DEF 14A of Axcelis Technologies Inc
Filed Mar 29, 2024 · FY20230001104659-24-040855
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS The Board has nominated nine directors for re-election at the 2024 annual meeting of stockholders, all of whom have terms ending at the 2024 annual meeting. Seven of the nominees were elected to terms of one year at the 2023 annual meeting, and, in February 2024, our Board of Directors expanded the Board, and appointed Gregory B. Graves and Necip Sayiner as directors. Two of our incumbent directors are not nominated for re-election at the 2024 annual meeting. Joseph P. Keithley will retire at the end of his current term in accordance with our governance policy regarding nominations of individuals who have turned 75. This retirement policy can be found in our Governance Guidelines available under the “ESG Hub” on our website at Axcelis.com. This retirement policy has no exemptions or conditions. Also, as previously announced, Ms. Puma’s service as Executive Chairperson and Board member will end at the 2024 annual meeting. Accordingly, our Board of Directors has nominated all of the current directors, other than Mr. Keithley and Ms. Puma, for re-election at the 2024 annual meeting. Each nominated director will, if elected, hold office for a term of one year until our annual meeting in 2025 and until the director’s successor is elected and qualified. Each of the Board’s nominees has consented to serve if elected. However, if prior to the 2024 annual meeting, any nominee is deemed unable to serve, proxies will be voted for any other candidate nominated by the Board. The Board recommends a vote FOR each of the nine Axcelis nominees. The eight independent nominees represent a balance of long tenured and newer directors with a strong mix of relevant experience. Axcelis’ Nominating and Governance Committee and Board have evaluated each of the Axcelis nominees against the factors and principles Axcelis uses to select nominees for director discussed below under “Corporate Governance—Board Nomination Process and Requirements.” All of the eight independent director nominees joined the Board in the last ten years, evenly split between those who joined the Board five or more years ago, and more recent additions to the Board: Our director nominees bring a strong mix of experience that supports the Company’s strategy to continue its growth as a supplier of capital equipment to the global semiconductor industry, as shown in the chart below:
PROPOSAL 1: ELECTION OF DIRECTORS
| | Public Company CEO | Semiconductor industry | Capital Equipment | Global Experience | Customer Viewpoint | Finance/ Accounting/ Capital Markets | M&A Management | Cybersecurity Risk Management | | Chiu | | | | | | | | | | Graves | | | | | | | | | | Kurtzweil | | | | | | | | | | Low | | | | | | | | | | Quirk | | | | | | | | | | Sayiner | | | | | | | | | | St. Dennis | | | | | | | | | | Titinger | | | | | | | | | | Vachani | | | | | | | | |
PROPOSAL 1: ELECTION OF DIRECTORS
In addition to our nominees’ experience-based skills, we are proud of the diversity represented by the slate of nominees, as shown in the chart below. As disclosed in the charts under “Stockholder Engagement—Responsiveness to Stockholder Interest in Diversity and Inclusion Issues” above, four of the nominees are not white non-Hispanic men, representing 44% of all nominees for election at the 2024 Annual Meeting. The chart below provides Board diversity information at December 31, 2023 in a format specified by Nasdaq:
PROPOSAL 1: ELECTION OF DIRECTORS
| Board Diversity Matrix as of December 31, 2023* | | | Board Size: | | | Total Number of Directors | 9 |
PROPOSAL 1: ELECTION OF DIRECTORS
| Gender: | Male | Female | Non-Binary | Gender Undisclosed | Notes | | Number of directors based on gender identity | 6 | 3 | — | — | Ms. Puma, Ms. Quirk, and Ms. Vachani are female | | Number of directors who identify in any of the categories below: | | | | | | | African American or Black | — | — | — | — | | | Alaskan Native or American Indian | | | | | | | Asian | 1 | 1 | — | — | Dr. Chiu and Ms. Vachani are Asian | | Hispanic or Latinx | 1 | — | — | — | Mr. Titinger is Hispanic | | Native Hawaiian or Pacific Islander | — | — | — | — | | | White | 4 | 2 | — | — | | | Two or more Races or Ethnicities | — | — | — | — | | | LGBTQ+ | — | — | — | — | | | Did Not Disclose Demographic Background | — | — | — | — | |
PROPOSAL 1: ELECTION OF DIRECTORS
* Note that at year end 2023, Mr. Graves and Dr. Sayiner had not yet joined our Board. The data also includes Ms. Puma and Mr. Keithley who are not nominees for re-election in 2024. Based on this evaluation of skills and attributes, our Nominating and Governance Committee and Board have concluded that it is in the best interests of Axcelis and its stockholders that each of the proposed nominees listed below be elected to serve as a director of Axcelis for a one year term.
PROPOSAL 1: ELECTION OF DIRECTORS
| 2024 Nominees for Election to the Axcelis Board of Directors | | | The following table contains biographical information about the nominees for election and the specific experience, qualifications, attributes, or skills of the nominees that led to the conclusion that each of these individuals should serve as a director of the Company, in light of our business and structure: | | | Tzu-Yin (“TY”) Chiu, Ph.D.: director since 2018, age 67 | | | Business Experience and Other Directorships | Experience, Qualifications and Attributes | | Dr. Tzu-Yin Chiu has served as President of National Silicon Industry Group (“NSIG”), since April 2020. NSIG is the parent company of Shanghai Xinsheng Semiconductor Technology Co., Ltd (known as “Zing Semi”), a provider of high-quality semiconductor wafer research and development, production, and sales, of which Dr. Chiu has served as Chief Executive Officer since 2019. Dr. Chiu retired as the non-executive Vice Chairman of Semiconductor Manufacturing International Corporation (“SMIC”), a leading semiconductor foundry in China, in 2018. Dr. Chiu served in that position following his retirement as SMIC’s CEO in 2017, a position he assumed in 2011, at which time he also joined the SMIC Board. Between 2009 and 2011, Dr. Chiu served as Chief Executive Officer of Hua Hong Semiconductor Limited (known as “HHNEC”), a global, leading pure-play foundry, headquartered in China. From 2005 to 2009, Dr. Chiu worked at other chip manufacturers in Asia, having first worked at SMIC from 2001 to 2005 as Senior Vice President, Operations. Prior to joining SMIC, Dr. Chiu was a Senior Director Fab Operations at Taiwan Semiconductor Manufacturing Company Limited. Dr. Chiu worked at AT&T/Bell Labs from 1984 to 1996, as the head of the High-Speed Electronics Department and Silicon Research Operations Department. In addition, Dr. Chiu has served as Vice Council Chairman of China Semiconductor Industry Association (CSIA) and a board member of Global Semiconductor Alliance (GSA). In addition to serving on the Board of NSIG, Dr. Chiu also serves as a director of EverDisplay Optronics (Shanghai) Co., Ltd. He also serves on the Engineering Advisory Board of University of California, Berkeley, and the external Advisory Board of Tsinghua-Berkeley Institute. | Dr. Chiu has over 30 years’ experience in the semiconductor industry and a track record of managing successful semiconductor manufacturing companies at the executive level. Dr. Chiu’s expertise spans technology research, business development, operations and corporate management. His familiarity with the Chinese semiconductor market has been particularly valuable to Axcelis as that market has grown. Dr. Chiu has served on the Technology and New Product Development Committee and the Nominating and Governance Committee since his election in May 2018. |
PROPOSAL 1: ELECTION OF DIRECTORS
| Gregory B. Graves: director since 2024, age 63 | | | Business Experience and Other Directorships | Experience, Qualifications and Attributes | | Mr. Graves served as Chief Financial Officer of Entegris, Inc., a leading supplier of advanced materials and process solutions for the semiconductor industry from 2007 to May 2023, and retired from Entegris in July 2023. In addition to the CFO title, Mr. Graves was also Entegris’s Executive Vice President and Treasurer, beginning in 2008, previously holding the title of Senior Vice President and CFO from 2007 to 2008. Prior to assuming the CFO role, from 2005 to 2007, Mr. Graves served as Entegris’s Senior Vice President, Strategic Planning & Business Development. Mr. Graves held business development and finance positions at Entegris Minnesota from 2002 to 2005. Prior to 2002, Mr. Graves held positions in investment banking and corporate development, including at U.S. Bancorp Piper Jaffray and at Dain Rauscher. Mr. Graves currently serves as a director of Laird Superfood, Inc., a plant-based food company; SkyWater Technology, Inc., a US semiconductor foundry; and Janel Corporation, a global logistics provider. He previously served as a director of Plug Power Inc., an energy solutions provider, until June 2019. | Mr. Graves’s background in accounting and finance, and his experience as a long-serving chief financial officer for a supplier to the semiconductor industry, give him valuable insight on finance and business development matters in our industry, which is highly valued by our Board. Since his appointment to the Board in February 2024, Mr. Graves has served as a member of the Axcelis Audit Committee and Compensation Committee. |
PROPOSAL 1: ELECTION OF DIRECTORS
| John T. Kurtzweil: director since 2015, age 67 | | | Business Experience and Other Directorships | Experience, Qualifications and Attributes | | Mr. Kurtzweil has served as an independent consultant since 2018, which includes periodically serving as an interim Chief Financial Officer for his clients. Mr. Kurtzweil is also engaged in cybersecurity matters, holding a certificate in cybersecurity oversight from Carnegie Mellon University. This background enables him to assist the Company, other boards, and his consulting clients in assessing their cybersecurity defenses and incident preparedness. From July 2017 to November 2018, Mr. Kurtzweil served as the Chief Financial Officer of Akoustis Technologies, Inc., an RF filter semiconductor company. From 2015 to March 2017, Mr. Kurtzweil was VP Finance of Cree, Inc., a provider of light emitting diode, lighting, and semiconductor products, and Chief Financial Officer of its subsidiary, Wolfspeed, a Cree Company. He was an independent consultant from October 2014 to June 2015. From 2012 until 2014, Mr. Kurzweil served as Senior Vice President, Chief Financial Officer and Special Advisor to the CEO of Extreme Networks, Inc., a provider of open networking innovations. From 2006 to 2012, Mr. Kurtzweil served as Executive Vice President, Finance and as Chief Financial Officer and Treasurer of Cree, Inc. From 2004 to 2006, Mr. Kurtzweil was Senior Vice President and Chief Financial Officer at Cirrus Logic, Inc., a fabless semiconductor company. Mr. Kurtzweil served as a director of Akoustis from January 2017 to July 2017, when he became Chief Financial Officer of Akoustis, and for Meru Networks, Inc. from May 2015 to July 2015 when the company was sold. Mr. Kurtzweil currently serves on the Board of SkyWater Technology, Inc., a US semiconductor foundry. | Mr. Kurtzweil brings to the Board significant senior executive leadership experience, including nineteen years as chief financial officer of publicly traded technology companies and placing an aggregate of over $2.0 billion in equity and debt instruments. His technology industry experience includes several M&A transactions and when combined with his treasury experience, gives him a valuable perspective as a director. Mr. Kurtzweil has developed an advanced understanding of cybersecurity strategies through a certificate program at Carnegie Mellon University. His qualifications to serve as a director also include that he is a certified public accountant and certified management accountant, his cybersecurity oversight expertise, his financial market experience, training through the Stanford Directors College, active membership with National Association of Corporate Directors and his qualifications as an audit committee financial expert. Mr. Kurtzweil has served on the Audit Committee (and as Chairperson since February 2017) and on the Compensation Committee since his election to the Board in May 2015. The Board highly values his contributions in these roles. |
PROPOSAL 1: ELECTION OF DIRECTORS
