DEF 14A of Lam Research Corp
Filed Sep 27, 2023 · FY20230001140361-23-045527
Director Compensation
Director Compensation Our director compensation is designed to attract and retain high-caliber directors and to align director interests with those of stockholders. The compensation and human resources committee’s independent compensation consultant advises the committee with respect to non-employee director compensation and assists with the review of competitiveness of such compensation. In November 2021, our Board adopted our current non-employee director compensation program. The objective of the non-employee director compensation program is to target and pay the non-employee directors at the median of our Peer Group (as defined and described below under “Compensation Matters - Executive Compensation and Other Information - Compensation Discussion and Analysis – Executive Compensation Governance and Procedures – Peer Group Practices and Survey Data”), as measured every other year. Under the non-employee director compensation program, non-employee director compensation is compared to our Peer Group annually and the results of this comparison are provided to the compensation and human resources committee in connection with its regular August meeting. Every other year, beginning in 2023, if this comparison shows any element of non-employee director compensation to be below the 50th percentile when compared to our Peer Group, this element will be automatically increased to a value equal, as nearly as practicable, to the 50th percentile, effective on the date of our next annual meeting of stockholders for service in the following calendar year (e.g. if an adjustment were made in connection with the August 2023 compensation and human resources committee meeting, then such adjustment will be effective on the date of our annual stockholder meeting in November 2023 for service in calendar year 2024). Under the program, the compensation and human resources committee has the option at any time to recommend that the Board exercise, and the Board has the right at any time to exercise, negative discretion to reduce (or to not increase) any element of non-employee director compensation. The non-executive director compensation program may be modified, replaced, superseded or cancelled by the Board at any time. The elements of our non-employee director compensation are described below. In the case of Mr. Archer, our president and CEO, his executive compensation (which is described below under “Compensation Matters - Executive Compensation and Other Information - Compensation Discussion and Analysis”) is reviewed annually by the independent members of the Board. Mr. Archer does not receive additional compensation for his service on the Board. Non-employee director compensation. Non-employee directors receive annual cash retainers and equity awards. The chair of the Board, the lead independent director (if applicable), and committee chairs and members receive additional cash retainers. Non-employee directors who join the Board or a committee mid-year receive pro-rated cash retainers and equity awards, as applicable. Our non-employee director compensation program is based on service during the calendar year; however, SEC rules require us to report compensation in this proxy statement on a fiscal year basis. Cash compensation paid to non-employee directors for the fiscal year ended June 25, 2023, together with the annual cash compensation program components in effect for calendar years 2023 and 2022, is shown below. Figure 18. Director Annual Retainers
Director Compensation
| Annual Retainers(1) | Calendar Year 2023 ($) | Calendar Year 2022 ($) | Fiscal Year 2023 ($) | | Non-employee Director | 87,500 | 87,500 | 87,500 | | Chair | 150,000 | 150,000 | 150,000 | | Audit Committee−Chair | 35,000 | 35,000 | 35,000 | | Audit Committee−Member | 15,000 | 15,000 | 15,000 | | Compensation and Human Resources Committee−Chair | 30,000 | 30,000 | 30,000 | | Compensation and Human Resources Committee−Member | 10,000 | 10,000 | 10,000 | | Nominating and Governance Committee−Chair | 20,000 | 20,000 | 20,000 | | Nominating and Governance Committee−Member | 10,000 | 10,000 | 10,000 |
Director Compensation
| (1) Each Director is entitled to an annual non-employee director cash retainer. Directors are also entitled to supplemental retainer fees if they have board leadership positions (e.g., chair) and/or are either committee chairs or members. |
Director Compensation
Each non-employee director also receives an annual equity award on the first Friday following the annual meeting. For the equity awards granted in November 2022, these had a targeted grant date value equal to $215,000 (the number of RSUs subject to the award is determined by dividing $215,000 by the 30 trading day average of the closing price of our common stock prior to the date of grant, rounded down to the nearest whole share). These awards generally vest on October 31 in the year following the grant and are subject to the terms and conditions of the Company’s 2015 Stock Incentive Plan, as amended (the “2015 Plan”), and the applicable award agreements. These awards immediately vest in full: (1) if a non-employee director dies or becomes subject to a “disability” (as determined pursuant to the 2015 Plan), (2) upon the occurrence of a “Corporate Transaction” (as defined in the 2015 Plan), or (3) on the date of the annual meeting, if the annual meeting during the year in which the award was expected to vest occurs prior to the vest date and the non-employee director is not re-elected or retires or resigns effective immediately prior to the annual meeting. Non-employee directors who commence service after the annual equity award has been granted receive on the first Friday following the first regularly scheduled, quarterly Board meeting attended a pro-rated award based on the number of regularly scheduled, quarterly Board meetings remaining in the year as of the effective date and time of the director’s appointment. The pro-rated awards are subject to the same vesting schedule, terms and conditions as the annual equity awards, except that if the award is granted on the first Friday following the regularly scheduled quarterly November Board meeting, the award vests immediately. On November 11, 2022, each director at such time (other than our president and CEO) received a grant of 563 RSUs for service during calendar year 2023. Unless there is an acceleration event, the RSUs granted to each current director for service during calendar year 2023 will vest in full on October 31, 2023, subject to the director’s continued service on the Board. On February 10, 2023, Dr. Kang, who was appointed to the Board effective February 7, 2023, also received a prorated grant of 452 RSUs for service during calendar year 2023. The following table shows compensation for fiscal year 2023 for persons serving as directors during fiscal year 2023 other than Mr. Archer: Figure 19. Director Compensation for Fiscal Year 2023
Director Compensation
| | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | | Sohail U. Ahmed | 103,750(3) | 278,246(4) | — | 381,996 | | Eric K. Brandt | 127,500(5) | 278,246(4) | — | 405,746 | | Michael R. Cannon | 122,500(6) | 278,246(4) | — | 400,746 | | Ho Kyu Kang | 87,500(7) | 226,086(8) | — | 313,586 | | Catherine P. Lego(9) | — | — | 30,978 | 30,978 | | Bethany J. Mayer | 115,000(10) | 278,246(4) | — | 393,246 | | Jyoti K. Mehra | 100,000(11) | 278,246(4) | — | 378,246 | | Abhijit Y. Talwalkar | 257,500(12) | 278,246(4) | — | 535,746 | | Lih Shyng (Rick L.) Tsai | 97,500(13) | 278,246(4) | — | 375,746 | | Leslie F. Varon | 122,500(14) | 278,246(4) | — | 400,746 |
Director Compensation
| (1) The amounts shown in this column represent the grant date fair value of unvested RSU awards granted during fiscal year 2023 in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 718, Compensation — Stock Compensation (“ASC 718”). However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. The fair value of RSUs was calculated based on the fair market value of the Company’s common stock at the date of grant, discounted for dividends. |
Director Compensation
| (2) Represents the portion of medical, dental, and vision premiums paid by the Company. |
Director Compensation
| (3) Mr. Ahmed received $103,750, representing his annual retainers for calendar year 2023 of $87,500 for service as a director and $15,000 for service as a member of the audit committee, and prorated annual retainer for calendar year 2022 of $1,250 for service as a member of the audit committee. |
Director Compensation
| (4) On November 11, 2022, each non-employee director who was on the Board at such time received an annual grant for calendar year 2023 of 563 RSUs, based on the 30 trading day average of the closing price per share of Lam’s common stock prior to the grant date, $381.23, and the target value of $215,000, rounded down to the nearest share. All of these RSUs (and no other non-employee director equity awards) were outstanding and unvested as of June 25, 2023. |
Director Compensation
| (5) Mr. Brandt received $127,500, representing his annual retainers for calendar year 2023 of $87,500 for service as a director, $30,000 for service as the chair of the compensation and human resources committee, and $10,000 for service as a member of the nominating and governance committee. |
Director Compensation
| (6) Mr. Cannon received $122,500, representing his annual retainers for calendar year 2023 of $87,500 for service as a director, $20,000 for service as the chair of the nominating and governance committee, and $15,000 for service as a member of the audit committee. |
Director Compensation
| (7) Dr. Kang earned $87,500, representing his annual retainer for calendar year 2023 of $87,500 for service as a director, but due to the timing of payment of his retainer, he did not receive the retainer during fiscal year 2023. |
Director Compensation
| (8) On February 10, 2023, Dr. Kang, who was appointed to the Board effective February 7, 2023, received an annual grant for calendar year 2023 of 452 RSUs, based on the 30 trading day average of the closing price per share of Lam’s common stock prior to the grant date, $474.68, and the target value of $215,000, rounded down to the nearest share. |
Director Compensation
| (9) Ms. Lego retired from the Board effective as of November 7, 2022, and, as a result, did not receive an annual retainer during fiscal year 2023. |
Director Compensation
| (10) Ms. Mayer received $115,000, representing her annual retainers for calendar year 2023 of $87,500 for service as a director, $15,000 for service as a member of the audit committee, and $10,000 for service as a member of the nominating and governance committee, and prorated annual retainer for calendar year 2022 of $2,500 for service as a member of the nominating and governance committee. |
Director Compensation
| (11) Ms. Mehra received $100,000, representing her annual retainer for calendar year 2023 of $87,500 for service as a director and $10,000 for service as a member of the compensation and human resources committee, and prorated annual retainer for calendar year 2022 of $2,500 for service as a member of the compensation and human resources committee. |
Director Compensation
| (12) Mr. Talwalkar received $257,500, representing his annual retainers for calendar year 2023 of $87,500 for service as a director, $150,000 for service as chairman, $10,000 for service as a member of the compensation and human resources committee, and $10,000 for service as a member of the nominating and governance committee. |
Director Compensation
| (13) Dr. Tsai received $97,500, representing his annual retainers for calendar year 2023 of $87,500 for service as a director and $10,000 for service as a member of the compensation and human resources committee. |
Director Compensation
| (14) Ms. Varon received $122,500, representing her annual retainers for calendar year 2023 of $87,500 for service as a director and $35,000 for service as the chair of the audit committee. |
Director Compensation
Other benefits. Any members of the Board enrolled in the Company’s health plans on or prior to December 31, 2012, can continue to participate after retirement from the Board in the Company’s Retiree Health Plans. The Board eliminated this benefit for any person who became a director after December 31, 2012. The most recent valuation of the Company’s accumulated post-retirement benefit obligation under ASC 715, Compensation-Retirement Benefits as of June 25, 2023, for eligible directors and the current directors who may become eligible, is shown below. Factors affecting the amount of post-retirement benefit obligation include current age, age at retirement, coverage tier (e.g., single, plus spouse, plus family), interest rate, and length of service. Figure 20. Accumulated Post-Retirement Benefit Obligations
Director Compensation
| Name | Accumulated Post-Retirement Benefit Obligation, as of June 25, 2023 ($) | | Sohail U. Ahmed | — | | Eric K. Brandt | — | | Michael R. Cannon | — | | John M. Dineen | — | | Ho Kyu Kang | — | | Catherine P. Lego | 377,000 | | Bethany J. Mayer | — | | Jyoti K. Mehra | — | | Abhijit Y. Talwalkar | — | | Lih Shyng (Rick L.) Tsai | — | | Leslie F. Varon | — |
Director Compensation
| Compensation Matters |
Compensation Discussion and Analysis
| | Table of Contents | Page | | I. | Overview of Executive Compensation | 29 | | | Our Business, Our Industry Environment, and Our Financial Performance | 30 | | | Executive Compensation Philosophy and Program Design | 31 | | | 2022 Say on Pay Voting Results and Stockholder Outreach | 33 | | II. | Executive Compensation Governance and Procedures | 34 | | | Role of the Compensation and Human Resources Committee | 34 | | | Role Of Committee Advisors | 34 | | | Role of Management | 35 | | | Peer Group Practices and Survey Data | 35 | | | Assessment of Compensation Risk | 36 | | | Tax and Accounting Considerations | 36 | | III. | Primary Components of NEO Compensation; CY2022 Compensation Payouts; CY2023 Compensation Targets and Metrics | 36 | | | Base Salary | 36 | | | Annual Incentive Program | 37 | | | Long-Term Incentive Program | 43 | | | Compensation Recovery, or “Clawback” Policy | 46 | | | Stock Ownership Guidelines | 46 | | | Severance/Change in Control Arrangements | 46 | | | Other Benefits Not Available to All Employees | 46 |
I. OVERVIEW OF EXECUTIVE COMPENSATION
