DEF 14A of MKS Inc
Filed Apr 1, 2025 · FY20240001193125-25-069811
TO BE HELD ON MONDAY, MAY 12, 2025 at 10:00 A.M. EASTERN TIME
| COMPENSATION COMMITTEE REPORT | 52 | | EXECUTIVE COMPENSATION TABLES | 53 | | Summary Compensation Table for 2024 | 53 | | Grants of Plan-Based Awards in Fiscal Year 2024 Table | 56 | | Outstanding Equity Awards at 2024 Fiscal Year-End Table | 57 | | Option Exercises and Stock Vested in Fiscal Year 2024 Table | 58 | | Potential Payments Upon Termination or Change-in-Control | 58 | | CEO Pay Ratio | 65 | | Pay Versus Performance | 67 | | EQUITY COMPENSATION PLAN INFORMATION | 71 | | OTHER MATTERS | 72 | | Expenses and Solicitation | 72 | | Deadline for Submission of Shareholder Proposals for the 2026 Annual Meeting | 72 | | Householding of Annual Meeting Materials | 72 | | No Incorporation by Reference | 73 | | APPENDIX A | A-1 | | Restated Articles of Organization | A-1 | | APPENDIX B | B-1 | | Amendment to Second Amended and Restated By-Laws | B-1 | | APPENDIX C | C-1 | | Reconciliation of 2024 Income from Operations to 2024 Non-GAAP Operating Income under Management Incentive Plan | C-1 | | Reconciliation of 2024 Gross Debt to 2024 Adjusted Net Debt | C-1 | | Reconciliation of 2024 Revenue to 2024 Adjusted Revenue | C-1 | | Reconciliation of 2024 Net Income to 2024 Adjusted EBITDA under Performance-Based RSUs | C-2 |
PROPOSAL 1 – ELECTION OF DIRECTORS
PROPOSAL 1 – ELECTION OF DIRECTORS Our Board of Directors is currently divided into three classes. The term of the Class II Directors expires at the 2025 Annual Meeting, the term of the Class III Directors expires at the 2026 Annual Meeting of Shareholders, or the 2026 Annual Meeting, and the term of the Class I Directors expires at the 2027 Annual Meeting of Shareholders. Pursuant to our By-Laws, our Board of Directors will be declassified over a three-year period beginning with the 2026 Annual Meeting, resulting in the Board being fully declassified (and all directors standing for annual elections) beginning with the 2028 Annual Meeting of Shareholders, or the 2028 Annual Meeting. Our Board of Directors, upon the recommendation of our Nominating and Corporate Governance Committee, has nominated John T.C. Lee and Jacqueline F. Moloney to serve as Class II Directors for a term to expire at the 2028 Annual Meeting. Dr. Lee and Dr. Moloney currently serve as directors. Each nominee has consented to being named herein and, if elected, to serve as a director until his or her successor is duly elected and qualified. Michelle M. Warner, who currently serves as a Class II Director, is not standing for re-election to the Board of Directors. The Board of Directors previously approved a decrease in the size of the Board of Directors effective immediately prior to the 2025 Annual Meeting, which eliminates the vacancy that would have existed at the 2025 Annual Meeting. Proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. Shares represented by all proxies received by the Board of Directors and not so marked as to withhold authority to vote for an individual director will be voted (unless one or more nominees are unable or unwilling to serve) for the election of the nominees named below. The Board of Directors expects that each of the nominees named below will be available for election, but if either of them is not a candidate at the time the election occurs, it is intended that such proxies will be voted for the election of a substitute nominee to be designated by the Board of Directors. THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE ELECTION OF JOHN T.C. LEE AND JACQUELINE F. MOLONEY TO SERVE AS CLASS II DIRECTORS IS IN THE BEST INTERESTS OF MKS AND OUR SHAREHOLDERS AND THEREFORE RECOMMENDS A VOTE “FOR” BOTH NOMINEES.
DIRECTORS
DIRECTORS Set forth below are the names and ages of each member of our Board of Directors (including those who are nominees for election as Class II Directors) and the positions and offices they hold with the Company. In addition, set forth below are biographies for each continuing director and director nominee, which include information about each individual’s specific experience, qualifications, attributes, or skills that led the Board of Directors to conclude that he or she should serve as a director of MKS. Information with respect to the number of shares of Common Stock beneficially owned by each individual, directly or indirectly, as of March 4, 2025, appears in this proxy statement under the heading “Security Ownership of Certain Beneficial Owners and Management.”
DIRECTORS
| Name | Age | Position | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | Class to Which Director Currently Belongs | | Rajeev Batra | 57 | Director | | | | I | | Peter J. Cannone III | 59 | Director | | | | III | | Gerald G. Colella | 68 | Chair | | | | I | | Joseph B. Donahue | 66 | Director | | | | III | | Wissam G. Jabre | 55 | Director | | | | III | | John T.C. Lee* | 62 | Director, President and CEO | | | | II | | Jacqueline F. Moloney* | 71 | Lead Director | | | | II | | Elizabeth A. Mora | 64 | Director | | | | I | | Michelle M. Warner | 58 | Director | | | | II |
DIRECTORS
| | Chair |
DIRECTORS
| | Member |
DIRECTORS
| * Nominee for election at the 2025 Annual Meeting |
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 4 |
DIRECTORS
| | Rajeev Batra Chairman and Co-Founder, AxD; Former Siemens U.S. Executive | | Age: 57 Director since: 2018 Independent | Standing Committees: Compensation (Chair); Nominating and Corporate Governance |
DIRECTORS
| Background | | Mr. Batra is a former Siemens U.S. executive who co-founded and has served as Chairman of AxD LLC, a consulting firm specializing in automation and digitization, since 2024. Over his 30+ year career at Siemens, Mr. Batra progressed from an individual contributor in 1993 to a wide range of high-level management, strategy and sales positions, culminating in his role as President of Siemens Digital Industries U.S., an innovation pioneer in industrial automation and digitalization in the discrete and process industries, from 2019 to 2023. He also served as President of Siemens Industry Inc. from 2023 to 2024 and a member of the Siemens U.S. Managing Board from 2021 to 2024, as well as President of the Digital Factory Division from 2014 to 2019; President of the Industry Automation Division from 2009 to 2014; Vice President and General Manager of the Automation & Motion Division from 2007 to 2009; and Vice President and General Manager of the Automotive & Aerospace Vertical Markets from 2002 to 2007, all for Siemens U.S. Mr. Batra has served as an advisory board member of Advanced Technology Services, Inc., a private, global services provider for industrial maintenance, technology and parts, since 2024, a director of Amsted Industries, a private, global manufacturer of industrial components, since 2019, and a member of the Executive Committee of the Manufacturers Alliance, a non-profit manufacturing leadership network, since 2016. Mr. Batra previously served as a director of Shapeways Holdings, Inc. from 2022 to 2024 and Chair and Member of the Board of Governors of the National Electrical Manufacturers Association (NEMA), a trade association of electrical equipment manufacturers, from 2014 to 2023. Mr. Batra received a B.S. in Electrical Engineering from Lawrence Technological University and an M.B.A. from the University of Michigan. |
DIRECTORS
| Key Qualifications as Determined by our Board of Directors | | • Significant management and leadership experience, cultivated over 25+ years in senior roles in broad global industrial markets • Extensive technology background, including in automation, industrial software, digitalization, OT/IT convergence, cybersecurity, and I4.0/IoT • Proven ability to develop and grow product, systems, digital services, and turnkey businesses in the Process and Discrete Markets, and founding Siemens’ Automotive & Aerospace Vertical Markets in the United States |
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 5 |
DIRECTORS
| | Peter J. Cannone III Former Chairman and CEO, Demand Science | | Age: 59 Director since: 2021 Independent | Standing Committees: Audit |
DIRECTORS
| Background | | Mr. Cannone served as Chairman and Chief Executive Officer of Demand Science Group, LLC, a leading global revenue intelligence platform delivering a comprehensive suite of business-to-business solutions, from 2020 to 2024, capping a long career as a senior executive for large and mid-market public and private technology companies in both growth and turnaround modes. His previous experience includes serving as General Partner of Optum Ventures, a healthcare-focused venture capital firm, from 2019 to 2020; Chief Executive Officer of UpCurve, Inc., a management company, where he oversaw portfolio firms that provided critical digital, cloud, financial and healthcare solutions to small and midsize businesses, from 2018 to 2019; Chief Executive Officer of ThriveHive, a provider of digital marketing services and one of UpCurve’s portfolio firms, from 2015 to 2019; President and Chief Executive Officer of OnForce, a leading vendor of SaaS technology-enabled workforce solutions, from 2007 to 2014; and a member of senior management at PC Connection, Inc. and MicroWarehouse from 1997 to 2006. Mr. Cannone holds a B.A. in Economics from the University of Massachusetts, Amherst and an M.B.A. from Rensselaer Polytechnic Institute. |
DIRECTORS
| Key Qualifications as Determined by our Board of Directors | | • Proven leader of public and private technology companies with 25+ years of experience in executive and senior management roles • Direct knowledge of and experience in mergers and acquisitions, capital raising, marketing, and financial planning and analysis • Track record of building high-performance teams and developing executives |
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 6 |
DIRECTORS
| | Gerald G. Colella Chair of the Board and Former CEO, MKS Instruments | | Age: 68 Director since: 2014 Independent | Other Current Public Company Directorships: Columbus McKinnon Corporation (Chair of the Board) |
DIRECTORS
| Background | | After joining MKS in 1983, Mr. Colella progressed from positions in materials planning and logistics to leading our global business and service operations before assuming senior management roles, including Vice President and Chief Business Officer, President and Chief Operating Officer and, ultimately, Chief Executive Officer. As CEO from 2014 until his retirement in 2020, he steered MKS through a period of unprecedented growth, increasing MKS’ revenue from approximately $780 million to over $2 billion. Since 2020, Mr. Colella has served as Chair of our Board of Directors. In addition to the other current public company directorship listed above, Mr. Colella served as a director of GCP Applied Technologies Inc. from 2017 to 2020. Mr. Colella holds a B.A. in Secondary Education from the University of Massachusetts and an M.B.A. from Southern New Hampshire University. |
DIRECTORS
| Key Qualifications as Determined by our Board of Directors | | • Deep insights into our business, industries and markets as a result of 35+ year career at MKS, culminating as CEO • Direct knowledge of and experience in operations, marketing, business strategy, and growth, organically and through acquisitions • Extensive background in leadership, management, and governance at the most senior levels of a public company |
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 7 |
DIRECTORS
| | Joseph B. Donahue Former EVP and COO, TE Connectivity | | Age: 66 Director since: 2020 Independent | Standing Committees: Audit |
DIRECTORS
| Background | | Mr. Donahue served as Executive Vice President and Chief Operating Officer of TE Connectivity Ltd. (formerly Tyco Electronics Ltd.), a publicly held manufacturer of connectors, sensors, and minimally invasive surgical assemblies for the automotive, industrial, medical, aerospace, and communications/consumer markets, from 2011 until 2017. In this role, Mr. Donahue was responsible for all aspects of corporate global operations, including supply chain, manufacturing, environment, health and safety, facilities, technology, and lean process improvement. He concurrently served as President of the Network Solutions segment of TE Connectivity from 2012 until the divestiture of that business in 2015. He also served at TE Connectivity as President, Transportation Solutions segment from 2010 through 2012, President of the Global Automotive Division from 2008 through 2009, and Senior Vice President of the same division beginning in 2007. From 2006 to 2007, he was Group Vice President, Wood Coatings Division, for Valspar Corporation, a manufacturer of commercial and industrial coatings. Over the prior 16 years, Mr. Donahue held a variety of senior management roles at TE Connectivity and AMP Incorporated. Mr. Donahue has served as a director of Kraton Corporation, a private, global sustainable producer of specialty polymers and high-value biobased products derived from pine wood pulping co-products, since 2023. Mr. Donahue holds a B.S. in Biological Sciences and an M.S. in Plastics Engineering from the University of Massachusetts Lowell. He also holds an M.S. in Manufacturing Systems Engineering from Lehigh University. |
DIRECTORS
| Key Qualifications as Determined by our Board of Directors | | • Extensive experience in executive leadership roles for companies serving multiple markets, including industrials • Valuable insights into managing all aspects of global operations and overseeing mergers and acquisitions • Deep understanding of international organizations, having lived and worked in Japan, China, and Germany |
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 8 |
DIRECTORS
| | Wissam G. Jabre EVP and CFO, NetApp | | Age: 55 Director since: 2024 Independent | Standing Committees: Audit |
DIRECTORS
| Background | | Mr. Jabre has served as Executive Vice President and Chief Financial Officer of NetApp, Inc., an intelligent data infrastructure company that provides unified data storage, integrated data services and cloud operations solutions, since March 2025. Previously, Mr. Jabre served as Executive Vice President and Chief Financial Officer of Western Digital Corporation, a leading developer, manufacturer, and provider of data storage devices based on both HDD and NAND flash technologies, from 2022 to February 2025. Prior to that, Mr. Jabre served as Senior Vice President and Chief Financial Officer of Dialog Semiconductor Plc, a provider of semiconductor-based system solutions, from 2016 until it was acquired by Renesas Electronics Corporation in 2021. Mr. Jabre previously served as Corporate Vice President of Finance at Advanced Micro Devices, Inc., from 2014 to 2016. Prior to 2014, he served in various finance leadership positions at Freescale Semiconductor, Inc. (acquired by NXP Semiconductors N.V.). Mr. Jabre holds a B.E. in Electrical Engineering from the American University of Beirut and an M.B.A. from Columbia Business School. He is a CFA© charterholder. |
