NOVA LTD.

 

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

Notice is hereby given that the annual general meeting of shareholders (the “Meeting”) of Nova Ltd. (the “Company”) will be held on Thursday, June 23, 2022, at 5 p.m. Israel time (10 a.m. eastern time), at the Company’s offices, located at 5 David Fikes St., Rehovot 7632805, Israel.

 

The agenda of the Meeting shall be as follows:

 

1.          Approval of the re-election of each of Dr. Michael Brunstein, Mr. Eitan Oppenhaim, Mr. Avi Cohen, Mr. Raanan Cohen, Ms. Dafna Gruber and Ms. Zehava Simon and the election of Ms. Sarit Sagiv, as a director of the Company to hold office until the close of the next annual general meeting.

 

2.          Approval of the Company’s compensation policy for directors and officers.

 

3.          Approval of employment terms of Mr. Eitan Oppenhaim, the President and Chief Executive Officer of the Company.

 

4.          Approval of amendments to the compensation terms of non-executive directors.

 

5.          Approval of amendments to the indemnification letter for directors and officers.

 

6.          Approval and ratification of the re-appointment of Kost Forer Gabbay & Kasierer, a member of Ernest & Young, as the independent auditors of the Company for the period ending at the close of the next annual general meeting.

 

In addition, the shareholders will be requested to consider at the Meeting the Company’s audited consolidated financial statements for the year ended December 31, 2021.

 

We know of no other matters to be submitted at the Meeting other than as specified herein. If any other business is properly brought before the Meeting, the persons named as proxies may vote in respect thereof in accordance with their best judgment.

 

In accordance with the Israeli Companies Law 5759-1999, and regulations promulgated thereunder (the “Companies Law”), any shareholder of the Company holding at least one percent of the outstanding voting rights of the Company for the Meeting may submit to the Company a proposed additional agenda item for the Meeting, to the Company’s offices, c/o Ms. Leeat Peleg, General Counsel, at 5 David Fikes St., Rehovot 7532805, Israel, no later than May 26, 2022. To the extent that there are any additional agenda items that the board of directors of the Company the ("Board") determines to add as a result of any such submission, the Company will publish an updated agenda and proxy card with respect to the Meeting, no later than June 2, 2022, which will be furnished to the U.S. Securities and Exchange Commission (the “Commission”) on Form 6-K, and will be made available to the public on the Commission’s website at http://www.sec.gov and in addition at http://www.magna.isa.gov.il or http://maya.tase.co.il.

 

The approval of each of the Proposals requires the affirmative vote of the Company’s shareholders holding at least a majority of the Company’s ordinary shares (“Shares” or the “ordinary shares”) present, in person or by proxy, and voting on the matter.

 

The approval of Proposal No. 2, and Proposal Nos. 3a and 4 in the event Proposal No. 2 is not approved, is also subject to the fulfillment of one of the following additional voting requirements: (i) the majority of the Shares that are voted at the Meeting in favor of the Proposal, excluding abstentions, includes a majority of the votes of shareholders who are not controlling shareholders or do not have a personal interest in the approval of the Proposal; or (ii) the total number of Shares of the shareholders mentioned in clause (i) above that are voted against the Proposal does not exceed two percent (2%) of the total voting rights in the Company. For this purpose, a “controlling shareholder” is any shareholder that has the ability to direct the Company’s activities other than by means of being a director or office holder of the Company. A person is presumed to be a controlling shareholder if it holds or controls, by himself or together with others, one half or more of any one of the “means of control” of a company. “Means of control” is defined as any one of the following: (i) the right to vote at a general meeting of a company, or (ii) the right to appoint directors of a company or its chief executive officer. A “personal interest” of a shareholder in an action or transaction of a company includes a personal interest of any of the shareholder’s relatives (i.e. spouse, brother or sister, parent, grandparent, child as well as child, brother, sister or parent of such shareholder’s spouse or the spouse of any of the above) or an interest of a company with respect to which the shareholder or the shareholder’s relative (as defined above) holds 5% or more of such company’s issued shares or voting rights, in which any such person has the right to appoint a director or the chief executive officer or in which any such person serves as director or the chief executive officer, including the personal interest of a person voting pursuant to a proxy which the proxy grantor has a personal interest, whether or not the person voting pursuant to such proxy has discretion with regards to the vote; and excludes an interest arising solely from the ownership of ordinary shares of a company. For the purpose of Proposal Nos. 3a and 4 (in the event Proposal No. 2 is not approved), the term controlling shareholder shall also include a person who holds 25% or more of the voting rights in the general meeting of the company if there is no other person who holds more than 50% of the voting rights in the company; for the purpose of a holding, two or more persons holding voting rights in the company each of which has a personal interest in the approval of the transaction being brought for approval of the company will be considered to be joint holders.

 

If a shareholder does not state whether he or she is a controlling shareholder or has personal interest, the Shares held by such shareholders will not be voted for Proposal No. 2, or Proposals No. 3a and 4, if Proposal No. 2 is not approved.

 

In connection with Proposal 2, the Companies Law allows the Board to approve such proposal even if the general meeting of shareholders has voted against its approval, provided that the Company’s compensation committee, and thereafter the Board, each determines to approve it, based on detailed arguments, and after having reconsidered the matter and concluded that such action is in the best interest of the Company.

 

Only shareholders of record at the close of business on May 24, 2022 (the “Record Date”) will be entitled to receive notice of, and to vote at the Meeting. All shareholders are cordially invited to attend the Meeting in person.