| (1) “CEO Total Compensation” consists of base salary, annual incentive payments, grant date fair values of equity-based awards both under the long-term incentive program or otherwise, and all other compensation as reported in the “Summary Compensation Table” below. |
Executive Compensation Philosophy
| • | provide competitive compensation to attract and retain top talent; |
Executive Compensation Philosophy
| • | create stockholder value over the long-term; |
Executive Compensation Philosophy
| • | align our annual program to annual performance and our long-term program to longer-term performance; |
Executive Compensation Philosophy
| • | recognize that a long-term, high-quality management team is a competitive differentiator for Lam, enhancing customer trust/ market share and, therefore, stockholder value; and |
Executive Compensation Philosophy
| • | performance that creates long-term stockholder value; |
Executive Compensation Philosophy
| • | retention of a long-term, high-quality management team. |
Program Design
| Element | How it is Paid | Purpose/Design | | Base Salary | Cash | We believe the purpose of base salary is to provide competitive compensation to attract and retain top talent and to provide employees, including our NEOs, with a fixed and fair amount of compensation for the jobs they perform. Accordingly, we seek to ensure that our base salary levels are competitive in reference to peer group practice and market survey data. | | Annual Incentive Program (AIP) | Cash | Our annual incentive program is designed to provide annual, performance-based compensation that is based on the achievement of pre-set annual financial, strategic, and operational objectives aligned with outstanding performance, and will allow us to attract and retain top talent, while maintaining cost-effectiveness to the Company. For more details regarding the design of the annual incentive program, see “III. Primary Components of NEO Compensation; CY2022 Compensation Payouts; CY2023 Compensation Targets and Metrics - Annual Incentive Program” below. | | Long-Term Incentive Program (LTIP) | A combination of: • market-based performance restricted stock units (“Market-based PRSUs”); • stock options; and • service-based RSUs | Our long-term incentive program is designed to attract and retain top talent, provide competitive levels of compensation, align pay with stock performance over a multi-year period, reward our NEOs for outstanding Company performance, and create stockholder value over the long-term. The program design provides that the target award opportunity is awarded in a combination of Market-based PRSUs, stock options, and service-based RSUs. For more details regarding the design of the LTIP, see “III. Primary Components of Named Executive Officer Compensation; Calendar Year 2022 Compensation Payouts; Calendar Year 2023 Compensation Targets and Metrics−Long-Term Incentive Program−Design” below. |
Program Design
| (1) The Company’s LTIP design provides that the target award opportunity is awarded in a combination of Market-based PRSUs, stock options and service-based RSUs, with at least 10% of the award in each of these last two vehicles. In calendar years 2022 and 2023, for our CEO and NEOs who are executive vice presidents, the percentages of the LTIP target award opportunity awarded in Market-based PRSUs, stock options and service-based RSUs were 60%, 20% and 20%, respectively; while for NEOs who are senior vice presidents, the percentages of the LTIP target award opportunity awarded in Market-based PRSUs, stock options and service-based RSUs were 55%, 15% and 30%, respectively. See “III. Primary Components of Named Executive Officer Compensation; Calendar Year 2022 Compensation Payouts; Calendar Year 2023 Compensation Targets and Metrics – Long-Term Incentive Program – Design” for further information regarding the impact of such a target pay mix. |
Program Design
| (2) For purposes of this illustration, we include Market-based PRSUs and stock options as performance-based, but do not classify service-based RSUs as performance-based. |
2022 Say on Pay Voting Results and Stockholder Outreach
| Topics | What we heard from our stockholders | Our perspective/How we responded | | Our Annual Incentive Program | We received favorable feedback from stockholders on our additional disclosure relating to the individual performance factor component of the AIP, which was intended to assist stockholders in better understanding how the program supports pay for performance. | Beginning with our 2021 proxy statement, we have added extensive detail to explain how the individual performance factor component of our AIP is determined. We recognize the need to explain how the individual performance factor component of our AIP is linked to the operating metrics we use to manage our business, and ultimately to our business results and financial performance. | | Our Long-Term Incentive Program | We received positive feedback on the increase to the relative weighting of Market-based PRSUs in the calendar year 2022 LTIP. Overall, stockholders continued to be satisfied with the design and pay-for-performance alignment of our LTIP. | Having substantially increased the relative weighting of Market-based PRSUs in the 2022 LTIP in order to enhance the alignment of pay with performance, our compensation and human resources committee did not make further changes to the program for the 2023 LTIP. However, the committee regularly evaluates the structure of our compensation programs, with the assistance of their compensation consultant, to ensure that our programs continue to serve their intended purposes. |
Role of the Compensation and Human Resources Committee
| • | reviewing and approving the appropriate peer group companies for purposes of evaluating the Company’s compensation competitiveness; |
Role of the Compensation and Human Resources Committee
| • | recommending to the independent members of the Board corporate goals and objectives under the Company’s compensation plans, compensation packages (e.g., annual base salary level, annual cash incentive award, long-term incentive award and any employment agreement, severance arrangement, change-in-control arrangement, equity grant, or special or supplemental benefits, and any material amendment to any of the foregoing) applicable to our CEO, and compensation payouts for our CEO; |
Role of the Compensation and Human Resources Committee
| • | reviewing and recommending for appropriate Board action all cash, equity-based and other compensation packages, and compensation payouts applicable to the chair and other non-employee members of the Board; |
Role of Management
Role of Management Our CEO, with support from our human resources and finance organizations, develops recommendations for the compensation of our other executive officers. Typically, these recommendations cover base salaries, annual incentive program target award opportunities, long-term incentive program target award opportunities, and the criteria upon which these award opportunities may be earned, as well as actual payout amounts under the annual and long-term incentive programs. The committee considers our CEO’s recommendations within the context of competitive compensation data, the Company’s compensation philosophy and objectives, current business conditions, the advice of Compensia, and any other factors it considers relevant. Our CEO attends committee meetings at the request of the committee but leaves the meeting for any deliberations related to and decisions regarding his own compensation, when the committee meets in executive session, and at any other time requested by the committee.
Peer Group Practices and Survey Data
Peer Group Practices and Survey Data In establishing the total compensation levels of our executive officers, as well as the mix and weighting of individual compensation elements, the committee monitors compensation data from a group of comparably sized companies in the technology industry (the “Peer Group”), which may differ from peer groups used by stockholder advisory firms. The committee selects the companies constituting our Peer Group based on their comparability to our lines of business and industry, annual revenue, and market capitalization, and our belief that we are likely to compete with them for executive talent. Our Peer Group is focused on public semiconductor, semiconductor equipment and materials companies that file standard reports with the SEC as domestic issuers, and similarly-sized high-technology equipment and hardware companies with a global presence and a significant investment in research and development. The table below summarizes how the calendar year 2023 Peer Group companies compare to the Company: Figure 29. Peer Group Revenue and Market Capitalization
Peer Group Practices and Survey Data
| Metric | Lam Research ($M) | Target for Peer Group | Peer Group Median ($M) | | Revenue (last completed reported four quarters as of July 5, 2022) | 16,737 | Approximately 0.33 to 3 times Lam | 18,918 | | Market Capitalization (30-day average as of July 5, 2022) | 64,664 | Approximately 0.33 to 3 times Lam | 75,385 |
Peer Group Practices and Survey Data
Based on these criteria, the Peer Group and targets may be modified from time to time. Our Peer Group was reviewed in August 2022 to ensure that our Peer Group continues to fit within our Peer Group criteria outlined above, and no changes were made for calendar year 2023 compensation decisions. Our Peer Group consists of the companies listed as follows: Figure 30. Peer Group Companies for Calendar Year 2023
Peer Group Practices and Survey Data
| Advanced Micro Devices, Inc. | Broadcom Inc. | Microchip Technology Incorporated | Qualcomm Incorporated | | Agilent Technologies, Inc. | Corning Incorporated | Micron Technology, Inc. | Seagate Technology Holdings Plc | | Analog Devices, Inc. | Intel Corporation | NVIDIA Corporation | Texas Instruments Inc. | | Applied Materials, Inc. | KLA Corporation | NXP Semiconductors N.V. | Western Digital Corporation |
Peer Group Practices and Survey Data
We derive revenue, market capitalization, and NEO compensation data from public filings made by our Peer Group companies with the SEC and from other publicly available sources. Radford Technology Survey data may be used to supplement compensation data from public filings as needed. The committee reviews compensation practices and selected data on base salary, bonus targets, total cash compensation, equity awards, and total compensation drawn from the Peer Group companies and/or the Radford Technology Survey as a reference to help ensure compensation packages are consistent with market norms. Base pay levels for each executive officer are generally set with reference to market-competitive levels and in reflection of each officer’s skills, experiences, and performance. Variable pay target award opportunities and total direct compensation for each executive officer are generally designed to deliver market-competitive compensation for the achievement of stretch goals, with downside risk for underperforming and upside reward for overperforming. For those executive officers who are new to their roles, compensation arrangements may be designed to deliver below-market compensation for a period of time. However, the committee does not “target” pay at any specific percentile. Rather, individual pay positioning depends on a variety of factors, such as prior job performance, job scope and responsibilities, skill set, prior experience, time in position, internal comparisons of pay levels for similar skill levels or positions, our goals to attract and retain executive talent, Company performance, and general market conditions.
Taxation of “Parachute” Payments
Taxation of “Parachute” Payments Sections 280G and 4999 of the Code provide that “disqualified individuals” within the meaning of the Code (which generally includes certain officers, directors and employees of the Company) may be subject to additional tax if they receive payments or benefits in connection with a change in control of the Company that exceed certain prescribed limits. The Company or its successor may also forfeit a deduction on the amounts subject to this additional tax. We did not provide any of our executive officers, any director, or any other service provider with a “gross-up” or other reimbursement payment for any tax liability that the individual might owe as a result of the application of sections 280G or 4999 during fiscal year 2023, and we have not agreed and are not otherwise obligated to provide any individual with such a “gross-up” or other reimbursement as a result of the application of sections 280G and 4999.
Internal Revenue Code Section 409A
Internal Revenue Code Section 409A Section 409A of the Code imposes significant additional taxes on an executive officer, director, or service provider that receives non-compliant “deferred compensation” that is within the scope of section 409A. Among other things, section 409A potentially applies to cash awards under the LTIP, if any, the Elective Deferred Compensation Plan, certain equity awards, and severance arrangements. To assist our employees in avoiding additional taxes under section 409A, we have structured the LTIP, the Elective Deferred Compensation Plan, and our equity awards in a manner intended to qualify them for exemption from, or compliance with, section 409A.
Accounting for Stock-Based Compensation
Accounting for Stock-Based Compensation We follow ASC 718 for accounting for our stock options and other stock-based awards. ASC 718 requires companies to calculate the grant date “fair value” of their stock option grants and other equity awards using a variety of assumptions. This calculation is performed for accounting purposes. ASC 718 also requires companies to recognize the compensation cost of stock option grants and other stock-based awards in their income statements over the period that an employee is required to render service in exchange for the option or other equity award.
III. PRIMARY COMPONENTS OF NEO COMPENSATION; CY2022 COMPENSATION PAYOUTS; CY2023 COMPENSATION TARGETS AND METRICS
III. PRIMARY COMPONENTS OF NEO COMPENSATION; CY2022 COMPENSATION PAYOUTS; CY2023 COMPENSATION TARGETS AND METRICS This section describes the components of our executive compensation program. It also describes, for each component, the payouts to our NEOs for calendar year 2022 and the forward-looking actions taken with respect to our NEOs in calendar year 2023.