DIRECTORS
| Key Qualifications as Determined by our Board of Directors | | • Demonstrated leader in financial oversight, risk management, and strategic planning as CFO of three major companies • Strong familiarity with our business from 20+ years of experience in the semiconductor industry • Valuable combination of financial and accounting expertise and engineering background |
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 9 |
DIRECTORS
| | John T.C. Lee President and CEO, MKS Instruments | | Age: 62 Director since: 2020 | Other Current Public Company Directorships: Cognex Corporation |
DIRECTORS
| Background | | Dr. Lee has served in progressive leadership roles since joining MKS in 2007, culminating in his appointment as our President and Chief Executive Officer in 2020. He previously served as our President from 2019 to 2020; our President and Chief Operating Officer from 2018 to 2019; our Senior Vice President and Chief Operating Officer from 2016 to 2018; our Senior Vice President of Business Units from 2014 to 2016; our Senior Vice President, Controls, HPS (our integrated process solutions business) and Pressure, Flow, Measurement and Control (PFMC) from 2012 to 2013; our Senior Vice President, Controls and PFMC from 2011 to 2012, and our Group Vice President, Controls and Information Technology products from 2007 to 2011. Prior to MKS, Dr. Lee served in leadership roles at Applied Materials, a global leader providing processing equipment to the semiconductor and display markets, from 2002 to 2007, including Managing Director of Factory Technology and Projects within the Solar Business Group and General Manager of the Cleans Product Group and the Maydan Technology Center. Prior to Applied Materials, Dr. Lee served as Research Director of the Silicon Fabrication Research Department at Lucent Technologies, Inc., a voice, data, and video communications provider, from 1997 to 2002 and as a Member of the Technical Staff in the Plasma Processing Research Group within Bell Labs from 1991 to 1997. In addition to the other current public company directorship listed above, he has served as Co-Chair of the Mass Opportunity Alliance since 2024, Chair of the Massachusetts High Technology Council (MHTC) since 2023, and a member of the Executive Committee of the Board of Directors of MHTC since 2021. He previously served as Vice Chair of MHTC from 2021 to 2023. Dr. Lee holds a B.S. from Princeton University and both an M.S.CEP and a Ph.D. from the Massachusetts Institute of Technology, all in Chemical Engineering. |
DIRECTORS
| Key Qualifications as Determined by our Board of Directors | | • Deep understanding of our extensive and complex product portfolio, driven by strong technical education and background • Unique leadership perspective from progressive leadership roles at MKS and Applied Materials, one of our largest customers • Direct knowledge of and experience in engineering, operations, mergers and acquisitions, and business development |
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 10 |
DIRECTORS
| | Jacqueline F. Moloney Professor and Chancellor Emerita, the University of Massachusetts Lowell Lead Director | | Age: 71 Director since: 2016 Independent | Standing Committees: Compensation; Nominating and Corporate Governance (Chair) Other Current Public Company Directorships: Enterprise Bancorp, Inc. |
DIRECTORS
| Background | | Dr. Moloney is a Professor and Chancellor Emerita at the University of Massachusetts Lowell who has been recognized as a national leader in innovation and entrepreneurship in higher education. During a nearly 40-year career at UMass Lowell, a public university with approximately 17,000 students, Dr. Moloney served as Chancellor from 2015 to 2022, Executive Vice Chancellor from 2007 to 2015, and Dean of Online and Continuing Education from 1994 to 2007, in addition to serving as a Professor since 1986. Dr. Moloney has over 35 years of experience as a leader in non-profit organizations. In recognition of her leadership and business acumen, she was recognized in 2024 as one of the top five college presidents since 2000 by the American Enterprise Institute. In addition, she and UMass Lowell were recognized in the top 20 of the Boston Globe’s Top 100 Women-Led Businesses for five consecutive years, she was recognized as one of seven prominent “Women Who Mean Business” by the Boston Business Journal, she was selected by the Massachusetts Technology Leadership Council as a finalist for the CEO of the Year award in 2018 and 2019, and she was named Chief Executive HR Champion by the College and University Professional Association for Human Resources in 2018. In addition to the other current public company directorship listed above, she served as a member of the Board of Directors of the Massachusetts High Technology Council from 2015 to 2022. Dr. Moloney holds a B.S. in Sociology from UMass Lowell, an M.A. in Social Psychology from Goddard College, and an Ed.D. from UMass Lowell. |
DIRECTORS
| Key Qualifications as Determined by our Board of Directors | | • Valuable knowledge of and insights into emerging strategic planning and management and business trends • Deep history of working with business and industry, including establishing incubators at UMass Lowell for early-stage companies • Strong leadership and interpersonal skills and business acumen |
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 11 |
DIRECTORS
| | Elizabeth A. Mora Former Chief Administrative Officer, The Charles Stark Draper Laboratory | | Age: 64 Director since: 2012 Independent | Standing Committees: Audit (Chair); Compensation Other Current Public Company Directorships: Inogen, Inc. (Chair of the Board); Limoneira Company |
DIRECTORS
| Background | | Over her 30+ year career, Ms. Mora established herself as a financial and accounting expert and business operations leader, culminating in her role as Chief Administrative Officer of The Charles Stark Draper Laboratory, a non-profit engineering innovation company, from 2016 to 2020. Ms. Mora was previously Chief Financial Officer of Draper Labs; Chief Financial Officer and Vice President for Finance of Harvard University; Associate Vice President, Research Administration and the Director of the Office of Sponsored Research of Harvard University; and a founding member of the National Regulatory Consulting Practice at Coopers & Lybrand (now PricewaterhouseCoopers LLP), where she began her career. In addition to the other current public company directorships listed above, Ms. Mora served as a director of NUBURU, Inc. from 2023 to January 2025, a member of the Advisory Board of The Association of LGBTQ+ Corporate Directors from 2022 to 2024, a director of Everest Consolidator Acquisition Corporation from 2021 to 2024 and a director of GCP Applied Technologies Inc. from 2016 to 2020. Ms. Mora is a Certified Public Accountant and holds a B.A. in Political Science from the University of California, Berkeley and an M.B.A. from the Simmons College Graduate School of Management. |
DIRECTORS
| Key Qualifications as Determined by our Board of Directors | | • Financial and accounting expert who served as the CFO of two major organizations, Draper Labs and Harvard University • Seasoned director with substantial experience navigating a range of public company corporate governance and regulatory issues • Critical insights into cybersecurity matters through prior oversight of IT at Draper Labs, a leader in cybersecurity threat detection |
Compensation Committee
| • | reviewing and making recommendations to the Board of Directors with respect to director compensation; and |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Equity Compensation
Equity Compensation Non-employee directors are eligible for awards under our 2022 Stock Incentive Plan, which is administered by the Compensation Committee. In 2024, under our director compensation program, non-employee directors received automatic grants of restricted stock units, or RSUs, on the date of the 2024 Annual Meeting, with a grant date value of $200,000, which RSUs will vest in full on the day prior to the 2025 Annual Meeting. In November 2024, our Board of Directors, upon the recommendation of the Compensation Committee, increased the value of the annual RSU grant to $225,000 for each non-employee director, effective January 1, 2025. Our Compensation Committee recommended this increase after reviewing a competitive analysis of director compensation programs, which was prepared by the Compensation Committee’s independent compensation consultant, Pearl Meyer. The analysis found that the equity compensation and total compensation paid to non-employee members of our Board fell below the median of our peer group. In addition, in 2024, under our director compensation program, if a new non-employee director joined our Board of Directors after our annual meeting of shareholders but before January 1st of the following year, he or she was entitled to an initial RSU grant with a value equal to the annual RSU grant. In the event a non-employee director joined our Board of Directors during the period from January 1st through the date of that year’s annual meeting of shareholders, he or she was not entitled to an initial RSU grant but was entitled to the annual RSU grant on the date of the annual meeting of shareholders. In November 2024, our Board of Directors, upon the recommendation of the Compensation Committee, amended our director compensation program, effective January 1, 2025, so that if a new non-employee director joins our Board of Directors other than in connection with an annual meeting of shareholders, he or she will be entitled to an initial RSU grant with a value equal to the annual RSU grant, pro-rated based on the effective date of his or her appointment.
Equity Compensation
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 29 |
Director Compensation Table for 2024
Director Compensation Table for 2024 The following table summarizes compensation earned by or paid to non-employee directors in 2024. Dr. Lee is excluded from the table because he is an executive officer and his compensation is set forth in the Executive Compensation section below, under the heading “Executive Compensation Tables — Summary Compensation Table for 2024.”
Director Compensation Table for 2024
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | | Rajeev Batra | $112,500 | $198,621 | — | $311,121 | | Peter J. Cannone III | $100,500(2) | $198,621 | — | $299,121 | | Gerald G. Colella | $193,000(2) | $198,621 | $25,122(3) | $416,743 | | Joseph B. Donahue | $100,500(2) | $198,621 | — | $299,121 | | Wissam G. Jabre(4) | $15,367 | $198,273 | — | $213,640 | | Jacqueline F. Moloney | $140,000 | $198,621 | — | $338,621 | | Elizabeth A. Mora | $120,000 | $198,621 | — | $318,621 | | Michelle M. Warner | $95,500(2) | $198,621 | — | $294,121 |
Director Compensation Table for 2024
| (1) Represents the aggregate grant date fair value for each RSU granted during the year, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification 718, or ASC 718. The grant date fair value of the RSU awards was calculated based on the closing price of our Common Stock on the grant date reduced by the present value of dividends expected to be paid on our Common Stock prior to vesting. The outstanding stock awards held as of December 31, 2024 by Mr. Jabre consisted of 2,009 RSUs and by each other non-employee director consisted of 1,622 RSUs. |
Director Compensation Table for 2024
| (2) Includes consideration for services on a special committee of the Board of Directors for mergers and acquisitions, which compensation consisted of a flat fee of $3,000 for up to five meetings and $1,000 per meeting thereafter up to a maximum of $10,000. In connection with their service on this special committee, Mr. Colella, Mr. Cannone, Mr. Donahue, and Ms. Warner each received $3,000. |
Director Compensation Table for 2024
| (3) In connection with his retirement as CEO in January 2020, Mr. Colella receives retiree medical benefits for life for himself and his spouse. In addition, Mr. Colella is reimbursed for certain out-of-pocket health care costs capped at $4,500 annually. The net present value of these benefits was $462,061 as of December 31, 2024 and we paid $25,122 for these benefits in 2024. Mr. Colella receives no other retirement benefits. |
Director Compensation Table for 2024
| (4) Mr. Jabre became a director in November 2024 and was therefore entitled to a pro-rated retainer for his services and an initial RSU grant with a value equal to the annual RSU grant. |
Compensation Philosophy and Objectives
| • | motivate and reward the attainment of short-term objectives that drive long-term value; and |
Compensation Philosophy and Objectives
| • | foster long-term alignment of executive and shareholder interests. |
Compensation Philosophy and Objectives
| • | foster long-term alignment of executive and shareholder interests; |
Compensation Philosophy and Objectives
| • | balance the short-term focus on annual cash incentive compensation with creating long-term shareholder value; |
What We Do
| ✓ | Provide maximum payout caps under incentive plans |
What We Do
| ✓ | Conduct robust annual reviews and validation of our peer group |
What We Do
| ✓ | Provide change-in-control benefits only upon a qualified double-trigger termination of employment |
What We Do
| ✓ | Utilize an independent compensation consultant |
What We Do Not Do
In May 2023, the Compensation Committee reviewed the peer companies to be used to determine 2024 executive compensation, which at that time consisted of 18 U.S. publicly traded companies that had been primarily selected based on similar industry and size. In determining whether these peer companies should continue to be included in the peer group, the Compensation Committee considered whether these peer companies had (i) a revenue range relative to our projected 2023 revenue between approximately 0.5 to 2.0 times, (ii) a market capitalization range relative to our average market capitalization for the twelve months ended December 31, 2022 between approximately 0.3 and 3.0 times, and (iii) an employee headcount relative to our employee headcount as of December 31, 2022 between approximately 0.5 to 2.0 times. The Compensation Committee also considered secondary factors, including other relevant peer groups, other performance considerations, and whether a company is a competitor for talent. The only change the Compensation Committee elected to make was to remove Revvity, Inc. (formerly PerkinElmer, Inc.) from the existing peer group because of a recent divestiture it made that resulted in no industry overlap with MKS. As a result, publicly available compensation data from the following 17 peer companies was used in determining executive compensation for 2024:
What We Do Not Do
In certain instances where robust peer group benchmark data was not available, our Compensation Committee utilized size and industry-appropriate broad survey data from the Radford Global Compensation Database.