| Russell J. Low, Ph.D.: director since 2023, age 53 | | | Business Experience and Other Directorships | Experience, Qualifications and Attributes | | Dr. Low is our President and Chief Executive Officer, a position he assumed in May 2023. Prior to that, beginning in 2021, he was our Executive Vice President, Global Customer and Engineering Operations. Dr. Low joined Axcelis in 2016 as Executive Vice President, Engineering. Prior to joining the Company, Dr. Low held the position of Vice President of Engineering, MOCVD Business Unit at Veeco Instruments since 2013, prior to which he was Veeco’s Senior Director of Engineering, Molecular Beam Epitaxy Business Unit beginning in 2012. From 2003 to 2012, Dr. Low held a number of positions at Varian Semiconductor Equipment Associates, most recently as Director of Technology. Prior to that, Dr. Low held engineering positions in the thermal processing and ion implant divisions of Applied Materials, Inc. from 1997 to 2003. Dr. Low serves on the North American Advisory Board (NAAB) of SEMI International and is a member of the Massachusetts High Tech Council. Dr. Low is not currently serving on any other public company Boards. | Dr. Low’s technical understanding, extensive management experience at the Company, and more broadly in our industry, contributed to his selection as Axcelis’ next Chief Executive Officer and President beginning in May 2023. As such, Dr. Low’s contributions to Board discussions are essential as the Company moves forward. Dr. Low’s leadership of the Company’s Engineering and Global Customer Operations functions during a period of improving financial performance and market share, were highly valued by the Board. |
PROPOSAL 1: ELECTION OF DIRECTORS
| Jeanne Quirk: director since 2022, age 54 | | | Business Experience and Other Directorships | Experience, Qualifications and Attributes | | Ms. Quirk is the Senior Vice President, Mergers and Acquisitions, for TE Connectivity, a position she has held since 2015. TE Connectivity (formerly known as Tyco Electronics Ltd.) is a manufacturer of connectivity and sensor solutions for a variety of industries including automotive, industrial equipment, data communication systems, aerospace, defense, oil and gas, energy, and semiconductor capital equipment. Since 2013, Ms. Quirk served as the Vice President, Strategy and Business Development for TE’s Industrial Solutions segment, with responsibility for partnering with the leadership team to identify and execute organic and inorganic growth initiatives. Since joining TE in 2000, she held a variety of leadership positions in M&A and integration, including leading TE’s M&A and divestiture efforts from 2007 through 2013. Prior to joining TE, Ms. Quirk worked at PricewaterhouseCoopers for 10 years where she assisted a broad range of strategic buyers and financial sponsors with their acquisitions. Ms. Quirk is not currently serving on any other public company Boards. | Ms. Quirk has over 30 years’ experience in the electronics industry, focused on inorganic growth, which is an area of interest for the Company. Ms. Quirk has served on the Audit Committee and the Nominating and Governance Committee since her election in February 2022. The Board highly values her contributions in these roles. |
PROPOSAL 1: ELECTION OF DIRECTORS
| Necip Sayiner: director since 2024, age 58 | | | Business Experience and Other Directorships | Experience, Qualifications and Attributes | | Dr. Sayiner served as the Executive Vice President of Renesas Electronics Corporation, a company engaged in the research, development, design, manufacture, sale, and servicing of semiconductor products, from February 2017 to March 2019, also serving as President of Renesas Electronics America from July 2017 to March 2019. Previously, he was the President, Chief Executive officer and a director of Intersil Corporation, a leading provider of innovative power management and precision analog solutions, from March 2013 until its acquisition by Renesas Electronics Corporation in February 2017. Prior to Intersil, from September 2005 to April 2012, he served as president and chief executive officer, and director of Silicon Laboratories, a fabless semiconductor company engaged in the design of analog-intensive, mixed signal integrated circuits. Dr. Sayiner served as Chairman of the Semiconductor Industry Association (“SIA”), from December 2015 to November 2016 and as Vice Chairman from November 2014 to December 2015. Dr. Sayiner was initially appointed to the Board of the SIA in September 2013. Dr. Sayiner also serves as a director on the board of Rambus, Inc., a manufacturer of semiconductor chips and IP that advance data center connectivity. He previously served as a director of Power Integrations, Inc., a semiconductor manufacturing company, until May 2023. | Dr. Sayiner’s deep knowledge of the semiconductor industry from his career at chip design and device manufacturing companies provides the Axcelis Board with valuable input from the customer perspective. His experience as chief executive officer, extensive engineering experience, and track record of strong revenue and profitability growth are all highly valued by our Board. Since his appointment to the Board in February 2024, Dr. Sayiner has served as a member of the Technology and New Product Development Committee and the Compensation Committee. |
PROPOSAL 1: ELECTION OF DIRECTORS
| Thomas St. Dennis: director since 2015, age 70 | | | Business Experience and Other Directorships | Experience, Qualifications and Attributes | | Thomas St. Dennis is the non-executive Chairperson of FormFactor, Inc., a leading provider of semiconductor wafer test technologies and expertise, a position he assumed in 2016. Previously, Mr. St. Dennis served as FormFactor’s Executive Chairperson beginning in 2013, and as its Chief Executive Officer from 2010 to 2014. Mr. St. Dennis held various positions at Applied Materials, Inc., a semiconductor equipment manufacturer, from 1992 to 1999 and again from 2005 to 2009. His most recent role at Applied Materials was as Senior Vice President and General Manager of the Silicon Systems Group. From 2003 to 2005, Mr. St. Dennis was Executive Vice President of Sales and Marketing at Novellus Systems, Inc., a semiconductor capital equipment manufacturer. Mr. St. Dennis currently serves on the boards of directors of FormFactor and Veeco Instruments Inc., a company that designs, manufactures and markets thin film equipment for semiconductor processing applications. | Mr. St. Dennis’ prior experience in the semiconductor equipment industry as well as his extensive international business background make him an effective advisor to the Board regarding strategic and marketing issues. His experience and skills are highly valued by our Board. Mr. St. Dennis has served on the Nominating and Governance Committee and the Technology and New Product Development Committee since his election to the Board in May 2015. Beginning in May 2020, Mr. St. Dennis was appointed Chairperson of the Technology and New Product Development Committee. The Board highly values his contributions in these roles. |
PROPOSAL 1: ELECTION OF DIRECTORS
| Jorge Titinger: director since 2019, age 62 | | | Business Experience and Other Directorships | Experience, Qualifications and Attributes | | Mr. Titinger is Axcelis’ Lead Director, serving since May 2023. It is contemplated that he will be appointed as Chairperson of the Board of Directors following the 2024 Annual Meeting of Stockholders, when Ms. Puma will cease to serve as Executive Chairperson. Mr. Titinger serves as principal of Titinger Consulting, a private consulting and advisory service provider founded by Mr. Titinger in 2016. Beginning in 2012, Mr. Titinger served as President and Chief Executive Officer of Silicon Graphics International Corp., a producer of computer hardware and software, which was acquired by Hewlett Packard Enterprise in 2016. From 2008 to 2011, Mr. Titinger served in various offices at Verigy Ltd., a provider of semiconductor automatic test equipment, ending as President and Chief Executive Officer in 2011. Prior to his service at Verigy, Mr. Titinger held executive positions with FormFactor, Inc. from 2007 to 2008, and KLA-Tencor Corporation from 2002 to 2007. Mr. Titinger served as a director of Xcerra Corporation, a provider of semiconductor and electronics test products and services from 2012 until it was acquired by Cohu, Inc., a supplier of semiconductor test and inspection equipment, in 2018. Mr. Titinger served on the Board of Directors of Cohu, Inc. from 2018 to 2021. Mr. Titinger currently serves as a director of (i) FormFactor, a leading provider of semiconductor wafer test technologies and expertise; (ii) CalAmp Corp., a provider of mobile resource management telematics systems, software, and subscription services for the Internet of Things market; and (iii) Ichor Holdings, Ltd. (also known as Ichor Systems), a leader in the design, engineering and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. | Mr. Titinger’s prior experience in the semiconductor industry as well as his extensive international business background make him an effective advisor to the Board regarding strategic and marketing issues. His leadership experience and skills are highly valued by our Board. Mr. Titinger also brings cybersecurity expertise, given his participation on the Cybersecurity and Data Privacy Committee of the Board of CalAmp Corp., a company that provides solutions to help organizations worldwide to monitor, track, and protect their data and vital assets. In addition, when Mr. Titinger served as an executive at KLA-Tencor Corporation, he was responsible for cybersecurity, managing that company’s CIO and the CISO. Mr. Titinger became the Chairperson of our Compensation Committee in May 2022 and Lead Director in May 2023. The Board highly values his contributions in these roles. |
PROPOSAL 1: ELECTION OF DIRECTORS
| Dipti Vachani: director since 2022, age 50 | | | Business Experience and Other Directorships | Experience, Qualifications and Attributes | | Ms. Vachani is the Senior Vice President, General Manager, Automotive and Embedded Line of Business for Arm Limited, a position she has held since 2018. Arm Limited is a designer of energy-efficient system-on-a-chip central processing units for cell phones and other applications including automotive, artificial intelligence and internet of things applications. From 2015 to 2018, Ms. Vachani was VP, General Manager of Intel Corporation’s Internet of Things Group. Prior to Intel, Ms. Vachani was VP, General Manager, Power and Lighting Display at Skyworks Solutions beginning in 2013. Ms. Vachani held various program and product line positions at Texas Instruments, Inc. from 2001 to 2013, ending as VP, General Manager, Single Core Processors. Ms. Vachani is not currently serving on any other public company Boards. | Ms. Vachani has over 25 years’ experience in the semiconductor industry, most recently focused on automotive and internet of things applications, important areas for many Axcelis customers. Ms. Vachani has served on the Technology and New Product Development Committee and the Compensation Committee since her election in February 2022. The Board highly values her contributions in these roles. |
BOARD OF DIRECTORS
BOARD OF DIRECTORS
Compensation of Directors
Compensation of Directors The Nominating and Governance Committee has responsibility under its charter to review and recommend non-employee director compensation for adoption by the full Board. Non-employee director compensation is approved by the full Board of Directors on the recommendation of the Nominating and Governance Committee. 2023 Director Cash Compensation. Non-employee director cash compensation in effect in 2023 was set on July 1, 2020 and reviewed in May 2022, using a Pearl Meyer report comparing the Company’s non-employee Board compensation to that provided by the companies in our executive compensation peer group. The 2022 report showed that the 2020 retainers for each category of director service were set at approximately the median for each category. Accordingly, no change was made to non-employee director cash compensation in 2022. Following the Board’s practice of reviewing Board compensation every other year, no review was undertaken in 2023. Director cash compensation will be reviewed by the Nominating and Governance Committee and full Board in May 2024. Our non-employee director cash compensation in effect since July 1, 2020 consists solely of annual cash retainers, paid quarterly in advance, in accordance with the following schedule:
Compensation of Directors
| Board Member Retainer | $60,000 | | Independent Chairperson/Lead Director Premium | $50,000 | | Committee Chairpersons Retainers | | | Audit Committee Chairperson | $25,000 | | Compensation Committee Chairperson | $15,000 | | Nominating and Governance Committee Chairperson | $10,000 | | Technology and New Product Development Committee Chairperson | $10,000 |
Compensation of Directors
| Other Committee Member Retainers | | | Audit Committee Member | $10,000 | | Compensation Committee Member | $7,500 | | Nominating and Governance Committee Member | $5,000 | | Technology and New Product Development Committee Member | $5,000 |
Compensation of Directors
