UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
the Securities Exchange Act of 1934
Filed by the Registrant ☑
☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted byRule 14a-6(e)(2)) | |
Definitive Proxy Statement | ||
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to§240.14a-12 |
LAM RESEARCH CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required. | ||||
☐ | Fee computed on table below per Exchange ActRules 14a-6(i)(1) and0-11. | |||
(1) | Title of each class of securities to which transaction applies:
| |||
(2) | Aggregate number of securities to which transaction applies:
| |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange ActRule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
(4) | Proposed maximum aggregate value of transaction:
| |||
(5) | Total fee paid:
| |||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Check box if any part of the fee is offset as provided by Exchange ActRule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid:
| |||
(2) | Form, Schedule or Registration Statement No.:
| |||
(3) | Filing Party:
| |||
(4) | Date Filed:
|
September 26, 201823, 2020
Dear Lam Research Stockholders,
We cordially invite you to attend in person or by proxy, the Lam Research Corporation 20182020 Annual Meeting of Stockholders. The annual meeting will be held on Tuesday, November 6, 2018,3, 2020, at 9:30 a.m.2:00 p.m. Pacific Standard TimeTime. This year’s annual meeting will be a virtual meeting. You may attend the annual meeting, vote, and submit your questions during the live webcast of the annual meeting by visiting www.virtualshareholdermeeting.com/LRCX2020 and entering the 16-digit control number included in the Building CA1 Auditorium at the principal executive officesour Notice of Lam Research Corporation, which is located at 4650 Cushing Parkway, Fremont, California 94538.Internet Availability or on your proxy card.
At this year’s annual meeting, stockholders will be asked to elect the nine nominees named in the attached proxy statement as directors to serve until the next annual meeting of stockholders, and until their respective successors are elected and qualified; to cast an advisory vote to approve our named executive officer compensation, or “Say on Pay”; to approve the adoption of the Lam Research Corporation 1999 Employee Stock Purchase Plan (the “ESPP”), as amended and restated; and to ratify the appointment of theErnst & Young LLP as our independent registered public accounting firm for fiscal year 2019.2021. The Board of Directors recommends that you vote in favor of each director nominee Say on Pay, the adoptionand each of the ESPP, as amended and restated, and the ratification of the appointment of the independent registered public accounting firm for fiscal year 2019.these proposals. Management will not provide a business update during this meeting; please refer to our latest quarterly earnings report for our currentmost recently-provided outlook.
Please refer to the proxy statement for detailed information about the annual meeting, each director nominee, and each of the proposals, as well as voting instructions.Your vote is important, and we strongly urge you to cast your vote as soon as possible by the internet, telephone, or mail, even if you plan to attend the meeting in person.meeting.
Sincerely yours,
Lam Research Corporation
Stephen G. NewberryAbhijit Y. Talwalkar
Chairman of the Board
Notice of of Stockholders
|
4650 Cushing Parkway
Fremont, California 94538
Telephone:510-572-0200
Meeting Information
Category | ||
Details | ||
Date and Time | Tuesday, November 3, 2020 2:00 p.m. Pacific Standard Time | |
Place | Via the Internet at www.virtualshareholdermeeting.com/LRCX2020 | |
Record Date | Only stockholders of record at the close of business on September 4, 2020, the “Record Date,” are entitled to notice of, and to vote at, the annual meeting. |
Proxy and Annual Report Materials
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 3, 2020
Our notice of 2020 Annual Meeting of Stockholders, proxy statement, and annual report to stockholders are available on the Lam Research website at https://investor.lamresearch.com.
Elect Electronic Delivery - Save Time, Money & Trees |
As part of our efforts to be an environmentally responsible corporate citizen, we encourage Lam stockholders to voluntarily elect to receive future proxy and annual report materials electronically. • If you are a registered stockholder, please visit • If you are a stockholder who owns stock through a broker or brokerage account, please opt for e-delivery athttps://enroll.icsdelivery.com/lrcxor by contacting your nominee. |
Date of Distribution
This notice, proxy statement and proxy card are first being made available and/or mailed to our stockholders on or about September 23, 2020.
Items of Business
# | Proposal | Our Board’s | ||||
1. | Election of nine directors to serve until the next annual meeting of stockholders, and until their respective successors are elected and qualified |
☑FOR each Director Nominee | ||||||
2. | Advisory vote to approve our named executive officer compensation, or “Say on Pay” |
|
3. | Ratification of the appointment of |
☑FOR | ||||||
|
Record Date
Only stockholders of record at the close of business on September 7, 2018, the “Record Date,” are entitled to notice of and to vote at the annual meeting.
Voting
Please vote as soon as possible, even if you plan to attend the annual meeting, in person.on all of the voting matters. You have three options for submitting your vote before the annual meeting: by the internet, telephone, or mail.
![]() | by the internet, | |
![]() | by telephone, or | |
![]() | by mail. |
The proxy statement and the accompanying proxy card provide detailed voting instructions.
Internet AvailabilityIT IS IMPORTANT THAT YOU VOTE to play a part in the future of Proxy Materials
Our Notice of 2018the Company. Please carefully review the proxy materials for the 2020 Annual Meeting of Stockholders, Proxy Statement, and Annual Report to Stockholders are available on the Lam Research website athttps://investor.lamresearch.com and atwww.proxyvote.com.Stockholders.
By Order of the Board of Directors,
Sarah A. O’Dowd
Ava M. Hahn
Secretary
This proxy statement is first being made available and/or mailed to our stockholders on or about September 26, 2018.
LAM RESEARCH CORPORATION
Proxy Statement for 20182020 Annual Meeting of Stockholders
|
To assist you in reviewing the proposals to be acted upon at the annual meeting, we call your attention to the following summarized information about the Company, the proposals and voting recommendations, the Company’s director nominees, highlights of the director’sdirectors’ key qualifications, skills and skills,experiences, board composition, the Company’s corporate governance, and executive compensation. For more complete information about these topics, please review the complete proxy statement.statement before voting. We also encourage you to read our latest annual report on Form 10-K, which is also available at: https://investor.lamresearch.com. The content of any website referred to in this proxy statement is not a part of nor incorporated by reference in this proxy statement unless expressly noted.
We use the terms “Lam Research,” “Lam,” the “Company,” “we,” “our,” and “us” in this proxy statement to refer to Lam Research Corporation, a Delaware corporation. We also use the term “Board” to refer to the Company’s Board of Directors.
ABOUT LAM RESEARCH CORPORATION
Lam Research is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. We have built a strong global presence with core competencies in areas like nanoscale applications enablement, chemistry, plasma and fluidics, advanced systems engineering, and a broad range of operational disciplines. Our products and services are designed to help our customers build smaller, faster, and better performing devices that are used in a variety of electronic products, including mobile phones, personal computers, servers, wearables, automotive vehicles, and data storage devices. Our vision is to realize full value from the natural technology extensions of our Company.
Our customer base includes leading semiconductor memory, foundry, and integrated device manufacturers that make products such as non-volatile memory, dynamic random-access memory (DRAM), and logic devices. We aim to increase our strategic relevance with our customers by contributing more to their continued success. Our core technical competency is integrating hardware, process, materials, software, and process control enabling results on the wafer.
Semiconductor manufacturing, our customers’ business, involves the complete fabrication of multiple dies or integrated circuits on a wafer. This involves the repetition of a set of core processes and can require hundreds of individual steps. Fabricating these devices requires highly sophisticated process technologies to integrate an increasing array of new materials with precise control at the atomic scale. Along with meeting technical requirements, wafer processing equipment must deliver high productivity and be cost-effective.
Demand from the Cloud, Internet of Things (IoT), and other markets is driving the need for increasingly powerful and cost-efficient semiconductors. At the same time, there are growing technical challenges with traditional scaling. These trends are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical 3D scaling strategies as well as multiple patterning to enable shrinks.
We believe we are in a strong position with our leadership and competency in deposition, etch, and clean to facilitate some of the most significant innovations in semiconductor device manufacturing. Several factors create opportunity for sustainable differentiation for us: (i) our focus on research and development, with several on-going programs related to sustaining engineering, product and process development, and concept and feasibility; (ii) our ability to effectively leverage cycles of learning from our broad installed base; (iii) our collaborative focus with ecosystem partners; and (iv) our focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 1 |
Figure 1. Fiscal Year 2020 Financial Highlights
Figure 2. Proposals and Voting Recommendations
Voting Matters | Board Vote Recommendation | ||||
Proposal No. 1: Election of Directors |
| FOR each nominee |
| ||
Proposal No. 2: Advisory Vote to Approve Our Named Executive Officer Compensation, or “Say on Pay” |
| FOR |
|
| |
Proposal No. 3: |
| ||||
2021 |
| FOR |
| ||
|
|
|
|
Figure 2.3. Summary Information Regarding Director Nominees
You are being asked to vote on the election of these nine directors. The following table provides summary information about each director nominee as of September 2018,2020, and their biographical information is contained in the “Voting Proposals – Proposal No. 1: Election of Directors – 20182020 Nominees for Director” section below.
Director | Committee Membership | Other Current Public Boards
| Director | Committee Membership (2) | Other Current Public Boards | |||||||||||||||||||||||||||
Name
|
Age
|
Since
|
Independent(1)
|
AC
|
CC
|
NGC
| Age | Since | Independent (1) | AC | CC | NGC | ||||||||||||||||||||
Martin B. Anstice
|
51
|
2012
|
No
|
*
| ||||||||||||||||||||||||||||
Sohail U. Ahmed |
| 62 |
|
| 2019 |
| Yes |
|
|
|
| |||||||||||||||||||||
Timothy M. Archer |
| 53 |
|
| 2018 |
| No |
|
|
|
| |||||||||||||||||||||
Eric K. Brandt
|
56
|
2010
|
Yes
|
C/FE
|
Altaba (formerly Yahoo!), Dentsply Sirona, Macerich
|
| 58 |
|
| 2010 |
| Yes | C/FE |
| M | Dentsply Sirona, Macerich, NortonLifeLock | ||||||||||||||||
Michael R. Cannon
|
65
|
2011
|
Yes
|
M/FE
|
M
|
Dialog Semiconductor, Seagate Technology
|
| 67 |
|
| 2011 |
| Yes | M/FE |
| C | Dialog Semiconductor, Seagate Technology | |||||||||||||||
Youssef A.El-Mansy
|
73
|
2012
|
Yes
|
M
| ||||||||||||||||||||||||||||
Christine A. Heckart
|
52
|
2011
|
Yes
|
M
| ||||||||||||||||||||||||||||
Catherine P. Lego
|
61
|
2006
|
Yes
|
*
|
C
|
M
|
Cypress Semiconductor, IPG Photonics
|
| 63 |
|
| 2006 |
| Yes | * | C | M | Cirrus Logic, Guidewire Software, IPG Photonics | ||||||||||||||
Stephen G. Newberry
|
64
|
2005
|
Yes
|
*
|
Splunk
| |||||||||||||||||||||||||||
Bethany J. Mayer |
| 58 |
|
| 2019 |
| Yes | M/FE |
|
| Box, Marvell Technology Group, Sempra Energy | |||||||||||||||||||||
Abhijit Y. Talwalkar
|
54
|
2011
|
Yes (Lead Independent Director)
|
*
|
M
|
C
|
Advanced Micro Devices, iRhythm Technologies, TE Connectivity
|
| 56 |
|
| 2011 |
| Yes (Chairman) | * | M | M | Advanced Micro Devices, iRhythm Technologies, TE Connectivity | ||||||||||||||
Lih Shyng (Rick L.) Tsai
|
67
|
2016
|
Yes
|
MediaTek, USI Corporation
|
| 69 |
|
| 2016 |
| Yes |
| M |
| MediaTek | |||||||||||||||||
Leslie F. Varon |
| 63 |
|
| 2019 |
| Yes | M/FE |
|
| Dentsply Sirona, Hamilton Lane |
(1) | Independence determined in accordance with Nasdaq rules. |
(2) | Membership and leadership shown will continue through November 1, 2020, on which date certain membership and leadership changes will take effect. See “Governance Matters - Corporate Governance - Board Committees” for details. |
| C | |
M | ||
FE | ||
* |
Continues on next page u
Figure 3.4. Director Nominee Key Qualifications, Skills and SkillsExperiences Highlights
The table below summarizes the key qualifications, skills and attributes most relevant to the decision to nominate candidates to serve onexperiences of our Board.nominees. Not having a mark does not mean the director nominee does not possess that qualification, skill or skill. Directorexperience. The director biographies contained in the “Voting Proposals – Proposal No. 1: Election of Directors – 20182020 Nominees for Director” section below describe each director’sdirector nominee’s background and relevant experience in more detail.detail, and identifies those qualifications, skills and experiences considered most relevant to the decision to nominate candidates to serve on our Board.
Key Qualifications, Skills & Experiences of |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Industry Knowledge- Knowledge of and experience with our | X | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||||
Customer/Deep Technology Knowledge - Deep knowledge and understanding of semiconductor processing equipment technologies, including an understanding of our customers’ markets and needs | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketing Experience -Extensive knowledge and experience inbusiness-to-business marketing and sales, and services and/or business development, preferably in a capital equipment industry | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||||
| X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||||
Finance Experience- Profit and loss (“P&L”) and financing experience as an executive responsible for financial results of a breadth and level of complexity comparable to the Company | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Global Business Experience - Experience as a current or former business executive of a business with substantial global operations | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
Mergers and Acquisitions | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
Board/Governance Experience- Experience with corporate governance requirements and practices | X | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cybersecurity Expertise- Understanding of and/or experience overseeing corporate cybersecurity programs, and having a history of participation in relevant cyber education | X | X | X | X |
Figure 4. Board5. Director Nominee Composition Highlights
The Board is committed to diversity and the pursuit of board refreshment and balanced tenure. The following table showscharts show the tenure, age and gender diversity of the current board.director nominees. We also separately present the diversity of the director nominees in terms of gender and ethnic/racial diversity.
tenure age gender diversity
Figure 5. Corporate Governance Highlights
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
|
Continues on next page u
Lam Research Corporation | 3 |
Figure 6. Corporate Governance Highlights
Board and Other Governance Information | As of September 2020 | |||
Size of Board as Nominated | 9 | |||
Number of Independent Nominated Directors | 8 | |||
Number of Nominated Directors Who Attended ³75% of Meetings | 9 | |||
Number of Nominated Directors on More Than Four Public Company Boards | 0 | |||
Number of Nominated Non-Employee Executive Officer Directors Who Are on More Than Two Public Company Boards | 0 | |||
Limitations on Other Board and Committee Memberships (Page 13) | Yes | |||
Directors Subject to Stock Ownership Guidelines (Page 13) | Yes | |||
Hedging and Pledging Prohibited (Page 9) | Yes | |||
Annual Election of Directors (Page 55) | Yes | |||
Voting Standard (Page 55) | Majority | |||
Plurality Voting Carveout for Contested Elections | Yes | |||
Separate Chair and CEO | Yes | |||
Independent Board Chair (Page 12) | Yes | |||
Independent Directors Meet Without Management Present (Page 12) | Yes | |||
Annual Board (Including Individual Director) and Committee Self-Evaluations (Page 10) | Yes | |||
Annual Independent Director Evaluation of CEO (Pages 14-15) | Yes | |||
Risk Oversight by Full Board and Committees (Page 15) | Yes | |||
Commitment to Board Refreshment and Diversity (Page 10) | Yes | |||
Robust Director Nomination Process (Pages 11) | Yes | |||
Significant Board Engagement (Pages 14-15) | Yes | |||
Board Orientation/Education Program (Pages 10-11) | Yes | |||
Code of Ethics Applicable to Directors (Page 9) | Yes | |||
Stockholder Proxy Access (Pages 11, 67-68) | Yes | |||
Stockholder Ability to Act by Written Consent | Yes | |||
Stockholder Engagement Program (Pages 15-16) | Yes | |||
Poison Pill | No | |||
Publication of annual Corporate Social Responsibility Report on Our Website (Pages 17-18) | Yes |
Figure 7. Executive Compensation Highlights
What We Do |
Pay for Performance(Pages |
Three-Year Performance Period for Our |
Absolute and Relative Performance Metrics (Pages |
Balance of Annual and Long-Term Incentives – Our incentive programs provide a balance of annual and long-term incentives. |
Different Performance Metrics for Annual and Long-Term Incentive Programs (Pages |
Capped Amounts (Pages |
Compensation Recovery/Clawback Policy |
Prohibit Option Repricing – Our stock incentive plans prohibit option repricing without stockholder approval. |
|
Stock Ownership Guidelines (Page |
Independent Compensation Advisor (Page |
Stockholder Engagement (Pages 16, 26-27) – We engage with stockholders on an annual basis and stockholder advisory firms on an as needed basis to obtain feedback concerning our compensation program. |
What We Don’t Do |
Tax“Gross-Ups” for Perquisites, for Other Benefits or upon a Change in Control (Pages |
Single-Trigger Change in Control Provisions (Pages |
(1) | Our executive officers may receive taxgross-ups in connection with relocation benefits that are widely available to all of our employees. |
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 5 |
|
Security Ownership of Certain Beneficial Owners and Management
The table below sets forth the beneficial ownership of shares of Lam common stock by: (1) each person or entity who we believe, based on our review of filings made with the United States Securities and Exchange Commission, or the “SEC,” beneficially owned as of September 7, 2018, more than 5% of Lam’s common stock on the date set forth below; (2) each current director of the Company; (3) each NEO identified below in the “Compensation Matters – Executive Compensation and Other Information – Compensation Discussion and Analysis” section; and (4) all current directors and current executive officers as a group. With the exception
of 5% owners, and unless otherwise noted, the information below reflects holdings as of September 7, 2018,4, 2020, which is the Record Date for the 20182020 Annual Meeting of Stockholders and the most recent practicable date for determining ownership. For 5% owners, holdings are as of the dates of their most recent ownership reports filed with the SEC, which are the most practicable dates for determining their holdings. The percentage of the class owned is calculated using 152,286,842145,087,944 as the number of shares of Lam common stock outstanding on September 7, 2018.
4, 2020.
Figure 7.8. Beneficial Ownership Table
Name of Person or Identity of Group | Shares Beneficially Owned (#)(1) | Percentage of Class | Shares Beneficially (#) (1)
| Percentage
| ||||||||||||
5% Stockholders
|
|
| ||||||||||||||
The Vanguard Group, Inc. | 14,164,985 | (2) | 9.3 | % | ||||||||||||
BlackRock, Inc. | 11,318,362 | (3) | 7.4 | % |
| 12,507,354 | (2) |
| 8.62 | % | ||||||
The Vanguard Group, Inc. |
| 11,789,265 | (3) |
| 8.13 | % | ||||||||||
FMR LLC |
| 8,975,609 | (4) |
| 6.19 | % | ||||||||||
Ameriprise Financial, Inc. |
| 7,927,471 | (5) |
| 5.46 | % | ||||||||||
Directors
|
|
| ||||||||||||||
Martin B. Anstice (also a Named Executive Officer)
|
|
133,648
|
|
|
*
|
| ||||||||||
Sohail U. Ahmed |
| 1,244 |
|
| * | |||||||||||
Timothy M. Archer (also a Named Executive Officer) |
| 134,752 |
|
| * | |||||||||||
Eric K. Brandt
|
|
27,440
|
|
|
*
|
|
| 26,965 |
|
| * | |||||
Michael R. Cannon
|
|
14,740
|
|
|
*
|
|
| 16,860 |
|
| * | |||||
Youssef A.El-Mansy
|
|
20,826
|
|
|
*
|
|
| 19,286 |
|
| * | |||||
Christine A. Heckart
|
|
16,240
|
|
|
*
|
| ||||||||||
Catherine P. Lego
|
|
49,248
|
|
|
*
|
|
| 51,368 |
|
| * | |||||
Stephen G. Newberry
|
|
8,497
|
|
|
*
|
| ||||||||||
Bethany J. Mayer |
| 1,240 |
|
| * | |||||||||||
Abhijit Y. Talwalkar
|
|
24,340
|
|
|
*
|
|
| 14,497 |
|
| * | |||||
Lih Shyng (Rick L.) Tsai
|
|
3,520
|
|
|
*
|
|
| 5,640 |
|
| * | |||||
Leslie F. Varon |
| 1,240 |
|
| * | |||||||||||
Named Executive Officers (“NEOs”)
|
|
| ||||||||||||||
Timothy M. Archer
|
|
74,198
|
|
|
*
|
| ||||||||||
Douglas R. Bettinger
|
|
85,563
|
|
|
*
|
|
| 122,328 |
|
| * | |||||
Richard A. Gottscho
|
|
42,897
|
|
|
*
|
|
| 21,376 |
|
| * | |||||
Scott G. Meikle
|
|
3,873
|
|
|
*
|
| ||||||||||
All current directors and executive officers as a group (18 people)
|
|
675,160
|
|
|
*
|
| ||||||||||
Patrick J. Lord |
| 1,807 |
|
| * | |||||||||||
Seshasayee (Sesha) Varadarajan |
| 33,614 |
|
| * | |||||||||||
All current directors and executive officers as a group (17 people) |
| 498,536 |
|
| * |
* | Less than 1% |
Continues on next page u
(1) | Includes shares subject to outstanding stock options that are now exercisable or will become exercisable within 60 days after September |
| Shares | ||||
Sohail U. Ahmed |
| 770 |
| ||
Timothy M. Archer |
| 66,978 |
| ||
Eric K. Brandt |
| 770 |
| ||
Michael R. Cannon |
| 770 |
| ||
El-Mansy |
| 770 |
| ||
Catherine P. Lego |
| 770 |
| ||
Bethany J. Mayer |
| 770 |
| ||
Abhijit Y. Talwalkar |
| 770 |
| ||
Lih Shyng (Rick L.) Tsai |
| 770 | |||
Leslie F. Varon |
| 770 |
| ||
Douglas R. Bettinger |
| 52,361 |
| ||
Richard A. Gottscho |
| — |
|
| |
Patrick J. Lord |
| — |
|
| |
Seshasayee (Sesha) Varadarajan |
| 4,861 |
| ||
All current directors and executive officers as a group |
| 139,867 |
|
The terms of any outstanding stock options that are now exercisable or will become exercisable within 60 days after September 4, 2020, and RSUs that will vest within that time period, are reflected in “Figure 33. FYE201850. FYE2020 Outstanding Equity Awards,” except as described in the following sentence. Ms. O’Dowdsentences. Scott G. Meikle, Ph.D. and Mr. JenningsVahid Vahedi, Ph.D. have options covering 47,9843,876 and 1,5534,861 shares, respectively, which are unexercised and exercisable within 60 days of September 7, 2018.4, 2020. The grants for Ms. O’DowdDrs. Meikle and Mr. JenningsVahedi have terms consistent with the terms reflected in “Figure 33. FYE201850. FYE2020 Outstanding Equity AwardsAwards.,” except for the grant to Ms. O’Dowd on February 8, 2013 of 22,140 shares, which fully vested on February 8, 2015 and will expire on February 8, 2020.