Elements of Compensation
Annual Cash Incentive Compensation For 2024, our Compensation Committee modified our annual cash incentive program to better align with our current business strategy of paying down the debt we incurred in connection with the Atotech Acquisition. In 2023, cash bonus payouts under the Management Incentive Plan were based on one performance metric, non-GAAP operating income. Although the Compensation Committee continues to believe non-GAAP operating income serves as a barometer of our success, non-GAAP operating income, defined as our GAAP operating income excluding any charges or income not related to our operating performance, does not directly account for our debt levels, which increased substantially as a result of the Atotech Acquisition and may adversely affect us by increasing our interest expense and decreasing our business flexibility, among other things. Following discussions with management about the importance of generating strong cash flow to reduce our debt, in February 2024, our Compensation Committee determined that a portion of future cash bonus payouts to our Named Executive Officers should be based on a second performance metric, adjusted net debt, defined as our gross debt, less cash and short-term investments, adjusted for the impact of foreign currency changes and certain items that our Compensation Committee considers to be outside the ordinary course of operations. For 2024, cash bonus payouts were based on two performance metrics, (i) non-GAAP operating income, weighted at 70% of each Named Executive Officer’s Target Bonus Amount (as defined below), and (ii) adjusted net debt, weighted at 30% of each Named Executive Officer’s Target Bonus Amount. Historically, achievement of our plan of record for a performance metric would result in a cash payout equal to 100% of a Named Executive Officer’s Target Bonus Amount for that performance metric. However, in order to address the expected continued softened business environment for 2024, drive increased profits, and reduce costs, our Compensation Committee determined that for 2024, achievement of our plan of record for a performance metric would result in a cash payout equal to 25% of a Named Executive Officer’s Target Bonus Amount for that performance metric. For a Named Executive Officer to receive a cash payout equal to 100% of his or her Target
Elements of Compensation
Bonus Amount for a performance metric in 2024, the Company would need to achieve a “Stretch Target” beyond our plan of record for that performance metric. Under the Management Incentive Plan, each Named Executive Officer (except Mr. Mayampurath) was eligible to receive a performance bonus based on a specified percentage of base salary earned during the 2024 calendar year. Any performance bonus under the Management Incentive Plan would be capped such that payout would not exceed an amount equal to 200% of the Named Executive Officer’s Target Bonus Amount. In 2024, payouts under the Management Incentive Plan were determined by multiplying each Named Executive Officer’s “Target Bonus Amount” by the Company’s percentage achievement of non-GAAP operating income and adjusted net debt, as described below. Target Bonus Amount consists of each Named Executive Officer’s base salary earned in 2024, multiplied by his or her “Target Bonus Percentage,” as determined by our Compensation Committee. If a Named Executive Officer’s base salary and/or Target Bonus Percentage changed during 2024, the Named Executive Officer’s Target Bonus Amount was pro-rated based on the number of days in 2024 that the Named Executive Officer received such base salary and/or Target Bonus Percentage. When our Compensation Committee met in February 2024, it did not approve any changes to the Target Bonus Percentages for Dr. Lee, Ms. Burke, Mr. Henry, or Mr. Schreiner. Listed below is the Target Bonus Percentage for each Named Executive Officer in 2023 and 2024.
Elements of Compensation
| Named Executive Officer | 2023 Target Bonus Percentage | 2024 Target Bonus Percentage | | John T.C. Lee | 125% | 125% | | Ramakumar Mayampurath | N/A | N/A | | Kathleen F. Burke | 70% | 70% | | David P. Henry | 65% | 65% | | James A. Schreiner | 65% | 65% |
Elements of Compensation
For 2024, our Compensation Committee set (i) plan of record achievement for non-GAAP operating income at an amount that was greater than actual achievement in 2023 but less than target achievement in 2023 and (ii) Stretch Target achievement for non-GAAP operating income at an amount that was greater than both actual achievement and target achievement in 2023. Our Compensation Committee set plan of record achievement and Stretch Target achievement for adjusted net debt at an amount that was greater than actual achievement in 2023. The successful alignment of our financial performance goals with our incentive payout opportunities for 2024 is evidenced by the fact that our Management Incentive Plan paid out at 30% achievement in a year where our Named Executive Officers needed to achieve Stretch Targets to earn their Target Bonus Amount. Although we executed well amid a muted demand environment, we were unable to achieve our Stretch Targets. Non-GAAP Operating Income Metric (70% Weighting): In 2024, Named Executive Officers (excluding Mr. Mayampurath) would receive the following percentage of their Target Bonus Amount tied to non-GAAP operating income under the Management Incentive Plan, with proportional payments for achievement in between the Threshold Bonus Amount and the Maximum Bonus Amount.
Elements of Compensation
| Non-GAAP Operating Income (for the year ended December 31, 2024) | % of Target Bonus Amount | | ≤$580.5 million (Threshold Bonus Amount) | 0% | | $774.0 million (Plan of Record Bonus Amount) | 25% | | $874.7 million (Stretch Target Bonus Amount) | 100% | | ≥$952.1 million (Maximum Bonus Amount) | 200% |
Elements of Compensation
Officers’ cash bonuses, in order to foster non-executive employee retention and engagement without penalizing the Named Executive Officers. For a full reconciliation of 2024 operating income to 2024 non-GAAP operating income for purposes of the Management Incentive Plan, see Appendix C to this proxy statement. Adjusted Net Debt Metric (30% Weighting): In 2024, Named Executive Officers (excluding Mr. Mayampurath) would receive the following percentage of their Target Bonus Amount tied to adjusted net debt under the Management Incentive Plan, with proportional payments for achievement in between the Threshold Bonus Amount and the Maximum Bonus Amount.
Elements of Compensation
| Adjusted Net Debt (as of December 31, 2024) | % of Target Bonus Amount | | ≥$3.89 billion (Threshold Bonus Amount) | 0% | | $3.79 billion (Plan of Record Bonus Amount) | 25% | | $3.71 billion (Stretch Target Bonus Amount) | 100% | | ≤$3.69 billion (Maximum Bonus Amount) | 200% |
Elements of Compensation
| Non-GAAP Operating Income % of Target Bonus Amount (Weighted at 70%) | Adjusted Net Debt % of Target Bonus Amount (Weighted at 30%) | Overall % of Target Bonus Amount | | 18% | 12% | 30% |
Elements of Compensation
| Named Executive Officer | Cash Payout | Payment as a Percentage of Target Bonus Amount | | John T.C. Lee | $363,935 | 30% | | Ramakumar Mayampurath | $N/A | N/A | | Kathleen F. Burke | $107,131 | 30% | | David P. Henry | $88,869 | 30% | | James A. Schreiner | $93,191 | 30% |
Elements of Compensation
Long-Term Equity Incentive Compensation When our Compensation Committee set 2024 annual executive compensation in February 2024, it awarded the following time-based and performance-based RSUs to our Named Executive Officers. The performance-based RSUs subject to Adjusted EBITDA, which account for 70% of our Named Executive Officers’ target performance-based RSUs, are subject to a one-year performance metric, and the performance-based RSUs subject to rTSR, which account for 30% of our Named Executive Officers’ target performance-based RSUs, are subject to a three-year performance metric, each as described below. The time-based RSUs vest in three equal annual installments from the original date of grant. The performance-based RSUs subject to Adjusted EBITDA vest in three equal annual installments from the original date of grant and the performance-based RSUs subject to rTSR vest in full on
Elements of Compensation
| | Performance-Based RSUs subject to Adjusted EBITDA(1) | | Performance-Based RSUs subject to rTSR(1) | | Time-Based RSUs(1) | | | Named Executive Officer | Grant Date Value | Number | Grant Date Value | Number | Grant Date Value | Number | | John T.C. Lee | $2,940,000 | 23,738 | $1,260,000 | 10,174 | $2,800,000 | 22,608 | | Ramakumar Mayampurath | $N/A | N/A | $N/A | N/A | $N/A | N/A | | Kathleen F. Burke | $428,750 | 3,462 | $183,750 | 1,484 | $612,500 | 4,945 | | David P. Henry | $332,500 | 2,685 | $142,500 | 1,151 | $475,000 | 3,835 | | James A. Schreiner | $315,000 | 2,543 | $135,000 | 1,090 | $450,000 | 3,633 |
Elements of Compensation
| (1) Grant date value of performance-based RSUs and corresponding number of performance-based RSUs assuming 100% achievement, with achievement capped at 200%. Grant date values differ from the amounts shown in the “Stock Awards” column of the Summary Compensation Table, which represent grant date fair values calculated in accordance with ASC 718. |
Elements of Compensation
| | Grant Date Value of Performance- Based RSUs(1) | | Grant Date Value of Time-Based RSUs(1) | | Total Grant Date Value(1) | | | Named Executive Officer | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | | John T.C. Lee | $3,600,000 | $4,200,000 | $2,400,000 | $2,800,000 | $6,000,000 | $7,000,000 | | Ramakumar Mayampurath | $N/A | $N/A | $N/A | $N/A | $N/A | $N/A | | Kathleen F. Burke | $562,500 | $612,500 | $562,500 | $612,500 | $1,125,000 | $1,225,000 | | David P. Henry | $375,000 | $475,000 | $375,000 | $475,000 | $750,000 | $950,000 | | James A. Schreiner | $400,000 | $450,000 | $400,000 | $450,000 | $800,000 | $900,000 |
Elements of Compensation
| (1) Grant date value of performance-based RSUs assuming 100% achievement, with achievement capped at 200%. Grant date values differ from the amounts shown in the “Stock Awards” column of the Summary Compensation Table, which represent grant date fair values calculated in accordance with ASC 718. |
Elements of Compensation
With respect to performance-based RSUs, our goal is to select Company financial metrics that best align with our Company objectives. From 2020 to 2023, we used one performance metric, Adjusted EBITDA, defined as the Company’s GAAP operating income excluding any charges or income not related to the operating performance of the Company plus depreciation and stock compensation expense. We believe Adjusted EBITDA provides a clear indication of how effectively we manage the operations of our Company, while continuing to recognize the cyclical nature and volatility of the markets we serve, as well as to drive continued improvement in our Company’s operating model independent of revenue levels. Following a review of market practice, our Compensation Committee determined that a portion of performance-based RSUs awarded to our Named Executive Officers should be based on a second performance metric, rTSR, which is defined as the annualized rate of return of our stock (including appreciation in stock price and reinvestment of dividends) compared to the S&P 1500 Composite Electronic Equipment, Instruments & Components Index. Our Compensation Committee believes measuring a portion of performance-based RSU achievement using rTSR strengthens long-term alignment between executive and shareholder interests and elevates the performance orientation of our executive compensation program. For 2024, Dr. Lee, Ms. Burke, Mr. Henry, and Mr. Schreiner received two performance-based awards, one of which was subject to Adjusted EBITDA and accounted for 70% of his or her target performance-based RSUs and the other of which was subject to rTSR and accounted for 30% of his or her target performance-based RSUs. Consistent with the modification to our Management Incentive Plan, our Compensation Committee also modified our long-term equity incentive compensation program. Historically, achievement of our plan of record for Adjusted EBITDA would result in 100% achievement of a Named Executive Officer’s performance-based RSUs. However, in order to address the expected continued softened business environment for 2024, drive increase profits, and reduce costs, our Compensation Committee determined that achievement of our plan of record for
Elements of Compensation
Adjusted EBITDA would result in 25% achievement of a Named Executive Officer’s performance-based RSUs subject to Adjusted EBITDA for 2024. For a Named Executive Officer to receive 100% achievement of his or her performance-based RSUs subject to Adjusted EBITDA in 2024, the Company would need to achieve a “Stretch Target” beyond our plan of record for Adjusted EBITDA. We choose to measure Adjusted EBITDA over a one-year performance period because of the cyclical nature and volatility of our markets, making it challenging to set multi-year performance targets, as evidenced by continued cyclical challenges in our end markets. To ensure our executive officers are focused on our Company’s long-term performance, the performance-based RSUs subject to Adjusted EBITDA vest in equal annual installments over three years from the original date of grant, subject to achievement of the performance metric. In addition, we choose to measure rTSR over a three-year performance period to further ensure executives are aligned with long-term shareholder interests. We use RSUs as our form of equity incentive compensation because we believe RSUs help to ensure that our executive officers’ interests are aligned with our shareholders’ interests in both a rising and a declining stock market. We believe RSUs are preferable to stock options, which have a relatively high accounting cost as compared to their potential value to the executive officer, and restricted stock, which gives the executive officer voting and dividend rights prior to full vesting. Also, because RSUs are worth more than stock options on the date of grant, we are able to grant fewer RSUs as compared to stock options, resulting in less potential dilution to shareholders’ holdings. In 2024, our Named Executive Officers would have forfeited all of their performance-based RSUs subject to Adjusted EBITDA if our Adjusted EBITDA was less than or equal to $553.2 million at an adjusted revenue level of $3.34 billion or if our Adjusted EBITDA was less than or equal to $831.7 million at an adjusted revenue level of $4.09 billion (with intermediate Adjusted EBITDA minimum thresholds at different adjusted revenue levels in between). If we achieved the plan of record for Adjusted EBITDA of $737.6 million at an adjusted revenue level of $3.34 billion or $1.11 billion at an adjusted revenue level of $4.09 billion (with proportional thresholds in between), then our Named Executive Officers would have received 25% of their target performance-based RSUs subject to Adjusted EBITDA. If we achieved the Stretch Target for Adjusted EBITDA of $848.2 million at an adjusted revenue level of $3.34 billion or $1.28 billion at an adjusted revenue level of $4.09 billion (with proportional thresholds in between), then our Named Executive Officers would receive 100% of their target performance-based RSUs subject to Adjusted EBITDA. If our Adjusted EBITDA was at or above $922.0 million at an adjusted revenue level of $3.34 billion or was at or above $1.39 billion at an adjusted revenue level of $4.09 billion (with proportional thresholds in between), then our Named Executive Officers would receive the maximum of 200% of their target performance-based RSUs subject to Adjusted EBITDA. If adjusted revenue was outside the range of $3.34 billion and $4.09 billion, then the performance target and payout would be calculated using the same payout formula. Proportional achievement levels would be made for Adjusted EBITDA between the minimum and maximum levels. If the percentage achievement for performance-based RSUs subject to Adjusted EBITDA was greater than 25% of the percentage achievement for the non-GAAP operating income metric of our annual cash incentive program, then our Compensation Committee could apply negative discretion with respect to the performance-based RSUs subject to Adjusted EBITDA up to an amount equal to the percentage achievement for the non-GAAP operating income metric. Our Compensation Committee believes the application of negative discretion under these circumstances helps foster appropriate alignment between pay and performance. In 2024, because our adjusted revenue was $3.62 billion and our Adjusted EBITDA for purposes of determining performance-based RSU achievement was $927 million, our Named Executive Officers received 51% of their target performance-based RSUs subject to Adjusted EBITDA. In addition to excluding charges or income not related to our operating performance, the calculation of Adjusted EBITDA for purposes of determining performance-based RSU achievement for 2024 excluded the Non-Executive Bonus Adjustment, consistent with the adjustment made to the calculation of non-GAAP operating income for purposes of the Management Incentive Plan. For full reconciliations of 2024 revenue to 2024 adjusted revenue and 2024 net income to 2024 Adjusted EBITDA for purposes of determining performance-based RSU achievement, see Appendix C to this proxy statement. The performance-based RSUs subject to rTSR that were granted to our Named Executive Officers in February 2024 will be measured over a three-year performance period from January 1, 2024 to December 31, 2026. rTSR for this performance period will be measured by comparing the 20-day trading day average of each of MKS and the S&P 1500 Composite Electronic Equipment, Instruments & Components Index at the beginning of the performance period against the respective 20-day trading day average at the end of the performance period.