The Company has entered into Indemnification Agreements with each of the non-employee directors, which are in the same form as the Indemnification Agreements with each of the Company’s executive officers. Axcelis’ Indemnification Agreements are intended to provide protection from legal liability arising from the individual’s service as a director to the extent typically provided by U.S. public companies. The Company indemnifies its non-employee directors to the fullest extent permitted by law with respect to his or her status or activities as a director of Axcelis against all judgments, fines, amounts paid in settlement, and all reasonably incurred expenses. These Indemnification Agreements supplement the indemnification provisions in the Company’s Restated Certificate of Incorporation. As required in the Indemnification Agreements, the Company purchases director and officer liability insurance that would reimburse the Company for costs incurred under the Indemnification Agreements and for certain third-party liabilities. In addition, the Company maintains “Side A” director and officer liability insurance, which is for the exclusive benefit of the directors and officers, permitting direct reimbursement from the insurer if the Company was unable or unwilling to provide indemnification due to a lack of funds or another issue. The adequacy of our director and officer liability insurance coverage is reviewed, and adjusted if needed, on an annual basis. Non-employee directors also receive reimbursement of reasonable and customary out-of-pocket expenses incurred in attending Board and committee meetings, in accordance with the Axcelis Board of Directors Expense Reimbursement Policy. Travel by directors to Axcelis Board meetings, or otherwise on Company business, is covered by our standard business travel insurance, which provides emergency medical coverage. Non-employee directors do not receive any Company-paid perquisites. The Board of Directors may, from time to time, form committees in addition to the four committees currently in use (Audit, Compensation, Nominating and Governance, and Technology and New Product Development) and set compensation for service on such additional committees. 2023 Equity Awards. On February 16, 2023, upon recommendation of the Nominating and Governance Committee and the Compensation Committee, the full Board of Directors approved the grant to each of the non-employee directors, effective May 15, 2023, of restricted stock units (“RSUs”) valued at $160,000. The number of units was determined by dividing $160,000 by a 30-day average closing price of the Company’s common stock over a period ending May 10, 2023, which was $124.81. In accordance with this formula, each non-employee director received an RSU exercisable for 1,282 shares of common stock. Using the grant date closing price of $127.99, each director RSU grant had a grant date value of $164,083. The Board fixed a one-year vesting period for the 2023 non-employee director RSU grants, reflecting market practice. Accordingly, the 2023 non-employee director RSU grants will vest on May 15, 2024, provided the director completes his or her one-year term of service. Long-term ownership of Company equity by directors is encouraged through the Company’s director stock ownership guidelines, which are discussed below under “Corporate Governance— Governance Policies.” The chart below shows compensation for all non-employee directors who served the Company during 2023:
Compensation of Directors
| Name | Fees earned or paid in cash ($) | Stock awards ($) (1)(2)(3) | Total ($) | | Tzu-Yin Chiu | $70,000.00 | $164,083.00 | $234,083 | | Richard J. Faubert (4) | $44,760.00 | $— | $44,760 | | Joseph P. Keithley | $80,000.00 | $164,083.00 | $244,083 | | John T. Kurtzweil | $92,500.00 | $164,083.00 | $256,583 | | Jeanne Quirk | $75,000.00 | $164,083.00 | $239,083 | | Thomas St. Dennis | $75,000.00 | $164,083.00 | $239,083 | | Jorge Titinger | $104,231.00 | $164,083.00 | $268,314 | | Dipti Vachani | $72,500.00 | $164,083.00 | $236,583 |
Compensation of Directors
(1) The amounts shown represents the grant date fair value of the equity awards received by each independent director in 2023 determined in accordance with the assumptions described in the Stock Award Plans and Stock-Based Compensation note to the Company’s 2023 Financial Statements included in the Company’s Annual Report on Form 10-K filed with the SEC. All of the independent directors received a RSU for 1,282 shares on May 15, 2023 with a grant date fair value of $164,083. These awards will vest as to 100% of the RSUs on May 15, 2024, provided the director completes his or her one year term of office. (2) At December 31, 2023, Ms. Quirk and Ms. Vachani each held 1,714 unvested RSUs in addition to the 2023 annual grant, for a total of 2,996 unvested RSUs. All other directors in office at year end 2023 held only the 1,282 unvested RSU granted in May 2023. (3) None of the non-employee directors received stock option grants in 2023. No non-employee director held stock options at year end 2023. Mr. Faubert retired from the Board in May 2023.
2023 Say-on-Pay Vote
2023 Say-on-Pay Vote At our 2023 annual meeting, approximately 97.2% of votes cast were in favor in the advisory vote on 2022 executive compensation (commonly referred to as “Say-on-Pay”). The Compensation Committee of our Board of Directors considered that the results of the 2023 Say-on-Pay vote validated our general approach to executive compensation. The overall structure of our 2023 executive compensation was unchanged from that in 2022. 2023 Executive Target Compensation Balanced Service and Performance-based Components. Base salary represented 13% of the 2023 total target compensation of the Company’s chief executive officer serving at the end of 2023 (Russell J. Low) and an average of 30% 2023 total target compensation of the non-CEO NEOs. In 2023, Dr. Low’s target cash incentive compensation represented 25% of his total target compensation and his equity compensation was equally divided between service vesting RSUs and PRSUs. Cash and equity performance-based compensation totaled 49% of Dr. Low’s total target compensation in 2023. For the non-CEO NEOs, on average, performance-based cash and equity components represented 37% of their total 2023 target compensation. • Each NEO in office in May 2023 (other than Mr. Brewer and Ms. Puma) received two 2023 RSU grants having equal value at grant: one with four year service vesting and the other to be earned based on achievement of operational performance goals designed to drive long term business value, and having a two year service vesting overlay. Using the value approved by the Compensation Committee, these RSU grants represented 75% of total target compensation for Dr. Low and 50% of the 2023 total target compensation, on average, of the other NEOs (excluding Ms. Puma). Mr. Blumenstock and Mr. Coogan, who joined the Company in June and September 2023, respectively, received only service vesting RSUs in 2023. • In light of the retirement plans for Ms. Puma and Mr. Brewer, they did not receive any service vesting RSUs in 2023, and each received a PRSU having a value equal to approximately half of market median for their roles. The PRSUs granted to Ms. Puma and Mr. Brewer used the same operational performance goals as in the PRSUs granted to the other NEOs, but provided that the grants, to the extent earned, would vest in full in February 2024. Using the values approved by the Compensation Committee, these PRSU grants represented 53% of total target compensation for Ms. Puma and 34% of the 2023 total target compensation for Mr. Brewer. • The Compensation Committee approved a retirement arrangement for Ms. Puma in 2023, covering her service as Executive Chairperson from May 2023 to May 2024, and a period thereafter until July 2025, during which she will serve as an Executive Advisor to the Company. This arrangement was documented in an Amended and Restated Employment Agreement signed in February 2023 and described below. Under this Agreement, Ms. Puma received a base pay for 2023 that equaled 23% of her total target compensation and cash and equity performance compensation that equaled 77% of her total 2023 target compensation. See below in this 2023 Compensation Discussion and Analysis, the discussion under “Employment and Change of Control Agreements—Amended and Restated Employment Agreement with Ms. Puma.” The 2023 target compensation elements for Dr. Low and the average for the other NEOs (other than Ms. Puma) are shown in the chart below: 2023 Realized Compensation was Above Target. In line with the financial performance of the Company in 2023, the 2023 performance-based compensation realized by the NEOs was above target pay as a result of achieving 2023 revenue and profitability above the 2023 profit plan, and strong achievement of operational goals used in the PRSUs. The NEOs earned 135% of the PRSUs granted in 2023 based on the achievement of nine out of ten 2023 operational goals, each weighted 15%. Except in the case of Ms. Puma and Mr. Brewer, the earned 2023 PRSUs vested 50% in February 2024 and the remaining 50% will vest in February 2025, subject to continuation of employment (the earned 2023 PRSUs granted to Ms. Puma and Mr. Brewer vested in full in February 2024). As a result of the over-target PRSUs and the payout on the 2023 Axcelis Management Incentive Plan, Dr. Low, the Company’s current chief executive officer, received 115% of his target pay for 2023, and, on average, the other NEOs (excluding Ms. Puma) received 109% of their target pay for 2023, assuming all earned 2023 PRSUs and service vesting RSUs vest over the remaining service periods. The chart below compares our current CEO’s 2023 realized compensation to his 2023 target compensation: The realized compensation information above provides a comparison of realized compensation to the target compensation approved by our Board Compensation Committee. In these calculations, we include the target cash incentive and approved value of equity awards in target compensation. For “realized” compensation, we use actual cash incentive paid and the approved value of equity awards, adjusted for the results of the achievement of performance objectives under our PRSUs. Another effort to show actual compensation is the Pay Versus Performance chart found below and related discussion, required by Item 402(v) of Regulation S-K issued by the SEC. The Pay Versus Performance chart compares the total compensation amounts shown in the Summary Compensation Table to an adjusted amount, referred to as compensation “actually paid.” The “actually paid” amounts are adjusted Summary Compensation Table amounts, in which the grant date fair value of equity awards required for the Summary Compensation Table is replaced by the sum of (A) the value of unvested shares at the first year end after grant, plus (B) increases and decreases in the value of (i) shares vesting in the year on the vest dates in comparison to the value of those shares at the prior year end, and (ii) unvested shares at year end in comparison to the value of those shares at the prior year end. Accordingly, the “actually paid” compensation is simply an alternative way of calculating the value for executive equity awards that uses the stock price at year end and vest dates, instead of the stock price at grant. The annual cash incentive earned as a result of performance is already included in the Summary Compensation Table and is unaffected by the re-valuations in the Pay Versus Performance chart.
Compensation Philosophy and Governance Practices
Compensation Philosophy and Governance Practices The Company’s overall compensation goal is to drive stockholder value by implementing an executive compensation program designed to: (1) motivate and retain executive talent by offering total target compensation with a proportion of performance-based compensation that aligns with median compensation in those categories at other companies of a similar size in the same or similar industries, as adjusted for individual factors; and (2) drive achievement of annual and long-term strategic objectives by rewarding executives through cash incentive pay tied to approved financial goals and equity grants that deliver value on the achievement of operational goals that will drive long-term business objectives, aligning pay with performance. The Company also seeks to support our compensation philosophy with strong governance practices, which include: • An annual Say-on-Pay vote and related stockholder outreach; • Annual or biennial benchmarking of executive compensation against an appropriate peer group; • An equity award plan that seeks to align to best practices (including with respect to cost and voting power dilution, fungible share counting for whole share awards and prohibitions on repricing and cash repurchases); • Equity grant practices below industry burn rates and acceptable voting power dilution; • Executive stock ownership guidelines; • Appropriate double trigger change of control benefits for executives with no excise tax indemnification; • An executive compensation clawback policy that empowers the Board to recover incentive compensation under terms set forth in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and • No executive perquisites.
