledge of our business and industry, and the willingness to devote the time needed to be an effective director. Majority Vote Standard for Election of Directors A nominee for election as a director in an uncontested election (an election where the number of nominees for election as directors is equal to or less than the number of directors to be elected) will be elected if the number of votes cast ‘‘FOR’’ such nominee’s election exceeds the number of votes cast ‘‘AGAINST’’ the nominee’s election. In a contested election (in which the number of nominees for election as directors exceeds the number of directors to be elected at such meeting), directors are elected by a plurality of all votes cast in such election. The election of directors , each incumbent www.skyworksinc.com at this Annual Meeting is uncontested. As a result, each nominee for election as a director at the Annual Meeting will only be elected if the votes cast ‘‘FOR’’ such nominee exceed the number of votes cast ‘‘AGAINST’’ such nominee. As required by our corporate governance guidelines, which are available on the Investor Relations portion of the Company’s website at director who is a nominee for election as a director at the Annual Meeting submitted to the Board of Directors an irrevocable resignation that would become effective if the votes cast ‘‘FOR’’ such nominee’s election do not exceed the votes cast ‘‘AGAINST’’ such nominee’s election and our Board of Directors determines to accept his or her resignation. Upon such resignation by a nominee and pursuant to the procedures set forth in the corporate governance guidelines, the Nominating and Corporate Governance Committee will evaluate the best interests of our Company and stockholders and will recommend to our Board of Directors the action to be taken with respect to the resignation. The Board of Directors will then decide whether to accept, reject, or modify the Nominating and Corporate Governance Committee’s recommendation, and the Company will publicly disclose such decision by the Board of Directors with respect to the director nominee. Shares represented by all proxies received by the Board of Directors that are properly completed, but do not specify a choice as to the election of directors, will be voted ‘‘FOR’’ the election of all eight of the nominees. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE EIGHT NOMINEES IN PROPOSAL 1 24MAR202119332572 9 Proxy Statement Page 9 Nominees for Election Christine King, Lead Independent Director Director since: 2014 (cid:127) Age: 71 Ms. King has been Lead Independent Director since 2019. She served as Executive Chairman of QLogic Corporation (a publicly traded developer of high-performance server and storage networking connectivity products) from August 2015 until August 2016, when it was acquired by Cavium, Inc. Previously, she served as Chief Executive Officer of Standard Microsystems Corporation (a publicly traded developer of silicon- based integrated circuits utilizing analog and mixed-signal technologies) from 2008 until the company’s acquisition in 2012 by Microchip Technology, Inc. Prior to Standard Microsystems, Ms. King was Chief Executive Officer of AMI Semiconductor, Inc., a publicly traded company, from 2001 until it was acquired by ON Semiconductor Corp. in 2008. Qualifications: We believe that Ms. King’s qualifications to serve as a director include her extensive management and operational experience in the high-tech and semiconductor industries as well as her significant strategic and financial expertise. Committee(s) (cid:127) Audit (cid:127) Compensation (Chair) Other Public Company Boards Current (cid:127) (cid:127) Allegro MicroSystems, Inc. IDACORP, Inc. Past 5 Years (cid:127) Cirrus Logic, Inc. (until 2018) (cid:127) QLogic Corporation (until 2016) Liam K. Griffin, President and Chief Executive Officer Director since: 2016 (cid:127) Age: 54 Prior to his appointment as Chief Executive Officer and to the Board of Directors in May 2016, Mr. Griffin had served as President of the Company since May 2014. He served as Executive Vice President and Corporate General Manager from November 2012 to May 2014, Executive Vice President and General Manager, High Performance Analog from May 2011 to November 2012, and Senior Vice President, Sales and Marketing from August 2001 to May 2011. Previously, Mr. Griffin was employed by Vectron International, a division of Dover Corp., as Vice President of Worldwide Sales from 1997 to 2001 and as Vice President of North American Sales from 1995 to 1997. Qualifications: We believe that Mr. Griffin’s qualifications to serve as a director include his strong relationships with Skyworks’ key customers, investors, employees, and other stakeholders, as well as a deep understanding of the semiconductor industry and its competitive landscape gained through serving in several different executive positions at Skyworks. Committee(s) (cid:127) None Other Public Company Boards Current (cid:127) National Instruments Corporation Past 5 Years (cid:127) Vicor Corporation (until 2019) Alan S. Batey Mr. Batey served as Executive Vice President and President of North America for General Motors Company (a publicly traded automotive manufacturer), as well as the Global Brand Chief for Chevrolet, a division of General Motors Company, from 2014 until 2019. His career spans more than 39 years with General Motors where he held various senior management positions in operations, marketing, and sales around the world. Qualifications: We believe that Mr. Batey’s qualifications to serve as a director include his extensive senior management experience at General Motors, where he developed expertise on a broad set of complex strategic, operational, and technological matters involving the automotive industry, an industry that is expected to be a growth market for the Company. Director since: 2019 (cid:127) Age: 58 Committee(s) (cid:127) Nominating and Corporate Governance Other Public Company Boards Current (cid:127) None Past 5 Years (cid:127) None Page 10 Proxy Statement 10 Kevin L. Beebe Director since: 2004 (cid:127) Age: 62 Mr. Beebe has been President and Chief Executive Officer of 2BPartners, LLC (a partnership that provides strategic, financial, and operational advice to private equity investors and management) since 2007. In 2014, Mr. Beebe became a founding partner of Astra Capital Management (a private equity firm based in Washington, D.C.). Previously, beginning in 1998, he was Group President of Operations at ALLTEL Corporation (a telecommunications services company). Qualifications: We believe that Mr. Beebe’s qualifications to serve as a director include his two decades of experience as an operating executive in the wireless telecommunications industry as well as his experience and relationships gained from advising leading private equity firms that are transacting business in the global capital markets. Timothy R. Furey Mr. Furey has been Chief Executive Officer of Integrated Smart Solutions (a provider of cloud-based IoT data analytics and energy management services for global commercial real estate investors and property management firms) since 2020. He also serves as Chairman of the Board of MarketBridge (a provider of digital marketing and predictive analytics solutions for enterprise technology, financial services, and consumer media companies). Mr. Furey founded MarketBridge and served as its Chief Executive Officer from 2000 to 2020. He is also Managing Partner of Decision Technology Group (an advisor and investor in data-driven technology startups). Qualifications: We believe that Mr. Furey’s qualifications to serve as a director include his experience as Chief Executive Officer of MarketBridge, as well as his engagements with MarketBridge’s clients (many of which are Fortune 1000 companies), which provide him with a broad range of knowledge regarding business operations and growth strategies. Committee(s) (cid:127) Nominating and Corporate Governance (Chair) Other Public Company Boards Current (cid:127) SBA Communications Corporation (cid:127) Frontier Communications Corporation (cid:127) Altimar Acquisition Corporation (cid:127) Altimar Acquisition Corp. II Past 5 Years (cid:127) NII Holdings, Inc. (until 2019) Director since: 1998 (cid:127) Age: 62 Committee(s) (cid:127) Audit (cid:127) Nominating and Corporate Governance Other Public Company Boards Current (cid:127) None Past 5 Years (cid:127) None David P. McGlade Director since: 2005 (cid:127) Age: 60 Mr. McGlade serves as Chairman of the Board of Intelsat S.A. (a publicly traded worldwide provider of satellite communication services), a position he has held since April 2013. Mr. McGlade served as Executive Chairman of Intelsat from April 2015 to March 2018, prior to which he served as Chairman and Chief Executive Officer. Mr. McGlade joined Intelsat in April 2005 and was the Deputy Chairman of Intelsat from August 2008 until April 2013. Previously, Mr. McGlade served as an Executive Director of mmO2 PLC and as the Chief Executive Officer of O2 UK (a subsidiary of mmO2), a position he held from October 2000 until March 2005. Qualifications: We believe that Mr. McGlade’s qualifications to serve as a director include his significant operational, strategic, and financial acumen, as well as his knowledge about global capital markets, developed over more than three decades of experience in the telecommunications business. Committee(s) (cid:127) Audit (Chair) (cid:127) Compensation Other Public Company Boards Current (cid:127) Intelsat S.A. Past 5 Years (cid:127) None 11 Proxy Statement Page 11 Robert A. Schriesheim Director since: 2006 (cid:127) Age: 60 Mr. Schriesheim currently serves as chairman of Truax Partners LLC (a consulting firm). He served as Executive Vice President and Chief Financial Officer of Sears Holdings Corporation (a publicly traded nationwide retailer) from August 2011 to October 2016. From January 2010 to October 2010, Mr. Schriesheim was Chief Financial Officer of Hewitt Associates, Inc. (a global human resources consulting and outsourcing company that was acquired by Aon Corporation). From October 2006 until December 2009, he was the Executive Vice President and Chief Financial Officer of Lawson Software, Inc. (a publicly traded ERP software provider). Qualifications: We believe that Mr. Schriesheim’s qualifications to serve as a director include his extensive knowledge of the capital markets and corporate financial capital structures, his expertise evaluating and structuring merger and acquisition transactions within the technology sector, and his experience gained through leading companies through major strategic and financial corporate transformations. Committee(s) (cid:127) Audit (cid:127) Compensation Other Public Company Boards Current (cid:127) Frontier Communications Corporation (cid:127) Houlihan Lokey, Inc. Past 5 Years (cid:127) Forest City Realty Trust (until 2018) (cid:127) NII Holdings, Inc. (until 2019) Kimberly S. Stevenson Director since: 2018 (cid:127) Age: 58 In January 2020, Ms. Stevenson became Senior Vice President and General Manager, Foundational Data Services Business Unit, at NetApp, Inc. (a publicly traded provider of cloud data services). From February 2019 to January 2020, she was a venture partner at RIDGE-LANE Limited Partners (a strategic advisory and venture development firm). Previously, Ms. Stevenson served as Senior Vice President and General Manager, Data Center Products and Solutions, at Lenovo Group Ltd. (a publicly traded manufacturer of personal computers, data center equipment, smartphones, and tablets) from May 2017 to October 2018. From September 2009 to February 2017, she served as a Corporate Vice President at Intel Corporation (a publicly traded semiconductor designer and manufacturer), holding various positions including Chief Operating Officer for the Client and Internet of Things Businesses and Systems Architecture Group from September 2016 to February 2017, Chief Information Officer from February 2012 to August 2016, and General Manager, IT Operations and Services, from September 2009 to January 2012. Qualifications: We believe that Ms. Stevenson’s qualifications to serve as a director include her extensive senior management experience in the semiconductor and technology industries and her expertise on best practices within information systems and operational risk management. Committee(s) (cid:127) Nominating and Corporate Governance Other Public Company Boards Current (cid:127) Boston Private Financial Holdings, Inc. (cid:127) Mitek Systems, Inc. Past 5 Years (cid:127) None Page 12 Proxy Statement 12 The table below summarizes the key qualifications and attributes relied upon by the Board of Directors in nominating eight of our current directors for election. Marks indicate specific areas of focus or expertise relied on by the Board of Directors. The lack of a mark in a particular area does not necessarily signify a director’s lack of qualification or experience in such area. 19MAR202122231552 13 Proxy Statement Page 13 Corporate Governance Highlights The Company has a proven track record of sound and effective corporate governance practices and policies, including those highlighted below. Corporate Governance Best Practices Annually Elected Directors All of our directors are elected annually Majority Vote Standard In uncontested elections, directors are elected by a majority of votes cast Lead Independent Director Initially established in 2014, the Lead Independent Director role has a robust set of duties set forth in our corporate governance guidelines Executive Sessions Our independent directors regularly meet in executive sessions without management, with the Lead Independent Director presiding Independent Board Committees All members of the Board’s three standing committees are independent directors Board Refreshment Risk Assessment Annual Board Assessment Executive Succession Plan Our Board has added three new directors in the past six years Our Board and its committees regularly review management’s processes for identifying, assessing, and managing risks The Nominating and Corporate Governance Committee oversees an annual evaluation of the effectiveness of the Board, each committee, and individual directors The Board periodically reviews and approves the executive succession plan in consultation with the Compensation Committee and the Chief Executive Officer No ‘‘Poison Pill’’ The Board has not adopted a ‘‘poison pill’’ Stock Ownership Requirements All directors and executive officers are subject to robust stock ownership requirements Prohibition on Pledging We prohibit our directors and employees from pledging Company securities Special Meeting Right Proxy Access Stockholder Engagement Our stockholders have the right to call a special meeting of the Company’s stockholders Eligible stockholders may nominate their own director nominees to be included in the Company’s proxy materials We regularly conduct outreach to our stockholders to understand their perspectives on governance matters Board of Director Meetings The Board of Directors met six (6) times during fiscal year 2020. During fiscal year 2020, each director attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all committees of the Board of Directors on which he or she served. The Company’s policy with respect to directors’ attendance at the Annual Meeting is included in our corporate governance guidelines, which are available on the Investor Relations portion of the Company’s website at www.skyworksinc.com each director then in office was in attendance. . At the 2020 Annual Meeting, Page 14 Proxy Statement 14 Director Independence Each year, the Board of Directors reviews the relationships that each director has with the Company and with other parties. Only those directors who do not have any of the categorical relationships that preclude them from being independent within the meaning of the applicable Listing Rules of the Nasdaq Stock Market LLC (the ‘‘Nasdaq Rules’’) and who the Board of Directors affirmatively determines have no relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, are considered to be independent directors. The Board of Directors has reviewed a number of factors to evaluate the independence of each of its members. These factors include its members’ current and historic relationships with the Company and its competitors, suppliers, and customers; their relationships with management and other directors; the relationships their current and former employers have with the Company; and the relationships between the Company and other companies of which a member of the Company’s Board of Directors is a director or executive officer. After evaluating these factors, the Board of Directors has determined that a majority of the members of the Board of Directors, namely, Alan S. Batey, Kevin L. Beebe, Timothy R. Furey, Christine King, David P. McGlade, Robert A. Schriesheim, and Kimberly S. Stevenson, do not have any relationships that would interfere with the exercise of independent judgment in carrying out their responsibilities as directors and that each such director is an independent director of the Company within the meaning of applicable Nasdaq Rules. Corporate Governance Guidelines The Board of Directors has adopted corporate governance practices to help fulfill its responsibilities to the stockholders in overseeing the work of management and the Company’s business results. These guidelines are intended to ensure that the Board of Directors has the necessary authority and practices in place to review and evaluate the Company’s business operations, as needed, and to make decisions that are independent of the Company’s management. In addition, the guidelines are intended to align the interests of directors and management with those of the Company’s stockholders. A copy of the Company’s corporate governance guidelines is available on the Investor Relations portion of the Company’s website at . www.skyworksinc.com In accordance with these corporate governance guidelines, independent members of the Board of Directors of the Company met in executive session without management present four (4) times during fiscal year 2020. The Lead Independent Director served as presiding director for these meetings. Code of Ethics We have adopted a written code of business conduct and ethics that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We make available our code of business conduct and ethics free of charge through our website at www.skyworksinc.com amendments to, or waivers from, our code of business conduct and ethics that are required to be publicly disclosed by posting any such amendment or waivers on our website pursuant to SEC requirements and Nasdaq Rules. . We intend to disclose any 15 Proxy Statement Page 15 Executive Officer and Director Stock Ownership Requirements As described in detail below under ‘‘Compensation Discussion and Analysis,’’ we have adopted Executive Officer and Director Stock Ownership programs that require our executive officers (including those Named Executive Officers who are still currently serving as executive officers) and non-employee directors to hold a significant equity interest in Skyworks with the objective of more closely aligning the interests of our executive officers and directors with those of our stockholders. All of our Named Executive Officers and directors have met the stock ownership guidelines as of the date hereof (with the exception of Mr. Batey, who is not required to comply with the guidelines until the fifth anniversary of his appointment to the Board of Directors). Board Leadership Structure Our Board of Directors selects the Company’s Chairman of the Board and Chief Executive Officer in the manner it determines to be in the best interests of the Company at the time. Our current Chairman of the Board, Mr. Aldrich, the former Chief Executive Officer of the Company, has served as the Chairman of the Board since May 2014. Our current Chief Executive Officer, Mr. Griffin, was appointed by our Board of Directors in May 2016 to succeed Mr. Aldrich as Chief Executive Officer and also to serve as a director. In May 2014, at the time of Mr. Aldrich’s appointment as Chairman of the Board, our Board of Directors also first appointed an independent director within the meaning of applicable Nasdaq Rules (see above under ‘‘Director Independence’’) to serve as the Lead Independent Director. Ms. King was appointed in May 2019 to be the current Lead Independent Director. The duties of the Lead Independent Director, as set forth in our corporate governance guidelines, include the following: (cid:127) presiding at all meetings of the Board of Directors at which the Chairman of the Board is not present, including executive sessions of the independent directors; (cid:127) calling meetings of the independent directors, as he or she deems appropriate, and assuring that the independent directors meet independently at least twice each year; (cid:127) providing leadership to the Board of Directors if circumstances arise in which the Chairman of the Board may be, or may be perceived to be, in conflict with the interests of the Company and its stockholders with regard to a particular matter; facilitating communications and serving as a liaison, when necessary, between the independent directors and the Chairman of the Board and/or the Chief Executive Officer; (cid:127) (cid:127) consulting with the Chairman of the Board in the preparation of the schedules, agendas, and information provided to the Board of Directors for each meeting, and ensuring that there is sufficient time at each meeting for discussion of all agenda items; (cid:127) retaining independent advisors on behalf of the Board of Directors as the Board of Directors or the independent directors may deem necessary or appropriate; and (cid:127) being available for consultation and direct communication upon the reasonable request of major stockholders. The Board believes our current leadership structure is appropriate and that the duties of the Lead Independent Director appropriately and effectively complement the duties of the Chairman of the Board. Page 16 Proxy Statement 16 Stockholder Engagement Responsiveness to the Company’s stockholders is a critical part of our commitment to good corporate governance. As noted in the list of best practices above, we regularly conduct outreach to our stockholders to understand their perspectives on governance matters. Most recently, we engaged in formal stockholder outreach following the 2020 Annual Meeting. We solicited feedback from approximately thirty institutional stockholders representing approximately 53% of the Company’s shares outstanding. Institutions representing approximately 38% of the Company’s shares outstanding, including twelve of our largest twenty stockholders, responded to our outreach. Specifically, in addition to covering compensation-related topics during our subsequent conversations, as discussed below under ‘‘Compensation Discussion and Analysis,’’ we solicited feedback from institutional stockholders on various timely governance and disclosure topics: (cid:127) When asked about the four management proposals at the 2020 Annual Meeting that would have eliminated all remaining supermajority voting provisions in our Restated Certificate of Incorporation, as amended, which we refer to as our Charter, but that had not received sufficient stockholder support, our institutional stockholders generally agreed that the Company had taken sufficient steps to remove the supermajority thresholds in our Charter. They noted that given our efforts, such thresholds did not present a significant governance concern. (cid:127) Many institutional stockholders were supportive of the Company holding a virtual stockholder meeting in 2021, and several expressed a desire that public companies in general continue to hold virtual stockholder meetings in future years, based on those institutions’ experience that such meetings have expanded stockholders’ ability to participate. (cid:127) Following questions from multiple stockholders regarding board oversight of the Company’s corporate responsibility and sustainability, our Board of Directors in February 2021 amended the Company’s Nominating and Corporate Governance Committee Charter to specifically include oversight of such issues in the Nominating and Corporate Governance Committee’s stewardship, reflecting existing practice. (cid:127) Most of our conversations with institutional stockholders also included discussions regarding board refreshment, environmental and sustainability topics, and human capital management practices. Our Board of Directors values the opinions expressed by our stockholders and will continue to consider the voting results from stockholder meetings, as well as feedback obtained through our stockholder engagement efforts, when making future decisions regarding corporate governance matters. Stockholder Communications Our stockholders may communicate directly with the Board of Directors as a whole or to individual directors by letter addressed directly to such individual or individuals at the following address: c/o Skyworks Solutions, Inc. 5260 California Avenue Irvine, CA 92617 Attention: Secretary The Company will forward to each director to whom such communication is addressed, and to the Chairman of the Board in his capacity as representative of the entire Board of Directors, any mail received at the Company’s corporate office to the address specified by such director and the Chairman of the Board. 17 Proxy Statement Page 17 Committees of the Board of Directors The Board of Directors has a standing Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. Audit Committee We have established an Audit Committee consisting of the following individuals, each of whom the Board of Directors has determined is ‘‘independent’’ within the meaning of applicable Nasdaq Rules and meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’): Mr. McGlade (Chairman), Mr. Furey, Ms. King, and Mr. Schriesheim. The primary responsibility of the Audit Committee is the oversight of the quality and integrity of the Company’s financial statements, the Company’s internal financial and accounting processes, and the independent audit process. Additionally, the Audit Committee has the responsibilities and authority necessary to comply with Rule 10A-3 under the Exchange Act. The Audit Committee meets privately with the independent registered public accounting firm, reviews their performance and independence from management, and has the sole authority to retain and dismiss the independent registered public accounting firm. These and other aspects of the Audit Committee’s authority are more particularly described in the Company’s Audit Committee Charter, which the Board of Directors adopted and is reviewed annually by the committee and is available on the Investor Relations portion of our website at . www.skyworksinc.com The Audit Committee has adopted a formal policy concerning approval of audit and non-audit services to be provided to the Company by its independent registered public accounting firm, KPMG LLP. The policy requires that all services provided by KPMG LLP, including audit services and permitted audit-related and non-audit services, be preapproved by the Audit Committee. The Audit Committee preapproved all audit and non-audit services provided by KPMG LLP for fiscal year 2020. The Audit Committee met seven (7) times during fiscal year 2020. Audit Committee Financial Expert The Board of Directors has determined that each of Mr. McGlade (Chairman), Ms. King, and Mr. Schriesheim meets the qualifications of an ‘‘audit committee financial expert’’ under SEC rules and the qualifications of ‘‘financial sophistication’’ under the applicable Nasdaq Rules, and qualifies as ‘‘independent’’ as defined under the applicable Nasdaq Rules. Compensation Committee We have established a Compensation Committee consisting of the following individuals, each of whom the Board of Directors has determined is ‘‘independent’’ within the meaning of applicable Nasdaq Rules, an outside director within the meaning of Section 162(m) of the Internal Revenue Code (‘‘IRC’’) (solely for purposes of administering any equity awards that may qualify as grandfathered performance-based compensation), and a non-employee director within the meaning of Rule 16b-3 under the Exchange Act: Ms. King (Chairman), Mr. McGlade, and Mr. Schriesheim. The Compensation Committee met five (5) times during fiscal year 2020. The functions of the Compensation Committee include establishing the appropriate level of compensation, including short- and long-term incentive compensation of the Chief Executive Officer, all other executive officers, and any other officers or employees who report directly to the Chief Executive Officer. The Compensation Committee also administers Skyworks’ equity-based compensation plans. The Compensation Committee’s authority to grant equity awards to the Company’s executive officers may not be delegated to the Company’s Page 18 Proxy Statement 18 management or others. The Board of Directors has adopted a written charter for the Compensation Committee, and it is available on the Investor Relations portion of the Company’s website at . www.skyworksinc.com The Compensation Committee has engaged Aon/ Radford Consulting (‘‘Aon/Radford’’) to assist it in determining the components and amounts of executive compensation. The consultant reports directly to the Compensation Committee, through its Chairman, and the Compensation Committee retains the right to terminate or replace the consultant at any time. The process and procedures followed by the Compensation Committee in considering and determining executive and director compensation are described below under ‘‘Compensation Discussion and Analysis.’’ Nominating and Corporate Governance Committee We have established a Nominating and Corporate Governance Committee consisting of the following individuals, each of whom the Board of Directors has determined is ‘‘independent’’ within the meaning of applicable Nasdaq Rules: Mr. Beebe (Chairman), Mr. Batey, Mr. Furey, and Ms. Stevenson. The Nominating and Corporate Governance Committee met three (3) times during fiscal year 2020. The Nominating and Corporate Governance Committee is responsible for evaluating and recommending individuals for election or reelection to the Board of Directors and its committees, including any recommendations that may be submitted by stockholders, as well as the evaluation and recommendation of corporate governance policies. The Nominating and Corporate Governance Committee oversees the annual evaluation process for the Board of Directors, each committee, and individual directors, by soliciting from each director his or her assessment of the effectiveness of the Board of Directors, the committees on which he or she serves, and other individual directors. These and other aspects of the Nominating and Corporate Governance Committee’s authority are more particularly described in the www.skyworksinc.com Nominating and Corporate Governance Committee Charter, which the Board of Directors adopted and is available on the Investor Relations portion of the Company’s website at . In February 2021, the Board of Directors amended the Nominating and Corporate Governance Committee Charter to specifically include oversight of matters of corporate responsibility and sustainability, including potential impacts to the Company’s business of environmental, social, and governance issues, reflecting existing practice. Director Nomination Procedures The Nominating and Corporate Governance Committee evaluates director candidates in the context of the overall composition and needs of the Board of Directors, with the objective of recommending a group that can best manage the business and affairs of the Company and represent the interests of the Company’s stockholders using its diversity of experience. The committee seeks directors who possess certain minimum qualifications, including the following: (cid:127) A director must have substantial or significant business or professional experience or an understanding of technology, finance, marketing, financial reporting, international business, or other disciplines relevant to the business of the Company. (cid:127) A director (other than an employee-director) must be free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of his or her independent judgment as a member of the Board of Directors or of a Board committee. (cid:127) The committee also considers the following qualities and skills, among others, in its selection of directors and as candidates for appointment to the committees of the Board of Directors: (cid:4) economic, technical, scientific, academic, financial, accounting, legal, marketing, or other expertise applicable to the business of the Company; (cid:4) leadership or substantial achievement in their particular fields; 19 Proxy Statement Page 19 (cid:4) demonstrated ability to exercise sound business judgment; (cid:4) integrity and high moral and ethical character; (cid:4) potential to contribute to the diversity of viewpoints, backgrounds, or experiences of the Board of Directors as a whole; (cid:4) capacity and desire to represent the balanced, best interests of the Company as a whole and not primarily a special interest group or constituency; (cid:4) ability to work well with others; (cid:4) high degree of interest in the business of the Company; (cid:4) dedication to the success of the Company; (cid:4) commitment to the responsibilities of a director; and (cid:4) international business or professional experience. The committee believes that our Board of Directors, taken as a whole, should embody a diverse set of skills, experiences, and backgrounds in order to better inform its decisions. The committee considers age, tenure, gender, race, and ethnicity, in addition to business experience and other specific areas of focus or expertise, in its holistic approach to assessing and identifying director nominees. The committee will also take into account the fact that a majority of the Board of Directors must meet the independence requirements of the applicable Nasdaq Rules. The Company expects that a director’s existing and future commitments will not materially interfere with such director’s obligations to the Company. For candidates who are incumbent directors, the committee considers each director’s past attendance at meetings and participation in and contributions to the activities of the Board of Directors. The committee identifies candidates for director nominees in consultation with the Chief Executive Officer of the Company and the Chairman of the Board, through the use of search firms or other advisors or through such other methods as the committee deems to be helpful to identify candidates. Once candidates have been identified, the committee confirms that the candidates meet all of the minimum qualifications for director nominees set forth above through interviews, background checks, or any other means that the committee deems to be helpful in the evaluation process. The committee then meets to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the Board of Directors. Based on the results of the evaluation process, the committee recommends candidates for director nominees for election to the Board of Directors. Stockholder Nominees The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders provided such stockholders follow the procedures set forth below. The committee does not intend to alter the manner in which it evaluates candidates, including the criteria set forth above, based on whether the candidate was recommended by a stockholder or otherwise. Stockholders who wish to nominate director candidates for election at the 2022 Annual Meeting, but who are not to be included in the Company’s proxy materials pursuant to the proxy access provisions in our By-laws, may do so in accordance with the provisions of our By-laws by submitting a written recommendation to the Secretary of the Company at the address below no earlier than the close of business on January 12, 2022, and no later than the close of business on February 11, 2022. In the event that the 2022 Annual Meeting is held more than thirty (30) days before or after the first anniversary of the Company’s 2021 Annual Meeting, then the required notice must be delivered in writing to the Secretary of the Company at the address below no earlier than 120 days prior to the date of the 2022 Annual Meeting and no later than the later of 90 days prior to the 2022 Annual Meeting or the 10th day following the day on which the public announcement of the date of the 2022 Annual Meeting is first made by the Company. For nominees for election to the Board of Directors proposed by stockholders to be considered, the recommendation for nomination must Page 20 Proxy Statement 20 be in writing and must include the following information: (cid:127) name of the stockholder, whether an entity or an individual, making the recommendation; (cid:127) a written statement disclosing such stockholder’s beneficial ownership of the Company’s capital stock; (cid:127) name of the individual recommended for consideration as a director nominee; (cid:127) a written statement from the stockholder making the recommendation stating why such recommended candidate would be able to fulfill the duties of a director; (cid:127) a written statement from the stockholder making the recommendation stating how the recommended candidate meets the independence requirements established by the SEC and the applicable Nasdaq Rules; (cid:127) a written statement disclosing the recommended candidate’s beneficial ownership of the Company’s capital stock; and (cid:127) a written statement disclosing relationships between the recommended candidate and the Company that may constitute a conflict of interest. A stockholder (or a group of up to twenty stockholders) who has owned at least three percent of the Company’s outstanding shares of common stock continuously for at least three years, and has complied with the other requirements in the Company’s By-laws, may nominate and include in the Company’s proxy materials a number of director nominees up to the greater of two individuals or 20% of the Board of Directors. Written notice of a proxy access nomination for inclusion in our proxy statement for the 2022 Annual Meeting of Stockholders must be submitted to the Secretary of the Company at the address below no earlier than the open of business on December 13, 2021, and no later than the close of business on January 12, 2022. In the event that the 2022 Annual Meeting is held more than thirty (30) days before, or more than sixty (60) days after, the first anniversary of the Company’s 2021 Annual Meeting, then the required notice must be delivered in writing to the Secretary of the Company at the address below no earlier than 150 days prior to the date of the 2022 Annual Meeting and no later than the later of 120 days prior to the 2022 Annual Meeting or the 10th day following the day on which the public announcement of the date of the 2022 Annual Meeting is first made by the Company. Written notice of proxy access nominations and written recommendations for nomination may be sent to the General Counsel and Secretary of the Company via U.S. mail or expedited delivery service to: Skyworks Solutions, Inc. 5260 California Avenue Irvine, California 92617 21 Proxy Statement Page 21 Role of the Board of Directors in Risk Oversight Our Board of Directors oversees our risk management processes directly and through its committees. Our management team is responsible for risk management on a day-to-day basis. The role of our Board of Directors and its committees is to oversee the risk management activities of our management team. They fulfill this duty by discussing with management the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices. During fiscal year 2020 specifically, at each meeting of the Board of Directors in or after March 2020, Company management updated the Board of Directors on the impacts of COVID-19 on our business and workforce. In general, our Board of Directors oversees risk management activities relating to business strategy, capital allocation, organizational structure, certain operational risks, and acquisitions; our Audit Committee oversees risk management activities related to financial controls, legal and compliance risks, and cybersecurity risk; our Compensation Committee oversees risk management activities relating to our compensation policies and practices as well as management succession planning; and our Nominating and Corporate Governance Committee oversees risk management activities relating to Board composition as well as matters of corporate responsibility and sustainability. Each committee reports to the Board of Directors on a regular basis, including reports with respect to the committee’s risk oversight activities as appropriate. For example, the Board of Directors periodically reviews and approves the executive succession plan in consultation with the Compensation Committee and the Chief Executive Officer. In addition, since risk issues often overlap, committees from time to time request that the Board of Directors discuss particular risks. Our Compensation Committee does not believe that any risks arising from our employee compensation policies and practices are reasonably likely to have a material adverse effect on our company. Our Compensation Committee believes that any such risks are mitigated by: (cid:127) The multiple elements of our compensation packages, including base salary, our annual short-term incentive compensation plan and (for our executive officers and other key employees) equity awards that vest (or are issuable) over multiple years and are intended to motivate employees to take a long-term view of our business. (cid:127) The structure of our short-term incentive compensation plan (described in greater detail in this Proxy Statement under ‘‘Compensation Discussion and Analysis’’), which is based on (i) a number of different financial and operating performance metrics to avoid employees placing undue emphasis on any particular performance metric at the expense of other aspects of our business, and (ii) performance targets that we believe are appropriately aggressive yet will not require undue risk-taking to achieve. Further, the structure of the short-term incentive compensation plan aids in driving sustained long-term financial performance as the goals and targets from the prior year’s plan are significant factors used in determining goals for the current year’s plan. Page 22 Proxy Statement 22 Compensation Committee Interlocks and Insider Participation The Compensation Committee of the Board of Directors currently consists of, and during fiscal year 2020 consisted of, Ms. King (Chairman), Mr. McGlade, and Mr. Schriesheim. No member of this committee was at any time during fiscal year 2020 an officer or employee of the Company, was formerly an officer of the Company or any of its subsidiaries, or had any employment relationship with the Company or any of its subsidiaries. No executive officer of the Company has served as a director or member of the compensation committee (or other committee serving an equivalent function) of any other entity, where one of such entity’s executive officers served as a director of the Company or a member of the Compensation Committee. Certain Relationships and Related Person Transactions Other than compensation agreements and other arrangements described below under ‘‘Information About Executive and Director Compensation,’’ since September 28, 2019, there has not been a transaction or series of related transactions to which the Company was or is a party involving an amount in excess of $120,000 and in which any director, executive officer, holder of more than five percent (5%) of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest. In January 2008, the Board of Directors adopted a written related person transaction approval policy, which was amended in November 2018, and which sets forth the Company’s policies and procedures for the review, approval or ratification of any transaction required to be reported in its filings with the SEC. The Company’s policy with regard to related person transactions is that all related person transactions between the Company and any related person (as defined in Item 404 of Regulation S-K) or their affiliates, in which the amount involved is equal to or greater than $120,000, be reviewed by the Company’s General Counsel and approved by the Audit Committee. In addition, the Company’s Code of Business Conduct and Ethics requires that employees discuss with the Company’s Compliance Officer any significant relationship (or transaction) that might raise doubt about such employee’s ability to act in the best interest of the Company. 