Elements of Compensation
Percentage achievement of the performance-based RSUs subject to rTSR is subject to two caps. First, if the Company has a negative absolute rTSR at the end of the performance period but is above the 50th percentile, eligible Named Executive Officers will receive no more than 50% of their target performance-based RSUs subject to rTSR. Second, the total value of the award at vest shall not exceed 8x the value of the award on the grant date. Additional Information Regarding Equity Awards It is our practice to make an initial equity-based grant to all of our Named Executive Officers at the time they commence employment in an amount that is consistent with amounts granted to other executive officers in the industry at similar levels of seniority. As discussed under “Compensation Philosophy and Objectives” above, Mr. Mayampurath received a one-time sign-on equity award with a grant date value of $1,750,000 in connection with his appointment as Executive Vice President, Chief Financial Officer, and Treasurer. We may also make equity-based grants to a Named Executed Officer in connection with a promotion or other change in position. In addition, we typically make an annual grant of equity-based compensation to our Named Executive Officers during the first fiscal quarter of each year. Discretionary equity-based awards may also be made during the year to provide an incentive to achieve a specific goal or to reward a significant achievement or for other reasons that the Compensation Committee determines. As discussed under “Executive Compensation Tables — Potential Payments Upon Termination or Change-in-Control – Other Named Executive Officers” below, in May 2024, Mr. Schreiner and the Company entered into an amendment to Mr. Schreiner’s employment agreement with the Company to extend his expatriate service in Berlin, Germany for a third year and, in connection therewith, replace an expatriate service cash bonus in the amount of $500,000 that was due to be paid to him on or shortly after August 17, 2024 with an expatriate service equity award with a grant date value of $850,000 in the form of time-based RSUs, or the Expatriate RSUs. The Expatriate RSUs were granted on May 15, 2024, 60% of which vested on August 17, 2024 and 40% of which are scheduled to vest on August 18, 2025, subject to Mr. Schreiner’s continued expatriate service. Perquisites We do not offer perquisites. Our Compensation Committee believes this practice simplifies and more consistently aligns our compensation and benefits offerings for Named Executive Officers with other employees, while placing greater focus on performance-based compensation.
Severance and Change-in-Control Provisions
Severance and Change-in-Control Provisions Each of our Named Executive Officers is entitled to certain payments and benefits in the event his or her employment terminates under specified circumstances as described in the applicable agreement and subject to his or her entry into a release of claims. In exchange for these payments and benefits, each of these officers has agreed to be restricted from competing with the Company during and following his or her termination of employment for a twelve-month period. In addition, RSU agreements with our Named Executive Officers with time-based vesting generally provide for acceleration of vesting in the event the executive’s employment is terminated without cause or the executive resigns for good reason within 24 months after a change-in-control event. RSU agreements with our Named Executive Officers with performance-based vesting based on Adjusted EBITDA provide for acceleration of vesting at target-level achievement in the event the executive’s employment is terminated without cause or the executive resigns for good reason within 24 months after a change-in-control event. RSU agreements with our Named Executive Officers with performance-based vesting based on rTSR provide
Severance and Change-in-Control Provisions
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Severance and Change-in-Control Provisions
that the performance period for such shares shall end on the day prior to the closing date of a change in control, with the number of shares, if any, that would have vested on such date, as determined in accordance with the terms of such agreements, converting into time-based vesting RSUs subject to acceleration of vesting in the event the executive’s employment is terminated without cause or the executive resigns for good reason within 24 months after a change-in-control event. The severance and change-in-control provisions are designed to be competitive in the marketplace, to provide security for each of our Named Executive Officers in the event that we are acquired and his or her respective position is impacted, and to provide an incentive for our Named Executive Officers to stay with us through such a change-in-control event. These provisions are also intended to protect us from competitive harm by compensating our Named Executive Officers for agreeing to substantial non-compete provisions after employment termination. See “Executive Compensation Tables — Potential Payments Upon Termination or Change-in-Control” for more information about these agreements.
Compensation Consultant
Compensation Consultant We engage a compensation consultant to serve as an independent advisor to the Compensation Committee regarding compensation for our directors and our executive officers. The Compensation Committee utilizes the compensation consultant in the following ways:
Compensation Consultant
| • | to provide the Compensation Committee with occasional consultation regarding compensation strategies and programs; |
Compensation Consultant
| • | to review our peer group to determine the appropriateness of its composition; |
Compensation Consultant
| • | to conduct formal competitive compensation analysis for the Compensation Committee regarding our directors and each executive officer, on a position-by-position basis, in comparison to similarly situated executive officers in our peer group using benchmarking data; |
Compensation Consultant
| • | to assess the rigor of proposed performance goals on the basis of a probability analysis, a year-over-year growth analysis and a historical payout versus our peer group analysis; and |
Compensation Consultant
| • | to assist the Compensation Committee with conducting a risk assessment of all of the Company’s compensation policies and practices. |
Compensation Consultant
Since May 2019, the Compensation Committee has engaged Pearl Meyer as its compensation consultant. The Compensation Committee has determined that the engagement of Pearl Meyer as a compensation consultant does not raise any conflicts of interest with MKS.
Compensation Consultant
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Governance Policies
Share ownership is measured as of December 31 of each year. Our Stock Ownership Guidelines count shares of our Common Stock and restricted stock units toward share ownership, except that restricted stock units subject to performance conditions are not counted. The Stock Ownership Guidelines provide for a phase-in period over five years to achieve compliance. If an individual has not attained his or her ownership goal, the individual may not sell any shares of our Common Stock acquired through his or her employment or directorship (except sales of shares of our Common Stock to pay taxes on vesting) until the next measurement date where the individual is in compliance with his or her ownership goal. As of December 31, 2024, our directors, CEO, and other Named Executive Officers were all in compliance with our Stock Ownership Guidelines or within the phase-in period. Clawback Policy Our Compensation Committee adopted an updated clawback policy, effective October 2, 2023, in accordance with Rule 10D-1 of the Exchange Act, or Rule 10D-1, and Nasdaq listing standards. The clawback policy applies to our current and former executive officers, as defined in Rule 10D-1, as well as other current executives who report to our Chief Executive Officer and other former executives who reported to our Chief Executive Officer. The clawback policy is administered by our Compensation Committee. In the event we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under U.S. federal securities laws, including any required restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, it is our policy to recover reasonably promptly the amount of erroneously awarded incentive-based compensation received by our executives. The recovery of such compensation applies regardless of whether an executive engaged in misconduct or otherwise cause or contributed to the requirement for a restatement, although the Compensation Committee is authorized to recover additional incentive-based compensation in situations where an executive engaged in intentional misconduct or fraud.
Governance Policies
Insider Trading Policy and Prohibition on Hedging and Pledging We have adopted an Insider Trading Policy governing the purchase, sale, and/or other dispositions of Company securities by our directors, officers, employees, and other covered persons. We believe our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules, and regulations, and Nasdaq listing standards. A copy of our Insider Trading Policy is filed as Exhibit 19.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Our Insider Trading Policy prohibits any of our directors or employees from engaging in purchases of financial instruments or other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our securities (including pre-paid variable forward contracts, equity swaps, collars, and exchange funds), and prohibits such individuals from purchasing our securities on margin or pledging such securities as collateral for a loan. Policies and Practices Related to the Grant of Equity Awards We grant equity awards, including restricted stock units, to our non-employee directors, officers, and certain of our employees on an annual basis. We may also grant equity awards to individuals upon hire or promotion or for retention purposes. We currently do not grant stock options, stock appreciation rights, or similar option-like instruments, and only grant restricted stock units. During the last fiscal year, neither our Board nor our Compensation Committee took material nonpublic information into account when determining the timing or terms of equity awards, nor did the Company time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
Summary Compensation Table for 2024
Summary Compensation Table for 2024 The following table sets forth the aggregate amounts of compensation earned by our 2024 Named Executive Officers in the years ended December 31, 2024, 2023, and 2022.
Summary Compensation Table for 2024
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | John T.C. Lee, President and CEO (principal executive officer) | 2024 | $970,492 | $- | $7,388,552 | $363,935 | $37,146 | $8,760,125 | | | 2023 | $950,000 | $- | $5,900,090 | $1,021,250 | $35,288 | $7,906,628 | | | 2022 | $944,727 | $- | $5,909,984 | $1,170,939 | $32,732 | $8,058,382 | | Ramakumar Mayampurath, EVP, CFO, and Treasurer (principal financial officer)(4) | 2024 | $134,906 | $1,000,000(5) | $1,721,962 | $- | $60,601 | $2,917,469 | | Kathleen F. Burke, EVP, General Counsel, and Secretary | 2024 | $510,148 | $- | $1,278,911 | $107,131 | $36,264 | $1,932,454 | | | 2023 | $504,000 | $- | $1,106,267 | $303,408 | $35,288 | $1,948,963 | | | 2022 | $499,773 | $- | $1,108,122 | $349,809 | $32,725 | $1,990,429 | | David P. Henry, EVP, Operations and Corporate Marketing | 2024 | $455,738 | $- | $991,808 | $88,869 | $36,498 | $1,572,913 | | | 2023 | $450,000 | $- | $737,511 | $251,550 | $35,403 | $1,474,464 | | | 2022 | $442,604 | $- | $738,732 | $283,116 | $33,047 | $1,497,499 | | James A. Schreiner, EVP and COO, Materials Solutions Division | 2024 | $477,900 | $- | $1,781,290 | $93,191 | $320,244 | $2,672,625 | | | 2023 | $465,718 | $- | $786,679 | $260,337 | $494,827 | $2,007,561 | | | 2022 | $457,598 | $- | $787,982 | $297,407 | $45,389 | $1,588,376 | | Seth H. Bagshaw, Former EVP, CFO, and Treasurer (former principal financial officer)(6) | 2024 | $650,500 | $- | $- | $- | $20,332 | $670,832 | | | 2023 | $623,775 | $- | $1,892,945 | $482,802 | $40,546 | $3,040,068 | | | 2022 | $615,774 | $- | $1,896,120 | $554,154 | $44,042 | $3,110,090 |
Summary Compensation Table for 2024
| (1) Represents the aggregate grant date fair value for each RSU granted to the executive officer during the covered year, calculated in accordance with ASC 718. The grant date fair value of time-based RSU awards was calculated based on the closing price of our Common Stock on the grant date reduced by the present value of dividends expected to be paid on our Common Stock prior to vesting. The grant date fair value of performance-based RSU awards subject to Adjusted EBITDA was calculated at target achievement and based on the closing price of our Common Stock on the grant date reduced by the present value of dividends expected to be paid on our Common Stock prior to vesting. The grant date fair value of performance-based RSU awards subject to rTSR was calculated using the Monte Carlo simulation model, which required the use of the following assumptions: |
Summary Compensation Table for 2024
| Expected Stock Price Volatility for MKS | Expected Term (Years) | Risk-Free Interest Rate | Expected Dividend Yield | | 44.13% | 2.87 | 4.28% | 0.89% |
Summary Compensation Table for 2024
The amounts under the “Stock Awards” column do not reflect the amount of compensation actually received by the 2024 Named Executive Officers during the fiscal year. Except with respect to Mr. Mayampurath and Mr. Schreiner in 2024, at least fifty percent of the values listed under “Stock Awards” represent performance-based RSUs, which are valued at the grant date based upon the probable outcome of the performance
Summary Compensation Table for 2024
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Summary Compensation Table for 2024
metrics. The following table sets forth the maximum value of the RSUs, assuming the highest level of performance is achieved for the performance-based portion of the RSUs, if applicable:
Summary Compensation Table for 2024
| Named Executive Officer | 2024 Maximum | 2023 Maximum | 2022 Maximum | | Dr. Lee | $11,048,979 | $9,440,144 | $9,455,975 | | Mr. Mayampurath | $1,721,962 | $N/A | $N/A | | Ms. Burke | $1,812,723 | $1,659,400 | $1,662,183 | | Mr. Henry | $1,405,785 | $1,106,267 | $1,108,098 | | Mr. Schreiner | $2,173,478 | $1,180,018 | $1,181,973 | | Mr. Bagshaw | $N/A | $2,934,065 | $2,938,986 |
Summary Compensation Table for 2024
On November 15, 2024, in connection with his hiring, Mr. Mayampurath was granted a one-time sign-on equity award with a grant date value of $1,750,000 in the form of time-based RSUs, which vests in two equal annual installments beginning in November 2025. He did not receive an annual stock award in 2024. In addition to his annual stock award for 2024, on May 15, 2024, Mr. Schreiner received an expatriate service equity award with a grant date value of $850,000 in the form of time-based RSUs, 60% of which vested on August 17, 2024 and 40% of which is scheduled to vest on August 18, 2025, subject to Mr. Schreiner’s continued expatriate service. This award was made pursuant to an amendment to Mr. Schreiner’s employment agreement with the Company to extend his expatriate service in Berlin, Germany for a third year. This award replaced an expatriate service cash bonus of $500,000 that was due to be paid to Mr. Schreiner on or shortly after August 17, 2024.