Review of Executive Compensation in 2023
Review of Executive Compensation in 2023 All executive compensation is determined by the Compensation Committee of the Board of Directors. For a discussion of the Committee’s processes in general, see “Corporate Governance— Compensation Committee” in this proxy statement. Executive compensation for incumbent executives is reviewed annually. The Compensation Committee engaged an outside compensation consultant, Pearl Meyer, to assist with decisions relating to 2023 compensation. The Committee assessed Pearl Meyer’s independence in light of the SEC rules and Nasdaq listing standards and determined that no conflict of interest or independence concerns exist. The Committee’s decisions on 2023 compensation were made with reference to a full benchmarked review of executive compensation provided by Pearl Meyer in October 2022. This Pearl Meyer report covered both cash and equity compensation for each of the executive officer positions at Axcelis in comparison to market data. In developing their reports for the Committee, Pearl Meyer obtained compensation information for a group of companies which had been selected by the Committee as peers for executive compensation purposes. In addition, Pearl Meyer used compensation information from a proprietary global technology survey, reflecting companies of approximately the same size as Axcelis. The weight of peer group information and compensation survey data information used to develop compensation benchmark data for each of the Axcelis executive officers varied by the position, depending on the availability of data for that position from the peer group. The Company’s compensation peer group for the October 2022 Pearl Meyer benchmarking report was comprised of the following 14 companies: 3D Systems Corporation Advanced Energy Industries, Inc. ACM Research, Inc. Cohu, Inc.. FormFactor, Inc. Ichor Holdings, Ltd. Kulicke and Soffa Industries, Inc. Lumentum Holdings Inc. Onto Innovation Inc. Photronics, Inc. Ultra Clean Holdings, Inc. Varex Imaging Corporation Veeco Instruments Inc. Viavi Solutions Inc. In Pearl Meyer’s October 2022 report, the total target direct 2022 compensation of each executive officer ranged between 7% above and 16% below the market median, averaging 10% below. The Committee took this input into consideration in fixing 2023 executive compensation, as discussed below.
Material Elements of Named Executive Officer Compensation
| Compensation Element | Principal Rationale for Inclusion | How Amount is Determined | | Base salaries | To attract and retain qualified executives in a competitive industry. | We seek to provide opportunities for each element of compensation at levels that consider both the market median benchmark for the position and the contribution and experience of the particular executive. | | Annual Cash Incentive | To drive achievement of annual objectives through at-risk pay tied to financial goals, resulting in appropriate pay-for-performance. | | | Equity Awards | To drive achievement of long-term stockholder value through RSU grants with service vesting, half of which are earned only on achievement of operational goals designed to drive long term performance, resulting in retention and appropriate pay-for-performance. | |
Annual Cash Incentive—2023 Axcelis Management Incentive Plan
Annual Cash Incentive—2023 Axcelis Management Incentive Plan In February 2023, the Compensation Committee adopted the Company’s annual cash incentive plan, the 2023 Axcelis Management Incentive Plan (the “2023 AMI”). Approximately 387 management-level employees plus the executive officers participated in the 2023 AMI, each of whom was assigned a target payout, expressed as a percent of base salary paid for the year. Dr. Low’s 2023 AMI target was set at 87%, reflecting a 60% target for the first four months of 2023 before he became CEO, and a 100% target thereafter. As in 2022, the Committee set the 2023 AMI target for Ms. Puma at 100% of her base salary. The 2023 AMI targets for Mr. Brewer, Ms. Fallon, and Dr. Redinbo, as a percentage of their respective base pay, remained at 2022 levels: 75% for Mr. Brewer and 60% for Ms. Fallon and Dr. Redinbo, as aligned with benchmarking. Later in the year, prior to the commencement of employment of each of Mr. Blumenstock and Mr. Coogan, the Committee approved the 2023 AMI target for each of them, with Mr. Blumenstock at 60% of base salary and Mr. Coogan at 70% of base salary. The Committee also determined to maintain the same metric categories for the 2023 AMI as used in 2022: revenue, operating profit, and gross margin. As in prior years, to facilitate calculating results, each of the gross margin and operating profit metrics were set at a pre-cash incentive payout amount. Revenue growth over time is critical for the Company, as an indication of growing market share. Operating profit is viewed as a preferable metric to net income since it eliminates factors outside the control of management. Gross margin evidences the Company’s ability to generate funds for R&D and other expenses, as well as to drive profitability. The table below shows the metrics established for the 2023 AMI, setting 0%, 100%, and 200% funding scores for 2023 revenue, operating profit, and gross margin.
Annual Cash Incentive—2023 Axcelis Management Incentive Plan
| Full Year Targets, in millions, except Gross Margins | 25% Score—80% of 2023 Profit Plan Performance | 100% Score—2023 Profit Plan | 200% Score—115% of Target Performance | Weighting of Metric | | Score | 25% | 100% | 200% | | | 2023 Revenue | $848.38 | $1,060.47 | $1,219.54 | 50% | | 2023 Operating Profit before annual cash incentive plan payout | $169.18 | $266.56 | $331.18 | 25% | | 2023 Gross Margins, before annual cash incentive plan payout | 43.9% | 44.5% | 45.0% | 25% |
Annual Cash Incentive—2023 Axcelis Management Incentive Plan
The minimum and maximum 2023 AMI revenue levels were set at 80% and 115% of the profit plan revenues, respectively. The operating profit levels are those modeled as achievable at each of the revenue levels. The range in gross margins is not associated with the revenue amounts at the three score levels but represents a reasonable range for the year. The 2023 AMI funding level was capped at a 200% payout. Under the 2023 AMI plan design, after year end, actual 2023 financial performance is compared to these metrics, and a weighted score developed. Assuming the threshold level is met, each of the metrics is scored by placing the 2023 results between the applicable goal posts (25% and 100% or 100% and 200%) and interpolating the final score. Each of these scores is weighted and totaled for a final score submitted to the Compensation Committee for approval. A total at-target payout (a 100% funding score) of the 2023 AMI would have equaled approximately $12.99 million. The Compensation Committee had the authority to adjust the funding for extraordinary items and other qualitative aspects of the Company’s 2023 performance (using benchmarks and budgets) to ensure that the funding score reflected actual performance and not extraordinary events and was otherwise appropriate. No special adjustment to the 2023 AMI score was made by the Committee. As designed, actual payouts equal the individual participant’s target payout multiplied by the AMI score determined using the metrics set by the Committee. In February 2024, the Compensation Committee determined that the final 2023 AMI funding score was 112.55%, based on the Company’s revenue, operating profit, and gross margin for the year, with the resulting scores shown in the chart below:
Annual Cash Incentive—2023 Axcelis Management Incentive Plan
| Metric | 2023 Results (millions other than Gross Margin) | Score | Weighting | Weighted Score | | 2023 Revenue | $1,130,604 | 144.1% | 50% | 72.045% | | 2023 Operating Profit before annual cash incentive plan payout | $286,932 | 131.5% | 25% | 32.881% | | 2023 Gross Margins before annual cash incentive plan payout | 43.94% | 30.49% | 25% | 7.622% | | Total Score | | | | 112.55% |
Annual Cash Incentive—2023 Axcelis Management Incentive Plan
This funding score resulted in the 2023 non-equity incentive plan compensation to the NEOs as shown in the “Executive Compensation—2023 Summary Compensation Table” below. A payout of the 2023 AMI was made in February 2024.
Long-Term Equity Incentive Compensation
Long-Term Equity Incentive Compensation Equity Compensation Philosophy. Equity compensation for NEOs, which since 2016 has taken the form of restricted stock units, is designed to align the interests of executives with those of our stockholders and to retain and motivate executives through the use of multi-year vesting periods and performance goals. Thus, equity grants should constructively influence management’s incentive to enhance the value of the Company’s stock and achieve strategic objectives. Long-term ownership of equity awards is further encouraged through the Company’s executive stock ownership guidelines, which establish a minimum number of shares that the executive must own, aligning the executive officers with long-term stockholder interests. The Chief Executive Officer is required to own shares having a value equal to three times his or her base salary. The other NEOs are required to own shares having a value equal to 1.5 times the executive’s base salary or, if less, 16,250 shares. Until an NEO meets the requisite stock ownership level prescribed by the stock ownership guidelines, the NEO is encouraged to retain 50% of the net shares received through the exercise of stock options or in connection with the vesting of RSUs. These guidelines are intended to ensure that the executives’ interests in the value of the Company’s stock include interests in stock as well as equity-based incentive awards, and as such are more fully aligned with the interests of Company stockholders. NEOs are also subject to the Company’s policies prohibiting hedging and pledging our common stock, which are discussed above under “Corporate Governance.” Equity Compensation Processes. Equity grants to executives are made upon hire and, typically, on an annual basis thereafter. Annual equity grants to executive officers have been made in most years in order to ensure a meaningful retentive effect by maintaining the percentage of the executive’s equity position that is unvested and to continue to award long-term compensation that is directly tied to Company performance. The Compensation Committee determines the form of equity grants made to the NEOs. The 2012 Equity Incentive Plan allows the Compensation Committee to award several different forms of equity rights, including restricted stock, RSUs, incentive stock options and non-qualified stock options. Past equity grants to NEOs have taken the form of non-qualified stock options and RSUs. RSUs allow us to issue fewer shares than stock options to deliver comparable value, which reduces overhang and potential stockholder dilution. RSUs also have a significant retention effect given the vesting terms. Beginning in 2016, the Compensation Committee attached performance goals to a portion of the RSU grants to NEOs, a practice aligned with peers, by issuing PRSUs. It is the Committee’s general practice to approve equity awards with a future effective date, usually the 15th (or the next succeeding trading day) of a month following the approval, with annual equity grants approved in February and made in May. The Company believes that this time period between the approval and effectiveness of an equity grant means that the Committee is unable to know or estimate the trading price of the Company’s common stock on the effective date of grant. As a result, the Committee has not, to date, thought it necessary to adopt a policy of timing the approval or effectiveness of equity awards to specific dates following the release of financial results or other material information. 2023 Annual Equity Grants. In February 2023, the Compensation Committee determined that, as in the prior year, RSUs would be used as the form of equity compensation for the NEO annual equity grants. Except in the case of Ms. Puma and Mr. Brewer, 50% of the total annual grants to the NEOs in office in May 2023 (Dr. Low, Ms. Fallon, and Dr. Redinbo) have vesting based on service alone, and the other 50% as PRSUs, to be earned based on the achievement of performance goals, followed by service vesting. Given the retirement plans of Ms. Puma and Mr. Brewer, they were granted 2023 PRSUs only, vesting to the extent earned in February 2024. Mr. Coogan and Mr. Blumenstock did not receive 2023 annual equity awards since they joined the Company after May 2023. In February 2023, the Compensation Committee fixed values for the 2023 RSU grant to each NEO then in office. Dr. Low’s grant was set at the Pearl Meyer market median for the CEO role, which Dr. Low would assume in May 2023. Ms. Puma’s 2023 grant was set at 50% of that value, as specified in her Amended and Restated Employment Agreement dated February 24, 2023, also approved by the Committee in February 2023. The Committee approved 2023 equity grants to Ms. Fallon and Dr. Redinbo at their full 2022 values (Dr. Redinbo had received a pro-rated 2022 equity award on his promotion), representing 111% and 104%, respectively, of the median annual equity award value for their positions as reported by Pearl Meyer in October 2022. Mr. Brewer received a 2023 PRSU valued at 50% of his 2022 equity grant value, given his retirement plans. The number of units for each RSU grant was determined by dividing the approved grant value by the average closing price of the Company’s common stock over a 30-day period ending three trading days prior to the grant date. The 2023 annual RSU grants to NEOs are set forth in the Grants of Plan Based Awards in Fiscal 2023 table below. The service-based vesting 2023 RSUs will vest at the rate of 25% on each of the first four anniversaries of the date of grant until fully vested in May 2027 (assuming continuation of employment). The 2023 PRSUs require that management earn the awards based on attaining up to ten performance goals, where each goal counted for 15% of the target grant. With the annual cash incentive plan focused on current annual financial results, the Committee used these performance-based annual equity awards to focus the NEOs on achieving near term milestones that were essential for the Company’s long term growth. As in 2022, aligned with Pearl Meyer’s benchmarking, the PRSUs permit recipients to earn above target awards for over-target performance. Accordingly, the achievement of more than six goals would result in earning more than 100% of the granted 2023 PRSUs, and achievement of all ten goals would entitle the executives to receive a maximum of 150% of the target grant. The 2023 PRSUs were designed to drive the achievement of specific operational goals that needed to be achieved in 2023 for the Company to fulfill its aggressive growth strategy and reach its business models of $1.1 billion and $1.3 billion in revenue, resulting in high profitability and market share. As in prior years, the Committee used the PRSUs to keep management’s focus on critical, well-understood, initiatives rather than on broad financial metrics. These operational goals related to penetrating customers with specific products, developing new applications and products and reaching specific financial objectives, all of which have strategic implications for our business. Unlike broad financial metrics, which can be set over multiple years, the type of foreseeable operational goals selected by the Committee are designed to be achieved near term. The Committee believes that these operational goals are no less strategic than longer term financial goals, and given the Company’s track record, may be more effective at driving the right near term behavior to achieve desired long term results.