23 Proxy Statement Page 23 PROPOSAL 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee has selected KPMG LLP as the Company’s independent registered public accounting firm for fiscal year 2021 and has further directed that management submit the selection of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. KPMG LLP was the independent registered public accounting firm for the Company for fiscal year 2020, and has been the independent registered public accounting firm for the Company since 2002. We are asking the stockholders to ratify the selection of KPMG LLP as the Company’s independent registered public accounting firm for fiscal year 2021. Representatives of KPMG LLP are expected to attend the Annual Meeting online. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate stockholder questions. Stockholder ratification of the selection of KPMG LLP as the Company’s independent registered public accounting firm is not required by the Company’s By-laws or other applicable legal requirements. However, the Audit Committee is submitting the selection of KPMG LLP to the stockholders for ratification as a matter of good corporate practice. The affirmative vote of a majority of the shares present online or represented by proxy at the Annual Meeting and entitled to vote on such matter at the Annual Meeting is required to approve the selection of KPMG LLP as the Company’s independent registered public accounting firm. In the event stockholders fail to ratify the appointment, the Audit Committee may reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the Company’s and stockholders’ best interests. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE SELECTION OF KPMG LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE COMPANY FOR FISCAL YEAR 2021 12MAR202122382806 Page 24 Proxy Statement 24 Audit Fees KPMG LLP provided audit services to the Company consisting of the annual audit of the Company’s 2020 consolidated financial statements contained in the Company’s Annual Report on Form 10-K and reviews of the financial statements contained in the Company’s Quarterly Reports on Form 10-Q for fiscal year 2020. The following table summarizes the fees of KPMG LLP billed to the Company for the last two fiscal years. Fee Category Audit Fees (1) Tax Fees (2) Total Fees Fiscal Year 2020 ($) 2,437,150 115,115 2,552,265 % of Total (%) 95.5 4.5 100 Fiscal Year 2019 ($) 2,315,150 170,500 2,485,650 % of Total (%) 93.1 6.9 100 (1) Audit fees consist of fees for the audit of our annual financial statements, review of the interim financial statements included in our quarterly reports on Form 10-Q, statutory audits and related filings in various foreign locations and audit procedures related to acquisition activity during fiscal years 2020 and 2019. Fiscal year 2020 and 2019 audit fees included fees for services incurred in connection with rendering an opinion under Section 404 of the Sarbanes-Oxley Act. Fiscal year 2020 audit fees also included fees for the review of registration statement auditor consents to incorporate by reference prior year financial statement opinions in Form S-8 filings. (2) Tax fees consist of fees for tax compliance, tax advice, and tax planning services. Tax compliance services, which primarily relate to the review of our U.S. tax returns and certain trade and customs forms, accounted for $104,615 and $160,000 of the total tax fees for fiscal years 2020 and 2019, respectively. In 2003, the Audit Committee adopted a formal policy concerning approval of audit and non-audit services to be provided to the Company by its independent registered public accounting firm, KPMG LLP. The policy requires that all services provided by KPMG LLP, including audit services and permitted audit-related and non-audit services, be preapproved by the Audit Committee. The Audit Committee preapproved all audit and non-audit services provided by KPMG LLP during fiscal year 2020 and our fiscal year ended September 27, 2019 (‘‘fiscal year 2019’’). 25 Proxy Statement Page 25 REPORT OF THE AUDIT COMMITTEE The Audit Committee of Skyworks’ Board of Directors is responsible for providing independent, objective oversight of Skyworks’ accounting functions and internal controls. Five different directors served on the Audit Committee for all or part of fiscal year 2020, each of whom is independent within the meaning of applicable Nasdaq Rules and meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act. The Audit Committee operates under a written charter approved by the Board of Directors. Management is responsible for the Company’s internal control and financial reporting process. The Company’s independent registered public accounting firm is responsible for performing an independent audit of Skyworks’ consolidated financial statements in accordance with generally accepted auditing standards and for issuing a report concerning such financial statements. In addition, the Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s internal controls and for issuing an opinion on the effectiveness thereof. The Audit Committee’s responsibility is to monitor and oversee these processes. In connection with these responsibilities, the Audit Committee met with management and representatives of KPMG LLP, the Company’s independent registered public accounting firm, and reviewed and discussed the audited financial statements for fiscal year 2020, results of the internal and external audit examinations, evaluations of the Company’s internal controls, and the overall quality of Skyworks’ financial reporting. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301, ‘‘Communications with Audit Committees,’’ issued by the Public Company Accounting Oversight Board. In addition, the Audit Committee has received the written disclosures from its independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board and the SEC regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence from the Company and its management, including the matters in the written disclosures that were received by the committee from such firm. Based upon the Audit Committee’s review and discussions described above, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for fiscal year 2020, as filed with the SEC. THE AUDIT COMMITTEE David P. McGlade, Chairman Timothy R. Furey Christine King Robert A. Schriesheim Page 26 Proxy Statement 26 PROPOSAL 3: ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (‘‘SAY-ON-PAY’’ VOTE) We are providing our stockholders with the opportunity to vote to approve, on a non-binding basis, the compensation of our Named Executive Officers as described below under ‘‘Information About Executive and Director Compensation’’ pursuant to Section 14A of the Exchange Act. As we describe below under ‘‘Compensation Discussion and Analysis,’’ our executive compensation program embodies a pay-for- performance philosophy that supports our business strategy and aligns the interests of our executives with our stockholders. Our Board of Directors is asking stockholders to approve a non-binding advisory vote on the following resolution: RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and any related material disclosed in this Proxy Statement. As an advisory vote, this proposal is not binding and will not overrule any decision by the Company or the Board of Directors (or any committee thereof), nor will it create or imply any change or addition to the fiduciary duties of the Company or the Board of Directors (or any committee thereof). However, our Compensation Committee and Board of Directors value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for Named Executive Officers. The next non-binding ‘‘say-on-pay’’ vote is scheduled to be held at our 2022 Annual Meeting of Stockholders. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS BY VOTING “FOR” PROPOSAL 3 12MAR202122382952 27 Proxy Statement Page 27 INFORMATION ABOUT EXECUTIVE AND DIRECTOR COMPENSATION Summary and Highlights Financial Highlights from Fiscal Year 2020 Despite the challenges of the COVID-19 pandemic, the Company delivered strong financial results in fiscal year 2020: (cid:127) Achieved net revenue of $3.4 billion (cid:127) Achieved operating margin of 26.6% on a GAAP basis (33.7% on a non-GAAP basis)1 (cid:127) Achieved diluted earnings per share of $4.80 on a GAAP basis ($6.13 on a non-GAAP basis)1 (cid:127) Generated operating cash flow of $1.2 billion (cid:127) Increased our quarterly dividend from $0.44 per share to $0.50 per share (cid:127) Returned $955 million to stockholders through repurchasing 6.3 million shares of our common stock for $648 million and through payments of $307 million in cash dividends Throughout the pandemic, we have remained committed to protecting the health of our employees and of the communities in which we operate. As a result, we implemented certain safety measures at our facilities worldwide, including: (cid:127) allowing many employees to work remotely, (cid:127) implementing social distancing, including limiting the number of employees attending meetings, (cid:127) screening employees when entering facilities, (cid:127) enhancing preventative and cleaning protocols, and (cid:127) suspending employee travel. While some of these measures reduced the overall efficiency of our operations or increased our manufacturing costs, we were better able to safeguard employee health while maintaining key business and manufacturing operations. Quarterly Dividends: Fiscal Years 2015 – 2020 Repurchases under Stock Repurchase Plans: Fiscal Years 2015 – 2020 ($M) 1 Please see table on page 79 for a full reconciliation of non-GAAP results to GAAP results. 18MAR202102323817 18MAR202102173248 Page 28 Proxy Statement 28 Driving Long-Term Stockholder Value The Company’s strong long-term performance is demonstrated in our total stockholder return (TSR), which has significantly outperformed relevant benchmarks over the past ten fiscal years, as displayed in the chart below. The TSR chart, which reflects performance through October 2, 2020, the last day of the Company’s fiscal year 2020, does not take into account a meaningful subsequent rise in the Company’s stock price, which we believe to be the result of the Company capitalizing on accelerating overall demand for wireless connectivity products coupled with the onset of technology transitions toward 5G and Wi-Fi 6 solutions. The closing price of the Company’s common stock on the Nasdaq Global Select Market on March 18, 2021, was $174.69 per share, approximately 19% higher than the closing price of $146.83 per share on October 2, 2020. Total Stockholder Return(1) 11MAR202119443511 (1) Total stockholder return, for Skyworks and the component companies of the indices, is calculated as share price appreciation plus the cumulative effect of reinvesting cash dividend payments into the respective securities for the one-, three-, and ten-year periods ended October 2, 2020. Other Accomplishments from Fiscal Year 2020 During fiscal year 2020, we broadened our customer set and expanded our suite of applications. Highlights from the year include: (cid:127) Accelerated ramp of Sky5(cid:5) platform supporting the next wave of premium 5G smartphones (cid:127) Extended market leadership in Wi-Fi 6 and 6E connectivity (cid:127) Deployed solutions for 5G Massive MIMO and small cell base stations (cid:127) Shipped Sky5(cid:5) connected-car solutions to leading automotive OEMs (cid:127) Delivered new cognitive wireless audio solutions, powering the leading gaming headsets (cid:127) Supported Tier-1 aerospace and defense OEMs with highly integrated GPS, circulator, and advanced filter solutions (cid:127) Expanded our unique filter solutions, including TC-SAW and BAW 29 Proxy Statement Page 29 Our Pay-for-Performance Philosophy Under our pay-for-performance philosophy, we believe that executive compensation should be strongly aligned with the interests of our long-term stockholders. As a result, a substantial portion of each Named Executive Officer’s annual compensation is tied to Company performance and stock price performance. The charts below show the target total direct compensation mix for fiscal year 2020 for our Chief Executive Officer and the average for the other Named Executive Officers, in each case reflecting actual salary, target short-term incentive award, and the grant date fair value of long-term stock-based compensation awards. Compensation Best Practices What We Do What We Don’t Do 15MAR202111415691 7MAR202120475595 7MAR202120475595 7MAR202120475595 7MAR202120475595 7MAR202120475595 7MAR202120475595 7MAR202120475595 7MAR202120475595 7MAR202120475595 7MAR202120475595 Heavily weight executive compensation toward ‘‘at risk,’’ performance-based compensation Balance short-term and long-term incentive compensation 9MAR202108412142 9MAR202108412142 9MAR202108412142 Use multi-year vesting for executive officer equity awards 9MAR202108412142 Base half of annual performance share award on three-year relative TSR performance metric 9MAR202108412142 Maintain robust stock ownership guidelines for executive officers and non-executive directors Guarantee bonus payments or base salary increases Provide single-trigger change-in-control benefits Provide excise tax gross-up payments in connection with a change in control of the Company Provide excessive perquisites to our executive officers Provide retirement or pension benefits to our executive officers that are not available to employees generally Structure our executive officer compensation program to encourage appropriate risk-taking 9MAR202108412142 Permit hedging or other forms of speculative transactions by employees or directors Benchmark pay practices against selected peer companies with whom we compete for executive talent 9MAR202108412142 9MAR202108412142 Solicit advice from the Compensation Committee’s independent compensation consultant 9MAR202108412142 Hold annual ‘‘Say-on-Pay’’ advisory vote 9MAR202108412142 Conduct regular engagement with stockholders on compensation-related topics Permit pledging by employees or directors Allow for the repricing of stock options without stockholder approval Pay dividends or dividend equivalents on unearned performance shares or restricted stock units Include ‘‘evergreen’’ provisions or ‘‘liberal’’ change- in-control definitions in our equity incentive award plans Page 30 Proxy Statement 30 Compensation Discussion and Analysis Table of Contents Named Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Approach for Determining Form and Amounts of Compensation . . . . . . . . . . . . . . . . . . . Components of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Engagement with Stockholders Regarding Executive Compensation . . . . . . . . . . . . . . . . . . Severance and Change-in-Control Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Officer Stock Ownership Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prohibition on Hedging and Certain Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . Compliance with Internal Revenue Code Section 162(m) . . . . . . . . . . . . . . . . . . . . . . . . . . 31 31 33 41 41 42 43 43 Named Executive Officers This Compensation Discussion and Analysis section discusses the compensation policies and programs for our Chief Executive Officer, our Chief Financial Officer, and our three next most highly paid executive officers during fiscal year 2020, as determined under the rules of the SEC. We refer to this group of executive officers as our ‘‘Named Executive Officers.’’ For fiscal year 2020, our Named Executive Officers were: (cid:127) Liam K. Griffin, President and Chief Executive Officer; (cid:127) Kris Sennesael, Senior Vice President and Chief Financial Officer; (cid:127) Carlos S. Bori, Senior Vice President, Sales and Marketing; (cid:127) Robert J. Terry, Senior Vice President, General Counsel and Secretary; and (cid:127) Karilee A. Durham, Senior Vice President, Human Resources. Approach for Determining Form and Amounts of Compensation The Compensation Committee, which is described above under ‘‘Committees of the Board of Directors,’’ is responsible for determining all components and amounts of compensation to be paid to our Named Executive Officers, as well as any other executive officers or employees who report directly to the Chief Executive Officer. The Compensation Committee sets compensation for the Named Executive Officers, including base salary, short-term incentives, and long-term stock-based incentives, at levels generally intended to be competitive with the compensation of comparable executives in semiconductor companies with which the Company competes for executive talent and to link the compensation of our Named Executive Officers to improvements in the Company’s financial performance and increases in stockholder value. Compensation Program Objectives The objectives of our executive compensation program are to attract, retain, and motivate highly qualified executives to operate our business, and to link the compensation of those executives to improvements in the Company’s financial performance and increases in stockholder value. Accordingly, the Compensation Committee’s goals in establishing our executive compensation program include: (cid:127) ensuring that our executive compensation program is competitive with a group of companies in the semiconductor industry with which we compete for executive talent; 31 Proxy Statement Page 31 (cid:127) providing a base salary that serves as the foundation of a compensation package that attracts and retains the executive talent needed to achieve our business objectives; (cid:127) providing short-term variable compensation that motivates executives and rewards them for achieving Company financial performance targets; (cid:127) providing long-term stock-based compensation that aligns the interest of our executives with stockholders by rewarding them for long-term increases in stockholder value; and (cid:127) ensuring that our executive compensation program is perceived as fundamentally fair to our employees. Retention of Compensation Consultant The Compensation Committee has engaged Aon/ Radford to assist in determining the components and amount of executive compensation. Aon/Radford reports directly to the Compensation Committee, through its chairman, and the Compensation Committee retains the right to terminate or replace the consultant at any time. The Compensation Committee has considered the relationships that Aon/Radford has with the Company, the members of the Compensation Committee and our executive officers, as well as the policies that Aon/Radford has in place to maintain its independence and objectivity, and has determined that Aon/Radford’s work for the Compensation Committee has not raised any conflicts of interest. Company management also purchases published compensation and benefits surveys from Aon/Radford, and on occasion engages certain affiliates of Aon/Radford in various jurisdictions for services unrelated to executive compensation and benefits, engagements for which the Company’s management has not sought the Compensation Committee’s approval. The fees paid to Aon/Radford and its affiliates in fiscal year 2020 for these surveys and additional services did not exceed $120,000. Use of Comparator Group Data The Compensation Committee annually compares the components and amounts of compensation that we provide to our Chief Executive Officer and each of the other Named Executive Officers with ‘‘Comparator Group’’ data for each position and uses this comparison data to help inform its review and determination of base salaries, short-term incentives, and long-term stock-based compensation awards, as discussed in further detail below under ‘‘Components of Compensation.’’ For fiscal year 2020, the Compensation Committee approved Comparator Group data consisting of a 50/50 blend of (i) Aon/Radford survey data of semiconductor companies (where sufficient data was not available in the Aon/Radford semiconductor survey data for a given executive position, the Comparator Group data also included survey data regarding high-technology companies), and (ii) data from the group of 16 publicly traded semiconductor companies listed below. The Company’s selected peer group remained unchanged from that used by the Compensation Committee for the prior fiscal year. The peer group includes many business competitors, as well as certain larger semiconductor companies with which the Company competes for executive talent. Advanced Micro Devices KLA Corporation Analog Devices Applied Materials Broadcom Lam Research Marvell Technology Maxim Integrated Products Microchip Technology Micron Technology NVIDIA ON Semiconductor Qorvo QUALCOMM Texas Instruments Xilinx The Compensation Committee generally seeks to make decisions regarding each Named Executive Officer’s compensation that are competitive within the Comparator Group, with consideration given to the executive’s role, responsibility, performance, and length of service. After reviewing the Comparator Group data and considering the input of Aon/Radford, the Compensation Committee established (and the full Board of Directors was advised of) the base salary, short-term incentive target, and stock-based Page 32 Proxy Statement 32 compensation for each Named Executive Officer for fiscal year 2020. Aon/Radford advised the Compensation Committee that such components of executive compensation for fiscal year 2020 were competitive for chief executive officers and other executive officers at companies of similar size and complexity in the semiconductor industry. In determining the compensation of our Chief Executive Officer for fiscal year 2020, the Compensation Committee focused on (i) competitive levels of compensation for chief executive officers who are leading a company of similar size and complexity, (ii) the importance of retaining and incentivizing a chief executive officer with the strategic, financial, and leadership skills necessary to ensure our continued growth and success, (iii) our Chief Executive Officer’s role relative to the other Named Executive Officers, (iv) input from the full Board of Directors on our Chief Executive Officer’s performance, and (v) the length of our Chief Executive Officer’s service to the Company. Our Chief Executive Officer was not present during the voting or deliberations of the Compensation Committee concerning his compensation. The Compensation Committee considered the recommendations of the Chief Executive Officer regarding the compensation of the other Named Executive Officers and each of his other direct reports. These recommendations were based on an assessment of each individual’s responsibilities, experience, performance, and contribution to the Company’s performance, and also took into account internal factors such as scope of role and level in the organization, in addition to external factors such as the current environment for attracting and retaining executives. Components of Compensation The key elements of compensation for our Named Executive Officers are base salary, short-term incentives, long-term stock-based incentives, and health and welfare benefits. For fiscal year 2020, the Compensation Committee sought to make decisions that would result in each Named Executive Officer’s target total direct compensation being competitive within the Comparator Group, with consideration given to the executive’s role, responsibility, performance, and length of service. Base Salary The Compensation Committee determines a competitive base salary for each executive officer using the Comparator Group data and input provided by Aon/ Radford. In order to provide flexibility in consideration of differences in individual executives’ scope of responsibilities, length of service, and performance, the Compensation Committee did not target a specific percentile of the Comparator Group for executive officer salaries; however, the salaries of the executive officers were generally near the median of the Comparator Group. The base salary for fiscal year 2020 for each Named Executive Officer, as reflected in the table below, increased on average 5.8% from the Named Executive Officer’s base salary in fiscal year 2019, with increases ranging from 5.0% to 6.1%. Salary increases were based on the market-based salary adjustments recommended by Aon/Radford as well as recommendations by the Chief Executive Officer (for Named Executive Officers other than himself). Liam K. Griffin Kris Sennesael Carlos S. Bori Robert J. Terry Karilee A. Durham FY2020 Base Salary ($) FY2019 Base Salary ($) 1,029,000 530,000 457,000 473,000 432,000 980,000 500,000 431,000 446,000 408,000 33 Proxy Statement Page 33 Short-Term Incentives Overview Our short-term incentive compensation plan for executive officers is established annually by the Compensation Committee and is intended to motivate and reward executives by tying a significant portion of their total cash compensation to the Company’s achievement of pre-established performance goals that are generally one year or less in duration. The Fiscal Year 2020 Executive Incentive Plan (the ‘‘Incentive Plan’’) adopted by the Compensation Committee on December 17, 2019, was based on the Company’s achievement of corporate performance goals established on a semi-annual basis during fiscal year 2020. The Compensation Committee moved to six-month performance periods for fiscal year 2020, as opposed to an annual performance period as in previous years, as a result of market uncertainty that existed in late 2019 related to the U.S.-China trade war, including restrictions on the Company’s ability to do business with Huawei Technology Co., Ltd., and certain of its affiliates (the ‘‘Trade War’’), and its potential impacts on the Company’s financial results for fiscal year 2020. The Compensation Committee concluded that establishing performance goals on a semi-annual basis in light of these uncertainties would best enable the Compensation Committee to establish meaningful and appropriate goals for each half of the year. This approach proved to be particularly appropriate for fiscal year 2020, as the performance goals set by the Compensation Committee for the second performance period, as discussed below, also reflected additional uncertainty in the Company’s business outlook that had arisen as a result of the COVID-19 outbreak. Incentive Opportunities For each executive officer, short-term incentive compensation at the ‘‘target’’ level is designed to be near the median short-term incentive compensation of the Comparator Group. After reviewing Comparator Group data, the Compensation Committee determined that the target incentive under the Incentive Plan, as a percentage of base salary, for each of the Named Executive Officers should not be increased, as compared to the target incentives under the prior year’s short-term incentive plan. The following table shows the range of short-term incentive compensation that each Named Executive Officer could earn in fiscal year 2020 as a percentage of such executive officer’s annual base salary. Threshold Target Maximum Chief Executive Officer Chief Financial Officer Other Executive Officers 80% 50% 40% 160% 100% 80% 320% 200% 160% Performance Goals In December 2019 and May 2020, the Compensation Committee established performance goals for the applicable semi-annual performance period, with each executive eligible to earn up to half of his or her annual short-term incentive compensation with respect to each six-month period. Under the Incentive Plan, any unearned amounts with respect to the first performance period were to be forfeited and could not be earned later based on performance during the second performance period or full-year performance. Payments under the Incentive Plan were based on achieving revenue and non-GAAP EBITDA performance goals, each of which was weighted at 50% for each respective performance period. EBITDA, for purposes of the non-GAAP EBITDA performance goal, was calculated by adding depreciation and amortization to the Company’s non-GAAP operating income, as publicly reported in the Company’s earnings release for the applicable period. The target level performance goals were established by the Compensation Committee under the Incentive Plan after reviewing the Company’s historical operating results and growth rates as well as the Company’s expected future results relative to peers and were designed to require significant effort and operational success on the part of our executives and the Company to achieve them. The maximum level Page 34 Proxy Statement 34 performance goals established by the Compensation Committee have historically been difficult to achieve and are designed to represent outstanding performance that the Compensation Committee believes should be rewarded. The performance goals established for the second half of fiscal year 2020 were based on the Company’s outlook in May 2020 for the remainder of the fiscal year and reflected the significant economic uncertainty associated with the COVID-19 outbreak, including an expectation of revenue for the second half of fiscal year 2020 lower than the Company’s original operating plan for the fiscal year. The performance goals established under the Incentive Plan for fiscal year 2020 were as follows (in millions): Revenue Non-GAAP EBITDA 1st Half 2nd Half 1st Half 2nd Half $1,400 $1,550 $1,660 $1,400 $1,550 $1,600 $590 $665 $720 $590 $640 $690 Threshold Target Maximum The Incentive Plan stipulated that payouts to executives following the end of the fiscal year, under either of the performance metrics, were conditioned upon the Company achieving a nominal level of full-year non-GAAP operating income of $500 million. Non-GAAP operating income, for purposes of the Incentive Plan, is based on the Company’s publicly disclosed non-GAAP operating income—which is calculated by excluding from GAAP operating income share-based compensation expense; acquisition-related expenses; amortization of acquisition-related intangibles; settlements, gains, losses, and impairments; restructuring-related charges; and certain deferred executive compensation—after accounting for any incentive award payments, including those to be made under the Incentive Plan. Calculation of Incentive Plan Payments Under the Incentive Plan, upon completion of the first six months of the fiscal year, the Compensation Committee determined the extent to which the Company’s performance goals for the first performance period were attained, reviewed the CEO’s recommended payouts under the Incentive Plan, and approved the awards to be made under the Incentive Plan with respect to the first performance period. Upon completion of the fiscal year, the Compensation Committee completed the same process with respect to the second performance period. Payments with respect to the first performance period were capped at 100% of the first half target level attributable to the applicable metric, with amounts over the target level held back and paid after the end of the fiscal year upon certification that the Company had achieved its nominal level of non-GAAP operating income for the fiscal year. Achievement under the performance goals at the ‘‘threshold,’’ ‘‘target,’’ or ‘‘maximum’’ level corresponds to payment under the Incentive Plan at the ‘‘threshold,’’ ‘‘target,’’ or ‘‘maximum’’ percentage, as applicable, with such percentage multiplied by the executive’s base salary for the six-month period and then multiplied by the weighting assigned to that performance goal. The payout for achievement under the performance goals between either the ‘‘threshold’’ and ‘‘target’’ levels or the ‘‘target’’ and ‘‘maximum’’ levels would be based on linear interpolation between the two relevant amounts. Each executive’s payment under the Incentive Plan is calculated by evaluating achievement of each performance goal individually, determining the portion of the total eligible incentive payment earned with respect to each such performance goal, and totaling the resulting amounts. The Compensation Committee retained the discretion to make payments, upon consideration of recommendations by the Chief Executive Officer, even if the threshold performance metrics were not met or if the nominal level of non-GAAP operating income was not met or to make payments in excess of the maximum level if the Company’s performance exceeded the maximum metrics. While the Compensation Committee believed it was appropriate to retain this discretion in order to make short-term incentive compensation awards in appropriate extraordinary circumstances, no such adjustments were actually made. 35 Proxy Statement Page 35 Fiscal Year Results For the first half of fiscal year 2020, the Company’s revenue and non-GAAP EBITDA achieved were $1,662 million and $729 million, respectively, resulting in a short-term compensation award for each Named Executive Officer with respect to such performance period equal to his or her maximum payment level, or 200% of the target payment level. A payment of the target amount was made to each Named Executive Officer in May 2020, with the remainder held back for potential payment following the completion of the fiscal year. For the second half of fiscal year 2020, the Company’s revenue and non-GAAP EBITDA achieved were $1,694 million and $728 million, respectively, resulting in a short-term compensation award for each Named Executive Officer with respect to such performance period equal to 200% of his or her target payment level. In November 2020, upon certifying that the nominal level of non-GAAP operating income had been achieved for the fiscal year, the Compensation Committee approved payment of the short-term incentive achieved with respect to the second performance period as well as payment of the remaining portion of the short-term incentive achieved with respect to the first performance period, which had been held back. The Compensation Committee did not exercise discretion, either upward or downward, to executives’ payments under the Incentive Plan. Revenue Non-GAAP EBITDA (in millions) 1st Half 2nd Half 1st Half 2nd Half Threshold Target Maximum Achieved $1,400 $1,550 $1,660 $1,662 $1,400 $1,550 $1,600 $1,694 $590 $665 $720 $729 $590 $640 $690 $728 Long-Term Stock-Based Compensation Overview The Compensation Committee generally makes long-term stock-based compensation awards to executive officers on an annual basis. Long-term stock-based compensation awards are intended to align the interests of our executive officers with those of our stockholders and to reward our executive officers for increases in stockholder value over periods of time greater than one year. It is the Company’s practice to make stock-based compensation awards to executive officers in November of each year at a prescheduled Compensation Committee meeting. For fiscal year 2020, the Compensation Committee made an annual stock-based compensation award to each of the Named Executive Officers on November 5, 2019, at a regularly scheduled Compensation Committee meeting. At the same meeting, the Compensation Committee also approved the grant of a one-time, non-recurring stock- based compensation award to each of the Named Executive Officers in order to address retention concerns further discussed below and to align the long-term compensation opportunity for each Named Executive Officer with those of peer companies. Fiscal Year 2020 Stock-Based Compensation Awards In making annual stock-based compensation awards to executive officers for fiscal year 2020, the Compensation Committee first reviewed the Comparator Group grant data by executive position. The Compensation Committee used that data to inform its determination of a target dollar value for the long-term stock-based award for each executive officer, as set forth in the table below, targeting awards for fiscal year 2020 that were competitive within the Comparator Group. Each executive officer was granted a performance share award (‘‘PSA’’) and a restricted stock unit (‘‘RSU’’) award equivalent to sixty percent (60%) and forty percent (40%), respectively, of the dollar value of the executive’s fiscal year 2020 stock- based award, calculating the number of shares subject to each award using the fair market value of the Company’s common stock on the date of such award and an assumption that the Company would achieve the ‘‘target’’ level of performance required to earn the PSA. The Compensation Committee’s rationale for awarding PSAs is to further align the executive’s Page 36 Proxy Statement 36 interest with those of the Company’s stockholders by using equity awards that will vest only if the Company achieves pre-established performance metrics, and we believe the Compensation Committee’s decision to award a portion of the PSAs subject to a performance metric measured over a three-year performance period more closely aligns the executive’s interests with those of the Company’s stockholders. Name Liam K. Griffin Kris Sennesael Carlos S. Bori Robert J. Terry Karilee A. Durham Value of FY20 Stock-Based Award(1) Number of Shares Subject to PSAs, at Target(2) Number of Shares Subject to RSUs(2) $10,000,000 $ 3,200,000 $ 2,700,000 $ 2,600,000 $ 1,800,000 60,777 19,448 16,410 15,802 10,940 40,518 12,965 10,940 10,534 7,293 (1) The grant date fair values of these stock-based awards as disclosed further below in the ‘‘Summary Compensation Table’’ and the ‘‘Grants of Plan-Based Awards Table’’ differ from the values stated above due to the grant date fair value of the PSAs being computed using a Monte Carlo simulation to value the portion of the award related to TSR percentile ranking, in accordance with the provisions of ASC 718. (2) Reflects the dollar value of the award, divided by $98.72 per share, which was the closing price of the Company’s common stock on the Nasdaq Global Select Market on November 5, 2019. After setting award levels by position and evaluating the Company’s business needs for the attraction and retention of executives and employees as well as internal and external circumstances impacting the Company and its employees, the Compensation Committee also reviewed the Comparator Group data to set the aggregate number of shares of the Company’s common stock that would be made available for annual equity awards to eligible non-executive employees of the Company, as a percentage of the total number of the outstanding shares of the Company’s common stock. FY20 PSAs The PSAs granted on November 5, 2019 (the ‘‘FY20 PSAs’’), have both ‘‘performance’’ and ‘‘continued employment’’ conditions that must be met in order for the executive to receive shares underlying the award. The ‘‘performance’’ condition of the FY20 PSAs compares the Company’s performance under three distinct performance metrics during the applicable performance period against a range of pre-established targets, as follows: Target Level Shares with Respect to Emerging Revenue Growth Metric (1) Target Level Shares with Respect to Design Win Metric (2) Target Level Shares with Respect to TSR Percentile Ranking Metric (3) Percentage of Aggregate Target Level Shares 25% 25% 50% Performance Period Fiscal Year 2020 Fiscal Year 2020 Fiscal Years 2020-2022 (1) (2) (3) The emerging revenue growth metric measures the Company’s year-over-year revenue growth in certain key product categories, each of which represents an identified growth market for the Company. The design win metric measures the success of the Company in achieving specific product design wins with a key customer. The total stockholder return, or TSR, percentile ranking metric measures the Company’s percentile ranking achieved with respect to its peer group. The peer group for purposes of the TSR percentile ranking metric includes each of the companies in the Philadelphia Semiconductor Index as of November 5, 2019, but excludes any such company that during the three-year performance period is acquired by or merged with (or enters into an agreement to be acquired by or merged with) another entity. 