Summary Compensation Table for 2024
| (2) Each 2024 Named Executive Officer’s annual cash performance bonus for 2024, 2023, and 2022 was calculated based on a specified target percentage of his or her eligible earnings for the relevant plan year. For 2024, the threshold bonus payout was 0% of this individual target bonus percentage and the maximum payout was 200% of this individual target bonus percentage, with proportional payouts for performance between these levels. For 2023 and 2022, the threshold bonus payout was 50% of this individual target bonus percentage and the maximum payout was 200% of this individual target bonus percentage, with proportional payouts for performance between these levels. Bonus payments in 2024 were based on the achievement of two financial metrics: (i) non-GAAP operating income (defined as GAAP operating income excluding any charges or income not related to the operating performance of the Company) for 2024, excluding the Non-Executive Bonus Adjustment, and (ii) adjusted net debt (defined as gross debt, less cash and short-term investments, adjusted for the impact of foreign currency changes and certain items that our Compensation Committee considers to be outside the ordinary course of operations) for 2024. Bonus payments in 2023 were based on the achievement of non-GAAP operating income (defined as GAAP operating income after bonus and excluding any charges or income not related to the operating performance of the Company) for 2023. Bonus payments in 2022 were based on the achievement of two financial metrics: (i) non-GAAP operating income (defined as GAAP operating income after bonus and excluding any charges or income not related to the operating performance of the Company) for 2022, excluding the results of Atotech, which we acquired in 2022, and (ii) annualized cost savings (defined as profit enhancements or cost reductions approved by the Chief Executive Officer that result, on an annualized basis, in quantified and measured benefits to the Company’s financial performance) for 2022. The individual target bonus percentage and the actual bonus achieved for each of the 2024 Named Executive Officers were as follows: |
Summary Compensation Table for 2024
| | 2024 | | 2023 | | 2022 | | | | Individual Target Bonus % | Annual Bonus Plan Achievement | Individual Target Bonus % | Annual Bonus Plan Achievement | Individual Target Bonus % | Annual Bonus Plan Achievement | | Named Executive Officer | | | | | | | | Dr. Lee | 125% | 30% | 125% | 86% | 125% | 100% | | Mr. Mayampurath | N/A | N/A | N/A | N/A | N/A | N/A | | Ms. Burke | 70% | 30% | 70% | 86% | 70% | 100% | | Mr. Henry | 65% | 30% | 65% | 86% | 65% | 100% | | Mr. Schreiner | 65% | 30% | 65% | 86% | 65% | 100% | | Mr. Bagshaw | N/A | N/A | 90% | 86% | 90% | 100% |
Summary Compensation Table for 2024
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Summary Compensation Table for 2024
| (3) Our Compensation Committee elected to discontinue perquisites effective December 31, 2020, with the exception that Mr. Bagshaw and Mr. Schreiner were permitted to retain their company-leased cars until the expiration of their leases in May 2023 and November 2023, respectively, to avoid lease cancellation costs. The amounts paid for such perquisites and the amount of all other compensation consisted of the following: |
Summary Compensation Table for 2024
| Named Executive Officer | Year | Auto | Health & Disability | 401(k) Match | Global Mobility | Relocation | | Dr. Lee | 2024 | $- | $26,796 | $10,350 | $- | $- | | | 2023 | $- | $25,388 | $9,900 | $- | $- | | | 2022 | $- | $23,582 | $9,150 | $- | $- | | Mr. Mayampurath | 2024 | $- | $3,590 | $2,163 | $- | $54,848 | | Ms. Burke | 2024 | $- | $25,914 | $10,350 | $- | $- | | | 2023 | $- | $25,388 | $9,900 | $- | $- | | | 2022 | $- | $23,575 | $9,150 | $- | $- | | Mr. Henry | 2024 | $- | $26,148 | $10,350 | $- | $- | | | 2023 | $- | $25,503 | $9,900 | $- | $- | | | 2022 | $- | $23,897 | $9,150 | $- | $- | | Mr. Schreiner | 2024 | $- | $26,192 | $10,350 | $283,702 | $- | | | 2023 | $11,323 | $25,629 | $9,900 | $447,976 | $- | | | 2022 | $12,280 | $23,959 | $9,150 | $- | $- | | Mr. Bagshaw | 2024 | $- | $9,982 | $10,350 | $- | $- | | | 2023 | $5,258 | $25,388 | $9,900 | $- | $- | | | 2022 | $11,310 | $23,582 | $9,150 | $- | $- |
Summary Compensation Table for 2024
Health & Disability benefits for 2024 included partial payment of premiums for medical, dental, vision, short-term and long-term disability, and life insurance. Global Mobility benefits for 2024 included benefits provided to Mr. Schreiner as a result of his expatriate service in Germany, including housing and utilities, auto, home leave, work permit assistance, local country unemployment insurance, foreign language classes, and tax equalization payments. The tax equalization payments for 2024, which amount to $176,182, reflect the estimated total net amount of tax equalization designed to cover taxes on Mr. Schreiner’s compensation in excess of the taxes he would have incurred in the United States, in accordance with our global mobility program. Relocation benefits for Mr. Mayampurath for 2024 included $38,750 in moving expenses and taxes with respect to such relocation expenses of $16,098, in accordance with our relocation policy.
Summary Compensation Table for 2024
| (4) Mr. Mayampurath joined the Company in October 2024. Accordingly, his compensation is not included with respect to 2023 or 2022. |
Summary Compensation Table for 2024
| (5) Represents a one-time sign-on cash bonus of $1,000,000, subject to repayment if Mr. Mayampurath voluntarily resigns or his employment is terminated for cause, each prior to the second anniversary of his start date. |
Summary Compensation Table for 2024
| (6) Mr. Bagshaw retired from the Company in May 2024. The amount for Mr. Bagshaw under “Salary” includes a payment of $441,729 for accrued but unused vacation in connection with his retirement. |
Summary Compensation Table for 2024
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 55 |
Grants of Plan-Based Awards in Fiscal Year 2024 Table
Grants of Plan-Based Awards in Fiscal Year 2024 Table
Grants of Plan-Based Awards in Fiscal Year 2024 Table
| Name | Grant Date(1) | Approval Date(2) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(3) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | Grant Date Fair Value of Stock Awards ($)(5) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | John T.C. Lee | N/A | N/A | $- | $1,213,115 | $2,426,230 | | | | | | | | 2/15/24 | 2/5/24 | | | | | | | 22,608 | $2,762,245 | | | 2/15/24(6) | 2/5/24 | | | | - | 23,738 | 47,477 | | $2,900,357 | | | 2/15/24(7) | 2/5/24 | | | | 2,543 | 10,174 | 20,347 | | $1,725,951 | | Ramakumar Mayampurath | N/A | N/A | $N/A | $N/A | $N/A | | | | | | | | 11/15/24 | 7/24/24 | | | | N/A | N/A | N/A | 16,591 | $1,721,962 | | Kathleen F. Burke | N/A | N/A | $- | $357,103 | $714,207 | | | | | | | | 2/15/24 | 2/5/24 | | | | | | | 4,945 | $604,241 | | | 2/15/24(6) | 2/5/24 | | | | - | 3,462 | 6,924 | | $422,969 | | | 2/15/24(7) | 2/5/24 | | | | 371 | 1,484 | 2,967 | | $251,701 | | David P. Henry | N/A | N/A | $- | $296,230 | $592,460 | | | | | | | | 2/15/24 | 2/5/24 | | | | | | | 3,835 | $468,595 | | | 2/15/24(6) | 2/5/24 | | | | - | 2,685 | 5,369 | | $328,017 | | | 2/15/24(7) | 2/5/24 | | | | 288 | 1,151 | 2,301 | | $195,197 | | James A. Schreiner | N/A | N/A | $- | $310,635 | $621,270 | | | | | | | | 2/15/24 | 2/5/24 | | | | | | | 3,633 | $443,932 | | | 2/15/24(6) | 2/5/24 | | | | - | 2,543 | 5,087 | | $310,752 | | | 2/15/24(7) | 2/5/24 | | | | 273 | 1,090 | 2,180 | | $184,923 | | | 5/15/24 | 5/6/24 | | | | | | | 6,602 | $841,682 | | Seth H. Bagshaw | N/A | N/A | $N/A | $N/A | $N/A | N/A | N/A | N/A | N/A | $N/A |
Grants of Plan-Based Awards in Fiscal Year 2024 Table
| (1) This column shows the date of grant for equity awards granted in 2024, all of which were made under the 2022 Stock Incentive Plan. |
Grants of Plan-Based Awards in Fiscal Year 2024 Table
| (2) This column shows the date on which the Compensation Committee approved the grant of equity awards. |
Grants of Plan-Based Awards in Fiscal Year 2024 Table
| (3) Represents aggregate threshold, target, and maximum payout levels under the annual cash incentive plan. The actual amount of annual cash incentive compensation earned by each 2024 Named Executive Officer is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table for 2024. See Footnote 2 to the Summary Compensation Table for 2024 for details on the terms of the annual cash incentive plan. |
Grants of Plan-Based Awards in Fiscal Year 2024 Table
| (4) The RSUs granted to Dr. Lee, Ms. Burke, Mr. Henry, and Mr. Schreiner on February 15, 2024 vest in equal annual installments over three years beginning in February 2025. The RSUs granted to Mr. Mayampurath on November 15, 2024 vest in two equal annual installments beginning in November 2025. Sixty percent of the RSUs granted to Mr. Schreiner on May 15, 2024 vested on August 17, 2024, with the remaining RSUs vesting on August 18, 2025. |
Grants of Plan-Based Awards in Fiscal Year 2024 Table
| (5) Represents the grant date fair value calculated in accordance with ASC 718. See Footnote 1 to the Summary Compensation Table for additional information. |
Grants of Plan-Based Awards in Fiscal Year 2024 Table
| (6) These RSUs were subject to achievement of Adjusted EBITDA over a one-year performance period. These RSUs vest in equal annual installments over three years beginning in February 2025, subject to achievement of the performance metric, which was established in 2024 and determined in February 2025. |
Grants of Plan-Based Awards in Fiscal Year 2024 Table
| (7) These RSUs are subject to achievement of rTSR over a three-year performance period. These RSUs vest in full in February 2027, subject to achievement of the performance metric, which was established in 2024 and is expected to be determined in February 2027. |
Grants of Plan-Based Awards in Fiscal Year 2024 Table
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 56 |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
Outstanding Equity Awards at 2024 Fiscal Year-End Table
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| | Stock Awards(1) | | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) ($) | | John T.C. Lee | 20,777(3) | $2,168,887 | 47,477(4) | $4,956,102 | | | 59,484(5) | $6,209,503 | 2,543(6) | $265,505 | | | 21,624(7) | $2,257,329 | | | | Ramakumar Mayampurath | 16,591(8) | $1,731,916 | - | $- | | Kathleen F. Burke | 3,932(3) | $410,444 | 6,924(4) | $722,765 | | | 10,957(5) | $1,143,759 | 371(6) | $38,720 | | | 4,945(7) | $516,261 | | | | David P. Henry | 2,447(3) | $255,443 | 5,369(4) | $560,511 | | | 181(9) | $18,864 | 288(6) | $30,027 | | | 7,305(5) | $762,540 | | | | | 3,835(7) | $400,365 | | | | James A. Schreiner | 2,622(3) | $273,734 | 5,087(4) | $531,011 | | | 181(9) | $18,864 | 273(6) | $28,447 | | | 7,792(5) | $813,419 | | | | | 3,633(7) | $379,294 | | | | | 2,641(10) | $275,688 | | | | Seth H. Bagshaw | - | $- | - | $- |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (1) All stock awards in the above table are RSUs. Except as otherwise noted below, all RSUs vest in three equal annual installments, with an annual vesting date of February 15th or the next business day if February 15th is not a business day. None of the 2024 Named Executive Officers had any outstanding option awards. |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (2) Values were calculated based on the closing price of our Common Stock on December 31, 2024 of $104.39 per share. |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (3) Grant date is April 29, 2022. |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (4) Grant date is February 15, 2024. Number of shares assumes maximum achievement of performance criteria (Adjusted EBITDA). |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (5) Grant date is February 15, 2023. |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (6) Grant date is February 15, 2024. Number of shares assumes threshold achievement of performance criteria (rTSR). |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (7) Grant date is February 15, 2024. |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (8) Grant date is November 15, 2024. These RSUs vest in two equal annual installments beginning in November 2025. |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (9) Grant date is August 17, 2022. |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| (10) Grant date is May 15, 2024. These RSUs vest on August 18, 2025. |
Outstanding Equity Awards at 2024 Fiscal Year-End Table
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 57 |
Option Exercises and Stock Vested in Fiscal Year 2024 Table
Option Exercises and Stock Vested in Fiscal Year 2024 Table
Option Exercises and Stock Vested in Fiscal Year 2024 Table
| | Stock Awards* | | | Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | | John T.C. Lee | 67,528(3) | $8,225,971 | | Ramakumar Mayampurath | - | $- | | Kathleen F. Burke | 12,458 | $1,521,786 | | David P. Henry | 8,022 | $979,946 | | James A. Schreiner | 12,618 | $1,529,143 | | Seth H. Bagshaw | 47,037 | $5,192,358 |
Option Exercises and Stock Vested in Fiscal Year 2024 Table
| (1) Reflects the number of shares vested before the surrender of shares in satisfaction of tax withholding obligations. |
Option Exercises and Stock Vested in Fiscal Year 2024 Table
| (2) Reflects the value realized before satisfaction of tax withholding obligations. |
Option Exercises and Stock Vested in Fiscal Year 2024 Table
| (3) Includes 2,994 shares that vested to cover U.S. Federal Insurance Contribution Act (FICA) tax withholding obligations, as Dr. Lee was retirement eligible in 2024. |
Option Exercises and Stock Vested in Fiscal Year 2024 Table
| * There were no option exercises in 2024. |
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control This section, including the tables below, summarizes the estimated payments and other benefits that each Named Executive Officer would be eligible to receive if his or her employment had terminated on December 31, 2024, under the circumstances set forth below.