Long-Term Equity Incentive Compensation
The 2023 RSU performance goals related to: (i) achieving a targeted reduction in the cost of non-quality; (ii) penetrating specific identified customers with our Purion H200 Silicon Carbide (“SiC”) implanter; (iii) penetrating specific identified mature technology customers with our high current implanters; (iv) penetrating specific identified advanced logic customers with our high current implanters; (v) penetrating one specific identified customer with one of our high energy implanters; (vi) placing an evaluation system or receiving a purchase order for an implanter at a silicon power customer; (vii) receiving a purchase order or evaluation placement for SiC implanters at specific Japanese customers; (viii) generating specific application proofs at an implanter in a customer R&D fab; (ix) releasing specified software upgrades; and (x) completing development of specified differentiated SiC power capabilities. Disclosure of customer names and exact financial and technical goals for these performance objectives would violate customer confidentiality agreements and provide sensitive information to the Company’s competitors. The 2023 PRSU terms do not contemplate partial achievement of a goal. PRSUs that are earned through goal achievement are also subject to service vesting terms, in which 50% of the earned 2023 RSUs vest in 2024 and 50% in 2025, provided that Ms. Puma’s and Mr. Brewer’s 2023 PRSUs vest 100% in 2024. In February 2024, the Compensation Committee determined that the Company met nine out of ten performance objectives, and accordingly, 135% of the 2023 PRSUs were earned and would vest in accordance with the two-year schedule for the NEOs (other than Ms. Puma and Mr. Brewer who have a one-year schedule), assuming continuation of employment. 2023 Equity Grants to Newly Hired Executives. In June 2023, the Committee approved a new hire equity award in the form of service vesting RSUs to Mr. Blumenstock, who joined Axcelis that month. This award vests over a four-year period, at the rate of 25% on each anniversary of the date of grant. The Committee set the value for this award based on the 2022 Pearl Meyer report median for the EVP Engineering position, and on internal equity, given award values to other Executive Vice Presidents. The new hire 2023 RSU grant to Mr. Blumenstock is set forth in the Grants of Plan Based Awards in Fiscal 2023 table below. Similarly, in August 2023, the Committee approved a new hire equity award in the form of service vesting RSUs to Mr. Coogan, who joined Axcelis in September 2023. This award vests over a four-year period, at the rate of 25% on each anniversary of the date of grant. The Committee set the value for this award based on Mr. Coogan’s compensation at his prior employer, the 2022 Pearl Meyer report median for the Chief Financial Officer, and on internal equity, given award values to Dr. Low and Mr. Brewer. The new hire 2023 RSU grant to Mr. Coogan is set forth in the Grants of Plan Based Awards in Fiscal 2023 table below.
Employment and Change of Control Agreements
Employment and Change of Control Agreements Employment Agreement with Dr. Low. The Committee approved an Employment Agreement with Dr. Low that became effective in May 2023, contemporaneously with his appointment as Chief Executive Officer. Dr. Low’s Employment Agreement provides for his service as the Company’s CEO through January 1, 2025, and for successive one-year periods thereafter, if not terminated by either party on notice to the other by April 1 of the preceding year. This Employment Agreement reflects the base salary and cash incentive target set by the Compensation Committee for 2023, and for 2024 and beyond, sets a minimum base salary of $633,000 and a cash incentive target of 100% of base pay. Dr. Low’s Employment Agreement also provides for severance upon a qualifying termination of employment and for participation in the Company’s equity compensation plans, the 401(k) savings plan and the welfare benefit plans that we sponsor. Dr. Low’s base salary and incentive opportunities may be subject to future adjustment by the Board, but not below the minimum levels in his Employment Agreement, unless mutually agreed. For the amounts due if Dr. Low had been terminated on December 31, 2023, see “Payments on Termination or Change of Control—Employment Agreement with Dr. Low” below. Amended and Restated Employment Agreement with Ms. Puma. The Committee approved a second Amended and Restated Employment Agreement with Ms. Puma dated February 24, 2023 (the “2023 Puma Agreement”). The 2023 Puma Agreement amended Ms. Puma’s existing agreement which had been in place since 2007 and was last amended and restated in May 2022. In the 2023 Puma Agreement, Ms. Puma agreed to provide services to the Company as Chief Executive Officer until the 2023 annual meeting of stockholders and to serve thereafter as Executive Chairperson of the Board of Directors until the 2024 annual meeting of stockholders. After that, Ms. Puma will no longer serve as an executive officer or director of the Company but will serve as an Executive Advisor to the Company until July 2025. The 2023 Puma Agreement provides for Ms. Puma’s compensation for such services but does not provide for separation pay unless terminated by the Company without cause or by Ms. Puma with good reason prior to July 31, 2025. In such case, the main component of the separation pay is the amount remaining to be paid under the agreement through July 31, 2025. For the amounts due if she had been terminated on December 31, 2023, see below “Payments on Termination or Change of Control—Amended and Restated Employment Agreement with Ms. Puma.” Executive Separation Pay Agreements. The Company has Executive Separation Pay Agreements with each of the NEOs, other than Dr. Low and Ms. Puma, entered into in 2019 or such later date as the person became an executive officer. These agreements provide that in the event of a termination without cause occurring after the executive’s first anniversary of employment, the executive will continue to receive base salary for 12 months. If the NEO elects to continue health coverage under COBRA, the Company will waive 12 months of COBRA premiums. In addition, the Company will provide transition support having a value of $15,000. These agreements auto-renew for each calendar year unless not later than April 1 of the preceding year, the Company or the executive had given notice not to extend the term. In 2023, Dr. Low’s Executive Separation Pay Agreement was superseded by his Employment Agreement, discussed above. No change was made to the agreements with Mr. Brewer, Ms. Fallon, or Dr. Redinbo in 2023, and the Company entered into the same agreements with each of Mr. Blumenstock and Mr. Coogan contemporaneously with their commencement of employment with the Company in 2023. For the amounts due if each of the executive officers had been terminated on December 31, 2023, see “Payments on Termination or Change of Control—Executive Officer Separation Pay Agreements” below. Although Mr. Coogan and Mr. Blumenstock are parties to Executive Separation Pay Agreements, they would not have been entitled to a payout at December 31, 2023 because they had not been employed by the Company for a year at that time. Change of Control Agreements. Each of the NEOs has a double-trigger Change of Control Agreement, having the benefits shown in the table below. These agreements do not provide any indemnification for the “Golden Parachute” excise taxes under Sections 280G and 4999 of the Internal Revenue Code. If a Change of Control Agreement applies, the NEO will receive the greater of the change of control payout or the payout under the Executive Separation Pay Agreement (or in the case of Dr. Low and Ms. Puma, under their Employment Agreements). These agreements auto-renew for each calendar year unless not later than April 1 of the preceding year, the Company or the executive had given notice not to extend the term. No change was made to these agreements in 2023, provided (i) Dr. Low’s Change of Control Agreement was amended and restated to increase his multiple for the separation pay from 1.5 to 2, contemporaneously with his appointment as CEO, and (ii) the Company entered into Change of Control Agreements with each of Mr. Blumenstock and Mr. Coogan contemporaneously with their commencement of employment with the Company in 2023, having the same terms as the other non-CEO NEOs. See “Payments on Termination or Change of Control— Change of Control Agreements” below.
Risk Assessment of Compensation Policies and Practices
Risk Assessment of Compensation Policies and Practices In 2023, the Company determined, in its reasonable business judgment, that its compensation policies and practices for its employees, including the NEOs, do not give rise to risks that are reasonably likely to have a material adverse effect on the Company. In reaching this determination, management engaged in (i) a review of the Company’s compensation programs, policies and practices, (ii) identification of risks, if any, related to the programs, policies and practices, (iii) consideration of the materiality of a potentially risk-related reward to the total compensation provided to the individual, and (iv) identification of those aspects of the program and its oversight that provide risk control. Although all compensation programs were considered, management’s review focused on the programs with variability of payout and in which there is a potential for the participant to directly affect payout. Based on this review, management determined that the compensation policies and practices for Axcelis’ employees do not create risks that are reasonably likely to have a material adverse effect on the Company, principally because: (1) The structure of our executive compensation program includes a balanced mix of cash and equity compensation; and (2) Our incentive compensation programs are subject to appropriate risk controls in their design and oversight: • The Company’s internal controls and risk management practices restrict risk-taking that is not consistent with risks inherent in the Company’s strategic plan, as approved by the Board; • Payment of small bonuses for extraordinary effort or for achieving individual or team goals are subject to approval by direct managers, and representatives of human resources and finance departments, and, for higher amounts, a representative of senior management; • Payment of sales incentive compensation is made pursuant to written plans, subject to calculation and approval by senior management and the finance department; Payouts under the Company’s European and Asian annual cash incentive plan are in the discretion of senior management, which considers both qualitative and quantitative assessments of performance; and Payouts under the Company’s U.S. annual cash incentive plan and achievement of performance goals related to executive RSUs are in the discretion of the Compensation Committee, which considers both qualitative and quantitative assessments of performance.