 

Shareholders who will not attend the Meeting in person may vote with respect to Proposal Nos. 1 through 6 by means of a proxy card and are obliged to complete, sign, date and return the proxy card no later than four hours before the time of the Meeting (i.e., 1 p.m. Israel time, 6 a.m. eastern time). A form of proxy card will be enclosed with the proxy statement. The form of proxy card was also furnished to the Commission on Form 6-K, and is available to the public on the Commission’s website at http://www.sec.gov and in addition at http://www.magna.isa.gov.il or http://maya.tase.co.il.

 

All Shares represented by properly executed proxies received prior to or at the Meeting and not revoked prior to, or at, the Meeting in accordance with the procedures described in the proxy statement, will be voted as specified in the instructions indicated in such proxies. Subject to applicable law and the rules of the Nasdaq Stock Market, in the absence of such instructions, the Shares represented by properly executed and received proxies will be voted “FOR” all of the proposed resolutions to be presented at the Meeting for which the Board recommends a “FOR”, other than Proposal No. 2 and Proposal Nos. 3a and 4 (in the event Proposal No. 2 is not approved) (unless the respective personal interest question is answered).

 

Shareholders wishing to express their position on an agenda item for this Meeting may do so by submitting a written statement (“Position Statement”) to the Company’s offices, c/o Ms. Leeat Peleg, Adv., at 5 David Fikes St., Rehovot 7632805, Israel. Any Position Statement received will be furnished to the Commission on Form 6-K, and will be made available to the public on the Commission’s website at http://www.sec.gov and in addition at http://www.magna.isa.gov.il or http://maya.tase.co.il. Position Statements should be submitted to the Company no later than June 13, 2022.

 

A shareholder is entitled to contact the Company directly and receive the text of the proxy card and any Position Statement.

 

A shareholder, whose Shares are registered with a TASE member and are not registered on the Company’s shareholder’s register, is entitled to receive from the TASE member who holds the Shares on the shareholder’s behalf, by e-mail, for no charge, a link to the text of proxy card and to the Position Statements posted on the Israel Securities Authority website, unless the shareholder notified that he or she is not so interested; provided, that the notice was provided with respect to a particular securities account, prior to the Record Date.

 

A shareholder, whose Shares are registered with a member of the TASE, is required to prove his or her Share ownership to vote at the Meeting. Such shareholder shall provide the Company with an ownership certificate (as of the Record Date) from that TASE member and is entitled to receive the ownership certificate in the branch of the TASE member or by mail to his address (in consideration of mailing fees only), if the shareholder so requested. Such a request will be made in advance for a particular securities account. Alternatively, shareholders who hold Shares through members of the TASE may vote electronically via the electronic voting system of the Israel Securities Authority up to six hours before the time fixed for the Meeting. Such shareholder should receive instructions about electronic voting from the TASE member through which he or she holds the Shares.

 

Discussion at the Meeting will be commenced if a quorum is present. A quorum is constituted by two or more shareholders who are present in person or by proxy, or who have delivered to the Company a proxy card indicating their manner of voting, and who hold or represent Shares conferring in the aggregate at least one-third (33.33%) of the voting power in the Company. For this purpose, abstaining shareholders shall be deemed present at the meeting. If a quorum is not present within half an hour of the time designated for the Meeting, the Meeting will be adjourned to June 30, 2022, at the same time and place. At the adjourned Meeting, any number of shareholders who are present in person or proxy, or who have delivered a proxy card, will constitute a quorum.

 

The wording of the resolutions to be voted at the Meeting and relevant documents thereto may be inspected at the Company’s offices, which are located at the 5 David Fikes St., Rehovot 7638305, Israel, during normal business hours and by prior coordination with Ms. Leeat Peleg, Adv. (Tel: +972-73-229-5600).

 

By the Order of the Board of Directors,

 

Dr. Michael Brunstein

Chairman of the Board of Directors of the Company

 

Dated: May 19, 2022

 

NOVA LTD.

 

5 David Fikes St., Rehovot
Israel

 

PROXY STATEMENT

 

ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

TO BE HELD ON JUNE 23, 2022

 

This proxy statement is furnished to the holders of ordinary shares, par value NTS 0.01 per share (the “Shares” or the “ordinary shares”), of Nova Ltd. in connection with the annual general meeting of shareholders of the Company to be held at the Company’s offices at the 5 David Fikes St., Rehovot 7632805, Israel on June 23, 2022, and thereafter as it may be adjourned from time to time (the “Meeting”). Unless the context otherwise requires, references in this Proxy Statement to “Nova,” the “Company,” “we” or “our” refer to Nova Ltd.

 

At the Meeting, the following resolutions will be proposed for adoption by the shareholders:

 

1.          Approval of the re-election of each of Dr. Michael Brunstein, Mr. Eitan Oppenhaim, Mr. Avi Cohen, Mr. Raanan Cohen, Ms. Dafna Gruber and Ms. Zehava Simon and the election of Ms. Sarit Sagiv, as a director of the Company to hold office until the close of the next annual general meeting.

 

2.          Approval of the Company’s compensation policy for directors and officers.

 

3.          Approval of employment terms of Mr. Eitan Oppenhaim, the President and Chief Executive Officer of the Company.

 

4.          Approval of amendments to the compensation terms of non-executive directors.

 

5.          Approval of amendments to the indemnification letter for directors and officers.

 

6.          Approval and ratification of the re-appointment of Kost Forer Gabbay & Kasierer, a member of Ernest & Young, as the independent auditors of the Company for the period ending at the close of the next annual general meeting.