Annual Incentive Program
Annual Incentive Program
Annual Incentive Program Components
Annual Incentive Program Components The components of our annual incentive program, each of which plays a role in determining actual payments made, are described in Figure 32 below. For calendar year 2023, the committee approved the addition of a new component to our annual incentive program, the Profitability Performance Factor. Figure 32. Annual Incentive Program Components The Funding Factor is set by the committee to create a maximum payout amount from which annual incentive program payouts may be made. The committee may exercise negative (but not positive) discretion against the Funding Factor result, and generally the entire funded amount is not paid out. Achievement of a minimum level of performance against the Funding Factor goal is required to fund any program payments. As a guide for using negative discretion against the Funding Factor result and for making payout decisions, the committee primarily tracks the results of the Performance Factors, which are generally weighted equally, and against which discretion may be applied in a positive or negative direction, provided the Funding Factor result is not exceeded. The metrics and goals for the annual incentive program are set annually in connection with our annual business planning cycle, and are directly connected to our annual business plans and goals. Goals are set depending on the business environment and the Company’s annual objectives and strategies, encompassed in the Annual Operating Plans for the Company and the organizations managed by each of the NEOs, to ensure that they remain stretch goals regardless of changes in the business environment, which can vary significantly from year-to-year in our industry. Accordingly, as business conditions improve, goals are calibrated to require better performance, and if business conditions deteriorate, goals are calibrated to incentivize stretch performance under more difficult conditions. The interplay between our corporate planning cycle and our compensation planning and evaluation cycle is summarized in Figure 33 below. Figure 33. Annual Planning and Compensation Decision Cycle We believe that, over time, outstanding business results create stockholder value. Consistent with this belief, multiple performance-based metrics (non-GAAP operating income, non-GAAP gross margin, product market share, and strategic, operational, and organizational metrics embodied in organizational Annual Operating Plans) are established for our NEOs as part of the annual incentive program. The specific metrics and goals and the relative weightings for the Performance Factors are determined by the committee considering the recommendation of our CEO, other than the metrics and goals for the Individual Performance Factor, which are determined by our CEO, or in the case of the CEO, by the committee. Generally, the Performance Factors are weighted equally. In recent years, including calendar year 2022, the committee used a Corporate Performance Factor, with the metric of non-GAAP operating income(8) as a percentage of revenue (“non-GAAP operating margin”), and an Individual Performance Factor, based primarily on our performance to corporate-level Annual Operating Plan goals, with each of the Corporate Performance Factor and Individual Performance Factor weighted equally. The committee selected non-GAAP operating margin as the Corporate Performance Factor metric because the committee believes that it is the performance metric that best reflects core operating results. Non-GAAP operating margin is considered useful to investors for analyzing business trends and comparing performance to prior periods. By excluding certain costs and expenses that are not indicative of core results, non-GAAP results are more useful for analyzing business trends over multiple periods. See “Figure 37. Individual Performance Factor Components for Calendar Year 2022” below for additional detail regarding the determination of the Individual Performance Factor for calendar year 2022. For calendar year 2023, in light of the focus by the Board, committee and management team on the profitability of the Company, the committee determined to add a third factor, the Profitability Performance Factor, to the 2023 annual incentive program, with the metric of non-GAAP gross margin as a percentage of revenue. The committee selected non-GAAP gross margin as a percentage of revenue as the Profitability Performance Factor metric because the committee believes that it is the performance metric that has the largest impact on the overall profitability of the Company. Non-GAAP gross margin as a percentage of revenue is considered useful to investors for analyzing the core profitability of the Company’s business and comparing performance to prior periods. Under the calendar year 2023 annual incentive program, the Corporate Performance Factor, Profitability Performance Factor and Individual Performance Factor will be weighted equally; however, the program was designed to cause Profitability Performance Factor results to scale up and down more rapidly (as compared to the Corporate Performance Factor) in the event that the Company’s non-GAAP gross margin as a percentage of revenue were to outperform or underperform relative to the goal for calendar year 2023, thereby increasing both the risk and potential reward associated with the program as compared to prior year programs that only incorporated the Corporate Performance Factor and Individual Performance Factor. The committee establishes individual target award opportunities for each NEO as a percentage of base salary. Specific target award opportunities are determined based on job scope and responsibilities, as well as an assessment of Peer Group data. Awards have a maximum payment amount defined as a multiple of the target award opportunity.
Annual Incentive Program Components
| (8) Non-GAAP operating income is derived from results determined in accordance with generally accepted accounting principles ("GAAP"), with charges and credits in the following line items excluded from GAAP results for applicable quarters during fiscal years 2023 and 2022: amortization related to intangible assets acquired through certain business combinations; product rationalization costs; restructuring charges; transformational costs; and elective deferred compensation-related liability net increase or decrease. |
Annual Incentive Program Components
We believe the metrics and goals set under this program have been effective to motivate our NEOs and the organizations they lead, and to achieve pay-for-performance results. Figure 34. Annual Incentive Program Payouts for Calendar Years 2020-2022
Annual Incentive Program Components
| Calendar Year | Average NEO’s Annual Incentive Payout as % of Target Award Opportunity | Business Environment | | 2022 | 96 | Strong revenue, profitability, and operating cash generation performance despite global supply chain constraints and inflationary pressures. Our installed base grew, and semiconductor investments increased across both memory and foundry/logic segments. | | 2021 | 168 | Strong revenue, profitability, and operating cash generation performance, with growth in our served available market, market share, and installed base. Semiconductor equipment investments increased across both memory and foundry/logic segments. | | 2020 | 137 | Strong revenue and profitability performance, with growth in our served available market, market share, and installed base. Demand for semiconductor equipment increased across both memory and foundry/logic segments. |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions In February 2022, the committee established the metrics and goals for the Funding Factor and the Corporate Performance Factor, set the calendar year 2022 target award opportunities, determined that the Corporate Performance Factor and the Individual Performance Factor should be weighted equally, and established the metrics and goals for the Individual Performance Factors for each then-employed NEO. In February 2023, the committee considered the actual results under these factors and made payout decisions for the calendar year 2022 program. 2022 Annual Incentive Program Funding Factor and Corporate Performance Factor. In February 2022, the committee set non-GAAP operating margin as the metric for the Funding Factor and Corporate Performance Factor for calendar year 2022. For the Funding Factor, the committee set the following parameters for calendar year 2022:
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| • | a minimum achievement of 5% non-GAAP operating margin was required to fund any program payments; and |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| • | achievement of non-GAAP operating margin greater than or equal to 20% would result in the maximum funding of 225% of target; |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| • | with actual funding levels interpolated between those points. |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
For the Corporate Performance Factor, the committee set the following parameters:
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| • | a goal of non-GAAP operating margin of 32.0% for the year, which was designed to be a stretch goal, and which would result in a Corporate Performance Factor of 1.0; and |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| • | achievement of non-GAAP operating margin greater than or equal to 37% would result in the maximum Corporate Performance Factor of 1.50 for the maximum payout; |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| • | with the actual performance result interpolated linearly between and below those points, subject to the minimum set by the Funding Factor. |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
The Corporate Performance Factor goal was designed to be a stretch goal. As is discussed above in “Annual Incentive Program Components”, goals are set annually depending on the business environment and the Company’s annual objectives and strategies, to ensure that they remain stretch goals regardless of changes in the business environment, which can vary significantly from year-to-year in our industry. As shown in Figure 35, over the five years through calendar year 2022, the committee raised the Corporate Performance Factor goal year-over-year each year as our outlook and the industry outlook improved, with the exception of calendar year 2019, when a weakened industry outlook for wafer fabrication equipment spending was reflected in a Corporate Performance Factor goal that was slightly below that of the prior year. Figure 35. Corporate Performance Factor Goals for Calendar Years 2018-2022 Actual non-GAAP operating margin was 31.7% for calendar year 2022. This performance resulted in a Funding Factor of 225% of target and a Corporate Performance Factor of 0.97 for calendar year 2022. 2022 Annual Incentive Program Target Award Opportunities. The annual incentive program target award opportunities for calendar year 2022 for each NEO were as set forth below in Figure 36 in accordance with the principles described above under “Executive Compensation Governance and Procedures - Peer Group Practices and Survey Data.” The target award opportunities (as a percentage of base salary) for each of our NEOs remained the same for calendar year 2022 relative to the prior year, with the exception of Mr. Archer, Dr. Vahedi and Mr. Varadarajan, whose target award opportunities were increased in order to increase the competitiveness of cash compensation while continuing to align compensation with performance. The committee also set a maximum award opportunity, which for calendar year 2022 was equal to 2.25 times the target award opportunity, consistent with prior years. Figure 36. Annual Incentive Program Target Award Opportunities for Calendar Year 2022
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| Named Executive Officer | Target Award Opportunity (% of Base Salary) | Target Award Opportunity ($)(1) | | Timothy M. Archer | 200 | 2,300,000 | | Douglas R. Bettinger | 115 | 810,750 | | Patrick J. Lord | 110 | 635,427 | | Vahid Vahedi | 100 | 537,151 | | Seshasayee (Sesha) Varadarajan | 100 | 537,151 |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| (1) Calculated by multiplying each NEO’s annual base salary as of October 1, 2022 by their respective target award opportunity percentage. |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
2022 Annual Incentive Program Individual Performance Factors. For calendar year 2022, as shown in Figure 37 below, the committee determined the Individual Performance Factor for each NEO (other than Mr. Archer) using a formula that took into consideration two elements: a weighted score for each NEO based on the Company’s performance relative to corporate-level annual operating plan goals, with weightings for each NEO based on the extent to which they (and the organizations managed by them) were expected to contribute to and be accountable for that corporate-level performance; and an individual score reflecting the extent to which individual NEOs provided exceptional contributions during the year. Figure 37. Individual Performance Factor Components for Calendar Year 2022
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| | Rationale for Inclusion | Contribution to Individual Performance Factor | | Corporate Scorecard Weighted Achievement | Reflects the Company’s performance relative to corporate-level annual operating plan goals, weighted according to the expected contributions of individual NEOs (and the organizations managed by them) | 80% | | Individual Achievement | Reflects the extent to which individual NEOs provide exceptional contributions during the year | 20% |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
The committee evaluated the Company’s performance relative to corporate-level annual operating plan goals, and determined to assign the scores shown in Figure 38 below. Figure 38. Corporate Scorecard for Calendar Year 2022
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| Corporate Goal Area | Objectives | Score | | Market Performance and Execution | Relate to: growth in our served addressable market; success of new product launches; penetration of new market opportunities and defense of established positions; and achievement of market share targets. | 97% | | Safety, Quality and Customer Satisfaction | Relate to: safety; quality; growth of Customer Support Business Group revenue; on-time delivery of products; and customer satisfaction. | 93% | | Human Capital Management & ESG | Relate to: employee engagement, as measured by employee survey; employee inclusion, as measured by employee survey; employee diversity; talent retention; and recognition of ESG progress through continued inclusion in the Dow Jones Sustainability Index for North America. | 95% | | Financial Performance | Relate to: operating income; earnings per share; and gross margin. | 93% |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
The committee assigned weightings for each corporate goal area for each of the NEOs (other than Mr. Archer), which were combined with the corporate-level scores to determine a weighted achievement score, as shown in Figure 39 below. Figure 39. Corporate Scorecard Weightings and Achievements for Calendar Year 2022
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| | Individual Weightings | | | | | | | Market Performance and Execution | Safety, Quality and Customer Satisfaction | Human Capital Management & ESG | Financial Performance | Corporate Scorecard Weighted Achievement | | Douglas R. Bettinger | 20% | 20% | 20% | 40% | 93.8% | | Patrick J. Lord | 20% | 40% | 20% | 20% | 93.8% | | Vahid Vahedi | 30% | 30% | 20% | 20% | 94.2% | | Seshasayee (Sesha) Varadarajan | 30% | 30% | 20% | 20% | 94.2% |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
The committee also determined the individual achievement scores for each NEO (other than Mr. Archer), as shown in Figure 40 below. The corporate scorecard weighted achievements for each such NEO were then combined with the individual achievements at a weighting of 80% and 20%, respectively, as described in Figure 37 above, to yield the Individual Performance Factors shown in Figure 40 below. In determining Mr. Archer’s Individual Performance Factor, the independent members of the Board evaluated the Company’s performance against its corporate-level goals, Mr. Archer’s individual performance, and the performance of the other members of the management team reporting to him, and determined to assign him an Individual Performance Factor equal to the average of the Individual Performance Factors of the executive and senior vice presidents reporting directly to him, rounded to three decimal places, as shown in Figure 40 below. The committee declined to exercise its discretion to recommend an adjustment to Mr. Archer’s Individual Performance Factor. Figure 40. Individual Performance Factors for Calendar Year 2022
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| Named Executive Officer | Corporate Scorecard Weighted Achievement (80%) | Individual Achievement (20%) | Individual Performance Factor | | Timothy M. Archer | n/a(1) | n/a(1) | 0.954 | | Douglas R. Bettinger | 93.8% | 100% | 0.950 | | Patrick J. Lord | 93.8% | 100% | 0.950 | | Vahid Vahedi | 94.2% | 100% | 0.954 | | Seshasayee (Sesha) Varadarajan | 94.2% | 100% | 0.954 |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| (1) As is discussed above, Mr. Archer’s Individual Performance Factor was determined as the average of the Individual Performance Factors of the executive and senior vice presidents reporting directly to him. |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
Calendar Year 2022 Annual Incentive Program Payout Decisions. Based on the above results and decisions, for the calendar year 2022 annual incentive program, the committee approved the payouts for each NEO as shown below in Figure 41, which were less than the maximum payout available under the Funding Factor and below each NEO’s target award opportunity: Figure 41. Annual Incentive Program Payouts for Calendar Year 2022
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| Named Executive Officer | Target Award Opportunity ($)(1) | Maximum Payout under Funding Factor (225.0% of Target Award Opportunity) ($)(2) | Individual Performance Factor | Corporate Performance Factor | Actual Payouts ($)(3) | | Timothy M. Archer | 2,300,000 | 5,175,000 | 0.954 | 0.970 | 2,212,600 | | Douglas R. Bettinger | 810,750 | 1,824,188 | 0.950 | 0.970 | 778,320 | | Patrick J. Lord | 635,427 | 1,429,711 | 0.950 | 0.970 | 610,010 | | Vahid Vahedi | 537,151 | 1,208,590 | 0.954 | 0.970 | 516,739 | | Seshasayee (Sesha) Varadarajan | 537,151 | 1,208,590 | 0.954 | 0.970 | 516,739 |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| (1) Calculated by multiplying each NEO’s annual base salary as of October 1, 2022 by their respective target award opportunity percentage. |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| (2) The Funding Factor resulted in a potential payout of up to 225.0% of target award opportunity for the calendar year (based on the actual non-GAAP operating margin results detailed under “2022 Annual Incentive Program Corporate Performance Factor” above and the specific goal described in the second paragraph under “2022 Annual Incentive Program Funding Factor and Corporate Performance Factor” above). |
Calendar Year 2022 Annual Incentive Program Parameters and Payout Decisions
| (3) Calculated by multiplying each NEO’s target award opportunity, in dollars, by the average of (x) the Corporate Performance Factor of 0.970 and (y) that NEO’s Individual Performance Factor. |
Calendar Year 2023 Annual Incentive Program Parameters
Calendar Year 2023 Annual Incentive Program Parameters In February 2023, the committee set the target award opportunity for each NEO as a percentage of base salary, and set a maximum award opportunity equal to 2.50 times the target award opportunity. For calendar year 2023, target award opportunities for the NEOs remained unchanged compared to the prior year. The target award opportunity for each NEO is shown below. The maximum award of 2.50 times target for calendar year 2023 was increased from prior years, when it was set at 2.25 times target. The committee’s decision to increase the maximum award for calendar year 2023 was based on the committee’s view that the addition of the Profitability Performance Factor to the calendar year 2023 annual incentive program as a second corporate-level goal would make the achievement of target award opportunities more difficult for each NEO to achieve, including by requiring enhanced coordination of execution across the Company. The committee also considered that the design of the Profitability Performance Factor element of the program would result in payouts increasing or decreasing more rapidly in the event of outperformance or underperformance relative to the goal for calendar year 2023, thereby increasing both the risk and potential reward associated with the program as compared to prior year programs that only incorporated the Corporate Performance Factor and Individual Performance Factor. The committee’s view was that balancing that increased difficulty and risk with the potential for larger maximum awards would serve the committee’s and the program’s objective of incentivizing and rewarding outperformance. Figure 42. Annual Incentive Program Target Award Opportunities for Calendar Year 2023
Calendar Year 2023 Annual Incentive Program Parameters
| Named Executive Officer | Target Award Opportunity (% of Base Salary) | | Timothy M. Archer | 200 | | Douglas R. Bettinger | 115 | | Patrick J. Lord | 110 | | Vahid Vahedi | 100 | | Seshasayee (Sesha) Varadarajan | 100 |
Calendar Year 2023 Annual Incentive Program Parameters
As noted above, the committee also determined to add an additional Performance Factor, the Profitability Performance Factor, to the annual incentive program for calendar year 2023. The committee approved non-GAAP operating margin as the annual metric for the Funding Factor and the Corporate Performance Factor, approved non-GAAP gross margin as a percentage of revenue as the annual metric for the Profitability Performance Factor, and set the annual goals for the Funding Factor, the Corporate Performance Factor, and the Profitability Performance Factor. Consistent with the program design, the Corporate Performance Factor and Profitability Performance Factor goals are more difficult to achieve than the Funding Factor goal. Individual Performance Factor metrics and goals were also established for each NEO, based upon corporate-level annual operating plan goals and individual performance. All Corporate, Profitability and Individual Performance Factor goals were designed to be stretch goals.