As discussed in “Governance Matters – Director Compensation” below, thenon-employee directors receive an annual equity grant as part of their compensation. These grants generally vest on October 31, 2018,2020, subject to continued service on the board as of that date, with immediate delivery of the shares upon vesting. For 2018,2020, Messrs. Ahmed, Brandt, Cannon, and Talwalkar; Drs.El-Mansy and Tsai; Messrs. Brandt, Cannon, Newberry and Talwalkar; and Mses. HeckartLego, Mayer and LegoVaron each received grants of 960770 RSUs. These RSUs are included in the tables above.
(2) | All information regarding BlackRock Inc., or “BlackRock,” is based solely on information disclosed in amendment number 12 to Schedule 13G filed by BlackRock with the SEC on February 5, 2020 on behalf of BlackRock and certain subsidiaries. According to the Schedule 13G filing, of the 12,507,354 shares of Lam common stock reported as beneficially owned by BlackRock as of December 31, 2019, BlackRock had sole voting power with respect to 10,810,314 shares, did not have shared voting power with respect to any shares, had sole dispositive power with respect to 12,507,354 shares, and did not have shared dispositive power with respect to any shares of Lam common stock. |
(3) | All information regarding The Vanguard Group, Inc., or “Vanguard,” is based solely on information disclosed in amendment number |
All information regarding |
(5) | All information regarding Ameriprise Financial, Inc., or “Ameriprise,” is based solely on information disclosed in amendment number seven to Schedule 13G filed by Ameriprise with the SEC on February 14, 2020. According to the Schedule 13G filing, of the 7,927,471 shares of Lam common stock reported as beneficially owned by |
Section 16(a) Beneficial Ownership Reporting ComplianceContinues on next page u
Lam Research Corporation 2020 Proxy Statement | 7 |
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers, directors, and people who own more than 10% of a registered class of our equity securities to file an initial report of ownership (on a Form 3) and reports on subsequent changes in ownership (on Forms 4 or 5) with the SEC by specified due dates. Our executive officers, directors, andgreater-than-10% stockholders are also required by SEC rules
to furnish us with copies of all section 16(a) forms they file. We are required to disclose in this proxy statement any failure to file any of these reports on a timely basis. Based solely on our review of the copies of the forms that we received fromfiled electronically with the filers,SEC, and on written representations from certain reporting persons, we believe that all of these requirements were satisfied during fiscal year 2020, with the exception of one late Form 4 for Scott Meikle, Ph.D., filed on November 21, 2019 to report the sale of 2,000 shares of Lam Research common stock on November 1, 2019. In addition, on August 12, 2020, Dr. El-Mansy filed a Form 5 reporting transfers of shares of Lam Research common stock held by Dr. El-Mansy to a family trust on nine occasions during fiscal years 2014, 2015, 2016, 2017 and 2018. Following the transfers, the transferred shares held by the trust continued to be reported as directly held and beneficially owned by Dr. El-Mansy. The transfers should have been reported on Form 5s filed within 45 days following the end of each of those fiscal years, and the shares held by the trust thereafter reported as indirectly held and beneficially owned by Dr. El-Mansy.
|
Our Board and members of management are committed to responsible corporate governance to manage the Company for the long-term benefit of its stockholders. To that end, the Board and management periodically review and update, as appropriate, the Company’s corporate governance policies and practices. As part of that process, the Board and management consider the requirements of federal and state law, including rules and regulations of the SEC; the listing standards for the Nasdaq Global Select Market, or “Nasdaq;”“Nasdaq”; published guidelines and recommendations of proxy advisory firms; published guidelines of some of our top stockholders; published guidelines of other selected public companies; and any feedback we receive from our stockholders. A list of key corporate governance practices is provided in the “Proxy Statement Summary” above.
We have instituted a variety of policies and procedures to foster and maintain responsible corporate governance, including the following:
Board committee charters. Each of the Board’s audit, compensation,Figure 9. Policies and nominating and governance committees has a written charter adopted by the Board that establishes practices and procedures for the committee in accordance with applicable corporate governance rules and regulations. Each committee reviews its charter annually and recommends changes to the Board, as appropriate. Each committee charter is available on the Investors section of our website athttps://investor.lamresearch.com/corporate-governance. The content on any website referred to in this proxy statement is not a part of or incorporated by reference in this proxy statement unless expressly noted. See “Board Committees” below for additional information regarding these committees.Procedures Summary
Corporate governance guidelines.
Policy or Procedure | Summary | |
Board committee charters* | Each of the Board’s audit, compensation and human resources, and nominating and governance committees has a written charter adopted by the Board that delegates authority and responsibilities to the committee. Each committee reviews its charter, and the nominating and governance committee reviews the charters of all of the committees, annually and recommends changes to the Board, as appropriate. See “Board Committees” below for additional information regarding these committees. | |
Corporate governance guidelines* | We adhere to written corporate governance guidelines, adopted by the Board and reviewed annually by the nominating and governance committee and the Board. Selected provisions of the guidelines are discussed below, including in the “Board Nomination Policies and Procedures,” “Director Independence Policies,” and “Other Governance Practices” sections below. | |
Corporate Code of Ethics* | We maintain a code of ethics that applies to all employees, officers, and members of the Board. The code of ethics establishes standards reasonably necessary to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, and full, fair, accurate, timely, and understandable disclosure in the periodic reports we file with the SEC and in other public communications. We will promptly disclose to the public any amendments to, or waivers from, any provision of the code of ethics to the extent required by applicable laws. We intend to make this public disclosure by posting the relevant material on our website, to the extent permitted by applicable laws. | |
Global Standards of Business Conduct* | We maintain written standards of business conduct to address a variety of situations that apply to our worldwide workforce. Among other things, these global standards of business conduct address relationships and/or conduct with one another, with Lam (including conflicts of interest, safeguarding of Company assets, and protection of confidential information), and with other companies and stakeholders (including anti-corruption). | |
Insider Trading Policy | Our insider trading policy restricts the trading of Company stock by our directors, officers, and employees, and includes provisions addressing insider blackout periods and prohibiting pledges of Company stock, and prohibiting such persons from engaging in hedging transactions, such as “cashless” collars, forward sales, equity swaps and other similar arrangements. Investments in exchange funds may be permitted on a case-by-case basis if the fund is broadly diversified. |
* | A copy is available on the Investors section of our website at https://investor.lamresearch.com/corporate-governance. |
Our Approach To Ensuring Board Effectiveness
As part of the Board’s commitment to responsible corporate governance, we have developed a number of practices that together serve to ensure that, over time, the Board continues to function in an effective manner that serves the long-term interests of the Company and its stockholders. Several of the practices that we consider to be most important and summarized in Figure 10 below, and the practices themselves are described in greater detail below.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 9 |
Figure 10. Board Effectiveness Practices
Board and committee evaluations. Every year, the Board conducts a self-evaluation of the Board, its committees, and the individual directors, overseen by the nominating and governance committee. From time to time, the evaluation is facilitated by an independent third-party consultant. The evaluation solicits the opinions of the directors regarding the effectiveness of the Board, Board committees, and individual directors in fulfilling its/their obligations. Feedback on Board and committee effectiveness is provided to the full Board for discussion, and feedback regarding individual director performance is provided to each individual director. The Board and committees identify and hold themselves accountable for action items stemming from the evaluation. The results of the evaluations are also considered as part of the director nomination process.
Board composition, diversity and refreshment. The Board and the nominating and governance committee regard board refreshment as important, and strive to maintain an appropriate balance of tenure, turnover, diversity, and skills to meet the needs of the Company and the Board. Selected provisionsIn consideration of the guidelines are discussed below, including inCompany’s evolving strategic priorities and as part of its refreshment planning, the nominating and governance committee regularly evaluates the Board’s composition, skills and experiences, diversity, and committee assignments to ensure that the Board functions effectively. See “Board Nomination PoliciesProxy Statement Summary - Figure 4. Director Nominee Key Qualifications, Skills and ProceduresExperiences Highlights” ,” “Director Independence Policies,” and “Other Governance PracticesProxy Statement Summary - Figure 5. Director Nominee Composition Highlights” for additional information. In line with the Board’s pursuit of board refreshment and balanced tenure, the Board in 2019 appointed three new directors.
The Board is committed to diversity, and for many years, the composition of the Board has reflected that commitment. As illustrated in “Proxy Statement Summary - Figure 5. Director Nominee Composition Highlights”, 67% of our nominees are diverse either as to gender or as to ethnicity/race. Every year since 2006, the Board has had at least two female directors, and starting in 2019, the total number of female directors increased to three. This year, 33% of our nominees are diverse with respect to ethnicity/race. In addition, over the last 10 years, the Board has appointed directors who have expanded the experiences, areas of substantive expertise, and geographic and industry diversity of the Board, as illustrated by the information provided in their biographies under “Voting Proposals - Proposal No. 1: Election of Directors��- 2020 Nominees for Director” sections below.
The Board is also committed to the pursuit of Board refreshment and balanced tenure. The Board believes that new perspectives and ideas are important to a forward-looking and strategic board, as is the ability to benefit from the valuable experience and familiarity of longer-serving directors who can bring to bear their learnings from their experience with the Company and with the industry and business environment in which the Company operates. Our corporate governance guidelines are availabledo not impose a term limit on Board service; however, the Board regularly assesses the directors’ tenure mix and strives to maintain a balance that will ensure both fresh perspectives and experience on the Investors sectionBoard.
The Board also considers refreshment and tenure with respect to the leadership and membership of its standing committees, and the nominating and governance committee evaluates short-term and long-term roadmaps for committee membership and leadership on a regular basis.
Director onboarding and education. To ensure that new directors are able to effectively participate in and contribute to the Board as quickly as possible, we provide a comprehensive orientation and onboarding program for our new directors. Upon joining the Board, new directors participate in an orientation program which includes introductions to other Board members and our senior management team, and in depth learning about our industry, business, technology, operations, culture, people, performance, strategic plans, risk management and corporate governance practices, among other topics. The onboarding process also includes tours of one or more of our website athttps://investor.lamresearch.com/corporate-governance.
Corporate code of ethics. We maintainmanufacturing or lab facilities. In addition, each new director is partnered with a code of ethics that applieslonger-tenured director to all employees, officers, and members offacilitate his or her integration into the Board. First time directors (i.e. those without prior public company board experience) are encouraged to attend an outside course shortly after joining the Board.
The codeOur Board is also committed to ongoing education. Our corporate governance guidelines provide that directors are expected to participate in educational events sufficient to maintain their understanding of ethics establishes standards reasonably necessarytheir duties as directors and to promote honestenhance their ability to fulfill their responsibilities. In addition to any external educational opportunities that the directors find useful, the Company and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, and full, fair, accurate, timely, and understandable disclosure in the periodic reports we file with the SEC and in other public communications. We will promptly discloseboard leadership are expected to the public any amendmentsfacilitate such participation by arranging for appropriate educational presentations from time to or waivers from, any provision of the code of ethics to the extent required by applicable laws. We intend to make this public disclosure by posting the relevant material on our website, to the extent permitted by applicable laws. A copy of the code of ethics is available on the Investors section of our website athttps://investor.lamresearch.com/corporate-governance.
Global standards of business conduct policy. We maintain written standards of appropriate conduct in a variety of business situations that apply to our worldwide workforce. Among other things, these global standards of business conduct address relationships with one another, relationships with Lam (including conflicts of interest, safeguarding of Company assets, and protection of confidential information), and relationships with other companies and stakeholders (including anti-corruption).
Insider trading policy. Our insider trading policy restricts the trading of Company stock by our directors, officers, and employees, and includes provisions addressing insider blackout periods and prohibiting hedges and pledges of Company stock.time.
Board Nomination Policies and Procedures
Board membership criteria. Under our corporate governance guidelines, the nominating and governance committee is responsible for recommending nominees to the independent directors, and the independent directors nominate the slate of directors for approval by our stockholders. In making its recommendations, whether for new or incumbent directors, the committee assesses the appropriate balance of experience, skills, and characteristics required for the Board at the time.
Factors to be considered by the nominating and governance committee may include, but are not limited to:
experience;
business acumen;
wisdom;
integrity;
judgment;
the ability to make independent analytical inquiries;
the ability to understand the Company’s business environment;
the candidate’s willingness and ability to devote adequate time to board duties;
diversity with respect to any attribute(s) the Board considers appropriate, including geographic, gender, age, and ethnic diversity;
specific skills, background, or experience
Continues on next page u
considered necessary or desirable for board or committee service;
specific experiences with other businesses or organizations that may be relevant to the Company or its industry; diversity with respect to any attribute(s) the Board considers appropriate, including geographic, gender, age, and ethnic diversity; and
the interplay of a candidate’s experiences and skills with those of other Board members.
The specific skills, background, and experiencesIn addition, our corporate governance guidelines provide that are evaluated in connection with board service include:
Each nominee’s key qualifications, skills, and attributes most relevanta director may not be nominated for re-election or reappointment to the nominationBoard after having attained the age of the candidate to serve on the Board are reflected in their biographies under “Voting Proposals – Proposal No. 1: Election of Directors – 2018 Nominees for Director” below. For a summary of the key qualifications, skills, and attributes of the Board see “Proxy Statement Summary – Figure 3. Director Key Qualifications and Skills Highlights.” The Board and the nominating and governance committee regard board refreshment as important, and strive to maintain an appropriate balance of tenure, turnover, diversity, and skills on the Board. See “ProxyStatement Summary–Figure 4. Board Composition Highlights”for additional information. In line with the Board’s pursuit of
board refreshment and balanced tenure, including consideration of any resignations, the Board has appointed seven new directors in the last six75 years.
For many years, the composition of the Board has reflected the Board’s commitment to diversity. For example, every year since 2016 the Board has had at least two female directors, and over the last 10 years has expanded the experiences, areas of substantive expertise and geographic diversity of the directors, as illustrated by the information provided in their biographies under “Voting Proposals – Proposal No. 1: Election of Directors – 2018 Nominees for Director” below.
Regarding tenure, the Board believes that new perspectives and ideas are important to a forward-looking and strategic board as is the ability to benefit from the valuable experience and familiarity of longer serving directors who can bring to bear their learnings from experience with the Company and in the industry and business environment in which the Company operates.
To be nominated, a new or incumbent candidate must provide an irrevocable conditional resignation that will be effective upon (1) the director’s failure to receive the required majority vote at an annual meeting at which the nominee facesre-election and (2) the Board’s acceptance of such resignation. In addition, no
Upon the recommendations of the nominating and governance committee, the independent members of the Board have nominated nine of our current directors for re-election to serve on the Board. One current director, after having attainedDr. El-Mansy, was ineligible to be nominated under the age requirement described above, and as previously disclosed in a current report on Form 8-K, is retiring from the Board effective as of 75 years, mayNovember 1, 2020. The size of the Board will be nominated forre-election or reappointmentreduced to nine prior to the Board.annual meeting. Each nominee’s key qualifications, skills, and attributes considered most relevant to the nomination of the candidate to serve on the Board are reflected in his or her biography under “Voting Proposals - Proposal No. 1: Election of Directors - 2020 Nominees for Director” below. For a summary of the key qualifications, skills, and attributes of the nominees to the Board, see “Proxy Statement Summary - Figure 4. Director Nominee Key Qualifications, Skills and Experiences Highlights.”
Nomination procedure. The nominating and governance committee sets specific qualifications for new directors, and identifies, screens, evaluates, and recommends qualified candidates for appointment or election to the Board. The committee considers recommendations from a variety of sources, including search firms, Board members, executive officers, and stockholders. Nominations for election by the stockholders are made by the independent members of the Board. New candidates to join the Board typically meet with our chair, our lead independent director (if applicable), members of the nominating and governance committee, additional board members, and our president and CEO, as well as representatives of the Company’s executive team, prior to being considered for recommendation by the nominating and governance committee for appointment to the Board. See “Voting Proposals –- Proposal No. 1: Election of Directors – 2018- 2020 Nominees for Director” below for additional information regarding the 20182020 candidates for election to the Board.
Certain provisions of our bylaws apply to the nomination or recommendation of candidates by a stockholder. For example, in February 2017, the Board amended and restated our bylaws to provide that under certain circumstances, a stockholder, or group of up to 20 stockholders, who have maintained continuous ownership of at least three percent (3%) of our common stock for at least three years may nominate and include a specified number of director nominees in our annual meeting proxy statement that cannot exceed the greater of two or 20% of the aggregate number of directors then serving on the Board (rounded down). Information regarding the nomination procedure is provided in the “Voting and Meeting Information –- Other Meeting Information –- Stockholder-Initiated Proposals and Nominations for 20192021 Annual Meeting” section below.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 11 |
Director Independence Policies
Board independence requirements. Our corporate governance guidelines require that a majority of the Board members be independent. No director will qualify as “independent” unless the Board affirmatively determines that the director qualifies as independent under the Nasdaq rules and has no relationship that would interfere with the exercise of independent judgment as a director. In addition, nonon-employee director may serve as a consultant or service provider to the Company without the approval of a majority of the independent directors (and any such director’s independence must be reassessed by the full Board following such approval).
Board member independence. The Board has determined that all current directors, other than Mr. Anstice,Archer, are independent in accordance with Nasdaq criteria for director independence. In making the determination, the Board considered prior employment with the Company, disclosed related party transactions, known familial relationships of directors with employees (not involving immediate family members) and commercial transactions involving other parties with common directorships, none of which qualified as related party transactions or were considered by the Board to interfere with the exercise of independent judgment as a director.
Board committee independence.All members of the Board’s audit, compensation and human resources, and nominating and governance committees must benon-employee or outside directors and independent in accordance with applicable Nasdaq criteria as well as in the case of the compensation committee, applicable rules under section 162(m) of the Internal Revenue Code of 1986, as amended, or the “Code,” and Rule16b-3 of the Exchange Act. See “Board Committees” below for additional information regarding these committees.
Lead independent director. Our corporate governance guidelines authorize the Board to designate a lead independent director from among the independent members. Mr. Talwalkar was appointed the lead independent director, effective August 27, 2015. SeeAs described below under “Leadership Structure of the Board,” below for information regarding the responsibilitiesan independent director, Mr. Talwalkar, currently serves as chairman of the Board, and as a result the Board has not designated a lead independent director.
Executive sessions of independent directors.The Board and its audit, compensation and human resources, and nominating and governance committees hold meetings of the independent directors and committee members, without management present, as part of each regularly scheduled meeting and at any other time at the discretion of the Board or committee, as applicable.
Board access to independent advisors. The Board as a whole, and each standing Board committee separately, has the complete authority to retain, at the Company’s expense, and terminate, in their discretion, any independent consultants, counselors, or advisors as they deem necessary or appropriate to fulfill their responsibilities.
Board education program. Our corporate governance guidelines provide that directors are expected to participate in educational events sufficient to maintain their understanding of their duties as directors and to enhance their ability to fulfill their responsibilities. In addition to any external educational opportunities that the directors find useful, the Company and the board leadership are expected to facilitate such
participation by arranging for appropriate educational presentations from time to time.
Leadership Structure of the Board
The Company’s governance framework provides the Board with the authority and flexibility necessary to select the appropriate leadership structure for the Board. In making determinations about the leadership structure, the Board considers many factors, including the specific needs of the business and what is in the best interests of the Company’s stockholders.
Under our corporate governance guidelines, the Board’s leadership structure includes a chair and may also include a separate lead independent director. Currently, Mr. Talwalkar, an independent director, serves as chairman of the Board, consists ofand as a chairman andresult the Board has not designated a lead independent director.
