2014 SUSTAINABILITY R E P O R T

Transcription

1 2014 SUSTAINABILITY R E P O R T

2 TABLE OF CONTENTS LETTER FROM THE CEO 4 ABOUT MICROCHIP 6 ENVIRONMENTAL RESPONSIBILITY 16 WORKPLACE INITIATIVE 25 SUPPLY CHAIN RESPONSIBILITY 36 PRODUCT STEWARDSHIP 38 COMMUNITY INVOLVEMENT 43 UN GLOBAL COMPACT 47 GRI CONTENT INDEX 48

3 DISCLAIMER When evaluating Microchip and its business, you should give careful consideration to the factors listed in our Form 10-K and in other documents that we file with the U.S. Securities and Exchange Commission. Our actual results could differ materially from the results described in these responses. Although we believe that the matters reflected in these responses are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these responses. We disclaim any obligation to update information contained in any of these responses. ABOUT THIS REPORT This is Microchip Technology s second sustainability report covering our performance from FY 2012 FY We have engaged Strategic Sustainability Consulting (SSC), an independent party to support our sustainability reporting efforts. We believe that this report contains information that is accurate, timely and balanced. While the report and the data within have not been formally assured, we have completed an internal assessment process in conjunction with SSC to review the contents for clarity. This report is based on the Global Reporting Initiative s G4 Guidelines. We welcome your feedback to Alan Abbott at Alan.Abbott@microchip.com. ENVIRONMENTAL SUGGESTION DISCLAIMER Because of this report s length and intense colors, Microchip recommends printing in black and white on a high-efficiency network printer. For printing, Microchip suggests using high post-consumer fiber white ledger paper or white ledger paper produced from rapidly renewable resources. 3

4 LETTER FROM THE CEO At Microchip Technology Incorporated (Microchip), our vision to be the leading supplier of embedded control solutions includes a corporate commitment to acting in ethical and responsible way. Our focus on environmental and social responsibility, transparency, and engagement guides our decision-making processes and helps keep us accountable as we continuously improving all aspects of our business. LETTER FROM THE CEO I am pleased to announce Microchip s 2014 Sustainability Report. This report details our activities throughout the past three years at Microchip sites around the globe, from our environmentallypreferred products to our community involvement and workplaces initiatives. As a global company, it is important for us to not only focus our sustainability efforts at our home base in the United States, but at our facilities in the ASEAN and Europe regions where we operate. In 2013, Microchip joined the United Nations Global Compact (UNGC), a voluntary initiative based on the idea that businesses have a role to play in advancing human rights, labor, environment, and anti-corruption principles through their own operations and through collaborative innovation. While Microchip has always placed great emphasis on complying with the laws and policies in the regions where we operate, we also value our position as a global leader and believe in the value of engaging in voluntary environmental and social initiatives. We believe, and are finding through empirical evidence, that effective integration of sustainability into our operations, our products, and our workforce help us become a stronger and more resilient company. I am particularly proud of the environmental contributions that our low-power components make to a more sustainable world. Currently used in thousands of products across a range of industries, manufacturers choose Microchip products to help dramatically reduce their products energy consumption, extend their products useful life, and improve the user experience. This report highlights a few of the many examples of Microchip products that contribute to making the world a better place. We are excited to share these innovations with you and look forward to how the application of our products will continue to shape the future. Ensuring a healthy and happy workplace is vital to Microchip s success as a company. I am pleased to share a few of the initiatives we have put in place for our employees health and wellbeing. One of the more innovative new developments has been the introduction of our benefits mascot, Chip. Chip is a fun character who appears around our facilities to raise employee awareness concerning the benefits available to them and their families. 4

5 LETTER FROM THE CEO 5 Whether it is healthcare at our on-site clinics, company-sponsored guided meditation, or financial planning for our family s future, Microchip employees benefit most from the benefits they understand. Chip has been doing a great job of raising that critical awareness. As in previous years, our workplace initiatives are recognized externally. I am honored that once again our Thailand facilities have won multiple government-sponsored awards for welfare, safety, public health, and labor; and I congratulate our Gresham facility COMMUNITY SUPPORT AND OUTREACH ARE VERY IMPORTANT TO MICROCHIP, AND WE CONTINUE TO PROVIDE SUPPORT AROUND THE WORLD IN A VARIETY OF AREAS INCLUDING EDUCATION, ENVIRONMENTAL PROTECTION, AND INTERNATIONAL AID AND HUMANITARIAN RELIEF. for winning the prestigious Patriotic Employer Award from the United States Department of Defense for Microchip s efforts to support our troops during deployment. Community support and outreach are very important to Microchip, and we continue to provide support around the world in a variety of areas including education, environmental protection, and international aid and humanitarian relief. As a hightech company, we believe that Microchip has a special role to play in science, technology, engineering, and math (STEM) through financial contributions, in-kind giving, and volunteerism. At a corporate level, we continue to provide support for robotics teams and competitions, and many of our employees are involved locally in supporting STEM, robotics, and other engineering education opportunities for students in their local communities. I am extremely proud of the impact that Microchip has in STEM initiatives, and believe that our involvement will ensure that students enter the workforce ready to take on the next generation of engineering challenges. Microchip continues our commitment to the good works and ideals expressed by the United Way with the organization s efforts to end homelessness, end hunger, and promote the educational attainment that is critical for our children and youth to succeed. To that effect, Microchip has again been recognized as a leader in our local community as our United Way Committee continues their fine efforts to support this remarkable organization. Looking to the future, I believe that sustainability will continue to play an important role in Microchip s success, particularly as the demand for energy-efficient products continues to grow. I believe that we are well-positioned, with expert talent and capable facilities, to meet this evolving landscape. At the same time, Microchip must be prepared for the highly cyclical nature of the semiconductor industry. Ultimately, I believe that thoughtful sustainability practices will help us weather these storms and continue our remarkable track record of success. I look forward to sharing this journey with you. ST E V E S A N GH I Chairman of the Board, President and Chief Executive Officer