Long-Term Incentive Program
Long-Term Incentive Program
Design
Design Our LTIP is designed to attract and retain top talent, provide competitive levels of compensation, align pay with achievement of business objectives and with stock performance over a multi-year period, reward our NEOs for outstanding Company performance, and create stockholder value over the long-term. Under the current long-term incentive program, at the beginning of each multi-year performance period, target award opportunities (expressed as a U.S. dollar value), performance metrics and the mix of vehicles used are established for the program. Prior to our 2022/2024 long-term incentive program, 50% of the total target award opportunity was generally awarded in Market-based PRSUs, and the remaining 50% was awarded in a combination of stock options and service-based RSUs with at least 10% of the award in each of these two vehicles. The specific percentage of service-based RSUs and stock options was reviewed annually to determine whether service-based RSUs or stock options would be the more efficient form of equity for the majority of the award based on criteria such as the business environment and the potential value to motivate and retain the executives. We consider Market-based PRSUs and stock options to be performance-based, but do not classify service-based RSUs as performance-based. Beginning with our 2022/2024 long-term incentive program, the committee determined to substantially increase the weighting of Market-based PRSUs relative to prior years, with the aim of furthering the committee’s objective of aligning pay with performance. The committee also determined that it would be appropriate to provide for a different mix for the CEO and NEOs who are executive presidents than for NEOs who are senior vice presidents. Beginning with the 2022/2024 long-term incentive program, of the total target award opportunity for the CEO and NEOs who are executive vice presidents, 60% was awarded in Market-based PRSUs, 20% was awarded in stock options, and 20% was awarded in service-based RSUs; while for NEOs who are senior vice presidents, 55% was awarded in Market-based PRSUs, 15% was awarded in stock options, and 30% was awarded in service-based RSUs. Primarily as a result of this change, the percentage of the average NEO’s target pay mix which is performance-based increased from 59% in calendar year 2021 to 73% in calendar year 2022. While service-based RSUs and stock options vest on an annual basis over three years, Market-based PRSUs cliff vest after three years. Cliff, rather than annual, vesting provides for both retention and for aligning NEOs with longer-term stockholder interests.
Equity Vehicles
Equity Vehicles The equity vehicles used in our 2023/2025 long-term incentive program are as follows: Figure 43. 2023/2025 LTIP Program Equity Vehicles
Equity Vehicles
| Equity Vehicles | Vesting | Terms | | Market-based PRSUs • CEO/EVPs: 60% of Target Award Opportunity • SVPs: 55% of Target Award Opportunity | • Awards cliff vest three years from the March 1, 2023 grant date (the “Grant Date”) subject to satisfaction of a minimum performance requirement and continued employment. • Awards that vest at the end of the performance period are distributed in shares of our common stock. | • The number of Market-based PRSUs granted is determined by dividing the applicable percentage of the target opportunity by the 30 trading day average of the closing price of our common stock prior to the Grant Date, $497.18, rounded down to the nearest share. • The number of shares represented by the Market-based PRSUs that can be earned over the performance period is determined according to the performance parameters described in Figure 44 below. | | Stock Options • CEO/EVPs: 20% of Target Award Opportunity • SVPs: 15% of Target Award Opportunity | • Awards vest one-third on the first, second, and third anniversaries of the Grant Date, subject to continued employment. • Awards are exercisable upon vesting. • Expiration is on the seventh anniversary of the Grant Date. | • The number of stock options granted is determined by dividing the applicable percentage of the target opportunity by the 30 trading day average of the closing price of our common stock prior to the Grant Date, $497.18, rounded down to the nearest share and multiplying the result by three. The ratio of three options for every RSU is based on a Black Scholes fair value accounting analysis. • The exercise price of stock options is the closing price of our common stock on the Grant Date. | | Service-based RSUs • CEO/EVPs: 20% of Target Award Opportunity • SVPs: 30% of Target Award Opportunity | • Awards vest one-third on the first, second, and third anniversaries of the Grant Date, subject to continued employment. • Awards are distributed in shares of our common stock upon vesting. | • The number of RSUs granted is determined by dividing the applicable percentage of the target opportunity by the 30 trading day average of the closing price of our common stock prior to the Grant Date, $497.18, rounded down to the nearest share. |
Equity Vehicles
Figure 44. 2023/2025 Market-based PRSU Performance Parameters
Equity Vehicles
| Parameter | Terms | | | Performance Period | Three years from the first business day in February (February 1, 2023 through January 31, 2026). | | | Performance Index | PHLX Semiconductor Sector Total Return Index, or “XSOX index” | | | Number of Shares | • | Based on our “total return” stock price performance compared to the market price performance of the Performance Index, subject to a ceiling as described below. The stock price performance or market price performance is measured using the average closing price for the 50 trading days prior to the dates the performance period begins and ends, assuming that any dividends paid on our common stock are reinvested on the ex-dividend date (consistent with the treatment of dividends in the Performance Index). | | | • | The target number of shares represented by the Market-based PRSUs is increased by 2% of target for each 1% that our stock price performance exceeds the market price performance of the Performance Index; similarly, the target number of shares represented by the Market-based PRSUs is decreased by 2% of target for each 1% that our stock price performance trails the market price performance of the Performance Index. The result of the vesting formula is rounded down to the nearest whole number. | | | • | A table reflecting the potential payouts depending on various comparative results is shown below in Figure 45. | | Award Ceiling/Minimum | The final shares awarded cannot exceed 150% of target (requiring a positive percentage change in our stock price performance compared to that of the market price performance of the Performance Index equal to or greater than 25 percentage points) and can be as little as 0% of target (requiring a percentage change in our stock price performance compared to that of the market price performance of the Performance Index equal to or lesser than negative 50 percentage points). | |
Equity Vehicles
Figure 45. Market-based PRSU Potential Payouts
Equity Vehicles
| Lam’s Total Return % Change Performance Compared to XSOX Index % Change Performance | Market-based PRSUs That Can Be Earned (% of Target)(1) | | + 25% or more | 150 | | 10% | 120 | | 0% (equal to index) | 100 | | -10% | 80 | | -25% | 50 | | -50% or less | 0 |
Equity Vehicles
| (1) The results of the vesting formula (reflecting the number of Market-Based PRSUs that can be earned) are linearly interpolated between the stated percentages using the formula described in the third row of Figure 44. |
Target Award Opportunity
| | Target Award Opportunity ($) by Long-Term Incentive Program | | | | | Named Executive Officer | 2020/2022(1) | 2021/2023(2) | 2022/2024(3) | 2023/2025(4) | | Timothy M. Archer | 9,500,000 | 11,000,000 | 15,000,000 | 15,000,000 | | Douglas R. Bettinger | 2,750,000 | 3,050,000 | 3,750,000 | 4,250,000 | | Patrick J. Lord | 2,500,000 | 2,500,000 | 3,000,000 | 3,500,000 | | Vahid Vahedi | 2,150,000 | 2,250,000 | 2,750,000 | 3,000,000 | | Seshasayee (Sesha) Varadarajan | 2,150,000 | 2,250,000 | 2,750,000 | 3,250,000 |
Target Award Opportunity
| (1) The three-year performance period for the 2020/2022 LTIP began on February 3, 2020 and ended on February 2, 2023. |
Target Award Opportunity
| (2) The three-year performance period for the 2021/2023 LTIP began on February 1, 2021 and ends on January 31, 2024. |
Target Award Opportunity
| (3) The three-year performance period for the 2022/2024 LTIP began on February 1, 2022 and ends on January 31, 2025. |
Target Award Opportunity
| (4) The three-year performance period for the 2023/2025 LTIP began on February 1, 2023 and ends on January 31, 2026. |
Calendar Year 2020/2022 LTIP Award Parameters and Payouts
Calendar Year 2020/2022 LTIP Award Parameters and Payouts On March 2, 2020, the committee granted to each NEO, as part of the calendar year 2020/2022 CEO staff long-term incentive program (the “2020/2022 LTIP Awards”), Market-based PRSUs, and service-based RSUs and stock options, with a total target award opportunity shown below. The service-based RSUs and stock options vested over three years, one-third on each anniversary of the grant date. The Market-based PRSUs cliff vested three years from the grant date. The terms of the Market-based PRSUs and service-based RSUs granted to all the NEOs as part of the 2020/2022 LTIP Awards were the same. Figure 47. 2020/2022 LTIP Award Grants
Calendar Year 2020/2022 LTIP Award Parameters and Payouts
| Named Executive Officer | Target Award Opportunity ($) | Market-based PRSUs Award (#)(1) | Stock Options Award (#) | Service-based RSUs Award (#) | | Timothy M. Archer | 9,500,000 | 15,178 | 12,140 | 12,142 | | Douglas R. Bettinger | 2,750,000 | 4,393 | 3,512 | 3,515 | | Patrick J. Lord | 2,500,000 | 3,994 | 3,192 | 3,195 | | Vahid Vahedi | 2,150,000 | 3,435 | 2,748 | 2,748 | | Seshasayee (Sesha) Varadarajan | 2,150,000 | 3,435 | 2,748 | 2,748 |
Calendar Year 2020/2022 LTIP Award Parameters and Payouts
| (1) The number of Market-based PRSUs awarded is reflected at target. The final number of shares that may be earned is 0% to 150% of target. |
Calendar Year 2020/2022 LTIP Award Parameters and Payouts
In February 2023, the committee determined the payouts for the calendar year 2020/2022 LTIP Awards of Market-based PRSUs. The number of shares represented by the Market-based PRSUs earned over the performance period was based on our stock price performance compared to the market price performance of the XSOX index. Based on the above formula and Market-based PRSU Vesting Summary set forth in Figures 44 and 45, the Company’s stock price performance over the three-year performance period was equal to 64.76% and the performance of the XSOX index (based on market price) over the same three-year performance period was equal to 57.18%. Lam’s stock price outperformed the XSOX index by 7.58%, which resulted in a performance payout of 115.17% of the target number of Market-based PRSUs granted to each NEO. Based on such results, the committee made the following payouts to each NEO for the 2020/2022 LTIP Award of Market-based PRSUs. Figure 48. 2020/2022 LTIP Market-based PRSU Award Payouts
Calendar Year 2020/2022 LTIP Award Parameters and Payouts
| Named Executive Officer | Target Market-based PRSUs (#) | Actual Payout of Market-based PRSUs (115.17% of Target Award Opportunity) (#) | | Timothy M. Archer | 15,178 | 17,480 | | Douglas R. Bettinger | 4,393 | 5,059 | | Patrick J. Lord | 3,994 | 4,599 | | Vahid Vahedi | 3,435 | 3,956 | | Seshasayee (Sesha) Varadarajan | 3,435 | 3,956 |
Calendar Year 2023 LTIP Awards
Calendar Year 2023 LTIP Awards Calendar Year 2023 decisions for the 2023/2025 long-term incentive program. On March 1, 2023, the committee made a grant under the 2023/2025 long-term incentive program, of Market-based PRSUs, stock options, and service-based RSUs on the terms set forth in Figures 43 and 44 with a combined value equal to the NEO’s total target award opportunity, as shown below. Figure 49. 2023/2025 LTIP Award Grants
Calendar Year 2023 LTIP Awards
| Named Executive Officer | Target Award Opportunity ($) | Market-based PRSUs Award (#)(1) | Stock Options Award (#) | Service-based RSUs Award (#) | | Timothy M. Archer | 15,000,000 | 18,102 | 18,102 | 6,034 | | Douglas R. Bettinger | 4,250,000 | 5,128 | 5,127 | 1,709 | | Patrick J. Lord | 3,500,000 | 4,223 | 4,221 | 1,407 | | Vahid Vahedi | 3,000,000 | 3,318 | 2,715 | 1,810 | | Seshasayee (Sesha) Varadarajan | 3,250,000 | 3,595 | 2,940 | 1,961 |
Calendar Year 2023 LTIP Awards
| (1) The number of Market-based PRSUs awarded is reflected at target. The final number of shares that may be earned will be 0% to 150% of target. |
Severance/Change in Control Arrangements
Severance/Change in Control Arrangements The Company has adopted an executive severance policy and executive change in control policy, which are intended to help attract and retain our NEOs, and to facilitate a smooth transaction and transition planning in connection with change in control events. The severance policy provides for designated payments in the event of an involuntary termination of employment, death or disability, as such terms are defined in the policy. The change in control policy provides for designated payments in the case of a change in control or an acquisition by the Company, in each case when coupled with an involuntary termination (i.e., a double trigger is required before payment is made due to a change in control or acquisition by the Company), as such terms are defined in the policy. For additional information about these arrangements and detail about post-termination payments under these arrangements, see the “Executive Compensation Tables – Potential Payments upon Termination or Change in Control” section below.
