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K R A M E R L E V I N N A F T A L IS
& F R A N K E L LLP
September
20,
2007
VIA
EDGAR AND FEDERAL EXPRESS
United
States Securities and Exchange Commission
Division
of Corporation Finance
One
Station Place
100
F
Street
Washington,
D.C. 20549-6010
Attn: Perry
J. Hindin, Special Counsel
| Re: |
Vishay
Intertechnology, Inc.
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Definitive
14A
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Filed
April 16, 2007
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File
No. 001-07416
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Ladies
and Gentlemen:
On
behalf
of Vishay Intertechnology, Inc. (the “Company”), we provide the Company’s
responses to the letter dated August 21, 2007 setting forth the comments
of the
staff (the “Staff”) of the Securities and Exchange Commission relating to the
above referenced filing. For your convenience, the Staff’s comments
have been restated below in their entirety, with the response to each comment
set forth immediately below the comment.
Director
Compensation, page 10
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1.
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Include
a footnote describing all assumptions made in the valuation of
the stock
awards granted to your directors by reference to a discussion of
those
assumptions in the footnotes to your financial statements included
in your
annual report on Form 10-K. See the Instruction to Item 402(k)
of Regulation S-K, indicating that the Instruction to Item 402(c)(2)(v)
and (vi) applies equally to Item
402(k).
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Response: The
Company acknowledges the Staff’s comment and will clarify in the footnotes in
future filings the assumptions made in the valuation of stock awards by
reference to a discussion of those assumptions in the Company’s financial
statements or footnotes to the financial statements.
Compensation
Disclosure and Analysis, page 19
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2.
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We
note your reference to the compensation committee’s engagement of
MullinTBG and Mercer and Co. Describe in greater detail the
nature and scope of each consultant’s assignment and the material elements
of the instructions or directions given to the consultants with
respect to
the performance of their duties under the engagement. See Item
407(e)(3)(iii) of Regulation S-K.
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1177
AVENUE NEW
YORK
NY
10036
PHONE
212-715-9100
FAX
212-715-8000
www.kramerlevin.com
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AT
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K R A M E R L E V I N N A F T A L IS
& F R A N K E L LLP
United
States Securities and
Exchange Commission
Division
of Corporation
Finance
September
20, 2007
Page
2
to
the consultants with respect to the performance of
their duties under the engagement. See Item 407(e)(3)(iii) of
Regulation S-K.
Response: The
Company acknowledges the Staff’s comment and, to the extent relevant in future
filings, the Company will provide greater detail regarding the nature and
scope
of the assignment and instructions given to Mullin Consulting in 2003 and
2004.
The
Staff
is advised that the engagement of MullinTBG and Mercer and Co. to provide
current executive compensation consulting services was terminated in the
second
half of 2007 before any substantive work was performed. Prior to
termination, a representative of Mullin made a prospective presentation to
the
Compensation Committee in which he offered certain qualitative views
on the Company’s current executive compensation structure, in comparison with
contemporary executive compensation practices generally. At the time
the proxy statement was prepared and distributed, it was contemplated that
Mullin and Mercer would commence a formal analysis and provide its
recommendations to the Committee. This did not
materialize.
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3.
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You
state that on the advice of its consultants, the compensation committee
believes that the elements of compensation and their balance are
generally
in line with compensation arrangements at other public companies
of
Vishay’s size and within its sector. You also state that the
committee determined the minimum base salaries in 2004 based upon,
among
other considerations, a comparison to peer group executive
salaries. Identify these peer group companies against which you
have benchmarked your compensation and discuss the degree to which
the
committee considered such companies comparable to you. In
addition, clarify the meaning of the phrase “in line with compensation
arrangements.” For example, is the target level of each element
of compensation as well as overall target compensation at the 50th,
60th
or 75th
percentile
of companies of your size and within your
sector?
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Response: The
Company acknowledges the Staff’s comment and, to the extent relevant in future
filings, intends to identify the peer group against which the Compensation
Committee compared base salaries and other compensation in 2004. The
Compensation Committee did not, however, perform any percentile
analysis.
The
Staff
is advised that the Compensation Committee did not numerically benchmark
the
compensation of the Company’s top executive officers against any specific peer
group for 2007. The disclosure referred to by the Staff reflects a
sense of the Compensation Committee, based on their general knowledge and
understanding of compensation practices at other mid-cap companies with whom
the
Company tends to be compared.
K R A M E R L E V I N N A F T A L IS
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United
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September
20, 2007
Page
3
The
Company anticipates that the Compensation Committee will be guided by the
Staff’s comment in its consideration of future levels of executive compensation
and that the Company’s Compensation Discussion and Analysis will be formulated
in future filings to reflect this consideration.
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4.