The Board has determined our chairman, Mr. Newberry, who served as chief executive officer of the Company from June 2005 to January 2012, to be independent. The Board recognizes the value of having an independent chairman and a lead independent director managing the responsibilities of board leadership. Lam and its stockholders benefit from having Mr. Newberry as its chairman, as he brings to bear his experience as CEO as well as his other qualifications in carrying out his responsibilities as chairman, whichchair’s duties include (1) preparing the agenda for the Board meetings with input from the CEO, the Board, and the committee chairs; (2) upon invitation, attending meetings of any of the Board committees onof which he or she is not a member; (3) conveying to the CEO, together with the chair of the compensation and human resources committee, the results of the CEO’s performance evaluation; (4) reviewing proposals submitted by stockholders for action at meetings of stockholders and, depending on the subject matter, determining the appropriate body, among the Board or any of the Board committees, to evaluate each proposal, and making recommendations to the Board regarding action to be taken in response to such proposal; (5) as requested by the Board, providing reports to the Board on the chair’s activities; (6) coordinating and developing the agenda for, and moderating executive sessions of the Board’s independent directors; (7) conveying to the CEO, as appropriate, discussions from executive sessions of the Board’s independent directors; and (8) performing such other duties as the Board may reasonably request from time to time; and (6) as requested by the Board, providing reports to the Board on the chairman’s activities. The Company and its stockholders also benefit from having Mr. Talwalkar as its lead independent director, as he brings to bear his experience as a former CEO of a semiconductor company and a board chairman of another public company as well as his other qualifications in carrying out his responsibilities as lead independent director, which include: (1) coordinating the activities of the independent directors; (2) consulting with the chairman regarding matters such as (a) schedules of and agendas for Board meetings, (b) the quality, quantity, and timeliness of the flow of information from management, and (c) the retention of consultants who report directly to the Board; (3) developing the agenda for and moderating executive sessions of the Board’s independent directors; and (4) moderating executive sessions of the full Board when the chairman is unable to be present.time.
In addition to the principal policies and procedures described above, we have established a variety of other practices to enhance our corporate governance, including the following:
Board and committee assessments. Every year, the Board conducts a self-evaluation of the Board, its committees, and the individual directors, overseen by the nominating and
Continues on next page u
governance committee and generally led by the lead independent director and the chairman of the Board. From time to time, the evaluation is facilitated by an independent third-party consultant. The evaluation solicits the opinions of the directors regarding the effectiveness of the Board, committees, and individual directors in fulfilling its/their obligations. Feedback on Board and committee effectiveness is provided to the full Board for discussion, and feedback regarding individual director performance is provided to each individual director. The Board and committees identify and hold themselves accountable for any action items stemming from the assessment. The results of the evaluations are also considered as part of the director nomination process.
Director resignation or notification of change in executive officer status.Under our corporate governance guidelines, any director who is also an executive officer of the Company must offer to submit his or her resignation as a director to the Board if the director ceases to be an executive officer of the Company. The Board may accept or decline the offer, in its discretion. The corporate governance guidelines also require anon-employee director to notify the nominating and governance committee if the director changes or retires from his or her executive position at another public company. The nominating and governance committee reviews the appropriateness of the director’s continuing Board membership under the circumstances, and the director is expected to act in accordance with the nominating and governance committee’s recommendations.
Limitations on other board and committee memberships.The Board believes that it is critical that directors dedicate sufficient time to their service on the Board. Under our corporate governance guidelines, Board members may not serve on more than four public company boards (including service on the Company’s Board).Non-employee directors who are sitting executivesexecutive officers at other public companies may not serve on more than threetwo public company boards (including the Company’s Board). The nominating and governance committee will review the appropriateness of continued Board membership if anon-employee director who is a sitting executive serves on more than two such boards, and the director is expected to follow the recommendation of the nominating and governance committee. In addition,non-employee directors may not serve on more than three audit committees of public company boards (including the Company’s audit committee)., unless approved by the nominating and governance committee. Finally, the Company’s CEO may not serve on more than one other public company board.
Director and executive stock ownership.Under the corporate governance guidelines, each director is expected to own at least the lesser of five times the value of the annual cash retainer (not including any committee chair or other supplemental retainers for directors) or 3,0005,000 shares of Lam common stock, by the fifth anniversary of his or her initial election to the Board. Guidelines for stock ownership by designated members of the executive management team are described below under “Compensation Matters – Matters—Executive Compensation and Other Information – Information—Compensation Discussion and Analysis.” All of our directors and designated members of our executive management team were in
compliance with the Company’s applicable stock ownership guidelines at the end of fiscal year 20182020 or have a period of time remaining under the programguidelines to do so.meet the requirements.
Communications with board members.Any stockholder who wishes to communicate directly with the Board, with any Board committee, or with any individual director regarding the Company may write to the Board, the committee, or the director c/o Secretary, Lam Research Corporation, 4650 Cushing Parkway, Fremont, California 94538. The Secretary will forward all such communications to the appropriate director(s).
Any stockholder, employee, or other person may communicate any complaint regarding any accounting, internal accounting control, or audit matter to the attention of the Board’s audit committee by sending written correspondence by mail (to Lam Research Corporation, Attention: Board Audit Committee, P.O. Box 5010, Fremont, California 94537-5010) or by telephone(855-208-8578) or internet (through the Company’s third-party provider website at www.lamhelpline.ethicspoint.com). The audit committee has established procedures to ensure that employee complaints or concerns regarding audit or accounting matters will be received and treated anonymously (if the complaint or concern is submitted anonymously and if permitted under applicable law).
Our Board held a total of fiveten meetings during fiscal year 2018.2020. The number of committee meetings held is shown in Figure 8.Figures 11-13. All of the directors attended at least 75% of the aggregate number of Board meetings and meetings of Board committees on which they served during their tenure in fiscal year 2018, with the exception of Young Bum (YB) Koh, Ph.D. due to medical reasons.2020.
We expect our directors to attend the annual meeting of stockholders each year unless unusual circumstances make attendance impractical. All but one of the individuals who were directors as of the 20172019 annual meeting of stockholders attended that meeting.
The Board has three standing committees: an audit committee, a compensation and human resources committee, and a nominating and governance committee. The purpose, membership, and charter of each are described below.
Figure 8. Committee Membership
Current Committee Memberships
| ||||||
Name
| Audit
| Compensation
|
Nominating and Governance
| |||
Eric K. Brandt
|
Chair
| |||||
Michael R. Cannon
|
x
|
x
| ||||
Youssef A.El-Mansy
|
x
| |||||
Christine A. Heckart
|
x
| |||||
Catherine P. Lego
|
Chair
|
x
| ||||
Abhijit Y. Talwalkar
|
x
|
Chair
| ||||
Total Number of Meetings Held in FY2018
| 8
| 5
| 4
|
Audit committee. The purpose Copies of the audit committee is to oversee the Company’s accounting and financial reporting processes and the audits of our financial statements, including the system of internal controls. As part of its responsibilities, the audit committee reviews and oversees potential conflict of interest situations, transactions required to be disclosed pursuant to Item 404 of RegulationS-K of the SEC, and any other transaction involving an executive or Board member. A copy of the audit committeeeach charter isare available on the Investors section of our website athttps://investor.lamresearch.com/corporate-governance.
Figure 11. Audit Committee
The Board concluded that all audit committee members arenon-employee directors who are independent in accordance with
Membership (1)(2) | Independence (4) | Meetings in FY2020 | Purpose | |||
Eric K. Brandt (Chair) (3) Michael R. Cannon (3) Bethany J. Mayer (3) Leslie F. Varon (3) | 4 of 4 | 10 | Purpose is to oversee the Company’s accounting and financial reporting processes, the Company’s Internal Audit Program, its investment policies and performance, its information security (including cybersecurity), its Ethics and Compliance Program, and the audits of our financial statements, including the system of internal controls. As part of its responsibilities, the |
(1) | As of September 4, 2020. Effective November 1, 2020, Leslie F. Varon will become the chair and Catherine P. Lego will become a member, and Eric K. Brandt will no longer be a member of the committee. |
(2) | Each member is able to read and understand fundamental financial statements as required by the Nasdaq listing standards. |
(3) | Each is |
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 13 |
(4) | The Board concluded that all members are non-employee directors who are independent in accordance with the Nasdaq listing standards and SEC rules for audit committee member independence. |
Figure 12. Compensation committee. The purpose of the compensation committee is to discharge certain responsibilities of the Board relating to executive compensation; to oversee incentive, equity-based plans, and other compensatory plans in which the Company’s executive officers and/or directors participate; and to produce an annual report on executive compensation for inclusion as required in the Company’s annual proxy statement. The compensation committee is authorized to perform the responsibilities of the committee referenced above and described in its charter. A copy of the compensation committee charter is available on the Investors section of our website athttps://investor.lamresearch.com/corporate- governance.Human Resources Committee
The Board concluded that all members of the compensation committee arenon-employee directors who are independent in accordance with Rule16b-3 of the Exchange Act and the Nasdaq criteria for director and compensation committee member independence and who are outside directors for purposes of section 162(m) of the Code.
Membership (1) | Independence (2) | Meetings in FY2020 | Purpose | |||
Youssef A. El-Mansy | 4 of 4 | 5 | Purpose is to discharge certain responsibilities of the Board relating to executive compensation; to oversee incentive, equity-based plans, and other compensatory plans in which the Company’s executive officers and/or directors participate; to produce an annual report on executive compensation for inclusion as required in the Company’s annual proxy statement; and to discharge certain responsibilities of the Board with respect to organization and people matters. The committee is authorized to perform the responsibilities referenced above and described in its charter. |
(1) | As of September 4, 2020. Effective November 1, 2020, Eric K. Brandt will become the chair and Sohail U. Ahmed will become a member, and Youssef A. El-Mansy and Catherine P. Lego will no longer be members of the committee. |
(2) | The Board concluded that all members of the compensation and human resources committee are non-employee directors who are independent in accordance with Rule 16b-3 of the Exchange Act and the Nasdaq criteria for director and compensation committee member independence. |
Figure 13. Nominating and governance committee. The purpose of the nominating and governance committee is to identify individuals qualified to serve as members of the Board of the Company, to recommend nominees for election as directors of the Company, to oversee self-evaluations of the Board’s performance, to develop and recommend corporate governance guidelines to the Board, and to provide oversight with respect to corporate governance. A copy of the nominating and governance committee charter is available on the Investors section of our website athttps://investor.lamresearch.com/corporate-governance.Governance Committee
The Board concluded that all nominating and governance committee members arenon-employee directors who are independent in accordance with the Nasdaq criteria for director independence.
Eric K. Brandt Purpose is to identify individuals qualified to serve as members of the Board of the Company, to recommend nominees for election as directors of the Company, to oversee self-evaluations of the Board’s performance, to develop and recommend corporate governance guidelines to the Board, and to provide oversight with respect to corporate governance. The nominating and governance committee will consider for nomination persons properly nominated by stockholders in accordance with the Company’s bylaws and other procedures described below under “Voting and Meeting Information - Other Meeting Information - Stockholder-Initiated Proposals and Nominations for the 2021 Annual Meeting.” Subject to then-applicable law, stockholder nominations for director will be evaluated by the Company’s nominating and governance committee in accordance with the same criteria as is applied to candidates identified by the nominating and governance committee or other sources.The nominating and governance committee will consider for nomination persons properly nominated by stockholders in accordance with the Company’s bylaws and other procedures described below under “Voting and Meeting Information – Other Meeting Information – Stockholder-Initiated Proposals and Nominations for the 2019 Membership (1) Independence (2) Meetings in
FY2020Purpose
Michael R. Cannon (Chair) Catherine P. Lego
Abhijit Y. Talwalkar4 of 4 4
(1) | As of September 4, 2020. |
(2) | The Board concluded that all members of the nominating and governance committee are non-employee directors who are independent in accordance with the Nasdaq criteria for director independence. |
General. The Board directs and oversees the management of the business and affairs of the Company. In this oversight role, the Board serves as the ultimate decision-making body of the Company, except for those matters reserved for the stockholders. Board agendas facilitate dialogue between the Board and management regarding drivers of long-term stockholder value and key strategic and operational risks.
The Board and its committees have the primary responsibilities for:
overseeing the Company’s business strategies, and approving the Company’s business strategies, capital allocation plans/plans and priorities, annual operating plan, and major corporate actions as set forth below;in the below sub-bullets;
° | A strategic plan is presented to the Board for discussion on an annual |
° | An operating plan is presented to the Board for discussion on an annual basis, and updates are presented at each quarterly Board |
Continues on next page u
° | Capital allocation plans and priorities are discussed on a quarterly |
° | Other major corporate actions are presented and discussed as part of |
appointing, annually evaluating the performance of, and approving the compensation of the CEO;
reviewing with the CEO the performance of the Company’s other executive officers and approving their compensation;
reviewing and approving CEO and top leadership succession planning;
advising and mentoring the Company’s senior management;
overseeing the Company’s internal controls over financial reporting and disclosure controls and procedures;
overseeing the Company’s ethics and compliance programs, including the Company’s code of ethics; and
overseeing the Company’s material risks and enterprise risk management processes and programs, described in further detail below.programs.
Risk Oversight. The Board is actively engaged in risk oversight. Management regularly reports to the Board on its risk assessments and risk mitigation strategies for the major risks of our business. Generally, the Board exercises its oversight responsibility directly; however, in specific cases, such responsibility has been delegated to committees of the Board. Committees that have been charged with risk oversight regularly report to the Board on those risk matters within their areas of responsibility. Risk oversight responsibility has been delegated to committees ofallocated between the Board and its committees as set forthsummarized in Figure 14 and described in more detail below.
Figure 14. Risk Oversight
Our audit committee oversees risks related to the Company’s accounting and financial reporting, internal controls, annual financial statement audits, independent registered public accounting firm, internal audit function, and related party transactions.transactions, ethics and compliance program, investment policy and portfolio, hedging strategies, and tax strategies. The audit committee also oversees the review and monitoring ofour information security policies,program (including cybersecurity), with the responsibility of recommending such Board action as it deems appropriate.
Our compensation and human resources committee oversees risks related to the Company’s equity and executive compensation programs and plans.plans, executive succession plans, employee engagement programs, and environmental, social and governance, or “ESG,” matters relating to the Company’s workforce, including inclusion and diversity.
Our nominating and governance committee oversees risks related to corporate governance, board effectiveness, director independence, Board and Board committee composition, and CEO succession planning.ESG matters not assigned to other committees.
We believe that engagement with our stockholders is an important part of effective corporate governance. Our senior management, including our president and CEO, CFOchief financial officer (CFO) and members of our Investor Relations team, maintain regular contact with a broad base of investors through quarterly earnings calls, meetings, analystinvestor day events, industry conferences and other investor and industry events. In addition, we regularly engage with major stockholders on governance matters, including
executive compensation and environmental and social governance.ESG topics. The outreach is generally conducted outside of our proxy solicitation period and, depending on the topics, includes members of our Legal, Investor Relations and Human Resources Environmental Health & Safetyfunctions, and Legal functions.may also include members of the Board. During the proxy solicitation period, we may also engage with our stockholders about topics to be addressed at our annual meeting of stockholders. Our process for engaging with stockholders on governance topics and annual meeting proposals is summarized in Figure 15 below.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 15 |
Figure 15. Stockholder Governance Engagement Cycle
Before Annual Meeting Engage with stockholders to answer questions and obtain feedback on governance matters and annual meeting matters | During Annual Meeting Stockholders vote on election of directors, say on pay, and other management and stockholder proposals | After Annual Meeting Review annual meeting results and stockholder feedback with Board and recommend responsive actions |
Through these engagements, we receive valuable input from our stockholders which helps us to evaluate key initiatives from additional perspectives. We share allthe opinions and information received from our stockholders with our board of directors.the Board. Over the last few years, we have heard from stockholders about their views on subjects such as executive compensation, ESG considerations, culture, leadership transitions, proxy access, returning capital to stockholders, director tenure, board refreshment, director skills and experiences, and board and workforce diversity, and environmental and social governance matters.diversity. Understanding the feedback shared with us, we have adopted proxy access, have maintained our focus on board diversification, board refreshment based on skills and experiences, workforce diversity, and pay for performance, and have enhanced our proxy statement and Corporate Social Responsibility, (CSR)or CSR, Report disclosures.
We engaged in extensive stockholder outreach on governance topics and annual meeting proposals in 2019, both prior to and during the proxy solicitation period, as illustrated in Figure 16 below. After Institutional Shareholder Services, or ISS, issued a voting recommendation against our Say on Pay proposal, we supplemented the outreach we had carried out prior to the proxy solicitation period, by contacting stockholders holding in total over 50% of our shares and offering the opportunity to discuss any concerns they might have with either Ms. Lego, the chair of the compensation and human resources committee, or Mr. Talwalkar, our then lead independent director (and current Board chairman). Ms. Lego or Mr. Talwalkar participated in meetings with stockholders holding in total approximately 29% of our shares. We have summarized our governance outreach efforts, and described the topics discussed, in Figure 16 below, as well as in “Compensation Discussion and Analysis – Overview of Executive Compensation – 2019 Say on Pay Voting Results and Stockholder Outreach”:
Figure 16. 2019 Stockholder Governance Outreach Summary
Topics | What we heard from our stockholders | Our Perspective/How we responded | ||
Leadership, culture and human capital | Certain stockholders were interested in the leadership changes, company culture, and the Board’s role with respect to culture and human capital | We consider leadership succession, culture and employee engagement to be top priorities. Under the Board’s supervision, we have taken various initiatives to create a more open, inclusive and diverse culture. We have added additional detail to explain the Board’s role in the Company’s culture and leadership (see “Culture and Human Capital Management” on page 17). In addition, for calendar year 2020, all of our named executive officers have goals and objectives related to culture, talent, and inclusion and diversity as part of our annual incentive program (see “Compensation Discussion and Analysis – Overview of Executive Compensation –2019 Say on Pay Voting Results and Stockholder Outreach” on pages 26-27). | ||
Corporate governance | Certain stockholders were interested in Board changes and the director nomination and onboarding processes | We have added additional detail regarding our director onboarding process and our director refreshment process (see “Our Approach To Ensuring Board Effectiveness” on pages 9-11). | ||
Corporate Social Responsibility | Our stockholders expressed satisfaction with our CSR program and reporting | We continue to enhance our CSR program and reporting. We have added additional detail regarding our CSR program (see “Corporate Social Responsibility” on pages 17-18). | ||
Executive Compensation | See “Compensation Discussion and Analysis – Overview of Executive Compensation – 2019 Say on Pay Voting Results and Stockholder Outreach” on pages 26-27. |
Stockholder ProposalCulture and Human Capital Management
AtThe Board is actively engaged in overseeing our 2017 annual meetingculture and the management of stockholders, an advisory stockholder proposal regarding annual disclosurehuman capital. In 2019, the Board amended the charter ofEEO-1 data received support what was previously known as the compensation committee (now the compensation and human resources committee) to include additional responsibilities with respect to organizational and people matters, including the review of approximately 40%executive officer succession plans as described below, review of shares voted. As partemployee engagement programs, and review of ESG matters relating to the Company’s workforce, including inclusion and diversity and the workforce portion of the Company’s CSR report.
One of the Board’s primary responsibilities is to oversee the performance, development and succession of our stockholderexecutive talent; however, the Board’s investment in people development extends beyond the executive team. The Board and the compensation and human resources committee engage with management across a broad range of human capital related topics. Under the Board’s oversight, we have focused on employee engagement, some of our investors also told us they would appreciate more disclosure about inclusion and diversity. We will include in our next CSR report enhanced disclosure aboutdiversity, professional development, recognition, safety, and wellness, with the goal of ensuring Lam is a place where everyone can do their best work. In 2019, we started conducting a new series of employee pulse surveys focused on employee engagement, culture, inclusion and diversity, manager effectiveness, and communications. The surveys provide management and the Board with valuable employee feedback and help ensure the executive leadership team is focused on and held accountable for fostering and promoting a culture that is consistent with Lam’s Mission, Vision and Core Values and our inclusion and diversity goals. Based on employee feedback, we launched a new inclusion and diversity training program focused on unconscious bias and microinequities, expanded self-service resources available for professional development, facilitated the creation of additional employee resource groups, created new job rotation and mentoring programs, and demographic information about the ethnicexpanded our management training offerings. As is discussed below in “Compensation Matters – Executive Compensation and gender diversityOther Information – Compensation Discussion and Analysis,” for calendar year 2020, all of our workforce. In addition, we will update our leadership disclosure on our websitenamed executive officers have compensation goals related to include our Officeculture, talent, and inclusion and diversity, to help ensure the members of the Chief Executive Officer (OCEO) staff rather than only our executive officers.team are aligned with our corporate goals in these areas and are accountable for the results achieved.
The Board believes that visits to Company facilities and direct engagement with employees enable it to judge the Company’s cultural journey first-hand. Since 2017, the Board has visited our facilities in Fremont, Livermore, Tualatin, Taiwan and South Korea, and met directly with employees in small groups at all these locations in order to engage with and hear directly from them. Due to the pandemic, these in-person meetings have been paused in recent months, and are expected to resume when the circumstances permit.
We are committed to equal opportunity and non-discrimination in our employment practices, including equitable compensation for work performed. The charter of our compensation and human resources committee includes oversight responsibility for our compensation policies and practices related to pay equity laws. We maintain robust employment policies and procedures to reinforce our commitment to equal opportunity, non-discrimination, and pay equity. Our policies and procedures prohibit discrimination, harassment or retaliation in any aspect of employment, including recruiting, hiring, promotion, or compensation.
Corporate Social Responsibility
An important part of advancing the industry and empowering progress is being a socially responsible company. We invest in environmental, social, and economic responsibility across our business and integrate corporate social responsibility principles into our day-to-day operations. Our CSR strategy is composed of six key pillars. This framework focuses our attention on our most important topics and pressing challenges, while helping us to deliver value to our stakeholders.
Business and Governance.Our core values underpin our commitments to sustainable growth and to making a positive contribution to people and the planet. We are committed to responsible and sustainable business practices and continuous improvement in our own operations, in our partnerships with our customers, and across our supply chain.chain and in our engagements with our other stakeholders. Goals and objectives are approved by senior leadership, including the CEO. Our management also meets regularly with the Board and its committees to discuss CSR strategy, gain alignment on plans and goals, and report on progress.