Executive Compensation Tables
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(3) | Total ($) | | Timothy M. Archer President and Chief Executive Officer | 2023 | 1,150,000 | — | 11,291,907 | 3,643,192 | 2,212,600(4) | 12,400 | 18,310,099 | | | 2022 | 1,084,615 | — | 10,079,176 | 2,669,527 | 3,096,188(5) | 11,650 | 16,941,156 | | | 2021 | 1,050,000 | — | 11,071,172 | 1,195,482 | 2,170,382(6) | 8,700 | 15,495,736 | | Douglas R. Bettinger Executive Vice President and Chief Financial Officer | 2023 | 705,000 | — | 3,198,654 | 1,031,855 | 778,320(4) | 12,183 | 5,726,012 | | | 2022 | 687,984 | — | 2,519,532 | 667,118 | 1,304,012(5) | 11,564 | 5,190,210 | | | 2021 | 666,046 | — | 3,069,258 | 331,314 | 898,530(6) | 11,288 | 4,976,436 | | Patrick J. Lord Executive Vice President and Chief Operating Officer | 2023 | 577,661 | — | 2,633,964 | 849,515 | 610,010(4) | 11,392 | 4,682,542 | | | 2022 | 543,324 | — | 2,015,730 | 596,912 | 995,107(5) | 11,255 | 4,162,328 | | | 2021 | 515,145 | — | 2,515,577 | 292,852 | 639,360(6) | 10,370 | 3,973,304 | | Vahid Vahedi Senior Vice President and Chief Technology Officer | 2023 | 537,151 | — | 2,402,604 | 546,418 | 516,739(4) | 11,312 | 4,014,224 | | | 2022 | 514,174 | — | 1,977,102 | 410,119 | 792,700(5) | 9,124 | 3,703,219 | | | 2021 | 487,875 | — | 2,264,555 | 263,825 | 556,021(6) | 13,835 | 3,586,111 | | Seshasayee (Sesha) Varadarajan Senior Vice President, Global Products Group | 2023 | 537,151 | 6,400(7) | 2,603,133 | 520,842 | 516,739(4) | 9,312 | 4,193,577 | | | 2022 | 514,174 | 1,600(7) | 1,977,102 | 366,757 | 792,700(5) | 11,124 | 3,663,457 | | | 2021 | 487,875 | 1,600(7) | 2,264,555 | 244,598 | 556,021(6) | 8,387 | 3,563,036 |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control On December 22, 2020, the independent members of our Board adopted an executive severance policy (the “severance policy”) and an executive change in control policy (the “change in control policy”), effective as of January 1, 2021. The policies are applicable to our NEOs. The following is a summary of the policies.
Potential Payments to Named Executive Officers upon Termination or Change in Control
Potential Payments to Named Executive Officers upon Termination or Change in Control The tables below summarize the potential payments to our NEOs, assuming an employment termination or change in control of the Company as of the end of fiscal year 2023. These amounts are calculated assuming that the employment termination or change in control occurs on the last day of fiscal year 2023, June 25, 2023. The closing price per share of our common stock on June 23, 2023, which was the last trading day of fiscal year 2023, was $608.76. The short-term incentive program pro rata amounts are calculated by multiplying the applicable pro rata percentage by the target. Actual performance will not be known until after the end of calendar year 2023. Figure 58. Potential Payments to NEOs upon Termination or Change in Control
Potential Payments to Named Executive Officers upon Termination or Change in Control
| Potential Payments to Mr. Archer upon Termination or Change in Control as of June 25, 2023 | | | | | | | | | Involuntary Termination | | | | | | Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control or Acquisition by Lam ($) | | Compensation | | | | | | | Severance | — | — | — | 1,725,000 | 2,300,000 | | Short-term Incentive (5-year average) | — | — | — | 2,022,302 | 4,044,605 | | Short-term Incentive (pro rata) | — | 958,333 | — | 958,333 | 842,626 | | Long-term Incentives: | | | | | | | Stock Options (Unvested and Accelerated) | — | 2,843,931 | — | 91,294 | 2,843,931 | | Service-based Restricted Stock Units (Unvested and Accelerated) | — | 7,352,603 | — | 662,331 | 7,352,603 | | Performance-based Restricted Stock Units (Unvested and Accelerated) | — | 26,966,242 | — | 10,452,410 | 26,183,985 | | Benefits and Perquisites | | | | | | | Health Benefit Continuation/Retiree Health Plans | 825,000 | 825,000 | 825,000 | 825,000 | 825,000 | | Total | 825,000 | 38,946,109 | 825,000 | 16,736,670 | 44,392,750 |
Potential Payments to Named Executive Officers upon Termination or Change in Control
| Potential Payments to Mr. Bettinger upon Termination or Change in Control as of June 25, 2023 | | | | | | | | | Involuntary Termination | | | | | | Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control or Acquisition by Lam ($) | | Compensation | | | | | | | Severance | — | — | — | 705,000 | 1,057,500 | | Short-term Incentive (5-year average) | — | — | — | 433,724 | 1,301,173 | | Short-term Incentive (pro rata) | — | 337,813 | — | 337,813 | 361,437 | | Long-term Incentives: | | | | | | | Stock Options (Unvested and Accelerated) | — | 782,335 | — | 22,921 | 782,335 | | Service-based Restricted Stock Units (Unvested and Accelerated) | — | 2,004,038 | — | 175,932 | 2,004,038 | | Performance-based Restricted Stock Units (Unvested and Accelerated) | — | 7,304,511 | — | 2,793,600 | 7,076,835 | | Benefits and Perquisites | | | | | | | Health Benefit Continuation/COBRA Benefit | — | 30,122 | — | 30,122 | 30,122 | | Total | — | 10,458,819 | — | 4,499,112 | 12,613,440 |
Potential Payments to Named Executive Officers upon Termination or Change in Control
| Potential Payments to Dr. Lord upon Termination or Change in Control as of June 25, 2023 | | | | | | | | | Involuntary Termination | | | | | | Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control or Acquisition by Lam ($) | | Compensation | | | | | | | Severance | — | — | — | 577,661 | 866,492 | | Short-term Incentive (5-year average) | — | — | — | 317,851 | 953,554 | | Short-term Incentive (pro rata) | — | 264,761 | — | 264,761 | 264,876 | | Long-term Incentives: | | | | | | | Stock Options (Unvested and Accelerated) | — | 640,073 | — | 18,376 | 640,073 | | Service-based Restricted Stock Units (Unvested and Accelerated) | — | 1,636,956 | — | 143,059 | 1,636,956 | | Performance-based Restricted Stock Units (Unvested and Accelerated) | — | 5,955,499 | — | 2,270,065 | 5,767,392 | | Benefits and Perquisites | | | | | | | Health Benefit Continuation/COBRA Benefit | — | 45,182 | — | 45,182 | 45,182 | | Total | — | 8,542,471 | — | 3,636,955 | 10,174,525 |
Potential Payments to Named Executive Officers upon Termination or Change in Control
| Potential Payments to Dr. Vahedi upon Termination or Change in Control as of June 25, 2023 | | | | | | | | | Involuntary Termination | | | | | | Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control or Acquisition by Lam ($) | | Compensation | | | | | | | Severance | — | — | — | — | 805,727 | | Short-term Incentive (5-year average) | — | — | — | — | 821,218 | | Short-term Incentive (pro rata) | — | — | — | — | 228,116 | | Long-term Incentives: | | | | | | | Stock Options (Unvested and Accelerated) | — | 418,926 | — | — | 418,926 | | Service-based Restricted Stock Units (Unvested and Accelerated) | — | 1,999,777 | — | — | 1,999,777 | | Performance-based Restricted Stock Units (Unvested and Accelerated) | — | 4,928,522 | — | — | 4,783,027 | | Benefits and Perquisites | | | | | | | Health Benefit Continuation/Retiree Health Plans | 811,000 | 811,000 | 811,000 | 811,000 | 811,000 | | Total | 811,000 | 8,158,225 | 811,000 | 811,000 | 9,867,791 |
Potential Payments to Named Executive Officers upon Termination or Change in Control
| Potential Payments to Mr. Varadarajan upon Termination or Change in Control as of June 25, 2023 | | | | | | | | | Involuntary Termination | | | | | | Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control or Acquisition by Lam ($) | | Compensation | | | | | | | Severance | — | — | — | — | 805,727 | | Short-term Incentive (5-year average) | — | — | — | — | 820,640 | | Short-term Incentive (pro rata) | — | — | — | — | 227,955 | | Long-term Incentives: | | | | | | | Stock Options (Unvested and Accelerated) | — | 445,440 | — | — | 445,440 | | Service-based Restricted Stock Units (Unvested and Accelerated) | — | 2,091,699 | — | — | 2,091,699 | | Performance-based Restricted Stock Units (Unvested and Accelerated) | — | 5,114,194 | — | — | 4,953,480 | | Benefits and Perquisites | | | | | | | Health Benefit Continuation/COBRA Benefit | — | 43,588 | — | 43,588 | 43,588 | | Total | — | 7,694,921 | — | 43,588 | 9,388,529 |
CEO Pay Ratio
CEO Pay Ratio In accordance with SEC rules, we are providing the ratio of the annual total compensation of our CEO, to the median of the annual total compensation of our employees (other than our CEO). The fiscal year 2023 annual total compensation of our CEO, Mr. Archer, was $18,310,099, the fiscal year 2023 annual total compensation of our median compensated employee (other than our CEO) was $81,126, and the ratio of these amounts was 226 to 1. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources system of record and the methodology described below. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. For purposes of identifying our median compensated employee in fiscal year 2023, we used our global employee population as of June 25, 2023, identified based on our human resources systems of record. We used total direct compensation as our consistently applied compensation measure for such population. In this context, total direct compensation means the sum of the applicable annual base salaries determined as of June 25, 2023, the incentive cash target amount payable for service in calendar year 2023, and the approved value of the annual equity awards granted during fiscal year 2023 for our global employee population. We annualized the annual base salary and incentive cash target amounts for all employees who did not work for the entire year. Given its global population, the Company used the foreign currency exchange rates in effect at the end of fiscal year 2023 to determine the annual total direct compensation and therefore the median compensated employee. After identifying our median compensated employee, we then calculated the annual total direct compensation for our median compensated employee for fiscal year 2023 using the same methodology used for our CEO as set forth in the “Summary Compensation Table” of this proxy statement.