John T.C. Lee
John T.C. Lee Pursuant to the terms of Dr. Lee’s employment agreement dated as of November 18, 2019, Dr. Lee is entitled to receive a base salary and to participate in the Company’s annual cash incentive program and long-term equity incentive plan. From time to time in its sole discretion, our Compensation Committee may review and adjust Dr. Lee’s base salary, target compensation goal for the annual cash incentive program, and target award for the long-term equity incentive plan. Dr. Lee’s employment agreement provides for a term that is at-will, with termination upon death or disability or at the election of Dr. Lee or the Company. Under the employment agreement, and consistent with applicable law, on any termination of employment, Dr. Lee is entitled to: (i) any unpaid base salary through the employment end date, (ii) accrued, vested benefits under the Company’s benefit plans and programs and pursuant to any equity award agreements relating to awards under the current or any future Company equity incentive plan, (iii) any accrued but unused vacation, and (iv) any unreimbursed expenses incurred through the employment end date in accordance with the Company’s expense reimbursement policies. In the event that Dr. Lee’s employment is terminated by the Company without cause (as defined below) or is terminated by Dr. Lee for good reason (as defined below), he is entitled to: (i) continuation of base salary for 18 months, (ii) a lump sum equal to 1.5 times the annual amount of his target cash incentive compensation for which he is eligible, (iii) any cash incentive compensation earned for the calendar year preceding his termination but not yet paid, and (iv) to the extent that he elects to continue coverage, payment by the Company of premiums for medical, vision, and dental insurance coverage under COBRA for a period of 18 months, less the premium contribution paid by similarly situated employees. In the event that Dr. Lee’s employment is terminated by the Company without cause, or is terminated by Dr. Lee for good reason, within 24 months after a change-in-control (as defined in his employment agreement), he is entitled to: (i) a lump sum payment equal to three times his annual base salary, (ii) a lump sum payment equal to three times the annual amount of his target cash incentive compensation, (iii) any cash incentive compensation earned for the calendar year preceding his termination but not yet paid, (iv) a prorated portion of his then-current year’s target cash incentive compensation, and (v) to the extent that he elects to continue coverage, payment by
John T.C. Lee
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 58 |
John T.C. Lee
the Company of its usual share of premiums for medical, vision, and dental insurance coverage under COBRA during the period of time Dr. Lee is entitled to elect such coverage under COBRA, and after the end of the COBRA continuation period, if Dr. Lee continues to pay the premium that would be charged for COBRA coverage, he may continue such insurance coverage until the end of the 36 month period following his employment termination date on the same terms as if COBRA coverage were still in effect and the Company will continue to pay the Company’s usual share of such premiums. In the event such payments are determined to be subject to an excise tax imposed by Section 4999 of the Internal Revenue Code, such payments will be payable in full or, if applicable, reduced so that no portion of the payments is subject to the excise tax, whichever of the foregoing amounts results in receipt by Dr. Lee on an after-tax basis of the greater amount, taking into account all applicable taxes, including the penalty tax. Dr. Lee is not entitled to any gross-up payment for any such excise tax due. In the event Dr. Lee’s employment is terminated due to death or disability, he (or his estate) is entitled to: (i) any cash incentive compensation earned for the calendar year preceding his termination but not yet paid and (ii) a prorated portion of his then-current year’s target cash incentive compensation. Dr. Lee’s employment agreement contains non-competition provisions that provide that he may not, during the term of his employment and for one year after termination of employment, engage in any competitive business or activity. In addition, he may not, during the term of employment and for two years after the termination of employment: (i) solicit, hire or otherwise induce any Company employee to terminate his or her employment with the Company, (ii) solicit or hire any of our suppliers, joint ventures, research partners or customers for the purpose of competing with the Company, (iii) encourage any of such persons or entities not to enter into a business relationship with the Company or interfere with the relationship between the Company and such persons or entities, or (iv) sell to any of the Company’s customers any products of the types sold by the Company with respect to which products he had material dealings in the performance of his duties within the period two years prior to his termination. Any equity awarded to Dr. Lee under the current or any future Company equity incentive plan that is unvested as of Dr. Lee’s termination of employment date will be subject to accelerated vesting to the extent provided in the equity award agreements governing the award. Dr. Lee has entered into time-based RSU agreements; performance-based RSU agreements subject to Adjusted EBITDA, which we refer to as Adjusted EBITDA RSU agreements; and performance-based RSU agreements subject to rTSR, which we refer to as rTSR RSU agreements. In the case of the time-based RSU agreements and the Adjusted EBITDA RSU agreements, if Dr. Lee is terminated without cause or resigns with good reason within 24 months following a change-in-control (as defined in the applicable RSU agreements), the RSU agreements provide for full acceleration of vesting of all RSUs, provided, that, in the case of the Adjusted EBITDA RSU Agreements, if the RSUs are still subject to performance criteria, only the target number of RSUs will vest. In the case of the rTSR RSU agreements, if the RSUs are still subject to performance criteria at the time of the change-in-control, the RSUs will be converted into time-based RSUs, which we refer to as Converted RSUs, based on actual performance, using the per share price paid to holders of our Common Stock in connection with the change-in-control as the “end price” for purposes of determining rTSR. If the acquiring entity refuses to assume the Converted RSUs, the rTSR RSU agreements provide for full acceleration of vesting of all Converted RSUs. If the acquiring entity assumes the Converted RSUs and Dr. Lee is terminated without cause or resigns with good reason within 24 months following the change-in-control, the rTSR RSU agreements provide for full acceleration of vesting of all RSUs. The RSU agreements for Dr. Lee also provide for full acceleration of vesting of all shares (or, in the case of performance-based RSUs that are still subject to performance criteria, the actual number of RSUs to vest based upon satisfaction of performance criteria) upon retirement, death or disability, or a pro rata portion of such shares and performance-based RSUs upon early retirement. Retirement, in this context, means a voluntary termination of employment by Dr. Lee after he is at least age 65 and has at least 10 years of service with us, and early retirement, in this context, means a voluntary termination of employment by Dr. Lee after he is at least age 60 and has at least 15 years of service with us. For purposes of the foregoing description of benefits under the employment agreement with Dr. Lee, “cause” will exist if Dr. Lee: (i) commits a felony or engages in fraud, misappropriation or embezzlement, (ii) knowingly fails or refuses to perform his duties in a material way and either the failure or refusal cannot reasonably be cured (as
John T.C. Lee
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 59 |
John T.C. Lee
determined by the Company in its reasonable judgment) or he fails to effect a cure within 10 days after the Company notifies him in writing of the failure or refusal, (iii) knowingly causes, or knowingly creates a serious risk of causing, material harm to the Company’s business or reputation or (iv) breaches, in a material way, his employment agreement, the confidential information agreement or any other material agreement between him and the Company, and either the breach cannot be cured (as determined by the Company in its reasonable judgment) or he fails to effect a cure within 10 days after the Company notifies him in writing of the breach. For purposes of the foregoing description of benefits under the employment agreement with Dr. Lee, subject to compliance with certain procedural requirements, “good reason” for Dr. Lee to resign will exist if, without his express written consent: (i) the Company materially reduces his position, duties, title, reporting relationship, authorities, or responsibilities, (ii) the Company reduces his then-current base salary or target bonus, (iii) the Company changes his principal place of work to a location more than 50 miles from his then-current principal place of work, or (iv) the Company breaches, in a material way, his employment agreement or any other material agreement between him and the Company. Under the RSU agreements for Dr. Lee entered into prior to February 2023, “cause” means conviction for the commission of a felony, willful failure by him to perform his responsibilities to the Company, or willful misconduct by him. Subject to compliance with certain procedural requirements, “good reason” under these RSU agreements means voluntary separation from service within 90 days following (i) a material diminution in position, duties, and responsibilities from those described in his employment agreement, (ii) a material reduction in his base salary (other than as part of a general salary reduction program affecting senior executives), (iii) a material reduction in the aggregate value of his pension and welfare benefits from those in effect prior to the change-in-control (other than as proportionate to the reductions applicable to other senior executives pursuant to a cost-saving plan that includes all senior executives), (iv) a material breach of any provision of the employment agreement by the Company, or (v) the Company’s requiring him to be based at a location causing a one-way commute in excess of 60 miles from his primary residence. Under the RSU agreements for Dr. Lee that were entered into beginning in February 2023, cause will exist if Dr. Lee (i) commits a felony or engages in fraud, misappropriation, or embezzlement, (ii) knowingly fails or refuses to perform his duties in a material way and, to the extent that the Company determines such failure or refusal can reasonably be cured, fails or refuses to effect a cure within 10 days after the Company notifies him in writing of the failure or refusal, (iii) knowingly causes, or knowingly creates a serious risk of causing, material harm to the Company’s business or reputation, or (iv) breaches, in a material way, his employment agreement, the confidential information agreement or any other agreement between him and the Company and, to the extent that the Company determines such breach can reasonably be cured, fails or refuses to effect a cure within 10 days after the Company notifies him in writing of the breach. Subject to compliance with certain procedural requirements, “good reason” for Dr. Lee to resign will exist under these RSU agreements if, without his express written consent: (i) the Company materially reduces his position, duties, or responsibilities, (ii) the Company reduces his then-current base salary, or (iii) the Company changes such his principal place of work to a location more than 50 miles from his then-current principal place of work.