6 ABOUT MICROCHIP Headquartered in Chandler, Arizona, Microchip Technology provides microcontroller and analog semiconductors, with low-risk product development, lower total system cost, and faster time to market. With locations around the world, we offer a wide range of products that make global innovation possible. Microchip s vision is to be the very best embedded controller solutions company ever, and in order to do so, we must identify market opportunities, develop and manufacture product timely and cost effectively, and market it appropriately. We actively continue to strive to be the best while operating in an ethical and sustainable manner to protect our economic stability and reputation for our customers, shareholders, employees, and communities. M I C R O C H I P T E C H N O L O G Y A T A G L A N C E Countries with Manufacturing Facilities and Design Centers United States, Thailand, China, Taiwan, Philippines, India, Hungary, Romania, Switzerland, Germany, and the United Kingdom Employees 9,500+ Products 10,000+ Product Categories PIC Microcontrollers, Amplifiers & Linear, Data Converters, Interface, Motor Drivers, Power Management, Safety & Security, Thermal Management, Memory Touch and Input Sensing, Wireless, Real-Time Clock ABOUT MICROCHIP Governance For more information about our company, Board of Directors, executive structure, investor information, and more, visit our website. 6

7 LEADERSHIP AND GOVERNANCE BOARD OF DIRECTORS Microchip is led by a 5-member board of directors, who provide governance and oversight to the company. STEVE SANGHI Chairman of the Board, President and Chief Executive Officer MATTHEW W. CHAPMAN Board Member L.B. DAY Board Member ESTHER JOHNSON Board Member WADE F. MEYERCORD Board Member When considering a candidate for a director position, the Nominating and Governance Committee looks for demonstrated character, judgment, relevant business, functional and industry experience, and a high degree of skill. The Board of Directors and the Nominating and Governance Committee believe it is important that the members of the Board of Directors represent diverse viewpoints. Accordingly, the Nominating and Governance Committee considers issues of diversity in identifying and evaluating director nominees, including differences in education, professional experience, viewpoints, technical skills, individual expertise, ethnicity and gender. ABOUT MICROCHIP 7

8 CORPORATE OFFICERS All of Microchip s corporate officers bring excellent leadership to the table. STEVE SANGHI Chairman of the Board, President and Chief Executive Officer ERIC BJORNHOLT Vice President and Chief Financial Officer GANESH MOORTHY Chief Operating Officer MITCHELL LITTLE Vice President, Worldwide Sales and Applications ABOUT MICROCHIP STEPHEN DREHOBL Vice President, MCU8 Division RICHARD SIMONCIC Vice President, Analog, Power and Interface Division 8

9 MEMBERSHIPS, ASSOCIATIONS, AND CERTIFICATIONS UNITED NATIONS GLOBAL COMPACT MEMBER The UN Global Compact works with businesses to help create a more sustainable world CARBON DISCLOSURE PROJECT (CDP) PARTICIPANT Microchip discloses our greenhouse gas emissions and our emissions reduction initiatives to CDP CONFLICT FREE SOURCING INITIATIVE MEMBER CFSI helps companies make informed choices about conflict minerals in their supply chain SONY GREEN PARTNER CERTIFIED Sony awards this certification for suppliers that help produce environmentally sensitive products SAMSUNG ECO-PARTNER CERTIFIED Samsung gives its suppliers this certification to companies that make an effort to develop environmentally-friendly products CANON CERTIFICATE OF GREEN ACTIVITY Suppliers that adhere to Canon s Green Procurement Standards are awarded this certificate HELPFUL LINKS Information for investors, including financial performance, can be found at Microchip s charters regarding the Nominating and Governance Committee, the Audit Committee, and the Compensation Committee are located at Board member and executive officer information can be found at ABOUT MICROCHIP 9