Pay Versus Performance
Pay Versus Performance The following disclosure has been prepared in accordance with the pay versus performance disclosure requirements set forth in Item 402(v) of Regulation S-K under the Exchange Act, which requires the presentation of certain information about the relationship between the compensation of our NEOs and our performance. Amounts reported as “Compensation Actually Paid” differ from the compensation amounts disclosed elsewhere in this proxy statement and do not reflect the value of the compensation actually received by the NEOs, including our CEO, who serves as our principal executive officer (“PEO”). For information about how our executive compensation program seeks to align pay with performance, please refer to “Executive Compensation and Other Information – Compensation Discussion and Analysis” beginning on page 28. Figure 59. Pay Versus Performance
Pay Versus Performance
| Fiscal Year | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(1)(2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($)(1) | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($)(1)(2) | Value of Initial Fixed $100 Investment Based On: (3) | | Net Income ($ in thousands) | Non-GAAP Operating Income as a Percentage of Revenue (%)(5) | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($)(4) | | | | 2023 | 18,310,099 | 35,457,770 | 4,654,089 | 8,924,931 | 209 | 190 | 4,510,931 | 30.7 | | 2022 | 16,941,156 | 10,266,747 | 4,179,804 | 3,029,959 | 152 | 145 | 4,605,286 | 31.3 | | 2021 | 15,495,736 | 56,855,461 | 4,171,767 | 17,871,377 | 211 | 171 | 3,908,458 | 31.5 |
Pay Versus Performance
| (1) Timothy M. Archer was our CEO for each of the years presented. Our other NEOs, other than the CEO, during the years presented were as follows: |
Pay Versus Performance
| • | FY 2023: Douglas R. Bettinger, Patrick J. Lord, Vahid Vahedi and Seshasayee (Sesha) Varadarajan | | • | FY 2022: Douglas R. Bettinger, Patrick J. Lord, Vahid Vahedi and Seshasayee (Sesha) Varadarajan | | • | FY 2021: Douglas R. Bettinger, Richard A. Gottscho, Patrick J. Lord and Vahid Vahedi |
Pay Versus Performance
| (2) The following table presents the amounts deducted from and added to our CEO’s total compensation for each year, as well as the average amounts deducted from and added to the average of the total compensation for the other NEOs, other than the CEO, for each year, as reported in the Summary Compensation Table, in order to determine the “compensation actually paid” to our CEO and the average “compensation actually paid” to the other NEOs, in accordance with SEC rules. Neither our CEO nor the other NEOs participated in any defined benefit or actuarial pension plans (including supplemental plans) during the years presented, and no such plans are reported in the Summary Compensation Table. As a result, no information regarding deductions or additions related to pension plans is presented. |
Pay Versus Performance
For purposes of these adjustments, the fair value of equity awards was determined as follows: (i) for service-based RSUs at fiscal year-end, using the closing price of the Company’s common stock on the last trading day preceding the fiscal year-end; (ii) for Market-based PRSUs at fiscal year-end, using a Monte Carlo simulation model with assumptions for expected volatility, risk-free interest rate, expected term and dividend yield determined as of the fiscal year-end; (iii) for service-based RSUs and Market-based PRSUs upon vesting, using the closing price of the Company’s common stock on the vesting date; (iv) for stock option awards at fiscal year-end, using a Black-Scholes option valuation model with assumptions for expected volatility, risk-free interest rate, expected term and dividend yield determined as of the fiscal year-end; and (v) for stock option awards upon vesting, using a Black-Scholes option valuation model with assumptions for expected volatility, risk-free interest rate, expected term and dividend yield determined as of the vesting date.
Pay Versus Performance
| | CEO | | | Other NEOs (Average) | | | | Adjustments | FY 2023 | FY 2022 | FY 2021 | FY 2023 | FY 2022 | FY 2021 | | Summary Compensation Table (SCT) Total | 18,310,099 | 16,941,156 | 15,495,736 | 4,654,089 | 4,179,804 | 4,171,767 | | (Deduct): SCT "Stock Awards" column value | (11,291,907) | (10,079,176) | (11,071,172) | (2,709,589) | (2,122,367) | (2,591,242) | | (Deduct): SCT "Option Awards" column value | (3,643,192) | (2,669,527) | (1,195,482) | (737,158) | (510,227) | (295,211) | | Add: year-end fair value of equity awards granted in the applicable fiscal year that are outstanding and unvested as of the applicable fiscal year-end | 18,979,835 | 11,041,230 | 13,042,142 | 4,391,629 | 2,280,231 | 3,081,156 | | Add (Deduct): year-over-year change in fair value of equity awards granted in prior years that are outstanding and unvested as of the applicable fiscal year-end | 7,625,472 | (7,109,304) | 27,474,359 | 1,681,231 | (1,644,600) | 8,431,240 | | Add: vesting date fair value of equity awards granted and vested in the applicable fiscal year | — | — | — | — | — | — | | Add (Deduct): year-over-year change in fair value of equity awards granted in prior years that vested in the applicable fiscal year | 5,477,463 | 2,142,368 | 13,109,878 | 1,644,729 | 847,118 | 5,073,667 | | (Deduct): fair value as of prior year-end of equity awards granted in prior years that failed to vest in the applicable fiscal year | — | — | — | — | — | — | | Add: dollar value of dividends/earnings paid on equity awards in the applicable fiscal year | — | — | — | — | — | — | | Compensation Actually Paid | 35,457,770 | 10,266,747 | 56,855,461 | 8,924,931 | 3,029,959 | 17,871,377 |
Pay Versus Performance
| (3) Total shareholder return is calculated based on the value of an initial fixed investment of $100 on June 26, 2020 through the end of the listed fiscal year, and assuming dividends are reinvested. |
Pay Versus Performance
| (4) The peer group used is the PHLX Semiconductor Sector Total Return Index, which is the same peer group used in Part II, Item 5 of our Form 10-K. |
Pay Versus Performance
| (5) Appendix A contains a reconciliation of non-GAAP operating income as a percentage of revenue to the results reported in our financial statements. |
Relationship Between Compensation Actually Paid and Performance
Relationship Between Compensation Actually Paid and Performance The following graphs present the relationships between: (i) “compensation actually paid” (“CAP”), as disclosed in the Pay Versus Performance table, compared to our total shareholder return (“TSR”); (ii) our TSR compared to the TSR of the PHLX Semiconductor Sector Total Return Index, which is the Company’s “peer group” for purposes of the Pay Versus Performance table; (iii) CAP as disclosed in the Pay Versus Performance table compared to our net income; and (iv) CAP as disclosed in the Pay Versus Performance table compared to our non-GAAP operating income as a percentage of revenue.(9) Figure 60. Relationships Between Compensation Actually Paid and Performance and Company TSR and Peer Group TSR
Relationship Between Compensation Actually Paid and Performance
| (9) Appendix A contains a reconciliation of non-GAAP operating income as a percentage of revenue to the results reported in our financial statements. |
Relationship Between Compensation Actually Paid and Performance
| (1) Total shareholder return is calculated based on the value of an initial fixed investment of $100 on June 26, 2020 through the end of the listed fiscal year, and assuming dividends are reinvested. |
Relationship Between Compensation Actually Paid and Performance
| (2) Appendix A contains a reconciliation of non-GAAP operating income as a percentage of revenue to the results reported in our financial statements. |
Proposal No. 1: Election of Directors
Proposal No. 1: Election of Directors This first proposal relates to the election to the Board of eleven nominees who are directors of the Company as of the date of this proxy statement. In general, the eleven nominees identified in this proposal who receive the highest number of “for” votes will be elected. However, any nominee who fails to receive affirmative approval from holders of a majority of the votes cast in such nominee’s election at the annual meeting, either by proxy or in person, will not be elected to the Board, even if they are among the top eleven nominees in total “for” votes. This requirement reflects the majority vote provisions implemented by the Company in November 2009. The term of office of each person elected as a director will be until the next annual meeting of stockholders, or until their successor is elected and qualified or their earlier resignation or removal. Unless otherwise instructed, the people named on the proxy card as proxy holders (the “Proxy Holders”) will vote the proxies received by them for the eleven nominees named below, each of whom is currently a director of the Company. The proxies cannot be voted for more than eleven nominees, whether or not there are additional nominees. If any nominee of the Company should decline or be unable to serve as a director as of the time of the annual meeting, then unless otherwise instructed, the proxies will be voted for any substitute nominee designated by the then-current Board to fill the vacancy. The Company is not aware of any nominee who will be unable, or will decline, to serve as a director. The nominees for election or reelection have been nominated for election to the Board in accordance with the criteria and procedures discussed above in “Governance Matters - Corporate Governance.” Appointment of New Directors. As part of its Board refreshment planning and continued focus on diversity, the Board identified the desirability of augmenting its skills and experiences in two areas: with the addition of a former executive of a major customer; and with the addition of a member with extensive senior executive leadership experience, broad international expertise with products that require high levels of engineering and manufacturing in complex global supply chains, and public company board experience. The Board identified Dr. Kang as a candidate without the involvement of a search firm. Dr. Kang was introduced by Mr. Archer and selected as a director because of his experience as a former executive of one of the Company's major customers, who had significant experience working with the Company as well as extensive knowledge of and experience in the semiconductor industry and semiconductor engineering and development. The Board retained a third-party search firm in connection with the second identified area of need, and selected Mr. Dineen as having significant executive leadership and public company directorship experience.The Board identified Mr. Dineen as a valuable addition to the Board due to his extensive global management and operations experience, and his experience serving on public company boards with global operations. Over the course of several months, Dr. Kang and Mr. Dineen each met with our chairman, nominating and governance committee chair, members of the nominating and governance committee, additional board members, and our president and CEO, as well as representatives of the Company’s executive team. Following those meetings, the nominating and governance committee separately recommended each of Dr. Kang and Mr. Dineen for appointment to the Board. The Board, after discussing each of the recommendations and increasing the size of the Board, approved each recommendation of the committee and appointed Dr. Kang and Mr. Dineen to the Board. Information Regarding Each Nominee. In addition to the biographical information concerning each nominee’s specific experience, attributes, positions and qualifications and age as of September 8, 2023, we believe that each of our nominees, while serving as a director and/or officer of the Company, has devoted adequate time to the Board and performed their duties with critical attributes such as honesty, integrity, wisdom, and an adherence to high ethical standards. Each nominee has demonstrated strong business acumen, an ability to make independent analytical inquiries, to understand the Company’s business environment and to exercise sound judgment, as well as a commitment to the Company and its core values. We believe the nominees have diverse viewpoints, skills, backgrounds, and experiences that will encourage a robust decision-making process for the Board.