2023 Summary Compensation Table
2023 Summary Compensation Table
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) (1) | Stock awards ($) (2) | Non-equity incentive plan compensation ($) (3) | All other compensation ($) (4) | Total ($) | | Executive Officers Serving at December 31, 2023 | | | | | | | | Russell J. Low, President and Chief Executive Officer (5) | 2023 | $530,102 | $3,076,368 | $519,068 | $9,900 | $4,135,438 | | | 2022 | $372,692 | $663,254 | $416,707 | $9,150 | $1,461,804 | | | 2021 | $360,000 | $622,771 | $432,000 | $8,808 | $1,423,579 | | James G. Coogan, Executive Vice President and Chief Financial Officer (6) | 2023 | $123,115 | $960,528 | $382,107 | $2,238 | $1,467,989 | | Mary G. Puma, Executive Chairperson (former Principal Executive Officer) (7) | 2023 | $663,923 | $1,538,184 | $747,245 | $9,900 | $2,959,252 | | | 2022 | $623,462 | $2,368,862 | $1,161,821 | $9,150 | $4,163,294 | | | 2021 | $615,000 | $2,224,270 | $1,230,000 | $9,374 | $4,078,644 | | Kevin J. Brewer, Executive Vice President Finance and Operations (former Principal Financial Officer) (8) | 2023 | $415,000 | $384,610 | $350,312 | $9,900 | $1,159,822 | | | 2022 | $411,461 | $710,726 | $575,069 | $9,150 | $1,706,407 | | | 2021 | $392,000 | $667,266 | $588,000 | $8,700 | $1,655,966 | | Lynnette C. Fallon, Executive Vice President, HR/Legal and General Counsel | 2023 | $375,000 | $691,146 | $253,238 | $9,900 | $1,329,284 | | | 2022 | $370,385 | $638,673 | $414,127 | $9,150 | $1,432,334 | | | 2021 | $342,077 | $599,646 | $410,492 | $9,125 | $1,361,340 | | Gregory F. Redinbo, Executive Vice President, Marketing and Applications (9) | 2023 | $310,000 | $615,376 | $209,343 | $3,400 | $1,138,119 | | | 2022 | $277,796 | $319,368 | $310,604 | $9,150 | $916,919 | | | 2021 | $160,000 | $416,900 | $260,000 | $134,800 | $971,700 | | Gerald M. Blumenstock, Executive Vice President, Engineering (10) | 2023 | $181,250 | $714,997 | $219,473 | $81,563 | $1,197,282 |
2023 Summary Compensation Table
(1) Base salary is set by the Compensation Committee, based on benchmarking using our peer group or survey data. Other than Dr. Low and Ms. Puma, the named executive officers (NEOs) do not have employment agreements addressing base salary. Dr. Low’s and Ms. Puma’s employment agreements are described under the heading “Payments on Termination or Change in Control” in this proxy statement. Represents the grant date fair value of RSU awards received by the NEO in the year indicated, determined in accordance with the assumptions described in the Stock Award Plans and Stock-Based Compensation note to the Company’s Financial Statements included in the Annual Report on Form 10-K filed with the SEC for the respective year. Non-equity incentive plan compensation represents amounts that were paid under the Axcelis Management Incentive Plans for the respective year, as described in the “Compensation Discussion and Analysis” in this proxy statement and in the proxy statement for our 2023 and 2022 Annual Meetings, respectively. (4) The amounts in this column represent (A) the amount paid in cash as a matching contribution to Axcelis’ 401(k) plan in respect of contributions made by the NEO during the year; (B) the value of service awards received in the year, under a recognition program in which gift certificates are given to employees on each five year work anniversary, increasing in value from $100 to $425, after tax; (C) in the case of Dr. Redinbo, a 2021 relocation allowance, part of his new hire package, and a $100 first responder bonus in 2023; and (D) in the case of Mr. Blumenstock, a sign on relocation bonus of $75,000 in 2023. (5) Dr. Low became President and Chief Executive Officer on May 11, 2023, having served as an executive officer since 2016. (6) Mr. Coogan became EVP and Chief Financial Officer on September 29, 2023, on which date he was first employed by the Company. (7) Ms. Puma also served as President and Chief Executive Officer until May 11, 2023. (8) Mr. Brewer also served as EVP and Chief Financial Officer until September 29, 2023. (9) Dr. Redinbo became EVP, Marketing and Applications on September 6, 2022. Prior to that date, Dr. Redinbo served in a non-executive officer role beginning with his first employment by the Company on May 24, 2021. Mr. Blumenstock became EVP, Engineering on June 12, 2023, on which date he was first employed by the Company.
Grants of Plan Based Awards in Fiscal 2023
Grants of Plan Based Awards in Fiscal 2023
Grants of Plan Based Awards in Fiscal 2023
| | | Date of Compensation Committee Approval | Estimated Possible Payouts under Non-Equity Incentive Plan Awards (1) | | Estimated Possible Payouts under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | Grant Date Fair Value of Stock and Option Awards (4) | | Name | Grant Date (2) | | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Russell J. Low | | | $461,189 | $922,378 | | | | | | | | 5/15/2023 | 2/16/2023 | | | | | | 12,018 | $1,538,184 | | | 5/15/2023 | 2/16/2023 | | | 1,803 | 12,018 | 18,027 | | $1,538,184 | | James G. Coogan | | | $339,500 | $679,000 | | | | | | | | 10/16/2023 | 8/9/2023 | | | | | | 5,891 | $960,528 | | Mary G. Puma | | | $663,923 | $1,327,846 | | | | | | | | 5/15/2023 | 2/16/2023 | | | 1,803 | 12,018 | 18,027 | | $1,538,184 | | Kevin J. Brewer | | | $311,250 | $622,500 | | | | | | | | 5/15/2023 | 2/16/2023 | | | 1,803 | 3,005 | 4,508 | | $384,610 | | Lynnette C. Fallon | | | $225,000 | $450,000 | | | | | | | | 5/15/2023 | 2/16/2023 | | | | | | 2,700 | $345,573 | | | 5/15/2023 | 2/16/2023 | | | 405 | 2,700 | 4,050 | | $345,573 | | Gregory F. Redinbo | | | $186,000 | $372,000 | | | | | | | | 5/15/2023 | 2/16/2023 | | | | | | 2,404 | $307,688 | | | 5/15/2023 | 2/16/2023 | | | 361 | 2,404 | 3,606 | | $307,688 | | Gerald M. Blumenstock | | | $195,000 | $390,000 | | | | | | | | 6/15/2023 | 6/1/2023 | | | | | | 4,182 | $714,997 |
Grants of Plan Based Awards in Fiscal 2023
(1) These target and maximum payouts are under the 2023 Axcelis Management Incentive Plan, discussed above in “2023 Compensation Discussion and Analysis—Annual Cash Incentive—2023 Axcelis Management Incentive Plan.” Based on the achievement of financial metrics for 2023, a payout to the NEOs was made under the 2023 AMI, as shown in the Summary Compensation Table. (2) The NEOs, other than Messrs. Coogan and Blumenstock, were granted performance based RSUs under the Company’s 2012 Equity Incentive Plan effective May 15, 2023, to be earned based on the achievement of performance goals tied to long-term objectives. The threshold number of shares that could be earned was 15%, if only one out of ten performance goals was achieved. Up to 150% of the target shares could be earned, if all 10 performance goals were met. Unearned performance based RSUs are forfeited. As discussed above, 135% of the 2023 performance based RSUs were earned. Except for Ms. Puma and Mr. Brewer, 50% of the earned shares vested on February 28, 2024, with the remainder to vest on February 28, 2025. Under retirement terms applicable to Ms. Puma and Mr. Brewer, 100% of the earned shares vested on February 28, 2024. Other than future services to the Company, no consideration was paid or will be due in order to acquire these RSUs. Unvested earned 2023 performance RSUs will be forfeited if the NEO’s employment terminates prior to vesting, except in the case of Mr. Lawson. See “Long-Term Equity Incentive Compensation—2023 Annual Equity Grants” in “2023 Compensation Discussion and Analysis” above. (3) The NEOs, other than Ms. Puma and Mr. Brewer, were granted service based RSUs under the Company’s 2012 Equity Incentive Plan effective on the respective grant dates shown above, which vest as to 25% of such shares on the each of the first four anniversaries of the date of grant, assuming continuation of employment. Other than future services to the Company, no consideration was paid or will be due in order to acquire these RSUs. The 2023 service based RSUs will be forfeited if the NEO’s employment terminates prior to vesting. See “Long-Term Equity Incentive Compensation—2023 Annual Equity Grants” in “2023 Compensation Discussion and Analysis” above. Represents the grant date fair value of the equity awards received by the NEO in 2023, determined in accordance with the assumptions described in the Stock Award Plans and Stock Based Compensation note to the Company’s 2023 Financial Statements included in the Annual Report on Form 10-K filed with the SEC.
Pay Versus Performance
Pay Versus Performance Note: In accordance with an instruction to the SEC regulation under which this Pay Versus Performance information is provided (Regulation S-K, Item 407(v)), this Pay Versus Performance information shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. Specifically, this Pay Versus Performance information is not included in the executive compensation information incorporated by reference into Part III of the Company’s Annual Report on Form 10-K. The Pay Versus Performance table below compares the total compensation amounts shown in the “Executive Compensation—2023 Summary Compensation Table” above to compensation “actually paid” to each of Dr. Low and Ms. Puma, both of whom served as our CEO and principal executive officer (a “PEO”) in 2023 and to an average of our NEOs in this proxy statement, excluding Dr. Low and Ms. Puma. The “actually paid” amounts in the Pay Versus Performance table reflect a re-valuation of equity awards granted to our PEOs and other NEOs. SEC regulations instruct us to back out the grant date fair value of equity awards that is used in the Summary Compensation Table and replace it with values for unvested equity awards at each year end and values for shares on each vest date. The “actually paid” amounts also reflect the achievement of specific operational goals on the PRSUs granted to executives, which, in 2021, 2022 and 2023 increased the number of shares subject to those PRSUs. Accordingly, the “actually paid” compensation is an alternative way of calculating the value for executive equity awards that uses the stock price at year end for unvested grants and at vest dates for those that vest in the year, instead of the stock price at grant for only those awards newly granted in the year. For employees that have served for more than the current year, the “actually paid” values will almost always be higher because they include values for all prior grants, not just the current year. The Summary Compensation Table already incorporates the value of the cash incentive paid for each year, so that performance-related compensation component is unchanged in the “actually paid” amounts in the table. In the table below, Ms. Puma is referred to as “PEO #1” and Dr. Low as “PEO #2.”