10 STAKEHOLDER ENGAGEMENT At Microchip, stakeholder engagement is an ongoing process of dialogue. As expectations for high tech companies change, we are constantly reviewing and improving our business practices to adapt to our customer s needs and to the best practices in our industry. A key element of our success is how well we understand what our stakeholders want and how well we communicate our message back to them. SUPPLIERS AND SERVICE PROVIDERS Our supply chain is global and begins in the local communities that provide the products and services that make Microchip s product possible. As a guiding value, Microchip believes suppliers, representatives, and distributors are our partners. We strive to maintain professional and mutually beneficial partnerships with those suppliers, representatives, distributors, design houses, and consultants who are an integral link in the achievement of our mission and guiding values. HOW DO WE COMMUNICATE? We communicate with our suppliers in a variety of ways, from basic policies that set out our expectations to multi-day on-site visits to walk through their facilities and delve into their capabilities and practices. WHAT DO THEY WANT FROM US? Our suppliers want our business at a fair price and with consistent expectations. They are usually open to our sustainability-related requests that conform to industry standards and norms. We believe in understanding, transparency, and education to ensure we are all working toward the same goals and understand the reason why they are important. WHAT DO WE WANT FROM THEM? We seek suppliers that understand their sustainability impacts and make authentic efforts to minimize those impacts across the entire product life cycle. COMMUNITY AND ADVOCACY GROUPS Responsibly-produced electronics are a topic of great interest to a variety of advocacy groups. We are also actively involved in our local communities social causes. ABOUT MICROCHIP 10 HOW DO WE COMMUNICATE? We spend a significant amount of time understanding communities and advocates concerns and providing information about our policies and practices. This includes feedback through surveys, participation in key initiatives like the Carbon Disclosure Project, Electronics Industry Citizenship Coalition/GeSI s Conflict Free Sourcing Initiatives, and United Nations Global Compact among others. Microchip also offers financial support for approved community initiatives and supports volunteer efforts from our employees.

11 WHAT DO THEY WANT FROM US? These stakeholders want to know that we ve heard and understand their concerns and that we re doing what is within our power to find solutions that benefit all parties involved. WHAT DO WE WANT FROM THEM? We welcome thoughtful, constructive dialogue with our civil society counterparts and their insights regarding how we can best improve our practices to mitigate our business negative impacts on society and the environment. CUSTOMERS AND CONSUMERS Our products are sold in nearly every sector of the electronics industry. As such, we have diverse customer needs and are highly cognizant of the need to be responsive, accurate, and relevant when engaged in customer and consumer dialogues. HOW DO WE COMMUNICATE? Our entire company is highly engaged with our customers and has regular meetings both at our facilities and at customer sites. We also participate in trade shows and other industry events, culminating with our Master s Conference, where we can interact with our peers and customers, while spotting trends in our respective sectors. Through our website, dedicated staff of industry experts, and social media presence, we are able to provide information on our company and our products. WHAT DO THEY WANT FROM US? We see sustainability issues beginning to play a larger part in customers questions and purchasing decisions and are planning our engagement efforts accordingly. WHAT DO WE WANT FROM THEM? We want Microchip integrated circuits, modules, and development boards to be recognized and known for their excellence and for the safe, responsible, and sustainable way that they are produced. ABOUT MICROCHIP 11

12 ETHICS AND INTEGRITY Our commitment to conducting our business operations with integrity and in an ethical manner is an integral component of our Guiding Values. It is our goal from every employee to our board of directors to treat our customers and partners with respect and deal with them ethically and responsibly during every interaction. VISION Be the very best embedded control solutions company ever. MISSION Microchip Technology Incorporated is a leading supplier of fieldprogrammable embedded control solutions by delivering the popular PIC microcontrollers; a broad spectrum of innovative analog products, related non-volatile memory products and Flash-IP solutions. In order to contribute to the ongoing success of customers, shareholders and employees, our mission is to focus resources on high value, high quality products and to continuously improve all aspects of our business, providing an industry leading return on investment. GUIDING VALUES Microchip is a values-based company. We operate on an overriding Vision and Mission, and eleven Guiding Values. These values dictate our dayto-day decisions and establish our corporate culture. Our Guiding Values convey our overall philosophy. Our Guiding Values cover many aspects of corporate responsibility: Quality comes first Customers are our focus Continuous improvement is essential Employees are our greatest strength Products and technology are our foundation Total cycle times are optimized Safety is never compromised Profits and growth provide for everything we do Communication is vital Suppliers, representatives and distributors are our partners Professional ethics are practiced ABOUT MICROCHIP 12 Each has its place in making Microchip a company you can be proud to choose, whether as a supplier, an employee, an investor, or a contributing business partner in your community. Microchip s Vision, Mission and the expansion of our Guiding Values can be viewed at:

13 COMPLIANCE WITH LAWS Microchip is headquartered in the United States, but has global operations. As a global company, our operations are subject to numerous laws and regulations. In this regard, Microchip requires its employees, directors, and officers to comply with all mandatory laws applicable to its business operations. We also require our personnel to abide by a code of business conduct and ethics, which defines Microchip s vision of ethical behavior and embodies compliance with the law. Microchip s Code of Business Conduct and Ethics and associated policies that include Compliance with Laws, Confidentiality, Conflicts of Interest, Insider Trading and Reporting Legal Non-Compliance are located at Compliance with international laws is a key aspect of conducting the business of Microchip in an ethical manner. Our Code of Business Conduct and Ethics outlines and defines Microchips requirement that our staff, suppliers, and customers comply with international laws that prohibit bribery and similar acts to gain additional business or other favorable treatment. These laws include, but are not limited to: the United States Foreign Corrupt Practices Act ( FCPA ), UK Bribery Act, and the People s Republic of China s Criminal Law. Global anti-corruption laws make it a crime for companies to bribe or provide anything of value to government officials and other individuals in order to obtain new business, maintain existing business, or receive other benefits. It is unacceptable for any Microchip executive, director, or employee to act in any manner that is contrary to these laws. Further, we consider our suppliers, representatives, and distributors as critical to achieving our mission. Therefore, we expect our partners to similarly abide by our ethical guiding values, including compliance with global anti-corruption laws. We encourage our partners to not only comply with these laws, but to participate in the enforcement of our policies by reporting suspected violations of these laws by any person to Microchip pursuant to HR-675 Reporting Legal Non-Compliance available at: We take our obligation to follow all relevant laws and regulations seriously. In the chart below, we have outlined our compliance record on a number of sustainability-related issues. ABOUT MICROCHIP 13