Proposal No. 1: Election of Directors
| | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE ELEVEN DIRECTOR NOMINEES SET FORTH BELOW. |
Proposal No. 1: Election of Directors
2023 Nominees for Director
Proposal No. 1: Election of Directors
| Sohail U. Ahmed Director since 2019 Age 65 Board Committees: • Audit ◦ Member since 2022 • Compensation and Human Resources ◦ Member: 2020–2022 | Experience Sohail U. Ahmed is the former Senior Vice President and General Manager of the Technology and Manufacturing Group at Intel Corporation, a leading producer of microchips, computing and communications products, where he was responsible for overseeing the research and development and deployment of next-generation silicon logic technologies for production of future Intel microprocessors. He held that position from January 2015 to October 2018. Immediately prior to that, he was Corporate Vice President and General Manager, Logic Technology Department at Intel from 2004 to January 2015. Mr. Ahmed joined Intel in 1984, working as a process engineer, and held progressive technical and management positions in logic process development. Mr. Ahmed earned an M.S. degree in chemical engineering from the University of California, Davis, and a B.S. degree in chemical engineering from the University of Southern California. Qualifications The Board has concluded that Mr. Ahmed should serve as a director of the Company because of his extensive knowledge and experience acquired as an executive of a major semiconductor manufacturer focused on next-generation silicon logic technologies, his deep knowledge and understanding of semiconductor processing equipment technologies, and his experience as a senior executive of a major Company customer. Key Skills and Experiences • Industry Knowledge • Customer/Deep Technology Knowledge • Leadership Experience • Global Business Experience • Human Capital Management Experience • Manufacturing/Operations Experience |
Proposal No. 1: Election of Directors
| Timothy M. Archer Director since 2018 Age 56 | Experience Timothy M. Archer has served as the Company’s President and Chief Executive Officer since December 5, 2018. Mr. Archer joined the Company in June 2012 as our executive vice president, chief operating officer; and was promoted to president and chief operating officer in January 2018. Prior to joining us, he spent 18 years at Novellus Systems, Inc. in various technology development and business leadership roles, including most recently as chief operating officer from January 2011 to June 2012; executive vice president of Worldwide Sales, Marketing, and Customer Satisfaction from September 2009 to January 2011; and executive vice president of the PECVD and Electrofill Business Units from November 2008 to September 2009. His tenure at Novellus also included assignments as senior director of technology for Novellus Systems Japan from 1999 to 2001 and senior director of technology for the Electrofill Business Unit from April 2001 to April 2002. He started his career in 1989 at Tektronix, where he was responsible for process development for high-speed bipolar integrated circuits. Mr. Archer currently serves on the International Board of Directors for SEMI, the global industry association representing the electronics manufacturing and design supply chain. From 2020 to 2022, Mr. Archer served as chairman of the board for the National GEM Consortium, a nonprofit organization that is dedicated to increasing the participation of underrepresented groups at the master’s and doctoral levels in engineering and science. Mr. Archer completed the Program for Management Development at the Harvard Graduate School of Business and earned a B.S. degree in applied physics from the California Institute of Technology. Qualifications The Board has concluded that Mr. Archer should serve as a director of the Company because of his strong leadership; his knowledge and experience acquired from his current service as President, Chief Executive Officer and a director of the Company, and his past service as President and Chief Operating Officer, and as Executive Vice President and Chief Operating Officer of the Company; his deep knowledge and understanding of semiconductor processing equipment technologies; his understanding of our customers' markets and needs; and his mergers and acquisitions experience. Key Skills and Experiences • Industry Knowledge • Customer/Deep Technology Knowledge • Marketing, Disruptive Technology, and Strategy Experience • Leadership Experience • Finance Experience • Global Business Experience • M&A Experience • Cybersecurity Experience • Human Capital Management Experience • Risk Management Experience • Manufacturing/Operations Experience |
Proposal No. 1: Election of Directors
| Eric K. Brandt Director since 2010 Age 61 Board Committees: • Audit ◦ Chair: 2014−2020 ◦ Member: 2010−2014 • Compensation and Human Resources ◦ Chair since 2020 • Nominating and Governance ◦ Member since 2019 Public company directorships in last five years: • Gen Digital Inc. • Dentsply Sirona Inc. • The Macerich Company • Altaba Inc. (former) | Experience Eric K. Brandt is the former Executive Vice President and Chief Financial Officer of Broadcom Corporation, a global supplier of semiconductor devices, a position he held from March 2007 until its merger with Avago Technologies Limited in February 2016. From September 2005 to March 2007, Mr. Brandt served as President and Chief Executive Officer of Avanir Pharmaceuticals, Inc., a pharmaceutical company. Prior to Avanir Pharmaceuticals, Mr. Brandt was Executive Vice President-Finance and Technical Operations and Chief Financial Officer of Allergan Inc., a global specialty pharmaceutical company, where he also held a number of other senior positions following his arrival there in May 1999. Mr. Brandt has served as a member of the board of directors of: Gen Digital Inc. (formerly NortonLifeLock, Inc.), a consumer cyber security provider, since February 2020, where he is the chair of the audit committee; The Macerich Company, a real estate investment trust focused on regional malls, since June 2018, where he is the chair of the capital allocation committee and a member of the compensation committee; Altaba Inc. (formerly Yahoo! Inc.), a private company that remained, and was subsequently renamed, following the completion of Yahoo!’s sale of its operating businesses in June 2017 (and which is in the process of a stockholder approved plan of dissolution and liquidation), since its inception, where he is the lead independent director and chair of the audit committee, and has served as chairman of the board, chair of the nominating and governance committee, and a member of the compensation committee; and Dentsply Sirona Inc. (formerly Dentsply International, Inc.), a manufacturer and distributor of dental product solutions, since 2004, where he is the non-executive chairman of the board and a member of the corporate governance and nominating committee, and has served as chair of the executive committee and a member of the human resources committee and the audit and finance committee. He previously served on the board of directors of: MC10, Inc., a privately-held medical device Internet of Things (IoT) company, from March 2016 until February 2018, where he was chair of the compensation committee and governance committee; Yahoo! Inc., a digital information discovery company, from March 2016 to June 2017, where he was chairman of the board and chair of the audit and finance committee; Vertex Pharmaceuticals, Inc., a pharmaceutical company, from 2002 to 2009, where he was chair of the audit committee, and a member of the nominating and governance committee; and Avanir Pharmaceuticals from 2005 to 2007. Mr. Brandt earned an M.B.A. degree from the Harvard Graduate School of Business and a B.S. degree in chemical engineering from the Massachusetts Institute of Technology. Qualifications The Board has concluded that Mr. Brandt should serve as a director of the Company because of his financial expertise including as a former chief financial officer of a publicly traded company that is a customer of our customers; his knowledge of and experience in the semiconductor industry and other technology industries; his mergers and acquisitions experience; his board governance experience from service on other public company boards, including as an audit committee member and chair, a compensation committee member and a nominating and governance committee member and chair; and his cybersecurity expertise. Key Skills and Experiences • Industry Knowledge • Customer/Deep Technology Knowledge • Marketing, Disruptive Technology, and Strategy Experience • Leadership Experience • Finance Experience • Global Business Experience • M&A Experience • Comparative Board/Governance Experience • Cybersecurity Experience • Human Capital Management Experience • Risk Management Experience • Manufacturing/Operations Experience |
Proposal No. 1: Election of Directors
| Michael R. Cannon Director since 2011 Age 70 Board Committees: • Audit ◦ Member since 2013 • Compensation and Human Resources ◦ Member: 2010–2013 • Nominating and Governance ◦ Chair since 2019 ◦ Member: 2011−2019 Public company directorships in last five years: • Seagate Technology Holdings plc • Dialog Semiconductor Plc (former) | Experience Michael R. Cannon is the General Partner of MRC & LBC Partners, LLC, a private management consulting company. From February 2007 until his retirement in January 2009, Mr. Cannon served as President of Global Operations of Dell Inc., a computer systems manufacturer and services provider; and from January 2009 to January 2011, he served as a consultant to Dell. Prior to joining Dell, he was President and Chief Executive Officer of Solectron Corporation, an electronic manufacturing services company, from January 2003 to February 2007. From July 1996 to January 2003, Mr. Cannon served as President and Chief Executive Officer of Maxtor Corporation, a disk drive and storage systems manufacturer. Prior to joining Maxtor, Mr. Cannon held senior management positions at International Business Machines Corp. (IBM), a global services, software and systems company. Mr. Cannon has served as a member of the board of directors of Seagate Technology Holdings public limited company, a disk drive and storage solutions company, since February 2011, where he became chairman of the board in July 2020, is a member of the nominating and corporate governance committee and the compensation committee, and has served as lead independent director, as the chair of the nominating and corporate governance committee, and as a member of the audit and finance committees. He previously served on the board of directors of Dialog Semiconductor Plc, a mixed signal integrated circuits company, from February 2013 until it was acquired in August 2021, where he served as the chair of the remuneration committee and as a member of the nomination committee; Adobe Systems Inc., a diversified software company, from December 2003 to April 2016, where he had been a member of the audit committee and chair of the compensation committee; Elster Group SE, a precision metering and smart grid technology company, from October 2010 until the company was acquired in August 2012; Solectron Corporation, an electronic manufacturing services company, from January 2003 to January 2007; and Maxtor Corporation, a disk drive and storage solutions company, from July 1996 until Seagate acquired Maxtor in May 2006. Mr. Cannon studied mechanical engineering at Michigan State University and completed the Advanced Management Program at the Harvard Graduate School of Business. Qualifications The Board has concluded that Mr. Cannon should serve as a director of the Company because of his industry knowledge; his marketing experience; his experience as President at a public corporation that is a customer of our customers; his finance experience; his 20 years of international business experience; his experience with mergers and acquisitions; and his extensive board experience as a director on other public company boards, including service on audit, compensation and nominating and governance committees. Key Skills and Experiences • Industry Knowledge • Marketing, Disruptive Technology, and Strategy Experience • Leadership Experience • Finance Experience • Global Business Experience • M&A Experience • Comparative Board/Governance Experience • Cybersecurity Experience • Human Capital Management Experience • Risk Management Experience • Manufacturing/Operations Experience |
Proposal No. 1: Election of Directors
| John M. Dineen Director since 2023 Age 60 Public company directorships in last five years: • Cognizant Technology Solutions Corporation • Syneos Health, Inc. • Merrimack Pharmaceuticals, Inc. (former) | Experience John M. Dineen served as an Operating Advisor at Clayton, Dubilier & Rice LLC, a private equity investment firm, from January 2015 to December 2022. Previously, Mr. Dineen served in various senior leadership roles at General Electric Company (GE), a global digital industrial company, from 1986 to 2014, where he managed several key business divisions of GE. Most recently, from 2008 to 2014, he was president and chief executive officer of London-based GE Healthcare, a leading provider of medical imaging, diagnostics, and other health information technology. Before that, he served as president and chief executive officer of GE Transportation from 2005 to 2008. In addition, he served in several international management roles in Asia and Europe during his time at GE. Mr. Dineen has served as a member of the boards of directors of: Cognizant Technology Solutions Corporation, a professional services company, since April 2017, where he is the chair of the finance and strategy committee and a member of the audit committee and has served as a member of the nominating, governance, and public affairs committee; Syneos Health, Inc., a fully integrated biopharmaceutical solutions company, from December 2018, where he serves as the chair of the board; Carestream Dental LLC, a privately-held provider of digital imaging, software, and practice management solutions for dental practitioners, where he has served as the chair of the board since April 2017; and Healogics, Inc., a privately-held provider of advanced wound care, since June 2015. He previously served on the boards of directors of: Merrimack Pharmaceuticals, Inc., a pharmaceutical company specializing in the development of drugs for the treatment of cancer, from June 2015 to October 2019, where he served as the chair of the organization and compensation committee; and Torque Therapeutics, Inc., a privately-held developer of immunotherapies to address cancers, that was since combined with Cogen Immune Medicine and renamed Repertoire Immune Medicines, from January 2016 to December 2019. Mr. Dineen earned a B.S. degree in computer science and biological sciences from the University of Vermont. Qualifications The Board has concluded that Mr. Dineen should serve as a director of the Company because of his leadership skills and his extensive global management and operations experience across several industries, including healthcare, technology, and international management, and his board governance experience from service on public company boards with global operations. Key Skills and Experiences • Marketing, Disruptive Technology, and Strategy Experience • Leadership Experience • Finance Experience • Global Business Experience • M&A Experience • Comparative Board/Governance Experience • Cybersecurity Experience • Human Capital Management Experience • Risk Management Experience • Manufacturing/Operations Experience |
Proposal No. 1: Election of Directors
| Ho Kyu Kang Director since 2023 Age 61 | Experience Ho Kyu Kang has served as the Chair Professor in the Department of Systems Semiconductor Engineering at Yonsei University since March 2021. Prior to his current position, Dr. Kang served as Executive Vice President and Head of Research at the Semiconductor R&D Center of Samsung Electronics Co., Ltd., (Samsung), a manufacturer of consumer electronics, information technology and mobile communications products, and semiconductor devices, from 2017 to 2021. Before that, he served as Executive Vice President and leader of process development at the Semiconductor R&D Center from 2015 to 2017, as Senior Vice President and team leader from 2010 to 2015, and as Vice President responsible for the system large-scale integration process architecture team and advanced technology development from 2003 to 2010. Dr. Kang joined Samsung as a research and development engineer in 1985. He is the author or co-author of numerous international papers. Dr. Kang previously served on the boards of directors of: the Semiconductor Research Corporation (SRC), a U.S.-based, non-profit, multinational research and development consortium, from 2017 to 2020; SEMATECH, a U.S.-based, non-profit, multinational research and development consortium, from 2010 to 2015. Dr. Kang earned a Ph.D. in material science and engineering from Stanford University, a M.S. degree in material science and engineering from Korea Advanced Institute of Science and Technology (KAIST), and a B.S. degree in metallurgical engineering from Hanyang University. Qualifications The Board has concluded that Dr. Kang should serve as a director of the Company because of his decades of experience in semiconductor engineering and development; his extensive knowledge and experience acquired as an executive of a major semiconductor manufacturer; his deep knowledge and understanding of the semiconductor equipment industry and technologies; and his experience as a senior executive of Samsung, a major company customer. Key Skills and Experiences • Industry Knowledge • Customer/Deep Technology Knowledge • Leadership Experience • Global Business Experience • Manufacturing/Operations Experience |