 

Shareholders Entitled to Vote

 

Only holders of record of Shares at the close of business on May 24, 2022 (the “Record Date”) are entitled to receive notice of, and to vote at, the Meeting.

 

Proxies

 

All shareholders who are unable to attend the Meeting in person are requested to complete, date and sign the enclosed form of proxy and return it promptly in the pre-addressed envelope provided.

 

If you hold ordinary shares in “street name,” that is, you are an underlying beneficial holder who holds ordinary shares through a bank, broker or other nominee, the voting process will be based on you directing the bank, broker or other nominee to vote the ordinary shares in accordance with the voting instructions on your voting instruction card. Because a beneficial owner is not a shareholder of record, you may not vote those shares directly at the Meeting unless you obtain a “legal proxy” from the bank, broker or nominee that holds your shares, giving you the right to vote the shares at the Meeting.

 

Please follow the instructions on the proxy card or voting instruction card received from your bank, broker or nominee. You may also be able to submit voting instructions to a bank, broker or nominee by phone or via the Internet if your voting instruction card describes such voting methods. Please be certain to have your control number from your voting instruction card ready for use in providing your voting instructions.

 

It is important for a shareholder that holds ordinary shares through a bank or broker to instruct its bank or broker how to vote its shares if the shareholder wants its shares to count for the Proposals.

 

A shareholder, whose Shares are registered with a TASE member and are not registered on the Company’s shareholders’ register, is entitled to receive from the TASE member who holds the Shares on the shareholder's behalf, by e-mail, for no charge, a link to the text of proxy card and to the position statements posted on the Israel Securities Authority website, unless the shareholder notified that he or she is not so interested; provided, that the notice was provided with respect to a particular securities account, prior to the Record Date. A shareholder, whose Shares are registered with a member of the TASE, is required to prove his or her Share ownership to vote at the Meeting. Such shareholder shall provide the Company with an ownership certificate (as of the Record Date) from that TASE member and is entitled to receive the ownership certificate in the branch of the TASE member or by mail to his address (in consideration of mailing fees only), if the shareholder so requested. Such a request will be made in advance for a particular securities account. Alternatively, shareholders who hold Shares through members of the TASE may vote electronically via the electronic voting system of the Israel Securities Authority up to six hours before the time fixed for the Meeting. You should receive instructions about electronic voting from the TASE member through which you hold your Shares.

 

Upon the receipt of a properly executed proxy in the form enclosed herewith, the persons named as proxies therein will vote the Shares covered thereby in accordance with the directions of the shareholder executing such proxy. Subject to applicable law and the rules of the Nasdaq Stock Market, in the absence of such instructions, the Shares represented by properly executed and received proxies will be voted “FOR” all of the proposed resolutions to be presented at the Meeting for which the Company’s board of directors (the “Board”) recommends a “FOR”, other than Proposal No. 2 and Proposal Nos. 3a and 4 (in the event Proposal No. 2 is not approved) (unless the respective personal interest question is answered).

 

Position Statements

 

Shareholders wishing to express their position on an agenda item for this Meeting may do so by submitting a written statement (“Position Statement”) to the Company’s offices, c/o Ms. Leeat Peleg, Adv., at 5 David Fikes St., Rehovot 7610201, Israel. Any Position Statement received will be furnished to the Securities and Exchange Commission (the “Commission”) on Form 6-K, and will be made available to the public on the Commission’s website at http://www.sec.gov and in addition at http://www.magna.isa.gov.il or http://maya.tase.co.il. Position Statements should be submitted to the Company no later than June 13, 2022.

 

Meeting Agenda

 

In accordance with the Israeli Companies Law 5759-1999, and regulations promulgated thereunder (the “Companies Law”), any shareholder of the Company holding at least one percent of the outstanding voting rights of the Company for the Meeting may submit to the Company a proposed additional agenda item for the Meeting, to the Company’s offices, c/o Ms. Leeat Peleg, Adv., at 5 David Fikes St., Rehovot 7632805, Israel, no later than May 26, 2022. To the extent that there are any additional agenda items that the Board determines to add as a result of any such submission, the Company will publish an updated agenda and proxy card with respect to the Meeting, no later than June 2, 2022, which will be furnished to the Commission on Form 6-K, and will be made available to the public on the Commission’s website at http://www.sec.gov and in addition at http://www.magna.isa.gov.il or http://maya.tase.co.il.

 

Expenses and Solicitation

 

The Company expects to solicit proxies by mail and to mail this proxy statement and the accompanying proxy card to shareholders on or about May 27, 2022. This proxy statement and the accompanying proxy card are also available to the public through the following websites: http://www.magna.isa.gov.il, http://maya.tase.co.il or http://www.sec.gov.

 

All costs of solicitation of proxies will be borne by the Company. In addition to solicitations by mail, certain of the Company’s directors, officers and regular employees, without additional remuneration, may solicit proxies by telephone, telegraph and personal interviews. Brokers, custodians and fiduciaries will be requested to forward proxy soliciting material to the beneficial owners of Shares held in their names, and the Company will reimburse them for their reasonable out-of-pocket costs.