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee The following table sets forth the estimated benefits that Dr. Lee would have been entitled to receive upon termination of his employment effective December 31, 2024:
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee
| Termination Circumstance | Cash Severance(1) | Value of Accelerated Unvested Equity | Benefits Continuation | Total | | Termination by the Company Without Cause | $3,674,928 | $- | $39,099(2) | $3,714,027 | | Resignation for Good Reason | $3,674,928 | $- | $39,099(2) | $3,714,027 | | Voluntary Termination or Retirement | $299,928 | $14,175,791(3) | $- | $14,475,719 | | Death or Disability | $1,549,928 | $14,175,791(3) | $- | $15,725,719 | | Within 24 Months Following a Change-in-Control: | | | | | | • Termination by the Company Without Cause | $8,299,928 | $14,175,791(4) | $78,198(5) | $22,553,917 | | • Resignation for Good Reason | $8,299,928 | $14,175,791(4) | $78,198(5) | $22,553,917 |
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee
| (1) For termination by the Company without cause or resignation for good reason, reflects continuation of base salary for 18 months, a lump sum equal to 1.5 times the annual amount of his target cash incentive |
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 60 |
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee
| compensation, and accrued but unused vacation that we would be required to pay out upon a termination under applicable law and Dr. Lee’s employment agreement. For each of voluntary termination and retirement, reflects accrued but unused vacation. For death and disability, reflects a prorated portion of his then-current year’s target cash incentive compensation and accrued but unused vacation. For termination by the Company without cause or resignation for good reason, each within 24 months following a change in control, reflects a lump sum payment equal to three times his annual base salary, a lump sum payment equal to three times the annual amount of his target cash incentive compensation, a prorated portion of his then-current year’s target cash incentive compensation, and accrued but unused vacation. |
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee
| (2) Reflects our estimated cost for continuation of medical, dental, and vision coverage for 18 months, assuming the termination or resignation occurred on December 31, 2024. |
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee
| (3) Upon retirement, death, or disability, RSUs fully vest, subject to achievement of any remaining performance criteria. The stated value assumes the retirement, death, or disability occurred on December 31, 2024 and assumes the target number of unvested performance-based RSUs vested. |
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee
| (4) The unvested time-based RSUs fully vest and the target number of unvested performance-based RSUs vest. |
Potential Payments Upon Termination or Change-in-Control Table — John T.C. Lee
| (5) Reflects our estimated cost for continuation of medical, dental, and vision coverage for 36 months, assuming the termination or resignation occurred on December 31, 2024. |
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner The following table sets forth the estimated benefits that Mr. Mayampurath, Ms. Burke, Mr. Henry, and Mr. Schreiner would have been entitled to receive upon termination of his or her employment effective December 31, 2024:
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner
| Termination Circumstance | Cash Severance(1) | Value of Accelerated Unvested Equity | Benefits Continuation | Total | | Termination by the Company Without Cause | | | | | | Ramakumar Mayampurath | $638,188 | $- | $18,058(2) | $656,246 | | Kathleen F. Burke | $704,743 | $- | $26,066(2) | $730,809 | | David P. Henry | $577,376 | $- | $25,354(2) | $602,730 | | James A. Schreiner | $550,385 | $- | $25,354(2) | $575,739 | | Death or Disability | | | | | | Ramakumar Mayampurath | $13,188 | $1,731,916(3) | $- | $1,745,104 | | Kathleen F. Burke | $185,743 | $2,586,724(3) | $- | $2,772,467 | | David P. Henry | $113,376 | $1,557,322(3) | $- | $1,670,698 | | James A. Schreiner | $64,385 | $2,140,291(3) | $- | $2,204,676 | | Voluntary Termination or Retirement | | | | | | Ramakumar Mayampurath | $13,188 | $-(4) | $- | $13,188 | | Kathleen F. Burke | $185,743 | $-(4) | $- | $185,743 | | David P. Henry | $113,376 | $-(4) | $- | $113,376 | | James A. Schreiner | $64,385 | $-(4) | $- | $64,385 | | Within 24 Months Following a Change-in-Control: | | | | | | • Termination by the Company Without Cause | | | | | | • Resignation for Good Reason | | | | | | Ramakumar Mayampurath | $950,688 | $1,731,916(5) | $27,087(6) | $2,709,691 | | Kathleen F. Burke | $1,872,493 | $2,586,724(5) | $39,099(6) | $4,498,316 | | David P. Henry | $1,563,376 | $1,557,322(5) | $38,031(6) | $3,158,729 | | James A. Schreiner | $1,583,135 | $2,140,291(5) | $38,031(6) | $3,761,457 |
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner
| (1) For termination by the Company without cause, reflects a lump sum payment equal to 12 months base salary and accrued but unused vacation that we would be required to pay out upon a termination under applicable law and the applicable employment agreement. For each of death, disability, voluntary termination, and retirement, reflects accrued but unused vacation. For termination by the Company without cause or resignation for good reason, each within 24 months following a change in control, reflects a lump sum payment equal to one and one-half times his or her annual base salary, a lump sum payment equal to one and one-half times the annual amount of his or her target cash incentive compensation, a prorated portion of the then-current year’s target cash incentive compensation, and accrued but unused vacation. Mr. Mayampurath was not eligible to participate in the Company’s annual cash incentive compensation program in 2024 because he joined the Company in October 2024; therefore, the amount for Mr. Mayampurath for termination by the Company without cause or resignation for good reason, each within 24 months following a change in control, does not include a lump sum payment equal to one and one-half times the annual amount of his target cash incentive compensation or a prorated portion of the then-current year’s target cash incentive compensation. |
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner
| (2) Reflects our estimated cost for continuation of medical, dental, and vision coverage for 12 months, assuming the termination or resignation occurred on December 31, 2024. |
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner
| (3) Upon death or disability, RSUs fully vest, subject to achievement of any remaining performance criteria. The stated value assumes the death or disability occurred on December 31, 2024 and assumes the target number of any unvested performance-based RSUs vested. |
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner
| (4) Upon retirement (as defined in the RSU agreements), (i) RSUs that were outstanding as of December 31, 2024 for Ms. Burke fully vest, subject to achievement of any remaining performance criteria, (ii) certain RSUs that were outstanding as of December 31, 2024 for Mr. Henry and Mr. Schreiner fully vest, in each case subject to achievement of any remaining performance criteria, and (iii) none of the RSUs that were outstanding as of December 31, 2024 for Mr. Mayampurath vest. However, Mr. Mayampurath, Ms. Burke, Mr. Henry, and Mr. Schreiner did not meet the requirements for retirement as of December 31, 2024. |
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 64 |
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner
| (5) The unvested time-based RSUs fully vest and the target number of unvested performance-based RSUs vest. |
Potential Payments Upon Termination or Change-in-Control Table - Ramakumar Mayampurath, Kathleen F. Burke, David P. Henry, and James A. Schreiner
| (6) Reflects our estimated cost for continuation of medical, dental, and vision coverage for 18 months, assuming the termination or resignation occurred on December 31, 2024. |
CEO Pay Ratio
CEO Pay Ratio We disclose the ratio of our median employee’s annual total compensation to our principal executive officer’s annual total compensation to provide a measure of equitability of pay within our Company. We believe our compensation philosophy and process yield an equitable result for all of our employees. During 2024, our principal executive officer was our Chief Executive Officer, John T.C. Lee. For 2024, the annual total compensation for Dr. Lee was $8,760,125 and the annual total compensation for our median employee was $69,685, resulting in a pay ratio of approximately 125:1. In accordance with applicable SEC rules, we identified the median employee as of December 18, 2022 (the median employee determination date) by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by expected annual work schedule for hourly employees), (B) target bonus and commissions (or local country equivalent), (C) actual overtime and double-time received for 2022, and (D) the accounting value of any equity granted during 2022, and (ii) ranking this compensation measure for our employees from lowest to highest. This calculation was performed for all employees, excluding Dr. Lee, whether employed on a full-time, part-time, or seasonal basis. For purposes of identifying the median employee, we converted amounts paid in foreign currencies to U.S. Dollars based on the applicable average exchange rates for
CEO Pay Ratio
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 65 |
CEO Pay Ratio
December 2022. For 2024, we continued to use our 2022 median employee for our pay ratio analysis, as there have been no changes to our employee population or employee compensation arrangements that we reasonably believed would significantly affect our pay ratio disclosure. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. 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, apply certain exclusions, and make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
CEO Pay Ratio
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 66 |
Pay Versus Performance
Pay Versus Performance
Tabular Disclosure of Compensation Actually Paid versus Performance
Tabular Disclosure of Compensation Actually Paid versus Performance The following table discloses information on “compensation actually paid,” or CAP, to our principal executive officers, or PEOs, and the average CAP to our other Named Executive Officers, or non-PEO NEOs, during the previous five fiscal years, alongside Company total shareholder return, or TSR, peer group TSR, net income (loss), and the Company-selected financial performance measure of Adjusted EBITDA.
Tabular Disclosure of Compensation Actually Paid versus Performance
| | Summary Compensation Table Total for PEO(1) | | CAP to PEO(2) | | Average Summary Compensation Table Total for Non-PEO NEOs(3) | Average CAP to Non-PEO NEOs(4) | Value of Initial Fixed $100 Investment Based On: | | Net Income (Loss) ($ millions) | Adjusted EBITDA ($ millions)(6) | | Year | Lee | Colella | Lee | Colella | | | TSR | Peer Group TSR(5) | | | | 2024 | $8,760,125 | N/A | $7,389,231 | N/A | $1,953,259 | $1,818,697 | $98.47 | $175.92 | $190 | $927 | | 2023 | $7,906,628 | N/A | $13,215,067 | N/A | $2,117,764 | $3,083,750 | $96.33 | $150.70 | $(1,841) | $863 | | 2022 | $8,058,382 | N/A | $3,494,929 | N/A | $2,046,599 | $759,709 | $78.58 | $125.15 | $333 | $854 | | 2021 | $7,596,357 | N/A | $11,383,747 | N/A | $2,311,088 | $3,336,104 | $160.26 | $160.00 | $551 | $868 | | 2020 | $6,082,216 | $422,186 | $8,922,167 | $838,753 | $2,270,297 | $3,494,613 | $137.71 | $123.86 | $350 | $601 |
Tabular Disclosure of Compensation Actually Paid versus Performance
| (1) These amounts reflect the total compensation of Dr. Lee for the previous five years and the total compensation of Mr. Colella for 2020, each as calculated in accordance with the requirements of Item 402(c) of Regulation S-K, or Item 402(c). Dr. Lee succeeded Mr. Colella as our CEO on January 1, 2020. |
Tabular Disclosure of Compensation Actually Paid versus Performance
| (2) These amounts reflect CAP for Dr. Lee for the previous five years and for Mr. Colella for 2020, each as calculated in accordance with Item 402(v) of Regulation S-K, or Item 402(v). The table below summarizes the adjustments required to reconcile total compensation from the summary compensation table to CAP for each of our PEOs for the previous five years. |
Tabular Disclosure of Compensation Actually Paid versus Performance
| | 2024 | 2023 | 2022 | 2021 | 2020 | | | Adjustment | Lee | Lee | Lee | Lee | Lee | Colella | | Total Compensation from Summary Compensation Table | $8,760,125 | $7,906,628 | $8,058,382 | $7,596,357 | $6,082,216 | $422,186 | | Less Fair Value of Equity Awards Reported in the Summary Compensation Table in the Covered Year | $(7,388,552) | $(5,900,090) | $(5,909,984) | $(4,478,002) | $(3,205,190) | $(198,409) | | Plus Fair Value of Covered Year Equity Awards Unvested at Fiscal Year-End | $4,616,322 | $9,488,697 | $5,503,956 | $7,086,150 | $5,333,199 | $299,195 | | Year-Over-Year Change in Fair Value of Prior Years’ Equity Awards Unvested at Fiscal Year-End | $121,996 | $989,809 | $(3,482,934) | $698,646 | $651,261 | $- | | Change as of the Vesting Date (From the End of the Prior Fiscal Year) in Fair Value of Prior Years’ Equity Awards Vested in the Covered Year | $1,279,340 | $730,023 | $(674,491) | $480,596 | $60,681 | $315,781 | | Compensation Actually Paid | $7,389,231 | $13,215,067 | $3,494,929 | $11,383,747 | $8,922,167 | $838,753 |
Tabular Disclosure of Compensation Actually Paid versus Performance
| (3) These amounts reflect the average total compensation of Mr. Mayampurath, Ms. Burke, Mr. Henry, Mr. Schreiner, and Mr. Bagshaw for 2024; Ms. Burke, Mr. Henry, Mr. Schreiner, and Mr. Bagshaw for 2023 and 2022; Ms. Burke, Mr. Schreiner, Mr. Bagshaw, and Dr. Mark Gitin, our former Executive Vice President and General Manager, Photonics Solutions Division, for 2021; and Ms. Burke, Mr. Schreiner, and Mr. Bagshaw for 2020, each as calculated in accordance with the requirements of Item 402(c). |
Tabular Disclosure of Compensation Actually Paid versus Performance
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 67 |
Tabular Disclosure of Compensation Actually Paid versus Performance
| (4) These amounts reflect the average CAP for our non-PEO NEOs for the previous five years, each as calculated in accordance with the requirements of Item 402(v). The table below summarizes the adjustments required to reconcile average total compensation from the summary compensation table to average CAP for our non-PEO NEOs for the previous five years. |
Tabular Disclosure of Compensation Actually Paid versus Performance
| Adjustment | 2024 | 2023 | 2022 | 2021 | 2020 | | | Non-PEO NEOs | Non-PEO NEOs | Non-NEO PEOs | Non-NEO PEOs | Non-NEO PEOs | | Average Total Compensation from Summary Compensation Table | $1,953,259 | $2,117,764 | $2,046,599 | $2,311,088 | $2,270,297 | | Less Average Fair Value of Equity Awards Reported in the Summary Compensation Table in the Covered Year | $(1,154,794) | $(1,130,850) | $(1,132,739) | $(1,020,430) | $(1,010,868) | | Plus Average Fair Value of Covered Year Equity Awards Unvested at Fiscal Year-End | $833,417 | $1,742,044 | $1,025,706 | $1,577,301 | $1,672,797 | | Year-Over-Year Change in Average Fair Value of Prior Years’ Equity Awards Unvested at Fiscal Year-End | $10,766 | $198,872 | $(805,502) | $305,120 | $526,229 | | Change as of the Vesting Date (From the End of the Prior Fiscal Year) in Average Fair Value of Prior Years’ Equity Awards Vested in the Covered Year | $176,049 | $155,920 | $(374,355) | $163,025 | $36,158 | | Average Compensation Actually Paid | $1,818,697 | $3,083,750 | $759,709 | $3,336,104 | $3,494,613 |
Tabular Disclosure of Compensation Actually Paid versus Performance
| (5) Peer Group TSR represents TSR for the S&P 1500 Composite Electronic Equipment Instruments & Components Index, which is the industry peer group used for purposes of Item 201(e) of Regulation S-K. |
Tabular Disclosure of Compensation Actually Paid versus Performance
| (6) We selected this measure as the most important in linking 2024 NEO CAP to Company performance because long-term equity incentive compensation comprised the largest percentage of total NEO compensation and Adjusted EBITDA was the financial measure we used to determine achievement under 70% of the performance-based RSUs granted in 2024. Adjusted EBITDA is defined as the Company’s GAAP operating income, excluding any charges or income not related to the operating performance of the Company, plus depreciation and stock compensation expense. For 2024, Adjusted EBITDA excludes the Non-Executive Bonus Adjustment. For 2022, Adjusted EBITDA excludes the results of Atotech, which we acquired in August 2022. For 2021, Adjusted EBITDA excludes the results of Photon Control, which we acquired in July 2021. For further information regarding Adjusted EBITDA and its function in our executive compensation program, see “Executive Compensation — Compensation Discussion and Analysis — Elements of Compensation — Long-Term Equity Incentive Compensation” above. |
Tabular Disclosure of Compensation Actually Paid versus Performance
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 68 |
Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures
Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures The following two graphs further illustrate the relationship between the pay and performance figures that are included in the pay versus performance tabular disclosure above. The first graph below illustrates the relationship among PEO CAP, Average Non-PEO CAP, Company total shareholder return (MKS TSR), and S&P 1500 Composite Electronic Equipment Instruments & Components Index total shareholder return (Peer Group TSR). The second graph below illustrates the relationship among PEO CAP, Average Non-PEO CAP, Company Net Income (Loss), and Company Adjusted EBITDA.
Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 69 |
Tabular Disclosure of Most Important Measures Linking Compensation Actually Paid During 2024 to Company Performance
Tabular Disclosure of Most Important Measures Linking Compensation Actually Paid During 2024 to Company Performance We disclose below the most important measures we used to link 2024 NEO CAP to Company performance. For 2024, Named Executive Officers were granted two performance-based equity awards, one of which was based on achievement of Adjusted EBITDA at different adjusted revenue levels and the other of which was based on achievement of rTSR. For 2024, Named Executive Officers were also eligible for variable cash compensation based on achievement of non-GAAP operating income and adjusted net debt. For further information regarding these measures and their function in our executive compensation program, see “Executive Compensation — Compensation Discussion and Analysis” above.
Tabular Disclosure of Most Important Measures Linking Compensation Actually Paid During 2024 to Company Performance
| 2024 Most Important Measures | | Adjusted EBITDA | | Non-GAAP Operating Income Relative Total Shareholder Return Adjusted Net Debt | | Adjusted Revenue |
Tabular Disclosure of Most Important Measures Linking Compensation Actually Paid During 2024 to Company Performance
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | 70 |
DIRECTORS
DIRECTORS 2.1. Powers. The business of the Corporation shall be managed by a Board of Directors, who may exercise all the powers of the Corporation except as otherwise provided by law, by the Articles of Organization or by these By-Laws. In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled. 2.2. Number and Election. The number of Directors which shall constitute the whole Board of Directors shall be determined by vote of the stockholders or the Board of Directors, but shall consist of not less than three Directors (except that whenever there shall be only two stockholders the number of Directors shall be not less than two and whenever there shall be only one stockholder or prior to the issuance of any stock, there shall be at least one Director). The number of Directors may be decreased at any time and from time to time either by the stockholders or by a majority of the Directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more Directors. The Directors shall be elected at the annual meeting of stockholders by such stockholders as have the right to vote on such election. No Director need be a stockholder of the Corporation. Notwithstanding the foregoing provisions, if the Corporation is a “public corporation” as defined in the Massachusetts Business Corporation Act, as in effect from time to time (the “MBCA”), and has not elected, pursuant to Section 8.06(c) of the MBCA, to be exempt from the provisions of Section 8.06(b) of the MBCA, then: (a) In accordance with such Section 8.06(e)(4) of the MBCA, the number of directors shall be fixed only by vote of the Board of Directors. (b) In accordance with Section 8.06(a) of the MBCA, the Directors of the Corporation shall be classified with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, until the Corporation’s annual meeting of stockholders held in 2028. As of the effective date of these Second Amended and Restated By-Laws, the term of office of those Directors of the first class (“Class I Directors”) shall continue until the Corporation’s annual meeting of stockholders held in 2027 and until their successors are duly elected and qualified; the term of office of those Directors of the second class (“Class II Directors”) that are duly elected and qualified at the Corporation’s annual meeting of stockholders held in 2025 shall continue until the Corporation’s annual meeting of stockholders held in 2028 and until their successors are duly elected and qualified; and the term of office of those Directors of the third class (“Class III Directors”) shall continue until the Corporation’s annual meeting of stockholders held in 2026 and until their successors are duly elected and qualified. Thereafter all Directors shall be elected for terms expiring at the next annual meeting of stockholders and until their successors shall be elected and qualified, subject to prior death, resignation, retirement or removal. 2.3. Enlargement of the Board. The number of Directors may be increased at any time and from time to time by a majority of the Directors then in office. Notwithstanding the foregoing provisions, if the Directors of the Corporation are classified with respect to the time for which they severally hold office pursuant to Section 8.06(c) of the MBCA, the Board of Directors may be enlarged only in accordance with the provisions of 8.06(e). 2.4. Tenure. Except as otherwise provided by law, these By-Laws or the Articles of Organization, each Director shall hold office until the next annual meeting of stockholders and until his successor is elected and qualified, or until his earlier death, resignation or removal. 2.5. Vacancies. Unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board of Directors, may be filled by vote of a majority of the Directors present at the meeting of Directors at which a quorum is present. Each such successor shall hold office for the unexpired term of his predecessor and until his successor is chosen and qualified or until his earlier death, resignation or removal. Notwithstanding the foregoing provisions, if the directors of the Corporation are classified with respect to the time for which they severally hold office pursuant to Section 8.06(c) of the MBCA, any vacancy in the Board of Directors, however occurring, shall be filled solely in accordance with the provisions of Section 8.06(e) of the MBCA.
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | B-12 |
DIRECTORS
2.6. Resignation. A Director may resign at any time by delivering written notice of resignation to the Board of Directors, the Chairman of the Board or the Corporation. A resignation is effective when the notice is delivered unless the notice specifies a later effective date. 2.7. Removal. A director may be removed from office with or without cause by vote of the holders of a majority of the shares entitled to vote in the election of directors. However, the directors elected by the holders of a particular class or series of stock may be removed from office with or without cause only by vote of the holders of a majority of the outstanding shares of such class or series. In addition, a director may be removed from office for cause by vote of a majority of the directors then in office. A director may be removed for cause only after reasonable notice and opportunity to be heard before the body proposing to remove him. Notwithstanding the foregoing provision, if the directors of the Corporation are classified with respect to the time for which they severally hold office pursuant to paragraph (a) of Section 50A of the Massachusetts Business Corporation Law, as it may be amended from time to time, directors may only be removed for cause pursuant to paragraph (c) of such Section 50A. 2.8. Regular Meetings. Regular meetings of the Board of Directors may be held at such times and places as shall from time to time be fixed by the Board of Directors without notice of the date, time, place or purpose of the meeting. 2.9. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer, the President, the Secretary, any two Directors or one Director in the event that there is only one Director. 2.10. Notice. Special meetings of the Board of Directors must be preceded by at least two days’ notice of the date, time and place of the meeting. The notice need not describe the purpose of the special meeting. All notices to Directors shall conform to the requirements of Article III of these By-Laws. 2.11. Waiver of Notice. A Director may waive any notice before or after the date and time of the meeting. The waiver shall be in writing, signed by the Director entitled to the notice, or in the form of an electronic transmission by the Director to the Corporation, and filed with the minutes or corporate records. A Director’s attendance at or participation in a meeting waives any required notice to him or her of the meeting unless the Director at the beginning of the meeting, or promptly upon his or her arrival, objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. 2.12. Quorum. Unless otherwise provided by law, the Articles of Organization or these By-Laws, a quorum of the Board of Directors consists of a majority of the Directors then in office, provided always that any number of Directors (whether one or more and whether or not constituting a quorum) constituting a majority of Directors present at any meeting or at any adjourned meeting may make an adjournment thereof. 2.13. Action at Meeting. If a quorum is present when a vote is taken, the affirmative vote of a majority of Directors present is the act of the Board of Directors unless the Articles of Organization or these By-Laws require the vote of a greater number of Directors. A Director who is present at a meeting of the Board of Directors or a committee of the Board of Directors when corporate action is taken is considered to have assented to the action taken unless: (a) he or she objects at the beginning of the meeting, or promptly upon his or her arrival, to holding it or transacting business at the meeting; (b) his or her dissent or abstention from the action taken is entered in the minutes of the meeting; or (c) he or she delivers written notice of his or her dissent or abstention to the presiding officer of the meeting before its adjournment or to the Corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a Director who votes in favor of the action taken.
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | B-13 |
DIRECTORS
2.14. Action Without Meeting. Any action required or permitted to be taken by the Directors may be taken without a meeting if the action is taken by the unanimous consent of the members of the Board of Directors. The action must be evidenced by one or more consents describing the action taken, in writing, signed by each Director, or delivered to the Corporation by electronic transmission, to the address specified by the Corporation for the purpose or, if no address has been specified, to the principal office of the Corporation, addressed to the Secretary or other officer or agent having custody of the records of proceedings of Directors, and included in the minutes or filed with the corporate records reflecting the action taken. Action taken under this Section 2.14 is effective when the last Director signs or delivers the consent, unless the consent specifies a different effective date. A consent signed or delivered under this Section 2.14 has the effect of a meeting vote and may be described as such in any document. 2.15. Telephone Conference Meetings. The Board of Directors may permit any or all Directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all Directors participating may simultaneously hear each other during the meeting. A Director participating in a meeting by this means is considered to be present in person at the meeting. 2.16. Chairman of the Board and Vice-Chairman of the Board. The Board of Directors may appoint a Chairman of the Board. If the Board of Directors appoints a Chairman of the Board, he shall perform such duties and possess such powers as are assigned to him by the Board of Directors. If the Board of Directors appoints a Vice-Chairman of the Board, he shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board and shall perform such other duties and possess such other powers as may from time to time be vested in him by the Board of Directors. 2.17. Committees. The Board of Directors may create one or more committees and appoint members of the Board of Directors to serve on them. Each committee may have one or more members, who serve at the pleasure of the Board of Directors. The creation of a committee and appointment of members to it must be approved by a majority of all the Directors in office when the action is taken. Article III and Sections 2.10 through 2.15 of these By-Laws shall apply to committees and their members. To the extent specified by the Board of Directors, each committee may exercise the authority of the Board of Directors to the extent permitted by law. The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a Director with the standards of conduct described in Section 2.19 of these By-Laws. 2.18. Compensation. The Board of Directors may fix the compensation of Directors. 2.19. Standard of Conduct for Directors. (a) A Director shall discharge his or her duties as a Director, including his or her duties as a member of a committee: (1) in good faith; (2) with the care that a person in a like position would reasonably believe appropriate under similar circumstances; and (3) in a manner the Director reasonably believes to be in the best interests of the Corporation. In determining what the Director reasonably believes to be in the best interests of the Corporation, a Director may consider the interests of the Corporation’s employees, suppliers, creditors and customers, the economy of the state, the region and the nation, community and societal considerations, and the long-term and short-term interests of the Corporation and its stockholders, including the possibility that these interests may be best served by the continued independence of the Corporation. (b) In discharging his or her duties, a Director who does not have knowledge that makes reliance unwarranted is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, if prepared or presented by: (1) one or more officers or employees of the Corporation whom the Director reasonably believes to be reliable and competent with respect to the information, opinions, reports or statements presented; (2) legal counsel, public accountants or other persons retained by the Corporation, as to matters involving skills or expertise the Director reasonably believes are matters (i) within the particular person’s professional or expert competence or (ii) as to which the particular person merits confidence; or (3) a committee of the Board of Directors of which the Director is not a member if the Director reasonably believes the committee merits confidence. (c) A Director is not liable for any action taken as a Director, or any failure to take any action, if he or she performed the duties of his or her office in compliance with this Section 2.19.
DIRECTORS
| MKS INSTRUMENTS, INC. | 2025 PROXY STATEMENT | B-14 |
DIRECTORS
2.20. Conflict of Interest. (a) A conflict of interest transaction is a transaction with the Corporation in which a Director of the Corporation has a material direct or indirect interest. A conflict of interest transaction is not voidable by the Corporation solely because of the Director’s interest in the transaction if any one of the following is true: (1) the material facts of the transaction and the Director’s interest were disclosed or known to the Board of Directors or a committee of the Board of Directors and the Board of Directors or committee authorized, approved or ratified the transaction; (2) the material facts of the transaction and the Director’s interest were disclosed or known to the stockholders entitled to vote and they authorized, approved or ratified the transaction; or (3) the transaction was fair to the Corporation. (b) For purposes of this Section 2.20, and without limiting the interests that may create conflict of interest transactions, a Director of the Corporation has an indirect interest in a transaction if: (1) another entity in which he or she has a material financial interest or in which he or she is a general partner is a party to the transaction; or (2) another entity of which he or she is a director, officer or trustee or in which he or she holds another position is a party to the transaction and the transaction is or should be considered by the Board of Directors. (c) For purposes of clause (1) of subsection (a) of this Section 2.20, a conflict of interest transaction is authorized, approved or ratified if it receives the affirmative vote of a majority of the Directors on the Board of Directors (or on the committee) who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved or ratified under this Section 2.20 by a single Director. If a majority of the Directors who have no direct or indirect interest in the transaction vote to authorize, approve or ratify the transaction, a quorum is present for the purpose of taking action under this Section 2.20. The presence of, or a vote cast by, a Director with a direct or indirect interest in the transaction does not affect the validity of any action taken under clause (1) of subsection (a) of this Section 2.20 if the transaction is otherwise authorized, approved or ratified as provided in that subsection. (d) For purposes of clause (2) of subsection (a) of this Section 2.20, a conflict of interest transaction is authorized, approved or ratified if it receives the vote of a majority of the shares entitled to be counted under this subsection (d). Shares owned by or voted under the control of a Director who has a direct or indirect interest in the transaction, and shares owned by or voted under the control of an entity described in clause (1) of subsection (b) of this Section 2.20, may not be counted in a vote of stockholders to determine whether to authorize, approve or ratify a conflict of interest transaction under clause (2) of subsection (a) of this Section 2.20. The vote of those shares, however, is counted in determining whether the transaction is approved under other provisions of these By-Laws. A majority of the shares, whether or not present, that are entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this Section 2.20.