Item 7. Major Shareholders and Related Party Transactions
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Item 7. Major Shareholders and Related Party Transactions
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A. Major Shareholders
The following table shows the amount and percentage of our common stock beneficially owned as of December 31, 2013, December 31, 2012 and December 31, 2011 by (i) each person who is or was known by us to own beneficially more than 5% of our common stock, (ii) each current member of our board of directors, and (iii) all members of the board and named executive officers as a group. A person is a “beneficial owner” of a security if that person has or shares voting or investment power over the security or if he has the right to acquire beneficial ownership within 60 days. Unless otherwise noted, these persons may be contacted at our executive offices and, unless otherwise noted, have to our knowledge sole voting and investment power over the shares listed.
As shown in the table below, the Private Equity Consortium beneficially owned 14.82% of our shares of common stock as of December 31, 2013.
| Common Stock Beneficially Owned as of December 31 | ||||||||||||||||||||||||
| 2013 | 2012 | 2011 | ||||||||||||||||||||||
| Number | %* | Number** | %* | Number | %* | |||||||||||||||||||
| Funds advised by KKR(1)(2) | 14,059,822 | 5.58 | 32,197,150 | 12.79 | 40,028,656 | 15.90 | ||||||||||||||||||
| Funds advised by Bain(3)(6) | 7,744,241 | 3.08 | 25,756,791 | 10.23 | 32,021,770 | 12.72 | ||||||||||||||||||
| Funds advised by Silver Lake(4)(6) | 3,872,444 | 1.54 | 12,879,469 | 5.12 | 16,012,220 | 6.36 | ||||||||||||||||||
| Funds advised by Apax(5)(6) | 4,355,793 | 1.73 | 14,487,057 | 5.75 | 18,010,831 | 7.15 | ||||||||||||||||||
| Funds advised by Alpinvest(6) | 1,935,786 | 0.77 | 6,438,284 | 2.56 | 8,004,306 | 3.18 | ||||||||||||||||||
| NXP Co-Investment Investor S.a.r.l.(2)(7) | 5,290,174 | 2.10 | 15,029,155 | 5.97 | 18,684,787 | 7.42 | ||||||||||||||||||
| PPTL Investment LP | — | — | 16,549,097 | 6.57 | 30,517,299 | 12.12 | ||||||||||||||||||
| Wellington Management Company, LLP(8) | 28,935,677 | 11.49 | — | — | — | — | ||||||||||||||||||
| FMR and FIL(9) | 23,180,919 | 9.21 | — | — | — | — | ||||||||||||||||||
| T.Rowe(10) | 18,606,181 | 7.39 | — | — | — | — | ||||||||||||||||||
| Richard L. Clemmer | 3,224,174 | 1.28 | 1,309,587 | 0.52 | 809,357 | 0.32 | ||||||||||||||||||
| Sir Peter Bonfield | 43,549 | 0.02 | 27,897 | 0.01 | 13,695 | 0.005 | ||||||||||||||||||
| Johannes P. Huth | 89,999 | 0.04 | 79,999 | 0.03 | 73,333 | 0.03 | ||||||||||||||||||
| Kenneth Goldman | 22,999 | 0.01 | 14,999 | 0.01 | 8,333 | 0.003 | ||||||||||||||||||
| Dr. Marion Helmes | — | — | — | — | — | — | ||||||||||||||||||
| Josef Kaeser | 19,999 | 0.01 | 9,999 | 0.004 | 3,333 | 0.001 | ||||||||||||||||||
| Ian Loring(11) | 7,764,240 | 3.08 | 25,766,790 | 10.24 | 3,333 | 0.001 | ||||||||||||||||||
| Michel Plantevin | 19,999 | 0.01 | 9,999 | 0.004 | 3,333 | 0.001 | ||||||||||||||||||
| Jean-Pierre Saad | — | — | — | — | — | — | ||||||||||||||||||
| Julie Southern | — | — | — | — | — | — | ||||||||||||||||||
| All directors and named executive officers as a group(12) | 11,184,959 | 4.45 | 27,219,270 | 10.81 | 914,717 | 0.4 |
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| * | Percentage computations are based on 251,751,500 shares of our common stock issued and outstanding as of December 31, 2013, December 31, 2012 and December 31, 2011. |
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| ** | As of February 7, 2013. |
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| (1) | As of December 31, 2013, KKR’s affiliates and certain funds advised by KKR, through various KKR-affiliated entities, hold shares of our common stock through a Luxembourg holding company. The following KKR-affiliated entities (the “KKR Entities”) have an indirect interest in 14,059,822 shares of our common stock through their ownership of such Luxembourg holding company: KKR NXP (2006) Limited(1,096,471 shares); KKR NXP (European II) Limited (7,028,661 shares); KKR NXP (Millennium) Limited (5,934,687 shares); and KKR Associates Europe II Limited Partnership (3 shares). As the designated members of KKR Management LLC (which may be deemed to indirectly control one or more general partners, stockholders