 

Quorum and Voting Requirements

 

The quorum required consists of two or more shareholders who are present in person or proxy (or who have delivered a proxy card indicating their manner of voting) and who together hold or represent Shares conferring in the aggregate at least one-third (33.33%) of the voting power in the Company. For this purpose, abstaining shareholders shall be deemed present at the meeting. If a quorum is not present within one half hour of the time designated for the Meeting, the Meeting shall be adjourned to June 30, 2022, at the same time and place. At the adjourned Meeting, any number of shareholders who are present in person or by proxy, or who have delivered a proxy card, shall constitute a quorum.

 

The approval of each of the Proposals requires the affirmative vote of the Company’s shareholders holding at least a majority of the Shares present, in person or by proxy, and voting on the matter.

 

The approval of Proposal No. 2, and Proposal Nos. 3a and 4 in the event Proposal No. 2 is not approved, is also subject to the fulfillment of one of the following additional voting requirements: (i) the majority of the Shares that are voted at the Meeting in favor of the Proposal, excluding abstentions, includes a majority of the votes of shareholders who are not controlling shareholders or do not have a personal interest in the approval of the Proposal; or (ii) the total number of Shares of the shareholders mentioned in clause (i) above that are voted against the Proposal does not exceed two percent (2%) of the total voting rights in the Company.

 

For this purpose, a “controlling shareholder” is any shareholder that has the ability to direct the Company’s activities (other than by means of being a director or office holder of the Company. A person is presumed to be a controlling shareholder if it holds or controls, by himself or together with others, one half or more of any one of the “means of control” of a company. “Means of control” is defined as any one of the following: (i) the right to vote at a general meeting of a company, or (ii) the right to appoint directors of a company or its chief executive officer. A “personal interest” of a shareholder in an action or transaction of a company includes a personal interest of any of the shareholder’s relatives (i.e. spouse, brother or sister, parent, grandparent, child as well as child, brother, sister or parent of such shareholder’s spouse or the spouse of any of the above) or an interest of a company with respect to which the shareholder or the shareholder’s relative (as defined above) holds 5% or more of such company’s issued shares or voting rights, in which any such person has the right to appoint a director or the chief executive officer or in which any such person serves as director or the chief executive officer, including the personal interest of a person voting pursuant to a proxy which the proxy grantor has a personal interest, whether or not the person voting pursuant to such proxy has discretion with regards to the vote; and excludes an interest arising solely from the ownership of ordinary shares of a company. For the purpose of Proposal Nos. 3a and 4 (in (the event Proposal No. 2 is not approved), the term controlling shareholder shall also include a person who holds 25% or more of the voting rights in the general meeting of the company if there is no other person who holds more than 50% of the voting rights in the company; for the purpose of a holding, two or more persons holding voting rights in the company each of which has a personal interest in the approval of the transaction being brought for approval of the company will be considered to be joint holders.

 

If you do not state whether you are a controlling shareholder or have personal interest, your Shares will not be voted for Proposal No. 2, or Proposal Nos. 3a and 4, if Proposal No. 2 is not approved.

 

In connection with Proposal 2, the Companies Law allows the Board to approve such proposal even if the general meeting of shareholders has voted against its approval, provided that the Company’s compensation committee, and thereafter the Board, each determines to approve it, based on detailed arguments, and after having reconsidered the matter and concluded that such action is in the best interest of the Company.

 

Reporting Requirements

 

We are subject to the information reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), applicable to foreign private issuers. We fulfill these requirements by filing reports with the Commission. Our filings are available to the public on the Commission’s website at http://www.sec.gov.

 

As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements. The circulation of this notice and proxy statement should not be taken as an admission that we are subject to the proxy rules under the Exchange Act.

 

AFTER CAREFUL CONSIDERATION, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE PROPOSALS DESCRIBED IN THIS PROXY STATEMENT.

 

BOARD DIVERSITY MATRIX

The table below provides certain information regarding the diversity of our Board as of the date of this Proxy Statement.

Country of Principle Executive Offices:	Israel
Foreign Private Issuer	Yes
Disclosure Prohibited under Home Country Law	No
Total Number of Director	Seven

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

 

The table below reflects the Company’s compensation costs related to the employment of our five most highly compensated office holders (as defined in the Companies Law) with respect to the year ended December 31, 2021. We refer to the five individuals for whom disclosure is provided herein as our “Covered Executives.” For purposes of the table below, “compensation” includes amounts accrued or paid in connection with salary, bonuses, equity-based compensation, retirement or termination payments, benefits and perquisites (such as car and phone), social benefits and any undertaking to provide such compensation. All amounts reported in the table are in terms of cost to the Company (in USD), as recognized in our financial statements for the year ended December 31, 2021, including compensation paid to such Covered Executives following the end of the year in respect of services provided during the year. Each of the Covered Executives was covered by our directors’ and officers’ liability insurance policy and was granted an indemnification letter as approved by our shareholders in accordance with applicable law and our articles of association.

 

 

 

 

 

In addition, the Company’s compensation costs related to our Chairman of the Board for the year ended December 31, 2021, as recognized in our financial statements for the year ended December 31, 2021, are detailed in the table below.

 

 

The annual target bonus of the Company’s President and Chief Executive Officer for the year ended December 31, 2021 was divided into the following discrete components that were weighted as follows (the “2021 Bonus Plan”):

 

 

Each component was measured against a target that was determined by the compensation committee and the Board in February 2022. In addition, the 2021 Bonus Plan payout was subject to certain thresholds related to the Company’s revenue and profitability. These thresholds had been met in 2021. As required by the Company’s compensation policy, the total annual cash bonuses awarded to all our executive officers in 2021 did not exceed 10% of our non-GAAP operating profit in 2021 as detailed in the Form 6-K furnished by the Company to the Commission on February 24, 2022.