Workplace. GuidedAs described above in the “Culture and Human Capital Management” section, guided by our Core Value of mutual trust and respect,Values, we strive to provide a work environment that fosters inclusion and diversity, ensures every voice can be heard, and enables employees to achieve their full potential. We aim to maintain a collaborative, supportive, and opportunity-rich culture that enhances innovation and employee engagement. Throughout the COVID-19 pandemic, our focus and priority have remained on the health, safety, and well-being of our employees. We implemented health and safety procedures throughout our sites, distributed relief and recovery funds to employees, and offered benefits and other employee assistance programs to those experiencing disruptions due to the pandemic.
Community. We believe that positively involving our employees and giving back to our community is central to our culture and aligned withan expression of our Core Values. Our charitable giving includes employee volunteer hours, the Lam Research Foundation grant program, and employee giving.
donations. Our global philanthropy and volunteerism programs provide financial and human services to improve education and quality of life in the communities in which we operate. As a successful equipment supplier in the technology industry, we encourage students to pursue science, technology,
engineering and math, or math (STEM)“STEM,” careers, engage in activities
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 17 |
that give young people visibility into careers in the semiconductor industry, and support those students who demonstrate excellence in the STEM fields. We are also committed to creating positive impacts in communities around the world by contributing to local, national, and international organizations that support community needs such as hunger, food and water security, disadvantaged children and senior citizens, health improvement, and environmental protection. As part of our COVID-19 relief and recovery efforts, we have donated funds to our communities for both short-term assistance and longer-term recovery, including a portion dedicated to organizations supporting Black communities that have been disproportionately affected by the pandemic. We have also donated funds in support of initiatives fighting social injustice, by contributing to organizations that are working to end systemic racism through education, reform, and legislation.
OperationsSustainable Operations.:Environment and Safety. Lam ResearchAs the world tackles climate change and other critical environmental issues, we seek to do our part by responsibly managing our impact with global goals for energy efficiency, greenhouse gas emissions, water conservation, and waste reduction. We carefully monitorsmonitor and manages itsmanage our environmental impact across our business and work to implement cost-effective best practices, focusing our efforts where we believe we can have the business –biggest long-term impact. We look at impacts from procurement to manufacturing, during Rresearch and development, or “R&D,” and product design, and throughout a product’s lifecycle.
We carefully manage our greenhouse gas emissions, set goals, and report progress annually to the CDP (formerly the Carbon Disclosure Project) and through our annual CSR report. We aim to protect the health and safety of our personnel throughout our entire operation, including our offices, manufacturing sites, R&D centers, and our field team working at customer sites.
Products and Customers.We develop innovative products and solutions that meet or exceed safety requirements and incorporate energy efficiency features that benefit our customers and the environment. We also strive to extend the life of our products and solutions to enable our customers to realize greater value from our products with a potentially lower environmental impact.
Responsible and Accountable Global Supply Chain.Weunderstand the importance of an ethical and responsible supply chain, andwe engage with our suppliers to address a wide range of issues including human rights, supplier diversity, environmental impact, and mineral sourcing. We are a strong proponent of supply chain-related industry standards and have adopted the standard guidelines published by the Institute for Supply Management, or “ISM,” “Principles And Standards Of Ethical Supply Management Conduct With Guidelines.” In 2019, Lam joined as an affiliate member of the Responsible Business Alliance, or “RBA. We have also adopted the RBA Code of Conduct. All direct suppliers are expected to comply with our Global Supplier
Code of Conduct, which coversrequires suppliers’ adherence to both the RBA Code of Conduct and the ISM Guiding Principles, which cover ethics, integrity, transparency, anti-corruption, and responsible business practices. Additionally, all direct material suppliers must comply with our conflict minerals, and human trafficking, policies.
Lam Research is a proponent of industry standardsenvironmental sustainability, and has adopted the standard guidelines published by the Institute for Supply Management (ISM), “Principles And Standards Of Ethical Supply Management Conduct With Guidelines.” Lam Research has also adopted the Responsible Business Alliance (RBA) Code of Conduct.social responsibility.
For more information about our corporate social responsibility efforts, please refer to our CSR report available on the Company’s website.Corporate Social Responsibility section of our website at https://www.lamresearch.com/company/corporate-social-responsibility/.
Our director compensation is designed to attract and retain high-caliber directors and to align director interests with those of stockholders. Director compensation is reviewed and determined annually by the Board (in the case of Mr. Anstice,Archer, as our president and CEO, by the independent members of the Board, and Mr. Newberry, by all other independent members of the Board) uponfollowing a recommendation from the compensation and human resources committee.Non-employee director compensation (including the compensation of Mr. Newberry, who is currently ournon-employee chairman) is described below. Mr. Anstice,Archer, whose compensation as president and CEO is described below under “Compensation Matters –- Executive Compensation and Other Information –- Compensation Discussion and Analysis,” does not receive additional compensation for his service on the Board.
Non-employee director compensation.Non-employee directors receive annual cash retainers and equity awards. The chairmanchair of the Board, the lead independent director (if applicable), and committee chairs and members receive additional cash retainers.Non-employee directors who join the Board or a committeemid-year receivepro-rated cash retainers and equity awards, as applicable. Ournon-employee director compensation program is based on service during the calendar year; however, SEC rules require us to report compensation in this proxy statement on a fiscal-yearfiscal year basis. Cash compensation paid tonon-employee directors for the fiscal year ended June 24, 2018,28, 2020, together with the annual cash compensation program components in effect for calendar years 20182020 and 2017,2019, is shown below.
Figure 9.17. Director Annual Retainers
Annual Retainers | Calendar Year 2018 ($) | Calendar Year 2017 ($) | Fiscal Year 2018 ($) | |||||||||||||||||||||
Annual Retainers(1) | Calendar Year 2020 ($) | Calendar Year 2019 ($) | Fiscal Year 2020 ($) | |||||||||||||||||||||
Non-employee Director
|
|
75,000
|
|
|
65,000
|
|
|
70,000
|
| 75,000 | 75,000 | 75,000 | ||||||||||||
Chairman
|
|
120,000
|
|
|
160,000
|
|
|
140,000
|
| |||||||||||||||
Lead Independent Director
|
|
27,500
|
|
|
22,500
|
|
|
25,000
|
| |||||||||||||||
Chair | 130,000 | 120,000 | 130,000 | |||||||||||||||||||||
Audit Committee – Chair
|
|
30,000
|
|
|
30,000
|
|
|
30,000
|
| 30,000 | 30,000 | 30,000 | ||||||||||||
Audit Committee – Member
|
|
12,500
|
|
|
12,500
|
|
|
12,500
|
| 12,500 | 12,500 | 12,500 | ||||||||||||
Compensation Committee – Chair
|
|
20,000
|
|
|
20,000
|
|
|
20,000
|
| |||||||||||||||
Compensation Committee – Member
|
|
10,000
|
|
|
10,000
|
|
|
10,000
|
| |||||||||||||||
Compensation and Human Resources Committee – Chair | 20,000 | 20,000 | 20,000 | |||||||||||||||||||||
Compensation and Human Resources Committee – Member | 10,000 | 10,000 | 10,000 | |||||||||||||||||||||
Nominating and Governance Committee – Chair
|
|
15,000
|
|
|
15,000
|
|
|
15,000
|
| 15,000 | 15,000 | 15,000 | ||||||||||||
Nominating and Governance Committee – Member
|
|
5,500
|
|
|
5,000
|
|
|
5,250
|
| 5,500 | 5,500 | 5,500 |
(1) | Each Director is entitled to an annual non-employee director cash retainer. Directors are also entitled to supplemental retainer fees if they have board leadership positions (e.g., chair) and/or are either committee chairs or members. |
Each non-employee director also receives an annual equity grant on the first Friday following the annual meeting withmeeting. For the grants made in November 2019, these had a targeted grant date value equal to $200,000$210,000 (the number of RSUs subject to the award is determined by dividing $200,000$210,000 by the closing price of a share of Company common stock as of the date of grant, rounded down to the nearest 10 shares). These grants generally vest on October 31 in the year following the grant and are subject to the terms and conditions of the Company’s 2015 Stock Incentive Plan, as amended, or the “2015 Plan,” and the applicable award agreements. These grants immediately vest in full: (1) if anon-employee director dies or becomes subject to a “disability” (as determined pursuant to the 2015 Plan), (2) upon the occurrence of a “Corporate Transaction” (as defined in the 2015 Plan), or
Continues on next page u
(3) on the date of the annual meeting, if the annual meeting during the year in which the award was expected to vest occurs prior to the vest date and thenon-employee director is notre-elected or retires or resigns effective immediately prior to the annual meeting.Non-employee directors who commence service after the annual award has been granted receive on the first Friday following the first regularly scheduled, quarterly Board meeting attended apro-rated grant based on the number of regularly scheduled, quarterly Board meetings remaining in the year as of the effective date of the director’s appointment. Thepro-rated grants are subject to the same vesting schedule, terms and conditions as the annual equity awards, except that if the award is granted on the first Friday following the regularly scheduled quarterly November Board meeting, the grant vests immediately.
On November 10, 2017,8, 2019, each director at such time other than Mr. Ansticethe president and CEO received a grant of 960770 RSUs for service during calendar year 2018.
2020. Unless there is an acceleration event, these RSUs granted to each current director for service during calendar year 20182020 will vest in full on October 31, 2018,2020, subject to the director’s continued service on the Board.
Chairman compensation. Mr. Newberry, in addition to his regular compensation as anon-employee director, receives an additional cash retainer of $120,000 on the same date.
Mr. Newberry was eligible to participate through 2014 in the Company’s Elective Deferred Compensation Plan that is generally applicable to executives of the Company, subject to the general terms and conditions of such plan. He continues to maintain a balance in the plan until he no longer performs service for the Company as a director but is no longer eligible to defer any compensation into the plan.
The following table shows compensation for fiscal year 20182020 for persons serving as directors during fiscal 2018year 2020 other than Mr. Anstice:Archer:
Figure 10. FY201818. FY2020 Director Compensation
Director Compensation for Fiscal Year 2018 | ||||||||||||||||||||||||||||||||
Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | All Other Compen- sation ($)(2) | Total ($) | |||||||||||||||||||||||||||||
Stephen G. Newberry | 195,000 | (3) | 197,395 | (4) | 28,456 | 420,851 | ||||||||||||||||||||||||||
Director Compensation for Fiscal Year 2020 | Director Compensation for Fiscal Year 2020 | |||||||||||||||||||||||||||||||
| Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other ($)(2) | Total ($) | ||||||||||||||||||||||||||||
Sohail U. Ahmed | 112,500 | (3) | 305,059 | (4)(5) | — | 417,559 | ||||||||||||||||||||||||||
Eric K. Brandt | 105,000 | (5) | 197,395 | (4) | — | 302,395 | 110,500 | (6) | 206,476 | (4) | — | 316,976 | ||||||||||||||||||||
Michael R. Cannon | 93,000 | (6) | 197,395 | (4) | — | 290,395 | 102,500 | (7) | 206,476 | (4) | — | 308,976 | ||||||||||||||||||||
Youssef A.El-Mansy | 85,000 | (7) | 197,395 | (4) | 28,456 | 310,851 | 85,000 | (8) | 206,476 | (4) | 33,516 | 324,992 | ||||||||||||||||||||
Christine A. Heckart | 87,500 | (8) | 197,395 | (4) | — | 284,895 | ||||||||||||||||||||||||||
Young Bum (YB) Koh | 75,000 | (9) | 197,395 | (4),(10) | — | 272,395 | ||||||||||||||||||||||||||
Christine A. Heckart(9) | — | — | — | — | ||||||||||||||||||||||||||||
Catherine P. Lego | 100,500 | (11) | 197,395 | (4) | 27,150 | 325,045 | 100,500 | (10) | 206,476 | (4) | 32,096 | 339,072 | ||||||||||||||||||||
Bethany J. Mayer | 131,250 | (11) | 305,059 | (4)(5) | — | 436,309 | ||||||||||||||||||||||||||
Stephen G. Newberry(9) | — | — | 33,516 | 33,516 | ||||||||||||||||||||||||||||
Abhijit Y. Talwalkar | 127,500 | (12) | 197,395 | (4) | — | 324,895 | 220,500 | (12) | 206,476 | (4) | — | 426,976 | ||||||||||||||||||||
Lih Shyng (Rick L.) Tsai | 75,000 | (13) | 197,395 | (4) | — | 272,395 | 85,000 | (13) | 206,476 | (4) | — | 291,476 | ||||||||||||||||||||
Leslie F. Varon | 131,250 | (14) | 305,059 | (4)(5) | — | 436,309 |
(1) | The amounts shown in this column represent the grant date fair value of unvested RSU awards granted during fiscal year |
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 19 |
(2) | Represents the portion of medical, dental, and vision premiums paid by the Company. |
(3) | Mr. |
(4) | On November |
(5) | On August 30, 2019, Mr. Ahmed and Mses. Mayer and Varon each received a prorated annual grant for calendar year 2019 of 470 RSUs based on the $210.51 closing price of Lam’s common stock and the target value of $100,000, rounded down to the nearest 10 shares. |
(6) | Mr. Brandt received |
|
(7) |
|
|
Dr. |
(9) | Ms. Heckart resigned from and Mr. Newberry retired from the Board effective as of November 4, 2019 and as a result these former directors did not receive annual |
(10) |
|
Ms. Lego received $100,500, representing her annual retainers for calendar year 2020 of $75,000 |
(11) | Ms. Mayer received $131,250, representing her annual retainers for calendar year 2020 of $75,000 for service as a director and $12,500 for service as a member of the audit committee, and prorated annual retainers for calendar year 2019 of $37,500 for service as a director and $6,250 for service as a member of the audit committee. |
(12) | Mr. Talwalkar received |
(13) | Dr. Tsai received $85,000, representing his annual retainers for calendar year 2020 of $75,000 for service as a director and $10,000 for service as a member of the compensation and human resources committee. |
(14) | Ms. Varon received $131,250, representing her annual retainers for calendar year 2020 of $75,000 for service as a director and $12,500 for service as a member of the audit committee, and prorated annual |
Other benefits. Any members of the Board enrolled in the Company’s health plans on or prior to December 31, 2012, can continue to participate after retirement from the Board in the Company’s Retiree Health Plans. The Board eliminated this benefit for any person who became a director after December 31, 2012. The most recent valuation of the Company’s accumulated post-retirement benefit obligation under Accounting Standards Codification 715, Compensation-Retirement Benefits as of June 24, 2018,28, 2020, for eligible former directors and the current directors who may become eligible, is shown below. Factors affecting the amount of post-retirement benefit obligation include current age, age at retirement, coverage tier (e.g., single, plus spouse, plus family), interest rate, and length of service.
Figure 11. FY201819. FY2020 Accumulated Post-Retirement Benefit Obligations
Name | Accumulated Post-Retirement Benefit Obligation, as of June ($) | |||
Sohail U. Ahmed | — | |||
Eric K. Brandt | — | |||
Michael R. Cannon | — | |||
Youssef A. El-Mansy | 594,000 | |||
Christine A. Heckart | — | |||
Catherine P. Lego | 481,000 | |||
Bethany J. Mayer | — | |||
Stephen G. Newberry | 849,000 | |||
Abhijit Y. Talwalkar |
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
Lih Shyng (Rick L.) Tsai | — | |||
Leslie F. Varon | — |
Executive Compensation and Other Information
Compensation Discussion and Analysis
This Compensation Discussion and Analysis, or “CD&A,” describes our executive compensation program. Our CD&A discusses compensation earned by our fiscal year 2020 “Named Executive Officers,” or “NEOs,” who are as follows:
Figure 20. FY2020 NEOs
Named Executive Officer | Position(s) | |
Timothy M. Archer | President and Chief Executive Officer | |
Douglas R. Bettinger | Executive Vice President and Chief Financial Officer | |
Richard A. Gottscho | Executive Vice President, Chief Technology Officer | |
Patrick J. Lord | Executive Vice President, Customer Support Business Group and Global Operations | |
Seshasayee (Sesha) Varadarajan | Senior Vice President and General Manager, Deposition Business Unit |
Our CD&A is organized according to the following structure:
Continues on next page u
Lam Research Corporation |
Executive Compensation and Other Information
Compensation Discussion and Analysis
This Compensation Discussion and Analysis, or “CD&A,” describes our executive compensation program. It is organized into the following four sections:
|
|
|
|
Our CD&A discusses compensation earned by our fiscal year 2018 “Named Executive Officers,” or “NEOs,” who are as follows:
Figure 12. FY2018 NEOs
I. OVERVIEW OF EXECUTIVE COMPENSATION
To align with stockholders’ interests, our executive compensation program is designed to foster apay-for-performance culture and achieve the executive compensation objectives set forthdescribed in “Executive Compensation Philosophy and Program Design—Design - Executive Compensation Philosophy” below. We have structured our compensation program and payouts to reflect these goals. Highlights of our executive compensation program are listed in “Proxy Statement Summary – Figure 7. Executive Compensation Highlights” above. Our president and CEO’s compensation in relation to each of our revenue and net income, isas well as the Company’s cumulative five-year total shareholder return on common stock compared against the cumulative returns of other indexes, are shown below.
Figure 13. FY2013-FY2018 21. FY2015-FY2020 CEO Pay for Performance
CEO Pay for Performance
CEO Pay for performance net income revenue CEO total compensation (1)(2) Total compensation (in thousands) revenue and Net Income (in thousands)
(1) | “CEO Total Compensation” consists of base salary, annual incentive payments, accrued values of the cash payments under the long-term incentive program when applicable and grant date fair values of equity-based awards both under the long-term incentive program or otherwise, and all other compensation as reported in the “Summary Compensation Table” below. |
The CEO Total Compensation for fiscal year |
The graph below compares Lam’s cumulative five-year total shareholder return on common stock with the cumulative total returns of the Nasdaq Composite Total Return Index, the Standard & Poor’s (“S&P”) 500 (TR) Index, and the Philadelphia Semiconductor Sector Total Return Index. The graph tracks the performance of a $100 investment in our common stock and in each of the indices (with the reinvestment of all dividends) for the five years ended June 28, 2020.
Figure 22. Comparison of Cumulative Five-Year Total Return
COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN*
Among the Company, the Philadelphia Semiconductor Sector Total Return Index,
the Nasdaq Composite Total Return Index, and
the S&P 500 (TR) Index
* | $100 invested on |
* | Copyright © 2020 Standard & Poor’s, a |
To understand our executive compensation program fully, we believe it is important to understand:
our business, our industry environment, and our financial performance; and
our executive compensation philosophy and program design.
Our Business, Our Industry Environment, and Our Financial Performance
Lam Research is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. We have built a strong global presence with core competencies in areas like nanoscale applications enablement, chemistry, plasma and fluidics, advanced systems engineering, and a broad range of operational disciplines. Our products and services are designed to help our customers build smaller, faster, and better performing
devices that are used in a variety of electronic products, including mobile phones, personal computers, servers, wearables, automotive devices, storage devices, and networking equipment. Our vision is to realize full value from natural technology extensionsAn overview of our company.
Our customer base includes leading semiconductor memory, foundry,business and integrated device manufacturers that make products such asnon-volatile memory, DRAM memory, and logic devices. We aim to increase our strategic relevance with our customers by contributing more to their continued success. Our core technical competencyindustry environment is integrating hardware, process, materials, software, and process control enabling resultsset forth in “Proxy Statement Summary” on the wafer.
Semiconductor manufacturing, our customers’ business, involves the complete fabrication of multiple dies or integrated circuits on a wafer. This involves the repetition of a set of core processes and can require hundreds of individual steps. Fabricating these devices requires highly sophisticated process technologies to integrate an increasing array of new materials with precise control at the atomic scale. Along with meeting technical requirements, wafer processing equipment must deliver high productivity and be cost-effective.
Demand from the Cloud, Internet of Things (IoT), and other markets is driving the need for increasingly powerful and cost-efficient semiconductors. At the same time, there are growing technical challenges with traditional scaling. These trends are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical 3D scaling strategies as well as multiple patterning to enable shrinks.
We believe we are in a strong position with our leadership and competency in deposition, etch, and clean to facilitate some of the most significant innovations in semiconductor device manufacturing. Several factors create opportunity for sustainable differentiation for us: (i) our focus on research and development, with severalon-going programs related to sustaining engineering, product and process development, and concept and feasibility; (ii) our ability to effectively leverage cycles of learning from our broad installed base; (iii) our collaborative focus with ecosystem partners; and (iv) our focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.page 1.
Although we have a June fiscal year end, our executive compensation program is generally designed and oriented on a calendar-yearcalendar year basis to correspond with our calendar-year-basedcalendar year-based business planning. This CD&A generally reflects a calendar-yearcalendar year, or “CY”, orientation rather than a fiscal-yearfiscal year, or “FY”, orientation, as shown below. The Executive Compensation Tables at the end of this CD&A are based on our fiscal year, as required by SEC regulations.
Figure 23. Executive Compensation Calendar-Year Orientation
Fiscal Year 2020 | ||||||
Relevant for executive compensation tables | ||||||
Calendar Year 2019 | Calendar Year 2020 | |||||
Relevant for compensation program design and orientation | ||||||
Jan-Jun | Jul-Dec | Jan-Jun | Jul-Dec | |||
2019 | 2020 |
In calendar year 2019 demand for semiconductor equipment declined relative to calendar year 2018, with memory segment spending in particular declining significantly year-over-year. Against this challenging backdrop, Lam delivered strong financial performance.