or members of the entities that own or control the KKR Entities), Henry R. Kravis and George R. Roberts may be deemed to beneficially own the shares of our common stock indirectly held by the KKR Entities, but disclaim beneficial ownership of such shares. In addition, as the voting partner of certain affiliates of the KKR Entities, KKR SP Limited may be deemed to beneficially own the shares of our common stock indirectly held by the KKR Entities, but disclaims beneficial ownership of such shares. The principal business address of each of the entities and persons identified in this footnote except Mr. Roberts is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, New York, NY 10019, U.S.A. The principal business office for Mr. Roberts is c/o Kohlberg Kravis Roberts & Co. L.P., 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94025, U.S.A. We understand that the KKR Entities have sold 2,778,751 of our shares of common stock on or after February 19, 2014, in addition to the shares sold to us on February 19, 2014. |
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| (2) | On February 19, 2014, we entered in a share repurchase agreement with KKR NXP Investors S.à.r.l. and NXP Co-Investment Investor S.à.r.l. to repurchase 5,000,000 shares of our common stock from the KKR Entities and from NXP Co-Investment Partners S.à.r.l. at a price per share based on the market closing price. See Note 20 “Subsequent events” of our Notes to the Consolidated Financial Statements included in Part III, Item 18 of this Report. |
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| (3) | As of December 31, 2013, Bain Pumbaa LuxCo S.à.r.l. owns 7,744,241 shares of our common stock. As a shareholder of Bain Pumbaa LuxCo S.à.r.l., Bain Capital Lion Holdings, L.P. (“Lion Holdings”) has voting and dispositive power over 7,744,241 shares of our common stock held by Bain Pumbaa LuxCo S.à.r.l. and may be deemed to beneficially own all shares of our common stock held by Bain Pumbaa LuxCo S.à.r.l. Bain Capital Investors, LLC (“BCI”) is the managing general partner of Lion Holdings. As a result, BCI may be deemed to beneficially own all of the shares of our common stock held by Lion Holdings, but disclaims beneficial ownership of such shares of our common stock. BCI is controlled by an investment committee composed of 22 members, Andrew Balson, Steven Barnes, Joshua Bekenstein, Louis Bremer, John Connaughton, Todd Cook, Paul Edgerley, Christopher Gordon, Blair Hendrix, Jordan Hitch, David Humphrey, John Kilgallon, Lewis Klessel, Matthew Levin, Ian Loring, Philip Loughlin, Seth Meisel, Mark Nunnelly, Stephen Pagliuca, Ian Reynolds, Mark Verdi and Stephen Zide. Each such investment committee member, disclaims beneficial ownership of shares indirectly held by Lion Holdings. In addition, the Bain affiliated funds and individuals named above may be deemed by virtue of their rights under the shareholders’ agreement with respect to the Company to share voting power with respect to the shares of our common stock held by the other parties to the shareholders’ agreement, but disclaim beneficial ownership of such shares. The address of BCI and of Lion Holdings is John Hancock Tower, 200 Clarendon Street, Boston, MA 02116, U.S.A. |
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| (4) | As of December 31, 2013, SL II NXP S.à.r.l. owns 3,872,444 shares of our common stock. SLP II Cayman NXP, Ltd. owns 99.57% of the outstanding shares of our common stock held by SL II NXP S.à.r.l. and may be deemed to beneficially own all shares of our common stock held by SL II NXP S.à.r.l. Silver Lake Partners II Cayman, L.P. is the sole shareholder of SLP II Cayman NXP, Ltd. Silver Lake Technology Associates II Cayman, L.P. is the general partner of Silver Lake Partners II Cayman, L.P. Silver Lake (Offshore) AIV GP II, Ltd. is the general partner of Silver Lake Technology Associates II Cayman, L.P. Because of the foregoing relationships, each of SLP II Cayman NXP, Ltd., Silver Lake Partners II Cayman, L.P., Silver Lake Technology Associates II Cayman, L.P. and Silver Lake (Offshore) AIV GP II, Ltd. (together, the “Silver Lake Funds”) may be deemed to beneficially own all of the shares of our common stock held by SL II NXP S.à.r.l. Messrs. James A. Davidson, Glenn H. Hutchins, David J. Roux, Alan K. Austin, Michael J. Bingle, Gregory |