 

The annual target bonus of the Company’s President and Chief Executive Officer for the year ending on December 31, 2022, as set by our compensation committee and the Board is divided into the following discrete components that will be weighted as follows (the “2022 Bonus Plan”):

 

 

The 2022 Bonus Plan payout is subject to certain thresholds related to the Company’s revenue and profitability. Further, in accordance with our compensation policy, the total annual cash bonuses awarded to all our executive officers in 2022 cannot exceed 10% of our non-GAAP operating profit for 2022.

 

PROPOSAL NO. 1

 

APPROVAL OF THE RE-ELECTION OF EACH OF DR. MICHAEL BRUNSTEIN,
MR. EITAN OPPENHAIM, MR. AVI COHEN, MR. RAANAN COHEN,

MS. DAFNA GRUBER AND MS. ZEHAVA SIMON AND THE ELECTION OF MS. SARIT SAGIV, AS

A DIRECTOR OF THE COMPANY TO HOLD OFFICE UNTIL THE CLOSE OF THE NEXT

ANNUAL GENERAL MEETING

 

At the Meeting, shareholders will be asked to approve the re-election of each of Dr. Michael Brunstein, Mr. Eitan Oppenhaim, Mr. Avi Cohen, Mr. Raanan Cohen, Ms. Dafna Gruber and Ms. Zehava Simon and the election of Ms. Sarit Sagiv, as a director of the Company to hold office until the close of the next annual general meeting. Our Board has determined that each of the director nominees, other than Mr. Eitan Oppenhaim, qualifies as an “independent director” under the rules of the Nasdaq Stock Market.

 

There are currently seven directors serving on the Board, six of whom are standing for re-election or election under this Proposal No. 1. All of our directors attended 96% or more of the meetings of the Board and its committees on which they served, held since the previous annual general meeting.

 

Set out below are details on the directors standing for re-election or election:

 

Each of the director nominees named above has certified to us that he or she complies with all requirements under the Companies Law for serving as a director. Such certifications will be available for inspection at the Meeting.

 

For information on the compensation payable to our directors, please see our Annual Report.

 

At the Meeting, it is proposed that the following resolution be adopted:

 

“RESOLVED, to approve the re-election of each of Dr. Michael Brunstein, Mr. Eitan Oppenhaim, Mr. Avi Cohen, Mr. Raanan Cohen, Ms. Dafna Gruber and Ms. Zehava Simon and the election of Ms. Sarit Sagiv, as a director of the Company to hold office until the close of the next annual general meeting.”

 

The Board recommends shareholders vote

“FOR” Proposal No. 1

 

PROPOSAL NO. 2

 

APPROVAL OF THE COMPANY’S COMPENSATION POLICY

 

Pursuant to the Companies Law, a compensation policy must be re-approved (and re-considered) at least once in every three years. The current compensation policy was approved by our shareholders in June 2019, and on June 25, 2020, our shareholders approved an amendment to the compensation policy with respect to the premium payable in connection with our directors' and officers’ liability insurance policy.

 

Following a review of the compensation policy by our compensation committee and Board, the compensation committee and Board approved, and recommended that our shareholders approve, the compensation policy in the form attached hereto as Appendix A. In the event the proposed compensation policy is not approved by the shareholders by the required majority, our Board may nonetheless approve the compensation policy, provided that our compensation committee and thereafter our Board have concluded, following further discussion of the matter and for specified reasons, that such approval is in our best interests.

 

Our proposed compensation policy is designed to promote our objectives, business plan and long-term strategy, to create appropriate incentives to our office holders while taking into consideration the size and nature of operations of our Company as well as the competitive environment in which we operate. As such, our proposed compensation policy is intended to incentivize superior individual excellence and to align the interests of our office holders with our long-term performance, and as a result, with those of our shareholders. To that end, a portion of an office holder compensation package is targeted to reflect both our short- and long-term goals, the office holder’s individual performance, as well as measures designed to reduce office holder’s incentive to take excessive risks that may harm us in the long-term.

 

The proposed compensation policy is generally in line with the terms of our current compensation policy with (i) adjustments to certain bonuses caps and notice period to the CEO and executive officers; (ii) an increase in D&O insurance cap, in light of the current market capitalization of the Company; (iii) in accordance with the guidelines published by the Israel Securities Authority, a removal of the limitation on D&O insurance premium; and (iv) adjustments to the provisions on director compensation in line with Proposal No. 4 and in light of the change to a retainer based fee as opposed to a per meeting based fee (accordingly, the proposed changes to Part H of the proposed compensation policy will become effective only in the event Proposal No. 4 is also approved).

 

When considering the proposed revisions to the compensation policy, the compensation committee and the Board considered numerous factors, including the Company objectives, business plan and long-term strategy, as well as a comprehensive benchmark analysis prepared by Compvision, an independent compensation advisor. The comprehensive benchmark analysis included a survey of compensation policy terms of ten peer companies prepared by Compvision. Such survey included Israeli companies listed in the U.S., some of which are dually listed on the Tel Aviv Stock Exchange Ltd., such as Global-e Online Ltd., Elbit Systems Ltd., Playtika Holdings Corp., SolarEdge Technologies Ltd., Tower semiconductors Ltd., Kornit Digital Ltd., Stratasys Ltd. and Similarweb Ltd. This survey indicated that the terms of our proposed compensation policy are in line with market practices.