Pay Versus Performance
| | | | | | | | Value of Initial Fixed $100 Investment made on December 31, 2019, based on: | | | | | Year (a) (1) | Summary Compensation Table Total for PEO #1 (b) | Compensation Actually Paid (“CAP”) to PEO #1 (c) (2) | Summary Compensation Table Total for PEO#2 (b) | Compensation Actually Paid (“CAP”) to PEO #2 (c) (3) | Average Summary Compensation Table Total for Non-PEO NEOs (d) | Average CAP to Non-PEO NEOs (e) (4) | Total Shareholder Return (f) | Peer Group Total Shareholder Return (g) (4) | Net Income (h) | Revenues (i) | | 2023 | $2,959,252 | $9,858,734 | $4,135,438 | $6,510,602 | $1,258,904 | $2,141,924 | $538.13 | $225.75 | $246,263,000 | $1,130,604,000 | | 2022 | $4,163,294 | $5,700,318 | $1,461,805 | $1,751,594 | $1,463,285 | $1,728,963 | $329.34 | $137.05 | $183,100,000 | $920,000,000 | | 2021 | $4,078,644 | $11,982,293 | $1,423,579 | $3,663,680 | $1,405,289 | $3,648,869 | $309.38 | $213.35 | $98,650,000 | $662,428,000 | | 2020 | $3,825,614 | $4,708,025 | $1,307,974 | $1,582,284 | $1,356,639 | $1,620,922 | $120.83 | $151.14 | $49,982,000 | $474,560,000 |
Pay Versus Performance
During 2023, each of Mary G. Puma and Russell J. Low served for a portion of the year as Axcelis’ President and Chief Executive Officer. During 2022, 2021 and 2020, Ms. Puma served as our President and CEO. In these tables, Ms. Puma is referred to as “PEO #1” and Dr. Low is referred as “PEO #2.” During 2023, our remaining NEOs consisted of James G. Coogan, Kevin J. Brewer, Lynnette C. Fallon, Gregory F. Redinbo and Gerald M. Blumenstock. During 2022, 2021 and 2020, the non-CEO NEOs consisted of Kevin J. Brewer, Russell J. Low , Lynnette C. Fallon and Douglas A. Lawson. In accordance with SEC rules, the following adjustments were made to the PEO #1’s (Ms. Puma’s) total compensation for each year to determine CAP:
Pay Versus Performance
| | Footnote (2)—Table 1 | | | | | (a) | Reported Summary Compensation Table Total for PEO #1 (b) | Reported Value of Equity Awards (c) (i) | Equity Award Adjustments (d) (ii) | Compensation Actually Paid to PEO #1 (e) | | 2023 | $2,959,252 | $(1,538,184) | $8,437,665 | $9,858,734 | | 2022 | $4,163,294 | $(2,368,862) | $3,905,886 | $5,700,318 | | 2021 | $4,078,644 | $(2,224,270) | $10,127,919 | $11,982,293 | | 2020 | $3,825,614 | $(2,049,909) | $2,932,320 | $4,708,025 |
Pay Versus Performance
(i) The grant date fair value of equity awards in column (c) of Footnote (2)—Table 1 represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. (ii) The equity award adjustments in column (d) of Footnote (2)—Table 1 include the addition (or subtraction, as applicable) of the following: (1) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (2) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; and (3) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value. The amounts deducted or added in calculating the equity award adjustments are as follows:
Pay Versus Performance
| | Footnote (2)— Table 2 | | | | | Year (a) | Year End Fair Value of Equity Awards Granted in the Year (b) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards at Year End (c) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year (d) | Total Equity Award Adjustments (e) | | 2023 | $2,104,129 | $2,787,869 | $3,545,667 | $8,437,665 | | 2022 | $4,423,973 | $369,846 | $(887,933) | $3,905,886 | | 2021 | $5,432,442 | $3,879,395 | $816,083 | $10,127,919 | | 2020 | $2,537,983 | $410,556 | $(16,218) | $2,932,320 |
Pay Versus Performance
(3) In accordance with SEC rules, the following adjustments were made to the PEO #2’s (Dr. Low’s) total compensation for each year to determine CAP:
Pay Versus Performance
| | Footnote (3)—Table 1 | | | | | (a) | Reported Summary Compensation Table Total for PEO #2 (b) | Reported Value of Equity Awards (c) (i) | Equity Award Adjustments (d) (ii) | Compensation Actually Paid to PEO #2 (e) | | 2023 | $4,135,438 | $(3,076,368) | $5,451,531 | $6,510,602 | | 2022 | $1,461,805 | $(663,254) | $953,044 | $1,751,594 | | 2021 | $1,423,579 | $(622,771) | $2,862,872 | $3,663,680 | | 2020 | $1,307,974 | $(593,410) | $867,720 | $1,582,284 |
Pay Versus Performance
(i) The grant date fair value of equity awards in column (c) of Footnote (1)—Table 1 represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. The equity award adjustments in column (d) of Footnote (3)—Table 1 include the addition (or subtraction, as applicable) of the following: (1) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (2) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; and (3) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value. None of the years shown had any (A) awards granted and vested in same applicable year; (B) awards granted in prior years that were determined to fail to meet the applicable vesting conditions during the applicable year; or (C) dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
Pay Versus Performance
| | Footnote (3)—Table 2 | | | | | Year (a) | Year End Fair Value of Equity Awards Granted in the Year (b) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards at Year End (c) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year (d) | Total Equity Award Adjustments (e) | | 2023 | $3,662,744 | $785,807 | $1,002,980 | $5,451,531 | | 2022 | $1,097,108 | $105,066 | $(249,130) | $953,044 | | 2021 | $1,521,024 | $1,108,418 | $233,430 | $2,862,872 | | 2020 | $734,698 | $115,682 | $17,340 | $867,720 |
Pay Versus Performance
In accordance with SEC rules, the following adjustments were made to average total compensation for the NEOs as a group (excluding Ms. Puma in all years, and excluding Dr. Low in 2023) for each year to determine CAP, using the same methodology described above in Footnote 1:
Pay Versus Performance
| | Footnote (4)—Table 1 | | | | | (a) | Average Reported Summary Compensation Table Total for Non-PEO NEOs (b) | Average Reported Value of Equity Awards (c) (i) | Average Equity Award Adjustments (d) (ii) | Average Compensation Actually Paid to Non-PEO NEOs (e) | | 2023 | $1,258,904 | $(673,331) | $1,556,352 | $2,141,924 | | 2022 | $1,463,285 | $(639,377) | $905,055 | $1,728,963 | | 2021 | $1,405,289 | $(600,314) | $2,843,894 | $3,648,869 | | 2020 | $1,356,639 | $(600,125) | $864,408 | $1,620,922 |
Pay Versus Performance
(i) The grant date fair value of equity awards in column (c) of Footnote (4)—Table 1 represents the average of the total of the amounts reported in the “Stock Awards” and “Option Awards” columns for each non-PEO NEO in the Summary Compensation Table for the applicable year. (ii) The amounts deducted or added in calculating the average equity award adjustments are as follows:
Pay Versus Performance
| | Footnote (4)—Table 2 | | | | | Year (a) | Average Year End Fair Value of Equity Awards Granted in the Year (b) | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards at Year End (c) | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year (d) | Total Average Equity Award Adjustments (e) | | 2023 | $677,608 | $292,321 | $586,423 | $1,556,352 | | 2022 | $1,057,612 | $103,466 | $(256,024) | $905,055 | | 2021 | $1,466,176 | $1,138,403 | $239,315 | $2,843,894 | | 2020 | $743,011 | $120,704 | $693 | $864,408 |
Pay Versus Performance
(5) The Peer Group used in this chart is the Philadelphia Semiconductor Index (SOXX) which is also used in the Company’s stock performance graph provided under Item 201(e) of Regulation S-K in our annual report to stockholders. In each of the four years shown in the Pay Versus Performance table, the compensation “actually paid” (“CAP”) to our PEOs and average CAP to our other NEOs is higher than the amounts shown in the Summary Compensation Table, primarily due to the fact that the price of the common stock generally increased after the applicable equity award grant dates, other than for certain awards granted in 2023 and valued at year end 2023. Accordingly, the value of our equity awards at vest and the value of unvested awards was generally higher than the value at grant shown in the Summary Compensation Table. This stock price increase is aligned with increases in Axcelis’ net income and revenue, as shown in the Pay Versus Performance table. This strong performance is also seen in the outperformance of our cumulative shareholder return to that of the SOXX Index in 2021, 2022 and 2023. Our stock price increased by more than 500% from year end 2019 to year end 2023. This stock price increase reflected a 138% increase in our revenues from 2020 to 2023, a 393% increase in our net income from 2020 to 2023. Our 2023 revenues and net income increased by 23% and 34%, respectively, from 2022. In line with this strong financial performance and stock price increase, the CAP for each of Ms. Puma and Dr. Low for the four years shown represents more than 100% of their total compensation in the Summary Compensation Table. The same is true with respect to the average non-PEO NEO CAP for each of the four years shown. Accordingly, the above-target compensation in these four years, calculated as CAP per SEC regulation, is reflective of robust growth in revenues, net income, and stock price over the period. The three most important financial measures that impact realized executive compensation at Axcelis are:
Pay Versus Performance
| Revenues | | Operating Profit | | Gross Margin |
Pay Versus Performance
These three measures are the metrics used in the Axcelis Management Incentive Program, our annual cash incentive program, discussed in the Compensation Discussion and Analysis above. We believe these measures also have a significant influence on our stock price (which is the main differential between the Summary Compensation Table amounts and the “actually paid” amounts in the Pay Versus Performance Table), along with other measures considered by investors, such as net income and earnings per share.
Outstanding Equity Awards at Fiscal 2023 Year End
Outstanding Equity Awards at Fiscal 2023 Year End
Outstanding Equity Awards at Fiscal 2023 Year End
| | Stock Awards | | | | | Name | Number of Shares or Units of Stock that Have Not Vested (#) (1) | Market Value of Shares or Units of Stock that Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) (2) | | Russell J. Low | 27,633 | $3,583,756 | 12,018 | $1,558,614 | | James G. Coogan | 5,891 | $764,004 | — | $— | | Mary G. Puma | 55,402 | $7,185,137 | 12,018 | $1,558,614 | | Kevin J. Brewer | 5,279 | $684,634 | 3,005 | $389,718 | | Lynnette C. Fallon | 17,423 | $2,259,589 | 2,700 | $350,163 | | Gregory F. Redinbo | 11,451 | $1,485,080 | 2,404 | $311,775 | | Gerald M. Blumenstock | 4,182 | $542,364 | — | $— |
Outstanding Equity Awards at Fiscal 2023 Year End
(1) None of the NEOs held options to acquire securities of the Company stock at December 31, 2023. All of the NEOs were granted service based RSUs under the Company’s 2012 Equity Incentive Plan in 2023, and all of the NEOs other than Mr. Coogan and Mr. Blumenstock were granted service based RSUs in prior years. All of the service based RSUs granted to NEOs vest as to 25% of the shares on each of the first four anniversaries of the date of grant, assuming continuation of employment. In addition, each of the NEOs other than Mr. Coogan, Dr. Redinbo, and Mr. Blumenstock, were granted PRSUs on May 16, 2022 that were subject to the achievement of performance goals, 135% of which were earned. Half of these 2022 PRSUs vested in February 2023 and the remaining 50% of the 2022 PRSUs vested on February 28, 2024, given the executives’ continuation of employment through that date. (2) The market value of the unvested and unearned RSUs held by the executives at December 31, 2023 was determined by multiplying the number of shares by the closing price on December 29, 2023 (the last trading day of the year) of $129.69. Each of the NEOs other than Mr. Coogan and Mr. Blumenstock were granted PRSUs under the Company’s 2012 Equity Incentive Plan on May 15, 2023 that could be earned based on the achievement of 10 performance goals, each weighted 15%. The shares shown in the chart represent the target shares for these grants, assuming the achievement of the performance goals totaling 100%. In February 2024, the Compensation Committee determined that 135% of the 2023 performance RSUs were earned. In accordance with the terms of the grant, 50% of the earned 2023 PRSUs vested on February 28, 2024, except in the case of Ms. Puma and Mr. Brewer, who received 100% of their earned 2023 PRSUs. The unvested earned 2023 PRSUs will vest on February 28, 2025, assuming continuation of employment, except in the case of Mr. Lawson, who may retire prior to that date without affecting his vesting. See “Long-Term Equity Incentive Compensation—2023 Equity Grants” in “2023 Compensation Discussion and Analysis” above.
Option Exercises and Stock Vested During Fiscal 2023
Option Exercises and Stock Vested During Fiscal 2023
Option Exercises and Stock Vested During Fiscal 2023
| | Stock Awards (1) | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | | Russell J. Low | 20,050 | $2,594,376 | | James G. Coogan | — | $— | | Mary G. Puma | 70,857 | $9,169,619 | | Kevin J. Brewer | 35,308 | $4,476,238 | | Lynnette C. Fallon | 18,667 | $2,416,326 | | Gregory F. Redinbo | 3,849 | $629,098 | | Gerald M. Blumenstock | — | $— |
Option Exercises and Stock Vested During Fiscal 2023
(1) None of the NEOs exercised options to acquire securities of the Company during the year ended December 31, 2023. (2) Represents the closing market price of Axcelis common stock on the date of vesting (or if the vesting date is not a trading day, on the next trading day after the vesting date) multiplied by the number of shares vested. A portion of the vested shares were withheld for taxes and not issued to the NEO. The actual amount received by the NEO on the sale of any of the shares acquired on vesting will depend on the market values of the Company’s common stock at the time the NEO disposes of such shares.