Continues on next page u
Lam Research Corporation |
Figure 14. Executive Compensation Calendar-Year Orientation
Fiscal Year 2018 Relevant for executive compensation tables Calendar Year 2017 Calendar Year 2018 Relevant for compensation program design and orientation
In calendar year 2017, demand for semiconductor equipment continued to increase relative to calendar year 2016, as technology inflections continued to lead to higher investments from our customers. Against this backdrop, Lam delivered another year of record financial performance.
Highlights for calendar year 2017:2019:
achieved record revenues of approximately $9.6$9.5 billion for the calendar year, representing a 50% increase over calendar year 2016;year;
generated operating cash flow of approximately $2.0$2.6 billion, which represents approximately 21%27% of revenues; and
generated sufficient cash flow to support payment of approximately $293$662 million in dividends to stockholders, a 53%31% increase compared to calendar year 2016.2018.
In the first half of calendar year 2018, investments for2020, wafer fabrication equipment spending were strong as customers transition to next-generation technology nodes, whichhas strengthened in the NAND and Foundry/Logic segments, driven by increases in semiconductor demand and our customers’ technology-oriented investments. The COVID-19 pandemic has created volatility for the semiconductor industry, but we are increasingly complexseeing improvements in our own operations and costlier to produce.those of our suppliers.
In an improved wafer fabrication spending environment, Lam has continued to generatedelivered solid operating income and cash generation with revenues of $6.0$5.3 billion, and operating cash flows from operations of $1.8$1.4 billion earned from the March and June 20182020 quarters combined.
Executive Compensation Philosophy and Program Design
Executive Compensation Philosophy
The philosophy of our compensation and human resources committee that guided this year’s awards and payout decisions is that our executive compensation program should:
provide competitive compensation to attract and retain top talent;
provide total compensation packages that are fair to employees and reward corporate, organizational, and individual performance;
align pay with business objectives while driving exceptional performance;
optimize value to employees while maintaining cost-effectiveness to the Company;
create stockholder value over the long term;
align our annual program to annual performance and our long-term program to longer-term performance;
recognize that a long-term, high-quality management team is a competitive differentiator for Lam, enhancing customer trust/market share and, therefore, stockholder value; and
provide rewards when results have been demonstrated.
Our compensation and human resources committee’s executive compensation objectives are to motivate:
performance that creates long-term stockholder value;
outstanding performance at the corporate, organization, and individual levels; and
retention of a long-term, high-quality management team.
Program Design
Our program design incorporates an annual review of the compensation elements. However, a review can be undertaken whenever there is a change in roles or responsibilities or a new hire joins the Company.
Our program design uses a mix of annual and long-term components, and a mix of cash and equity components. Our executive compensation program includes base salary,salary; an annual incentive program, or “AIP,” and“AIP”; a LTIP,long-term incentive program, or “LTIP”; promotion, retention and/or new hire awards whenever necessary; as well as stock ownership guidelines and a compensation recovery policy. The primary elements of our executive compensation program are listed in Figure 24 below and are described in more detail in “III. Primary Components of NEO Compensation; CY2019 Compensation Payouts; CY2020 Compensation Targets and Metrics” below.
Figure 24. Compensation Components
Element | How it is Paid | Purpose/Design | ||
Base Salary | Cash | We believe the purpose of base salary is to provide competitive compensation to attract and retain top talent and to provide employees, including our NEOs, with a fixed and fair amount of compensation for the jobs they perform. Accordingly, we seek to ensure that our base salary levels are competitive in reference to Peer Group practice and market survey data. | ||
Annual Incentive Program (AIP) | Cash | Our annual incentive program is designed to provide annual, performance-based compensation that is based on the achievement of pre-set annual financial, strategic, and operational objectives aligned with outstanding performance, and will allow us to attract and retain top talent, while maintaining cost-effectiveness to the Company. For more details regarding the design of the annual incentive program, see “III. Primary Components of NEO Compensation; CY2019 Compensation Payouts; CY2020 Compensation Targets and Metrics - Annual Incentive Program” below. | ||
Long-Term Incentive Program (LTIP) | 50% Market-based PRSUs 50% combination of stock options and service-based RSUs | Our long-term incentive program is designed to attract and retain top talent, provide competitive levels of compensation, align pay with stock performance over a multi-year period, reward our NEOs for outstanding Company performance, and create stockholder value over the long-term. The program design provides that 50% of the target award opportunity is awarded in Market-based PRSUs and the remaining 50% in a combination of stock options and service-based RSUs, with at least 10% of the award in each of these two vehicles. In 2020, the percentages of the LTIP target award opportunity awarded in stock options and service-based RSUs were 10% and 40%, respectively. |
As illustrated below, our program design is weighted toward performance and stockholder value. The performance-based program components include AIPannual incentive program cash payouts and market-based equity and stock option awards under the LTIP.
Figure 15. NEO Compensation Target Pay Mix Averages(1)
Calendar Year 201825. CY2020 Average NEO Target Pay Mix 58% Performance-Based(2) Calendar Year 2017 Average NEO Target Pay Mix 58% Performance-Based(2) Calendar Year 2016 Average NEO Target Pay Mix 65% Performance-Based (2) Performance-Based Compensation(3) Non-Performance-Based Compensation
(1) |
|
The Company’s LTIP design provides that 50% of the target award opportunity is awarded in Market-based PRSUs and the remaining 50% in a combination of stock options and service-based RSUs with at least 10% of the award in each of these two vehicles. In |
For purposes of this illustration, we include Market-based PRSUs and stock options as performance-based, but do not classify service-based RSUs as performance-based. |
For senior vice presidents and above, we also have stock ownership guidelines that foster a long-term orientation. See next paragraph for additional information.
Our stock ownership guidelines for our NEOs and certain other senior executives are shown below. The requirements are specified in the alternative of shares or dollars to allow for stock price volatility. Ownership levels as shown below must
be achieved within five years of appointment to one of the below positions. Increased requirements due to promotions or an increase in the ownership guideline must be achieved within five years of promotion or a change in the guidelines. At the end of fiscal year 2018, all NEOs were in compliance with our stock ownership guidelines or have a period of time remaining under the guidelines to meet the required ownership level.
Figure 16. Executive Stock Ownership Guidelines
|
| |
|
| |
|
| |
|
|
Compensation Recovery, or “Clawback” Policy
Our executive officers covered by section 16 of the Exchange Act are subject to the Company’s compensation recovery, or “clawback,” policy. The clawback policy was adopted in August 2014 and will enable us to recover, within 36 months
of the issuance of the original financial statements, the excess amount of cash incentive-based compensation issued starting in calendar year 2015 to officers covered by section 16 of the Exchange Act when a material restatement of financial results is required. A covered individual’s fraud must have materially contributed to the need to issue restated financial statements
Continues on next page u
Lam Research Corporation |
in order for the clawback policy to apply to that individual. The recovery of compensation is not the exclusive remedy available in the event that the clawback policy is triggered.
Executive Compensation Highlights2019 Say on Pay Voting Results and Stockholder Outreach
HighlightsWe evaluate our executive compensation program and practices at least annually. Among other things, we consider the outcome of our most recent advisory vote on executive compensation, or Say on Pay, and input we receive from our stockholders. The primary components of our executive compensation program have remained consistent over the last several years, and until last year, stockholders have historically cast greater than 90% of votes in favor of the Say on Pay proposal, as shown in Figure 26 below. In 2019, our stockholders approved our 2019 Say on Pay proposal by a vote of 67.1% of votes cast in favor, 29.3% cast against, and 3.6% abstaining. Excluding abstentions, 69.6% of votes were cast for, as compared to 30.4% of votes cast against.
Figure 26. Historical Say on Pay Votes (1)
(1) | Percentages represented are as a percentage of votes cast. Abstentions are treated as votes cast and have the effect of “no” votes with respect to the Say on Pay proposal. |
While we believe that our most recent Say on Pay vote signifies our stockholders’ continuing support of our executive compensation program and practices, we recognize that some of our stockholders have concerns regarding certain compensation decisions made in fiscal year 2019, which contributed to the lower level of support our Say on Pay proposal received in 2019.
As is described above in more detail above in “Governance Matters – Corporate Governance – Stockholder Engagement,” we engage regularly with our stockholders, typically outside of our proxy solicitation period, on matters including compensation. In 2019, after Institutional Shareholder Services, or ISS, recommended that stockholders vote against our Say on Pay proposal, we engaged in additional outreach to our stockholders during the proxy solicitation period, in order to understand and address any concerns they might have relating to executive compensation and our Say on Pay proposal. The chair of our compensation and human resources committee, Catherine P. Lego, or our then-Lead Independent Director, Abhijit Y. Talwalkar, led these discussions.
The primary topic of discussion was the one-time issuance of promotion and retention equity awards that we granted to our CEO and CFO, respectively, in connection with our leadership transition that occurred at the end of 2018, and in particular, with the absence of performance-based vesting. In addition, some stockholders also expressed an interest in better understanding how the individual performance factor component of our annual incentive program is associated with the achievement of business results and supports our pay for performance philosophy. Figure 27 below summarizes what we heard from our stockholder outreach with respect to executive compensation, our perspective on those views, and what we are listeddoing in “Proxy Statement Summary – response.
Figure 6.27. Executive Compensation Highlights” above.Stockholder Outreach
What we heard from investors | Our perspective | What we are doing | ||||
Use and Structure of Special Equity Awards | Some stockholders were concerned by our issuance, in December 2018, of one time promotion or retention awards to two of our NEOs in connection with a management transition, and in particular, with the structure of these awards, including the lack of performance conditions. | We view the special equity awards as a one-time supplement to our regular compensation program that served a critical purpose in our management transition, by stabilizing our leadership structure, maintaining our focus on execution to its plans, and avoiding potential disruption and distraction at a critical time. | We do not anticipate granting significant one-time awards to current NEOs without a performance-based component. | |||
Our Regular Executive Compensation Program | Our stockholders generally view our executive compensation practices as appropriately aligning pay and performance. Some stockholders would like to see more disclosure relating to the individual performance factor component of the annual incentive program in order to better understand how the program supports pay for performance. Some stockholders also expressed interest in understanding whether our program includes goals and objectives related to ESG matters. | While we do not disclose in detail the specific metrics and goals that make up the individual performance factors for our NEOs, because they relate to strategic, operational, and organizational activities that we regard as competitively sensitive, we have an opportunity to better explain how the individual performance factors contribute to our business and financial performance and to explain how topics of interest to stockholders, such as ESG, may be reflected in individual performance factors. | We have added additional detail to better explain the linkage between the operating metrics we use to manage our business, and the individual performance factor metrics and goals against which our NEOs’ performance is assessed. For calendar year 2020, all of our NEOs have individual performance factor metrics and goals related to culture, talent, and inclusion and diversity as part of the annual incentive program. |
Other than the changes noted above, our compensation and human resources committee determined to maintain our executive compensation program and practices in their current form for calendar year 2020, in light of our stockholders’ continuing support.
II. EXECUTIVE COMPENSATION GOVERNANCE AND PROCEDURES
Role of the Compensation and Human Resources Committee
Our Board has delegated certain responsibilities to the compensation and human resources committee, or for purposes of this CD&A, the “committee,” through a formal charter. The committee(1)1 oversees the compensation programs in which our president and chief executive officer president and chief operating officer, andour CEO’s direct executive and senior vice president reports participate. The independent members of our Board approve the compensation packages and payouts for our CEO. The CEO is not present for any decisions regarding his compensation packages and payouts.
Committee responsibilities include, but are not limited to:
reviewing and approving the Company’s executive compensation philosophy, objectives, and strategies;
reviewing and approving the appropriate peer group companies for purposes of evaluating the Company’s compensation competitiveness;
causing the Board to perform a periodic performance evaluation of the CEO;
recommending to the independent members of the Board (as determined under both Nasdaq’s listing standards and section 162(m) of the Code)standards) corporate goals and objectives under the Company’s compensation plans, compensation packages (e.g., annual base salary level, annual cash incentive award, long-term incentive award and any employment agreement, severance arrangement,change-in-control arrangement, equity grant, or special or supplemental benefits, and any material amendment to any of the foregoing) as applicable to the CEO, and compensation payouts for the CEO;
annually reviewing with the CEO the performance of the Company’s other executive officers in light of the Company’s executive compensation goals and objectives and approving the compensation packages and compensation payouts for such individuals;
reviewing and recommending for appropriate Board action all cash, equity-based and other compensation packages, and compensation payouts applicable to the chairmanchair and other members of the Board; and
reviewing, and approving where appropriate, equity-based compensation plans.
The committee is authorized to delegate its authority and responsibilities as it deems proper and consistent with legal requirements to its members, any other committee of the Board andand/or one or more officers of the Company, in accordance with the provisions of
1 For purposes of this CD&A, a reference to a compensation action or decision by the committee with respect to our chief executive officer means an action or decision by the independent members of our Board after considering the recommendation of the committee and, in the case of all other NEOs, an action or decision by the committee.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 27 |
the Delaware General Corporation Law. For additional information on the committee’s responsibilities and authorities, see “Governance Matters—Matters - Corporate Governance—Governance - Board Committees—Committees - Compensation and Human Resources Committee” above.
In order to carry out these responsibilities, the committee receives and reviews information, analysis,analyses, and proposals prepared by our management and by the committee’s compensation consultant (see “Role of Committee Advisors” below).
The committee is authorized to engage its own independent advisors to assist in carrying out its responsibilities. The committee has engaged the services of Compensia, Inc., or “Compensia,” a national compensation consulting firm, as the committee’s compensation consultant. Compensia provides the committee with independent and objective guidance regarding the amount and types of compensation for our chairman,chair, non-employee directors, and executive officers, and how these amounts and types of compensation compare to other companies’ compensation practices, as well as guidance on market trends, evolving regulatory requirements, compensation of our independent directors, peer group composition, and other matters as requested by the committee.
Representatives of Compensia regularly attend committee meetings (including executive sessions without management present), communicate with the committee chair outside of meetings, and assist the committee with its consideration of performance metrics and goals. Compensia reports to the committee, not to management. At the committee’s request, Compensia meets with members of management to gather and discuss information that is relevant to advising the committee. The committee may replace Compensia or hire additional advisors at any time. Compensia has not provided any other services to the committee or to our management, and has received no compensation from us other than with respect to the services described above. The committee assessed the independence of Compensia pursuant to SEC rules and Nasdaq listing standards, including the following factors: (1) the absence of other services provided by it to the Company; (2) the fees paid to it by the Company as a percentage of its total revenue; (3) its policies and procedures to prevent conflicts of interest; (4) the absence of any
|
business or personal relationships with committee members; (5) the fact that it does not own any Lam common stock; and (6) the absence of any business or personal relationships with our executive officers. The committee assessed this information and concluded that the work of Compensia had not raised any conflict of interest.
Our CEO, with support from our human resources and finance organizations, develops recommendations for the compensation of our other executive officers. Typically, these recommendations cover base salaries, annual incentive program target award opportunities, long-term incentive program target award opportunities, and the criteria upon which these award opportunities may be earned, as well as actual payout amounts under the annual and long-term incentive programs.
The committee considers the CEO’s recommendations within the context of competitive compensation data, the Company’s compensation philosophy and objectives, current business conditions, the advice of Compensia, and any other factors it considers relevant. At the request of the committee, our chairman also provides input to the committee.
Our CEO attends committee meetings at the request of the committee but leaves the meeting for any deliberations related to and decisions regarding his own compensation, when the committee meets in executive session, and at any other time requested by the committee.
Peer Group Practices and Survey Data
In establishing the total compensation levels of our executive officers, as well as the mix and weighting of individual compensation elements, the committee monitors compensation data from a group of comparably sized companies in the technology industry, or the “Peer Group,” which may differ from peer groups used by stockholder advisory firms. The committee selects the companies constituting our Peer Group based on their comparability to our lines of business and industry, annual revenue, and market capitalization, and our belief that we are likely to compete with them for executive talent. Our Peer Group is focused on U.S.-based, public semiconductor, semiconductor equipment and materials companies, and similarly sizedsimilarly-sized high-technology equipment and hardware companies with a global presence and a significant investment in research and development. The table below summarizes how the Peer Group companies compare to the Company:
Figure 17. 201828. 2020 Peer Group Revenue and Market Capitalization
Metric | Lam Research ($M) | Target for Peer Group | Peer Group Median ($M) | |||||||
Revenue (last completed four quarters as of May 5, 2017)
|
|
7,215 |
|
0.33 to
|
|
4,769 |
| |||
Market Capitalization(30-day average as of May 5, 2017)
|
|
22,258 |
|
0.33 to
|
|
17,906 |
|
Metric | Lam Research ($M) | Target for Peer Group | Peer Group Median ($M) | |||||
Revenue (last completed reported four quarters as of June 18, 2019) | 10,418 | Approximately 0.33 to 3 times Lam | 6,237 | |||||
Market Capitalization (30-day average as of June 18, 2019) | 27,772 | Approximately 0.33 to 3 times Lam | 23,688 |
Based on these criteria, the Peer Group and targets may be modified from time to time. Our Peer Group was reviewed in July 2017August 2019 for calendar year 20182020 compensation decisions and based on the criteria identified above, three companies wereone company was added to the peer group (Microchip(Seagate Technology Incorporated, Texas Instruments Inc. and Western Digital Corporation)PLC) and one company (SanDisk Corporation) was removed.removed (Maxim Integrated Products, Inc.). Our Peer Group consists of the companies listed as follows:
Figure 18. CY201829. CY2020 Peer Group Companies
Advanced Micro Devices, Inc. | KLA Corporation | Seagate Technology PLC | ||
Agilent Technologies, Inc. | Microchip Technology Incorporated | Skyworks Solutions, Inc. | ||
| Micron Technology, Inc. | Texas Instruments Inc. | ||
Applied Materials, Inc. | NetApp, Inc. | Western Digital Corporation | ||
Broadcom Limited | NVIDIA Corporation | Xilinx, Inc. | ||
Corning Incorporated | ON Semiconductor Corporation |
| ||
|
Qualcomm Incorporated | |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
|
We derive revenue, market capitalization, and NEO compensation data from public filings made by our Peer Group companies with the SEC and from other publicly available sources. Radford Technology Survey data may be used to supplement compensation data from public filings as needed. The committee reviews compensation practices and selected data on base salary, bonus targets, total cash compensation, equity awards, and total compensation drawn from the Peer Group companies and/or the Radford Technology Survey as a reference to help ensure compensation packages are consistent with market norms.
Continues on next page u
Base pay levels for each executive officer are generally set with reference to market competitivemarket-competitive levels and in reflection of each officer’s skills, experiences, and performance. Variable pay target award opportunities and total direct compensation for each executive officer are generally designed to deliver market competitivemarket-competitive compensation for the achievement of stretch goals, with downside risk for underperforming and upside reward for overperforming. For those executive officers who are new to their roles, compensation arrangements may be designed to deliver below marketbelow-market compensation for a period of time. However, the committee does not “target” pay at any specific percentile. Rather, individual pay positioning depends on a variety of factors, such as prior job performance, job scope and responsibilities, skill set, prior experience, time in position, internal comparisons of pay levels for similar skill levels or positions, our goals to attract and retain executive talent, Company performance, and general market conditions.
Assessment of Compensation Risk
Management, with the assistance of Compensia, the committee’s independent compensation consultant, conducted a compensation risk assessment in 20182020 and concluded that the Company’s current employee compensation programs are not reasonably likely to have a material adverse effect on the Company’s business.
2017 Say on Pay Voting Results; Company ResponseTax and Accounting Considerations
Deductibility of Executive Compensation
Prior to 2018, and where applicable for grandfathered awards, section 162(m) of the Code imposed limitations on the deductibility for federal income tax purposes of compensation in excess of $1 million paid to our chief executive officer, and any of our three other most highly compensated executive officers (other than our chief financial officer) in a single tax year unless the compensation qualified as “performance-based compensation” within the meaning of the Code.
The committee considers a number of factors, including the deductibility of such compensation when making compensation decisions and retains the discretion to award compensation even if it is not deductible.
Taxation of “Parachute” Payments
Sections 280G and 4999 of the Code provide that “disqualified individuals” within the meaning of the Code (which generally includes certain officers, directors and employees of the Company) may be subject to additional tax if they receive payments or benefits in connection with a change in control of the Company that exceed certain prescribed limits. The Company or its successor may also forfeit a deduction on the amounts subject to this additional tax.
We evaluatedid not provide any of our executive compensation program annually.officers, any director, or any other service provider with a “gross-up” or other reimbursement payment for any tax liability that the individual might owe as a result of the application of sections 280G or 4999 during fiscal year 2020, and we have not agreed and are not otherwise obligated to provide any individual with such a “gross-up” or other reimbursement as a result of the application of sections 280G and 4999.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 29 |
Internal Revenue Code Section 409A
Section 409A of the Code imposes significant additional taxes on an executive officer, director, or service provider that receives non-compliant “deferred compensation” that is within the scope of section 409A. Among other things, section 409A potentially applies to cash awards under the LTIP, if any, the Elective Deferred Compensation Plan, certain equity awards, and severance arrangements.
To assist our employees in avoiding additional taxes under section 409A, we considerhave structured the outcomeLTIP, the Elective Deferred Compensation Plan, and our equity awards in a manner intended to qualify them for exclusion from, or compliance with, section 409A.