14 LEGAL CLAIMS AGAINST MICROCHIP T O P I C Environment 0 0 1* Labor & Workplace Health & Safety Corporate Governance Product Stewardship * In 2014, Microchip purchased the Supertex Fab in San Jose, California. During the acquisition and start-up process, we discovered several issues of noncompliance. During a subsequent December 2014 inspection by Santa Clara County, 17 environmental violations were identified, primarily related to permitting and record-keeping for hazardous waste and wastewater. We worked collaboratively with the County to resolve the violations, all of which were remediated and closed in January ABOUT MICROCHIP 14

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16 ENVIRONMENTAL RESPONSIBILITY Our commitment to environmental responsibility begins with compliance with laws and regulations in each of the areas where we operate, regardless of global location. We have dedicated environmental, health and safety (EHS) team that ensures we meet all local, state, national, and international requirements. We have an environmental policy in place at all manufacturing facilities, and we have an environmental management system in place at our Gresham Fab 4. Both of Microchip s Thailand facilities operate under a certified ISO14001 Environmental Management System. MICROCHIP S CORPORATE ENVIRONMENT, HEALTH AND SAFETY (EHS) POLICY INCLUDES THE FOLLOWING COMPONENTS: Microchip is committed to compliance with all relevant environmental laws and regulations Microchip actively manages its business in an environmentally responsible manner, consistent with its Mission and Guiding Values and the principles set forth in this policy ENVIRONMENTAL RESPONSIBILITY Microchip is committed to prevention of pollution through such strategies as minimizing utility usage, minimizing raw material usage and encouraging recycling 16

17 EMISSIONS AND CLIMATE CHANGE As our company grows and we add production capability and new facilities, our carbon footprint has grown. Nevertheless, we are committed to managing our emissions through cost-effective emissions-reduction activities. Our focus on energy efficiency in our facilities is paying off, and we have a variety of successful programs across our global facilities.... WE ALSO VOLUNTARILY REPORT EMISSIONS FROM ALL OF OUR MANUFACTURING, DESIGN, AND LOGISTICS FACILITIES WORLDWIDE. In addition to tackling specific emissions reductions initiatives in our facilities, we also track and report our carbon footprint each year, including participation in the Carbon Disclosure Project (CDP). In addition to our mandated carbon reporting for two of our semiconductor manufacturing sites, we also voluntarily report emissions from all of our manufacturing, design, and logistics facilities worldwide. This commitment to measuring and reporting our carbon footprint is helping us to be more consistent in identifying emissions-reductions opportunities and to be more transparent in communicating our environmental performance with stakeholders. SCOPE 1 EMISSIONS (METRIC TONS CO2E) F A C I L I T Y United States 106, , ,195 Europe Asia/Pacific 778 1,185 1,213 Total 107, , ,426 SCOPE 2 EMISSIONS (METRIC TONS CO2E) C O U N T R Y United States 129, , ,714 ENVIRONMENTAL RESPONSIBILITY Europe 327 1,188 1,599 Asia/Pacific 47,120 63,371 81,590 Total 177, , ,903 17

18 ENERGY USE RECENT ENERGY IMPROVEMENTS Microchip/SMSC, Hauppauge, NY Microchip s energy use has increased as we have grown and engaged in several large acquisitions that have increased our footprint, number of facilities, and headcount significantly. We recognize the increased responsibility that comes with the privilege of growth. Accordingly, Microchip s Hauppauge, NY, design facility uses an innovative groundwater extraction and re-injection system to provide low-energy input cooling capacity satisfying a portion of HVAC needs. Energy savings: 345 MWH/yr. Microchip s Tempe, AZ, Fab 2 Microchip s Fab 2 replaced a old, direct drive motor on wet scrubber 7-1 with a high efficiency motor and variable frequency drive. Energy savings: 135,780 KWH/yr. during that same time period, we have implemented over 10 new projects in Thailand alone and a handful in our already efficient United States locations that have helped reduce our energy use by over two million kwh/year. Moreover, Microchip continues to strive for efficiency and the resulting energy savings. As such, we actively migrate the production of products to our most efficient manufacturing centers wherever possible. ENERGY USAGE (MWH) ENERGY TYPE Electricity 311, , ,124 Natural Gas 81,436 60,729 90,845 Liquefied Petroleum Gas Distillate Fuel Oil ENVIRONMENTAL RESPONSIBILITY Total 393, , ,460 Fuel quantities shown are reported in alignment with the US EPA GHG Reporting Rule calculation methodology. Additional diesel fuel used for exempt applications, such as weekly readiness testing, is excluded. 18