37 Proxy Statement Page 37 The specific pre-established targets under the emerging revenue growth and TSR percentile ranking metrics are as follows: Company Metric(1) 1-year Emerging Revenue Growth (%) 3-year TSR Percentile Ranking (2) Threshold 5.0% 25th Target 15.0% 50th Maximum 30.0% 90th (1) Given both the Company’s contractual confidentiality obligations and the proprietary nature of the specific goals, the Company cannot publicly disclose the specific threshold, target, and maximum levels of performance established with respect to the design win metric. The Compensation Committee established the design win goals such that performance at the target level would exceed the Company’s performance relative to the prior year’s performance. (2) For the FY20 PSAs related to TSR percentile ranking, the Compensation Committee changed the threshold percentage at which the award begins to become earned—to the 25th percentile from the 40th percentile as in prior years—after reviewing the practices of peer companies. The number of shares issuable under the FY20 PSAs corresponds to the level of achievement of the performance goals, as follows (subject to linear interpolation for amounts between ‘‘threshold’’ and ‘‘target’’ or ‘‘target’’ and ‘‘maximum’’): Performance Achieved Threshold Target Maximum % of Target Level Shares Earned with Respect to Emerging Revenue Growth Metric % of Target Level Shares Earned with Respect to Design Win Metric % of Target Level Shares Earned with Respect to TSR Percentile Ranking Metric 50% 50% 50% 100% 100% 100% 200% 200% 300% The ‘‘continued employment’’ condition of the FY20 PSAs provides that, to the extent that the performance metrics are met, the shares earned under such metrics would vest as follows (provided, in each case, that the executive remains employed by the Company through each such vesting date): Anniversary of Grant Date(1) One Year Two Year Three Year % of Shares Earned with Respect to Emerging Revenue Growth Metric % of Shares Earned with Respect to Design Win Metric % of Shares Earned with Respect to TSR Percentile Ranking Metric 50% 50% 50% 50% 100% (1) In the event of termination by reason of death or permanent disability, the holder of an FY20 PSA (or the holder’s estate) would receive any earned but unissued shares that would have been issuable thereunder during the remaining term of the award. During fiscal year 2019, the base period against which fiscal year 2020 emerging revenue performance was measured, the Company achieved revenue in the specified key product categories of $199 million. During fiscal year 2020, the Company achieved revenue in the specified key product categories of $442 million, representing emerging revenue growth of 122%, exceeding the ‘‘maximum’’ level of performance and resulting in achievement with respect to such metric of 200% of the target level of shares. Also during fiscal year 2020, the Company achieved design wins with the specified key customer at a level exceeding the ‘‘maximum’’ level of performance, resulting in achievement with respect to such metric of 200% of the target level of shares. Accordingly, upon the Compensation Committee’s certification of the performance results in November 2020, the Company issued 50% of the shares earned by each Named Executive Officer under the FY20 PSAs with respect to the emerging revenue growth and design win performance metrics. The remaining shares earned under such metrics will be issued in November 2021, provided that the Named Executive Officer meets the continued employment condition. Page 38 Proxy Statement 38 Outstanding PSAs at the End of Fiscal Year 2020 As summarized in the table below of PSAs granted since our fiscal year ended September 28, 2018 (‘‘fiscal year 2018’’) (the first year in which the Compensation Committee awarded PSAs subject to a performance metric measured over a three-year performance period), achievement of the TSR percentile ranking performance metric under the FY20 PSAs, which is subject to a three-year performance period, will be determined following the conclusion of the Company’s fiscal year 2022. During the three-year performance period under the fiscal year 2018 PSAs comprising the Company’s fiscal years 2018, 2019, and 2020, the Company achieved a TSR of 44% resulting in its ranking in the 28th percentile against the applicable peer group. As a result of failing to achieve the threshold TSR percentile ranking metric, no shares were earned by the Named Executive Officers with respect to such performance metric, and all PSAs with respect to such performance metric were cancelled. PSA Fiscal Year Grant Date Performance Metric Performance Period Achieved (% of Target) FY18 FY19 FY20 11/7/2017 11/6/2018 11/5/2019 Non-GAAP EBITDA Growth 3-year TSR Percentile Ranking Non-GAAP EBITDA Growth 3-year TSR Percentile Ranking Emerging Revenue Growth Design Wins 3-year TSR Percentile Ranking FY18 FY18 - FY20 FY19 FY19 - FY21 FY20 FY20 FY20 - FY22 99.8% 0% 0% Performance Period in Progress (1) 200% 200% Performance Period in Progress (2) (1) As of March 18, 2021, performance under this metric during the applicable performance period is at the ‘‘threshold’’ level of performance. (2) As of March 18, 2021, performance under this metric during the applicable performance period is between the ‘‘target’’ and ‘‘maximum’’ levels of performance. One-Time, Non-Recurring Stock-Based Awards The Compensation Committee also granted each executive officer a one-time, non-recurring stock-based award at its meeting on November 5, 2019. The purpose of these awards was to address significant executive retention concerns that came to light during the Compensation Committee’s planning for fiscal year 2020 compensation. More specifically, the Compensation Committee reviewed analyses prepared by Aon/Radford showing that potential future payouts to the executive officers under the Company’s long-term incentive program were below the compensation opportunities an executive could expect upon leaving the Company and commencing similar employment at a company in the peer group. In addition, the potential future payouts were below both the median of the peer group and Aon/Radford’s recommended level of potential long-term equity payouts. The Compensation Committee noted that due to aggressive metric setting under the Company’s long-term incentive programs—as well as the occurrence of external events beyond the Company’s control, including the Trade War—actual payouts under the Company’s long-term incentive program had also lagged behind peer companies in recent years (including when adjusting for historical performance). At the same time, the Compensation Committee recognized that competition for executive talent had increased significantly in the semiconductor industry. As a result of its analysis of these various factors, the Compensation Committee determined that it was in the best interests of the Company and its stockholders to enhance retention by making one-time, non-recurring stock-based awards. For Mr. Griffin, the Company’s Chief Executive Officer, the one-time, non-recurring stock-based award consisted of a PSA that, like the FY20 PSAs, has both 39 Proxy Statement Page 39 ‘‘performance’’ and ‘‘continued employment’’ conditions that must be met in order for him to receive shares underlying the award, as follows: Value of PSA Award Number of Shares Subject to PSAs, at Target(1) $5,000,000 50,648 (1) Reflects the dollar value of the award, divided by $98.72 per share, which was the closing price of the Company’s common stock on the Nasdaq Global Select Market on November 5, 2019. The ‘‘performance’’ condition of the PSA award measures the Company’s non-GAAP EBITDA margin achieved relative to the 16 peer companies listed above during a two-year performance period comprising the Company’s fiscal years 2020 and 2021, with half of the total award available to be earned with respect to each fiscal year within the performance period. For purposes of the award, non-GAAP EBITDA margin is calculated by dividing non-GAAP EBITDA by revenue for the applicable fiscal year, where non-GAAP EBITDA is defined as non-GAAP operating income, plus depreciation and amortization, for the applicable fiscal year. With respect to the Company and each peer group company, non-GAAP EBITDA and revenue are calculated based on publicly reported financial information for the applicable fiscal year (which for the peer companies consists of the four-quarter period that ends closest to, but not later than, the end of the Company’s applicable fiscal year). When calculating the Company’s non-GAAP EBITDA margin, the impact of any acquisition or disposition occurring within the applicable fiscal year is excluded if the revenue attributable to such acquisition or disposition exceeds $50 million during such period. The specific pre-established targets under the PSA award are as follows (subject to linear interpolation for amounts between ‘‘threshold’’ and ‘‘target’’ or ‘‘target’’ and ‘‘maximum’’): Non-GAAP EBITDA Margin Percentile Ranking % of Target Level Shares Earned Threshold Target Maximum 25th 50th 75th 50% 100% 200% The ‘‘continued employment’’ condition of the PSA award provides that none of the shares earned based on performance would vest until the second anniversary of the grant date and would vest in full on such second anniversary only if Mr. Griffin remains employed by the Company. During fiscal year 2020, the Company achieved a non-GAAP EBITDA margin of 43%, which put the Company in the 88th percentile of the peer group, resulting in achievement with respect to such metric of 200% of the target level of shares with respect to fiscal year 2020, with such shares to be issued in November 2021, provided that Mr. Griffin meets the continued employment condition. For the other Named Executive Officers, the one-time, non-recurring stock-based award consisted of an RSU award that vests in two equal installments, with half of the underlying shares vesting on each of the first two anniversaries of the grant date provided the Named Executive Officer remains employed by the Company on the applicable vesting date, as follows: Name Kris Sennesael Carlos S. Bori Robert J. Terry Karilee A. Durham Value of RSU Award Number of Shares Subject to RSUs(1) $1,700,000 $1,500,000 $1,200,000 $ 800,000 17,220 15,194 12,155 8,103 (1) Reflects the dollar value of the award, divided by $98.72 per share, which was the closing price of the Company’s common stock on the Nasdaq Global Select Market on November 5, 2019. Other Compensation and Benefits We provide other benefits to our executive officers that are intended to be part of a competitive overall compensation program and are not tied to any company performance criteria. Consistent with our objective of having compensation programs that are considered fair to our employees, executive officers are eligible to participate in the Company’s medical, dental, vision, life, and disability insurance plans, as well as the Company’s 401(k) Savings and Investment Page 40 Proxy Statement 40 Plan and Employee Stock Purchase Plan, under the same terms as such benefits are offered to other benefits-eligible employees. The Company does not provide executive officers with any enhanced retirement benefits (i.e., executive officers are subject to the same limits on contributions as other employees, as the Company does not offer any supplemental executive retirement plan or other similar non-qualified deferred compensation plan), and they are eligible for 401(k) company-match contributions under the same terms as other employees. The Company offered executives the opportunity to participate in a reimbursement program for fiscal year 2020 providing up to an aggregate of $20,000 to each executive for the purchase of financial planning services, estate planning services, personal tax planning and preparation services, and/or an executive physical. No tax gross-up was provided for such reimbursements. In fiscal year 2020, each of the Named Executive Officers received reimbursement in connection with such services. Engagement with Stockholders Regarding Executive Compensation At our 2020 Annual Meeting of Stockholders, approximately 89% of the votes cast approved our ‘‘say-on-pay’’ proposal—the annual advisory vote regarding the compensation of the Company’s Named Executive Officers. We understood this to mean that stockholders generally approved of our compensation policies and determinations for fiscal year 2019 and that they were generally pleased with the Company’s enhanced disclosure of performance metrics and achievement in response to input from our stockholders following our 2019 Annual Meeting of Stockholders, at which our ‘‘say-on-pay’’ proposal was approved by only approximately 72% of the votes cast. Nonetheless, following the 2020 Annual Meeting, we engaged in formal stockholder outreach, soliciting feedback from approximately thirty institutional stockholders representing approximately 53% of the Company’s shares outstanding. Institutions representing approximately 38% of the Company’s shares outstanding, including twelve of our largest twenty stockholders, responded to our outreach, and our subsequent conversations covered a variety of governance and compensation-related topics. During these conversations, most institutional stockholders expressed approval of the Company’s strategy, performance, and management. In addition, most stockholders indicated support for the Company’s compensation policies and plan designs in general, with some stockholders suggesting that going forward the Company modify the metrics and performance period duration for certain long-term stock-based awards. After considering this input from our stockholders, as well as evaluating practices related to executive compensation by public companies generally, and our peer group specifically, our Compensation Committee determined that in general, its existing executive compensation policies and plan designs remained appropriate and in the best interests of the Company and its stockholders. Severance and Change-in-Control Benefits None of our executive officers, including the Named Executive Officers, has an employment agreement that provides a specific term of employment with the Company. Accordingly, the employment of any such employee may be terminated at any time. We do provide certain benefits to our Named Executive Officers upon certain qualifying terminations of employment and in connection with terminations of employment under certain circumstances following a change in control. A description of the material terms of our severance and change-in-control arrangements with the Named Executive Officers can be found immediately below and further below under ‘‘Potential Payments Upon Termination or Change in Control.’’ The Compensation Committee believes that severance protections can play a valuable role in recruiting and retaining superior talent. Severance and other termination benefits are an effective way to offer executives financial security to incent them to forego 41 Proxy Statement Page 41 an opportunity with another company. These agreements also protect the Company as the Named Executive Officers are bound by non-solicit covenants for a period of twelve (12) months after termination of employment. Outside of the change-in-control context, each Named Executive Officer is entitled to severance benefits if his or her employment is involuntarily terminated by the Company without cause and, in the case of the Chief Executive Officer, if he terminates his own employment for good reason (as defined in the Chief Executive Officer’s change-in-control agreement). The level of each Named Executive Officer’s cash severance or other termination benefit is generally tied to his or her annual base salary and short-term incentive amounts. Additionally, each Named Executive Officer would receive enhanced severance benefits and accelerated vesting of equity awards if his or her employment were terminated under certain circumstances in connection with a change in control of the Company. These benefits are described in detail further below under ‘‘Potential Payments Upon Termination or Change in Control.’’ The Compensation Committee believes these enhanced severance benefits and accelerated vesting are appropriate because the occurrence, or potential occurrence, of a change-in-control transaction would likely create uncertainty regarding the continued employment of executive officers that typically occurs in a change-in-control context, and such severance benefits and accelerated vesting encourage the Named Executive Officers to remain employed with the Company through the change-in-control process and to focus on enhancing stockholder value both before and during the process. In addition, the vesting protection helps assure the Named Executive Officers that they will not lose the expected value of their equity awards because of a change in control of the Company. Executive Officer Stock Ownership Requirements We have adopted Executive Stock Ownership guidelines with the objective of more closely aligning the interests of our executive officers with those of our stockholders. Under the Executive Officer Ownership guidelines, our Named Executive Officers are each required to hold the lower of (a) the number of shares with a fair market value equal to the applicable multiple of such executive’s current base salary, or (b) the applicable number of shares, each as set forth in the table below. All of our Named Executive Officers are in compliance with the stock ownership guidelines as of the date hereof. Chief Executive Officer Chief Financial Officer Senior Vice President, Sales and Marketing Senior Vice President and General Counsel Senior Vice President, Human Resources Multiple of Annual Base Salary(1) 6 2.5 2.5 2.5 2.5 Shares 137,200 29,400 25,400 26,300 24,000 (1) For purposes of the Executive Stock Ownership guidelines, the fair market value of the Company’s common stock is the average closing price per share of the Company’s common stock as reported on the Nasdaq Global Select Market (or if the common stock is not then traded on such market, such other market on which the common stock is traded) for the twelve (12) month period ending with the determination date. Page 42 Proxy Statement 42 Prohibition on Hedging and Certain Other Transactions Compliance with Internal Revenue Code Section 162(m) For fiscal year 2020, with the exception of compensation grandfathered pursuant to certain transition rules, the Company will be unable to deduct compensation in excess of $1 million paid to certain executive officers, including the Chief Financial Officer, as specified under Section 162(m) of the IRC. The Compensation Committee uses its judgment to authorize compensation payments that may be subject to the limit when the Compensation Committee believes such payments are appropriate and in the best interests of the Company and its stockholders. We prohibit our directors, officers, and employees (or any of their designees) from directly or indirectly engaging in the following transactions with respect to securities of the Company: (cid:127) selling short, including short sales ‘‘against the box’’; (cid:127) buying or selling put or call options; or (cid:127) purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of securities of the Company, whether through the use of traded securities, privately negotiated derivative securities or synthetic financial instruments. In addition, we prohibit our directors, officers, and employees from purchasing Company securities on margin, borrowing against Company securities held in a margin account, or pledging Company securities as collateral for a loan. 43 Proxy Statement Page 43 Compensation Tables for Named Executive Officers Summary Compensation Table The following table summarizes compensation earned by, or awarded or paid to, our Named Executive Officers for fiscal year 2020, fiscal year 2019, and fiscal year 2018. Name and Principal Position Year Salary ($)(1) Stock Awards ($)(2) Non-Equity Incentive Plan Compensation ($)(3) All Other Compensation ($)(4) Liam K. Griffin 2020 1,043,888 17,430,589 President and Chief Executive Officer Kris Sennesael Senior Vice President and Chief Financial Officer Carlos S. Bori Senior Vice President, Sales and Marketing Robert J. Terry Senior Vice President, General Counsel and Secretary Karilee A. Durham (5) Senior Vice President, Human Resources 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 972,000 11,658,937 894,808 7,150,399 537,192 5,677,593 496,000 3,264,443 456,366 2,491,910 463,189 4,856,262 428,200 3,147,860 398,535 2,491,910 479,396 4,431,833 442,700 1,981,920 409,054 1,557,371 437,908 3,037,435 3,292,800 1,011,257 1,284,664 1,060,000 322,467 369,341 731,200 222,373 251,669 756,800 230,112 257,914 691,200 33,162 18,399 12,242 18,591 15,352 13,075 15,444 12,561 12,346 15,994 15,287 12,466 16,531 Total ($) 21,800,439 13,660,593 9,342,113 7,293,376 4,098,262 3,330,692 6,066,095 3,810,994 3,154,460 5,684,023 2,670,019 2,236,805 4,183,074 (1) (2) The amount paid to each Named Executive Officer for each two-week pay period is calculated by dividing the Named Executive Officer’s annual base salary by 26. Whereas fiscal years 2018 and 2019 each consisted of 52 weeks, fiscal year 2020 consisted of 53 weeks, resulting in total salary payments for each Named Executive Officer to be higher than the annual base salary for such executive set forth above under ‘‘Components of Compensation—Base Salary.’’ The amounts in the Stock Awards column represent the grant date fair values, computed in accordance with the provisions of FASB ASC Topic 718—Compensation—Stock Compensation (‘‘ASC 718’’), of PSAs and RSUs granted during the applicable fiscal year, without regard to estimated forfeiture rates. For fiscal years 2018, 2019, and 2020, assuming the highest level of performance achievement with respect to the PSAs, the grant date fair values of the Stock Awards would be as follows: Mr. Griffin (FY 2018: $9,216,421; FY 2019: $14,658,935; FY 2020: $25,430,512), Mr. Sennesael (FY 2018: $3,211,920; FY 2019: $4,104,438; FY 2020: $6,637,546), Mr. Bori (FY 2018: $3,211,920; FY 2019: $3,957,856; FY 2020: $5,666,259), Mr. Terry (FY 2018: $2,007,357; FY 2019: $2,491,891; FY 2020: $5,211,819), and Ms. Durham (FY 2020: $3,577,434). For a description of the assumptions used in calculating the fair value of equity awards in 2020 under ASC 718, see Note 9 of the Company’s financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on November 17, 2020. (3) Reflects amounts paid to the Named Executive Officers pursuant to the executive incentive plan adopted by the Compensation Committee for each year indicated. (4) ‘‘All Other Compensation’’ includes the Company’s contributions to the executive’s 401(k) Plan account, the cost of group term life insurance premiums, and financial planning benefits. For fiscal year 2020, it specifically includes $11,400 in Company contributions to each Named Executive Officer’s 401(k) Plan account, as well as $19,119 in financial planning benefits for Mr. Griffin. (5) Ms. Durham was not a Named Executive Officer prior to fiscal year 2020. Page 44 Proxy Statement 44 Grants of Plan-Based Awards Table The following table summarizes all grants of plan-based awards made to the Named Executive Officers in fiscal year 2020, including incentive awards payable under our Fiscal Year 2020 Executive Incentive Plan. Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) Estimated Future Payouts Under Equity Incentive Plan Number of Stock Or Awards Stock Awards: All Other Grant Date Fair Value of Stock and Option Name Liam K. Griffin Grant Date Threshold ($) Target Maximum Threshold Target Maximum (#) (#) (#) ($) ($) Units (#) Awards ($) 823,200 1,646,400 3,292,800 11/5/2019 (2) 11/5/2019 (3) 11/5/2019 (4) 30,388 60,777 151,942 8,430,682 (5) 40,518 3,999,937 (6) 25,324 50,648 101,296 4,999,971 (7) Kris Sennesael 265,000 530,000 1,060,000 11/5/2019 (2) 11/5/2019 (3) 11/5/2019 (8) Carlos S. Bori 182,800 365,600 731,200 11/5/2019 (2) 11/5/2019 (3) 11/5/2019 (8) Robert J. Terry 189,200 378,400 756,800 11/5/2019 (2) 11/5/2019 (3) 11/5/2019 (8) Karilee A. Durham 172,800 345,600 691,200 11/5/2019 (2) 11/5/2019 (3) 11/5/2019 (8) 9,724 19,448 48,620 8,205 16,410 41,025 7,901 15,802 39,505 5,470 10,940 27,350 2,697,729 (5) 1,279,905 (6) 1,699,958 (6) 2,276,313 (5) 1,079,997 (6) 1,499,952 (6) 2,191,974 (5) 1,039,916 (6) 1,199,942 (6) 12,965 17,220 10,940 15,194 10,534 12,155 1,517,542 (5) 719,965 (6) 799,928 (6) 7,293 8,103 (1) (2) The amounts shown represent the potential value of awards earned under the Incentive Plan. The amounts actually paid to the Named Executive Officers under the Incentive Plan are shown above in the ‘‘Summary Compensation Table’’ under ‘‘Non-Equity Incentive Plan Compensation.’’ For a more complete description of the Incentive Plan, please see description above under ‘‘Components of Compensation—Short-Term Incentives.’’ The amounts shown represent shares potentially issuable pursuant to the FY20 PSAs granted on November 5, 2019, under the Company’s 2015 Long-Term Incentive Plan, as described above under ‘‘Components of Compensation—Long-Term Stock-Based Compensation.’’ (3) Represents shares underlying RSU awards granted under the Company’s 2015 Long-Term Incentive Plan. The RSU award vests over four years at a rate of twenty-five percent (25%) per year commencing one year after the date of grant and on each subsequent anniversary of the grant date for the following three years, provided the executive remains employed by the Company through each such vesting date. (4) The amounts shown represent shares potentially issuable pursuant to the one-time, non-recurring PSA award granted to Mr. Griffin on November 5, 2019, under the Company’s 2015 Long-Term Incentive Plan, as described above under ‘‘Components of Compensation—Long-Term Stock-Based Compensation.’’ 45 Proxy Statement Page 45 (5) Reflects the grant date fair value of the FY20 PSAs, computed in accordance with the provisions of ASC 718, using (a) a Monte Carlo simulation (which weights the probability of multiple potential outcomes) to value the portion of the award related to TSR percentile ranking, and (b) a price of $98.72 per share, which was the closing sale price of the Company’s common stock on the Nasdaq Global Select Market on November 5, 2019, to value the portion of the award related to emerging revenue growth and design wins, assuming performance at the ‘‘target’’ level. For a description of the assumptions used in calculating the fair value of equity awards granted in fiscal year 2020 under ASC 718, see Note 9 of the Company’s financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on November 17, 2020. (6) Reflects the grant date fair value of the RSUs granted on November 5, 2019, computed in accordance with the provisions of ASC 718 using a price of $98.72 per share, which was the closing price of the Company’s common stock on the Nasdaq Global Select Market on November 5, 2019. (7) Reflects the grant date fair value of the one-time, non-recurring PSA award granted to Mr. Griffin on November 5, 2019, computed in accordance with the provisions of ASC 718 using a price of $98.72 per share, which was the closing price of the Company’s common stock on the Nasdaq Global Select Market on November 5, 2019, and assuming performance at the ‘‘target’’ level. (8) Represents shares underlying RSU awards granted under the Company’s 2015 Long-Term Incentive Plan. The one-time, non-recurring RSU award vests over two years at a rate of fifty percent (50%) per year, as described above under ‘‘Components of Compensation— Long-Term Stock-Based Compensation.’’ Page 46 Proxy Statement 46 Outstanding Equity Awards at Fiscal Year End Table The following table summarizes the unvested stock awards and all stock options held by the Named Executive Officers as of the end of fiscal year 2020. Option Awards Stock Awards Number of Number of Securities Securities Underlying Underlying Option Unexercised Unexercised Exercise Options (#) Options (#) Exercisable Unexercisable Price ($) Option Expiration Date Name Number of Shares or Units of Stock that Have Not Vested (#) Market Value of Shares or Units of Stock that Have Not Vested ($)(1) Equity Incentive Plan Awards: Number of Unearned Shares, Units or other Rights that Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or other Rights that Have Not Vested ($)(1) Liam K. Griffin — 13,211 (2) 77.66 11/9/2023 60,778 (3) 8,924,034 9,290 (9) 1,364,051 50,648 3,862 12,387 36,301 40,518 (4) (5) (6) (7) (8) 7,436,646 567,057 1,818,783 5,330,076 5,949,258 108,906 91,164 12,662 (10) (11) (12) 15,990,668 13,385,610 1,859,161 Kris Sennesael Carlos S. Bori 40,000 9,578 1,500 5,191 6,165 — 75.22 8/29/2023 19,448 (3) 2,855,550 3,238 (9) 475,436 3,192 (2) 77.66 11/9/2023 933 4,316 10,164 12,965 17,220 (5) (6) (7) (8) (13) 136,992 633,718 1,492,380 1,903,651 2,528,413 30,492 29,172 (10) (11) 4,477,140 4,283,325 — 60.97 11/10/2021 16,410 (3) 2,409,480 3,238 (9) 475,436 — 3,082 (2) 84.89 77.66 11/9/2022 11/9/2023 901 4,316 9,801 10,940 15,194 (5) (6) (7) (8) (13) 132,294 633,718 1,439,081 1,606,320 2,230,935 29,403 24,615 (10) (11) 4,317,242 3,614,220 Robert J. Terry — 2,252 (14) 75.91 11/10/2023 15,802 (3) 2,320,208 2,023 (9) 297,037 658 2,698 6,171 10,534 12,155 (15) (6) (7) (8) (13) 96,614 396,147 906,088 1,546,707 1,784,719 18,513 23,703 (10) (11) 2,718,264 3,480,311 Karilee A. Durham 10,940 (3) 1,606,320 1,239 (9) 181,922 8,852 3,993 7,293 8,103 (16) (7) (8) (13) 1,299,739 586,292 1,070,831 1,189,763 11,979 16,410 (10) (11) 1,758,877 2,409,480 (1) Reflects a price of $146.83 per share, which was the closing sale price of the Company’s common stock on the Nasdaq Global Select Market on October 2, 2020. 47 Proxy Statement Page 47 (2) These options were granted on November 9, 2016, and vested at a rate of twenty-five percent (25%) per year on each anniversary of the grant date until they became fully vested on November 9, 2020. (3) Represents shares issuable under the FY20 PSAs (awarded on November 5, 2019, as described above under ‘‘Components of Compensation—Long-Term Stock-Based Compensation’’) with respect to two performance metrics measured over a one-year performance period consisting of the Company’s fiscal year 2020, assuming achievement at the ‘‘maximum’’ level of performance. Fifty percent (50%) of the shares earned under the FY20 PSAs with respect to such metrics were issued on November 5, 2020, and the remaining fifty percent (50%) of the shares earned with respect to such metrics will be issued on November 5, 2021, provided that the executive meets the continued employment condition. (4) Represents shares issuable under the one-time, non-recurring stock-based award granted to Mr. Griffin on November 5, 2019 (as described above under ‘‘Components of Compensation—Long-Term Stock-Based Compensation’’), with respect to a non-GAAP EBITDA margin metric measured over the Company’s fiscal year 2020, assuming achievement at the ‘‘maximum’’ level of performance. The shares earned under this award will be issued on November 5, 2021, provided that Mr. Griffin meets the continued employment condition. (5) Represents shares issuable under an RSU award granted on November 9, 2016, under the Company’s 2015 Long-Term Incentive Plan. The RSU award vested at a rate of twenty-five percent (25%) per year on each anniversary of the grant date until they became fully vested on November 9, 2020. (6) Represents shares issuable under an RSU award granted on November 7, 2017, under the Company’s 2015 Long-Term Incentive Plan. The RSU award vests at a rate of twenty-five percent (25%) per year on each anniversary of the grant date through November 7, 2021. (7) Represents shares issuable under an RSU award granted on November 6, 2018, under the Company’s 2015 Long-Term Incentive Plan. The RSU award vests at a rate of twenty-five percent (25%) per year on each anniversary of the grant date through November 6, 2022. (8) Represents shares issuable under an RSU award granted on November 5, 2019, under the Company’s 2015 Long-Term Incentive Plan. The RSU award vests at a rate of twenty-five percent (25%) per year on each anniversary of the grant date through November 5, 2023. (9) Represents shares issuable under the fiscal year 2018 PSAs (‘‘FY18 PSAs’’) with respect to a TSR percentile ranking performance metric, assuming achievement at the ‘‘threshold’’ level of performance. This portion of the FY18 PSAs, which was subject to a three-year performance period and originally scheduled to vest on November 7, 2020, was cancelled upon the Compensation Committee’s determination on October 20, 2020, that the performance condition had not been satisfied. (10) Represents shares issuable under the fiscal year 2019 PSAs (‘‘FY19 PSAs’’) with respect to the TSR percentile ranking performance metric, assuming achievement at the ‘‘maximum’’ level of performance. This portion of the FY19 PSAs, which is subject to a three-year performance period, will be issued on November 6, 2021, to the extent earned and provided that the executive meets the continued employment condition. (11) Represents shares issuable under the FY20 PSAs (awarded on November 5, 2019, as described above under ‘‘Components of Compensation—Long-Term Stock-Based Compensation’’) with respect to the TSR percentile ranking performance metric, assuming achievement at the ‘‘maximum’’ level of performance. This portion of the FY20 PSAs, which is subject to a three-year performance period, will be issued on November 5, 2022, to the extent earned and provided that the executive meets the continued employment condition. (12) Represents shares issuable under the one-time, non-recurring stock-based award granted to Mr. Griffin on November 5, 2019 (as described above under ‘‘Components of Compensation—Long-Term Stock-Based Compensation’’), with respect to a non-GAAP EBITDA margin metric measured over the Company’s fiscal year 2021, assuming achievement at the ‘‘threshold’’ level of performance. The shares earned under this award will be issued on November 5, 2021, provided that Mr. Griffin meets the continued employment condition. (13) Represents shares issuable under an RSU award granted on November 5, 2019, under the Company’s 2015 Long-Term Incentive Plan. The RSU award vests at a rate of fifty percent (50%) per year on each anniversary of the grant date through November 5, 2021. (14) These options were granted on November 10, 2016, and vested at a rate of twenty-five percent (25%) per year on each anniversary of the grant date until they became fully vested on November 10, 2020. (15) Represents shares issuable under an RSU award granted on November 10, 2016, under the Company’s 2015 Long-Term Incentive Plan. The RSU award vested at a rate of twenty-five percent (25%) per year on each anniversary of the grant date until they became fully vested on November 10, 2020. (16) Represents shares issuable under an RSU award granted on April 9, 2018, under the Company’s 2015 Long-Term Incentive Plan. The RSU award vests at a rate of twenty-five percent (25%) per year on each anniversary of the grant date through April 9, 2022. Page 48 Proxy Statement 48 Option Exercises and Stock Vested Table The following table summarizes the Named Executive Officers’ option exercises and stock award vesting during fiscal year 2020. Name Liam K. Griffin Kris Sennesael Carlos S. Bori Robert J. Terry Option Awards Stock Awards Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($)(1) Number of Shares Acquired on Vesting (#) 95,172 3,391,429 — — — — 7,471 130,998 84,285 27,163 20,374 13,987 Value Realized on Vesting ($)(2) 8,471,587 2,987,558 2,028,413 1,393,526 Karilee A. Durham (1) 650,156 The value realized on exercise is based on the amount by which the market price of a share of the Company’s common stock on the dates of exercise exceeded the applicable exercise price per share of the exercised option. 6,988 — — (2) The value realized upon vesting is determined by multiplying (a) the number of shares underlying the stock awards that vested, by (b) the closing price of the Company’s common stock on the Nasdaq Global Select Market on the applicable vesting date. Potential Payments Upon Termination or Change in Control Mr. Griffin On May 11, 2016, in connection with the appointment of Mr. Griffin as Chief Executive Officer, the Company entered into an amended and restated Change in Control / Severance Agreement with Mr. Griffin (the ‘‘Griffin Agreement’’). The Griffin Agreement sets out severance benefits that become payable if, while employed by the Company, other than following a change in control, Mr. Griffin either (i) is terminated without cause, or (ii) terminates his employment for good reason. The severance benefits provided to Mr. Griffin under either of these circumstances would consist of: (i) a lump-sum payment equal to two (2) times the sum of (A) his then-current annual base salary immediately prior to such termination and (B) the Bonus Amount (as defined below); (ii) full acceleration of the vesting of all of Mr. Griffin’s outstanding stock options, which stock options would become exercisable for a period of two (2) years after the termination date (but not beyond the expiration of their respective maximum terms), full acceleration of the vesting of all outstanding restricted stock awards, and the right to receive the number of performance shares under outstanding PSAs that are earned but unissued and that he would have earned had he remained employed through the end of the applicable performance period; and (iii) provided he is eligible for and timely elects to continue receiving group medical coverage, certain COBRA continuation for him and his eligible dependents (‘‘COBRA continuation’’) for up to fifteen (15) months after the termination date. The Bonus Amount is an amount equal to the greater of (x) the average of the short-term cash incentive awards received for the three (3) years prior to the year in which the termination occurs, and (y) the target annual short-term cash incentive award for the year in which the termination occurs. The Griffin Agreement also sets out severance benefits that become payable if, within the period of time commencing three (3) months prior to and ending two (2) years following a change in control, Mr. Griffin’s employment is either (i) terminated by the Company without cause, or (ii) terminated by him for good reason (a ‘‘Qualifying Termination’’). The severance benefits provided to Mr. Griffin in such circumstances would consist of the following: (i) a lump-sum payment equal to two and one-half (21⁄2) times the sum of (A) his annual base salary immediately prior to the change in control, and 49 Proxy Statement Page 49 (B) the CIC Bonus Amount (as defined below); (ii) all of Mr. Griffin’s then-outstanding stock options would become exercisable for a period of thirty (30) months after the termination date (but not beyond the expiration of their respective maximum terms); and (iii) COBRA continuation for up to eighteen (18) months after the termination date. The CIC Bonus Amount is an amount equal to the greater of (x) the average of the annual short-term cash incentive awards received for the three (3) years prior to the year in which the change of control occurs and (y) the target annual short-term cash incentive award for the year in which the change of control occurs. The Griffin Agreement also provides that in the event of a Qualifying Termination, Mr. Griffin is entitled to full acceleration of the vesting of all of his outstanding equity awards (including stock options, restricted stock awards, RSU awards, and all earned but unissued performance-based equity awards). At the time of a change in control, all such outstanding equity awards would continue to be subject to the same time-based vesting schedule to which the awards were subject prior to the change in control (including performance- based equity awards that are deemed earned at the time of the change in control as described below). For performance-based equity awards where the change in control occurs prior to the end of the performance period, such awards would be deemed earned as to the greater of (i) the target level of shares for such awards, or (ii) the number of shares that would have been earned pursuant to the terms of such awards based upon performance up through and including the day prior to the date of the change in control. In the event that the successor or surviving company does not agree to assume, or to substitute for, such outstanding equity awards on substantially similar terms with substantially equivalent economic benefits as exist for such award immediately prior to the change in control, then such awards would accelerate in full as of the change in control. In the event of Mr. Griffin’s death or permanent disability (within the meaning of Section 22(e)(3) of the IRC), the Griffin Agreement provides for full acceleration of the vesting of all then-outstanding equity awards subject to time-based vesting (including stock options, restricted stock awards, RSU awards, and all performance-based equity awards where the performance period has ended and the shares are earned but unissued). The Griffin Agreement also provides that if Mr. Griffin’s death or permanent disability occurs prior to the end of the performance period of a performance-based equity award, each such award would be deemed earned as to the greater of (i) the target level of shares for such award, or (ii) the number of shares that would have been earned pursuant to the terms of such award had he remained employed through the end of the performance period, and such earned shares would become vested and issuable to him after the performance period ends. In addition, all outstanding stock options would be exercisable for a period of twelve (12) months following the termination of employment (but not beyond the expiration of their respective maximum terms). The Griffin Agreement is intended to be exempt from or compliant with Section 409A of the IRC and has an initial two (2) year term from May 11, 2016, and thereafter renews automatically on an annual basis for up to five (5) additional years unless either the Company or Mr. Griffin timely provides a notice of non-renewal to the other prior to the end of the then-current term. The payments due to Mr. Griffin under the Griffin Agreement are subject to potential reduction in the event that such payments would otherwise become subject to excise tax incurred under Section 4999 of the IRC, if such reduction would result in his retaining a larger amount, on an after-tax basis, than if he had received all of the payments due. Additionally, the Griffin Agreement requires that Mr. Griffin sign a release of claims in favor of the Company before he is eligible to receive any benefits under the Griffin Agreement and contains a non-solicitation provision applicable to Mr. Griffin while he is employed by the Company and for twelve (12) months following the termination of his employment. Page 50 Proxy Statement 50 The terms ‘‘change in control,’’ ‘‘cause,’’ and ‘‘good reason’’ are each defined in the Griffin Agreement. Change in control means, in summary: (i) the acquisition by a person or a group of 40% or more of the outstanding stock of the Company; (ii) a change, without approval by the Board of Directors, of a majority of the Board of Directors of the Company; (iii) the acquisition of the Company by means of a reorganization, merger, consolidation, or asset sale; or (iv) stockholder approval of a liquidation or dissolution of the Company. Cause means, in summary: (i) deliberate dishonesty that is significantly detrimental to the best interests of the Company; (ii) conduct constituting an act of moral turpitude; (iii) willful disloyalty or insubordination; or (iv) incompetent performance or substantial or continuing inattention to or neglect of duties. Good reason means, in summary: (i) a material diminution in his base compensation, authority, duties, responsibilities, or budget over which he retains authority; (ii) a requirement that Mr. Griffin report to a corporate officer or employee instead of reporting directly to the Board of Directors; (iii) a material change in his office location; or (iv) any action or inaction constituting a material breach by the Company of the terms of the agreement. Mr. Sennesael, Mr. Bori, Mr. Terry, and Ms. Durham The Company entered into Change in Control / Severance Agreements with each of Mr. Sennesael, Mr. Bori, Mr. Terry, and Ms. Durham on August 29, 2016, November 9, 2016, November 10, 2016, and April 13, 2018, respectively. Each such Change in Control / Severance Agreement is referred to herein as a ‘‘CIC Agreement.’’ Each CIC Agreement sets out severance benefits that become payable if, within the period of time commencing three (3) months prior to and ending twelve (12) months following a change in control, the executive officer’s employment is either (i) terminated by the Company without cause, or (ii) terminated by the executive for good reason (for each such executive, a ‘‘Qualifying Termination’’). The severance benefits provided to the executive in such circumstances would consist of the following: (i) a lump sum payment equal to one and one-half (11⁄2) times the sum of (A) his or her annual base salary immediately prior to the change in control, and (B) the CIC Bonus Amount; (ii) all of the executive’s then-outstanding stock options would remain exercisable for a period of eighteen (18) months after the termination date (but not beyond the expiration of their respective maximum terms); and (iii) COBRA continuation for up to eighteen (18) months after the termination date. Each CIC Agreement also provides that in the event of a Qualifying Termination, the executive is entitled to full acceleration of the vesting of all of his or her outstanding equity awards (including stock options, restricted stock awards, RSU awards, and all earned but unissued performance-based equity awards). At the time of a change in control, all such outstanding equity awards would continue to be subject to the same time-based vesting schedule to which the awards were subject prior to the change in control (including performance-based equity awards that are deemed earned at the time of the change in control as described below). For performance-based equity awards where the change in control occurs prior to the end of the performance period, such awards would be deemed earned as to the greater of (i) the target level of shares for such awards, or (ii) the number of shares that would have been earned pursuant to the terms of such awards based upon performance up through and including the day prior to the date of the change in control. In the event that the successor or surviving company does not agree to assume, or to substitute for, such outstanding equity awards on substantially similar terms with substantially equivalent economic benefits as exist for such award immediately prior to the change in control, then such awards would accelerate in full as of the change in control. Each CIC Agreement also sets out severance benefits outside a change in control that become payable if the 51 Proxy Statement Page 51 executive’s employment is terminated by the Company without cause. The severance benefits provided to the executive under such circumstance would consist of the following: (i) biweekly compensation continuation payments for a period of twelve (12) months, with each such compensation continuation payment being equal to the aggregate payment amount divided by twenty-six (26), where the aggregate payment is equal to the sum of (x) his or her annual base salary, and (y) any short-term cash incentive award then due; (ii) all then-vested outstanding stock options would remain exercisable for a period of twelve (12) months after the termination date (but not beyond the expiration of their respective maximum terms); and (iii) COBRA continuation coverage for up to twelve (12) months after the termination date. In the event of the executive’s death or permanent disability (within the meaning of Section 22(e)(3) of the IRC), each CIC Agreement provides for full acceleration of the vesting of all then-outstanding equity awards subject to time-based vesting (including stock options, restricted stock awards, RSU awards, and all performance-based equity awards where the performance period has ended and the shares are earned but unissued). Each CIC Agreement also provides that for a performance-based equity award where the executive’s death or permanent disability occurs prior to the end of the performance period, such award would be deemed earned as to the greater of (i) the target level of shares for such award, or (ii) the number of shares that would have been earned pursuant to the terms of such award had the executive remained employed through the end of the performance period, and such earned shares would become vested and issuable to the executive after the performance period ends. In addition, all outstanding stock options would remain exercisable for a period of twelve (12) months following the termination of employment (but not beyond the expiration of their respective maximum terms). Each CIC Agreement is intended to be exempt from or compliant with Section 409A of the IRC and has an initial two (2) year term, and thereafter renews automatically on an annual basis for up to five (5) additional years unless either the Company or the executive timely provides a notice of non-renewal to the other prior to the end of the then-current term. The payments due to each executive under his or her CIC Agreement are subject to potential reduction in the event that such payments would otherwise become subject to excise tax incurred under Section 4999 of the IRC, if such reduction would result in the executive retaining a larger amount, on an after-tax basis, than if he or she had received all of the payments due. Additionally, each CIC Agreement requires that the executive sign a release of claims in favor of the Company before he or she is eligible to receive any benefits under the agreement. Each CIC Agreement also contains non-solicitation provisions applicable to the executive while he or she is employed by the Company and for a period of twelve (12) months following the termination of his or her employment. The terms ‘‘change in control,’’ ‘‘cause,’’ and ‘‘good reason’’ are each defined in the CIC Agreements. Change in control means, in summary: (i) the acquisition by a person or a group of 40% or more of the outstanding stock of the Company; (ii) a change, without approval by the Board of Directors, of a majority of the Board of Directors of the Company; (iii) the acquisition of the Company by means of a reorganization, merger, consolidation, or asset sale; or (iv) stockholder approval of a liquidation or dissolution of the Company. Cause means, in summary: (i) deliberate dishonesty that is significantly detrimental to the best interests of the Company; (ii) conduct constituting an act of moral turpitude; (iii) willful disloyalty or insubordination; or (iv) incompetent performance or substantial or continuing inattention to or neglect of duties. Good reason means, in summary: (i) a material diminution in the executive’s base compensation, authority, duties, or responsibilities; (ii) a material diminution in the authority, duties, or responsibilities of the executive’s supervisor; (iii) a material change in the executive’s office location; or (iv) any action or inaction constituting a material breach by the Company of the terms of the agreement. Page 52 Proxy Statement 52 The following table summarizes the payments and benefits that would be made to the Named Executive Officers as of October 2, 2020, in the following circumstances as of such date: (cid:127) (cid:127) (cid:127) termination without cause outside of a change in control; termination without cause or for good reason in connection with a change in control; and in the event of a termination of employment because of death or disability. The accelerated equity values in the table reflect a price of $146.83 per share, which was the closing sale price of the Company’s common stock on the Nasdaq Global Select Market on October 2, 2020. The table does not reflect any equity awards made after October 2, 2020. Name Benefit Termination w/o Cause Outside Change in Control ($)(1) Termination w/o Cause or for Good Reason, After Death/Disability Change in Control ($) ($) Liam K. Griffin (2) Kris Sennesael (2) Carlos S. Bori (2) Robert J. Terry (2) Karilee A. Durham (2) Salary and Short-Term Incentive Accelerated Options Accelerated RSUs Accelerated PSAs Medical (5) TOTAL Salary and Short-Term Incentive Accelerated Options Accelerated RSUs Accelerated PSAs Medical (5) TOTAL Salary and Short-Term Incentive Accelerated Options Accelerated RSUs Accelerated PSAs Medical (5) (3) 5,350,800 913,805 13,665,174 43,476,510 26,425 63,432,714 (6) 530,000 — — — 23,458 553,458 (6) 457,000 — — — 23,627 (4) (7) (7) 6,688,500 913,805 13,665,174 43,476,510 31,710 64,775,699 1,590,000 220,791 6,695,154 10,121,873 35,187 18,663,005 1,233,900 213,182 6,042,348 8,940,919 35,441 — 913,805 13,665,174 43,476,510 — 58,055,489 — 220,791 6,695,154 10,121,873 — 17,037,818 — 213,182 6,042,348 8,940,919 — TOTAL 480,627 16,465,790 15,196,449 Salary and Short-Term Incentive Accelerated Options Accelerated RSUs Accelerated PSAs Medical (5) (6) 473,000 — — — 23,627 (7) 1,277,100 159,712 4,730,275 7,616,659 35,441 — 159,712 4,730,275 7,616,659 — TOTAL 496,627 13,819,187 12,506,646 Salary and Short-Term Incentive Accelerated Options Accelerated RSUs Accelerated PSAs Medical (5) TOTAL (6) 432,000 — — — 23,627 455,627 (7) 1,166,400 — 4,146,626 5,168,269 35,441 10,516,736 — — 4,146,626 5,168,269 — 9,314,895 (1) For Mr. Griffin, includes amounts payable pursuant to a termination for good reason outside of a change in control. (2) Excludes the value of accrued vacation/paid time off required by law to be paid upon termination. (3) Represents an amount equal to two (2) times the sum of (A) Mr. Griffin’s annual base salary as of October 2, 2020, and (B) an Incentive Plan payment, which is equal to Mr. Griffin’s ‘‘target’’ short-term cash incentive award for fiscal year 2020, since such ‘‘target’’ payout level is greater than the three (3) year average of the actual incentive payments made to Mr. Griffin for fiscal years 2017, 2018, and 2019. 