Payments on Termination or Change of Control
Payments on Termination or Change of Control Employment Agreement with Dr. Low. Under his Employment Agreement, in the event Dr. Low’s employment is terminated either (i) by the Company for reasons other than cause, death, disability or (ii) by a voluntary resignation by Dr. Low with “good reason” (as defined in the Employment Agreement), he is entitled to full acceleration of vesting of options and other equity rights and a cash separation payment. The cash separation payment will equal 24 months of his monthly base salary and a monthly annual bonus amount, determined in accordance with the agreement. For this purpose, Dr. Low’s monthly bonus compensation equals his then effective annual base salary, divided by 12 and multiplied by the greater of (a) the percentage of his annual base salary that he actually received as a bonus for the prior fiscal year or (b) 25% of his annual base salary. Under the Employment Agreement, Dr. Low is also entitled to up to 18 months of Company-paid COBRA premiums. The following table sets forth the separation pay that would have been due to Dr. Low under his Employment Agreement if a qualifying termination occurred on December 31, 2023:
Payments on Termination or Change of Control
| Estimated Payments under the Low Employment Agreement if due at December 31, 2023 | | | | | Lump sum cash payment (1) | Value of accelerated vesting on equity awards (2) | 18 months of COBRA premiums for health coverage (3) | Total | | $3,151,757 | $2,577,331 | $52,064 | $5,781,152 |
Payments on Termination or Change of Control
This amount represents 24 months of Dr. Low’s base salary at the highest rate in effect in the year preceding December 31, 2023 plus 24 months of a monthly bonus amount as specified in Dr. Low’s Employment Agreement. The monthly rate of annual base salary ($45,861) and monthly bonus amount ($85,462) were calculated using his annual base salary of $550,333 in effect at December 31, 2023, and the 2022 Axcelis Management Incentive Plan bonus percentage of 186.4%, as specified in Dr. Low’s Employment Agreement. The lump sum cash payment above would be due within 30 days of termination. This amount reflects a valuation of the acceleration of Dr. Low’s outstanding equity awards using the methodology prescribed under IRC Section 280G, which provides for an excise tax on certain change of control payments. This valuation is based on the closing price of our common stock on the last trading day of 2023 ($129.69). For the service based RSUs, the value received is reduced by a value for the forgiven service as prescribed by the calculation methodology in IRC Reg §1.280G Q&A 24(c).The actual amount received by Dr. Low on the sale of shares issued on accelerated restricted stock units will depend on the market values at the time of such transactions. (3) Dr. Low’s employment agreement provides that the Company will pay for up to 18 months of COBRA premiums. This amount represents 18 months of COBRA premiums in effect during 2024 for Dr. Low’s coverage elections. Actual COBRA rates will change on January 1, 2025. 2023 Amended and Restated Employment Agreement with Ms. Puma. The 2023 Puma Agreement provides for Ms. Puma’s compensation for services through July 2025, but does not provide for separation pay unless terminated by the Company without cause or by Ms. Puma with good reason prior to July 31, 2025. In such case, the main component of the separation pay is the amount remaining to be paid under the agreement through July 31, 2025. Ms. Puma would receive a cash separation pay equal to her base salary for the remaining period, her target payout under the 2023 and 2024 AMI to the extent not paid (Ms. Puma’s target under the 2024 AMI only considers her base pay earned as Executive Chairperson), and a pro-rated 2024 PRSU for the period in which she serves as Executive Chairperson. Under the 2023 Puma Agreement, Ms. Puma is also entitled to up to 18 months of Company-paid COBRA premiums. The following table sets forth the separation pay that would have been due to Ms. Puma under her Employment Agreement if a qualifying termination occurred on December 31, 2023:
Payments on Termination or Change of Control
| Estimated Payments under the Puma Employment Agreement if due at December 31, 2023 | | | | | Lump sum cash payment (1) | Value of accelerated vesting on equity awards (2) | 18 months of COBRA premiums for health coverage (3) | Total | | $2,001,923 | $3,970,113 | $37,971 | $6,010,007 |
Payments on Termination or Change of Control
(1) This amount represents the remainder of Ms. Puma’s base salary due under her 2023 Employment Agreement through July 31, 2025 plus the Axcelis Management Incentive Plan for 2023 and 2024 paid at target, as determined under Ms. Puma’s 2023 Employment Agreement. The lump sum cash payment above would be due within 30 days of termination. (2) This amount reflects a valuation of the acceleration of Ms. Puma’s outstanding equity awards using the methodology prescribed under IRC Section 280G, which provides for an excise tax on certain change of control payments. This valuation is based on the closing price of our common stock on the last trading day of 2023 ($129.69). For the service based RSUs, the value received is reduced by a value for the forgiven service as prescribed by the calculation methodology in IRC Reg §1.280G Q&A 24(c).The actual amount received by Ms. Puma on the sale of shares issued on accelerated restricted stock units will depend on the market values at the time of such transactions. (3) Ms. Puma’s 2023 Employment Agreement provides that the Company will pay for up to 18 months of COBRA premiums. This amount represents 18 months of COBRA premiums in effect during 2024 for Ms. Puma’s coverage elections. Actual COBRA rates will change on January 1, 2025. Executive Officer Separation Pay Agreements. In May 2019, the Compensation Committee approved the execution of Executive Separation Pay Agreements with each of the NEOs other than the CEO (the “Executive Separation Pay Agreements”). Each of the NEOs in office in 2019 received an agreement at that time, and Dr. Redinbo received one in 2022 on his promotion to an executive officer. The Company provided each of Mr. Blumenstock and Mr. Coogan with an Executive Separation Pay Agreement on commencement of employment with the Company in 2023. These Executive Separation Pay Agreements provide that in the event of a termination without cause, the executive will continue to receive base salary for 12 months. If the NEO elects to continue health coverage under COBRA, the Company will waive 12 months of COBRA premiums. In addition, the Company will provide transition support having a value of $15,000. The executive must have been employed by the Company for one year or more at the time of termination to be eligible for benefits under the agreement. The NEO must provide a release of claims in order to receive the separation pay. The NEO will not be eligible to receive the severance payments and benefits described in the agreement in the event that (i) the executive’s employment is terminated by the Company for cause or due to executive’s death or disability, or (ii) the executive resigns from employment, regardless of the reason(s) for such resignation. The following table sets forth the separation pay that would have been due to these NEOs under their respective Executive Separation Pay Agreements if a qualifying termination occurred on December 31, 2023. Although Mr. Coogan and Mr. Blumenstock are parties to Executive Separation Pay Agreements, they would not have been entitled to a payout at December 31, 2023 because they had not been employed by the Company for a year at that time.
Payments on Termination or Change of Control
| Estimated Payments under the Executive Separation Pay Agreements if due at December 31, 2023 | | | | | | | Cash Separation Pay (1) | Value of transition assistance (2) | 12 months of COBRA premiums for health coverage (3) | Total | | Kevin J. Brewer | $415,000 | $15,000 | $25,314 | $455,314 | | Lynnette C. Fallon | $375,000 | $15,000 | $25,314 | $415,314 | | Gregory F. Redinbo | $310,000 | $15,000 | $34,709 | $359,709 |
Payments on Termination or Change of Control
(1) This amount represents 12 months of the NEO’s annual base salary in effect on December 31, 2023. This amount would be paid in 26 bi-weekly installments. (2) In the event separation pay is due, the Company will provide transition assistance to the NEO having a value of $15,000. The Company will work with the executive to provide assistance that meets the needs of the executive, and will offer support in accordance with the Company’s practices for executive terminations generally. (3) The Executive Separation Pay Agreements provide that the Company will pay for up to 12 months of COBRA premiums. This amount represents 12 months of 2024 COBRA premiums for the executive’s coverage elections for 2023. Actual COBRA rates will change on January 1, 2025. Change of Control Agreements. Each of the NEOs is a party to a Change of Control Agreement with the Company. None of the currently effective agreements have an indemnification or gross up for excise taxes. This is consistent with our 2014 governance policy against any new commitments to reimburse excise taxes due on change of control payouts under Sections 280G and 4999 of the Internal Revenue Code. See “Corporate Governance—Governance Policies,” above. The Change of Control Agreements provide that the NEOs are entitled to severance compensation in the event there is both (1) a change in control and (2) a termination of employment within a period of time following the change in control either (A) by the Company for reasons other than cause, death, disability or (B) due to a voluntary resignation by the executive with good reason. “Good reason” includes an adverse change in the executive’s role or position; a reduction in the executive’s base salary; or a material change in geographic location of the executive’s job. A “change of control” is defined in the agreement and covers a number of events, including a merger or acquisition involving the Company in which the persons holding the Company’s shares immediately prior to the transaction hold less than a majority of the shares outstanding after the transaction. Under the Change of Control Agreements, severance compensation consists of a cash payment equal to a multiple of the executive’s annual base salary and annual bonus as of the date of termination. The multiple in Ms. Puma’s and Dr. Low’s Change of Control Agreements is two, while the multiple in the other NEOs’ Change of Control Agreements is 1.5. The amounts that would have been due to each NEO under the Change of Control Agreements in effect at December 31, 2023, in the event that a change of control and termination occurred on that date, are set forth in the table below:
Payments on Termination or Change of Control
| Estimated Payments under the Change of Control Agreements if due at December 31, 2023 | | | | | Name | Lump sum cash payment (1) | Value of accelerated vesting on equity awards (2) | Total | | Russell J. Low | $2,751,665 | $2,577,331 | $5,328,996 | | James G. Coogan | $1,576,250 | $764,004 | $2,340,254 | | Mary G. Puma | $3,345,000 | $3,970,113 | $7,315,113 | | Kevin J. Brewer | $1,400,625 | $706,482 | $2,107,107 | | Lynnette C. Fallon | $1,125,000 | $1,076,230 | $2,201,230 | | Gregory F. Redinbo | $930,000 | $546,660 | $1,476,660 | | Gerald M. Blumenstock | $975,000 | $542,364 | $1,517,364 |
Payments on Termination or Change of Control
(1) This amount represents separation pay equal to (A) a multiple of (i) the executive’s current annual base salary plus (ii) a target bonus amount, and (B) the executive’s target AMI for 2023, prorated for the months worked during the year. Since termination for all NEOs is assumed at year end, the 2023 AMI targets have not been prorated. The multiple is 2, in the case of Dr. Low and Ms. Puma, and 1.5, in the case of the other NEOs. (2) These amounts reflect a valuation of the acceleration of all of the NEO’s outstanding unvested RSU awards using the value of the closing price of our common stock on the last trading day of 2023 ($129.69) and the methods prescribed by regulations under IRC Section 280G. For the service based RSUs, the value received is reduced by a value for the forgiven service as prescribed by the calculation methodology in IRC Reg §1.280G Q&A 24(c). The actual amount received by the NEO on the sale of shares from accelerated equity awards will depend on the market values at the time of the change of control. Depending on the terms of the transaction, some or all of the executive’s unvested equity awards may vest without regard to the effect of the Change of Control Agreements. (3) The Change of Control Agreement with each NEO provides that the lump sum cash value should be reduced by an amount needed to avoid the excise tax due under IRC Section 4999, if that creates the best after-tax result for the executive. If the change of control occurred on December 31, 2023, Dr. Low, Mr. Coogan, Dr. Redinbo and Mr. Blumenstock would be subject to excise taxes under IRC Section 4999 if they received the full payout in the table , for which they would be personally liable. In each NEO’s case, the amount of the excise tax due on the full payout is less than the amount the payout would need to be reduced to avoid the tax, so the amount in the table is the full payout without adjustment.