 

Our compensation committee and Board believe that by approving the proposed compensation policy, we will be better positioned to hire, retain and motivate leading candidates in our industry to serve as officers or members of our Board especially given the high demand for experienced and talented executives in the Israeli market.

 

The brief overview above is qualified in its entirety by reference to the full text of the proposed compensation policy, as reflected in Appendix A attached hereto.

 

At the Meeting, it is proposed that the following resolution be adopted:

 

“RESOLVED, to approve the compensation policy for the Company’s directors and officers, as detailed in the Proxy Statement, dated May 19, 2022.”

 

The Board recommends shareholders vote

“FOR” Proposal No. 2

 

PROPOSAL NO. 3

 

APPROVAL OF EMPLOYMENT TERMS OF
MR. EITAN OPPENHAIM, THE PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
THE COMPANY

 

At the Meeting, shareholders will be asked to approve the following employment terms of Mr. Eitan Oppenhaim as our President and Chief Executive Officer:

 

1. An increase of Mr. Oppenhaim’s monthly salary by 7% which brings the total base salary to NIS 172,500 (from NIS 161,000) effective as of June 2022 salary.

 

2. An increase of the annual target bonus that Mr. Oppenhaim is entitled to for 100% achievement, to eighteen (18) monthly base salaries (from 14 monthly salaries). For overachievement performance, Mr. Oppenhaim shall be entitled to up to twenty-eight (28) monthly base salaries.

 

3. A grant of 19,690 restricted share units and 19,690 performance share units to be made on July 1, 2022, in accordance with the following terms:

 

a. The restricted share units shall vest over a period of 3 (three) years, whereas one third (1/3) of such restricted share units shall vest on each anniversary of the grant, unless such restricted share units have been cancelled in accordance with the terms and conditions of the share incentive plan of the Company or the employment terms of Mr. Oppenhaim.

 

b. The performance share units shall vest over a period of three (3) years, whereas one third (1/3) of such performance share units shall vest on each anniversary of the grant, provided that the Company meets or exceeds the non-GAAP operating profit as set forth in the Company's budget approved by the Board for the fiscal year preceding the date of vesting, unless such performance share units have been cancelled in accordance with the terms and conditions of the share incentive plan of the Company or the employment terms of Mr. Oppenhaim.

 

In the event a portion of the performance share units fails to vest, such portion will be carried forward to the third vesting date and will vest if the Company’s average annual return on equity based on net income during the previous three (3) years will be no less than ten percent (10%).

 

4. A one-time special performance bonus in an amount equal to 14 monthly salaries (performance details described below).

 

All other employment terms shall remain unchanged. For further information on the compensation terms of Mr. Oppenhaim, please see our Annual Report. Mr. Oppenhaim also serves as a member of our Board and is not entitled to any director’s fee.

 

The proposed amendments to the employment terms of Mr. Oppenhaim were approved by the compensation committee and the Board, while considering, among others, Mr. Oppenhaim’s performance and contribution to the Company. The amended terms reflect Mr. Oppenhaim’s experience, a comprehensive compensation survey provided to the members of the compensation committee and the Board prepared by an independent compensation advisor, Aon - Human Capital Solutions (Radford), the terms of our compensation policy, and the ratio between the employer cost associated with the engagement of the President and Chief Executive Officer and the average and median employer cost associated with the engagement of the other employees of the Company. In addition, the Board noted the total shareholder return of the Company during 2021 of 108% compared to the peer group (with an average of 65%), showing a strong position of the Company compared to the market.

 

Our compensation committee and Board approved the terms described above as they believe that, together with the current terms of Mr. Oppenhaim’s compensation, it would serve as an appropriate long-term retention and performance incentive and advance the objectives of the Company, its work plan and long-term strategy.

 

Our compensation committee and Board reviewed a comprehensive analysis of 15 peer companies (prepared by an independent compensation advisor, Aon - Human Capital Solutions (Radford)). The peer group was constructed with careful consideration and represents an appropriate comparison pool based on the peer companies’ industry, size, revenues and maturity stage, was approved by our compensation committee and included, among others, ACM Research, Inc., Axcelis Technologies, Inc., Azenta, Inc., Camtek Ltd., Kornit Digital Ltd., Teradyne Inc.Tower Semiconductor Ltd., Maytronics Ltd. and Veeco Instruments Inc.

 

In addition, in light of the exceptional year of 2021, in which the Company has managed to reach a substantial overachievement of its goals and maintain continuous profitable growth by diversifying its organic and inorganic growth engines, including:

 

 

 

 

 

 

 

the compensation committee and the Board approved a special bonus to Mr. Oppenhaim in the amount of $698,000. The proposed special bonus is in line with our current compensation policy, as approved by our shareholders.

 

The employment terms of Mr. Oppenhaim following the proposed amendments are consistent with our compensation policy as proposed to be adopted under Proposal No. 2.

 

At the Meeting, it is proposed that the following resolutions be adopted:

 

a. “RESOLVED, to approve the amendments to the terms of employment of Mr. Eitan Oppenhaim, the President and Chief Executive Officer of the Company, as detailed in the Proxy Statement, dated May 19, 2022.”

 

b. “RESOLVED, to approve a special bonus to Mr. Eitan Oppenhaim, the President and Chief Executive Officer of the Company, as detailed in the Proxy Statement, dated May 19, 2022.”