53 Proxy Statement Page 53 (4) Represents an amount equal to two and one-half (21⁄2) times the sum of (A) Mr. Griffin’s annual base salary as of October 2, 2020, and (B) an Incentive Plan payment, which is equal to Mr. Griffin’s ‘‘target’’ short-term cash incentive award for fiscal year 2020, since such ‘‘target’’ payout level is greater than the three (3) year average of the actual incentive payments made to Mr. Griffin for fiscal years 2017, 2018, and 2019. (5) Represents the value of PSAs that were unvested and outstanding as of October 2, 2020, in accordance with Item 402(j) of Regulation S-K, using the following assumptions: (a) achievement at the ‘‘target’’ level of performance for the FY18 PSAs (3-year TSR percentile ranking metric) originally scheduled to vest on November 7, 2020, based on the Company’s TSR relative to peers for fiscal years 2018-2020 falling below the ‘‘threshold’’ level of performance (which resulted in the award’s cancellation due to the performance condition not being satisfied); (b) achievement at 140% of the ‘‘target’’ level of performance for the FY19 PSAs (3-year TSR percentile ranking metric) scheduled to vest on November 6, 2021, based on the Company’s TSR relative to peers for fiscal years 2019 and 2020; (c) achievement at 200% of the ‘‘target’’ level of performance for the FY20 PSAs (emerging revenue growth and design wins metrics) scheduled to vest on November 5, 2020, and November 6, 2021, based on the Company’s actual achievement at the ‘‘maximum’’ level of performance with respect to both performance metrics measured over a one-year performance period consisting of the Company’s fiscal year 2020; (d) achievement at 296% of the ‘‘target’’ level of performance for the FY20 PSAs (3-year TSR percentile ranking metric) scheduled to vest on November 5, 2022, based on the Company’s TSR relative to peers for fiscal year 2020; (e) achievement at 200% of the ‘‘target’’ level of performance for one half of the one-time, non-recurring stock-based award granted to Mr. Griffin scheduled to vest on November 5, 2021, based on the Company’s actual achievement at the ‘‘maximum’’ level of performance measured over the Company’s fiscal year 2020; and (f) achievement at the ‘‘target’’ level of performance for one half of the one-time, non-recurring stock-based award granted to Mr. Griffin scheduled to vest on November 5, 2021, which will be based on the Company’s performance measured over the Company’s fiscal year 2021. (6) Represents an amount equal to the Named Executive Officer’s annual base salary as of October 2, 2020. (7) Represents an amount equal to one and one-half (11⁄2) times the sum of (A) the Named Executive Officer’s annual base salary as of October 2, 2020, and (B) an Incentive Plan payment, which is equal to the Named Executive Officer’s ‘‘target’’ short-term cash incentive award for fiscal year 2020, since such ‘‘target’’ payout level is greater than the three (3) year average of the actual incentive payments made to the Named Executive Officer for fiscal years 2017, 2018, and 2019. Page 54 Proxy Statement 54 CEO Pay Ratio Following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of our other employees. For fiscal year 2020: (cid:127) The annual total compensation of our Chief Executive Officer was $21,800,439. (cid:127) The annual total compensation of our median compensated employee was $17,148. (cid:127) Based on the foregoing, we estimate that our Chief Executive Officer’s total annual compensation was approximately 1,271 times that of our median employee. To determine the median of the annual total compensation of our employees, we applied the following methodology and material assumptions: (cid:127) We did not use the de minimis exception to exclude any non-U.S. employees. We have a globally diverse workforce with total headcount of approximately 10,000 as of October 2, 2020, of which approximately 7,900 are located outside the United States, primarily in locations employing large direct labor forces such as Mexico and Singapore where wages are significantly lower than in the United States. The median employee identified within this employee population as of October 2, 2020, is a full-time employee in our Mexicali, Mexico facility. (cid:127) To identify the median employee, we used a consistently applied compensation measure that included total taxable earnings paid to our employees in the most recently completed taxable year in their respective jurisdictions. This included base salary, overtime pay, shift premiums, recognition bonuses, annual cash incentive awards, and long-term stock-based incentive awards. We annualized the compensation of permanent, full-time, and part-time employees who were hired after the beginning of the most recently completed taxable year in their respective jurisdictions. (cid:127) Using this consistently applied compensation measure, we identified an employee at the median and calculated such employee’s total compensation for fiscal year 2020 in accordance with Item 402(c)(2)(x) of Regulation S-K. (cid:127) We did not use any cost-of-living adjustments in identifying the median employee. (cid:127) The annual total compensation of our Chief Executive Officer is the amount reported in the ‘‘Total’’ column of our Summary Compensation Table for fiscal year 2020. We believe our pay ratio presented above is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. The SEC rules for identifying the median compensated 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. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. 55 Proxy Statement Page 55 Equity Compensation Currently, following each annual meeting of stockholders, each non-employee director who is reelected will receive a grant of RSUs having a value of approximately $200,000. Any newly appointed non-employee director will receive an initial equity grant of RSUs having a value of approximately $200,000. The number of shares subject to a non-employee director’s initial RSU award or annual award is determined by dividing the approximate value of the award, as stated above, by the average closing price per share of the Company’s common stock as reported on the Nasdaq Global Select Market (or if the common stock is not then traded on such market, such other market on which the common stock is traded) for each trading day during the 30 consecutive trading day period ending on, and including, the grant date. Unless otherwise determined by the Board of Directors, (a) a non-employee director’s initial equity grant of RSUs will vest in three (3) equal annual installments on the first three anniversaries of the date of grant, and (b) a non-employee director’s annual equity grant of RSUs will vest on the first anniversary of the date of grant. In the event of a change in control of the Company, any outstanding options and RSUs awarded under the 2008 Director Long-Term Incentive Plan will become fully exercisable and deemed fully vested, respectively. No director who is also an employee receives separate compensation for services rendered as a director. Mr. Griffin is currently the only director who is also an employee of the Company. Director Compensation The Board of Directors sets the compensation for the Company’s non-employee directors, after receiving the recommendations of the Compensation Committee. In formulating its recommendations, the Compensation Committee seeks and receives input from Aon/Radford related to the amounts, terms, and conditions of director cash compensation and stock-based compensation awards, with the goal of establishing non-employee director compensation that is similar to, and competitive with, the compensation of non-employee directors at peer companies in the semiconductor industry. Cash Compensation Non-employee directors of the Company are paid, in quarterly installments, an annual retainer of $75,000 (which increased from $70,000 as of February 2020). Additional annual retainers for Chairman, Lead Independent Director, and/or committee service (paid in quarterly installments) are as follows: any non-employee Chairman of the Board ($130,000); the Lead Independent Director, if one has been appointed ($50,000); the Chairman of the Audit Committee ($30,000); the Chairman of the Compensation Committee ($20,000); the Chairman of the Nominating and Governance Committee ($15,000); non-chair member of Audit Committee ($15,000, which increased from $12,000 as of February 2020); non-chair member of Compensation Committee ($10,000); and non-chair member of Nominating and Corporate Governance Committee ($7,500, which increased from $5,000 as of February 2020). In addition, the Compensation Committee continues to retain discretion to recommend to the full Board of Directors that additional cash payments be made to a non-employee director for extraordinary service during a fiscal year. Page 56 Proxy Statement 56 Director Compensation Table The following table summarizes the compensation paid to the Company’s non-employee directors for fiscal year 2020. Name David J. Aldrich, Chairman of the Board Christine King, Lead Independent Director Alan S. Batey Kevin L. Beebe Timothy R. Furey Balakrishnan S. Iyer David P. McGlade Robert A. Schriesheim Kimberly S. Stevenson (1) (3) Fees Earned or Paid in Cash ($) 203,750 158,000 78,633 88,750 94,875 61,635 104,016 93,633 80,625 Stock Awards ($)(1)(2) 226,626 226,626 226,626 226,626 226,626 — 226,626 226,626 226,626 Total ($) 430,376 384,626 305,259 315,376 321,501 61,635 330,642 320,259 307,251 The non-employee members of the Board of Directors who held such positions on October 2, 2020, held the following aggregate number of unexercised stock options, unvested RSU awards, and unearned, unvested performance share awards (assuming achievement at the ‘‘threshold’’ level of performance) as of such date: Name David J. Aldrich, Chairman of the Board Christine King, Lead Independent Director Alan S. Batey Kevin L. Beebe Timothy R. Furey David P. McGlade Robert A. Schriesheim Kimberly S. Stevenson Number of Securities Underlying Unexercised Options — — — — — — — — Number of Shares Subject to Unvested RSUs 2,140 2,140 3,820 2,140 2,140 2,140 2,140 2,812 Number of Unearned Performance Share Awards that Have Not Vested 5,099 — — — — — — — (2) Reflects the grant date fair value of 2,140 RSUs granted on May 6, 2020, to each non-employee director elected at the 2020 Annual Meeting of Stockholders, computed in accordance with the provisions of ASC 718 using a price of $105.90 per share, which was the closing sale price of the Company’s common stock on the Nasdaq Global Select Market on May 6, 2020. (3) Mr. Iyer served as a director until the 2020 Annual Meeting of Stockholders on May 6, 2020. Director Stock Ownership Requirements We have adopted Director Stock Ownership guidelines with the objective of more closely aligning the interests of our directors with those of our stockholders. The minimum number of shares of the Company’s common stock that the Director Stock Ownership guidelines require non-employee directors to hold while serving in their capacity as directors is the director base compensation (currently $75,000) multiplied by five (5), divided by the fair market value of the Company’s common stock (rounded to the nearest 100 shares). For purposes of the Director Stock Ownership guidelines, the fair market value of the Company’s common stock is the average closing price per share of the Company’s common stock as reported on the Nasdaq Global Select Market (or if the common stock is not then traded on such market, such other market on which the common stock is traded) for the twelve (12) month period ending with the determination date. All of our directors have met the stock ownership guidelines as of the date hereof (with the exception of Mr. Batey, who is not required to comply with the guidelines until the fifth anniversary of his appointment to the Board of Directors). 57 Proxy Statement Page 57 COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included herein with management, and based on the review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for the 2021 Annual Meeting of Stockholders. THE COMPENSATION COMMITTEE Christine King, Chairman David P. McGlade Robert A. Schriesheim Page 58 Proxy Statement 58 PROPOSAL 4: APPROVAL OF THE COMPANY’S AMENDED AND RESTATED 2015 LONG-TERM INCENTIVE PLAN Our equity incentive awards are critical to attracting, retaining, and motivating the most talented employees in our industry, upon whose judgment, interest, and special effort the successful operation of the Company is largely dependent. As a result, on November 11, 2020, our Board of Directors adopted, subject to stockholder approval, an amendment and restatement of the 2015 Long-Term Incentive Plan, as amended (which we refer to as the 2015 Plan). The amended and restated 2015 Plan (which we refer to as the Amended and Restated Plan) includes the following material changes to the 2015 Plan: (cid:127) Increases the number of shares of our common stock authorized for issuance under the 2015 Plan by 5,000,000 shares (or the equivalent of 3,333,333 shares if all were to be granted subject to Full Value Awards, as defined below, using the Company’s fungible share ratio of 1.5), subject to adjustment in the event of stock splits and other similar events; (cid:127) Removes references to Section 162(m) of the IRC to reflect changes made to Section 162(m) of the IRC as part of tax reform legislation enacted in 2017; and (cid:127) Provides for the term of the Amended and Restated Plan to expire on November 10, 2030. If the Amended and Restated Plan is approved by our stockholders, then, subject to adjustment in the event of stock splits and other similar events, the total number of shares that may be issued under the Amended and Restated Plan would be 14,750,000 shares plus an additional number of shares (up to 22,300,000) that is equal to the sum of the number of shares that remained in the pool of shares under the Company’s Amended and Restated 2005 Long-Term Incentive Plan (the ‘‘Prior Plan’’) as of May 19, 2015, which was the date on which our stockholders originally approved the 2015 Plan, plus the number of shares that were subject to awards outstanding under the Prior Plan as of May 19, 2015, and that are subsequently terminated, surrendered, cancelled, forfeited, or repurchased by us pursuant to a contractual repurchase right. We are asking our stockholders to approve the Amended and Restated Plan at the Annual Meeting. The 2015 Plan was originally adopted by our Board of Directors on November 11, 2014, approved by our stockholders on May 19, 2015, and amended by our Board of Directors on May 8, 2019. Highlights of the Amended and Restated Plan The Board of Directors recommends a vote for the approval of the Amended and Restated Plan because it believes the Amended and Restated Plan is in the best interests of the Company and its stockholders and contains features that are consistent with sound corporate governance practices, including the following: (cid:127) Does not provide for automatic vesting of outstanding awards upon a change in control of the Company. Upon a change in control, all outstanding equity awards granted under the Amended and Restated Plan will continue to be subject to the same time-based vesting schedule to which the awards were subject prior to the change in control (unless the successor or surviving company does not agree to assume, or to substitute for, such outstanding equity awards on substantially similar terms with substantially equivalent economic benefits as exist for such award immediately prior to the change in control, in which case the awards will accelerate in full as of the change in control). A 59 Proxy Statement Page 59 participant will be entitled to full accelerated vesting of all of his or her outstanding equity awards granted under the Amended and Restated Plan in the event that such participant’s employment is (i) terminated by the Company without cause, or (ii) terminated by the participant for good reason, in either case within the period of time commencing three (3) months prior to and ending twelve (12) months following a change in control. (cid:127) Does not include an ‘‘evergreen’’ provision. The number of shares of our common stock available for issuance under the Amended and Restated Plan is fixed and will not be adjusted based on the number of our shares outstanding. (cid:127) Includes a fungible share pool. Each share of common stock delivered in settlement of an award made under the Amended and Restated Plan other than an option, stock appreciation right (or ‘‘SAR’’), or other award for which the participant pays the fair market value of our common stock as of the date of grant (each, a ‘‘Full Value Award’’) will reduce the number of shares available for issuance by 1.5 shares. (cid:127) Does not permit repricings without stockholder approval. Without stockholder approval, we may not amend any option or SAR to reduce the exercise price or replace any stock option or SAR with cash or any other award when the exercise price of the stock option or SAR exceeds the fair market value of the underlying shares. (cid:127) Does not permit liberal share recycling. The Amended and Restated Plan provides that the following shares may not again be made available for issuance as awards under the Amended and Restated Plan: (i) shares used to pay the exercise price of an option (or other award), (ii) shares delivered to or withheld by us to pay the withholding taxes related to an award, (iii) shares that were subject to a stock-settled SAR and were not issued upon the net settlement or net exercise of such SAR, or (iv) shares repurchased on the open market with the proceeds of an option exercise. (cid:127) Does not provide for payment of dividends or dividend equivalents on awards until vesting. Dividends and dividend equivalents payable in connection with restricted stock awards, restricted stock units (‘‘RSUs’’), or other awards will only be paid if and when the shares underlying such awards vest. Dividends and dividend equivalents payable in connection with performance-based awards will only be paid to the extent that the performance-based vesting conditions are satisfied and the shares underlying such awards are earned and vest. (cid:127) Prohibits providing for dividend equivalents on options and SARs. The Amended and Restated Plan provides that no dividend equivalents may be payable with respect to options or SARs. (cid:127) Provides that stock option and SAR exercise prices will not be lower than the fair market value of the common stock on the grant date. The Amended and Restated Plan prohibits granting stock options and SARs with exercise prices lower than the fair market value of a share of our common stock on the grant date. (cid:127) Prohibits the grant of options with ‘‘reload’’ provisions. No options granted under the Amended and Restated Plan may contain a provision entitling the optionee to the automatic grant of additional options in connection with any exercise of the original options. (cid:127) Limits grants. Although no longer required for purposes of Section 162(m) of the IRC, the Amended and Restated Plan retains the grant limitations of the 2015 Plan. The maximum aggregate number of shares with respect to awards that may be granted to any one person during any calendar year is 1.5 million (subject to adjustment for certain equity restructurings and other corporate transactions). The maximum aggregate amount of cash that may be paid in awards payable in cash to any person during any one calendar year is $5 million. (cid:127) Provides for independent administration. The Compensation Committee of our Board of Directors, which consists of only non-employee directors, or another committee or subcommittee of our Board of Directors, administers the Amended and Restated Plan. Page 60 Proxy Statement 60 As of January 1, 2021, we had under all of our equity incentive plans (excluding our 2002 Employee Stock Purchase Plan and our Non-Qualified Employee Stock Purchase Plan) an aggregate of (i) 317,312 shares reserved for issuance pursuant to outstanding stock options, with a weighted average exercise price of $72.21 and a weighted average life of 2.10 years, (ii) 1,717,507 issued but unvested shares of restricted common stock and unissued shares of common stock under unvested restricted stock unit awards, (iii) 131,892 unissued shares of common stock under earned, but unvested, performance share awards, and (iv) 811,691 million unissued shares of common stock under performance share awards for which the performance periods have not yet been completed, assuming achievement at the target level of performance. As of January 1, 2021, the only equity incentive plans under which we are able to grant additional awards (excluding our 2002 Employee Stock Purchase Plan and our Non-Qualified Employee Stock Purchase Plan) are the 2015 Plan and the Company’s Amended and Restated 2008 Director Long-Term Incentive Plan, as amended (the ‘‘2008 Director Plan’’). As of January 1, 2021, there were 9,289,210 shares of our common stock available for future awards under the 2015 Plan and 593,063 shares of our common stock available for future awards under the 2008 Director Plan. The Board of Directors believes that the number of shares remaining available for grants under the 2015 Plan is insufficient to achieve the Company’s compensation objectives over the coming years. If the Amended and Restated Plan is not approved by our stockholders, the Company will continue to make grants under the 2015 Plan but expects, based on past grant practice and the Company’s recent stock price performance, that the Company will not have enough shares to make grants beyond the last quarter of calendar year 2023, although this date could be sooner in the event of a decrease in the Company’s stock price, continued workforce growth, grants in relation to merger and acquisition activity, or above-target performance under performance share awards. Information Regarding Burn Rate and Overhang In its determination to approve the Amended and Restated Plan, our Board of Directors considered our historical award usage and anticipated future award needs, advice from Aon/Radford, and guidelines from proxy advisory firms. In particular, the Board of Directors reviewed the Company’s ‘‘burn rate’’ and ‘‘overhang,’’ which we consider to be important metrics of how our equity compensation program affects our stockholders. As shown in the table below, the Company’s three-year average burn rate (for fiscal years 2018, 2019, and 2020) is 0.8%. The Company’s three-year ‘‘adjusted’’ average burn rate is 1.5%, which is below both (i) the median 2.4% three-year adjusted average burn rate of the Comparator Group, as provided by Aon/Radford, and (ii) the 4.7% burn rate cap that ISS applied to the semiconductor industry for 2020. Burn Rate (1) ‘‘Adjusted’’ Burn Rate (2) FY2020 0.8% 1.6% FY2019 0.9% 1.8% FY2018 0.6% 1.2% 3-year Average 0.8% 1.5% (1) (2) Burn rate is calculated as the sum of all stock option awards and Full Value Awards (at target level for PSAs) granted in a given fiscal year divided by the weighted average number of shares of our common stock outstanding as of the end of the fiscal year. We have calculated the burn rate based on the target award level for PSAs, which we believe provides the best estimate of our future burn rate. If we were to assume maximum award levels for PSAs granted in fiscal years 2018, 2019, and 2020, the Company’s three-year average burn rate would be 1.1%. ‘‘Adjusted’’ burn rate is calculated as the sum of all stock option awards and Full Value Awards (at target level for PSAs) granted in a given fiscal year, using a 2x multiple for Full Value Awards, divided by the weighted average number of shares of our common stock outstanding as of the end of the fiscal year. If we were to assume maximum award levels for PSAs granted in fiscal years 2018, 2019, and 2020, the Company’s three-year ‘‘adjusted’’ average burn rate would be 2.2%. 61 Proxy Statement Page 61 As of January 1, 2021, our total overhang ranged from 5.8% to a maximum of 7.8%, depending on the mix of Full Value Awards and stock options or SARs in future equity award grants using shares authorized for issuance under the 2015 Plan and the 2008 Director Plan. As a comparison, the median total overhang of the Comparator Group as provided by Aon/Radford for fiscal year 2020 was 8.8% and the 75th percentile overhang of the Comparator Group was 10.4%. If the Amended and Restated Plan is approved and an additional 5,000,000 shares (or the equivalent of 3,333,333 shares if all were to be granted subject to Full Value Awards) consequently become available for grant, our total overhang would range from 7.8% to a maximum of 10.8%, depending on the mix of Full Value Awards and stock options or SARs awarded under the Amended and Restated Plan and the 2008 Director Plan. We calculate overhang as the sum of the total number of shares underlying all equity awards outstanding and the total number of shares available for future award grants, which sum is then divided by the number of outstanding shares of our common stock. Based on our historical grant practices and our anticipated needs to support the Company’s current significant growth, as well as advice from Aon/ Radford, we believe that the increase in authorized shares requested for stockholder approval should be sufficient to cover equity awards under the Amended and Restated Plan for approximately two years. The proposal to adopt the Amended and Restated Plan will be approved by the stockholders if it receives the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the proposal. If you sign and return your proxy card or submit your proxy via telephone or the Internet, your shares will be voted (unless you indicate to the contrary) to approve the Amended and Restated Plan. Specifically marking ‘‘ABSTAIN’’ on your proxy card will have the same impact as a vote that is marked ‘‘AGAINST’’ the proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE COMPANY’S AMENDED AND RESTATED 2015 LONG-TERM INCENTIVE PLAN BY VOTING “FOR” PROPOSAL 4 16MAR202111330149 Page 62 Proxy Statement 62 Description of the Amended and Restated Plan A summary of the principal provisions of the Amended and Restated Plan is set forth below. The summary is qualified in its entirety by reference to the full text of the Amended and Restated Plan, which is attached as Exhibit A to the electronic copy of this Proxy Statement that is filed with the SEC (accessible ) and may also be accessed from the via www.sec.gov Company’s website at www.skyworksinc.com addition, a copy of the Amended and Restated Plan may be obtained from the Secretary of the Company. . In Administration Unless otherwise determined by the Board of Directors, the Amended and Restated Plan will be administered by the Compensation Committee (the ‘‘Administrator’’), which will consist solely of two or more non-employee directors, each of whom is intended to qualify as a ‘‘non-employee director’’ as defined by Rule 16b-3 under the Exchange Act and an ‘‘independent director’’ under the rules of Nasdaq (or other securities exchange or automated quotation system on which the Company’s common stock is listed or traded). To the extent permitted by applicable law, the Administrator may delegate to a committee or subcommittee of the Board of Directors any or all of its powers under the Amended and Restated Plan. In addition, to the extent permitted by applicable law and the Amended and Restated Plan, the Administrator may delegate to one or more officers of the Company the authority to grant or amend awards under the Amended and Restated Plan to participants other than (i) ‘‘executive officers’’ of the Company, as defined by Rule 3b-7 under the Exchange Act, (ii) ‘‘officers’’ of the Company, as defined by Rule 16a-1 under the Exchange Act, and (iii) officers to whom the authority to grant or amend awards under the Amended and Restated Plan has been delegated. The Administrator will have the authority to administer the Amended and Restated Plan, including the power to (i) designate participants under the Amended and Restated Plan, (ii) determine the types of awards granted to participants under the Amended and Restated Plan, the number of such awards, and the number of shares of common stock subject to such awards, (iii) determine and interpret the terms and conditions of any awards under the Amended and Restated Plan, including the vesting schedule and exercise price, (iv) prescribe the form of each award agreement, and (v) adopt rules for the administration, interpretation, and application of the Amended and Restated Plan. Eligibility Persons eligible to participate in the Amended and Restated Plan include all employees (including officers of the Company) and consultants and advisors (as the terms consultants and advisors are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933, as amended) of the Company and its subsidiaries. As of January 1, 2021, approximately 10,000 persons were eligible to receive awards under the 2015 Plan, which number consists of the approximate total number of the Company’s employees, including each of the five officers of the Company. As of January 1, 2021, the Company had no consultants eligible to receive awards under the 2015 Plan. Non-employee directors are not eligible to participate in the Amended and Restated Plan. Awards under the Amended and Restated Plan are subject to the discretion of the Administrator. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the Amended and Restated Plan. See ‘‘Existing Plan Benefits’’ below for a summary of equity awards granted under the 2015 Plan. 63 Proxy Statement Page 63 Limitation on Awards and Shares Available Subject to adjustment in the event of stock splits and other similar events, the aggregate number of shares of common stock that may be issued or transferred pursuant to awards under the Amended and Restated Plan is the sum of (i) 14.75 million shares, and (ii) such additional number of shares (up to 22.3 million shares) as is equal to the sum of (x) the number of shares reserved for issuance under the Prior Plan that remained available for grant under the Prior Plan as of May 19, 2015, which was the date on which our stockholders originally approved the 2015 Plan, and (y) the number of shares subject to awards granted under the Prior Plan which expire, terminate, or are otherwise surrendered, cancelled, forfeited, or repurchased by the Company pursuant to a contractual repurchase right. Each share of common stock delivered in settlement of a Full Value Award will reduce the number of shares available for issuance by 1.5 shares. Generally, if an award granted under the Amended and Restated Plan or under the Prior Plan terminates, expires, or lapses for any reason, the unused shares of common stock subject to the award will again be made available for issuance under the Amended and Restated Plan. Each share subject to a Full Value Award that is forfeited or expires for any reason or is settled for cash will increase the number of shares that can be issued under the Amended and Restated Plan by 1.5 shares. Otherwise, each share subject to an award that is forfeited or expires for any reason or is settled for cash will increase the number of shares that can be issued under the Amended and Restated Plan by one share. However, the following shares may not again be made available for issuance as awards under the Amended and Restated Plan: (i) shares used to pay the exercise price of an option (or other award), (ii) shares delivered to or withheld by us to pay the withholding taxes related to an award, (iii) shares that were subject to a stock-settled SAR and were not issued upon the net settlement or net exercise of such SAR, or (iv) shares repurchased on the open market with the proceeds of an option exercise. The payment of dividend equivalents in cash in conjunction with outstanding awards will not be counted against the shares available for issuance under the Amended and Restated Plan. Awards settleable only in cash will not be counted against the shares available for issuance under the Amended and Restated Plan. In addition, shares issued in assumption of, or in substitution for, any outstanding awards previously granted by an entity in connection with a corporate transaction (‘‘Substitute Awards’’) will not be counted against the shares available for issuance under the Amended and Restated Plan. The maximum aggregate number of shares with respect to awards that may be granted to any one person during any calendar year is 1.5 million (not including any Substitute Awards and subject to adjustment for certain equity restructurings and other corporate transactions). The maximum aggregate amount of cash that may be paid to any person during any one calendar year is $5 million. For purposes of the foregoing limits, the combination of an option in tandem with a SAR is treated as a single award, and the fungible share counting rules shall not apply and instead each share subject to any type of award shall be counted as one share. Awards The Amended and Restated Plan provides for the grant of nonqualified stock options, restricted stock awards, RSUs, performance awards, dividend equivalents, SARs, and other stock unit awards. Each award will be evidenced by a written award agreement with terms and conditions consistent with the Amended and Restated Plan. Except as otherwise provided by the Amended and Restated Plan, each award may be made alone or in addition or in relation to any other award. The terms of each award need not be identical, and the Administrator need not treat participants uniformly. Upon the exercise or vesting of an award, the exercise or purchase price must be paid in full by one of the following methods, in the discretion of the Administrator: cash or check; delivery Page 64 Proxy Statement 64 of a written or electronic notice that the participant has placed a market sell order with a broker with respect to shares then issuable upon exercise or vesting of an award and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required, provided that payment of such proceeds is then made to the Company upon settlement of such sale; subject to certain requirements, tendering shares of common stock valued at their fair market value; and/or by payment of such other lawful consideration acceptable to the Administrator. Any tax withholding obligations may be satisfied in the Administrator’s sole discretion by allowing a participant to elect to have the Company withhold shares otherwise issuable under an award that have a fair market value equal to the aggregate amount of such liabilities. Except as otherwise provided in the Amended and Restated Plan, the Administrator may at any time provide that any award will become immediately exercisable in full or in part, free of some or all restrictions or conditions or otherwise realizable in full or in part, as the case may be. Nonqualified Stock Options. The exercise price of nonqualified stock options granted pursuant to the Amended and Restated Plan will not be less than 100% of the fair market value of the common stock on the date of grant. Nonqualified stock options may be subject to vesting conditions established by the Administrator, including continued employment or achievement of performance criteria, and be exercised as determined by the Administrator, but in no event after the seven (7) year anniversary of the date of grant. No option granted under the Amended and Restated Plan may contain any provision entitling the optionee to the automatic grant of additional options in connection with any exercise of the original option. Restricted Stock. A restricted stock award granted pursuant to the Amended and Restated Plan is the grant of shares of common stock at a price determined by the Administrator (including zero), that is subject to transfer restrictions and may be subject to substantial risk of forfeiture until specific conditions are met. Conditions may be based on continuing employment or achieving performance goals. During the period of restriction, participants holding shares of restricted stock have full voting rights with respect to such shares. Dividends paid on the shares prior to vesting will accrue and will only be paid to the participant if and when the shares of restricted stock vest. Restricted Stock Units. RSUs granted pursuant to the Amended and Restated Plan may be subject to vesting conditions established by the Administrator including continued employment or achievement of performance criteria. Like restricted stock, RSUs may not be sold or otherwise transferred or hypothecated until vesting conditions are removed or expire. Unlike restricted stock, the common stock underlying RSUs will not be issued until the RSUs have vested, and recipients of RSUs generally will have no voting rights and will not receive dividend payments prior to the time when vesting conditions are satisfied and the shares subject to the award are issued to the participant. Dividend Equivalents. Dividend equivalents are rights to receive the equivalent value (in cash or common stock) of dividends paid on common stock. Dividend equivalents represent the value of the dividends per share of common stock paid by the Company, calculated with reference to the number of shares that are subject to any award held by the participant. Dividend equivalents are converted to cash or additional shares of common stock by such formula and at such time subject to such limitations as may be determined by the Administrator. Dividend equivalents are credited as of dividend payment dates during the period after the award is granted and before the award vests and are paid to the participant only if and when the award vests. Dividend equivalents cannot be granted with respect to options or SARs. Stock Appreciation Rights. SARs entitle recipients to receive common stock determined in whole or in part by reference to the appreciation in the value of the common stock over the value of our common stock on the date of grant of the SAR. SARs must have a 65 Proxy Statement Page 65 base price that is at least equal to the fair market value of the common stock on the grant date and may have a term of no greater than seven (7) years. SARs will be settled by the delivery of shares of common stock. SARs may be issued in tandem with options or as stand-alone rights. Other Stock Unit Awards. Under the Amended and Restated Plan, the Board of Directors has the right to grant other awards of shares of our common stock and other awards that are valued in whole or in part by reference to, or are otherwise based upon, our common stock or other property. Other stock unit awards have such terms and conditions as the Board of Directors may determine, including performance-based conditions. Other stock unit awards are available as a form of payment in settlement of other awards granted under the Amended and Restated Plan or as payment in lieu of compensation to which a recipient is otherwise entitled. Other stock unit awards may be paid in common stock or cash, as determined by the Board of Directors. Performance Awards. A restricted stock award, RSU award, other stock unit award, cash bonus award, stock bonus award, or any other award granted under the Amended and Restated Plan may be made subject to achievement of performance goals. Performance goals applicable to a performance award may vary by participant, be different for different awards, or be particular to a participant or the subsidiary, division, business unit, department, branch, or other unit in which the participant works. The performance goals may be based on one or more of the following performance criteria, any of which may be measured with respect to an individual participant, the Company, or any one or more of the Company’s subsidiaries, divisions, or business units, and in absolute or relative terms: revenues, net income (loss), operating income (loss), gross profit, earnings before or after discontinued operations, interest, taxes, depreciation