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20 WASTE DIVERSION AND RECYCLING Regardless of where Microchip is located, we make sure that every site has the option to recycle. In 2014 alone, five different Microchip facilities recycled over 3 million pounds of waste. With 18 different recycling options available, we are making sure that we can divert as much waste as possible from our communities landfills, wastewater treatment sites, and atmosphere. BATTERY RECYCLING Why do we recycle batteries? Most batteries contain corrosives and/ or heavy metals; some contain reactive lithium metal. If incinerated or landfilled, the chemicals and heavy metals from these batteries lead, cadmium and mercury contaminate our air, land, and water and poison our food chain. Recycling significantly reduces the dangers these batteries pose to our health and the environment by diverting them from landfills and incinerators. Recycling can also keep the cost of batteries down by reducing the landfill and clean-up costs. Many countries have directives or regulations in place requiring some form of battery recycling. Here at Microchip, we abide by these regulations and packaging requirements by separating, preparing, and packaging batteries to prevent short circuits, dangerous evolution of heat, and damage to terminals, spillage, or environmental issues during transportation or physical harm to those handling them. Instructions have been posted at our battery collection stations to further assist employees in ensuring they have taken all necessary steps. In addition, Microchip continues to remind employees that the reduction of waste and environmental exposure starts with prevention. We purchase and encourage our staff to use battery testers to minimize the disposal of good batteries and to choose rechargeable batteries. They are encouraged to purchase a battery tester to minimize the disposal of good batteries and to choose rechargeable batteries. ENVIRONMENTAL RESPONSIBILITY 20

21 DUMP YOUR JUNK INITIATIVE For six weeks out of the year, every building at our Chandler site has the opportunity to house a collection site for Dump Your Junk Microchip s annual spring cleaning event. Dump Your Junk allows employees to clean out their offices, cubicles, and work areas and recycle many DUMP YOUR JUNK ALLOWS EMPLOYEES TO common office items, such as CLEAN OUT THEIR OFFICES, CUBICLES, AND monitors, laptops, software, WORK AREAS AND RECYCLE MANY COMMON hardware, office supplies, OFFICE ITEMS... batteries, precious metals and other e-waste items or chemicals items that might be harder to recycle than your traditional paper and plastic. By clearing out our workspace, not only do we have the opportunity to recycle common workplace materials, but it also helps keep our work environment uncluttered and safe! We are proud of the results of our efforts that have been reflected by a steady increase in our company s recycling efforts. RECYCLING DATA RECYCLED MATERIALS (LBS) Paper and Cardboard 715,085 1,279, ,056 Plastics 740, , ,589 Metals 190, , ,113 Electronic and Universal Waste 47, , ,510 Site Specific Recycle 25, , ,181 Equivalent Reuse Post Consumer Fiber 66,447 90,200 87,000 ENVIRONMENTAL RESPONSIBILITY Rapidly Renewable Resource 8,825 21,499 10,611 Total 1,794,295 3,463,571 3,042,060 21

22 WATER USE As an instrumental requirement for semiconductor manufacturing, water usage has been on the rise at various Microchip facilities that corresponds with our increased production. Microchip has been taking notice and seeking to apply innovative measures to reduce our use. We are committed to continuing to find ways to curb our total water usage and to decrease our effluent wastewater. PRODUCTION FACILITIES WATER USE (Gallons) FACILITY Chandler 20,510,000 25,044,000 22,109,000 Gresham 322,530, ,038, ,192,365 Tempe 292,305, ,475, ,299,800 MTHAI 142,583, ,884, ,485,174 MMT 69,166,055 57,577,355 64,623,880 Total 826,586, ,976, ,601,219 PRODUCTION FACILITIES EFFLUENT WASTE (Gallons) FACILITY Chandler 5,070,843 5,486,176 5,171,787 Gresham 247,206, ,143, ,006,769 Tempe 220,961, ,502, ,386,221 MTHAI 77,075,630 78,585,109 86,820,409 MMT 40,134,867 37,830,494 41,517,808 Total 585,378, ,061, ,731,207 ENVIRONMENTAL RESPONSIBILITY 22

23 US ENVIRONMENTAL AWARDS A point of pride for Microchip is the Gresham Site Services Reverse Osmosis and De-Ionization (RODI) Team received a Gold Award from the City of Gresham for 11 consecutive years of operating their acid waste neutralization (AWN) system with 100% Pretreatment Compliance. The facility has received no AWN compliance violations for the last 11 years. THAILAND ENVIRONMENTAL AWARDS 3Rs AWARD (Reduce, Reuse & Recycle) 2013 Department of Industrial Works 3Rs AWARD 2014 Department of Industrial Works GREENING THE MICROCHIP OFFICE In fall 2014, a new initiative to improve indoor office health was introduced in the Chennai, India Development center: A Plant at Your Desk. The motivation to launch this program came from studies that have concluded that plants can enhance employee productivity, prevent fatigue during attention-demanding work, and reduce ambient noise within an office. ENVIRONMENTAL RESPONSIBILITY Each employee was offered a plant along with a plant holder, and if any person chose to take a plant, they were expected to take part in minimal plant maintenance (like watering and exposing the plan to sunlight). With over 50% of Chennai employees taking part in the initiative, they were taking part in making their workplace a healthier place! 23