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You
state on page 20 that the compensation arrangements with your named
executive officers have an evergreen feature, whereby as a consequence,
the compensation arrangements can only be modified with the respective
executive’s consent, without which, the executive would otherwise have the
right to terminate employment and receive severance
pay. Explain why you chose to structure the agreements to
contain such a term.
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Response: The
Company acknowledges the Staff’s comment. The staff is advised that
an evergreen term is essentially similar to the right of an executive to
receive
severance if the company does not renew his employment agreement at the end
of
its stated term, a not uncommon feature in senior executive employment
arrangements. The Compensation Committee chose to include the
evergreen feature rather than a right to severance upon end-of-term non-renewal
in recognition of the long-standing affiliation of each of the senior executives
with the Company, their significant contributions to the growth of the Company
over the years and the expectation that their affiliation with the Company
would
continue for the foreseeable future. In future filings the Company
will include disclosure concerning the evergreen feature of the senior executive
employment contracts to this effect.
Incentive
Compensation, page 21
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5.
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You
state on page 21 that Mr. Zandman and Mr. Shoshani receive a discretionary
performance bonus of up to 42.5% of base salary, as determined
by the
compensation committee, based on their individual performance and,
in par,
based on your adjusted net income. Please provide additional
qualitative and quantitative detail and an analysis of how individual
performance contributed to actual 2006 compensation for these named
executive officers. For example what factors does the
compensation committee consider in its assessment and, if applicable,
how
are they weighted? Are certain factors or goals considered more
determinative of compensation levels than others? See Item
402(b)(2)(vii) of Regulation S-K.
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Response: The
Company acknowledges the Staff’s comment. The individual performance
goals are established by the Company’s Chief Executive Officer in consultation
with the executives themselves at the beginning of each calendar
year. The performances of the executives are reviewed by the Chief
Executive Officer with the Compensation Committee following the end of the
year. Historically, the goals have been qualitative rather than
quantitative, such as the reorganization of the Company’s sales force or the
successful relocation
K R A M E R L E V I N N A F T A L IS
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Division
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September
20, 2007
Page
4
of
certain operations to lower cost jurisdictions. To the extent
applicable in future filings, the Company will provide a description of these
performance goals, together with the weighting of the goals as
appropriate.
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6.
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We
note your discussion of the Vishay Intertechnology Section 162(m)
Cash
Bonus Plan in which Dr. Zandman, Dr. Paul and Mr. Grubb
participate. You indicate that that plan provides an annual
bonus as a percentage of adjusted net income that is capped at
three times
each named executive officer’s base salary. We also note in
your summary compensation table on page 27 that you have recorded
non-equity incentive compensation for each of these officers, and
footnote
2 to the table states that payments under this plan are considered
non-equity incentive compensation. It does not appear that you
have appropriately recorded in your Grants of Plan Based Awards
table on
page 30 the corresponding amounts of estimated future payouts under
this
non-equity incentive plan. Please give appropriate
consideration to the requirements of Item 402(d)(2) of Regulation
S-K.
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Response: Item
402(d)(iii) of Regulation S-K requires disclosure of “[t]he dollar value of the
estimated future payout upon satisfaction of the conditions in question under
non-equity incentive plan awards granted in the fiscal year.” The
Company notes that there are no future payouts to the executives under the
Section 162(m) Cash Bonus Plan. The entire award for 2006, or for any
other year under the plan, is paid out in a lump sum shortly after the end
of
the relevant year, after determination of the adjusted net income for that
year
and approval of the determination by the Compensation
Committee. Accordingly, the Company submits that disclosure under
this Item of payouts under the plan is not required.
Summary
Compensation Table, page 27
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7.
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The
Compensation Discussion and Analysis should be sufficiently precise
to
identify material differences in compensation policies with respect
to
individual named executive officers. Refer to Section II.B.1.
of Commission Release No. 33-8732A. For example, we note the
disparity between the amount of non-equity incentive compensation
provided
to Dr. Zandman, Dr. Paul and Mr. Grubb as compared to the bonus
amounts
paid to Messrs. Zandman and Shoshani. We also note the
disparity in the amounts of non-equity incentive compensation provided
to
Dr. Zandman, representing 3% of adjusted net income, as compared
to Dr.
Paul and Mr. Grubb, representing 1% of adjusted net income. As
another example, we refer you to the option awards granted to the
named
executive officers on February 27, 2007 as set forth on page
32. Please provide a more detailed discussion explaining these
various differences.
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Response: The
Company notes that the Compensation Committee did not in 2006 address the
gradations in executive compensation among the various senior executive officers
with the
K R A M E R L E V I N N A F T A L IS
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September
20, 2007
Page
5
particularity
contemplated by the Staff’s comment. For example, the disparity in
the amounts of non-equity incentive compensation was recommended by the
Compensation Committee and approved by the Company’s stockholders in 2004 and
has remained unchanged since that time. The Company anticipates that
the Compensation Committee will be guided by the Staff’s comment in its
consideration of future levels of executive compensation and that the Company’s
Compensation Discussion and Analysis will be formulated in future filings
to
reflect this consideration.