and/or amortization, operating profit before or after discontinued operations and/or depreciation and/or amortization, earnings (loss) per share, net cash flow, cash flow from operations, free cash flow, revenue growth, earnings growth, gross margins, operating margins, net margins, inventory management (including, but not limited to, reductions in inventory, inventory turns, and inventory levels), working capital (including a specific component thereof), return on sales, return on assets, return on stockholders’ equity, return on investment or working capital, cash or cash equivalents position, achievement of balance sheet or income statement objectives or total stockholder return, stock price, improvement in financial ratings, completion of strategic acquisitions/ dispositions, manufacturing efficiency, product quality, customer satisfaction, market share and/or product design wins, a specific cost or expense item, and implementation or completion of a specified key business project, or any other criteria established by the Administrator. In addition, the Administrator may, in its sole discretion, provide that one or more adjustments be made to one or more of the performance goals, including the exclusion of one or more of the following: extraordinary and/or nonrecurring items, the cumulative effects of changes in accounting principles or applicable laws, gains or losses on the dispositions of discontinued operations, the write-down of any asset, charges for restructuring and rationalization programs, amortization of purchased intangibles associated with acquisitions, compensation expenses related to acquisitions, other acquisition- related charges (including, but not limited to, items attributable to the business operations of any entity acquired by the Company during the applicable performance period), impairment charges, gain or loss on minority equity investments, noncash income tax expenses, equity-based compensation expenses, items relating to financing activities; other nonoperating items; items related to the disposal of a business or segment of a business; items attributable to any stock dividend, stock split, combination, or exchange of shares occurring during the applicable performance period; or any other adjustments as determined by the Administrator. Page 66 Proxy Statement 66 Performance awards can be paid in cash, common stock, or a combination of both. The Administrator may, in its discretion, adjust the cash or number of shares of common stock payable pursuant to any performance award, and the Administrator may, at any time, waive the achievement of the applicable performance goals, including in the case of the death or disability of the participant or in the event of a change in control of the Company. Transferability of Awards Except as the Administrator may otherwise determine or provide in an award, awards may not be sold, assigned, transferred, pledged, or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution and, during the life of the participant, may only be exercisable by the participant. system on which shares of common stock are listed or traded). Adjustments to Awards In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spinoff, or other similar change in capitalization (other than normal cash dividends), the Company will make equitable adjustments (or substituted awards may be made if applicable), to the extent determined by the Board of Directors, to the aggregate number and kind of shares that may be issued under the Amended and Restated Plan (including adjustments to award limits), the number and kind of shares subject to each outstanding award under the Amended and Restated Plan, the exercise price of such outstanding award (if applicable), and the terms and conditions of any outstanding awards. Repricing Effect of a Reorganization Event Unless approved by the Company’s stockholders or permitted under the Amended and Restated Plan in connection with a change in capitalization, reorganization event, or change in control, the Company may not (i) amend any outstanding option or SAR granted under the Amended and Restated Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding option or SAR, (ii) cancel any outstanding option or SAR (whether or not granted under the Amended and Restated Plan) and grant in substitution new awards covering the same or a different number of shares of common stock and having an exercise or purchase price per share lower than the then-current exercise price per share of the cancelled option or SAR, (iii) cancel in exchange for a cash payment any outstanding option or SAR with an exercise price per share above the then-current fair market value of the common stock, or (iv) take any other action under the Amended and Restated Plan that constitutes a ‘‘repricing’’ within the meaning of the rules of Nasdaq (or other securities exchange or automated quotation The Amended and Restated Plan also contains provisions addressing the consequences of a Reorganization Event, which is defined as (i) any merger or consolidation as a result of which our common stock is converted into or exchanged for the right to receive cash, securities, or other property, or is cancelled, (ii) any exchange of all of our common stock for cash, securities, or other property pursuant to a share exchange transaction, or (iii) any dissolution or complete liquidation of the Company. In connection with a Reorganization Event, the Board of Directors will take one or more of the following actions as to outstanding awards (other than restricted stock): (i) provide that awards will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice, provide that all unexercised awards will become exercisable in full and will terminate immediately prior to the consummation of the Reorganization Event unless exercised by the award holder within a specified period following the date of such notice, (iii) provide that outstanding 67 Proxy Statement Page 67 awards will become realizable or deliverable, or restrictions applicable to an award will lapse in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of common stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the ‘‘Acquisition Price’’), make or provide for a cash payment to an award holder equal to (A) the number of shares of common stock subject to the award multiplied by (B) the excess, if any, of the Acquisition Price over the exercise or purchase price of such award, less any applicable tax withholdings, in exchange for the termination of such awards, and/or (v) provide that, in connection with a dissolution or complete liquidation of the Company, awards will convert into the right to receive liquidation proceeds (if applicable, net of the exercise or purchase price thereof). In connection with a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company with respect to outstanding awards of restricted stock will inure to the benefit of the Company’s successor and will apply to the cash, securities, or other property which shares of common stock were converted into or exchanged for in connection with the Reorganization Event in the same manner and to the same extent as they applied to the restricted stock. In connection with a liquidation or dissolution of the Company, except to the extent otherwise provided in the award agreement or other agreement between the participant and the Company, all restrictions and conditions on all awards of restricted stock then outstanding will automatically be deemed terminated or satisfied. Effect of a Change in Control At the time of a change in control, all outstanding equity awards granted under the Amended and Restated Plan will continue to be subject to the same time-based vesting schedule to which the awards were subject prior to the change in control (including performance-based equity awards that are deemed earned at the time of the change in control as described below). For performance-based equity awards where the change in control occurs prior to the end of the performance period, such awards will be deemed earned as to the greater of (i) the target level of shares for such awards, or (ii) the number of shares that would have been earned pursuant to the terms of such awards based upon performance up through and including the day prior to the date of the change in control (unless the Board of Directors determines that it would be impracticable to calculate performance pursuant to (ii), in which case the awards will be deemed earned at target). In the event that the successor or surviving company does not agree to assume, or to substitute for, such outstanding equity awards on substantially similar terms with substantially equivalent economic benefits as exist for such awards immediately prior to the change in control, then such awards will accelerate in full as of the change in control. The Amended and Restated Plan also provides that a participant will be entitled to full accelerated vesting of all of his or her outstanding equity awards in the event that such participant’s employment is (i) terminated by the Company without cause, or (ii) terminated by the participant for good reason, in either case within the period of time commencing three (3) months prior to and ending twelve (12) months following a change in control. The terms ‘‘change in control,’’ ‘‘cause,’’ and ‘‘good reason’’ are each defined in the Amended and Restated Plan. Change in control means, in summary: (i) the acquisition by a person or a group of 40% or more of the outstanding stock of the Company; (ii) a change, without approval by the Board of Directors, of a majority of the Board of Directors of the Company; (iii) the acquisition of the Company by means of a reorganization, merger, consolidation, or asset sale; or (iv) stockholder approval of a liquidation or dissolution of the Company. Cause means, in summary: (i) deliberate dishonesty that is significantly detrimental to the best interests of the Company; (ii) conduct constituting an act of moral turpitude; (iii) willful disloyalty or insubordination; or (iv) incompetent performance or substantial or Page 68 Proxy Statement 68 continuing inattention to or neglect of duties. Good reason means, in summary: provided the participant timely gives notice of the event or condition to the Company and sufficient time for the Company to correct the event or condition, (i) a reduction of 5% or more in base salary; or (ii) a change in office location of more than fifty (50) miles. However, the Amended and Restated Plan provides that if the participant and the Company are party to an employment agreement, severance agreement, change in control agreement or other similar agreement that contains a definition of cause or good reason, the definitions in that agreement shall control. Death or Permanent Disability In the event of a participant’s death or permanent disability (within the meaning of Section 22(e)(3) of the IRC), the Amended and Restated Plan provides for full acceleration of the vesting of all then-outstanding equity awards subject to time-based vesting (including all performance-based equity awards where the performance period has ended and the shares are earned but unissued). The Amended and Restated Plan also provides that for a performance-based equity award where the participant’s death or permanent disability occurs prior to the end of the performance period, such award will be deemed earned as to the greater of (i) the target level of shares for such award, or (ii) the number of shares that would have been earned pursuant to the terms of such award had the participant remained employed through the end of the performance period, and such earned shares will become vested and issuable to the participant after the performance period ends. In addition, all outstanding stock options will remain exercisable following the termination of employment for a period of twelve (12) months, in the case of death, and for a period of six (6) months, in the case of permanent disability (but not beyond the expiration of their respective maximum terms). Substitute Options In connection with a merger or consolidation of an entity with us or the acquisition by us of the property or stock of an entity, the Board of Directors may grant options in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute options may be granted on such terms as the Board of Directors deems appropriate in the circumstances, notwithstanding any limitations under the Amended and Restated Plan. Amendment and Termination The Board of Directors may at any time amend, suspend, or terminate the Amended and Restated Plan. Without approval of the Company’s stockholders, no amendment may increase the number of shares authorized under the Amended and Restated Plan (except as provided under the Amended and Restated Plan in connection with changes in capitalization), materially increase the benefits provided under the Amended and Restated Plan, materially expand the class of participants eligible to participate in the Amended and Restated Plan, expand the types of awards provided under the Amended and Restated Plan, or make any other changes that require stockholder approval under the rules of Nasdaq (or other securities exchange or automated quotation system on which shares of our common stock are listed or traded). In no event may any award be granted pursuant to the Amended and Restated Plan on or after November 10, 2030. Federal Income Tax Consequences The U.S. federal income tax consequences of the Amended and Restated Plan under current federal law, which is subject to change, are summarized in the following discussion of the general tax principles applicable to the Amended and Restated Plan. This summary is not intended to be exhaustive and, among other considerations, does not describe state, local, or foreign tax consequences. Tax considerations may vary 69 Proxy Statement Page 69 from locality to locality and depending upon individual circumstances. Nonqualified Stock Options. A participant will not have income upon the grant of a nonqualified stock option. A participant will have compensation income upon the exercise of a nonqualified stock option equal to the value of the stock on the day the participant exercised the option less the exercise price. Upon sale of the stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the option was exercised. This capital gain or loss will be long-term if the participant has held the stock for more than one year and otherwise will be short-term. Restricted Stock. A participant will not have income upon the grant of restricted stock unless an election under Section 83(b) of the IRC is made within 30 days of the date of grant. If a timely 83(b) election is made, then a participant will have compensation income equal to the value of the stock less the purchase price. When the stock is sold, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the date of grant. If the participant does not make an 83(b) election, then when the stock vests the participant will have compensation income equal to the value of the stock on the vesting date less the purchase price. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term. Restricted Stock Units. A participant will not have income upon the grant of a restricted stock unit. A participant is not permitted to make a Section 83(b) election with respect to a restricted stock unit award. When the restricted stock unit vests, the participant will have income on the vesting date in an amount equal to the fair market value of the stock on the vesting date less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term. Stock Appreciation Rights. A participant will not have income upon the grant of a SAR. A participant will have compensation income upon the exercise of a SAR equal to the fair market value of the stock received. When the stock distributed in settlement of the SAR is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the exercise date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term. Other Stock Unit Awards. The tax consequences associated with any other stock unit award will vary depending on the specific terms of such award. Among the relevant factors are whether or not the award has a readily ascertainable fair market value, whether or not the award is subject to forfeiture provisions or restrictions on transfer, the nature of the property to be received by the participant under the award, and the participant’s holding period and tax basis for the award or underlying common stock. Dividend Equivalents; Accrued Dividends. The grantee generally will not realize taxable income at the time of the grant of the dividend equivalents or at the time dividends are accrued on unvested restricted stock awards. When a dividend equivalent or accrued dividend is paid upon an award vesting, the participant will recognize compensation income. Tax Consequences to the Company. There will not be any tax consequences to the Company as a result of the adoption of the Amended and Restated Plan or the grant of awards thereunder except that we will be entitled to a deduction when a participant recognizes compensation income, subject to the deduction limitations of Section 162(m) of the IRC. Page 70 Proxy Statement 70 Plan Benefits New Plan Benefits Existing Plan Benefits Awards under the Amended and Restated Plan are subject to the discretion of the Administrator. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the Amended and Restated Plan. Name Pursuant to SEC rules, the following table sets forth the number of shares subject to awards granted under the 2015 Plan from May 19, 2015 (when the 2015 Plan was initially approved by stockholders) through the date hereof. These share numbers do not take into account the effect of awards that have been cancelled or that have expired unexercised. Number of Number of Shares Subject Shares of Number of Number of to Stock Options (#) Restricted Shares Subject Shares Subject to PSAs (#)(1) Stock (#) to RSUs (#) Liam K. Griffin, President and Chief Executive Officer Kris Sennesael, Senior Vice President and Chief Financial Officer Carlos S. Bori, Senior Vice President, Sales and Marketing Robert J. Terry, Senior Vice President, General Counsel and Secretary Karilee A. Durham, Senior Vice President, Human Resources All current executive officers as a group All employees (excluding current executive officers) as a group 168,845 52,770 17,521 14,942 — 254,078 724,249 5,460 — 1,201 1,000 — 7,661 197,172 369,422 94,240 62,044 49,083 46,108 82,381 75,516 62,021 30,788 448,647 620,128 128,253 3,215,406 1,844,247 (1) Represents shares (a) actually released under PSAs that have been earned and vested; (b) scheduled to be released under PSAs that have not yet vested but for which the performance condition has been satisfied; and (c) subject to PSAs that have not yet vested and for which the performance condition has not yet been satisfied, assuming the target level of performance. 71 Proxy Statement Page 71 Equity Compensation Plan Information As of October 2, 2020, the Company has the following equity compensation plans under which its equity securities were authorized for issuance to its employees and/or directors: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) the 2002 Employee Stock Purchase Plan the Non-Qualified Employee Stock Purchase Plan the 2005 Long-Term Incentive Plan the 2008 Director Long-Term Incentive Plan the 2015 Long-Term Incentive Plan Except for the Non-Qualified Employee Stock Purchase Plan (the ‘‘Non-Qualified ESPP’’), each of the foregoing equity compensation plans was approved by the Company’s stockholders. A description of the material features of the Non-Qualified ESPP is provided below under the heading ‘‘Non-Qualified Employee Stock Purchase Plan.’’ The following table presents information about these plans as of October 2, 2020. Number of Securities to be Issued Upon Exercise of Outstanding Options, Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights (#) Warrants and Rights ($) Plan Category Equity compensation plans approved by security holders Equity compensation plans not approved by security holders TOTAL (a) 362,866 (1) — 362,866 (b) 70.28 — 70.28 Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (#) (c) 12,418,077 (2) 395,441 (3) 12,813,518 (1) (2) Excludes 1,777,198 unvested shares under restricted stock and RSU awards and 1,107,377 unvested shares under PSAs, which figure assumes achievement of performance goals under the FY20 PSAs at target levels. Includes 1,426,186 shares available for future issuance under the 2002 Employee Stock Purchase Plan, 10,398,828 shares available for future issuance under the 2015 Long-Term Incentive Plan, and 593,063 shares available for future issuance under the 2008 Director Long-Term Incentive Plan. No further grants will be made under the 2005 Long-Term Incentive Plan. (3) Represents shares available under the Non-Qualified ESPP. Non-Qualified Employee Stock Purchase Plan The Company maintains the Non-Qualified ESPP to provide employees of the Company and participating subsidiaries with an opportunity to acquire a proprietary interest in the Company through the purchase, by means of payroll deductions, of shares of the Company’s common stock at a discount from the market price of the common stock at the time of purchase. The Non-Qualified ESPP is intended for use primarily by employees of the Company located outside the United States. Under the plan, eligible employees may purchase common stock through payroll deductions of up to 10% of compensation. The price per share is the lower of 85% of the market price at the beginning or end of each six-month offering period. Page 72 Proxy Statement 72 PROPOSAL 5: STOCKHOLDER PROPOSAL REGARDING SIMPLE MAJORITY VOTING In accordance with SEC rules, we have set forth below a stockholder proposal from Mr. John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278. Mr. Chevedden has notified us that he is the beneficial owner of 100 shares of the Company’s common stock and that he intends to present the following proposal at the Annual Meeting. The stockholder proposal will be voted upon at the Annual Meeting if properly presented. The Company assumes no responsibility for the content or accuracy of the text of the stockholder’s resolution or the statement and graphic the stockholder furnished to us in support thereof, which appear below exactly as submitted. The stockholder proposal includes some assertions the Company believes are incorrect. Proposal 5 – Simple Majority Vote RESOLVED, Shareholders request that our board take each step necessary so that each voting requirement in our charter and bylaws (that is explicit or implicit due to default to state law) that calls for a greater than simple majority vote be eliminated, and replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws. If necessary this means the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws. Shareholders are willing to pay a premium for shares of companies that have excellent corporate governance. Supermajority voting requirements have been found to be one of 6 entrenching mechanisms that are negatively related to company performance according to ‘‘What Matters in Corporate Governance’’ by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the Harvard Law School. Supermajority requirements are used to block initiatives supported by most shareowners but opposed by a status quo management. This proposal topic won our 99% support at our 2020 annual meeting. This proposal topic also won from 74% to 88% support at Weyerhaeuser, Alcoa, Waste Management, Goldman Sachs and FirstEnergy. These votes would have been higher than 74% to 88% if more shareholders had access to independent proxy voting advice. The proponents of these proposals included Ray T. Chevedden and William Steiner. Church & Dwight shareholders gave 99%-support to a 2020 proposal on this same topic. The current supermajority vote requirement does not make sense. For instance with our 80% simple majority vote requirement in an election calling for an 80% shareholder approval in which 81% of shares cast ballots – then 2% of shares opposed to certain improvement proposal topics would prevail over the 79% of shares that vote in favor. In anticipation of impressive shareholder support for this proposal topic an enlightened Governance Committee and an enlightened Board of Directors and could expedite adoption of this proposal topic by giving shareholders an opportunity to vote on a binding management version of this proposal at our 2021 annual meeting. Hence adoption could take place in 2021 instead of 2022. Adopting simple majority vote can be one step to make the corporate governance of Skyworks Solutions more competitive and unlock shareholder value. An additional governance best practice is just waiting to be adopted at Skyworks Solutions. For instance, a shareholder right to act by written consent. This is all the more important due to the near total extinction of in-person shareholder meetings which diminishes the current shareholder right to call a special meeting. Please vote yes: Simple Majority Vote – Proposal 5 9MAR202107583308 73 Proxy Statement Page 73 Statement by the Board of Directors on the Stockholder Proposal At the Company’s 2020 Annual Meeting, we presented four Company proposals that, if approved by the stockholders, would have removed all existing supermajority voting provisions from the Company’s Restated Certificate of Incorporation, as amended, which we refer to as our Charter. Each of the proposals was supported by the Board of Directors, which believed them to be in the best interests of our stockholders, after taking into consideration emerging trends in corporate governance as well as the approval by our stockholders of a stockholder proposal presented at our 2019 Annual Meeting similar to the stockholder proposal above. However, despite the recommendation of the Board of Directors in favor of all four proposals, as well as the Company engaging in enhanced solicitation of stockholder votes for the Annual Meeting with the goal of increasing the number of shares represented at the 2020 Annual Meeting, none of the four proposals passed. This result was consistent with the result from the Company’s 2016 Annual Meeting at which four nearly identical proposals failed to receive sufficient stockholder support. Specifically, the four proposals that failed to pass at both the 2016 Annual Meeting and the 2020 Annual Meeting were for approval of amendments to the Charter to eliminate the supermajority voting provisions relating to the following: (cid:127) Stockholder approval of a merger or consolidation, disposition of all or substantially all of our assets, or issuance of a substantial amount of our securities (requiring the affirmative vote of at least 80% of the shares of the Company’s outstanding common stock); (cid:127) Stockholder approval of a business combination with any related person (requiring the affirmative vote of at least 90% of the shares of the Company’s outstanding common stock); (cid:127) Stockholder amendment of Charter provisions governing directors (requiring the affirmative vote of at least 80% of the shares of the Company’s outstanding common stock); and (cid:127) Stockholder amendment of Charter provisions governing action by stockholders (requiring the affirmative vote of at least 80% of the shares of the Company’s outstanding common stock). We view the advisory vote on the stockholder proposal above as an opportunity for our stockholders to indicate whether there might be sufficient support to pass the four previously failed proposals should they be reintroduced in the future. The Board of Directors will again carefully consider the outcome of the vote on this proposal, together with additional investor input received in the course of the Company’s regular stockholder engagement program, in reaching a decision regarding how to proceed. THE BOARD OF DIRECTORS MAKES NO RECOMMENDATION REGARDING HOW STOCKHOLDERS SHOULD VOTE ON PROPOSAL 5 16MAR202106454330 Page 74 Proxy Statement 74 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT To the Company’s knowledge, the following table sets forth the beneficial ownership of the Company’s common stock as of March 18, 2021, by the following individuals or entities: (i) each person or entity who beneficially owns five percent (5%) or more of the outstanding shares of the Company’s common stock as of March 18, 2021; (ii) the Named Executive Officers (as defined above under ‘‘Information About Executive and Director Compensation’’); (iii) each director and nominee for director; and (iv) all current executive officers and directors of the Company, as a group. Beneficial ownership is determined in accordance with the rules of the SEC, is not necessarily indicative of beneficial ownership for any other purpose, and does not constitute an admission that the named Names and Addresses of Beneficial Owners(1) The Vanguard Group, Inc. BlackRock, Inc. David J. Aldrich Alan S. Batey Kevin L. Beebe Carlos S. Bori Karilee A. Durham Timothy R. Furey Liam K. Griffin Christine King David P. McGlade Robert A. Schriesheim Kris Sennesael Kimberly S. Stevenson Robert J. Terry stockholder is a direct or indirect beneficial owner of those shares. As of March 18, 2021, there were 165,088,091 shares of the Company’s common stock issued and outstanding. In computing the number of shares of Company common stock beneficially owned by a person and the percentage ownership of that person, shares of Company common stock that are subject to stock options or other rights held by that person that are currently exercisable or that will become exercisable within sixty (60) days of March 18, 2021, are deemed outstanding. These shares are not, however, deemed outstanding for the purpose of computing the percentage ownership of any other person. Number of Shares Beneficially Owned(2) Percent of Class 17,911,518 (3) 15,290,274 (4) 150,439 (5) 2,981 57,857 48,131 (5) 14,392 20,758 66,343 (5) 17,995 39,932 79,644 105,191 5,779 11,652 (5) 621,094 (5) 10.85% 9.26% (*) (*) (*) (*) (*) (*) (*) (*) (*) (*) (*) (*) (*) (*) All current directors and executive officers as a group (13 persons) * Less than 1% (1) Unless otherwise set forth in the following notes, each person’s address is the address of the Company’s principal executive offices at Skyworks Solutions, Inc., 5260 California Avenue, Irvine, CA 92617, and stockholders have sole voting and sole investment power with respect to the shares, except to the extent such power may be shared by a spouse or otherwise subject to applicable community property laws. 75 Proxy Statement Page 75 (2) Includes the number of shares of Company common stock subject to stock options held by that person that are currently exercisable or will become exercisable within sixty (60) days of March 18, 2021 (the ‘‘Current Options’’), as follows: Mr. Bori—15,938 shares under Current Options; Mr. Griffin—13,211 shares under Current Options; Mr. Sennesael—52,770 shares under Current Options; Mr. Terry—502 shares under Current Options; current directors and executive officers as a group (13 persons)—82,421 shares under Current Options. Also includes the number of shares of Company common stock to be issued upon the vesting of restricted stock units within sixty (60) days of March 18, 2021 (the ‘‘Vesting RSUs’’), as follows: Mr. Aldrich—2,140 shares under Vesting RSUs; Mr. Batey—2,140 shares under Vesting RSUs; Mr. Beebe—2,140 shares under Vesting RSUs; Ms. Durham—4,426 shares under Vesting RSUs; Mr. Furey—2,140 shares under Vesting RSUs; Ms. King—2,140 shares under Vesting RSUs; Mr. McGlade—2,140 shares under Vesting RSUs; Mr. Schriesheim—2,140 shares under Vesting RSUs; Ms. Stevenson—2,140 shares under Vesting RSUs; current directors and executive officers as a group (14 persons)—21,546 shares under Vesting RSUs. The table does not reflect the number of shares of Company common stock to be issued pursuant to unvested restricted stock units (the ‘‘Unvested RSUs’’) and earned, but unissued, performance share awards subject to time-based vesting only (the ‘‘Unvested PSAs’’) that are not scheduled to vest within sixty (60) days of March 18, 2021, as follows: Mr. Batey—1,680 shares under Unvested RSUs; Mr. Bori—32,556 shares under Unvested RSUs and 8,204 shares under Unvested PSAs; Ms. Durham—21,890 shares under Unvested RSUs and 5,468 shares under Unvested PSAs; Mr. Griffin—91,364 shares under Unvested RSUs and 81,036 shares under Unvested PSAs; Mr. Sennesael—36,719 shares under Unvested RSUs and 9,724 shares under Unvested PSAs; Ms. Stevenson—672 shares under Unvested RSUs; Mr. Terry—26,946 shares under Unvested RSUs and 7,900 shares under Unvested PSAs; current directors and executive officers as a group (13 persons)—211,827 shares under Unvested RSUs and 112,332 shares under Unvested PSAs. (3) Consists of shares beneficially owned by The Vanguard Group, Inc. (‘‘Vanguard’’), which has sole voting power with respect to zero shares, shared voting power with respect to 272,990 shares, sole dispositive power with respect to 17,183,878 shares and shared dispositive power with respect to 727,640 shares. Vanguard Fiduciary Trust Company, a wholly owned subsidiary of Vanguard, is the beneficial owner of 193,126 shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly owned subsidiary of Vanguard, is the beneficial owner of 147,691 shares as a result of its serving as investment manager of Australian investment offerings. With respect to the information relating to Vanguard, the Company has relied on information supplied by Vanguard on a Schedule 13G/A filed with the SEC on February 10, 2021. The address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355. (4) Consists of shares beneficially owned by BlackRock, Inc. (‘‘BlackRock’’), in its capacity as a parent holding company of various subsidiaries under Rule 13d-1(b)(1)(ii)(G). In its capacity as a parent holding company or control person, BlackRock has sole voting power with respect to 13,187,489 shares and sole dispositive power with respect to 15,290,274 shares which are held by the following of its subsidiaries: BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited, and BlackRock Fund Managers Ltd. With respect to the information relating to BlackRock and its affiliated entities, the Company has relied on information supplied by BlackRock on a Schedule 13G/A filed with the SEC on February 1, 2021. The address of BlackRock is 55 East 52nd Street, New York, NY 10055. (5) Includes shares held in the Company’s 401(k) Savings and Investment Plan as of March 18, 2021. Page 76 Proxy Statement 76 OTHER PROPOSED ACTION As of the date of this Proxy Statement, the directors know of no other business that is expected to come before the Annual Meeting. However, if any other business should be properly presented to the Annual Meeting, the persons named as proxies will vote in accordance with their judgment with respect to such matters. OTHER MATTERS Solicitation Expenses Skyworks will bear the expenses of the preparation of the proxy materials and the solicitation by the Board of Directors of proxies. Proxies may be solicited on behalf of the Company in person or by telephone, e-mail, facsimile, or other electronic means by directors, officers, or employees of the Company, who will receive no additional compensation for any such services. We have retained D.F. King & Co. to assist in the solicitation of proxies, at a cost to the Company of approximately $12,500, plus reasonable out-of-pocket expenses. Electronic Delivery of Proxy Materials We are able to distribute our Annual Report and this Proxy Statement to our stockholders in a fast and efficient manner via the Internet. This reduces the amount of paper delivered to a stockholder’s address. Stockholders may elect to view all future annual reports, proxy statements, and notices on the Internet instead of receiving them by mail. You may make this election when voting your proxy this year. Simply follow the instructions to vote via the Internet to register your consent. Your election to view proxy materials online is perpetual unless you revoke it later. Future proxy cards will contain the Internet website address and instructions to view the materials. You will continue to have the option to vote your shares by telephone, mail, or via the Internet. Annual Report on Form 10-K and Stockholder List A copy of our 2020 Annual Report accompanies this Proxy Statement. You also may obtain, free of charge, a copy of the Company’s Annual Report on Form 10-K for fiscal year 2020, as filed with the SEC, via the Company’s website at or upon written request addressed to Investor Relations: www.skyworksinc.com , Skyworks Solutions, Inc. 5260 California Avenue Irvine, CA 92617 A list of stockholders of record as of March 18, 2021, will be available for inspection during ordinary business hours at our executive offices in Irvine, CA, from April 30, 2021, to May 12, 2021, as well as online during our Annual Meeting. 77 Proxy Statement Page 77 Stockholder Proposals Proposals to be considered for inclusion in the proxy materials for the Company’s 2022 Annual Meeting of Stockholders pursuant to Rule 14a-8 under the Exchange Act must meet the requirements of Rule 14a-8 and be delivered in writing to the General Counsel and Secretary of the Company at its executive offices at 5260 California Avenue, Irvine, CA 92617, no later than November 26, 2021. The submission of a stockholder proposal does not guarantee that it will be included in the proxy materials for the Company’s 2022 Annual Meeting. is first made by the Company. A proposal that is submitted outside of these time periods will not be considered to be timely and, pursuant to Rule 14a-4(c)(1) under the Exchange Act and if a stockholder properly brings the proposal before the meeting, the proxies that management solicits for that meeting will have ‘‘discretionary’’ authority to vote on the stockholder’s proposal. Even if a stockholder makes timely notification, the proxies may still exercise ‘‘discretionary’’ authority in accordance with the SEC’s proxy rules. According to the applicable provisions of our By-laws, if a stockholder wishes to present a proposal at our 2022 Annual Meeting outside the processes of Rule 14a-8, with such proposal not to be considered for inclusion in the proxy materials for such meeting, then the stockholder must give written notice to the Secretary of the Company at the address noted above no earlier than the close of business on January 12, 2022, and no later than the close of business on February 11, 2022. In the event that the 2022 Annual Meeting is held more than thirty (30) days before or after the first anniversary of the Company’s 2021 Annual Meeting, then the required notice must be delivered in writing to the Secretary of the Company at the address above no earlier than 120 days prior to the date of the 2022 Annual Meeting and no later than the later of 90 days prior to the 2022 Annual Meeting or the 10th day following the day on which the public announcement of the date of the 2022 Annual Meeting Our Board of Directors encourages stockholders to attend the Annual Meeting online. Whether or not you plan to attend, you are urged to submit a proxy promptly in one of the following ways: (cid:127) by completing and submitting your proxy via the Internet by visiting the website address listed on the proxy card; (cid:127) by completing and submitting your proxy using the toll-free telephone number listed on the proxy card; or (cid:127) by completing, signing, and dating the proxy card and returning it in the postage-prepaid envelope provided for that purpose. A prompt response will greatly facilitate arrangements for the meeting and your cooperation will be appreciated. Page 78 Proxy Statement 78 Appendix A: UNAUDITED RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES GAAP operating income Share-based compensation expense (a) Acquisition-related expenses Amortization of acquisition-related intangibles Settlements, gains, losses, and impairments (b) Restructuring and other charges Non-GAAP operating income GAAP operating margin % Non-GAAP operating margin % GAAP net income per share, diluted Share-based compensation expense (a) Acquisition-related expenses Amortization of acquisition-related intangibles Settlements, gains, losses, and impairments (b) Restructuring and other charges Tax adjustments Non-GAAP net income per share, diluted GAAP net cash provided by operating activities Capital expenditures Free cash flow (Non-GAAP) Year Ended Oct. 2, 2020 (In millions, except per share amounts) 891.8 156.6 1.3 36.5 41.2 2.0 $1,129.4 26.6% 33.7% Year Ended Oct. 2, 2020 $ 4.80 0.92 0.01 0.21 0.26 0.01 (0.08) $ 6.13 Year Ended Oct. 2, 2020 $1,204.5 389.4 815.1 (a) For the fiscal year ended October 2, 2020, approximately $23.2 million, $68.7 million and $64.7 million were included in cost of goods sold, research and development expense, and selling, general, and administrative expense, respectively. (b) During the fiscal year ended October 2, 2020, the Company incurred $43.8 million in non-recurring charges consisting primarily of a $23.4 million production utilization charge due to the suspension of the Company’s operations in Mexicali, Mexico, for approximately two weeks pursuant to an order by the government of the state of Baja California, Mexico, designed to mitigate the spread of COVID-19, as well as a $9.8 million impairment charge on its intangible assets. 79 Appendix A Page 79 Discussion Regarding the Use of Non-GAAP Financial Measures Our annual report and this proxy statement contain some or all of the following financial measures that have not been calculated in accordance with United States Generally Accepted Accounting Principles (‘‘GAAP’’): (i) non-GAAP operating income and operating margin, (ii) non-GAAP diluted earnings per share, and (iii) non-GAAP free cash flow. As set forth in the ‘‘Unaudited Reconciliations of Non-GAAP Financial Measures’’ table found above, we derive such non-GAAP financial measures by excluding certain expenses and other items from the respective GAAP financial measure that is most directly comparable to each non-GAAP financial measure. Management uses these non-GAAP financial measures to evaluate our operating performance and compare it against past periods, make operating decisions, forecast for future periods, compare our operating performance against peer companies and determine payments under certain compensation programs. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by eliminating certain non-recurring expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods and competitors more difficult, obscure trends in ongoing operations or reduce management’s ability to make forecasts. We provide investors with non-GAAP operating income and operating margin and non-GAAP diluted earnings per share because we believe it is important for investors to be able to closely monitor and understand changes in our ability to generate income from ongoing business operations. We believe these non-GAAP financial measures give investors an additional method to evaluate historical operating performance and identify trends, an additional means of evaluating period-over-period operating performance and a method to facilitate certain comparisons of our operating results to those of our peer companies. We also believe that providing non-GAAP operating income and operating margin allows investors to assess the extent to which our ongoing operations impact our overall financial performance. We further believe that providing non-GAAP diluted earnings per share allows investors to assess the overall financial performance of our ongoing operations by eliminating the impact of share- based compensation expense, acquisition-related expenses, amortization of acquisition-related intangibles, settlements, gains, losses, and impairments, restructuring-related charges, and certain tax items which may not occur in each period presented and which may represent non-cash items unrelated to our ongoing operations. We believe that disclosing these non-GAAP financial measures contributes to enhanced financial reporting transparency and provides investors with added clarity about complex financial performance measures. We calculate non-GAAP operating income by excluding from GAAP operating income, share-based compensation expense, acquisition-related expenses, amortization of acquisition-related intangibles, settlements, gains, losses, and impairments, and restructuring-related charges. We calculate non-GAAP diluted earnings per share by excluding from GAAP diluted earnings per share, share-based compensation expense, acquisition-related expenses, amortization of acquisition-related intangibles, settlements, gains, losses, and impairments, restructuring-related charges, and certain tax items. Free cash flow is a non-GAAP measure calculated by subtracting capital expenditures from the most directly comparable GAAP measure, cash flows from operating activities. We believe free cash flow provides insight into our liquidity, our cash-generating capability, and the amount of cash potentially available to return Page 80 Appendix A 80 to stockholders, as well as our general financial performance. vary significantly in amount between companies and make comparisons less reliable. We exclude the items identified above from the respective non-GAAP financial measure referenced above for the reasons set forth with respect to each such excluded item below: Share-Based Compensation—because (1) the total amount of expense is partially outside of our control because it is based on factors such as stock price volatility and interest rates, which may be unrelated to our performance during the period in which the expense is incurred, (2) it is an expense based upon a valuation methodology premised on assumptions that vary over time, and (3) the amount of the expense can vary significantly between companies due to factors that can be outside of the control of such companies. Acquisition-Related Expenses—including such items as, when applicable, amortization of acquired intangible assets, fair value adjustments to contingent consideration, fair value charges incurred upon the sale of acquired inventory, and acquisition-related expenses, because they are not considered by management in making operating decisions and we believe that such expenses do not have a direct correlation to our future business operations and thereby including such charges does not necessarily reflect the performance of our ongoing operations for the period in which such charges or reversals are incurred. Settlements, Gains, Losses, and Impairments—because such settlements, gains, losses, and impairments (1) are not considered by management in making operating decisions, (2) are infrequent in nature, (3) are generally not directly controlled by management, (4) do not necessarily reflect the performance of our ongoing operations for the period in which such charges are recognized and/or (5) can Restructuring-Related Charges—because these charges have no direct correlation to our future business operations and including such charges or reversals does not necessarily reflect the performance of our ongoing operations for the period in which such charges or reversals are incurred. Certain Income Tax Items—including certain deferred tax charges and benefits that do not result in a current tax payment or tax refund and other adjustments, including but not limited to, items unrelated to the current fiscal year or that are not indicative of our ongoing business operations. The non-GAAP financial measures presented in the table above should not be considered in isolation and are not an alternative for the respective GAAP financial measure that is most directly comparable to each such non-GAAP financial measure. Investors are cautioned against placing undue reliance on these non-GAAP financial measures and are urged to review and consider carefully the adjustments made by management to the most directly comparable GAAP financial measures to arrive at these non-GAAP financial measures. Non-GAAP financial measures may have limited value as analytical tools because they may exclude certain expenses that some investors consider important in evaluating our operating performance or ongoing business performance. Further, non-GAAP financial measures are likely to have limited value for purposes of drawing comparisons between companies as a result of different companies potentially calculating similarly titled non-GAAP financial measures in different ways because non-GAAP measures are not based on any comprehensive set of accounting rules or principles. 81 Appendix A Page 81 (This page has been left blank intentionally.) FISCAL YEAR 2020 ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 3MAR202115122153 Table of Contents Cautionary Statement . . . . . . . . . . . . . . . Introduction . . . . . . . . . . . . . . . . . . . . . . . Industry Background . . . . . . . . . . . . . . . . Business Overview . . . . . . . . . . . . . . . . . . Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 85 87 88 89 92 Quantitative and Qualitative Disclosures . . . . . . . . . . . . . . . . . . About Market Risk 100 Selected Financial Data . . . . . . . . . . . . . . 102 Consolidated Statements of Operations . . . . . 103 Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheets . . . . . . . . . . . . . Consolidated Statements of Cash Flows . . . . . Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 105 106 107 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . Management’s Annual Report on Internal Control over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . 108 132 135 135 136 Comparative Stock Performance Graph . 137 CAUTIONARY STATEMENT This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), and is subject to the ‘‘safe harbor’’ created by those sections. Any statements that are not statements of historical fact should be considered to be forward-looking statements. Words such as ‘‘anticipates’’, ‘‘believes’’, ‘‘continue’’, ‘‘could’’, ‘‘estimates’’, ‘‘expects’’, ‘‘intends’’, ‘‘may’’, ‘‘plans’’, ‘‘potential’’, ‘‘predicts’’, ‘‘projects’’, ‘‘seek’’, ‘‘should’’, ‘‘targets’’, ‘‘will’’, ‘‘would’’, and similar expressions or variations or negatives of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Annual Report. Additionally, forward-looking statements include, but are not limited to: (cid:127) our plans to develop and market new products, enhancements or technologies and the timing of these development and marketing plans; (cid:127) our estimates regarding our capital requirements and our needs for additional financing; (cid:127) our estimates of our expenses, future revenues, and profitability; (cid:127) our estimates of the possible impacts of the COVID-19 pandemic; (cid:127) our estimates of the size of the markets for our products and services; (cid:127) our expectations related to the rate and degree of market acceptance of our products; and (cid:127) our estimates of the success of other competing technologies that may become available. Although forward-looking statements in this Annual Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known and understood by us. Consequently, forward-looking statements involve inherent risks and uncertainties and actual financial results and outcomes may differ materially and adversely from the results and outcomes discussed in or anticipated by the forward-looking statements. A number of important factors could cause actual financial results to differ materially and adversely from those in the forward-looking statements. We urge you to consider the risks and uncertainties discussed elsewhere in this report and in the other documents filed by us with the Securities and Exchange Commission (‘‘SEC’’) in evaluating our forward-looking statements. We have no plans, and undertake no obligation, to revise or update our forward-looking statements to reflect any event or circumstance that may arise after the date of this report. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. This Annual Report also contains estimates made by independent parties and by us relating to market size and growth and other industry data. These estimates involve a number of assumptions and limitations and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of important factors, including those described in ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’. These and other factors could cause results to differ materially and adversely from those expressed in the estimates made by the independent parties and by us. 85 Annual Report Page 85 In this document, the words ‘‘we’’, ‘‘our’’, ‘‘ours’’, ‘‘us’’, ‘‘Skyworks’’, and ‘‘the Company’’ refer only to Skyworks Solutions, Inc., and its consolidated subsidiaries and not any other person or entity. In addition, the following is a list of industry standards that may be referenced throughout the document: (cid:127) 5G (Fifth Generation): next-generation cellular network technology (cid:127) ASoC (Analog System on Chip): combines the required electronic circuits of various computer components into a single, integrated chip (cid:127) BAW (Bulk Acoustic Wave): electrical input signal is converted to an acoustic wave for filtering and converted back into an electrical signal by a metal-piezo-metal vertical structure (cid:127) BiFET (Bipolar Field Effect Transistor): integrates indium gallium phosphide—based heterojunction bipolar transistors with field effect transistors on the same gallium arsenide substrate (cid:127) DC (Direct Current): unidirectional flow of an electrical charge (cid:127) CMOS (Complementary Metal Oxide Semiconductor): a technology of constructing integrated circuits (cid:127) GaAs (Gallium Arsenide): a compound of the elements gallium and arsenic that is used in the production of semiconductors (cid:127) HBT (Heterojunction Bipolar Transistor): a type of bipolar junction transistor which uses differing (cid:127) semiconductor materials for the emitter and base regions, creating a heterojunction IoT (Internet of Things): the interconnection of uniquely identifiable embedded computing devices within the existing internet infrastructure (cid:127) LED (Light Emitting Diode): a two-lead semiconductor light source (cid:127) LTE (Long Term Evolution): 4th generation (‘‘4G’’) radio technologies designed to increase the capacity and speed of mobile telephone networks (cid:127) MIMO (Multiple In, Multiple Out): a method for multiplying the capacity of a radio link using multiple transmission and receiving antennas to exploit multipath propagation; more commonly, it refers to LTE, 5G, and Wi-Fi techniques to send more than one data signal (also known as data layers) with encoded information to increase capacity in modern telecommunications systems (cid:127) pHEMT (Pseudomorphic High Electron Mobility Transistor): a type of field effect transistor incorporating a junction between two materials with different band gaps (cid:127) RF (Radio Frequency): electromagnetic wave frequencies that lie in the range extending from around 3 kHz to 300 GHz (cid:127) SAW (Surface Acoustic Wave): electrical input signal is converted to an acoustic wave for filtering and converted back into an electrical signal by interdigitated transducers on a piezoelectric substrate (cid:127) SOI (Silicon On Insulator): technology refers to the use of layered silicon-insulator-silicon substrate in place of conventional silicon substrates in semiconductor manufacturing (cid:127) TC-SAW (Temperature Compensated Surface Acoustic Wave): SAW filters that have been designed to reduce shift in frequency over temperature Skyworks and the Skyworks symbol are trademarks or registered trademarks of Skyworks Solutions, Inc. or its subsidiaries in the United States and other countries. Third-party brands and names are for identification purposes only and are the property of their respective owners. Page 86 Annual Report 86 INTRODUCTION Skyworks Solutions, Inc., together with its consolidated subsidiaries (‘‘Skyworks’’ or the ‘‘Company’’), is empowering the wireless networking revolution. The Company’s highly innovative analog semiconductors are connecting people, places, and things, spanning a number of new and previously unimagined applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, medical, military, smartphone, tablet, and wearable markets. Our key customers include Amazon, Apple, Arris, Bose, Cisco, DJI, Ericsson, Foxconn, Garmin, Gemalto (a Thales company), General Electric, Fibocom, Google, Honeywell, Huawei, Itron, Lenovo, LG Electronics, Microsoft, Motorola, Netgear, Northrop Grumman, OPPO, Rockwell Collins, Samsung, Sierra Wireless, Sonos, Technicolor, VIVO, Xiaomi, and ZTE. Our competitors include Analog Devices, Broadcom, Cirrus Logic, Maxim Integrated Products, Murata Manufacturing, NXP Semiconductors, Qorvo, and Qualcomm. We operate worldwide with engineering, manufacturing, sales, and service facilities throughout Asia, Europe, and We make available free of charge on our website North America. Our Internet address is www.skyworksinc.com. our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as practicable after we electronically submit such material to the SEC. The information contained on our website is not incorporated by reference in this Annual Report. Our SEC filings are also available to the public at www.sec.gov. In August 2018, we acquired Avnera Corporation (‘‘Avnera’’) and expanded our leadership in wireless connectivity by adding ultra-low power analog circuits to enable smart interfaces via acoustic signal processing, sensors, and integrated software. The acquisition of Avnera enables us to capitalize on the rapid proliferation of audio functionality and its convergence with our advanced connectivity solutions. With our global sales channels, strong customer relationships and operational scale, we are leveraging Avnera’s innovative product portfolio and systems expertise to increase our footprint in automotive, industrial, home automation, enterprise, and high-end consumer markets. 87 Annual Report Page 87 INDUSTRY BACKGROUND Wireless connectivity is exploding on a global basis. The COVID-19 pandemic has underscored the importance of our mission of connecting everyone and everything, all the time. Work-from-home, remote healthcare, virtual education, and other social distancing trends, driven in part by the pandemic, have propelled an extraordinary need for faster speeds, increased bandwidth and capacity, significantly lower latency, and more reliable and secure wireless connectivity. 5G is dramatically altering the world, creating a market for diverse and transformative applications, and changing how individuals live, work, play, and learn. Most of the world’s largest economies now have functioning commercial 5G networks, and the world’s leading smartphone manufacturers have released 5G-enabled devices. The transition from 4G to 5G has just started, and according to a June 2020 Ericsson ‘‘Mobility Report,’’ there are expected to be 2.8 billion mobile 5G subscriptions globally by the end of 2025. At the same time, connectivity is expanding into an adjacent set of IoT markets. From smart homes to the smart grid and from industrial to wearables, the number of connected devices is rapidly proliferating. ABI Research IoT Market Tracker forecasts 117 billion IoT connections by 2026. Skyworks is enabling these opportunities with highly customized system solutions supporting a broad set of wireless protocols including cellular LTE, Wi-Fi, Bluetooth(cid:5), LoRa(cid:5), Thread and Zigbee(cid:5). In addition, next-generation Wi-Fi 6 products are emerging as the standard offering across enterprise, carrier, and retail segments and are expected to accelerate the deployment of IoT devices. ABI Research anticipates relatively swift adoption with 1.4 billion Wi-Fi 6E chipset shipments by 2025. Looking forward, we see significant growth opportunity for our industry and for Skyworks. The key catalysts for Skyworks will continue to be the insatiable demand for data and the profitable usage model, as each connection becomes more valuable and the world embraces 5G. Solving Connectivity Challenges We expect that highly integrated semiconductor solutions will play an increasingly pivotal role in the deployment of this next generation standard by resolving the daunting analog and RF complexities that are challenging the capabilities of existing hardware and the supporting network infrastructure. Meeting these design challenges requires broad competencies including signal transmission and conditioning, the ability to ensure seamless hand-offs between multiple standards, power management, voltage regulation, battery charging, advanced filtering, and tuning. Skyworks is at the forefront of this sea change in connectivity, delivering the solutions that will enable the true potential of 5G and the IoT. We have a rich heritage in analog systems design and have spent years investing in key technologies and resources. Our strength is underpinned by world-class performance and scale across a broad array of capabilities that include advanced TC-SAW and BAW filters, an expanded family of MIMO, ultra-high band, and diversity receive modules and expanding into emerging technologies. From our breakthrough Sky5(cid:5) unifying platform to our 5G small cell solutions, Skyworks’ approach across both infrastructure and user equipment facilitates powerful, high-speed end-to-end 5G connectivity. Page 88 Annual Report 88 BUSINESS OVERVIEW Our ambitious vision is to connect everyone and everything, all the time. To this end, key elements of our strategy include: Industry-Leading Technology As the industry migrates to more complex 5G architectures across a multitude of wireless applications, we are well positioned to help mobile device manufacturers handle growing levels of system complexity in the transmit and receive chain. The trend towards increasing front-end and analog design challenges in smartphones and other platforms plays directly into our core strengths and positions us to address these challenges. We believe that we offer the broadest portfolio of radio and analog solutions from the transceiver to the antenna as well as all required manufacturing process technologies. We also hold strong technology leadership positions in passive devices, advanced integration including proprietary shielding and 3-D die stacking as well as SAW, TC-SAW and BAW filters. Our product portfolio is reinforced by a library of approximately 3,950 worldwide patents and other intellectual property that we own and control. Together, our industry-leading technology enables us to deliver the highest levels of product performance and integration. Customer Relationships Given our scale and technology leadership, we are engaged with key original equipment manufacturers (‘‘OEMs’’), smartphone providers and baseband reference design partners. Our customers value our global supply chain, our innovative technology and our system engineering expertise, resulting in deep customer loyalty. We partner with our customers to support their long-term product road maps and are valued as a system solutions provider rather than just a point product vendor. Diversification We are diversifying our business in three areas: our addressed markets, our customer base, and our product offerings. By leveraging core analog and mixed signal technologies, we are expanding our family of solutions to a set of increasingly diverse end markets and customers. With the adoption of 5G and the opportunity to enable more applications, we are steadily growing our business beyond just mobile devices (where we support all top-tier manufacturers, including the leading smartphone suppliers and key baseband vendors) into additional high- performance analog markets, including automotive, home and factory automation, infrastructure, aerospace and defense, medical, smart energy, and wireless networking. In these markets we leverage our scale, intellectual property, and worldwide distribution network, which spans over 3,200 customers and over 2,500 analog components. Delivering Operational Excellence We vertically integrate our supply chain where we can differentiate with highly specialized internal manufacturing capabilities or enter into alliances and strategic relationships for leading-edge technologies. This hybrid manufacturing model allows us to better balance our manufacturing capacity with the demand of the marketplace. Our internal capacity utilization remains high, resulting in stable gross margins and strong return on invested capital on a broader range of revenue. 89 Annual Report Page 89 Additionally, we continue to drive reductions in product design and manufacturing cycle times and further improve product yields. The combination of agile, flexible capacity and world-class module manufacturing and scale advantage allows us to achieve low product costs while integrating multiple technologies into highly sophisticated multi-chip modules. Maintaining a Performance-Driven Culture We consider our people and corporate culture to be a major competitive advantage and a key driver of our overall strategy. We create key performance indicators that align employee efforts with corporate strategy and link responsibilities with performance measurement. Accountability is paramount, and we compensate our employees through a pay-for-performance methodology. We strive to be an employer-of-choice among peer companies and have created a work environment in which turnover is below geographic and industry averages. Generating Superior Operating Results and Stockholder Returns We seek to generate financial returns that are comparable to a highly diversified analog semiconductor company. Given our product volume and overall utilization we strive to achieve a best-in-class return on investment and operating income to reward stockholders. Our Product Portfolio Our product portfolio consists of various solutions, including: (cid:127) Amplifiers: the modules that strengthen the signal so that it has sufficient energy to reach a base station (cid:127) Antenna Tuners: aperture and impedance tuning products that improve antenna performance across frequencies (cid:127) Attenuators: circuits that allow a known source of power to be reduced by a predetermined factor (usually expressed as decibels) (cid:127) Circulators/Isolators: ferrite-based components commonly found on the output of high-power amplifiers used to protect receivers in wireless transmission systems (cid:127) Wireless ASoC: an intelligent 2.4 GHz and 5GHz wireless radio integrated circuit that includes all the analog and digital functions optimized for building cognitive wireless audio headsets, headphones, and wireless speaker systems (cid:127) DC/DC Converters: an electronic circuit which converts a source of direct current from one voltage level to another (cid:127) Demodulators: a device or an RF block used in receivers to extract the information that has been modulated onto a carrier or from the carrier itself (cid:127) Detectors: devices used to measure and control RF power in wireless systems (cid:127) Diodes: semiconductor devices that pass current in one direction only (cid:127) Directional Couplers: transmission coupling devices for separately sampling the forward or backward wave in a transmission line (cid:127) Diversity Receive Modules: devices used to improve receiver sensitivity in high data rate applications (cid:127) Filters: devices for recovering and separating mixed and modulated data in RF stages, including SAW, TC-SAW, and BAW filters (cid:127) Front-end Modules: two or more functions co-packaged to optimize the performance, cost, and application suitability in products, including intermediate or radio frequency signal paths (cid:127) Hybrid: a type of directional coupler used in radio and telecommunications Page 90 Annual Report 90 (cid:127) LED Drivers: devices which regulate the current through a light emitting diode or string of diodes for the purpose of creating light (cid:127) Low Noise Amplifiers: devices used to reduce system noise figure in the receive chain (cid:127) Mixers: devices that enable signals to be converted to a higher or lower frequency signal and thereby allowing the signals to be processed more effectively (cid:127) Modulators: devices that take a baseband input signal and output a radio frequency modulated signal (cid:127) Optocouplers/Optoisolators: semiconductor devices that allow signals to be transferred between circuits or systems while ensuring that the circuits or systems are electrically isolated from each other (cid:127) Phase Locked Loops: closed-loop feedback control system that maintains a generated signal in a fixed phase relationship to a reference signal (cid:127) Phase Shifters: designed for use in power amplifier distortion compensation circuits in base station applications (cid:127) Power Dividers/Combiners: utilized to equally split signals into in-phase signals as often found in balanced signal chains and local oscillator distribution networks (cid:127) Receivers: electronic devices that change a radio signal from a transmitter into useful information (cid:127) Switches: components that perform the change between the transmit and receive function, as well as the band function for cellular handsets (cid:127) Synthesizers: devices that provide ultra-fine frequency resolution, fast switching speed, and low phase-noise performance (cid:127) Technical Ceramics: polycrystalline oxide materials used for a wide variety of electrical, mechanical, thermal, and magnetic applications (cid:127) Voltage Controlled Oscillators/Synthesizers: fully integrated, high performance signal source for high dynamic range transceivers (cid:127) Voltage Regulators: generate a fixed level which ideally remains constant over varying input voltage or load conditions We believe we possess broad technology capabilities and one of the most complete wireless communications product portfolios in the industry. 91 Annual Report Page 91 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this Annual Report. In addition to historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ substantially and adversely from those referred to herein due to a number of factors, including, but not limited to, those described below and elsewhere in this Annual Report. OVERVIEW We, together with our consolidated subsidiaries, are empowering the wireless networking revolution. Our highly innovative analog semiconductors are connecting people, places, and things spanning a number of new and previously unimagined applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, medical, military, smartphone, tablet, and wearable markets. Our key customers include Amazon, Apple, Arris, Bose, Cisco, DJI, Ericsson, Foxconn, Garmin, Gemalto (a Thales company), General Electric, Fibocom, Google, Honeywell, Huawei, Itron, Lenovo, LG Electronics, Microsoft, Motorola, Netgear, Northrop Grumman, OPPO, Rockwell Collins, Samsung, Sierra Wireless, Sonos, Technicolor, VIVO, Xiaomi, and ZTE. Impact of COVID-19 The COVID-19 pandemic and the resulting economic downturn are affecting business conditions in our industry. Overall demand for our products has decreased as a result of the pandemic, which impacted our operating results for fiscal 2020. The duration, severity, and future impact of the pandemic continue to be highly uncertain and could still result in significant disruptions to our business operations, including our supply chain, as well as negative impacts to our financial condition. As a result of the temporary suspension of our operations in Mexicali, Mexico, for approximately two weeks in April 2020, we incurred a $23.4 million production utilization charge, as described below. A renewed suspension of our operations in Mexicali, or a continued reduction in our production capacity due to employee quarantines, employee absenteeism, and restrictions on certain of our employees’ ability to work, would negatively impact our future operating results. RESULTS OF OPERATIONS Fiscal Years Ended October 2, 2020, September 27, 2019, and September 28, 2018. The following table sets forth the results of our operations expressed as a percentage of net revenue. See Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 27, 2019, filed with the SEC on November 14, 2019, as amended by Amendment No. 1 to such Annual Report on Form 10-K, filed with the SEC on January 27, 2020, for Management’s Discussions and Analysis of Financial Condition and Results of Operations for the fiscal year ended September 28, 2018. Page 92 Annual Report 92 Net revenue Cost of goods sold Gross profit Operating expenses: Research and development Selling, general, and administrative Amortization of intangibles Restructuring, impairment, and other charges Total operating expenses Operating income Other income (expense), net Income before income taxes Provision for income taxes Net income General October 2, 2020 100.0% September 27, 2019 100.0% September 28, 2018 100.0% 51.9 48.1 13.7 6.9 0.4 0.4 21.5 26.6 — 26.6 2.3 52.5 47.5 12.5 5.9 0.7 0.2 19.3 28.2 0.3 28.5 3.2 49.6 50.4 10.4 5.4 0.5 — 16.3 34.1 0.3 34.4 10.7 24.3% 25.3% 23.7% During the fiscal year ended October 2, 2020, the following key factors contributed to our overall results of operations, financial position, and cash flows: (cid:127) Net revenue decreased 0.6% to $3,355.7 million, as compared to fiscal 2019. This decrease in revenue was driven primarily by reduced demand resulting from Huawei continuing to remain on the Entity List. Additionally, demand for our products was negatively impacted by the ongoing COVID-19 pandemic. These decreases in revenue were partially offset by an increase in demand for our new 5G solutions being deployed across a growing set of customers. (cid:127) Our ending cash, cash equivalents and marketable securities balance decreased 9.5% to $980.0 million in fiscal 2020 from $1,082.2 million in fiscal 2019. This decrease in cash, cash equivalents and marketable securities during fiscal 2020, was primarily the result of the repurchase of 6.3 million shares of common stock for $647.5 million, capital expenditures of $389.4 million, and dividend payments of $307.0 million, partially offset by cash generated from operations of $1,204.5 million. Net Revenue (dollars in millions) Net revenue October 2, 2020 $ 3,355.7 Change (0.6)% Fiscal Years Ended September 27, 2019 $ 3,376.8 Change (12.7)% September 28, 2018 $ 3,868.0 We market and sell our products directly to OEMs of communications and electronics products, third-party original design manufacturers and contract manufacturers, and indirectly through electronic components distributors. We generally experience seasonal peaks during our fourth and first fiscal quarters (which correspond to the second half of the calendar year), primarily as a result of increased worldwide production of consumer 93 Annual Report Page 93 electronics in anticipation of increased holiday sales, whereas our second and third fiscal quarters are typically lower and in line with seasonal industry trends. The decrease in net revenue in fiscal 2020, as compared to fiscal 2019, was driven by reduced demand resulting from Huawei continuing to remain on the Entity List as well as the ongoing COVID-19 pandemic, partially offset by an increase in demand for our new 5G solutions being deployed across a growing set of customers. For information regarding net revenue by geographic region and customer concentration, see Note 14 of this Annual Report. Gross Profit (dollars in millions) Gross profit % of net revenue October 2, 2020 $ 1,612.9 48.1% Change 0.6% Fiscal Years Ended September 27, 2019 $ 1,603.8 47.5% Change (17.8)% September 28, 2018 $ 1,950.7 50.4% Gross profit represents net revenue less cost of goods sold. Our cost of goods sold consists primarily of purchased materials, labor and overhead (including depreciation and share-based compensation expense) associated with product manufacturing. Erosion of average selling prices of established products is typical of the semiconductor industry. Consistent with trends in the industry, we anticipate that average selling prices for our established products will continue to decline over time. As part of our normal course of business, we mitigate the gross margin impact of declining average selling prices with efforts to increase unit volumes, reduce material costs, improve manufacturing efficiencies, lower manufacturing costs of existing products and by introducing new and higher value-added products. The increase in gross profit in fiscal 2020, as compared to fiscal 2019, was primarily the result of a favorable product mix, partially offset by lower unit volumes and lower average selling prices. In addition, there was a $23.4 million production utilization charge in fiscal 2020, due to the temporary suspension of our operations in Mexicali in the government’s effort to contain the COVID-19 pandemic. This one-time charge was less than the $66.1 million inventory-related one-time charge incurred in fiscal 2019, due to lower expected demand as a result of Huawei being added to the Entity List. As a result of these impacts, gross profit margin increased to 48.1% of net revenue for fiscal 2020, as compared to 47.5% in fiscal 2019. Research and Development (dollars in millions) Research and development % of net revenue October 2, 2020 $ 464.1 13.8% Change 9.4% Fiscal Years Ended September 27, 2019 $ 424.1 12.5% Change 4.8% September 28, 2018 $ 404.5 10.4% Research and development expenses consist primarily of direct personnel costs including share-based compensation expense, costs for pre-production evaluation and testing of new devices, masks, engineering prototypes and design tool costs. Page 94 Annual Report 94 The increase in research and development expense in fiscal 2020, as compared to fiscal 2019, was primarily related to an increase in employee-related share-based compensation expense due to higher performance achievement with respect to performance stock awards. Selling, General, and Administrative (dollars in millions) Selling, general, and administrative % of net revenue October 2, 2020 $ 231.4 6.9% Change 16.7% Fiscal Years Ended September 27, 2019 $ 198.3 5.9% Change (4.6)% September 28, 2018 $ 207.8 5.4% Selling, general, and administrative expenses include legal and related costs, accounting, treasury, human resources, information systems, customer service, bad debt expense, sales commissions, share-based compensation expense, advertising, marketing, costs associated with business combinations completed or contemplated during the period, and other costs. The increase in selling, general, and administrative expenses in fiscal 2020, as compared to fiscal 2019, was primarily related to increases in employee-related share-based compensation expense due to higher performance achievement with respect to performance stock awards. Amortization of Intangibles (dollars in millions) Total amortization of intangibles, including inventory step-up % of net revenue October 2, 2020 $ 46.0 1.5% Change (18.9)% Fiscal Years Ended September 27, 2019 $ 56.7 1.7% Change 112.4% September 28, 2018 $ 26.7 0.7% The decrease in total amortization expense for fiscal 2020, as compared to fiscal 2019, was primarily related to fully amortized intangible assets that were acquired in prior years. Restructuring, Impairment, and Other Charges (dollars in millions) Restructuring, impairment, and other charges % of net revenue October 2, 2020 $ 13.8 0.4% Change 102.9% Fiscal Years Ended September 27, 2019 $ 6.8 0.2% Change 750.0% September 28, 2018 $ 0.8 —% Restructuring, impairment, and other charges incurred in fiscal 2020 were primarily related to the abandonment of a previously capitalized in-process research and development (‘‘IPR&D’’) project. 95 Annual Report Page 95 Restructuring, impairment, and other charges incurred in fiscal 2019 were primarily related to employee severance and other termination benefits as well as charges on a leased facility resulting from restructuring plans initiated during the period. Provision for Income Taxes (dollars in millions) Provision for income taxes % of net revenue October 2, 2020 $ 76.9 2.3% Change (28.4)% Fiscal Years Ended September 27, 2019 $ 107.4 3.2% Change (74.0)% September 28, 2018 $ 413.7 10.7% The annual effective tax rate for fiscal 2020 of 8.6% was less than the United States federal statutory rate of 21.0% primarily due to benefits of 9.7% related to foreign earnings taxed at a rate less than the United States federal rate, 4.6% related to benefits from the foreign derived intangible income (‘‘FDII’’) deduction, 1.2% related to stock windfall deductions, and 2.6% related to the recognition of federal research and development tax credits, partially offset by increases in income tax rate expense impact of 4.0% related to global intangible low-taxed income (‘‘GILTI’’) expense, and 1.1% related to a change in our tax reserves. The decrease in the effective tax rate for fiscal 2020, as compared to the 11.2% effective rate for fiscal 2019, was primarily due to benefits related to favorable changes to GILTI and increased windfall tax deductions. See Note 8 of this Annual Report for additional information regarding income taxes. LIQUIDITY AND CAPITAL RESOURCES (in millions) Cash and cash equivalents at beginning of period Net cash provided by operating activities Net cash used in investing activities Net cash used in financing activities October 2, 2020 $ 851.3 1,204.5 (581.4) (907.7) Fiscal Years Ended September 27, 2019 $ 733.3 1,367.4 (336.9) (912.5) September 28, 2018 $ 1,616.8 1,260.6 (1,150.4) (993.7) Cash and cash equivalents at end of period $ 566.7 $ 851.3 $ 733.3 Cash provided by operating activities: Cash provided by operating activities consists of net income for the period adjusted for certain non-cash items and changes in certain operating assets and liabilities. The $162.9 million decrease in cash provided by operating activities for fiscal 2020, as compared to fiscal 2019, was primarily related to unfavorable changes in working capital. Cash used in investing activities: Cash used in investing activities consists primarily of cash paid for acquisitions net of cash acquired, capital expenditures, purchased intangibles, and cash related to the sale or maturity of marketable securities. The Page 96 Annual Report 96 $244.5 million increase in cash used in investing activities for fiscal 2020, as compared to fiscal 2019, was primarily related to a $269.3 million difference in the net purchase and sale of marketable securities, partially offset by a $9.0 million decrease in cash used for capital expenditures. Cash used in financing activities: Cash used in financing activities consists primarily of cash transactions related to equity. The $4.8 million decrease in cash used in financing activities for fiscal 2020, as compared to fiscal 2019, was primarily related to an increase of $35.0 million in net proceeds from employee stock option exercises and a decrease of $10.1 million in stock repurchase activity. These decreases in cash used in financing activities were partially offset by an increase of $33.1 million in dividend payments and an increase of $10.3 million related to the minimum statutory payroll tax withholdings upon vesting of employee performance and restricted stock awards. Liquidity: Cash, cash equivalents and marketable securities totaled $980.0 million as of October 2, 2020, representing a decrease of $102.3 million from September 27, 2019. The decrease resulted from $647.5 million used to repurchase 6.3 million shares of stock, $389.4 million in capital expenditures, and $307.0 million in cash dividend payments, which was partially offset by $1,204.5 million in cash generated from operations during fiscal 2020. Based on our historical results of operations, we expect that our cash, cash equivalents and marketable securities on hand and the cash we expect to generate from operations will be sufficient to fund our research and development, capital expenditures, potential acquisitions, working capital, quarterly cash dividend payments (if such dividends are declared by the Board of Directors), outstanding commitments and other liquidity requirements associated with existing operations for at least the next 12 months. However, we cannot be certain that our cash on hand and cash generated from operations will be available in the future to fund all of our capital and operating requirements. In addition, any future strategic investments and acquisitions may require additional cash and capital resources. If we are unable to obtain sufficient cash or capital to meet our needs on a timely basis and on favorable terms, our business and operations could be materially and adversely affected. Our invested cash balances primarily consist of highly liquid marketable securities that are available to meet near-term cash requirements including: term deposits, certificate of deposits, money market funds, U.S. Treasury securities, agency securities, corporate debt securities and commercial paper. OFF-BALANCE SHEET ARRANGEMENTS All significant contractual obligations are recorded on our consolidated balance sheet or fully disclosed in the notes to our consolidated financial statements. We have no material off-balance sheet arrangements as defined in SEC Regulation S-K Item 303(a)(4)(ii). 97 Annual Report Page 97 CONTRACTUAL CASH FLOWS Set forth below is a summary of our contractual payment obligations related to our operating leases, other commitments, and long-term liabilities at October 2, 2020 (in millions): Payments Due By Period Obligation Other long-term liabilities (1) Operating lease obligations Other commitments (2) Total Total $ 310.1 203.4 11.5 $ 525.0 Less Than 1 Year $ 19.1 25.7 8.0 $ 52.8 1-3 Years $ 38.2 53.8 3.5 $ 95.5 3-5 Years $ 38.2 42.3 — $ 80.5 Thereafter $ 214.6 81.6 — $ 296.2 (1) Other long-term liabilities primarily include our gross unrecognized tax benefits, repatriation tax payable, and executive deferred compensation. Gross unrecognized tax benefits and executive deferred compensation are both classified as beyond five years due to the uncertain nature of the liabilities. (2) Other commitments consist of contractual license and royalty payments and other purchase obligations. CRITICAL ACCOUNTING ESTIMATES The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and judgments in applying our most critical accounting policies that can have a significant impact on the results we report in our financial statements. The SEC has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results and which require our most difficult, complex, or subjective judgments or estimates. Based on this definition, our most critical accounting policies include revenue recognition, which impacts the recording of net revenue; inventory valuation, which impacts the cost of goods sold and gross margin; assessment of goodwill and long-lived assets, which impacts the impairment of the respective assets; share-based compensation, which impacts cost of goods sold and operating expenses; loss contingencies, which impacts operating expenses; and income taxes, which impacts the income tax provision. These policies and significant judgments involved are discussed further below. We have other significant accounting policies that do not generally require subjective estimates or judgments or would not have a material impact on our results of operations. Our significant accounting policies are described in Note 2 of this Annual Report. Revenue Recognition. We recognize revenue in accordance with the Financial Accounting Standards Board’s (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) 606 Revenue from Contracts with Customers net of estimated reserves. Our revenue reserves contain uncertainties because they require management to make assumptions and to apply judgment to estimate the value of future credits to customers for product returns, price protection and stock rotation for products sold to certain electronic component distributors. We base these estimates on the expected value method considering all reasonably available information, including our historical experience and current expectations, and is reflected in the transaction price when sales are recorded. Inventory Valuation. We value our inventory at the lower of cost or net realizable value. Reserves for excess and obsolete inventory are established on a quarterly basis and are based on a detailed analysis of aged material, Page 98 Annual Report 98 salability of our inventory, market conditions, and product life cycles. Once reserves are established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory. Our reserves contain uncertainties because the calculation requires management to make assumptions and to apply judgment regarding historical experience, market conditions and technological obsolescence. Changes in actual demand or market conditions could adversely impact our reserve calculations. Income Taxes. The application of tax laws and regulations to calculate our tax liabilities is subject to legal and factual interpretation, judgment, and uncertainty in a multitude of jurisdictions. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations, and court rulings. We recognize potential liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes and interest will be due. We record an amount as an estimate of probable additional income tax liability at the largest amount that we feel is more likely than not, based upon the technical merits of the position, to be sustained upon audit by the relevant tax authority. OTHER MATTERS Inflation did not have a material impact on our results of operations during the three-year period ended October 2, 2020. 