 

The Board recommends shareholders vote

“FOR” Proposal No. 3

 

PROPOSAL NO. 4

 

APPROVAL OF AMENDMENTS TO THE COMPENSATION TERMS OF NON-EXECUTIVE DIRECTORS

 

The compensation arrangement of our directors (excluding the chairman of the Board and, unless approved otherwise, any other director who is also an employee of the Company), as approved in 2017, includes an annual payment of NIS 92,000 (approximately US$28,500) and a payment per meeting of NIS3,000 (approximately US$930) (for each execution of a written consent in lieu of a meeting, an amount of NIS 1,500 and for each meeting that the director attends by teleconference, an amount of NIS 1,800). The compensation scheme was adopted in accordance with certain rules under the Companies Law addressing the compensation of external directors in Israeli companies.

 

In addition, as approved in 2019, each member of our Board (excluding the chairman) is granted an annual award of options to purchase 3,340 ordinary shares and 2,220 restricted share units, or, options and restricted share units with an aggregate fair market value of US$100,000 (with the same ratio of options and restricted share units), the lower of the two. Such grant is made to each director on the date of each annual general meeting at which such director is elected or reelected. The exercise price of each option is determined pursuant to our equity-based compensation policy and the equity awards vest annually over a period of four years.

 

The compensation arrangement of Dr. Michael Brunstein, the chairman of our Board includes a gross annual fee of US$110,000 payable monthly in NIS and an annual award of options to purchase 15,850 ordinary shares and 10,550 restricted share units, or, options and restricted share units with an aggregate fair market value of US$600,000 (with the same ratio of options and restricted share units), the lower of the two. Such grant is made on the date of each annual general meeting at which our chairman is elected or reelected. The exercise price of each option is determined pursuant to our equity-based compensation policy and the equity awards vest annually over a period of four years.

 

In order to promote retention and motivation of our directors and to better align the compensation terms with our Board members’ duties and in light of the Company’s “opt out” of the external director regime under the Companies Law, our compensation committee and Board approved and recommended to the shareholders of the Company to approve the following new compensation scheme for non-executive directors (other than the chairperson of the Board), which does not include any pay per meeting, as follows (effective as of the date of the Meeting and with respect to Ms. Sarit Sagiv, effective as of the date of her appointment to the Board in August  2021):

 

 

 

 

It is further purposed that the chairman of the Board will be entitled to the same annual retainer (paid in NIS) of NIS 360,000 and an annual equity grant of restricted share units (instead of options and restricted share units) at the currently approved value of $600,000.

 

In the event this Proposal No. 4 is not approved, the current director fee scheme will remain in place.

 

These compensation terms of the Company’s non-executive directors are consistent with our compensation policy as proposed to be adopted under Proposal No. 2. When reviewing these terms, the compensation committee and the Board reviewed a peer group compensation survey prepared by Compvision, an independent compensation advisor and considered market trends in similar companies. Such survey included Israeli companies listed in the U.S., some of which are dually listed on the Tel Aviv Stock Exchange Ltd., such as Global-e Online Ltd., Elbit Systems Ltd., Playtika Holdings Corp., SolarEdge Technologies Inc., Tower semiconductors Ltd., Kornit Digital Ltd., Stratasys Ltd. and Similarweb Ltd.

 

At the Meeting, it is proposed that the following resolution be adopted:

 

 “RESOLVED, to approve an amendment of the compensation terms for directors of the Company, as described in the Proxy Statement, dated May 19, 2022.”

 

The Board recommends shareholders vote

“FOR” Proposal No. 4

 

PROPOSAL NO. 5

APPROVAL OF AMENDMENTS TO THE INDEMNIFICATION LETTER FOR DIRECTORS AND OFFICERS

Our articles of association permit us to exculpate, indemnify and ensure our directors and officeholders to the fullest extent permitted by the Companies Law.

 

We have entered into agreements with each of our current directors and office holders undertaking to indemnify them for any obligation imposed on them or expense spent by them as a result of their capacity as directors or executive officers of the Company.

 

In light of our interest in continuing to attract and retain highly qualified directors and executive officers and due to an increasing difficulty in obtaining a fit insurance policy for our directors and executive officers, the increasing cost of obtaining such insurance and our current market valuation of the Company, our compensation committee and Board concluded that it is in our best interest and that of our shareholders to add Section 16 to the indemnification letters, as follows:

 

“16.          Subject to the provisions of the Companies Law, the Company hereby releases you, in advance, from liability for any damage that arises from the breach of your duty of care (within the meaning of such terms under Sections 252 and 253 of the Companies Law), other than breach of the duty of care towards the Company in a distribution (as such term is defined in the Companies Law).”

 

The brief overview above is qualified in its entirety by reference to the full text of the proposed indemnification letter (including the change above and certain editorial changes in addition), as reflected in Appendix B attached hereto (additions are underlined and deletions are struck through).

 

At the Meeting, it is proposed that the following resolution be adopted:

 

“RESOLVED, to approve the amendments to the indemnification agreements, as detailed in the Proxy Statement, dated May 19, 2022.”

 

The Board recommends shareholders vote

“FOR” Proposal No. 5

PROPOSAL NO. 6

 

APPROVAL AND RATIFICATION OF THE RE-APPOINTMENT OF KOST
FORER GABBAY & KASIERER, A MEMBER OF ERNST & YOUNG, AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR THE PERIOD ENDING
AT THE CLOSE OF THE NEXT ANNUAL GENERAL MEETING

 

Under the Companies Law and our articles of association, the shareholders of our Company are authorized to appoint the Company’s independent auditors. Under our articles of association, the Board (or a committee, if it is so authorized by the Board) is authorized to determine the independent auditor’s remuneration. In addition, the approval by the Company’s audit committee of the independent auditor’s re-appointment and remuneration is required under the corporate governance rules of the Nasdaq Stock Market.