Accounting for Stock-Based Compensation
We follow Accounting Standards Codification (“ASC”) 718 for accounting for our stock options and other stock-based awards. ASC 718 requires companies to calculate the grant date “fair value” of our most recent Say on Pay votetheir stock option grants and input we receive from our stockholders. In 2017, our stockholders approved our 2017 advisory vote on executiveother equity awards using a variety of assumptions. This calculation is performed for accounting purposes. ASC 718 also requires companies to recognize the compensation with 94.78%cost of stock option grants and other stock-based awards in their income statements over the votes castperiod that an employee is required to render service in favor ofexchange for the advisory proposal. We believe that our most recent Say on Pay vote signifies our stockholders’ support of our executive compensation program and practices. We did not make any material changes to our programs and practices in fiscal year 2018.
option or other equity award.
III. PRIMARY COMPONENTS OF NAMED EXECUTIVE OFFICERNEO COMPENSATION; CALENDAR YEAR 2017CY2019 COMPENSATION PAYOUTS; CALENDAR YEAR 2018CY2020 COMPENSATION TARGETS AND METRICS
This section describes the components of our executive compensation program. It also describes, for each component, the payouts to our NEOs for calendar year 20172019 and the forward-looking actions taken with respect to our NEOs in calendar year 2018.2020.
We believe the purpose of base salary is to provide competitive compensation to attract and retain top talent and to provide compensation to employees, including our NEOs, with a fixed and fair amount of compensation for the jobs they perform. Accordingly, we seek to ensure that our base salary levels are competitive in reference to Peer Group practice and market survey data. Adjustments to base salary are generally considered by the committee each year in February.
For calendar years 20182020 and 2017,2019, base salaries for NEOs were determined by the committee in February of each year (other than the calendar year 2019 base salary for Mr. Bettinger, which was determined by the committee in November 2018 in connection with the expansion of the scope of his responsibilities) and became effective on March 1 or the first day of the pay period that included March 1 (if earlier), based on the factors described above. The following base salary adjustments for 20172020 were made to remain competitive againstrelative to our Peer Group and reflect performance as follows: Mr. Anstice’sArcher’s base salary was increased by 3.5%5%, Mr. Archer’sBettinger’s base salary was increased by 3.0%3%, Dr. Meikle’sGottscho’s base salary was increased by 2.4%2%, and Mr. Bettinger’sDr. Lord’s base salary was increased by 1.5%10% in connection with his promotion to executive vice president and increased scope of responsibility as the executive responsible for both the customer support business group and global operations organization, and Mr. Varadarajan’s base salary was increased by 6%. The base salaries of the NEOs for calendar years 20182020 and 20172019 are shown below.
Figure 19.30. NEO Annual Base Salaries
Named Executive Officer
|
Annual Base
|
Annual Base
| Annual Base Salary ($) | Annual Base Salary ($) | ||||||||||||
Martin B. Anstice |
|
1,025,000 |
|
|
990,000 |
| ||||||||||
Timothy M. Archer |
|
688,418 |
|
|
668,367 |
| 1,050,000 | 1,000,000 | ||||||||
Douglas R. Bettinger |
|
592,770 |
|
|
584,010 |
| 659,200 | 640,000 | ||||||||
Richard A. Gottscho |
|
567,324 |
|
|
567,324 |
| 596,031 | 584,344 | ||||||||
Scott G. Meikle(3) |
|
430,000 |
|
|
420,000 |
| ||||||||||
Patrick J. Lord | 509,850 | 463,500 | ||||||||||||||
Seshasayee (Sesha) Varadarajan | 480,392 | 453,200 |
(1) | Effective February |
(2) | Effective February |
|
DesignAnnual Incentive Program Components
OurThe components of our annual incentive program, is designed to provide annual, performance-based compensation that: (1) is based on the achievement ofpre-set annual financial, strategic, and operational objectives aligned with outstanding performance, and (2) will allow us to attract and retain top talent, while maintaining cost-effectiveness to the Company. The committee establishes individual target award opportunities for each NEO as a percentage of base salary. Specific target award opportunities are determined based on job scope and responsibilities, as well as an assessment of Peer Group data. Awards have a maximum payment amount defined as a
multiple of the target award opportunity. The maximum award for 2017 and 2018 was set at 2.25 times target, consistent with prior years.
Annual incentive program components
Annual incentive program components, each of which plays a role in determining actual payments made, include:are described in Figure 31 below.
Figure 31. Annual Incentive Program Components
Component Funding Factor Create a maximum payout amount from which annual incentive program payouts may be made. Achievement of a minimum level of performance against the Funding Factor goals is required to fund any program payments. The committee may exercise negative (but not positive) discretion against the Funding Factor result. The committee primarily tracks the results of the Corporate Performance Factor and the Individual Performance Factors as a guide to using negative discretion. Generally, the entire funded amount is not paid out. Corporate Performance Factor A corporate-wide metric and goal that is designed to be a stretch goal. Applies to all NEOs. Individual Performance Factors Target Award Opportunity The Funding Factor is set by the committee to create a maximum payout amount from which annual incentive program payouts may be made. The committee may exercise negative (but not positive) discretion against the Funding Factor result, and generally the entire funded amount is not paid out. Achievement of a minimum level of performance against the Funding Factor goals is required to fund any program payments. In February 2017, for calendar year 2017, the committee setnon-GAAP operating income as a percentage of revenue as the metric for the Funding Factor, with the following goals:Role Extent of Discretion Permitted The committee may exercise positive or negative discretion, provided the Funding Factor result is not exceeded. Based on organization-specific metrics and goals that are designed to be stretch goals that apply to each individual NEO. The committee may exercise positive or negative discretion, provided the Funding Factor result is not exceeded. The committee establishes individual target award opportunities for each NEO as a percentage of base salary. Specific target award opportunities are determined based on job scope and responsibilities, as well as an assessment of Peer Group data. Awards have a maximum payment amount defined as a multiple of the target award opportunity. The maximum award for 2019 and 2020 was set at 2.25 times target, consistent with prior years. N/A a minimum achievement of 5%non-GAAP operating income as a percentage of revenue was required to fund any program payments, andachievement ofnon-GAAP operating income (as a percentage of revenue) greater than or equal to 22% resulting in the maximum payout potential of 225% of target,with actual funding levels interpolated between those points.The committee selectednon-GAAP operating income as a percentage of revenue because it believes that operating income as a percentage of revenue is the performance metric that best reflects core operating results.(2)Non-GAAP operating income is considered useful to investors for analyzing business trends and comparing performance to prior periods. By excluding certain costs and expenses that are not indicative of core results,non-GAAP results are more useful for analyzing business trends over multiple periods.As a guide for using negative discretion against the Funding Factor results and forFor making payout decisions, the committee primarily tracks the results of the following two components that are weighted equally in making payout decisions, and against which discretion may be applied in a positive or
negative direction, provided the Funding Factor result is not exceeded:
The specific metricsmetric and goals, and their relative weightings,goal for the Corporate Performance Factor, and the relative weightings of the Corporate Performance Factor and the Individual Performance Factors, are determined by the committee based uponconsidering the recommendation of our CEO,CEO. The specific metric and goals for the Individual Performance Factors are determined by our CEO, or in the case of the CEO, by the committee.
The metrics and goals for the Corporate and Individual Performance Factors are set annually.annually in connection with our annual business planning cycle, and are directly connected to our annual business plans and goals. Goals are set depending on the business environment ensuringand the Company’s annual objectives and strategies, encompassed in the Annual Operating Plans for the company and the organizations managed by each of the NEOs, to ensure that they areremain stretch goals regardless of changes in the business environment.environment, which can vary significantly from year-to-year in our industry. Accordingly, as business conditions improve, goals are setcalibrated to require better performance, and if business conditions deteriorate, goals are setcalibrated to requireincentivize stretch performance under more difficult conditions. The interplay between our corporate planning cycle and our compensation planning and evaluation cycle is summarized in Figure 32 below.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 31 |
Figure 32. Annual Planning and Compensation Decision Cycle
We believe that, over time, outstanding business results create stockholder value. Consistent with this belief, multiple performance-based metrics(non-GAAP operating income, product market share, and strategic, operational, and organizational metrics)metrics embodied in organizational Annual Operating Plans) are established for our NEOs as part of the Corporate and Individual Performance Factors.
We believe the metrics and goals set under this program, together with the exercise of discretion by the committee as described above, have been effective to motivate our NEOs and the organizations they lead, and to achievepay-for-performance results.
|
Continues on next page u
Figure 20.33. CY2017-CY2019 Annual Incentive Program Payouts
Calendar Year | Average NEO’s Annual Incentive Payout as % of Target Award Opportunity | Business Environment | ||||
2017 |
|
204 |
|
Strong operating performance and continued expansion of served available markets, supported by overall economic environment. Healthy demand for semiconductor equipment driven by capacity and technology investments.
| ||
2016 |
|
166 |
|
Strong operating performance and continued expansion of served available markets, supported by stable economic conditions. Healthy demand for semiconductor equipment driven by capacity and technology investments.
| ||
2015 |
|
159 |
|
Strong operating performance and expansion of served available markets, supported by stable economic conditions. Robust demand for semiconductor equipment driven by both capacity and technology investments.
|
Calendar Year | Average NEO’s Annual Incentive Payout as % of Target Award Opportunity | Business Environment | ||||
2019 | 97 | Strong revenue, profitability, and cash generation performance despite an overall decrease in demand for semiconductor equipment driven by a decrease in memory investments partially offset by foundry/logic spending. | ||||
2018 | 137 | Strong operating performance and continued expansion of served available markets. Growth in demand for semiconductor equipment driven by the memory segment for both capacity and technology investments. | ||||
2017 | 204 | Strong operating performance and continued expansion of served available markets, supported by overall economic environment. Healthy demand for semiconductor equipment driven by capacity and technology investments. |
Calendar year 2017 annual incentive program parameters and payout decisionsYear 2019 Annual Incentive Program Parameters
In February 2017,2019, the committee set the calendar year 20172019 target award opportunityopportunities and established the metrics and goals for the Funding Factor, the metrics and annual goals for the Corporate Performance Factor, and the metrics and goals were established for the Individual Performance Factors for each then-employed NEO, exceptNEO.
2019 Annual Incentive Program Funding Factor. In February 2019, the committee set non-GAAP operating income2 as a percentage of revenue, or “non-GAAP operating profit,” as the metric for Dr. Meikle whose metrics and goalsthe Funding Factor for his Individual Performance Factor were determined in July 2017 in conjunctioncalendar year 2019, with the commencementfollowing goals:
a minimum achievement of his employment. In February 2018,5% non-GAAP operating profit was required to fund any program payments, and
achievement of non-GAAP operating profit greater than or equal to 20% would result in the maximum funding of 225% of target,
with actual funding levels interpolated between those points.
The committee selected non-GAAP operating profit as the performance metric because it believes that it is the performance metric that best reflects core operating results. Non-GAAP operating profit is considered useful to investors for analyzing business trends and comparing performance to prior periods. By excluding certain costs and expenses that are not indicative of core results, non-GAAP results are more useful for analyzing business trends over multiple periods.
2Non-GAAP operating income is derived from GAAP results, with charges and credits in the actualfollowing line items excluded from GAAP results under these factorsfor applicable quarters during fiscal years 2020 and made payout decisions for the calendar year 2017 program, all as described below.2019: amortization related to intangible assets acquired through certain business combinations; gains and losses on elective deferred compensation-related liability; and restructuring charges.
20172019 Annual Incentive Program Target Award Opportunities.The annual incentive program target award opportunities for calendar year 20172019 for each NEO were as set forth below in Figure 2136 in accordance with the principles set forthdescribed above under “Executive Compensation Governance and Procedures –- Peer Group Practices and Survey Data.”
20172019 Annual Incentive Program Corporate Performance Factor. In February 2017,2019, the committee setnon-GAAP operating income as a percentage of revenueprofit as the metric for the calendar year 20172019 Corporate Performance Factor, and set:
a goal of 22%26.5% of revenue for the year, which was designed to be a stretch goal, and which would result in a Corporate Performance Factor of 1.00; and
a maximum Corporate Performance Factor of 1.50 for the maximum payout.
These goals were designed to be stretch goals. Actualnon-GAAP operating income as a percentage of revenue was 28.7% forAs shown in Figure 34, over the calendar year 2017. This performance which exceededyears from 2015 through 2018, we steadily raised the maximum Corporate Performance Factor resulted in a totalgoal year over year, as our outlook and the industry outlook improved. For calendar year 2019, the Corporate Performance Factor goal was set at a level that was only slightly below that of 1.50the prior year, even as the industry outlook for wafer fabrication equipment spending weakened, particularly within the memory segment, which was expected to decline from significant levels of investment in calendar year 2017.2018.
Figure 34. CY2015-CY2019 Corporate Performance Factor Goals
20172019 Annual Incentive Program Individual Performance Factors.For 2017,calendar year 2019, the performance metrics and goals for each NEO’s Individual Performance Factor were set based on anthe annual basisoperating plans for the organization or organizations managed by that NEO, which collectively were intended to drive overall company performance. For competitive reasons, we do not disclose in detail the specific metrics and weregoals that make up the Annual Operating Plans for our business units, because they relate to strategic, operational, and organizational activities that we regard as competitively sensitive. However, all such metrics and goals constitute specific strategic, operational, and organizational performance objectives, are designed to be stretch goals.goals, and are intended to deliver business results and create stockholder value. The calendar year 2019 metrics and goals that made up the Annual Operating Plans for our business units generally related to key areas such as financial performance, customer satisfaction, market share, product development and organizational development. For each of our NEOs, the relationship of their respective Individual Performance Factor for Mr. Anstice (as well as Mr. Archer)Factors for calendar year 20172019 to the Annual Operating Plans for the organizations they managed is described in more detail below:
Mr. Archer’s Individual Performance Factor was based on the average of the Individual Performance Factors of all the executive and senior vice presidents reporting to him, subject to discretion based on the Company’s performance to business, strategic, and operational objectives. For all other NEOs, their respective Individual Performance Factors were based on market share and/or strategic, operational, and organizational performance goals specific to the organizations they managed, as described in more detail below.
The accomplishments of actual individual performance against the established goals described below during 2017 were considered.
Mr. Bettinger’s Individual Performance Factor for calendar year 2017 was based on the accomplishment of strategic, operational,Annual Operating Plan metrics and organizational development goals for the finance, global information systems, communications and investor relations.relations organizations, including metrics and goals relating to financial performance, compliance, operational and organizational flexibility and speed, productivity, quality, and organizational effectiveness.
Dr. Gottscho’s Individual Performance Factor for calendar year 2017 was based on the accomplishment of market share,Annual Operating Plan metrics and strategic, operational, and organizational development goals for the central engineering groupsgroup and the establishment of strategic and organizational goals for the office of the chief technology officer.officer, including metrics and goals related to financial performance, including revenue and profitability, expansion of served available markets, engineering productivity, research and development, and organizational development.
Dr. Meikle’sLord’s Individual Performance Factor for calendar year 2017 was based on the accomplishment of strategic, operational,Annual Operating Plan metrics and organizational development goals for the global customer operations group.support business group (CSBG), including metrics and goals related to financial performance, including revenue and profitability, customer experience, engineering and operational execution, product development, and organizational development.
The committee’s consideration of
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 33 |
Mr. Varadarajan’s Individual Performance Factor was based on the above accomplishmentsAnnual Operating Plan metrics and goals for the deposition business unit, including metrics and goals related to market share, strategic risk reduction, financial performance, including revenue and profitability, customer experience, product development, engineering and operational execution, safety and organizational development.
Calendar Year 2019 Annual Incentive Program Payout Decisions
In February 2020, the committee considered the actual results under these factors and made payout decisions for the calendar year 2019 program. Actual non-GAAP operating profit was 26.17% for calendar year 2019. This performance resulted in a Funding Factor of 225% of target and a Corporate Performance Factor of 0.967 for calendar year 2019.
In addition, in recommending to the followingcommittee the Individual Performance Factors for calendar year 2019 for each NEO: Mr. Anstice, 1.45;of the other NEOs reporting to him, Mr. Archer 1.45; Mr. Bettinger, 1.16; Dr. Gottscho, 1.40;considered the performance against Annual Operating Plan metrics and Dr. Meikle 1.35.
2017 Annual Incentive Program Payout Decisions. In February 2018, in lightgoals of the Fundingorganizations respectively managed by each NEO. The committee, in turn, in recommending to the independent members of our board Mr. Archer’s Individual Performance Factor, resultsconsidered Mr. Archer’s performance against his individual goals and basedobjectives, taking into consideration the individual performance of all the executive and senior vice presidents reporting to him as reflected in the average of their Individual Performance Factors. The committee declined to exercise its discretion to recommend an adjustment to Mr. Archer’s Individual Performance Factor. Following a robust discussion by the committee (and, in the case of Mr. Archer’s Individual Performance Factor, by the independent members of our board), these recommendations were approved, resulting in the Individual Performance Factors for calendar year 2019 shown in Figure 35 below.
Figure 35. CY2019 Individual Performance Factors
Named Executive Officer | Individual Performance Factor | |||
Timothy M. Archer | 0.967 | |||
Douglas R. Bettinger | 0.960 | |||
Richard A. Gottscho | 0.960 | |||
Patrick J. Lord | 0.960 | |||
Seshasayee (Sesha) Varadarajan | 0.980 |
Based on the above results and decisions, the committee approved for the
calendar year 20172019 annual incentive program payouts for each NEO as shown below in Figure 36, which were less than the maximum payout available under the Funding Factor as shown below in Figure 21:
Factor:
Figure 21. CY201736. CY2019 Annual Incentive Program Payouts
Named Executive Officer | Target Award Opportunity (% of Base Salary) | Target Award Opportunity ($)(1) | Maximum Payout under Funding Factor (225.0% of Target Award Opportunity) ($)(2) | Actual Payouts ($) | Target Award Opportunity (% of Base Salary) | Target Award Opportunity ($) (1) | Maximum Payout under Funding Factor (225.0% of Target Award Opportunity) ($) (2) | Actual Payouts ($) | ||||||||||||||||||||||||
Martin B. Anstice |
|
150 |
|
|
1,485,000 |
|
|
3,341,250 |
|
|
3,229,875 |
| ||||||||||||||||||||
Timothy M. Archer |
|
110 |
|
|
735,204 |
|
|
1,654,209 |
|
|
1,599,068 |
| 150 | 1,500,000 | 3,375,000 | 1,450,500 | ||||||||||||||||
Douglas R. Bettinger |
|
90 |
|
|
525,609 |
|
|
1,182,620 |
|
|
914,560 |
| 100 | 640,000 | 1,440,000 | 616,960 | ||||||||||||||||
Richard A. Gottscho |
|
90 |
|
|
510,592 |
|
|
1,148,832 |
|
|
1,072,242 |
| 90 | 525,910 | 1,183,298 | 506,977 | ||||||||||||||||
Scott G. Meikle | 80 | 112,224 | (3) | 252,504 | 227,254 | |||||||||||||||||||||||||||
Patrick J. Lord | 85 | 393,975 | 886,444 | 379,792 | ||||||||||||||||||||||||||||
Seshasayee (Sesha) Varadarajan | 85 | 385,220 | 866,745 | 375,204 |
(1) | Calculated by multiplying each NEO’s annual base salary |
(2) | The Funding Factor resulted in a potential payout of up to 225.0% of target award opportunity for the calendar year (based on the actualnon-GAAP operating |
|
Calendar year 2018 annual incentive program parametersYear 2020 Annual Incentive Program Parameters
In February 2018,2020, the committee set the target award opportunity for each NEO as a percentage of base salary, and consistent with prior years set a cap on payments equal to 2.25 times the target award opportunity. The target award opportunity for each NEO is shown below. The target percentages increased for Dr. Lord to reflect his promotion to executive vice president and increased scope of responsibility as the executive responsible for both the customer support business group and global operations organization.
Figure 22. CY201837. CY2020 Annual Incentive Program Target Award Opportunities
Named Executive Officer | Target Award Opportunity (% of Base Salary) | ||||||
|
| ||||||
Timothy M. Archer |
| ||||||
Douglas R. Bettinger |
| ||||||
Richard A. Gottscho | 90 | ||||||
| 90 | ||||||
Seshasayee (Sesha) Varadarajan |
| 85 |
The committee also approvednon-GAAP operating profit as the annual metric for the Funding Factor and the Corporate Performance Factor, asnon-GAAP operating income as a percentage of revenue and set the annual goals for the Funding Factor and the Corporate Performance Factor. Consistent with the program design, the Corporate Performance Factor goal is more difficult to achieve than the Funding Factor goal. Individual Performance Factor metrics and goals were also established for each NEO. These include strategic and operational performance goals specific to individuals and their business organization. As a result, each NEO has multiple performance metrics and goals under this program. For calendar year 2020, all of our NEOs have individual performance factor metrics and goals related to culture, talent, and inclusion and diversity. All Corporate and Individual Performance Factor goals were designed to be stretch goals.
Design
Our LTIP is designed to attract and retain top talent, provide competitive levels of compensation, align pay with achievement of business objectives and with stock performance over a multi-year period, reward our NEOs for outstanding Company performance, and create stockholder value over the long term.long-term.
Under the current long-term incentive program, at the beginning of each multi-year performance period, target award opportunities (expressed as a U.S. dollar value) and performance metrics are established for the program. Of the total target award opportunity, 50% is awarded in Market-based PRSUs, and the remaining 50% is awarded in a combination of stock options and service-based RSUs with at least 10% of the award in each of these two vehicles. The specific percentage of service-based RSUs and stock options areis reviewed annually to determine whether service-based RSUs or stock options are the more efficient form of equity for the majority of the award based on criteria such as the current business environment and the potential value to motivate and retain the executives. We consider performance-based RSUsMarket-based PRSUs and stock options asto be performance-based, but do not classify service-based RSUs as performance-based. This means that if options constitute 10% of the total target award opportunity, the long-term incentive program will be 60% performance-based. If options constitute 40% of the total target award opportunity, the long-term incentive program will be 90% performance-based.