99 Annual Report Page 99 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are subject to overall financial market risks, such as changes in market liquidity, credit quality, investment risk, interest rate risk and foreign exchange rate risk as described below. Investment and Interest Rate Risk Our exposure to interest rate and general market risks relates principally to our investment portfolio, which consists of cash and cash equivalents (money market funds and marketable securities purchased with less than ninety days until maturity) that total approximately $566.7 million and marketable securities (U.S. Treasury and government securities, corporate bonds and notes, municipal bonds) that total approximately $408.1 million and $5.2 million within short-term and long-term marketable securities, respectively, as of October 2, 2020. The main objectives of our investment activities are liquidity and preservation of capital. Our cash equivalent investments have short-term maturity periods that dampen the impact of market or interest rate risk. Our marketable securities consist of short-term and long-term maturity periods between 90 days and two years. Credit risk associated with our investments is not material because our investments are diversified across several types of securities with high credit ratings, which reduces the amount of credit exposure to any one investment. Based on our results of operations for the fiscal year ended October 2, 2020, a hypothetical reduction in the interest rates on our cash, cash equivalents, and other investments to zero would result in an immaterial reduction of interest income with a de minimis impact on income before taxes. Given the low interest rate environment, the objectives of our investment activities, and the relatively low interest income generated from our cash, cash equivalents, and other investments, we do not believe that investment or interest rate risks currently pose material exposures to our business or results of operations. Foreign Exchange Rate Risk Substantially all sales to customers and arrangements with third-party manufacturers provide for pricing and payment in United States dollars, thereby reducing the impact of foreign exchange rate fluctuations on our results. A percentage of our international operational expenses are denominated in foreign currencies and exchange rate volatility could positively or negatively impact those operating costs. For the fiscal years ended October 2, 2020, September 27, 2019, and September 28, 2018, we had foreign exchange losses of $5.9 million, $6.2 million, and $5.5 million, respectively. Increases in the value of the United States dollar relative to other currencies could make our products more expensive, which could negatively impact our ability to compete. Conversely, decreases in the value of the United States dollar relative to other currencies could result in our suppliers raising their prices to continue doing business with us. Given the relatively small number of customers and arrangements with third- party manufacturers denominated in foreign currencies, we do not believe that foreign exchange volatility has a material impact on our current business or results of operations. However, fluctuations in currency exchange rates could have a greater effect on our business or results of operations in the future to the extent our expenses increasingly become denominated in foreign currencies. Page 100 Annual Report 100 We may enter into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, certain firmly committed transactions, forecasted future cash flows and net investments in foreign subsidiaries. However, we may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. For the fiscal year ended October 2, 2020, we had no outstanding foreign currency forward or option contracts with financial institutions. 101 Annual Report Page 101 SELECTED FINANCIAL DATA The information set forth below for the five years ended October 2, 2020, is not necessarily indicative of results of future operations, and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and related notes appearing elsewhere in this Annual Report to fully understand factors that may affect the comparability of the information presented below. Our fiscal year ends on the Friday closest to September 30. Fiscal 2020 consisted of 53 weeks and ended on October 2, 2020. Fiscal 2019, 2018, 2017, and 2016 each consisted of 52 weeks and ended on September 27, 2019, September 28, 2018, September 29, 2017, and September 30, 2016, respectively. The following table represents the selected financial data (in millions, except per share data): Statement of Operations Data: October 2, 2020(1) September 27, 2019(1) September 28, 2018(2) September 29, 2017 September 30, 2016(3) Fiscal Years Ended Net revenue Operating income Operating margin Net income Earnings per share: Basic Diluted Cash dividends declared per share Balance Sheet Data: Working capital Property, plant, and equipment, net Total assets Stockholders’ equity $ 3,355.7 $ 3,376.8 $ $ $ $ $ 891.8 26.6% 814.8 4.84 4.80 1.82 $ $ $ $ $ 952.0 28.2% 853.6 4.92 4.89 1.58 $ 3,868.0 $ 1,319.3 $ 3,651.4 $ 1,253.8 $ 3,289.0 $ 1,118.7 $ $ $ $ 34.1% 34.3% 918.4 $ 1,010.2 $ $ $ 5.48 5.41 1.16 5.06 5.01 1.34 As of 34.0% 995.2 5.27 5.18 1.06 $ $ $ $ October 2, 2020 September 27, 2019 September 28, 2018 September 29, 2017 September 30, 2016 $ 1,869.2 $ 1,249.5 $ 5,106.7 $ 4,164.2 $ 1,860.6 $ 1,205.6 $ 4,839.6 $ 4,122.3 $ 1,872.5 $ 1,140.9 $ 4,828.9 $ 4,097.0 $ 2,245.8 $ 882.3 $ 4,573.6 $ 4,065.7 $ 1,791.9 $ 806.3 $ 3,855.4 $ 3,541.4 (1) (2) (3) Fiscal 2020 and fiscal 2019 net revenue, net income, and earnings per share were adversely impacted as a result of the U.S. Bureau of Industry and Security of the U.S. Department of Commerce placing Huawei on the Entity List in May 2019. Fiscal 2018 net income and earnings per share include a one-time charge of $224.6 million related to the mandatory deemed repatriation tax on foreign earnings and a one-time charge of $18.3 million related to the revaluation of deferred tax assets and liabilities at the new corporate tax rate, as a result of the Tax Reform Act. Fiscal 2016 net income and earnings per share include other income of $88.5 million related to the receipt of a merger termination fee in November 2015 in connection with the termination by PMC-Sierra, Inc. (‘‘PMC’’), of the Amended and Restated Agreement and Plan of Merger that we had entered into with PMC in October 2015. Page 102 Annual Report 102 SKYWORKS SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts) Net revenue Cost of goods sold Gross profit Operating expenses: Research and development Selling, general, and administrative Amortization of intangibles Restructuring, impairment, and other charges Total operating expenses Operating income Other income (expense), net Income before income taxes Provision for income taxes Net income Earnings per share: Basic Diluted Weighted average shares: Basic Diluted October 2, 2020 $ 3,355.7 1,742.8 1,612.9 464.1 231.4 11.8 13.8 721.1 891.8 (0.1) 891.7 76.9 $ $ 4.84 4.80 168.5 169.9 Cash dividends declared and paid per share $ 1.82 Fiscal Years Ended September 27, 2019 $ 3,376.8 1,773.0 1,603.8 September 28, 2018 $ 3,868.0 1,917.3 1,950.7 424.1 198.3 22.6 6.8 651.8 952.0 9.0 961.0 107.4 $ $ 4.92 4.89 173.5 174.5 $ 1.58 404.5 207.8 18.3 0.8 631.4 1,319.3 12.8 1,332.1 413.7 $ 918.4 $ $ 5.06 5.01 181.3 183.2 $ 1.34 $ 814.8 $ 853.6 See accompanying Notes to Consolidated Financial Statements. 103 Annual Report Page 103 SKYWORKS SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Net income Other comprehensive income (loss), net of tax Fair value of investments Pension adjustments Foreign currency translation adjustment October 2, 2020 $ 814.8 0.1 — — Fiscal Years Ended September 27, 2019 $ 853.6 0.3 0.5 — Comprehensive income $ 814.9 $ 854.4 September 28, 2018 $ 918.4 (0.1) — (0.2) $ 918.1 See accompanying Notes to Consolidated Financial Statements. Page 104 Annual Report 104 SKYWORKS SOLUTIONS, INC. CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) ASSETS Current assets: Cash and cash equivalents Marketable securities Receivables, net of allowance of $0.6 and $0.8, respectively Inventory Other current assets Total current assets Property, plant, and equipment, net Operating lease right-of-use assets Goodwill Intangible assets, net Deferred tax assets, net Marketable securities Other long-term assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable Accrued compensation and benefits Other current liabilities Total current liabilities Long-term tax liabilities Long-term operating lease liabilities Other long-term liabilities Total liabilities Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock, no par value: 25.0 shares authorized, no shares issued Common stock, $0.25 par value: 525.0 shares authorized; 232.3 shares issued and 165.6 shares outstanding at October 2, 2020, and 230.2 shares issued and 170.1 shares outstanding at September 27, 2019 Additional paid-in capital Treasury stock, at cost Retained earnings Accumulated other comprehensive loss Total stockholders’ equity Total liabilities and stockholders’ equity As of October 2, 2020 September 27, 2019 $ 566.7 408.1 393.6 806.0 143.2 2,317.6 1,249.5 167.9 1,189.8 53.5 55.3 5.2 67.9 $ 851.3 203.3 465.3 609.7 105.0 2,234.6 1,205.6 — 1,189.8 107.9 40.8 27.6 33.3 $ 5,106.7 $ 4,839.6 226.9 113.5 108.0 448.4 311.3 150.7 32.1 942.5 — 41.4 3,403.7 (4,093.5) 4,820.4 (7.8) 4,164.2 190.5 76.0 107.5 374.0 312.4 — 30.9 717.3 — 42.5 3,188.0 (3,412.9) 4,312.6 (7.9) 4,122.3 $ 5,106.7 $ 4,839.6 See accompanying Notes to Consolidated Financial Statements. 105 Annual Report Page 105 SKYWORKS SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Share-based compensation Depreciation Amortization of intangible assets, including inventory step-up Deferred income taxes Asset impairment charges Changes in fair value of contingent consideration Other, net Changes in assets and liabilities: Receivables, net Inventory Accounts payable Other current and long-term assets and liabilities Net cash provided by operating activities Cash flows from investing activities: Capital expenditures Purchased intangibles Purchases of marketable securities Sales and maturities of marketable securities Payments for acquisitions, net of cash Net cash used in investing activities Cash flows from financing activities: Repurchase of common stock—payroll tax withholdings on equity awards Repurchase of common stock—stock repurchase program Dividends paid Net proceeds from exercise of stock options Proceeds from employee stock purchase plan Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental cash flow disclosures: Income taxes paid Non-cash investing in capital expenditures, accrued but not paid Fiscal Years Ended October 2, 2020 September 27, 2019 September 28, 2018 $ 814.8 $ 853.6 $ 918.4 156.6 318.3 46.0 (13.4) 11.8 — 3.8 71.7 (190.4) 61.1 (75.8) 80.1 314.9 56.7 (6.1) — (3.1) 16.8 190.5 (119.6) (33.0) 16.6 1,204.5 1,367.4 (389.4) (9.1) (790.5) 607.6 — (581.4) (33.1) (647.5) (307.0) 57.1 22.8 (907.7) (284.6) 851.3 566.7 110.8 78.7 $ $ $ (398.4) (25.0) (360.5) 447.0 — (336.9) (22.8) (657.6) (273.9) 22.1 19.7 (912.5) 118.0 733.3 851.3 124.4 101.5 $ $ $ 107.8 272.5 26.7 27.3 — (11.9) (0.7) (193.8) 11.9 (126.0) 228.4 1,260.6 (422.3) (8.6) (683.7) 368.2 (404.0) (1,150.4) (48.0) (759.5) (243.2) 38.8 18.2 (993.7) (883.5) 1,616.8 733.3 135.9 108.0 $ $ $ See accompanying Notes to Consolidated Financial Statements. Page 106 Annual Report 106 SKYWORKS SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In millions) Shares of Par value of Shares of Value of Additional treasury common stock stock common stock treasury stock paid-in capital Accumulated other Total Retained comprehensive stockholders’ earnings income (loss) equity Balance at September 29, 2017 183.1 $ 45.8 42.9 $ (1,925.0) $ 2,893.8 $ 3,059.6 $ (8.5) $ 4,065.7 Net income Exercise and settlement of share-based awards, net of shares withheld for taxes Share-based compensation expense Stock repurchase program Dividends declared Pre-combination service on replacement awards Other comprehensive loss — 2.0 — — 0.5 — (7.7) (1.9) — — — — — — — 0.4 — 7.7 — — — — — 918.4 (48.0) — (759.5) — — — 57.8 107.3 1.9 — 0.2 — — (1.9) — (243.2) — — — — — — — — (0.3) 918.4 10.3 105.4 (759.5) (243.2) 0.2 (0.3) Balance at September 28, 2018 177.4 $ 44.4 51.0 $ (2,732.5) $ 3,061.0 $ 3,732.9 $ (8.8) $ 4,097.0 Net income Exercise and settlement of share-based awards, net of shares withheld for taxes Share-based compensation expense Stock repurchase program Dividends declared Other comprehensive income — 1.6 — — 0.3 — (8.9) (2.2) — — — — — 0.3 — 8.9 — — — — 853.6 (22.8) — (657.6) — — 42.2 82.5 2.2 — — — — — (273.9) — — — — — — 0.8 853.6 19.8 82.5 (657.6) (273.9) 0.8 Balance at September 27, 2019 170.1 $ 42.5 60.1 $ (3,412.9) $ 3,188.0 $ 4,312.6 $ (7.9) $ 4,122.3 Net income Exercise and settlement of share-based awards, net of shares withheld for taxes Share-based compensation expense Stock repurchase program Dividends declared Other comprehensive income Balance at October 2, 2020 — 1.8 — — 0.5 — (6.3) (1.6) — — — — — 0.3 — 6.3 — — — — 814.8 (33.1) — (647.5) — — 79.4 134.7 1.6 — — — — — (307.0) — — — — — — 0.1 814.8 46.8 134.7 (647.5) (307.0) 0.1 165.6 $ 41.4 66.7 $ (4,093.5) $ 3,403.7 $ 4,820.4 $ (7.8) $ 4,164.2 See accompanying Notes to Consolidated Financial Statements. 107 Annual Report Page 107 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Skyworks Solutions, Inc., together with its consolidated subsidiaries (‘‘Skyworks’’ or the ‘‘Company’’), is empowering the wireless networking revolution. The Company’s analog semiconductors are connecting people, places, and things, spanning a number of new applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, medical, military, smartphone, tablet, and wearable markets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation All Skyworks subsidiaries are included in the Company’s consolidated financial statements and all intercompany balances are eliminated in consolidation. Certain items in the fiscal years 2019 and 2018 financial statements have been reclassified to conform to the fiscal 2020 presentation. Fiscal Year The Company’s fiscal year ends on the Friday closest to September 30. Fiscal 2020 consisted of 53 weeks and ended on October 2, 2020. Fiscal 2019 and 2018 each consisted of 52 weeks and ended on September 27, 2019, and September 28, 2018, respectively. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, expenses, comprehensive income and accumulated other comprehensive loss during the reporting period. The Company evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment. Judgment is required in determining the reserves for and fair value of items such as overall fair value assessments of assets and liabilities, particularly those classified as Level 2 or Level 3 in the fair value hierarchy, marketable securities, inventory, intangible assets associated with business combinations, share-based compensation, loss contingencies, and income taxes. In addition, judgment is required in determining whether a potential indicator of impairment of long-lived assets exists and in estimating future cash flows for any necessary impairment testing. Actual results could differ significantly from these estimates. Cash and Cash Equivalents The Company invests excess cash in time deposits, certificate of deposits, money market funds, U.S. Treasury securities, agency securities, other government securities, corporate debt securities and commercial paper. The Company considers highly liquid investments as cash equivalents including money market funds and investments with maturities of 90 days or less when purchased. Page 108 Annual Report 108 Investments The Company classifies its investment in marketable debt securities as ‘‘available-for-sale.’’ Available-for-sale securities are carried at fair value with unrealized holding gains or losses recorded in other comprehensive income, net of tax. Gains or losses are included in earnings in the period in which they are realized. The cost of securities sold is determined based on the specific identification method. The cost of available-for-sale debt securities is adjusted for premiums and discounts, with the amortization or accretion of such amounts included as a portion of interest. Available-for-sale debt securities with an original maturity date greater than three months and less than one year are classified as current investments. Available-for-sale debt securities with an original maturity date exceeding one year are classified as long-term. Fair Value Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principle or most advantageous market in an orderly transaction between market participants at the measurement date. Applicable accounting guidance provides a hierarchy for inputs used in measuring fair value that prioritize the use of observable inputs over the use of unobservable inputs, when such observable inputs are available. The three levels of inputs that may be used to measure fair value are as follows: (cid:127) Level 1—Quoted prices in active markets for identical assets or liabilities. (cid:127) Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model- driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data. (cid:127) Level 3—Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including assumptions and judgments made by the Company. It is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. When available, the Company uses quoted market prices to measure fair value. If market prices are not available, the Company is required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument. The Company measures certain assets and liabilities at fair value on a recurring basis in three levels, based on the market in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. It recognizes transfers within the fair value hierarchy at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred. The carrying value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities approximates fair value due to the short-term maturities of these assets and liabilities. Inventory Inventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. Reserves for excess and obsolete inventory are established on a quarterly basis and are based on a detailed analysis of aged material, salability of our inventory, market conditions, and product life cycles. Once reserves are established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory. 109 Annual Report Page 109 Property, Plant, and Equipment Property, plant, and equipment are carried at cost less accumulated depreciation, with significant renewals and betterments being capitalized and retired equipment written off in the respective periods. Maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives, which range from five to thirty years for buildings and improvements and three to ten years for machinery and equipment. Leasehold improvements are depreciated over the lesser of the economic life or the life of the associated lease. Leases The Company determines if an arrangement is a lease at its inception. Right-of-use (‘‘ROU’’) assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date. The lease term includes renewal options when it is reasonably certain that the option will be exercised and excludes termination options. To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for these leases is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included in operating lease ROU assets, other current liabilities, and long-term operating lease liabilities in the Company’s condensed consolidated balance sheet. Valuation of Long-Lived Assets Definite lived intangible assets are carried at cost less accumulated amortization. Amortization is calculated based on the pattern of benefit to be recognized from the underlying asset over its estimated useful life. Carrying values for long-lived assets and definite lived intangible assets are reviewed for possible impairment as circumstances warrant. Factors considered important that could result in an impairment review include significant underperformance relative to expected, historical or projected future operating results, significant changes in the manner of use of assets or the Company’s business strategy, or significant negative industry or economic trends. In addition, impairment reviews are conducted at the judgment of management whenever asset values are deemed to be unrecoverable relative to future undiscounted cash flows expected to be generated by that particular asset group. The determination of recoverability is based on an estimate of undiscounted cash flows expected to result from the use of an asset group and its eventual disposition. Such estimates require management to exercise judgment and make assumptions regarding factors such as future revenue streams, operating expenditures, cost allocation and asset utilization levels, all of which collectively impact future operating performance. The Company’s estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, technological changes, economic conditions, changes to its business model or changes in its operating performance. If the sum of the undiscounted cash flows is less than the carrying value of an asset group, the Company would recognize an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset group. Page 110 Annual Report 110 Goodwill and Indefinite-Lived Intangible Assets Goodwill and indefinite-lived intangible assets are not amortized but are tested at least annually as of the first day of the fourth fiscal quarter for impairment or more frequently if indicators of impairment exist during the fiscal year. The Company assesses its conclusion regarding segments and reporting units in conjunction with its annual goodwill impairment test and has determined that it has one reporting unit for the purposes of allocating and testing goodwill. The Company’s impairment analysis compares its fair value to its net book value to determine if there is an indicator of impairment. In the Company’s calculation of fair value, it considers the closing price of its common stock on the selected testing date, the number of shares of its common stock outstanding and other marketplace activity such as a related control premium. If the calculated fair value is determined to be less than the book value of the reporting unit, an impairment loss is recognized equal to that excess; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Revenue Recognition The Company derives its revenue primarily from the sale of semiconductor products under individual customer purchase orders, some of which have underlying master sales agreements that specify terms governing the product sales. In the absence of a sales agreement, the Company’s standard terms and conditions apply. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company applies a five-step approach as defined in FASB ASC 606, Revenue from Contracts with Customers (Topic 606), in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied. Each distinct promise to transfer products is considered to be an identified performance obligation for which revenue is recognized at a point in time upon transfer of control of the products to the customer. Transfer of control occurs upon shipment to the distributor or direct customer or when products are pulled from consignment inventory by the customer. Point in time recognition is determined as products manufactured under non-cancellable orders create an asset with an alternative use to the Company. Returns under the Company’s general assurance warranty of products have not been material, and warranty-related services are not considered a separate performance obligation. Pricing adjustments and estimates of returns are treated as variable consideration for purposes of determining the transaction price. Sales returns are generally accepted at the Company’s discretion or from distributors with stock rotation rights. Stock rotation allows distributors limited levels of returns and is based on the distributor’s prior purchases. Price protection represents price discounts granted to certain distributors and is based on negotiations on sales to end customers. Variable consideration is estimated using the expected value method considering all reasonably available information, including the Company’s historical experience and its current expectations, and is reflected in the transaction price when sales are recorded. The Company records net revenue excluding taxes collected on its sales to trade customers. Accounts receivable represents the Company’s unconditional right to receive consideration from its customer. Substantially all payments are collected within the Company’s standard terms, which do not include a significant 111 Annual Report Page 111 financing component. To date, there have been no material impairment losses on accounts receivable. There were no material contract assets or contract liabilities recorded on the consolidated balance sheet in any of the periods presented. All incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration. Share-Based Compensation The Company recognizes compensation expense for all share-based payment awards made to employees and directors including non-qualified employee stock options, share awards and units, employee stock purchase plan and other special share-based awards based on estimated fair values. The fair value of share-based payment awards is amortized over the requisite service period, which is defined as the period during which an employee is required to provide service in exchange for an award. The Company uses a straight-line attribution method for all grants that include only a service condition. Awards with both performance and service conditions are expensed over the service period for each separately vesting tranche. Share-based compensation expense recognized during the period includes actual expense on vested awards and expense associated with unvested awards. Forfeitures are recorded as incurred. The Company determines the fair value of share-based option awards based on the Company’s closing stock price on the date of grant using a Black-Scholes options pricing model. Under the Black-Scholes model, a number of variables are used including, but not limited to: the expected stock price volatility over the term of the award, the risk-free rate, the expected life of the award and dividend yield. The determination of fair value of restricted and certain performance stock awards and units is based on the value of the Company’s stock on the date of grant with performance awards and units adjusted for the actual outcome of the underlying performance condition. For more complex performance awards including units with market-based performance conditions the Company employs a Monte Carlo simulation valuation method to calculate the fair value of the awards based on the most likely outcome. Under the Monte Carlo simulation, a number of variables and assumptions are used including, but not limited to: the expected stock price volatility over the term of the award, a correlation coefficient, the risk-free rate, and dividend yield. Research and Development Costs Research and development costs are expensed as incurred. Loss Contingencies The Company records its best estimates of a loss contingency when it is considered probable and the amount can be reasonably estimated. When a range of loss can be reasonably estimated with no best estimate in the range, the minimum estimated liability related to the claim is recorded. As additional information becomes available, the Company assesses the potential liability related to the potential pending loss contingency and revises its estimates. Material loss contingencies are disclosed if there is at least a reasonable possibility that a loss or an additional loss may have been incurred and include estimated legal costs. Page 112 Annual Report 112 Restructuring A liability for post-employment benefits is recorded when payment is probable and the amount is reasonably estimable. Contract exit costs include contract termination fees and future contractual commitments for lease payments. A liability for contract exit costs is recognized in the period in which the Company terminates the contract or on the cease-use date for leased facilities. Foreign Currencies The Company’s functional currency is the United States dollar. Gains and losses related to foreign currency transactions and conversion of foreign denominated cash balances are included in current results. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. This method also requires the recognition of future tax benefits such as net operating loss carry forwards, to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The carrying value of the Company’s net deferred tax assets assumes the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets resulting in additional income tax expense in its Consolidated Statement of Operations. Management evaluates the realizability of the deferred tax assets and assesses the adequacy of the valuation allowance quarterly. Likewise, in the event the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made. The determination of recording or releasing tax valuation allowances is made, in part, pursuant to an assessment performed by management regarding the likelihood that the Company will generate future taxable income against which benefits of its deferred tax assets may or may not be realized. This assessment requires management to exercise judgment and make estimates with respect to its ability to generate revenues, gross profits, operating income, and taxable income in future periods. Amongst other factors, management must make assumptions regarding overall business and semiconductor industry conditions, operating efficiencies, the Company’s ability to develop products to its customers’ specifications, technological change, the competitive environment, and changes in regulatory requirements which may impact its ability to generate taxable income and, in turn, realize the value of its deferred tax assets. The calculation of the Company’s tax liabilities includes addressing uncertainties in the application of complex tax regulations and is based on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. 113 Annual Report Page 113 The Company recognizes liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its recognition threshold and measurement attribute of whether it is more likely than not that the positions the Company has taken in tax filings will be sustained upon tax audit, and the extent to which, additional taxes would be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period in which it is determined the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result. The Company recognizes any interest or penalties, if incurred, on any unrecognized tax liabilities or benefits as a component of income tax expense. Earnings Per Share Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share incorporate the potentially dilutive incremental shares issuable upon the assumed exercise of stock options, the assumed vesting of outstanding restricted stock units, and the assumed issuance of common stock under the stock purchase plan using the treasury share method. Shares issuable upon the vesting of performance stock awards are likewise included in the calculation of diluted earnings per share as of the date the condition(s) have been satisfied. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (‘‘ASU’’) 2016-02, Leases (Topic 842) (‘‘ASU 2016-02’’). This ASU requires lessees to reflect leases with a term greater than one year on their balance sheet as assets and obligations. The Company adopted the standard in the first quarter of fiscal 2020, using the modified retrospective approach, whereby the Company was not required to adjust comparative period financial statements for the new standard. Upon adoption, the Company recorded an ROU asset of $141.4 million and a lease liability of $143.1 million. This standard did not have a material impact on the Consolidated Statement of Operations or Consolidated Statement of Cash Flows. Upon adoption, the Company elected the package of three practical expedients that permits the Company to maintain its historical conclusions about lease identification, lease classification and initial direct costs for leases that exist at the date of adoption. Further, the Company elected the practical expedient to not separate lease and non-lease components. 3. MARKETABLE SECURITIES The Company’s portfolio of available-for-sale marketable securities consists of the following (in millions): Available-for-sale: U.S. Treasury and government Corporate bonds and notes Municipal bonds Total Current Noncurrent October 2, 2020 $ 129.4 276.8 1.9 September 27, October 2, 2019 $ 34.2 66.2 102.9 2020 $ 5.0 — 0.2 September 27, 2019 $ 20.0 5.9 1.7 $ 408.1 $ 203.3 $ 5.2 $ 27.6 The contractual maturities of noncurrent available-for-sale marketable securities were due within two years or less. There were gross unrealized gains of $0.3 million on U.S. Treasury securities and $0.2 million on corporate Page 114 Annual Report 114 bonds and notes as of October 2, 2020, and $0.1 million in gross unrealized losses on municipal bonds as of September 27, 2019. 4. FAIR VALUE Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis The Company measures certain assets and liabilities at fair value on a recurring basis such as its financial instruments. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the fiscal year ended October 2, 2020. Assets and liabilities recorded at fair value on a recurring basis consisted of the following (in millions): As of October 2, 2020 As of September 27, 2019 Fair Value Measurements Level 1 Level 2 Level 3 Total Total Fair Value Measurements Level 1 Level 2 Level 3 Assets Cash and cash equivalents* $ 566.7 $ 561.2 $ 5.5 $ — $ 851.3 $ 809.5 $ 41.8 $ — U.S. Treasury and government securities Corporate bonds and notes Municipal bonds Total 134.4 276.8 2.1 43.2 91.2 — 276.8 — 2.1 — — — 54.2 72.1 104.6 28.4 — 25.8 72.1 — 104.6 — — — $ 980.0 $ 604.4 $ 375.6 $ — $ 1,082.2 $ 837.9 $ 244.3 $ — * Cash equivalents included in Levels 1 and 2 consist of money market funds and corporate bonds and notes, commercial paper, and agency securities purchased with less than ninety days until maturity. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company’s non-financial assets and liabilities, such as goodwill, intangible assets, and other long-lived assets resulting from business combinations, are measured at fair value using income approach valuation methodologies at the date of acquisition and are subsequently re-measured if there are indicators of impairment. During fiscal 2020, the Company abandoned a previously capitalized IPR&D project and recorded an impairment charge of $9.8 million. 115 Annual Report Page 115 5. INVENTORY Inventory consists of the following (in millions): Raw materials Work-in-process Finished goods Finished goods held on consignment by customers Total inventory October 2, 2020 $ 37.8 566.4 198.9 2.9 $ 806.0 As of September 27, 2019 $ 24.4 336.2 245.7 3.4 $ 609.7 6. PROPERTY, PLANT, AND EQUIPMENT, NET Property, plant, and equipment, net consists of the following (in millions): Land and improvements Buildings and improvements Furniture and fixtures Machinery and equipment Construction in progress Total property, plant, and equipment, gross Accumulated depreciation Total property, plant, and equipment, net October 2, 2020 $ 11.8 424.8 46.5 2,556.1 140.7 3,179.9 (1,930.4) $ 1,249.5 As of September 27, 2019 $ 11.7 354.4 33.8 2,311.5 172.5 2,883.9 (1,678.3) $ 1,205.6 7. GOODWILL AND INTANGIBLE ASSETS The Company’s goodwill balance was $1,189.8 million as of October 2, 2020, and September 27, 2019. The Company performed an impairment test of its goodwill as of the first day of the fourth fiscal quarter in accordance with its regularly scheduled testing. The results of this test indicated that the Company’s goodwill was not impaired. There were no other indicators of impairment noted during the fiscal year ended October 2, 2020. Page 116 Annual Report 116 Intangible assets consist of the following (in millions): As of October 2, 2020 As of September 27, 2019 Weighted average amortization Gross Net Gross Net period (years) carrying Accumulated carrying carrying Accumulated carrying amount amortization amount amount amortization amount 5.0 3.8 3.0 3.0 $ 18.2 $ (15.8) $ 2.4 $ 25.6 $ (19.5) $ 6.1 101.0 1.6 26.3 19.5 (81.6) (1.5) (14.2) — 19.4 0.1 12.1 19.5 94.4 1.6 24.9 35.9 $ $ (48.9) (1.3) (4.8) — 45.5 0.3 20.1 35.9 Customer relationships Developed technology and other Trademarks Technology licenses IPR&D Total intangible assets $ 166.6 $ (113.1) $ 53.5 $ 182.4 $ (74.5) $ 107.9 Fully amortized intangible assets are eliminated from both the gross and accumulated amortization amounts in the first quarter of each fiscal year. Accrued technology licenses payable of $11.5 million and $20.1 million have been included in other current liabilities within the consolidated balance sheets as of October 2, 2020, and September 27, 2019, respectively. Annual amortization expense for the next five fiscal years related to definite-lived intangible assets, excluding IPR&D, is expected to be as follows (in millions): Amortization expense, cost of goods sold Amortization expense, operating expense Total amortization expense 2021 $ 6.0 $ 17.0 $ 23.0 2022 $ 0.1 $ 5.0 $ 5.1 2023 $ 0.1 $ 1.0 $ 1.1 2024 $ 0.1 $ 1.0 $ 1.1 2025 $ 0.1 $ 1.0 $ 1.1 Thereafter $ 1.7 $ 0.9 $ 2.6 8. INCOME TAXES Income before income taxes consists of the following components (in millions): United States Foreign Income before income taxes October 2, 2020 $ 435.9 455.8 $ 891.7 Fiscal Years Ended September 27, 2019 $ 427.2 533.8 $ 961.0 September 28, 2018 $ 712.2 619.9 $ 1,332.1 117 Annual Report Page 117 The provision for income taxes consists of the following components (in millions): Current tax expense (benefit): Federal State Foreign Deferred tax expense (benefit): Federal Foreign Provision for income taxes October 2, 2020 $ 44.4 — 49.5 93.9 (6.8) (10.2) (17.0) $ 76.9 Fiscal Years Ended September 27, 2019 September 28, 2018 $ 85.3 (0.1) 23.5 108.7 (0.4) (0.9) (1.3) $ 107.4 $ 347.7 0.3 31.2 379.2 20.3 14.2 34.5 $ 413.7 The actual income tax expense is different than that which would have been computed by applying the federal statutory tax rate to income before income taxes. A reconciliation of income tax expense as computed at the United States federal statutory income tax rate to the provision for income tax expense is as follows (in millions): Tax expense at United States statutory rate Foreign tax rate difference Tax on deemed repatriation Effect of stock compensation Change of tax rate on deferred taxes Research and development credits Change in tax reserve Domestic production activities deduction Global Intangible Low-Taxed Income Foreign Derived Intangible Income Settlements with Tax Authorities Other, net October 2, 2020 $ 187.3 (86.6) 0.2 (10.3) — (23.0) 10.1 — 35.9 (41.2) (0.5) 5.0 Fiscal Years Ended September 27, 2019 $ 201.8 (115.3) September 28, 2018 $ 327.4 (111.9) 8.1 (1.6) — (25.7) 14.0 — 54.3 (41.5) 4.3 9.0 224.6 (25.6) 18.3 (19.9) 6.7 (13.9) — — — 8.0 Provision for income taxes $ 76.9 $ 107.4 $ 413.7 The Company operates in foreign jurisdictions with income tax rates lower than the United States tax rate of 21.0% for the fiscal years ended October 2, 2020, and September 27, 2019. The Company’s tax benefits related to foreign earnings taxed at a rate less than the United States federal rate were $86.6 million and $115.3 million for the fiscal years ended October 2, 2020, and September 27, 2019, respectively. The Tax Reform Act includes, among other things, a reduction of the United States corporate tax rate from 35.0% to 21.0%, a mandatory deemed repatriation tax on foreign earnings, repeal of the corporate alternative minimum tax and the domestic production activities deduction, and expensing of certain capital investments. The law makes fundamental changes to the taxation of multinational entities, including a shift from worldwide taxation with deferral to a hybrid territorial system, featuring a participation exemption regime, a minimum tax on low-taxed Page 118 Annual Report 118 foreign earnings, and new measures to deter base erosion and promote export from the United States. As a result of this legislation, during fiscal 2018 the Company recognized a one-time transition tax related to the deemed repatriation of foreign earnings of $224.6 million and a charge related to the revaluation of its deferred tax assets at the new corporate tax rate of $18.3 million. During fiscal 2020 and fiscal 2019, the Company recorded discrete income tax expense adjustments of $0.2 million and $8.1 million, respectively, to the prior year provisional estimates. The Company had accrued $18.6 million and $177.0 million of the deemed repatriation tax in short-term and long-term liabilities within the consolidated balance sheet, respectively, as of October 2, 2020. The Company had accrued $18.8 million and $195.9 million of the deemed repatriation tax in short-term and long-term liabilities within the consolidated balance sheet, respectively, as of September 27, 2019. In addition to the introduction of a modified territorial tax system, the Tax Reform Act includes new sets of provisions aimed at preventing or decreasing U.S. tax base erosion: the GILTI provisions, the base erosion and anti-abuse tax (‘‘BEAT’’) provisions, and the FDII provisions. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The Company has made an accounting policy election to account for taxes due on GILTI inclusions as a component of current-period tax expense. The BEAT provisions eliminate the deduction of certain base-erosion payments made to related foreign corporations and impose a minimum tax if greater than regular tax. The FDII provisions allow a U.S. corporation an immediate deduction for a portion of its FDII. The amount of the deduction will depend in part on the Company’s U.S. taxable income. The GILTI and FDII provisions became effective for the Company in fiscal 2019 and resulted in a $54.3 million tax expense and a $41.5 million tax benefit, respectively. In fiscal 2020, the GILTI and FDII provisions resulted in $35.9 million tax expense and $41.2 million tax benefit, respectively. The Company has analyzed the BEAT provisions for fiscal 2020, 2019, and 2018, and has determined that it is not subject to the minimum tax imposed by the BEAT provisions. The Company’s federal income tax returns for fiscal 2015, fiscal 2016, fiscal 2018, and fiscal 2019 are currently under IRS examination. During the year ended September 27, 2019, the Company effectively settled a portion of this IRS examination. As a result, the Company accrued a tax payable of $3.8 million, including interest. On October 2, 2010, the Company expanded its presence in Asia by launching operations in Singapore. The Company operates under a tax holiday in Singapore, which is effective through September 30, 2030. The current tax holiday is conditioned upon the Company’s compliance with certain employment and investment thresholds in Singapore. The impact of the tax holiday decreased Singapore’s taxes by $63.1 million, $32.8 million, and $38.4 million for the fiscal years ended October 2, 2020, September 27, 2019, and September 28, 2018, respectively, which resulted in tax benefits of $0.37, $0.19, and $0.21 of diluted earnings per share, respectively. 119 Annual Report Page 119 Deferred income tax assets and liabilities consist of the tax effects of temporary differences related to the following (in millions): Deferred tax assets: Inventory Bad debts Accrued compensation and benefits Product returns, allowances, and warranty Restructuring Share-based and other deferred compensation Net operating loss carry forwards Non-United States tax credits State tax credits Leases Property, plant, and equipment Other, net Deferred tax assets Less valuation allowance Net deferred tax assets Deferred tax liabilities: Prepaid insurance Property, plant, and equipment Intangible assets Leases Other, net Net deferred tax liabilities Total net deferred tax assets Fiscal Years Ended October 2, 2020 September 27, 2019 $ 12.1 $ 10.1 0.1 10.1 0.4 — 25.9 7.4 16.5 115.5 43.4 24.3 5.8 261.5 (137.4) 124.1 (0.9) (26.4) (7.6) (41.5) (6.6) (83.0) 0.2 5.9 0.3 0.6 21.2 11.3 20.7 106.4 — 17.7 5.9 200.3 (129.1) 71.2 (0.5) (19.3) (17.4) — (6.3) (43.5) $ 41.1 $ 27.7 In accordance with GAAP, management has determined that it is more likely than not that a portion of the Company’s historic and current year income tax benefits will not be realized. As of October 2, 2020, the Company has a valuation allowance of $137.4 million. This valuation allowance is comprised of $118.8 million related to United States state tax credits and $18.6 million related to foreign deferred tax assets. The Company does not anticipate sufficient taxable income or tax liability to utilize these state and foreign credits. If these benefits are recognized in a future period, the valuation allowance on deferred tax assets will be reversed and up to a $137.4 million income tax benefit may be recognized. The Company will need to generate $124.1 million of future United States federal taxable income to utilize its United States deferred tax assets as of October 2, 2020. The Company believes that future reversals of taxable temporary differences, and its forecast of continued earnings in its domestic and foreign jurisdictions, support its decision to not record a valuation allowance on other deferred tax assets. The Company will continue to assess its valuation allowance in future periods. The net valuation allowance increased by $8.3 million and $10.5 million in fiscal 2020 and fiscal 2019, respectively, primarily related to increases for foreign and state net operating loss and tax credit carryovers. Page 120 Annual Report 120 As of October 2, 2020, the Company has United States federal net operating loss carry forwards of approximately $8.1 million. The utilization of these net operating losses is subject to certain annual limitations as required under Internal Revenue Code section 382 and similar state income tax provisions. The United States federal net operating loss carry forwards expire at various dates through 2035. The Company also has state income tax credit carry forwards of $115.4 million, net of federal benefits, for which the Company has provided a valuation allowance. The state tax credits relate primarily to California research tax credits that can be carried forward indefinitely. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in millions): Balance at September 27, 2019 Increases based on positions related to prior years Decreases based on positions related to prior years Increases based on positions related to current year Decreases relating to settlements with taxing authorities Decreases relating to lapses of applicable statutes of limitations Balance at October 2, 2020 Unrecognized tax benefits $ 103.3 2.8 (3.9) 15.5 — (0.1) $ 117.6 Of the total unrecognized tax benefits at October 2, 2020, $95.3 million would impact the effective tax rate, if recognized. The remaining unrecognized tax benefits would not impact the effective tax rate, if recognized, due to the Company’s valuation allowance and certain positions that were required to be capitalized. The Company anticipates reversals within the next 12 months related to items such as the lapse of the statute of limitations, audit closures, and other items that occur in the normal course of business. Due to open examinations, an estimate of anticipated reversals within the next 12 months cannot be made. During the fiscal years 2020, 2019, and 2018, the Company recognized $4.6 million, $6.0 million, and $4.1 million, respectively, of interest or penalties related to unrecognized tax benefits. Accrued interest and penalties of $16.1 million and $12.7 million related to uncertain tax positions have been included in long-term tax liabilities within the consolidated balance sheet as of October 2, 2020, and September 27, 2019, respectively. The Company’s major tax jurisdictions as of October 2, 2020, are the United States, California, Canada, Mexico, Japan, and Singapore. For the United States, the Company has open tax years dating back to fiscal 2001 due to the carry forward of tax attributes. For California, the Company has open tax years dating back to fiscal 1999 due to the carry forward of tax attributes. For Canada, the Company has open tax years dating back to fiscal 2014. For Mexico, the Company has open tax years back to fiscal 2014. For Japan, the Company has open tax years back to fiscal 2014. For Singapore, the Company has open tax years dating back to fiscal 2014. The Company is subject to audit examinations by the respective taxing authorities on a periodic basis, of which the results could impact its financial position, results of operations or cash flows. 121 Annual Report Page 121 9. STOCKHOLDERS’ EQUITY Common Stock At October 2, 2020, the Company is authorized to issue 525.0 million shares of common stock, par value $0.25 per share, of which 232.3 million shares are issued and 165.6 million shares are outstanding. Holders of the Company’s common stock are entitled to dividends in the event declared by the Company’s Board of Directors out of funds legally available for such purpose. Dividends may not be paid on common stock unless all accrued dividends on preferred stock, if any, have been paid or declared and set aside. In the event of the Company’s liquidation, dissolution or winding up, the holders of common stock will be entitled to share pro rata in the assets remaining after payment to creditors and after payment of the liquidation preference plus any unpaid dividends to holders of any outstanding preferred stock. Each holder of the Company’s common stock is entitled to one vote for each such share outstanding in the holder’s name. No holder of common stock is entitled to cumulate votes in voting for directors. The Company’s restated certificate of incorporation as amended to date (the ‘‘Certificate of Incorporation’’) provides that, unless otherwise determined by the Company’s Board of Directors, no holder of stock has any preemptive right to purchase or subscribe for any stock of any class which the Company may issue or sell. Preferred Stock The Company’s Certificate of Incorporation has authorized and permits the Company to issue up to 25.0 million shares of preferred stock without par value in one or more series and with rights and preferences that may be fixed or designated by the Company’s Board of Directors without any further action by the Company’s stockholders. The designation, powers, preferences, rights and qualifications, limitations, and restrictions of the preferred stock of each series will be fixed by the certificate of designation relating to such series, which will specify the terms of the preferred stock. At October 2, 2020, the Company had no shares of preferred stock issued or outstanding. Stock Repurchase On January 30, 2019, the Board of Directors approved a stock repurchase program, pursuant to which the Company is authorized to repurchase up to $2.0 billion of its common stock from time to time prior to January 30, 2021, on the open market or in privately negotiated transactions as permitted by securities laws and other legal requirements. This authorized stock repurchase program replaced in its entirety the January 31, 2018, stock repurchase program. The timing and amount of any shares of the Company’s common stock that are repurchased under the repurchase program are determined by the Company’s management based on its evaluation of market conditions and other factors. During the fiscal year ended October 2, 2020, the Company paid approximately $647.5 million (including commissions) in connection with the repurchase of 6.3 million shares of its common stock (paying an average price of $102.74 per share) under the January 30, 2019, stock repurchase plan. As of October 2, 2020, $978.8 million remained available under the January 30, 2019, stock repurchase plan. Page 122 Annual Report 122 During the fiscal year ended September 27, 2019, the Company paid approximately $657.6 million (including commissions) in connection with the repurchase of 8.9 million shares of its common stock (paying an average price of $74.26 per share). During the fiscal year ended September 28, 2018, the Company paid approximately $759.5 million (including commissions) in connection with the repurchase of 7.7 million shares of its common stock (paying an average price of $98.84 per share). Dividends On November 2, 2020, the Company announced that the Board of Directors had declared a cash dividend on the Company’s common stock of $0.50 per share. This dividend is payable on December 10, 2020, to the Company’s stockholders of record as of the close of business on November 19, 2020. Future dividends are subject to declaration by the Board of Directors. The dividends charged to retained earnings in fiscal 2020 and 2019 were as follows (in millions except per share data): First quarter Second quarter Third quarter Fourth quarter Fiscal Years Ended October 2, 2020 September 27, 2019 Per Share $ 0.44 0.44 0.44 0.50 $ 1.82 Total $ 75.1 74.9 73.5 83.5 $ 307.0 Per Share $ 0.38 0.38 0.38 0.44 $ 1.58 Total $ 67.1 66.0 65.7 75.1 $ 273.9 Employee Stock Benefit Plans As of October 2, 2020, the Company has the following equity compensation plans under which its equity securities were authorized for issuance to its employees and/or directors: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) the 2002 Employee Stock Purchase Plan the Non-Qualified Employee Stock Purchase Plan the 2005 Long-Term Incentive Plan the 2008 Director Long-Term Incentive Plan the 2015 Long-Term Incentive Plan Except for the Non-Qualified Employee Stock Purchase Plan, each of the foregoing equity compensation plans was approved by the Company’s stockholders. As of October 2, 2020, a total of 65.2 million shares are authorized for grant under the Company’s share-based compensation plans, with 0.4 million options outstanding. The number of common shares reserved for future awards to employees and directors under these plans was 11.0 million at October 2, 2020. The Company currently grants new equity awards to employees under the 2015 Long-Term Incentive Plan and to non-employee directors under the 2008 Director Long-Term Incentive Plan. 2015 Long-Term Incentive Plan. Under this plan, officers, employees, and certain consultants may be granted stock options, restricted stock awards and units, performance stock awards and units and other share-based awards. The plan has been approved by the stockholders. Under the plan, up to 19.4 million shares have been authorized for grant. A total of 10.4 million shares are available for new grants as of October 2, 2020. The 123 Annual Report Page 123 maximum contractual term of options under the plan is seven years from the date of grant. Options granted under the plan at the determination of the compensation committee generally vest ratably over four years. Restricted stock awards and units granted under the plan at the determination of the compensation committee generally vest over three or more years. With respect to restricted stock awards, dividends are accumulated from the grant date and paid when the underlying shares vest. If the underlying shares are forfeited for any reason, the rights to the dividends with respect to such shares are forfeited. No dividends or dividend equivalents are accumulated or paid with respect to restricted stock unit awards or other awards until the shares underlying such awards vest and are issued to the award holder. Performance stock awards and units are contingently granted depending on the achievement of certain predetermined performance goals and generally vest over two or more years. 2008 Director Long-Term Incentive Plan. Under this plan, non-employee directors may be granted stock options, restricted stock awards, and other share-based awards. The plan has been approved by the stockholders. Under the plan a total of 1.5 million shares have been authorized for grant. A total of 0.6 million shares are available for new grants as of October 2, 2020. The maximum contractual term of options granted under the plan is ten years from the date of grant. Options granted under the plan are generally exercisable over four years. Restricted stock awards and units granted under the plan generally vest over one or more years. With respect to restricted stock awards, dividends are accumulated from the grant date and paid when the underlying shares vest. If the underlying shares are forfeited for any reason, the rights to the dividends with respect to such shares are forfeited. Employee Stock Purchase Plans. The Company maintains a domestic and an international employee stock purchase plan. Under these plans, eligible employees may purchase common stock through payroll deductions of up to 10% of their compensation. The price per share is the lower of 85% of the fair market value of the common stock at the beginning or end of each offering period (six months). The plans provide for purchases by employees of up to an aggregate of 11.6 million shares. Shares of common stock purchased under these plans in the fiscal years ended October 2, 2020, September 27, 2019, and September 28, 2018, were 0.3 million, 0.3 million, and 0.2 million, respectively. At October 2, 2020, there are 1.8 million shares available for purchase. The Company recognized compensation expense of $6.6 million, $5.8 million, and $5.2 million for the fiscal years ended October 2, 2020, September 27, 2019, and September 28, 2018, respectively, related to the employee stock purchase plan. The unrecognized compensation expense on the employee stock purchase plan at October 2, 2020, was $3.1 million. The weighted average period over which the cost is expected to be recognized is approximately four months. Stock Options The following table represents a summary of the Company’s stock options: Shares (in millions) Weighted average exercise price Weighted average remaining contractual life (in years) Aggregate intrinsic value (in millions) Balance outstanding at September 27, 2019 Granted Exercised Canceled/forfeited Balance outstanding at October 2, 2020 Exercisable at October 2, 2020 1.3 — (0.9) — 0.4 0.3 $ 65.38 $ 98.72 $ 63.69 $ 50.23 $ 70.28 $ 70.10 2.2 1.9 $ 27.8 $ 24.6 Page 124 Annual Report 124 The weighted-average grant date fair value per share of employee stock options granted during the fiscal years ended October 2, 2020, September 27, 2019, and September 28, 2018, was $24.49, $21.74, and $68.32, respectively. Restricted and Performance Awards and Units The following table represents a summary of the Company’s restricted and performance awards and units: Shares (in millions) Weighted average grant date fair value Non-vested awards outstanding at September 27, 2019 Granted (1) Vested Canceled/forfeited Non-vested awards outstanding at October 2, 2020 2.9 1.4 (1.0) (0.4) 2.9 $ 89.14 $ 99.68 $ 85.35 $ 93.44 $ 94.77 (1) includes performance stock awards granted and earned assuming target performance under the underlying performance metrics The weighted average grant date fair value per share for awards granted during the fiscal years ended October 2, 2020, September 27, 2019, and September 28, 2018, was $99.68, $78.41, and $108.86, respectively. The following table summarizes the total intrinsic value for stock options exercised and awards vested (in millions): Awards Options October 2, 2020 $ 100.9 $ 44.2 Fiscal Years Ended September 27, 2019 $ 67.7 $ 26.4 September 28, 2018 $ 134.4 $ 75.0 Valuation and Expense Information The following table summarizes pre-tax share-based compensation expense by financial statement line and related tax benefit (in millions): Cost of goods sold Research and development Selling, general and administrative October 2, 2020 $ 23.2 68.7 64.7 Total share-based compensation expense $ 156.6 Share-based compensation tax benefit Capitalized share-based compensation expense at period end $ $ 10.3 10.6 Fiscal Years Ended September 27, 2019 September 28, 2018 $ 13.0 41.6 25.5 $ 80.1 $ $ 1.6 4.7 $ 14.4 42.6 50.8 $ 107.8 $ $ 25.6 2.9 125 Annual Report Page 125 The following table summarizes total compensation costs related to unvested share-based awards not yet recognized and the weighted average period over which it is expected to be recognized at October 2, 2020: Awards Options Unrecognized compensation cost for unvested awards (in millions) $ 170.7 $ 0.3 Weighted average remaining recognition period (in years) 1.6 0.5 The fair value of the restricted stock awards and units is equal to the closing market price of the Company’s common stock on the date of grant. The Company issued performance stock unit awards during fiscal 2020, fiscal 2019, and fiscal 2018 that contained market-based conditions. The fair value of these performance stock unit awards was estimated on the date of the grant using a Monte Carlo simulation with the following weighted average assumptions: Volatility of common stock Average volatility of peer companies Average correlation coefficient of peer companies Risk-free interest rate Dividend yield October 2, 2020 32.22% 33.96% 0.61 1.62% 1.78% Fiscal Year Ended September 27, 2019 32.65% 37.07% 0.47 2.98% 1.84% September 28, 2018 35.54% 36.78% 0.47 1.74% 1.15% The fair value of each stock option is estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: Expected volatility Risk-free interest rate Dividend yield Expected option life (in years) October 2, 2020 34.26% 1.65% 1.78% 4.0 Fiscal Years Ended September 27, 2019 34.47% 2.76% 1.84% 4.0 September 28, 2018 35.86% 2.00% 1.15% 4.0 The Company used a historical volatility calculated by the mean reversion of the weekly-adjusted closing stock price over the expected life of the options. The risk-free interest rate assumption is based upon observed treasury bill interest rates appropriate for the expected life of the Company’s employee stock options. The dividend yield was calculated based on the annualized dividend and the stock price on the date of grant. The expected life of employee stock options represents a calculation based upon the historical exercise, cancellation, and forfeiture experience for the Company across its demographic population. The Company believes that this historical data is the best estimate of the expected life of a new option and that generally all groups of the Company’s employees exhibit similar behavior. Page 126 Annual Report 126 10. LEASES The Company’s lease arrangements consist primarily of corporate, manufacturing, and other facility agreements as well as various machinery and office equipment agreements. The leases expire at various dates through 2033, some of which include options to extend the lease term. The options with the longest potential total lease term consist of options for extension of up to three five-year periods following expiration of the original lease term. During the fiscal year ended October 2, 2020, the Company recorded $28.1 million of operating lease expense and $7.6 million of variable lease expense. During the fiscal years ended September 27, 2019, and September 28, 2018, the Company recorded $18.7 million and $20.5 million of rent expense, respectively. The Company’s finance leases and short-term leases are immaterial. Supplemental cash information and non-cash activities related to operating leases are as follows (in millions): Operating cash outflows from operating leases Operating lease assets obtained in exchange for new lease liabilities Maturities of lease liabilities under operating leases by fiscal year are as follows (in millions): 2021 2022 2023 2024 2025 Thereafter Total lease payments Less: imputed interest Present value of lease liabilities Less: current portion (included in other current liabilities) Total Fiscal Year Ended October 2, 2020 $ 25.4 $ 31.0 As of October 2, 2020 $ 25.7 28.7 25.1 21.7 20.6 81.6 203.4 (24.5) 178.9 (28.2) $ 150.7 Future minimum lease liabilities under non-cancelable operating leases are as follows (in millions): 2020 2021 2022 2023 2024 Thereafter Total As of September 27, 2019 $ 26.7 25.9 24.8 23.3 21.5 97.7 $ 219.9 127 Annual Report Page 127 Weighted-average remaining lease term and discount rate related to operating leases are as follows: Weighted-average remaining lease term (years) Weighted-average discount rate 11. COMMITMENTS AND CONTINGENCIES Legal Matters As of October 2, 2020 8.2 3.3% From time to time, various lawsuits, claims and proceedings have been, and may in the future be, instituted or asserted against the Company, including those pertaining to patent infringement, intellectual property, environmental hazards, product liability and warranty, safety and health, employment, and contractual matters. The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights. From time to time, third parties have asserted and may in the future assert patent, copyright, trademark, and other intellectual property rights to technologies that are important to the Company’s business and have demanded and may in the future demand that the Company license their technology. The outcome of any such litigation cannot be predicted with certainty and some such lawsuits, claims or proceedings may be disposed of unfavorably to the Company. Generally speaking, intellectual property disputes often have a risk of injunctive relief, which, if imposed against the Company, could materially and adversely affect the Company’s financial condition, or results of operations. From time to time the Company may also be involved in legal proceedings in the ordinary course of business. The Company monitors the status of legal proceedings and other contingencies on an ongoing basis to ensure loss contingencies are recognized and/or disclosed in its financial statements and footnotes. The Company does not believe there are any pending legal proceedings that are reasonably possible to result in a material loss. The Company is engaged in various legal actions in the normal course of business and, while there can be no assurances, the Company believes the outcome of all pending litigation involving the Company will not have, individually or in the aggregate, a material adverse effect on its business or financial statements. 12. GUARANTEES AND INDEMNITIES The Company has made no significant contractual guarantees for the benefit of third parties. However, the Company generally indemnifies its customers from third-party intellectual property infringement litigation claims related to its products, and, on occasion, also provides other indemnities related to product sales. In connection with certain facility leases, the Company has indemnified its lessors for certain claims arising from the facility or the lease. The Company indemnifies its directors and officers to the maximum extent permitted under the laws of the state of Delaware. The duration of the indemnities varies, and in many cases is indefinite. The indemnities to customers in connection with product sales generally are subject to limits based upon the amount of the related product sales and in many cases are subject to geographic and other restrictions. In certain instances, the Company’s indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. The Company has not recorded any liability for these indemnities in the Page 128 Annual Report 128 accompanying consolidated balance sheets and does not expect that such obligations will have a material adverse impact on its financial statements. 13. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts): Net income Weighted average shares outstanding—basic Dilutive effect of equity-based awards Weighted average shares outstanding—diluted Net income per share—basic Net income per share—diluted Anti-dilutive common stock equivalents October 2, 2020 Fiscal Years Ended September 27, 2019 September 28, 2018 $ 814.8 $ 853.6 $ 918.4 168.5 1.4 169.9 4.84 4.80 0.1 $ $ 173.5 1.0 174.5 4.92 4.89 1.4 $ $ 181.3 1.9 183.2 5.06 5.01 0.2 $ $ Basic earnings per share are calculated by dividing net income by the weighted average number of shares of the Company’s common stock outstanding during the period. The calculation of diluted earnings per share includes the dilutive effect of equity-based awards that were outstanding during the fiscal years ended October 2, 2020, September 27, 2019, and September 28, 2018, using the treasury stock method. Shares issuable upon the vesting of performance stock awards are likewise included in the calculation of diluted earnings per share as of the date the condition(s) have been satisfied. Certain of the Company’s outstanding share-based awards, noted in the table above, were excluded because they were anti-dilutive, but they could become dilutive in the future. 14. SEGMENT INFORMATION AND CONCENTRATIONS The Company has a single reportable operating segment which designs, develops, manufactures, and markets similar proprietary semiconductor products, including intellectual property. In reaching this conclusion, management considers the definition of the chief operating decision maker (‘‘CODM’’), how the business is defined by the CODM, the nature of the information provided to the CODM and how that information is used to make operating decisions, allocate resources, and assess performance. The Company’s CODM is the president and chief executive officer. The results of operations provided to and analyzed by the CODM are at the consolidated level and accordingly, key resource decisions and assessment of performance are performed at the consolidated level. The Company assesses its determination of operating segments at least annually. 129 Annual Report Page 129 Geographic Information The Company presents net revenue by geographic area based upon the location of the OEMs’ headquarters as it believes that doing so best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Net revenue by geographic area is as follows (in millions): United States China South Korea Taiwan Europe, Middle East, and Africa Other Asia-Pacific Total October 2, 2020 $ 2,012.8 700.7 254.6 240.4 122.9 24.3 Fiscal Years Ended September 27, 2019 $ 1,860.4 718.7 365.5 271.1 134.9 26.2 September 28, 2018 $ 1,946.2 982.8 432.7 339.1 144.6 22.6 $ 3,355.7 $ 3,376.8 $ 3,868.0 The Company’s revenue from external customers is generated principally from the sale of semiconductor products that facilitate various wireless communication applications. Accordingly, the Company considers its product offerings to be similar in nature and therefore not segregated for reporting purposes. Accrued customer liabilities of $20.3 million and $38.5 million have been included in other current liabilities within the consolidated balance sheets as of October 2, 2020, and September 27, 2019, respectively. Net property, plant, and equipment balances, based on the physical locations within the indicated geographic areas are as follows (in millions): Japan Mexico Singapore United States Rest of world Concentrations October 2, 2020 $ 507.0 364.9 237.4 124.8 15.4 As of September 27, 2019 $ 491.9 351.5 229.9 117.6 14.7 $ 1,249.5 $ 1,205.6 Financial instruments that potentially subject the Company to concentration of credit risk consist principally of trade accounts receivable. Trade accounts receivable are primarily derived from sales to manufacturers of communications and consumer products and electronic component distributors. The Company performs ongoing credit evaluations of customers. In fiscal 2020, 2019, and 2018, Apple, through sales to multiple distributors, contract manufacturers and direct sales for multiple applications including smartphones, tablets, desktop, and notebook computers, watches and other devices, in the aggregate accounted for 56%, 51%, and 47% of the Company’s net revenue, respectively. Page 130 Annual Report 130 At October 2, 2020, the Company’s three largest accounts receivable balances comprised 70% of aggregate gross accounts receivable. This concentration was 67% and 66% at September 27, 2019, and September 28, 2018, respectively. 15. QUARTERLY FINANCIAL DATA (UNAUDITED) The following table summarizes the quarterly and annual results (in millions, except per share data). Amounts may not total for the fiscal year due to rounding: Fiscal 2020 Net revenue Gross profit Net income Per share data (1) Net income, basic Net income, diluted Fiscal 2019 Net revenue Gross profit Net income Per share data (1) Net income, basic Net income, diluted First quarter $ 896.1 444.3 257.1 $ $ 1.51 1.50 $ 972.0 485.1 284.9 $ $ 1.61 1.60 Second quarter $ 766.1 375.6 181.1 $ $ 1.07 1.06 $ 810.4 400.2 214.0 $ $ 1.23 1.23 Third quarter $ 736.8 334.1 129.7 $ $ 0.78 0.77 $ 767.0 312.5 144.1 $ $ 0.83 0.83 Fourth quarter $ 956.8 458.9 246.9 $ $ 1.48 1.46 $ 827.4 406.0 210.6 $ $ 1.23 1.22 Fiscal year $ 3,355.7 1,612.9 814.8 $ $ 4.84 4.80 $ 3,376.8 1,603.8 853.6 $ $ 4.92 4.89 (1) Earnings per share calculations for each of the quarters are based on the weighted average number of shares outstanding and included common stock equivalents in each period. Therefore, the sums of the quarters do not necessarily equal the full year earnings per share. 131 Annual Report Page 131 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Skyworks Solutions, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Skyworks Solutions, Inc. and subsidiaries (the Company) as of October 2, 2020 and September 27, 2019, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ equity for each of the years in the three-year period ended October 2, 2020, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of October 2, 2020, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 2, 2020 and September 27, 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended October 2, 2020, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 2, 2020 based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in fiscal 2020 due to the adoption of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 842, Leases. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Page 132 Annual Report 132 Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Assessment of the Gross Unrecognized Tax Benefits As discussed in Notes 2 and 8 to the consolidated financial statements, the Company has recorded gross unrecognized tax benefits of $117.6 million in domestic and foreign jurisdictions as of October 2, 2020. The Company records unrecognized tax benefits when there is more than a 50% likelihood that its tax positions will not be sustained upon examination by the taxing authorities. This determination requires management of the Company to apply judgment in the interpretation of domestic and international tax laws and regulations. 133 Annual Report Page 133 We identified the assessment of the gross unrecognized tax benefits as a critical audit matter because of the high degree of auditor judgment involved in evaluating the Company’s interpretation of domestic and international tax laws and regulations, including the need to involve professionals with specialized skills and knowledge. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s unrecognized tax benefit process, including controls over the interpretation of domestic and international tax laws and regulations. We involved domestic and international tax professionals with specialized skills and knowledge, who assisted in: (cid:127) assessing the Company’s ongoing compliance with applicable domestic and international tax laws and regulations, (cid:127) reading the Company’s documentation that provided the basis for its tax positions, (cid:127) evaluating the impact of changes in the Company’s tax structure, changes in domestic and international tax laws and regulations, and similar settlements with applicable taxing authorities, and (cid:127) evaluating the Company’s interpretation of domestic and international tax laws and regulations based on our understanding and interpretation of the domestic and international tax laws and regulations. /s/ KPMG LLP We have served as the Company’s auditor since 2002. Irvine, California November 16, 2020 Page 134 Annual Report 134 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Management’s Annual Report on Internal Control Over Financial Reporting The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (cid:127) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (cid:127) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (cid:127) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of October 2, 2020. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013 Internal Control-Integrated Framework. Based on their assessment, management concluded that, as of October 2, 2020, the Company’s internal control over financial reporting is effective based on those criteria. The Company’s independent registered public accounting firm has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as stated within their report which appears herein. 135 Annual Report Page 135 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Dividends Our common stock is traded on the Nasdaq Global Select Market under the symbol ‘‘SWKS’’. The number of stockholders of record of our common stock as of November 2, 2020, was 10,419. On November 2, 2020, the Company announced that the Board of Directors had declared a cash dividend of $0.50 per share of common stock, payable on December 10, 2020, to stockholders of record as of November 19, 2020. We intend to continue to pay quarterly dividends subject to capital availability and our view that cash dividends are in the best interests of our stockholders. Future cash dividends may be affected by, among other items, our views on potential future capital requirements, including those relating to research and development, creation and expansion of sales distribution channels and investments and acquisitions, legal risks, stock repurchase programs, debt issuance, changes in federal and state income tax law and changes to our business model. Issuer Purchases of Equity Securities The following table provides information regarding repurchases of common stock made during the fiscal quarter ended October 2, 2020: Period 6/27/20 - 7/24/20 7/25/20 - 8/28/20 8/29/20 - 10/2/20 Total Number of Shares Purchased 490 (2) 636,181 (3) 1,031,417 (4) 1,668,088 Average Price Paid per Share $125.85 $142.17 $138.45 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) — 627,437 1,025,231 1,652,668 $1.21 billion $1.12 billion $0.98 billion (1) The stock repurchase program approved by the Board of Directors on January 30, 2019, authorizes the repurchase of up to $2.0 billion of our common stock from time to time on the open market or in privately negotiated transactions as permitted by securities laws and other legal requirements. The January 30, 2019, stock repurchase program replaced in its entirety the January 31, 2018, plan and is scheduled to expire on January 30, 2021. (2) Represents shares repurchased by us at the fair market value of the common stock as of the applicable purchase date, in connection with the satisfaction of tax withholding obligations under equity award agreements. (3) (4) 627,437 shares were repurchased at an average price of $142.12 per share as part of our stock repurchase program, and 8,744 shares were repurchased by us at the fair market value of the common stock as of the applicable purchase date, in connection with the satisfaction of tax withholding obligations under equity award agreements with an average price of $146.09 per share. 1,025,231 shares were repurchased at an average price of $138.42 per share as part of our stock repurchase program, and 6,186 shares were repurchased by us at the fair market value of the common stock as of the applicable purchase date, in connection with the satisfaction of tax withholding obligations under equity award agreements with an average price of $142.76 per share. Page 136 Annual Report 136 Comparative Stock Performance Graph The following graph shows the change in Skyworks’ cumulative total stockholder return for the last five fiscal years, based upon the market price of Skyworks’ common stock, compared with: (i) the cumulative total return on the Standard & Poor’s 500 Index and (ii) the Standard & Poor’s 500 Semiconductor Index. The graph assumes a total initial investment of $100 on October 2, 2015, and shows a ‘‘Total Return’’ that assumes reinvestment of dividends, if any, and is based on market capitalization at the beginning of each period. Comparison of Cumulative Five-Year Total Return Skyworks Solutions, Inc. S&P 500 Index S&P 500 Semiconductors S R A L L O D 400 300 200 100 0 10/02/15 09/30/16 09/29/17 09/28/18 09/27/19 10/02/20 Years Ending 9MAR202106503086 Total Return to Stockholders (Includes reinvestment of dividends) ANNUAL RETURN PERCENTAGE Company Name / Index Skyworks Solutions, Inc. S&P 500 Index S&P 500 Semiconductors 09/30/16 09/29/17 (7.95) 13.56 36.62 35.54 18.61 26.71 Years Ending 09/28/18 (9.80) 17.91 27.59 09/27/19 (12.75) 3.72 1.22 10/02/20 92.54 15.25 50.06 INDEXED RETURNS Company Name / Index Skyworks Solutions, Inc. S&P 500 Index S&P 500 Semiconductors Base Period 10/02/15 100 100 100 09/30/16 09/29/17 09/28/18 09/27/19 10/02/20 92.05 113.56 136.62 124.76 134.69 173.10 112.53 158.81 220.86 98.19 164.73 223.56 189.05 189.85 335.47 Years Ending 137 Annual Report Page 137 24MAR202114160 Connecting Everyone and Everything, All the Time Autonomous Vehicles Connected Home Wearables Emergency Response Industrial Automation Location-Based Infrastructure Telemedicine Smart Cities Artificial Intelligence Services Executive Management Transfer Agent and Registrar Liam K. Griffin President, Chief Executive Officer and Director Carlos S. Bori Senior Vice President, Sales and Marketing Kari A. Durham Senior Vice President, Human Resources Reza Kasnavi Senior Vice President, Technology and Manufacturing Joel R. King Senior Vice President and General Manager, Mobile Solutions Kris Sennesael Senior Vice President and Chief Financial Officer David Stasey Vice President and General Manager, Diversified Analog Solutions Robert J. Terry Senior Vice President, General Counsel and Secretary Board of Directors David J. Aldrich Chairman of the Board, Skyworks Solutions, Inc. Alan S. Batey Retired Executive Vice President and President of North America, General Motors Kevin L. Beebe President and Chief Executive Officer, 2BPartners, LLC Timothy R. Furey Chief Executive Officer, Integrated Smart Solutions Liam K. Griffin President and Chief Executive Officer, Skyworks Solutions, Inc. Christine King Lead Independent Director, Skyworks Solutions, Inc. Retired Executive Chairman, QLogic Corporation David P. McGlade Chairman of the Board, Intelsat S.A. Robert A. Schriesheim Chairman, Truax Partners LLC Kimberly S. Stevenson Senior Vice President and General Manager, NetApp, Inc. American Stock Transfer & Trust Company 6201 15th Avenue Brooklyn, NY 11219 (800) 937-5449 (United States and Canada) (718) 921-8124 (outside United States) www.astfinancial.com Our transfer agent can help you with a variety of stockholder- related services including change of address, lost stock certificates, stock transfers, account status and other administrative matters. Investor Relations You can contact Skyworks’ Investor Relations team directly to order an Investor’s Kit or to ask investment-oriented questions about Skyworks at: Skyworks Solutions, Inc. 5260 California Avenue Irvine, CA 92617 (949) 231-3433 investor.relations@skyworksinc.com You can also view this annual report along with other financial- related information and other public filings with the U.S. Securities and Exchange Commission at: www.skyworksinc.com. Independent Registered Public Accountants KPMG LLP Executive Offices Skyworks Solutions, Inc. 5260 California Avenue Irvine, CA 92617 (949) 231-3000 Common Stock Skyworks common stock is traded on the Nasdaq Global Select Market® under the symbol SWKS. Annual Meeting The annual meeting of stockholders will be held virtually on May 12, 2021, at www.virtualshareholdermeeting.com/SWKS2021 2020 Annual Report Notice of 2021 Annual Meeting and Proxy Statement www.skyworksinc.com Your Vote Counts! 2021 Annual Meeting of SKYWORKS SOLUTIONS, INC. May 12, 2021, at 11:00 a.m. PDT Exclusively via live audio webcast at www.virtualshareholdermeeting.com/SWKS2021 Vote by 11:59 p.m. EDT on May 11, 2021 for shares held directly and by 11:59 p.m. EDT on May 7, 2021 for shares held in a Plan. SKYWORKS SOLUTIONS, INC. ATTN: CORPORATE SECRETARY 5260 CALFORNIA AVENUE IRVINE, CA 92617-3073 D45822-P49639-Z79136 Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on May 12, 2021 You invested in SKYWORKS SOLUTIONS, INC. and it’s time to vote! You have the right to vote on proposals being presented at the Annual Meeting. Get informed before you vote View the Annual Report and Proxy Statement online by visiting www.ProxyVote.com OR you can receive a free paper or email copy of the proxy material(s) by requesting prior to April 28, 2021. If you would like to request a copy of the proxy material(s) for this and/or future stockholder meetings, you may (1) visit www.ProxyVote.com, (2) call 1-800-579-1639 or (3) send an email to sendmaterial@proxyvote.com. If sending an email, please include your control number (indicated below) in the subject line. Unless requested, you will not otherwise receive a paper or email copy. For complete information and to vote, visit www.ProxyVote.com Control # Smartphone users Point your camera here to access the proxy materials and vote without entering a control number Vote Virtually at the Meeting* May 12, 2021 11:00 a.m. PDT Virtually at: www.virtualshareholdermeeting.com/SWKS2021 You can vote by mail by requesting a paper copy of the materials, which will include a proxy card. *Please check the meeting materials for any special requirements for meeting attendance. V1 SAMPLE Vote at www.ProxyVote.com THIS IS NOT A VOTABLE BALLOT This is an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. Voting Items 1. To elect the following eight individuals nominated to serve as directors of the Company with terms expiring at the next Annual Meeting of Stockholders. Board Recommends Nominees: 1a. Alan S. Batey 1b. Kevin L. Beebe 1c. Timothy R. Furey 1d. Liam K. Griffin 1e. Christine King 1f. David P. McGlade 1g. Robert A. Schriesheim 1h. Kimberly S. Stevenson 2. To ratify the selection by the Company’s Audit Committee of KPMG LLP as the independent registered public accounting firm for the Company for fiscal year 2021. 3. To approve, on an advisory basis, the compensation of the Company’s named executive officers, as described in the Company’s Proxy Statement. 4. To approve the Company’s Amended and Restated 2015 Long-Term Incentive Plan. For For For For For For For For For For For 5. To approve a stockholder proposal regarding supermajority voting provisions. Neutral Prefer to receive an email instead? While voting on www.ProxyVote.com, be sure to click “Sign up for E-delivery.” D45823-P49639-Z79136 SAMPLE Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report and Proxy Statement are available at www.skyworksinc.com/annualreport. D36555-P49639-Z79136 SKYWORKS SOLUTIONS, INC. Annual Meeting of Stockholders May 12, 2021, 11:00 a.m. PDT This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) Liam K. Griffin and Robert J. Terry, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of SKYWORKS SOLUTIONS, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 11:00 a.m., PDT on May 12, 2021, held virtually at www.virtualshareholdermeeting.com/SWKS2021, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side SAMPLE SKYWORKS SOLUTIONS, INC. ATTN: CORPORATE SECRETARY 5260 CALFORNIA AVENUE IRVINE, CA 92617-3073 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 11, 2021 for shares held directly and by 11:59 p.m. Eastern Time on May 7, 2021 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/SWKS2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 11, 2021 for shares held directly and by 11:59 p.m. Eastern Time on May 7, 2021 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. D36554-P49639-Z79136 SKYWORKS SOLUTIONS, INC. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR NAMED IN PROPOSAL 1 AND "FOR" PROPOSALS 2 THROUGH 4. THE BOARD OF DIRECTORS MAKES NO RECOMMENDATION REGARDING HOW STOCKHOLDERS SHOULD VOTE ON PROPOSAL 5. 1. To elect the following eight individuals nominated to serve as directors of the Company with terms expiring at the next Annual Meeting of Stockholders. Nominees: 1a. Alan S. Batey 1b. Kevin L. Beebe 1c. Timothy R. Furey 1d. Liam K. Griffin 1e. Christine King 1f. David P. McGlade 1g. Robert A. Schriesheim 1h. Kimberly S. Stevenson For Against Abstain For Against Abstain 2. 3. 4. 5. To ratify the selection by the Company’s Audit Committee of KPMG LLP as the independent registered public accounting firm for the Company for fiscal year 2021. To approve, on an advisory basis, the compensation of the Company’s named executive officers, as described in the Company’s Proxy Statement. To approve the Company’s Amended and Restated 2015 Long-Term Incentive Plan. To approve a stockholder proposal regarding supermajority voting provisions. ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)DateTO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:KEEP THIS PORTION FOR YOUR RECORDSDETACH AND RETURN THIS PORTION ONLYTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.SAMPLE