 

Following the recommendation by the Company’s audit committee and the Board, it is proposed that Kost Forer Gabbay & Kasierer, a member of Ernest & Young, be reappointed as the independent auditors of the Company for the period ending at the close of the next annual general meeting. Such auditors served as the Company’s auditors for fiscal year 2021 and have no relationship with the Company or with any affiliate of the Company, except as described in the Annual Report. Information on fees paid to the Company’s independent public accountants may be found in the Annual Report.

 

At the Meeting, it is proposed that the following resolution be adopted:

 

“RESOLVED, to approve and ratify the re-appointment of Kost Forer Gabbay & Kasierer, a member of Ernest & Young, as the independent auditors of the Company for the period ending at the close of the next annual general meeting.”

 

The Board recommends shareholders vote

“FOR” Proposal No. 6

OTHER BUSINESS

 

Management knows of no other business to be acted upon at the Meeting. However, if any other business properly comes before the Meeting, the persons named in the enclosed proxy will vote upon such matters in accordance with their best judgment.

 

By the Order of the Board of Directors,

 

Dr. Michael Brunstein

Chairman of the Board of Directors of the Company

Dated: May 19, 2022

 

This document sets forth the Compensation Policy for Executive Officers and Directors (this “Compensation Policy” or “Policy”) of Nova Ltd. (“Nova” or the “Company”), in accordance with the requirements of the Companies Law, 5759-1999 (the “Companies Law”).

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All Nova’s non-employee Board members may be entitled to an annual cash fee retainer of up to NIS 210,000 (and up to NIS 360,000 for the chairperson of Nova’s Board), an annual committee membership fee retainer of up to NIS 42,000, and an annual committee chairperson cash fee retainer of up to NIS 63,000 (it is being clarified that the payment for the chairpersons would be in lieu of (and not in addition) to the payments referenced above for committee membership).23.1.

 

 

 

 

 

 

 

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Appendix B

 

Ms.\Mr.

 

I.D:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.1.

You will inform the Company of every legal or administrative proceeding that may be brought against you in connection with any event that may entitle you to indemnification, and of every warning made to you in writing, regarding legal or administrative proceedings that may be commenced against you, and this will be done in a timely manner, immediately after you first become aware of such, and you will provide to the Company or to whom the Company will instruct you, all documents in connection with such proceedings.

Similarly, you must advise the Company on an ongoing and current basis concerning all events which you suspect may give rise to the initiation of legal or administrative proceedings against you.

 

12.2.

The Company will, within a reasonable period of time (or within a shorter period of time if the matter requires filing a statement of defense or a response to a proceeding), take upon itself the handling of your defense in the legal proceeding and/or entrust such handling to any prominent attorney the Company may select at its discretion for this purpose, subject to the fulfillment of all the following conditions: (a) you have informed the Company as provided in Section 12.1 above; and (b) the legal proceedings against you solely involves a claim for monetary damages. The Company and/or the above-mentioned attorney will be entitled to act within their exclusive discretion to bring the proceeding to a close; the appointed attorney will owe his/her duty of loyalty to the Company and to you. In the event that a conflict of interests arises between you and the Company, the attorney will so inform the Company of any such conflict and you, subject to the Company’s approval, which approval not to be unreasonably withheld, will have the right to appoint an attorney on your behalf, and the provisions of this Letter of Indemnification will apply to expenses you may incur as a result of such appointment. If the Company decides to settle or arbitrate a monetary obligation, the Company will be entitled to do so, as long as the lawsuit or the threat of a lawsuit against you will be fully withdrawn. At the request of the Company you will sign any document that will empower the Company and/or attorney as mentioned above, to act on your behalf with regard to your defense in the above-mentioned proceedings and to represent you in all matters relating to these proceedings, as set forth above. Without derogating from the above provision with respect to a conflict of interests, in any event where, on reasonable grounds, the attorney chosen by the Company is unacceptable to you, you shall be entitled to appoint your own attorney and the provisions of this Letter of Indemnification will apply to expenses you may incur as a result, provided, however, that the proposed appointment of such attorney including the identity and terms of engagement of such attorney be brought immediately to the attention of the Company for its prior written approval, which approval not to be unreasonably withheld.

 

 

 

If required by law, the Company’s authorized organs will consider the request for indemnification and the amount thereof and will determine if you are entitled to indemnification and the amount thereof.

 

 

 

 

 

 

 

 

 

 

 

 

 

Respectfully,   ___________________________________________________   Eitan Oppenhaim                                         Dror David President & Chief Executive Officer          Chief Financial Officer on behalf of Nova Ltd.

I accept the terms and conditions of the above. I am aware that my agreement to accept this Letter of Indemnification constitutes my irrevocable agreement that this Letter of Indemnification replaces and substitutes any previous undertaking of the Company for indemnification, to the extent granted to me. Notwithstanding, the above, if this Letter of Indemnification shall be void for any reason whatsoever than any previous undertaking of the Company for indemnification towards me shall remain in force.

____________________ Name: _______________ Date: ________________

 

 

Subject to any provision of law, the events are as follows: