SiliconBeat

Shareholders of IXYS voted down the company’s proposed 2008 Equity Incentive Plan at the company’s annual shareholder meeting on Friday, according to a filing the Milpitas chip maker made Monday. The company’s board of directors adopted the new plan in May and was seeking approval from shareholders for reserving 3,500,000 new shares to be used in give equity compensation to its employees. The new shares were in addition to 6,400,000 shares still available under a plan adopted in 1999 that expires next year.

In its defense of the plan, the board said the usual things: the plan would help “attract and retain qualified employees, consultants and non-employee directors”,  “motivate high levels of performance,” and “align the interests of plan participants with those of the Company’s stockholders.”

• Shareholders rejected the new plan despite certain features designed to make it more palatable to compensation critics, including:the prohibition of automatic increase in the number of shares available for distribution each year, known as an “evergreen” clause, which the 1999 plan included
• the curtailment of option grants priced below the full market value of the shares on the day they are awarded (The 1999 plan allowed for the issuing of nonstatutory options that could be priced as low as 85% of the fair market value.)
• the prohibition of any repricing of stock options and stock appreciation rights without the approval of the stockholders
• Limiting the number of shares that could be awarded in a single year to any one participant to no more than 500,000 shares

The board, which had previously limited further awards under the 1999 plan in anticipation of approval of the new plan, lifted that restriction.  The plan expires in May.