Proposal No. 1: Election of Directors
| Bethany J. Mayer Director since 2019 Age 61 Board Committees: • Audit ◦ Member since 2019 • Nominating and Governance ◦ Member since 2022 Public company directorships in last five years: • Box, Inc. • Sempra Energy Inc. • Hewlett Packard Enterprise Company • Marvell Technology Group Ltd. (former) | Experience Bethany J. Mayer has served as an Executive Advisor of Siris Capital Group LLC, a private equity firm, since May 2021, where she previously served as an Executive Partner from January 2018 to April 2021. She was the Executive Vice President, Corporate Development and Technology of Sempra Energy, an energy services holding company, from November 2018 to January 2019. From September 2014 to December 2017, Ms. Mayer was the President and Chief Executive Officer of Ixia, a test, visibility, security solutions, network testing tools and virtual network security solutions provider for applications across physical and virtual networks that was ultimately acquired by Keysight Technologies in 2017. From May 2011 to May 2014, Ms. Mayer served as Senior Vice President and General Manager of Hewlett-Packard Company’s (HP) Networking business unit and the Network Function Virtualization business unit. From 2010 until 2011, she served as Vice President, Worldwide Marketing and Alliances of HP’s Enterprise Servers Storage and Networking Group. Prior to joining HP, she held leadership roles at Blue Coat Systems, Inc., a hardware, software, and services provider for cybersecurity and network management; Cisco Systems, Inc., an internet technology company; and Apple Computer, Inc., a technology company. She has served as a member of the boards of directors of: Hewlett Packard Enterprise Company, a multinational information technology company, since June 2023, where she is a member of the technology committee; Celestial AI, a privately-held software computing and memory company, since April 2023; Ambri Inc., a battery manufacturing company, since November 2022; Box, Inc., a cloud content management and file sharing service for businesses, since April 2020, where she is the chair of the board, chair of the compensation committee, and a member of the operating committee; Sempra Energy since June 2019 after serving from February 2017 to November 2018, where she is the chair of the safety, sustainability and technology committee and a member of the executive committee; and Electronics for Imaging Inc., a privately held print technology company, since July 2019. Ms. Mayer previously served on the boards of directors of: Marvell Technology Group Ltd, a infrastructure semiconductor solutions company, from May 2018 to June 2022, where she was a member of the executive compensation committee, nominating and governance committee, and audit committee; Pulse Secure, LLC, a privately-held provider of access and mobile security solutions to both enterprises and service providers, from September 2019 to December 2020, where she was the chairperson of the board, and previously served as a member from January 2018 to November 2018; SnapRoute, Inc., a privately-held developer of open source network stacks for enterprises, from May 2018 to July 2019; DataStax, Inc., a privately-held database software provider for cloud applications, from May 2018 to April 2019; Delphi Automotive PLC, an auto parts supplier, from August 2015 to April 2016; and Ixia from September 2014 to December 2017. Ms. Mayer earned an M.S. degree in Cybersecurity Risk and Strategy from New York University, an M.B.A. degree from CSU-Monterey Bay and a B.S. degree in political science from Santa Clara University. Qualifications The Board has concluded that Ms. Mayer should serve as a director of the Company because of her leadership skills and her experience in operational roles at companies in various technology industries, including networks, network management, servers, security solutions, cybersecurity and internet technology; and her board governance experience from service on other boards. Key Skills and Experiences • Industry Knowledge • Marketing, Disruptive Technology, and Strategy Experience • Leadership Experience • Finance Experience • Global Business Experience • M&A Experience • Comparative Board/Governance Experience • Cybersecurity Experience • Human Capital Management Experience • Risk Management Experience • Manufacturing/Operations Experience |
Proposal No. 1: Election of Directors
| Jyoti K. Mehra Director since 2021 Age 47 Board Committee: • Compensation and Human Resources ◦ Member since 2022 | Experience Jyoti K. Mehra has served as the Executive Vice President of Human Resources of Gilead Sciences, Inc., a biopharmaceutical company, since July 2019. She previously served as Vice President of Human Resources of Gilead from October 2017 to July 2019. Prior to joining Gilead, she held positions of increasing responsibility with Novartis Pharmaceuticals Corporation, a pharmaceutical company, and its affiliates, from 2005 through October 2017, most recently as Vice President of Human Resources of Novartis from July 2014 to October 2017. Ms. Mehra earned an M.A. degree in politics from Jawaharlal Nehru University, and a B.A. degree in political science from Delhi University. Qualifications The Board has concluded that Ms. Mehra should serve as a director of the Company because of her leadership and international business experience in a high-technology industry; her substantial human capital and talent development experience, including experience as the head of human resources of a public company with global operations; her governance experience; and her cybersecurity experience. Key Skills and Experiences • Leadership Experience • Global Business Experience • M&A Experience • Comparative Board/Governance Experience • Cybersecurity Experience • Human Capital Management Experience |
Proposal No. 1: Election of Directors
| Abhijit Y. Talwalkar Chairman Director since 2011 Age 59 Board Committees: • Compensation and Human Resources ◦ Chair: 2012−2015 ◦ Member since 2015, previously 2011–2012 • Nominating and Governance ◦ Chair: 2015−2019 ◦ Member since 2019, previously 2015–2015, 2011–2014 Public company directorships in last five years: • Advanced Micro Devices Inc. • iRhythm Technologies Inc. • TE Connectivity Ltd. | Experience Abhijit Y. Talwalkar is the former President and Chief Executive Officer of LSI Corporation, a leading provider of silicon, systems and software technologies for the storage and networking markets, a position he held from May 2005 until the completion of LSI’s merger with Avago Technologies in May 2014. From 1993 to 2005, Mr. Talwalkar was employed by Intel Corporation, a leading producer of microchips, computing and communications products. At Intel, he held a number of senior management positions, including as Corporate Vice President and Co-General Manager of the Digital Enterprise Group, which was comprised of Intel’s business client, server, storage and communications business, and as Vice President and General Manager for the Intel Enterprise Platform Group, where he focused on developing, marketing, and supporting Intel business strategies for enterprise computing. Prior to joining Intel, Mr. Talwalkar held senior engineering and marketing positions at Sequent Computer Systems, a multiprocessing computer systems design and manufacturer that later became a part of IBM; Bipolar Integrated Technology, Inc., a very-large-scale integration (VLSI) bipolar semiconductor company; and Lattice Semiconductor Inc., a service driven developer of programmable design solutions widely used in semiconductor components. Mr. Talwalkar has served as a member of the board of directors of: Advanced Micro Devices Inc., a developer of high performance computing, graphics and visualization technologies, since June 2017, where he is a member of the compensation and leadership resources committee, chair of the innovation and technology committee and has served as a member of the nominating and corporate governance committee and the innovation and technology committee; TE Connectivity Ltd, a connectivity and sensor solutions company, since March 2017, where he is the chair of the management development and compensation committee and has served as a member of the audit committee; and iRhythm Technologies Inc., digital health care solutions company, since May 2016, where he is the chairman of the board and a member of the compensation and human capital management committee and the nominating and corporate governance committee, and has served as a member of the audit committee. He previously served as a member of the board of directors of LSI from May 2005 to May 2014 and the U.S. Semiconductor Industry Association from May 2005 to May 2014. He was additionally a member of the U.S. delegation for World Semiconductor Council proceedings. Mr. Talwalkar earned a B.S. degree in electrical engineering from Oregon State University. Qualifications The Board has concluded that Mr. Talwalkar should serve as a director of the Company because of his experience in the semiconductor industry, including as the former chief executive officer of a semiconductor company and his previous role in the semiconductor industry’s trade association; his technology experience; his business and operations leadership roles at other semiconductor companies that include a customer of the Company; his finance experience; his global business experience; his mergers and acquisitions experience; his board governance experience from service on other public company boards, including as chairman of another board; and his cybersecurity expertise. Key Skills and Experiences • Industry Knowledge • Customer/Deep Technology Knowledge • Marketing, Disruptive Technology, and Strategy Experience • Leadership Experience • Finance Experience • Global Business Experience • M&A Experience • Comparative Board/Governance Experience • Human Capital Management Experience • Risk Management Experience |
Proposal No. 1: Election of Directors
| Lih Shyng (Rick L.) Tsai Director since 2016 Age 72 Board Committees: • Compensation and Human Resources ◦ Member since 2019 Public company directorships in last five years: • MediaTek Inc. • USI Corporation (former) | Experience Rick L. Tsai has served as the CEO of MediaTek Inc., a Taiwanese-listed global fabless semiconductor company, since February 2018. He was Co-CEO of MediaTek from June 2017 to February 2018. He is the former Chief Executive Officer of Chunghwa Telecom Co., Ltd., a Taiwanese integrated telecom service provider, a position he held from January 2014 until December 2016. From August 2011 to January 2014, Dr. Tsai concurrently served as Chief Executive Officer of TSMC Solar Ltd., a provider of high-performance solar modules, and TSMC Solid State Lighting Ltd. (SSL), a company providing lighting solutions that combine its parent’s expertise in semiconductor manufacturing and rigorous quality control with its own integrated capabilities spanning epi-wafers, chips, emitter packaging and extensive value-added modules and light engines, both of which are wholly-owned subsidiaries of Taiwan Semiconductor Manufacturing Company, Limited (TSMC). Prior to these positions, Dr. Tsai was TSMC’s President of New Businesses from June 2009 to July 2011 and President and CEO of TSMC from July 2005 to June 2009. Dr. Tsai held other key executive positions, such as COO, EVP of Worldwide Sales and Marketing, and EVP of Operations, since joining TSMC in 1989. Dr. Tsai served as President of TSMC’s affiliate, Vanguard International Semiconductor, from 1999 to 2000. Prior to joining TSMC, Dr. Tsai held various technical positions at Hewlett Packard, an international information technology company, from 1981 to 1989. Dr. Tsai has served as a member of the board of directors of MediaTek Inc. since June 2017. He previously served on the board of directors of: USI Corporation, a Taiwanese-listed polyethylene manufacturer, from June 2014 until March 2019; NXP Semiconductors N.V., from July 2014 until June 2017; Chunghwa Telecom from January 2014 until December 2016, where he served as chairman; TSMC from 2003 to 2013; TSMC Solar and TSMC SSL from August 2011 to January 2014, where he served as their chairman; and Taiwan Semiconductor Industry Association (TSIA) from June 2009 to March 2013, where he served as chairman. Dr. Tsai earned a Ph.D. degree in material science and engineering from Cornell University and a B.S. degree in physics from the National Taiwan University in Taipei, Taiwan. Qualifications The Board has concluded that Dr. Tsai should serve as a director of the Company because of his substantial operational and leadership experience in global businesses, particularly through his service as President, CEO and director of TSMC, a major customer of the Company; his knowledge of the semiconductor and semiconductor equipment industry; his extensive executive and board experience for global technology companies, including NXP Semiconductor, Chunghwa Telecom and MediaTek; and his mergers and acquisitions experience. Key Skills and Experiences • Industry Knowledge • Customer/Deep Technology Knowledge • Marketing, Disruptive Technology, and Strategy Experience • Leadership Experience • Finance Experience • Global Business Experience • M&A Experience • Comparative Board/Governance Experience • Human Capital Management Experience • Risk Management Experience • Manufacturing/Operations Experience |
Proposal No. 1: Election of Directors
| Leslie F. Varon Director since 2019 Age 66 Board Committees: • Audit ◦ Chair since 2020 ◦ Member 2019−2020 Public company directorships in last five years: • Dentsply Sirona Inc. • Hamilton Lane | Experience Leslie F. Varon is the former Chief Financial Officer of Xerox Corporation, a document solutions company, a position she held from November 2015 until December 2016. From January 2017 until March 2017, when she retired from the company, she was a Special Advisor to the then new Xerox Chief Executive Officer. Her previous leadership roles during her tenure at Xerox include: Vice President, Investor Relations from March 2015 until October 2015; Vice President, Finance and Corporate Controller from July 2006 until February 2015, where she oversaw global financial operating executives and had responsibility for corporate financial planning and analysis, accounting, internal audit, risk management, global real estate and worldwide shared services centers; Vice President, North America Finance and Operational Support from October 2004 until June 2006; Vice President, Investor Relations and Corporate Secretary from 1997 until September 2004; and Director of Corporate Audit from 1993 until 1997. Ms. Varon has served as a member of the boards of directors of: Dentsply Sirona, Inc., a manufacturer and distributor of dental product solutions, since January 2018, where she chairs the audit and finance committee; and Hamilton Lane, a private markets investment company, since May 2017, where she is the chair of the audit committee. She previously served on the board of directors of Xerox International Partners, a joint venture of Xerox and Fuji Xerox, from July 2006 until March 2017. Ms. Varon earned an M.B.A. degree from Virginia Tech, and a B.S. degree in Psychology from Binghamton University. Qualifications The Board has concluded that Ms. Varon should serve as a director of the Company because of her substantial finance experience; her qualifications as an audit committee financial expert; her leadership experience as a former chief financial officer; her board governance experience on other public company boards, including her service as a current chair of two other public company audit committees; and her mergers and acquisitions experience. Key Skills and Experiences • Industry Knowledge • Leadership Experience • Finance Experience • Global Business Experience • M&A Experience • Comparative Board/Governance Experience • Risk Management Experience |