24 P L A N T I N G M A N G R O V E S I N T H A I L A N D In 2012, MTHAI Ozone Club organized an activity that allowed Microchip employees and their family members to plant mangroves in Klong Klone village in the Samutsongkram province. This initiative, which helped aid restoration of the mangrove forest in the region, was filled with activities and events such as planting, sightseeing, and observing local mangrove animals. The impact of this trip was paramount, as it helped to maintain forest resources, protect native trees, and strengthen the ecological system. ENVIRONMENTAL RESPONSIBILITY 24

25 WORKPLACE INITIATIVES Microchip is a US company with operations around the world, and it is our goal to provide strong benefits, wellness programs, safe workplaces, and equal opportunity no matter where our employees are based. EMPLOYMENT EMPLOYEES BY LOCATION North America 2,346 2,691 3,006 Europe Asia/Pacific 4,329 5,260 5,846 OPEN DOOR POLICY An important tool in our commitment to ethical business practices is our Open Door Policy. This policy allows Microchip employees to raise any work related issues such as job, wages, performance reviews, and more at the level they think is the most appropriate for quick and fair resolution. This policy applies from the top down, with everyone from our C-Suite Executives to our Junior Management required to be accessible, and available anytime they are not in a meeting. We believe communication is vital, and we encourage open, honest, constructive, and ongoing dialogue to resolve issues whenever possible. DIVERSITY AND OPPORTUNITY WORKPLACE INITIATIVES To ensure the right of each employee to equal employment opportunities, our EEO policy prohibits discrimination based on the basis of sex and makes provision for employees to work in an environment free of intimidation or harassment. We also have a separate sexual harassment policy that explicitly outlines appropriate behavior in the office and grievance procedures if problems arise. 25

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27 HUMAN RIGHTS Microchip is a United States headquartered company with global operations. These operations include primary manufacturing located in the United States, assembly and test operations in Thailand, and engineering design centers and sales offices located around the world. Microchip complies with all legal requirements related to labor, including prohibitions on forced or compulsory labor, child labor, and discrimination. Additionally, with very few exceptions for internship-type programs in the United States which are allowed by law, Microchip requires all employees to be 18 years of age or older. LABOR/MANAGEMENT RELATIONS While none of Microchip s employees are unionized, we do acknowledge the right to collective bargaining where allowed by law. We have strong employee programs to support workers and their families, including robust benefits plan and career development opportunities. BENEFITS We want to make sure we give back to our employees in many ways, and one such way is by providing extensive benefits, such as: Family and Medical Leave of Absence Paid vacation and holidays Tuition Reimbursement 401(k) Retirement Savings Plan Health benefits, such as medical and dental coverage Bridging of Service, for those Microchip employees that are rehired Long term disability Employee stock grants TRAINING AND EDUCATION WORKPLACE INITIATIVES 27 The Microchip Learning Center perpetuates Microchip s strategic and competitive culture in alignment with the Guiding Values. In order to support our internal customers continuous improvement, we design, deliver, and coordinate programs using a variety of systems, methods, and tools to meet performance development needs. We believe continuous education and training are critical to maintaining Microchip s competitive edge. Microchip invests in our employees future, by ensuring access to our training is available in native languages and during times that

28 IN ADDITION TO THE 33 FULL TIME AND 16 PART-TIME TRAINING PROFESSIONALS AROUND THE WORLD, IN 2014, 442 MANAGERS AND EMPLOYEES GOT INVOLVED IN DELIVERING PRACTICAL LEADERSHIP AND TECHNICAL TRAINING TO THEIR PEERS. accommodate our global presence and workforce and offering employees the opportunity to pursue relevant higher education. Learning and Development at Microchip is a joint effort between employees, managers and the Global Organizational Learning and Development department. In addition to the 33 full time and 16 part-time training professionals around the world, in 2014, 442 managers and employees got involved in delivering practical leadership and technical training to their peers. Microchip s courses cover a range of training topics: orientation to the company, team skills, communication skills, leadership skills, technical knowledge of Microchip products applications, sales process training, computer skills, and operational manufacturing skills. We are proud to have been recognized many times for our successes and accomplishment related to our employee training programs. WORKPLACE INITIATIVES 28

29 W O R K P L A C E A W A R D S In 2013 and 2014, our San Jose, CA area facilities were honored with the Top Workplaces Program award from the Bay Area News. This program looks at surveys filled out by employees and then ranks companies based off the survey results. In 2012 and 2013, Microchip received the Training Top 125 award from Training Magazine, which recognizes companies with robust workforce training and development programs. Each year, the City of Gresham looks to recognize individuals and business for the advancement of the local economy. In 2013 and 2014, Microchip was awarded their Gresham Resource Efficiency Assistance to (Great) Businesses program award. Microchip was recognized for its commitment to workforce training using Mt. Hood Community College in addition to our nationally recognized internal training and employee development programs, partnering with our local community college and employment department for screening and hiring, investing in new equipment and facility upgrades, and supporting community outreach programs such as FIRST Robotics. This award, given out by Thailand s Labor Department, recognizes factories that urge all employees to be aware of illegal drugs or any substance abuse problem, mutually campaign for the continuous prevention of the spreading of illegal drugs to the workplace and encourage all employees to effectively spend their free time to enhance the quality of their lives and that of their families. Microchip Technology (Thailand) is one of 551 companies from a total of more than 200,000 companies to receive the Thailand National Safety Award 2014 from the Prime Minister. MTHAI received this award from 2010 to WORKPLACE INITIATIVES The award is presented by the Ministry of Labor to outstanding companies in Occupational Health and Safety, Management system. Every company must pass the Best practice regulation from the Thailand Labor Department. The regulation supports a safe and happy workplace for every employee in Thailand. Receiving this award means that we are the best among the best in terms of safety, health and environment. Together, everyone at MTHAI made a major contribution to our success. Some example activities are as follows: 29