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| Keith Mondre, Charles Giancarlo, Andrew Wagner and Kenneth Y. Hao and Mses. Karen King and Yolande A. Jun serve as directors of Silver Lake (Offshore) AIV GP II, Ltd. They disclaim beneficial ownership of the ordinary shares indirectly owned by the Silver Lake Funds. In addition, the Silver Lake affiliated funds and individuals named above may be deemed by virtue of their rights under the shareholders’ agreement with respect to the Company to share voting power with respect to the shares of our common stock held by the other parties to the shareholders’ agreement, but disclaim beneficial ownership of such shares. Silver Lake’s address is c/o 2775 Sand Hill Road, Suite 100 Menlo Park, CA 94025, U.S.A. According to filings made by SL II NXP S.à.r.l., we understand that SL II NXP S.à.r.l. has sold 350,000 of our shares of common stock on or after February 7, 2014. |
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| (5) | As of December 31, 2013, Meridian Holding S.à r.l. owns 4,355,793 shares of our common stock. Apax NXP VI A L.P. is an English limited partnership and owns 66.59% of the outstanding shares of Meridian Holding S.à.r.l. Apax NXP (UK) VI A1 GP Co. Ltd, an English private limited company, is the general partner of Apax NXP VI A L.P. Apax WW Nominees Ltd, an English company, holds, directly or indirectly, 100% of the interests in Apax NXP (UK) VI A1 GP Co. Ltd as nominee for Apax Partners Europe Managers Ltd, the custodian of Apax Europe VI-A, L.P., an English limited partnership. Apax Europe VI GP L.P. Inc., a Guernsey limited partnership, is the general partner of Apax Europe VI-A, L.P. Apax Europe VI GP Co. Limited, a Guernsey company, is the general partner of Apax Europe VI GP L.P. Inc. Apax Partners Europe Managers Ltd, an English company, holds 100% of the interests in Apax WW Nominees Ltd. Apax Partners Europe Managers Ltd has also been appointed by Apax Europe VI GP L.P. Inc. (acting by Apax Europe VI GP Co. Limited, its general partner) as discretionary investment manager of the investments of Apax Europe VI-A, L.P. Apax Partners Europe Managers Ltd, Apax Europe VI GP Co. Limited and Apax Europe VI GP L.P. Inc. are responsible for the investments and general administration of Apax Europe VI-A, L.P. Because of the foregoing relationships, each of Apax NXP VI A L.P., Apax NXP (UK) VI A1 GP Co. Ltd, Apax Europe VI-A, L.P., Apax Europe VI GP L.P. Inc., Apax Europe VI GP Co. Limited and Apax Partners Europe Managers Ltd may be deemed to beneficially own all of the shares of our common stock held by Meridian Holding S.à.r.l. As directors and shareholders of Apax Partners Europe Managers Ltd., Martin Halusa, Nico Hansen and Michael Phillips may be deemed to beneficially own the shares of our common stock indirectly held by Apax Europe VI, but disclaim ownership of such shares. In addition, the Apax-affiliated funds and individuals named above may be deemed by virtue of their rights under the shareholders’ agreement with respect to the Company to share voting power with respect to the shares of our common stock held by the other parties to the shareholders’ agreement, but disclaim beneficial ownership of such shares. The address of Apax Partners LLP and Apax Partners Europe Managers Ltd. is 33 Jermyn Street, London SW1Y 6DN, England, and the address of Apax Partners L.P. is 601 Lexington Avenue, 53rd Floor, New York, NY 10022, U.S.A. We understand that Meridian Holding S.à.r.l. has sold its entire holding of our shares of common stock on or after February 17, 2014. |
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| (6) | As of December 31, 2013, AlpInvest Partners CSI 2006 Lion C.V. owns 1,935,786 shares in our common stock and AlpInvest Partners Later Stage II-A Lion C.V. owns 26,444 shares of our common stock. As the managing director of AlpInvest Partners Beheer 2006 B.V. (which manages AlpInvest Partners CSI 2006 Lion C.V. and AlpInvest Partners Later Stage II-A Lion C.V.), AlpInvest Partners B.V. may be deemed to hold voting and dispositive power with respect to the shares in our common stock beneficially owned by AlpInvest Partners CSI 2006 Lion C.V. and AlpInvest Partners Later Stage II-A Lion C.V., but disclaims beneficial ownership of such shares. As managing directors of AlpInvest Partners B.V. Volkert