While service-based RSUs and stock options vest on an annual basis over three years, Market-based PRSUs cliff vest after three years. Cliff, rather than annual, vesting provides for both retention and for aligning NEOs with longer-term stockholder interests.
Continues on next page u
Lam Research Corporation |
Equity Vehicles
The equity vehicles used in our 2018/20202020/2022 long-term incentive program are as follows:
Figure 23. 2018/202038. 2020/2022 LTIP Program Equity Vehicles
Equity Vehicles | Vesting | Terms | ||||||
50% of Target Award Opportunity |
|
| ||||||
|
| • Awards cliff vest three years from the March
• Awards that vest at the end of the performance period are distributed in shares of our common stock. | • The number of Market-based PRSUs granted is determined by dividing 50% of the target opportunity by the 30-day average of the closing price of our common stock prior to the Grant Date, $312.94, rounded down to the nearest share. • The number of shares represented by the Market-based PRSUs that can be earned over the performance period is determined according to the performance parameters described in Figure 39 below. | |||||
Stock Options 10% of Target Award Opportunity |
| • Awards vestone-third on the first, second, and third anniversaries of the March
• Awards are exercisable upon vesting. • Expiration is on the seventh anniversary of the Grant Date. | • The number of stock options granted is determined by dividing 10% of the target opportunity by the30-day average of the closing price of our common stock prior to the Grant Date,
•
| |||||
Service-based RSUs
|
| • Awards vestone-third on the first, second, and third anniversaries of the March
• Awards are distributed in shares of our common stock upon vesting. | • The number of RSUs granted is determined by dividing 40% of the target opportunity by the30-day average of the closing price of our common stock prior to the Grant Date, |
Figure 39. 2020/2022 Market-based PRSU Performance Parameters
Parameter | Terms | |
Performance Period | Three years from the first business day in February (February 3, 2020 through February 2, 2023). | |
Performance Index | PHLX Semiconductor Sector Total Return Index (XSOX) | |
Number of Shares | • • The target number of shares represented by the Market-based PRSUs is increased by 2% of target for each 1% that our stock price performance exceeds the market price performance of the Performance Index; similarly, the target number of shares represented by the Market-based PRSUs is decreased by 2% of target for each 1% that our stock price performance trails the market price performance of the Performance Index. The result of the vesting formula is rounded down to the nearest whole number. • A table reflecting the potential payouts depending on various comparative results is shown below in Figure 40. | |
Award Ceiling/Minimum | The final shares awarded cannot exceed 150% of target (requiring a positive percentage change in our stock price performance compared to that of the market price performance of the Performance Index equal to or greater than 25 percentage points) and can be as little as 0% of target (requiring a percentage change in our stock price performance compared to that of the market price performance of the Performance Index equal to or lesser than negative 50 percentage points). |
Figure 24.40. Market-based PRSU Vesting SummaryPotential Payouts
% Change in Lam’s Stock Price
|
Market-based PRSUs (% of Target) (1)
| |||||||
Lam’s Total Return % Change Performance Compared to XSOX Index % Change Performance | Market-based PRSUs That Can Be Earned (% of Target) (1) | |||||||
+ 25% or more |
|
150 |
| 150 | ||||
10% |
|
120 |
| 120 | ||||
0% (equal to index) |
|
100 |
| 100 | ||||
- 10% |
|
80 |
| 80 | ||||
- 25% |
|
50 |
| 50 | ||||
- 50% or less |
|
0 |
| 0 |
(1) |
|
Target Award Opportunity
Under the long-term incentive program, the committee sets a target award opportunity for each participant based on the NEO’s position and responsibilities and an assessment of competitive compensation data. The target award opportunities for each participant are expressed in a U.S. dollar value. The target amounts for each NEO under the program cycles affecting fiscal year 20182019 are shown below.
Figure 25.41. LTIP Target Award Opportunities
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
(1) | The three-year performance period for the 2017/2019 LTIP began on February 1, 2017 and ended on January 31, 2020. |
(2) | The three-year performance period for the 2018/2020 LTIP began on February 1, 2018 and ends on January 31, 2021. |
The three-year performance period for the |
|
(4) | The three-year performance period for the |
(5) |
|
Calendar Year 2015/20172017/2019 LTIP Award Parameters and Payouts
On February 11, 2015,March 1, 2017, the committee granted to each then-current NEO (Mr. Archer, Mr. Bettinger, Dr. Gottscho and Dr. Lord), as part of the calendar year 2015/20172017/2019 CEO staff long-term incentive program, or “2015/2017“2017/2019 CEO Staff LTIP Awards,” Market-based PRSUs, and service-based RSUs and stock options, with a total target award opportunity shown below. On March 1, 2017, the equity award grant board committee granted to the remaining current NEO (Mr. Varadarajan), as part of the 2017/2019 vice president long-term incentive program, or “2017/2019 VP LTIP Awards” (which we refer to collectively with the 2017/2019 CEO Staff LTIP Awards as the “2017/2019 LTIP Awards”), Market-based PRSUs and service-based RSUs with a total award opportunity shown below. The service-based RSUs and stock options (only under the 2017/2019 CEO Staff LTIP Awards) vested over three years,one-third on each anniversary of the grant date. The Market-based PRSU’sPRSUs cliff vested three years from the grant date. The terms of the Market-based PRSUs and service-based RSUs granted to all the NEOs as part of the 2017/2019 LTIP Awards were the same.
Figure 26. 2015/2017 LTIP AwardsContinues on next page u
Named Executive Officer(1)
|
Target
|
Market-
|
Stock
|
Service-
| ||||||||||||
Martin B. Anstice |
|
6,750,000 |
|
|
41,873 |
|
|
25,122 |
|
|
33,498 |
| ||||
Timothy M. Archer |
|
3,500,000 |
|
|
21,712 |
|
|
13,026 |
|
|
17,369 |
| ||||
Douglas R. Bettinger |
|
2,500,000 |
|
|
15,508 |
|
|
9,303 |
|
|
12,406 |
| ||||
Richard A. Gottscho |
|
3,000,000 |
|
|
18,610 |
|
|
11,166 |
|
|
14,888 |
|
Lam Research Corporation 2020 Proxy Statement | 37 |
Figure 42. 2017/2019 LTIP Award Grants
Named Executive Officer | Target Award Opportunity ($) | Market-based PRSUs (#) (1) | Stock Options Award (#) | Service-based RSUs Award (#) | ||||||||||||
Timothy M. Archer | 4,500,000 | 19,428 | 15,540 | 15,542 | ||||||||||||
Douglas R. Bettinger | 2,750,000 | 11,872 | 9,496 | 9,498 | ||||||||||||
Richard A. Gottscho | 3,250,000 | 14,031 | 11,224 | 11,225 | ||||||||||||
Patrick J. Lord | 1,350,000 | 5,828 | 4,660 | 4,662 | ||||||||||||
Seshasayee (Sesha) Varadarajan | 1,200,000 | 5,180 | — | 5,180 |
(1) |
|
The number of Market-based PRSUs awarded is reflected at target. The final number of shares that may |
In February 2018,2020, the committee determined the payouts for the calendar year 2015/20172017/2019 LTIP Awards of Market-based PRSUs. The number of shares represented by the Market-based PRSUs earned over the performance period was based on our stock price performance compared to the market price performance of the SOXPhiladelphia Semiconductor Sector (SOX) index.
Based on the above formula and Market-based PRSU Vesting Summary set forth in Figures 2339 and 24,40 (but substituting the SOX index for the XSOX index, and disregarding the impact of dividends paid, consistent with that index), the Company’s stock price performance over the three-year performance period was equal to 143.56%166.83% and the performance of the SOX index (based on market price) over the same three-year performance period was equal to 92.36%100.15%. While Lam’s stock price outperformed the SOX index by 51.20%66.68%, which would have resulted in a performance payout of 202.40% to target
Continues on next page u
under our Market-based PRSU program, the actual number of shares paid represented by the Market-based PRSUs was limited to the maximum possible performance payout of 150% of the target number of Market-based PRSUs granted to each NEO. Based on such results, the committee made the following payouts to each NEO for the 2015/20172017/2019 LTIP Award of Market-based PRSUs.
Figure 27. 2015/201743. 2017/2019 LTIP Market-based PRSU Award Payouts
Named Executive Officer(1)
| Target
|
Actual Payout (#)
| ||||||
Martin B. Anstice |
|
41,873 |
|
|
62,809 |
| ||
Timothy M. Archer |
|
21,712 |
|
|
32,568 |
| ||
Douglas R. Bettinger |
|
15,508 |
|
|
23,262 |
| ||
Richard A. Gottscho |
|
18,610 |
|
|
27,915 |
|
|
Named Executive Officer | Target Market-based PRSUs (#) | Actual Payout of Market-based PRSUs (150% of Target Award Opportunity) (#) | ||||||
Timothy M. Archer | 19,428 | 29,142 | ||||||
Douglas R. Bettinger | 11,872 | 17,808 | ||||||
Richard A. Gottscho | 14,031 | 21,046 | ||||||
Patrick J. Lord | 5,828 | 8,742 | ||||||
Seshasayee (Sesha) Varadarajan | 5,180 | 7,770 |
Calendar Year 20182020 LTIP Awards
Calendar year 2018Year 2020 decisions for the 2018/20202020/2022 long-term incentive program.On March 1, 2018,2, 2020, the committee made a grant under the 2018/20202020/2022 long-term incentive program, of Market-based PRSUs, stock options, and service-based RSUs on the terms set forth in Figure 23Figures 38 and 39 with a combined value equal to the NEO’s total target award opportunity, as shown below.
Figure 28. 2018/202044. 2020/2022 LTIP AwardsAward Grants
Named Executive Officer |
Target Award Opportunity ($) |
Market- based PRSUs Award (1) (#) |
Stock Options Award (#) |
Service- based RSUs Award (#) | Target Award Opportunity ($) | Market-based PRSUs (#) (1) | Stock Options Award (#) | Service-based RSUs Award (#) | ||||||||||||||||||||||||
Martin B. Anstice |
|
9,000,000 |
|
|
23,687 |
|
|
18,948 |
|
|
18,950 |
| ||||||||||||||||||||
Timothy M. Archer |
|
5,000,000 |
|
|
13,159 |
|
|
10,524 |
|
|
10,527 |
| 9,500,000 | 15,178 | 12,140 | 12,142 | ||||||||||||||||
Douglas R. Bettinger |
|
2,250,000 |
|
|
5,921 |
|
|
4,736 |
|
|
4,737 |
| 2,750,000 | 4,393 | 3,512 | 3,515 | ||||||||||||||||
Richard A. Gottscho |
|
2,500,000 |
|
|
6,579 |
|
|
5,260 |
|
|
5,263 |
| 2,500,000 | 3,994 | 3,192 | 3,195 | ||||||||||||||||
Scott G. Meikle |
|
1,250,000 |
|
|
3,289 |
|
|
2,628 |
|
|
2,631 |
| ||||||||||||||||||||
Patrick J. Lord | 2,500,000 | 3,994 | 3,192 | 3,195 | ||||||||||||||||||||||||||||
Seshasayee (Sesha) Varadarajan | 2,150,000 | 3,435 | 2,748 | 2,748 |
(1) | The number of Market-based PRSUs awarded is reflected at target. The final number of shares that may be earned will be 0% to 150% of target. |
Employment / Compensation Recovery, or “Clawback” Policy
Our executive officers covered by section 16 of the Exchange Act are subject to the Company’s compensation recovery, or “clawback,” policy. The clawback policy was adopted in August 2014 and took effect starting in calendar year 2015. It enables us,
in the event that a material restatement of financial results is required, to recover, within 36 months of the issuance of the original financial statements, the excess amount of cash incentive-based compensation issued to covered individuals. A covered individual’s fraud must have materially contributed to the need to issue restated financial statements in order for the clawback policy to apply to that individual. The recovery of compensation is not the exclusive remedy available in the event that the clawback policy is triggered.
For senior vice presidents and above, we also have stock ownership guidelines that foster a long-term orientation. Our stock ownership guidelines for our NEOs and certain other senior executives are shown below. The requirements are specified in the alternative of shares or dollars to allow for stock price volatility. Ownership levels as shown below must be achieved within five years of appointment to one of the below positions. Increased requirements due to promotions or an increase in the ownership guideline must be achieved within five years of promotion or a change in the guidelines. At the end of fiscal year 2020, all NEOs were in compliance with our stock ownership guidelines or have a period of time remaining under the guidelines to meet the required ownership level.
Figure 45. Executive Stock Ownership Guidelines
Position | Guidelines (lesser of) | |
President and Chief Executive Officer | 5x base salary or 50,000 shares | |
Executive Vice Presidents | 2x base salary or 10,000 shares | |
Senior Vice Presidents | 1x base salary or 5,000 shares |
Employment/Change in Control Arrangements
The Company enters into employment /or change in control agreements to help attract and retain our NEOs, and believes
that these agreements facilitate a smooth transaction and transition planning in connection with change in control events. Effective January 2018, the Company entered into new three-year term employment agreements with Messrs. Anstice,Mr. Archer (amended on March 16, 2018 and August 8, 2019), Mr. Bettinger (amended on November 30, 2018) and Dr. Gottscho, and a new change in control agreement with Mr. Varadarajan, and effective September 8, 2020, the Company entered into a new employment agreement with Dr. Meikle.Lord with a term ending on the same date as the employment agreements with Mr. Archer, Mr. Bettinger and Dr. Gottscho. The employment agreements generally provide for designated payments in the event of an involuntary termination of employment, death or disability, as such terms are defined in the applicable agreements. The employment agreements, and also the change in control agreements, generally provide for designated payments in the case of a change in control when coupled with an involuntary termination (i.e., a double trigger is required before payment is made due to a change in control), as such terms are defined in the applicable agreements.
For additional information about these arrangements and detail about post-termination payments under these arrangements, see the“Potential Payments upon Termination or Change in Control” section below.
Other Benefits Not Available to All Employees
Elective Deferred Compensation Plan
The Company maintains an Elective Deferred Compensation Plan that allows eligible employees (including all the NEOs) to voluntarily defer receipt of all or a portion of base salary and certain incentive compensation payments until a date or dates elected by the participating employee. This allows the employee to defer taxes on designated compensation amounts. In addition, the Company providesis obligated to pay a limited Company contribution to the plan for all eligible employees.
Supplemental Health and Welfare
We provide certain health and welfare benefits not generally available to other employees, including the payment of premiums for supplemental long-term disability insurance and Company-provided coverage in the amount of $1 million for both life and accidental death and dismemberment insurance for all NEOs.
We also provide post-retirement medical and dental insurance coverage for eligible former executive officers under our Retiree Health Plans, subject to certain eligibility requirements. The program was closed to executive officers who joined the Company or
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 39 |
became executive officers through promotion effective on or after January 1, 2013. We have an independent actuarial valuation of post-retirement benefits for eligible NEOs conducted annually in accordance with generally accepted accounting principles. The most recent valuation was conducted in June 20182020 and reflected the retirement benefit obligation for the NEOs as shown below.
Figure 29.46. NEO Post-Retirement Benefit Obligations
| |||||||
Named Executive Officer | As of June 28, 2020 ($) |
| |||||
Timothy M. Archer | 959,000 | ||||||
Douglas R. Bettinger (1) |
| ||||||
Richard A. Gottscho |
| ||||||
Patrick J. Lord (1) |
| ||||||
| — |
(1) | Mr. Bettinger, Dr. Lord and |
IV. TAX AND ACCOUNTING CONSIDERATIONS
Deductibility of Executive Compensation
Prior to 2018, section 162(m) of the Code imposed limitations on the deductibility for federal income tax purposes of compensation in excess of $1 million paid to our chief executive officer, and any of our three other most highly compensated executive officers (other than our chief financial officer) in a single tax year unless the compensation qualified as “performance-based compensation” within the meaning of the Code.
The committee considers a number of factors, including the deductibility of such compensation when making compensation decisions and retains the discretion to award compensation even if it is not deductible.
Taxation of “Parachute” Payments
Sections 280G and 4999 of the Code provide that “disqualified individuals” within the meaning of the Code (which generally includes certain officers, directors and employees of the Company) may be subject to additional tax if they receive payments or benefits in connection with a change in control of the Company that exceed certain prescribed limits. The Company or its successor may also forfeit a deduction on the amounts subject to this additional tax.
We did not provide any of our executive officers, any director, or any other service provider with a“gross-up” or other reimbursement payment for any tax liability that the individual might owe as a result of the application of sections 280G or 4999 during fiscal year 2018, and we have not agreed and are not otherwise obligated to provide any individual with such a“gross-up” or other reimbursement as a result of the application of sections 280G and 4999.
Internal Revenue Code Section 409A
Section 409A of the Code imposes significant additional taxes on an executive officer, director, or service provider that receivesnon-compliant “deferred compensation” that is within the scope of section 409A. Among other things, section 409A potentially applies to the cash awards under the LTIP, the Elective Deferred Compensation Plan, certain equity awards, and severance arrangements.
To assist our employees in avoiding additional taxes under section 409A, we have structured the LTIP, the Elective Deferred Compensation Plan, and our equity awards in a manner intended to qualify them for exclusion from, or compliance with, section 409A.
Accounting for Stock-Based Compensation
We follow ASC 718 for accounting for our stock options and other stock-based awards. ASC 718 requires companies to calculate the grant date “fair value” of their stock option grants and other equity awards using a variety of assumptions. This calculation is performed for accounting purposes. ASC 718 also requires companies to recognize the compensation cost of stock option grants and other stock-based awards in their income statements over the period that an employee is required to render service in exchange for the option or other equity award.
Continues on next page u
The compensation and human resources committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of SEC RegulationS-K. Based on this review and discussion, the compensation and human resources committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s Annual Report on Form10-K.
This Compensation Committee Report shall not be deemed “filed” with the SEC for purposes of federal securities law, and it shall not, under any circumstances, be incorporated by reference into any of the Company’s past or future SEC filings. The report shall not be deemed soliciting material.
MEMBERS OF THE COMPENSATION AND HUMAN RESOURCES COMMITTEE
Youssef A.El-Mansy
Catherine P. Lego (Chair)
Abhijit Y. Talwalkar
Lih Shyng (Rick L.) Tsai
Compensation Committee Interlocks and Insider Participation
None of the compensation and human resources committee members has ever been an officer or employee of Lam Research. No interlocking relationship exists as of the date of this proxy statement or existed during fiscal year 20182020 between any member of our compensation and human resources committee and any member of any other company’s board of directors or compensation committee.