30 Employee Safety Self-inspection: an activity where everyone checks their own safety in the workplace before starting to work Supervisor communication center: an activity where supervisors and managers transfer safety information from our intranet database to employees on the manufacturing production line Safety Committee s regular inspection In 2014, Microchip won the Alfred P. Sloan Awards for Excellence in Workplace Effectiveness and Flexibility for eight straight years. The award distinguishes Microchip as one of the top practitioners of workplace flexibility in the United States, which have created exemplary workplace environments that support employees need for flexibility. The award is part of the When Work Works flexible-workplace initiative, a partnership between the Society for Human Resource Management (SHRM) and the Families and Work Institute (FWI). T H A I L A N D W O R K P L A C E A W A R D S WE Award for Outstanding Employee Labor and Welfare - Thailand Ministry of Labor Thailand Work Place Learning Award - Thailand of Skill Dev. Of Labor Incorporation National Safety Award Thailand Ministry of Labor Clean Food Good Taste Award Thailand Ministry of Public Health ER Award for Outstanding Employee Labor and Welfare Thailand Ministry of Labor National Safety Award Thailand Ministry of Labor Model Company in Happy Workplace The Federation Of Thai Industries Chachoengsao (MTHAI & MMT) Zero Accident Award Thailand Ministry of Labor Clean Food Good Taste Award Thailand Ministry of Labor WORKPLACE INITIATIVES 2014 ER Award for Outstanding Employee Labor and Welfare Thailand Ministry of Labor National Safety Award Thailand Ministry of Labor Clean Food Good Taste Award Thailand Ministry of Labor 30

31 TRIP REDUCTION PROGRAM One popular program that Microchip offers is its trip reduction programs for Chandler, Tempe, and Gresham facilities, which give employees incentives to use a carpool, take a bus, bike, or walk to work. TRIP REDUCTION PROGRAM IN CHANDLER AND TEMPE At Microchip s Arizona locations, we offer a variety incentives and initiatives to help reduce our single occupancy vehicle rate. If an employee chooses to ride the bus, we provide a 100% bus subsidy, with Smart Cards for bus and light rail. If someone chooses to bike or walk to work, they can participate in the free lunch program, attend the bike and walk event that is held every spring, and have access to secure bike racks and lockers. Finally, carpool and alternative fuel vehicles have access to premium parking spots that are especially prized during the warm summer months in the Valley of the Sun. No matter what method of transportation a Microchip employee uses through the Trip Reduction Program, you will be guaranteed a ride home for emergencies, access to shower facilities, trip reduction SharePoint site, and incentives and events such as catered meals, gift cards, and prizes. We have over 60 people participating in the bus program, with another 200 people who carpool at both the Chandler and Tempe sites. TRIP REDUCTION PROGRAM IN GRESHAM Just like the Trip Reduction Program in Tempe and Chandler, our Gresham Trip Reduction Program offers many incentives to our employees in order to reduce our single occupancy vehicle rate. At our Oregon facility, we offer annual Tri Met passes for under $70/year, the option to participate in telecommuting or flextime, secure bike lockers and shower facilities, a guaranteed ride home for personal emergencies, reserved parking for carpools, hybrid vehicles, and motorcycles, and more. Since 2003, our single occupancy vehicle rate has decreased by 26% at our Gresham location. SINGLE OCCUPANCY VEHICLE RATE FOR ALL SITES Chandler 84% 96% 96% WORKPLACE INITIATIVES Tempe 87% 79% 79% Gresham 64% 64% 64% 31

32 OCCUPATIONAL HEALTH AND SAFETY Workplace health and safety is very important to Microchip, and we are committed to providing a safe and healthy place to work. Microchip provides and maintains safe and healthy working conditions and follows operating procedures that safeguards employees, contractors, vendors, and the communities in which we work. We provide health and safety programs that are consistent with the highest standards of professional practice. Being OHSAS Certified, Microchip Technology (Thailand) has met international standards for having knowledge and control over occupational health and safety risks. LOST TIME INCIDENTS Chandler Tempe Gresham MTHAI MMT INJURY RATE (CASES) PER 100 EMPLOYEES Chandler Tempe Gresham MTHAI MMT WORKPLACE INITIATIVES OSHA Industry Injury Rate