Doeksen and Johan Paul de Klerk may be deemed to beneficially own the shares of our common stock owned by AlpInvest Partners Later Stage II-A Lion C.V. and AlpInvest Partners CSI 2006 Lion C.V., but disclaim beneficial ownership of such shares. In addition, the AlpInvest-affiliated funds and individuals named above may be deemed by virtue of their rights under the shareholders’ agreement with respect to the Company to share voting power with respect to the shares of our common stock held by the other parties to the shareholders’ agreement, but disclaim beneficial ownership of such shares. AlpInvest’s address is c/o AlpInvest Beheer, Jachthavenweg 118, 1081 KJ Amsterdam, the Netherlands. We understand that AlpInvest Partners CSI 2006 Lion C.V. has sold its entire holding of our shares of common stock on or after February 19, 2014. |
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| (7) | As the general partner of NXP Co-Investment Partners L.P. (the 100% direct parent company of NXP Co-Investment Partners S.a.r.l.). As the general partner of NXP Co-Investment Partners L.P., NXP Co- |
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| Investment GP Ltd. beneficially owns the shares held indirectly by NXP Co-Investment Partners L.P. Funds and entities advised by KKR, Bain, Silver Lake and Apax own NXP Co-Investment GP Ltd., but none of them own a majority, and none may be deemed to beneficially own them. We understand that NXP Co-Investment Investor S.a.r.l. has sold 2,145,216 of our shares of common stock as of February 12, 2014. |
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| (8) | Wellington Management Company, LLP (“Wellington Management”), in its capacity as investment adviser, may be deemed to beneficially own 28,935,677 shares of our common stock, which are held by its clients and with regard to which Wellington Management has shared voting power and shared dispositive power. Wellington Management’s address is 28 Congress Street, Boston, Massachusetts, 02210, United States. |
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| (9) | FMR LLC and/or Edward C. Johnson 3d, chairman of FMR LLC (collectively, “FMR”), through, among others, Fidelity Management & Research Company “Fidelity”), Strategic Advisers, Inc. (“SA”), Pyramis Global Advisors, LLC (“PGALLC”) and Pyramis Global Advisors Trust Company (“PGATC”), and/or FIL Limited (“FIL”), through, among others, various subsidiaries, are, directly or indirectly, the beneficial owners of 23,180,919 shares of our common stock. The address of Fidelity and SA is 82 Devonshire Street, Boston, Massachusetts 02109, United Sates. The address of PGALLC and PGATC is 900 Salem Street, Smithfield, Rhode Island 02917, United States. The address of FIL is Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda. |
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| (10) | T.Rowe Rice Associates, inc. (“T.Rowe”), in its capacity as investment adviser, may be deemed to beneficially own 18,606,181 shares of our common stock, which are held by its clients. T.Rowe’s address is 100 E. Pratt Street, Baltimore, Maryland 21202, United States. |
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| (11) | Mr. Loring is a director of our Company, as well as a member of the investment committee of Bain Capital Investors, LLC. Amounts disclosed for Mr. Loring include shares beneficially owned by the funds advised by Bain. Mr. Loring disclaims beneficial ownership of any shares owned directly or indirectly by funds advised by Bain. |
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| (12) | Reflects shares that may be beneficially owned by our directors. However, each director disclaims beneficial ownership of such shares. In addition, as of December 31, 2013, stock options and other rights to shares represented a total of 23,449,381 shares of common stock were outstanding. |
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B. Related Party Transactions
Private Equity Consortium
Advisory Services Agreements
KKR and Bain as members of the Private Equity Consortium provide certain advisory services to us. We have entered into separate agreements in this regard with the respective parties, under which each of the various legal entities will receive an annual advisory fee of $25,000 (with an aggregate total amount of $50,000 annually).