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8.
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You
state in footnote 3 that the amounts in the stock award column
of the
table represent the grant-date fair value of 5,000 phantom stock
units
awarded annually to each named executive officer pursuant to the
terms of
their employment agreements. Either confirm that such value
represents the dollar amount recognized for financial statement
reporting
purposes with respect to the fiscal year in accordance with FAS123R
or
disclose by footnote such dollar amount. See Item 402(c)(2)(v)
of Regulation S-K.
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Response: The
Company confirms that the amounts in the stock award column represents the
dollar amount recognized for financial statement reporting purposes with
respect
to the fiscal year in accordance with FAS123R.
Pension
Benefits, page 33
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9.
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You
do not provide any disclosure regarding the Vishay Nonqualified
Retirement
Plan. Provide a succinct narrative description of any material
factors necessary to an understanding of each plan
covered by the tabular disclosure. While material factors will
vary depending upon the facts, examples of such factors may include
the
items listed in Item 402(h)(3) of Regulation
S-K.
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Response: The
Company acknowledges the Staff’s comment and will provide narrative disclosure
concerning the Vishay Nonqualified Retirement Plan in future
filings.
Potential
Payment Upon Termination or a Change in Control, page 36
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10.
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Your
disclosure in this section is not fully responsive to Item 402(j)
of
Regulation S-K. For example, providing a bullet point list
indicating certain executive officers receive salary continuation
for
three years and 5,000 shares of common stock is
insufficient. As another example, providing a general
description of Dr. Zandman’s royalty rights or that you will provide named
executive officers with a golden parachute gross-up is also not
fully
responsive to the item requirement. Please quantify the
estimated payments and benefits that would be provided to your
named
executive officers in each covered circumstance. Provide
quantitative disclosure applying the assumptions that the triggering
event
took place on the last business day of your last completed fiscal
year
and
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K R A M E R L E V I N N A F T A L IS
& F R A N K E L LLP
United
States Securities and
Exchange Commission
Division
of Corporation
Finance
September
20, 2007
Page
6
using
a price per share equal to the closing market
price as of that date. In the event that uncertainties exist as to
the provision of payments and benefits or the amount involved, you may make
a
reasonable estimate (or a reasonable estimated range of amounts) applicable
to
the payment or benefit and disclose the material assumptions underlying such
estimates or estimated ranges in your disclosure. In such event, the
disclosure would require forward-looking information as
appropriate. See Item 402(j)(2) and Instruction 1 to Item
402(j).
Response: The
Company acknowledges the Staff’s comment and in future filings intends to
quantify in tabular form each element of compensation that would have been
received by each of the Company’s executives other than Dr. Zandman had they
been terminated as of the end of the relevant fiscal year, together with
the
total of all such elements and narrative disclosure to the extent necessary
to
describe assumptions. The Company intends in future filings to
quantify the estimated payout of Dr. Zandman’s royalty rights and the underlying
assumptions used in estimating such payout. We note that, as
disclosed in the Company’s proxy materials, the other elements of Dr. Zandman’s
severance arrangements will be negotiated at the time of Dr. Zandman’s
termination of employment.
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11.
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In
addition, to the extent there are any material conditions or obligations
applicable to the receipt of payments or benefits, including
non-compete, non-solicitation and confidentiality
agreements, please describe and explain such provisions. See
Item 402(j)(4) of Regulation S-K.
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Response: While
the employment contracts of the Company’s senior executives recite that salary,
bonus and severance payment due the executives are in consideration for the
executive’s agreement to be bound and compliance with covenants of
non-competition, non-solicitation, non-disparagement and confidentiality,
the
agreements do not explicitly provide for forfeiture of payments on awards
for a
breach of these covenants. Accordingly, the Company does not believe
that it would be appropriate to describe the executive’s compensation as
conditional on these customary undertakings. The Company may provide
disclosure to this effect in future filings as appropriate.
Certain
Relationships and Related Transactions, page 44
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12.
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You
describe the policies and procedures involving related
transactions. Disclose whether the policies and procedures are
in writing, and if not, how such policies and procedures are
evidenced. See Item 404(b)(1)(iv) of Regulation
S-K.
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Response: In
response to the Staff’s comment, the Company will disclose that its Related
Party Transactions Policy is in writing.
K R A M E R L E V I N N A F T A L IS
& F R A N K E L LLP
United
States Securities and
Exchange Commission
Division
of Corporation
Finance
September
20, 2007
Page
7
Please
call me at (212) 715-9280 if you have any questions regarding this
letter.
Very
truly
yours,
/s/ Abbe
L.
Dienstag
Abbe
L.
Dienstag
cc: Dr.
Gerald Paul
Mr.
Richard Grubb