33 A HAPPY WORKPLACE Microchip Technology (Thailand) operations uses a program called Happy 8, where our employees can focus on bettering their overall happiness by focusing on the following concepts: Happy Body Happy Heart Happy Society Happy Relax Happy Brain Happy Soul Happy Money Happy Family To ensure the overall happiness of our employees, MTHAI takes part in a number of activities throughout the year. Some of these activities and events include: Annual company New Year s Party Songkran Day a traditional Thai New Year Day when people will celebrate new beginning Buddhist Lent Day a national Thai holiday where employees present collected money and candles for monks to use Mother s Day Activities Table Tennis Competition Christmas Day Activities New Year s Merit Making an opportunity for employees to offer food to the monks to help create good spiritual blessings for the upcoming year EUREST CAFETERIA Microchip is proud to work with Eurest to bring sustainable, healthy options to our Tempe and Chandler cafeterias. Through Eurest, Microchip s cafeterias will follow the CORE4 Sustainability Platform for our food options: WORKPLACE INITIATIVES 1. Buy Local 2. Advocate for Sustainable Oceans 3. Certified Humane/Cage Free Eggs 4. Poultry produced without the routine use of human antibiotics 5. rbgh Free Yogurt and Milk 6. Waste Reduction 7. Packaging from plant based renewable resources 8. Social and ecological certified coffee 9. Customer Nutrition, Health & Wellness 10. Compass Associate Nutrition, Health & Wellness 33

34 WORKPLACE AUDITS From , we have had five customers audit our Thai facilities, and the overall findings were excellent. In 2014, a Workplace Conditions Assessment was completed as well. With an overall facility score of 95%, Microchip is leading the way both in Thailand, where the national average facility score is 79%, and globally as well (global average being 78%). Our MTHAI facility achieved a perfect score in four out of the six assessment areas: labor, health & safety, environment, and business practices. Overall, auditors were impressed, noting that our record keeping system is among the top percentile of the population. MICROCHIP PROVIDING ACADEMIC SUPPORT IN THAILAND For the past three years, Microchip Thailand s Academic Program has been providing universities throughout Thailand with academic support through our development tools. Working with MTHAI s HR department and the Development Tools team, Microchip is allowing university students to gain experience with our products to help enhance their academic advancement. One of the first universities in Thailand to add Microchip products to their curriculum, Khonkaen University, were greatly appreciative of Microchip development tools and soon added our products to labs and learning centers throughout the university. There has been a notable shift in preference for our product, with many students now choosing to use Microchip products for their own projects once they had to opportunity to work with our development tools in class. As more of the university students graduate, we hope that they will join our Microchip team or bring our products to other companies in Thailand. WORKPLACE INITIATIVES 34

35 2ND ANNUAL MTHAI MINI MASTER OF BUSINESS WORKPLACE INITIATIVES 35 Microchip believes that our The second annual MTHAI Mini Master of Business Administration, a cooperative effort between Microchip Technology (Thailand) and Mahidol University, was held from September 2012 through March This program allowed 45 senior and management participants from MTHAI and MMT to gain new knowledge and leadership capabilities through three course objectives: selfmanagement, functional integration, and corporate strategy. The classes were held after working hours, with 3-hour sessions twice a week. The 108 hour program required participants to study 14 different subjects, covering a wide range of topics, such as problem solving and decision making, project management and execution, and strategic change and management. At the end of the program, all attendees had to present a final summary presentation to top management. TEAM BUILDING AT THE ROMANIA DESIGN CENTER When the Romania Design Center relocated to a brand new facility in October 2012, the following year saw huge growth for the team, and that s why in September 2013 the design center knew the entire team would benefit from a day of team building. Working with a large influx of new people means dealing with new situations, and an informal setting, like a day of team building, can allow for employees to strengthen working relationships. The day was spent completing exercises that allowed team members to come up with mechanisms that would allow everyone to get to know each other through effective teamwork and communications. FAR EAST NEW LEADER PROGRAM Microchip believes that our employees are our greatest strength, and we are 100% committed to developing the talents of our staff. Outstanding leadership is a critical element to the success of any company, and in order to make sure that our supervisors and managers have the best leadership skills possible, we developed the Far East New Leader Program. This program is designed to support and increase the knowledge and competencies of new supervisors and managers at Microchip through quarterly classroom training, online learning, self-study, development plans, self-assessment tools, as well as coaching activities.

36 SUPPLY CHAIN RESPONSIBILITY Microchip supports regulatory and industry-driven efforts to ensure our global staff and suppliers are treated ethically. Microchip s Code of Business Conduct and Ethics requires compliance to laws and ethical behavior by its employees, agents, contractors and consultants. The Code includes reporting procedures and accountability provisions that may include immediate termination of employment or business relationships at Microchip s discretion. Microchip s Code of Business Conduct and Ethics includes the following components: Compliance with applicable governmental laws, rules, and regulations Reporting suspected non-compliance Disciplinary actions Read the entire Code of Business Conduct and Ethics here: CONFLICT MINERALS Microchip Technology shares the global concern regarding the human tragedies occurring in the Democratic Republic of the Congo and the adjoining countries associated, in part, with the mining of columbitetantalite (tantalum), cassiterite (tin), wolframite (tungsten), and gold (3TG). SUPPLY CHAIN RESPONSIBILITY 36 These minerals originate from various continents, but armed groups engaged in, or interfering with mining operations within the Democratic Republic of the Congo and the adjoining countries (the Dodd-Frank Covered Countries ) are subjecting people to human rights violations and using proceeds from the sale of these Conflict Minerals to finance and sustain regional conflicts. Microchip supports responsible materials sourcing. We recognize the need to develop programs that allow for improved transparency in the 3TG supply chains. Our goal is to provide reasonable assurance that all integrated circuits manufactured by Microchip are DRC conflict free. In