Shareholders’ Agreement
Prior to the consummation of the initial public offering in August 2010, the members of the Private Equity Consortium restructured their indirect shareholding in our common stock such that each of them holds directly, or indirectly through a separate Luxembourg holding company, shares of our common stock. At the same time, KASLION Holding B.V. ceased to hold shares of our common stock. In connection with this restructuring, the members of the Private Equity Consortium and the Management Foundation (together, the “Existing Shareholders”) entered into a new shareholders’ agreement among themselves, which replaced the shareholders’ agreement entered into on September 29, 2006. We are not a party to the new shareholders’ agreement.
Under the terms of the new shareholders’ agreement, the Existing Shareholders and any affiliate to which the Existing Shareholders transfer common stock were only allowed to sell shares of our common stock after having received approval from an investors committee consisting of representatives of the Private Equity Consortium. These restrictions terminated as a result of the secondary offering of December 10, 2013 when the Existing Shareholders collectively ceased to hold less than 25% of shares of our common stock.
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The new shareholders’ agreement also contains voting agreements among the Existing Shareholders with respect to, among other matters, the election of certain non-executive members to our board of directors. These voting arrangements terminated as a result of the secondary offering on December 10, 2013 when the existing shareholders collectively ceased to hold at least 25% of shares of our common stock. The shareholders’ agreement provides that our board of directors shall be comprised of, among others, seven non-executive members and that certain stockholders have the right to designate such non-executive members, subject to their election by our general meeting of stockholders. So long as any fund advised by KKR and Bain beneficially owns at least 2.5% of the outstanding shares of our common stock, each such fund shall have the right to designate two members to our board of directors. If any party’s shareholding falls below the relevant threshold, it will cause the board member(s) nominated by it to promptly resign from the board of directors, unless otherwise agreed.
The new shareholders agreement will terminate upon the occurrence of certain events, including: (i) with respect to the individual parties to the agreement, upon such party ceasing to hold shares of common stock and (ii) with respect to all parties, upon certain parties’ collective shareholdings falling below specified thresholds.
Registration Rights Agreement
In connection with the restructuring, the Existing Shareholders and certain other investors have entered into a registration rights agreement with us. In accordance with the registration rights agreement, we have filed a shelf registration statement on Form F-3 with the SEC on August 23, 2011. In addition, the registration rights agreement provides the Existing Shareholders with an unlimited number of demand registration rights and with piggyback registration rights, with a right to participate for certain other investors, which, in either case if exercised, would impose on us an obligation to register for public resale with the SEC shares of our common stock that are held by the Existing Shareholders or such other investors, in any. The demand registration rights can be exercised at any time after the expiration of the lockup period. The piggyback registration rights may be exercised whenever we propose to register any of our securities under the Securities Act or equivalent non-U.S. securities laws, other than the initial public offering on August 5, 2010 or a registration pursuant to demand registration rights, on Form F-4 or S-4 or any successor form or solely relating to an offering and sale to our employees or directors pursuant to any employee stock option plan or any other benefit plan arrangement. In each such event, we are required to pay the registration expenses.
C****. Interests of Experts and Counsel
Not applicable.
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