The following tables (Figures30-35)47-52) show compensation information for our named executive officers:
Figure 30.47. Summary Compensation Table
Summary Compensation Table | ||||||||||||||||||||||||||||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) | ||||||||||||||||||||||||
Martin B. Anstice
| 2018 | 1,001,442 | — | 7,526,050 | 1,080,493 | 3,229,875 | (4) | 10,785 | 12,848,645 | |||||||||||||||||||||||
2017 | 969,808 | — | 7,023,914 | 758,314 | 2,396,304 | (5) | 10,541 | 11,158,881 | ||||||||||||||||||||||||
2016 | 937,789 | — | 6,175,315 | 1,224,848 | 2,207,558 | (6) | 10,521 | 10,556,031 | ||||||||||||||||||||||||
Timothy M. Archer President and Chief Operating Officer | 2018 | 674,922 | — | 4,180,920 | 600,122 | 1,599,068 | (4) | 9,856 | 7,064,888 | |||||||||||||||||||||||
2017 | 646,945 | — | 3,950,881 | 426,531 | 1,165,193 | (5) | 11,301 | 6,200,851 | ||||||||||||||||||||||||
2016 | 624,061 | — | 3,293,501 | 653,260 | 1,079,250 | (6) | 10,689 | 5,660,761 | ||||||||||||||||||||||||
Douglas R. Bettinger Chief Financial Officer | 2018 | 586,874 | — | 1,881,292 | 270,066 | 914,560 | (4) | 9,123 | 3,661,915 | |||||||||||||||||||||||
2017 | 572,561 | — | 2,414,365 | 260,640 | 849,190 | (5) | 7,983 | 4,104,739 | ||||||||||||||||||||||||
2016 | 548,827 | — | 2,264,175 | 449,109 | 771,574 | (6) | 8,080 | 4,041,765 | ||||||||||||||||||||||||
Richard A. Gottscho Executive Vice President, Corporate Chief Technology Officer | 2018 | 567,324 | 5,867 | (7) | 2,090,283 | 316,208 | 1,072,242 | (4) | 9,384 | 4,061,308 | ||||||||||||||||||||||
2017 | 559,837 | 6,171 | (7) | 2,853,402 | 362,059 | 833,015 | (5) | 9,307 | 4,623,791 | |||||||||||||||||||||||
2016 | 545,296 | 9,600 | (7) | 2,675,862 | 606,262 | 771,574 | (6) | 9,082 | 4,617,676 | |||||||||||||||||||||||
Scott G. Meikle Senior Vice President, Global Customer Operations | 2018 | 344,115 | — | 4,089,102 | (8) | 149,859 | 227,254 | (4) | 8,797 | 4,819,127 | ||||||||||||||||||||||
2017 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
2016 | — | — | — | — | — | — | — |
Summary Compensation Table | ||||||||||||||||||||||||||||||||||||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||||||||||||||||
Timothy M. Archer President and Chief Executive Officer | 2020 | 1,017,308 | — | 8,350,730 | 923,416 | 1,450,500 | (4) | 11,050 | 11,753,004 | |||||||||||||||||||||||||||||||
|
2019 |
|
|
809,512 |
|
|
— |
|
|
7,829,921 |
|
|
3,911,321 |
|
|
1,181,842 |
(5) |
|
12,513 |
|
|
13,745,109 |
| |||||||||||||||||
|
2018 |
|
|
674,922 |
|
|
— |
|
|
4,180,920 |
|
|
600,122 |
|
|
1,599,068 |
(6) |
|
9,856 |
|
|
7,064,888 |
| |||||||||||||||||
Douglas R. Bettinger Executive Vice President and Chief Financial Officer | 2020 | 646,646 | — | 2,417,174 | 267,136 | 616,960 | (4) | 9,759 | 3,957,675 | |||||||||||||||||||||||||||||||
|
2019 |
|
|
620,518 |
|
|
— |
|
|
9,856,919 |
|
|
529,186 |
|
|
739,421 |
(5) |
|
9,073 |
|
|
11,755,117 |
| |||||||||||||||||
|
2018 |
|
|
586,874 |
|
|
— |
|
|
1,881,292 |
|
|
270,066 |
|
|
914,560 |
(6) |
|
9,123 |
|
|
3,661,915 |
| |||||||||||||||||
Richard A. Gottscho Executive Vice President, Chief Technology Officer | 2020 | 588,390 | 6,400 | (7) | 2,197,418 | 257,676 | 506,977 | (4) | 9,694 | 3,566,555 | ||||||||||||||||||||||||||||||
|
2019 |
|
|
584,126 |
|
|
10,971 |
(7) |
|
1,755,652 |
|
|
474,750 |
|
|
707,680 |
(5) |
|
9,553 |
|
|
3,542,732 |
| |||||||||||||||||
|
2018 |
|
|
567,324 |
|
|
5,867 |
(7) |
|
2,090,283 |
|
|
316,208 |
|
|
1,072,242 |
(6) |
|
9,384 |
|
|
4,061,308 |
| |||||||||||||||||
Patrick J. Lord Executive Vice President, Customer Support Business Group and Global Operations | 2020 | 479,544 | — | 2,197,418 | 242,796 | 379,792 | (4) | 8,972 | 3,308,522 | |||||||||||||||||||||||||||||||
|
2019 |
|
|
463,327 |
|
|
— |
|
|
1,404,389 |
|
|
352,790 |
|
|
554,243 |
(5) |
|
8,668 |
|
|
2,783,417 |
| |||||||||||||||||
|
2018 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||||||||||
Seshasayee (Sesha) Varadarajan Senior Vice President and General Manager, Deposition Business Unit | 2020 | 462,613 | 10,074 | (8) | 1,889,916 | 209,024 | 375,204 | (4) | 8,829 | 2,955,660 | ||||||||||||||||||||||||||||||
|
2019 |
|
|
453,031 |
|
|
— |
|
|
1,229,006 |
|
|
308,609 |
|
|
494,802 |
(5) |
|
8,785 |
|
|
2,494,233 |
| |||||||||||||||||
|
2018 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
(1) | The amounts shown in this column represent the value of service-based and market-based performance RSU awards, under the LTIP, granted in accordance with ASC 718. However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. The assumptions used to calculate the fair value of the RSUs in fiscal year |
(2) | The amounts shown in this column represent the value of the stock option awards granted, under the LTIP, in accordance with ASC 718. However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. The assumptions used to calculate the fair value of stock options in fiscal year |
(3) | Please refer to |
(4) | Represents the amount earned by and subsequently paid under the calendar year 2019 AIP. |
(5) | Represents the amount earned by and subsequently paid under the calendar year 2018 AIP. |
(6) | Represents the amount earned by and subsequently paid under the calendar year 2017 AIP. |
|
|
(7) | Represents patent awards. |
(8) | Represents |
Continues on next page u
Lam Research Corporation |
Figure 31. FY201848. FY2020 All Other Compensation Table
All Other Compensation Table for Fiscal Year 2018 | ||||||||||||||||||||||||||||||||||||||||
Company Matching Contribution to the Company’s Section 401(k) Plan ($) | Company Paid Long-Term Disability Insurance Premiums (1) ($) | Company Paid Life Insurance Premiums (2) ($) | Company Contribution to the Elective Deferred Compensation Plan ($) | Total ($) | ||||||||||||||||||||||||||||||||||||
Martin B. Anstice |
| 8,285 |
|
| — |
|
| — |
|
| 2,500 |
|
| 10,785 |
| |||||||||||||||||||||||||
All Other Compensation Table for Fiscal Year 2020 | All Other Compensation Table for Fiscal Year 2020 | |||||||||||||||||||||||||||||||||||||||
| Company Matching Contribution to the Company’s Section 401(k) Plan ($) | Company Paid Long-Term ($) (1) | Company Paid Life ($) (2) | Company Contribution to the Elective Deferred Compensation Plan ($) | Total ($) | |||||||||||||||||||||||||||||||||||
Timothy M. Archer |
| 7,356 |
|
| — |
|
| — |
|
| 2,500 |
|
| 9,856 |
| 8,550 |
|
| 2,500 | 11,050 | ||||||||||||||||||||
Douglas R. Bettinger |
| 8,252 |
|
| — |
|
| — |
|
| 871 |
|
| 9,123 |
| 8,666 |
|
| 1,093 | 9,759 | ||||||||||||||||||||
Richard A. Gottscho |
| 8,250 |
|
| 1,134 |
|
| — |
| �� |
| — |
|
| 9,384 |
| 8,618 | 1,076 |
|
| 9,694 | |||||||||||||||||||
Scott G. Meikle |
| 8,797 |
|
| — |
|
| — |
|
| — |
|
| 8,797 |
| |||||||||||||||||||||||||
Patrick J. Lord | 8,906 |
| 66 |
| 8,972 | |||||||||||||||||||||||||||||||||||
Seshasayee (Sesha) Varadarajan | 8,727 |
| 102 |
| 8,829 |
(1) | Represents the portion of supplemental long-term disability insurance premiums paid by |
(2) | Represents the portion of life insurance premiums paid by |
Figure 32. FY201849. FY2020 Grants of Plan-Based Awards
Grants of Plan-Based Awards for Fiscal Year 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Grants of Plan-Based Awards for Fiscal Year 2020 | Grants of Plan-Based Awards for Fiscal Year 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Award Type | Grant |
| Approved |
Estimated Future Equity Incentive |
Estimated Future | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) (3) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date ($) (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Target ($) (1) | Maximum ($)(1) | Target (#)(2) | Maximum (#)(2) | Award Type | Grant Date | Approved Date | Target ($) (1) | Maximum ($) (1) | Target (#) (2) | Maximum (#) (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Program | N/A | 2/7/18 | 1,537,500 | 3,459,375 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Martin B. Anstice | Market-based PRSUs | 3/1/18 | 2/7/18 | 23,687 | (4) | 35,530 | (4) | 4,030,343 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/1/18 | 2/7/18 | 18,950 | (5) | 3,495,707 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 3/1/18 | 2/7/18 | 18,948 | (6) | 190.07 | 1,080,493 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Program | N/A | 2/6/18 | 860,523 | 1,936,177 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy M. Archer | Annual Incentive Program | N/A | 2/20/20 | 1,575,000 | 3,543,750 |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market-based PRSUs | 3/2/20 | 2/20/20 |
|
|
| 15,178 | (4) | 22,767 | (4) |
|
|
|
|
| 4,867,433 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/2/20 | 2/20/20 |
|
|
|
|
|
|
| 12,142 | (5) |
|
|
| 3,483,297 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market-based PRSUs | 3/1/18 | 2/6/18 | 13,159 | (4) | 19,738 | (4) | 2,239,004 | Stock Options | 3/2/20 | 2/20/20 |
|
|
|
|
|
|
|
|
| 12,140 | (6) | 300.33 | 923,416 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/1/18 | 2/6/18 | 10,527 | (5) | 1,941,916 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 3/1/18 | 2/6/18 | 10,524 | (6) | 190.07 | 600,122 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Program | N/A | 2/6/18 | 533,493 | 1,200,359 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Douglas R. Bettinger | Annual Incentive Program | N/A | 2/19/20 | 659,200 | 1,483,200 |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market-based PRSUs | 3/2/20 | 2/19/20 |
|
|
| 4,393 | (4) | 6,589 | (4) |
|
|
|
|
| 1,408,791 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/2/20 | 2/19/20 |
|
|
|
|
|
|
| 3,515 | (5) |
|
|
| 1,008,383 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market-based PRSUs | 3/1/18 | 2/6/18 | 5,921 | (4) | 8,881 | (4) | 1,007,458 | Stock Options | 3/2/20 | 2/19/20 |
|
|
|
|
|
|
|
|
| 3,512 | (6) | 300.33 | 267,136 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/1/18 | 2/6/18 | 4,737 | (5) | 873,834 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 3/1/18 | 2/6/18 | 4,736 | (6) | 190.07 | 270,066 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Program | N/A | 2/6/18 | 510,592 | 1,148,832 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richard A. Gottscho | Annual Incentive Program | N/A | 2/19/20 | 536,428 | 1,206,963 |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market-based PRSUs | 3/2/20 | 2/19/20 |
|
|
| 3,994 | (4) | 5,991 | (4) |
|
|
|
|
| 1,280,836 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/2/20 | 2/19/20 |
|
|
|
|
|
|
| 3,195 | (5) |
|
|
| 916,582 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market-based PRSUs | 3/1/18 | 2/6/18 | 6,579 | (4) | 9,868 | (4) | 1,119,417 | Stock Options | 3/2/20 | 2/19/20 |
|
|
|
|
|
|
|
|
| 3,192 | (6) | 300.33 | 257,676 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/1/18 | 2/6/18 | 5,263 | (5) | 970,866 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patrick J. Lord | Annual Incentive Program | N/A | 2/19/20 | 458,865 | 1,032,446 |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market-based PRSUs | 3/2/20 | 2/19/20 |
|
|
| 3,994 | (4) | 5,991 | (4) |
|
|
|
|
| 1,280,836 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/2/20 | 2/19/20 |
|
|
|
|
|
|
| 3,195 | (5) |
|
|
| 916,582 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 3/2/20 | 2/19/20 |
|
|
|
|
|
|
|
|
| 3,192 | (6) | 300.33 | 242,796 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 3/1/18 | 2/6/18 | 5,260 | (6) | 190.07 | 316,208 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Program | N/A | 2/6/18 | 365,500 | 822,375 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scott G. Meikle | Market-based PRSUs | 3/1/18 | 2/6/18 | 3,289 | (4) | 4,933 | (4) | 559,623 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/1/18 | 2/6/18 | 2,631 | (5) | 485,341 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 3/1/18 | 2/6/18 | 2,628 | (6) | 190.07 | 149,859 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Hire | 9/1/17 | 7/31/17 | 18,827 | (7) | 3,044,138 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Seshasayee (Sesha) Varadarajan | Annual Incentive Program | N/A | 2/19/20 | 408,333 | 918,750 |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market-based PRSUs | 3/2/20 | 2/19/20 |
|
|
| 3,435 | (4) | 5,152 | (4) |
|
|
|
|
| 1,101,570 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service-based RSUs | 3/2/20 | 2/19/20 |
|
|
|
|
|
|
| 2,748 | (5) |
|
|
| 788,346 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 3/2/20 | 2/19/20 |
|
|
|
|
|
|
|
|
| 2,748 | (6) | 300.33 | 209,024 |
(1) | The AIP target and maximum estimated future payouts reflected in this table were calculated using the base salary approved in February |
(2) | The amounts reported represent the target and maximum number of Market-based PRSUs that may vest on the terms described in “Executive Compensation and Other Information – Compensation Discussion and Analysis” above. The number of shares that may be earned is equal to from 0% to 150% of target. |
(3) | The amounts reported represent the fair value of Market-based PRSU, service-based RSU, and stock option awards granted during fiscal year |
(4) | The Market-based PRSUs will vest on |
(5) | The RSUs will vest in three equal installments on |
(6) | The stock options will become exercisable in three equal installments on |
|
Figure 33. FYE201850. FYE2020 Outstanding Equity Awards
Outstanding Equity Awards at 2018 FiscalYear-End | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Equity Awards at 2020 Fiscal Year-End | Outstanding Equity Awards at 2020 Fiscal Year-End | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market of Shares or That Have | Equity (#) | Equity Plan Awards: | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value ($) (1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Market or Payout | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Martin B. Anstice | 18,948 | (2) | 190.07 | 3/1/25 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,950 | (3) | 3,310,565 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23,687 | (4) | 4,138,119 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9,209 | (5) | 18,419 | (5) | 119.67 | 3/1/24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,421 | (6) | 3,218,149 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
34,539 | (7) | 6,033,963 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
43,402 | (8) | 21,701 | (8) | 75.57 | 3/1/23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10,851 | (9) | 1,895,670 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
54,253 | (10) | 9,477,999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy M. Archer | 10,524 | (2) | 190.07 | 3/1/25 | 3/2/2020 | (2) | — | 12,140 | 300.33 | 3/2/27 |
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10,527 | (3) | 1,839,067 | 3/2/2020 | (3) |
|
|
|
|
| 12,142 | 3,673,198 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13,159 | (4) | 2,298,877 | 3/2/2020 | (4) |
|
|
|
|
|
|
| 15,178 | 4,591,649 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,180 | (5) | 10,360 | (5) | 119.67 | 3/1/24 | 3/1/2019 | (2) | 11,329 | 22,659 | 176.75 | 3/1/26 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10,362 | (6) | 1,810,241 | 3/1/2019 | (3) |
|
|
|
|
| 8,498 | 2,570,815 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19,428 | (7) | 3,394,072 | 3/1/2019 | (5) |
|
|
|
|
|
|
| 21,243 | 6,426,432 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11,574 | (8) | 11,574 | (8) | 75.57 | 3/1/23 | 12/6/2018 | (6) | 26,785 | 44,645 | 145.73 | 12/6/25 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,787 | (9) | 1,010,989 | 12/6/2018 | (7) |
|
|
|
|
| 10,639 | 3,218,510 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
28,935 | (10) | 5,054,945 | 3/1/2018 | (2) | 7,016 | 3,508 | 190.07 | 3/1/25 |
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13,026 | (11) | 80.60 | 2/11/22 | 3/1/2018 | (3) |
|
|
|
|
| 3,509 | 1,061,543 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy M. Archer | 3/1/2018 | (5) |
|
|
|
|
|
|
| 13,159 | 3,980,861 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2017 | (2) | 15,540 | — | 119.67 | 3/1/24 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,736 | (2) | 190.07 | 3/1/25 | 3/2/2020 | (2) | — | 3,512 | 300.33 | 3/2/27 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,737 | (3) | 827,554 | 3/2/2020 | (3) |
|
|
|
|
| 3,515 | 1,063,358 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,921 | (4) | 1,034,399 | 3/2/2020 | (4) |
|
|
|
|
|
|
| 4,393 | 1,328,970 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,165 | (5) | 6,331 | (5) | 119.67 | 3/1/24 | 3/1/2019 | (2) | 4,248 | 8,496 | 176.75 | 3/1/26 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,332 | (6) | 1,106,200 | 3/1/2019 | (3) |
|
|
|
|
| 3,186 | 963,829 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11,872 | (7) | 2,074,038 | 3/1/2019 | (5) |
|
|
|
|
|
|
| 7,966 | 2,409,874 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15,914 | (8) | 7,957 | (8) | 75.57 | 3/1/23 | 11/30/2018 | (7) |
|
|
|
|
| 34,305 | 10,377,949 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,979 | (9) | 695,131 | 3/1/2018 | (2) | 3,157 | 1,579 | 190.07 | 3/1/25 |
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19,892 | (10) | 3,475,132 | 3/1/2018 | (3) |
|
|
|
|
| 1,579 | 477,679 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Douglas R. Bettinger | 9,303 | (11) | 80.60 | 2/11/22 | 3/1/2018 | (5) |
|
|
|
|
|
|
| 5,921 | 1,791,221 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9,658 | (12) | 51.76 | 2/18/21 | 3/1/2017 | (2) | 9,496 | — | 119.67 | 3/1/24 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,242 | (13) | 51.76 | 2/18/21 | 3/1/2016 | (2) | 23,871 | — | 75.57 | 3/1/23 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/11/2015 | (2) | 9,303 | — | 80.60 | 2/11/22 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/18/2014 | (8) | 7,242 | — | 51.76 | 2/18/21 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/18/2014 | (2) | 9,658 | — | 51.76 | 2/18/21 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/2/2020 | (2) | — | 3,192 | 300.33 | 3/2/27 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/2/2020 | (3) |
|
|
|
|
| 3,195 | 966,551 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/2/2020 | (4) |
|
|
|
|
|
|
| 3,994 | 1,208,265 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2019 | (2) | 3,540 | 7,080 | 176.75 | 3/1/26 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2019 | (3) |
|
|
|
|
| 2,656 | 803,493 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richard A. Gottscho | 3/1/2019 | (5) |
|
|
|
|
|
|
| 6,638 | 2,008,128 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2018 | (2) | 1,753 | 1,754 | 190.07 | 3/1/25 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2018 | (3) |
|
|
|
|
| 1,755 | 530,923 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2018 | (5) |
|
|
|
|
|
|
| 6,579 | 1,990,279 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/2/2020 | (2) | — | 3,192 | 300.33 | 3/2/27 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/2/2020 | (3) |
|
|
|
|
| 3,195 | 966,551 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/2/2020 | (4) |
|
|
|
|
|
|
| 3,994 | 1,208,265 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2019 | (2) | 2,832 | 5,664 | 176.75 | 3/1/26 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patrick J. Lord | 3/1/2019 | (3) |
|
|
|
|
| 2,124 | 642,552 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2019 | (5) |
|
|
|
|
|
|
| 5,310 | 1,606,381 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2018 | (2) | 1,333 | 1,334 | 190.07 | 3/1/25 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2018 | (3) |
|
|
|
|
| 1,334 | 403,562 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2018 | (5) |
|
|
|
|
|
|
| 5,000 | 1,512,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2017 | (2) | 1,554 | — | 119.67 | 3/1/24 |
|
|
|
|
|
Continues on next page u
Lam Research Corporation |
Outstanding Equity Awards at 2018 FiscalYear-End | ||||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market of Shares or That Have | Equity (#) | Equity Plan Awards: | ||||||||||||||||||||||||
Richard A. Gottscho | 5,260 | (2) | 190.07 | 3/1/25 | ||||||||||||||||||||||||||||
5,263 | (3) | 919,446 | ||||||||||||||||||||||||||||||
6,579 | (4) | 1,149,351 | ||||||||||||||||||||||||||||||
7,483 | (5) | 119.67 | 3/1/24 | |||||||||||||||||||||||||||||
7,484 | (6) | 1,307,455 | ||||||||||||||||||||||||||||||
14,031 | (7) | 2,451,216 | ||||||||||||||||||||||||||||||
9,403 | (8) | 75.57 | 3/1/23 | |||||||||||||||||||||||||||||
4,702 | (9) | 821,439 | ||||||||||||||||||||||||||||||
23,509 | (10) | 4,107,022 | ||||||||||||||||||||||||||||||
Scott G. Meikle | 2,628 | (2) | 190.07 | 3/1/25 | ||||||||||||||||||||||||||||
2,631 | (3) | 459,636 | ||||||||||||||||||||||||||||||
3,289 | (4) | 574,588 | ||||||||||||||||||||||||||||||
18,827 | (14) | 3,289,077 |
Outstanding Equity Awards at 2020 Fiscal Year-End | ||||||||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value ($) (1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Market or Payout | |||||||||||||||||||||||||||||||||||
Seshasayee (Sesha) Varadarajan | 3/2/2020 | (2) | — | 2,748 | 300.33 | 3/2/27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
3/2/2020 | (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,748 | 831,325 |
|
|
|
|
|
| ||||||||||||||||||||
3/2/2020 | (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,435 | 1,039,156 | ||||||||||||||||||||
3/1/2019 | (2) | 2,477 | 4,955 | 176.75 | 3/1/26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
3/1/2019 | (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,859 | 562,385 |
|
|
|
|
|
| ||||||||||||||||||||
3/1/2019 | (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,647 | 1,405,810 | ||||||||||||||||||||
3/1/2018 | (2) | 2,384 | 1,192 | 190.07 | 3/1/25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
3/1/2018 | (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,193 | 360,906 |
|
|
|
|
|
| ||||||||||||||||||||
3/1/2018 | (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,474 | 1,353,474 |
(1) | Calculated by multiplying the number of |
(2) | The stock options |
(3) | The RSUs |
(4) | The Market-based PRSUs |
(5) | The Market-based PRSUs will vest on |
The stock options |
|
(7) | The |
(8) | The stock options |
|
|
|
|
|
|
Figure 34. FY201851. FY2020 Option Exercises and Stock Vested
Option Exercises and Stock Vested for Fiscal Year 2018(1) | ||||||||||||||||||||||||||||||||||||
Option Exercises and Stock Vested for Fiscal Year 2020 (1) | Option Exercises and Stock Vested for Fiscal Year 2020 (1) | |||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||||||||||||||||||
Martin B. Anstice |
| 69,070 |
|
| 10,182,365 |
|
| 94,036 |
|
| 16,083,228 |
| ||||||||||||||||||||||||
Timothy M. Archer |
| 37,650 |
|
| 4,961,765 |
|
| 49,325 |
|
| 8,446,939 |
| 36,174 | 7,303,600 |
| 48,462 | 14,101,009 | |||||||||||||||||||
Douglas R. Bettinger |
| — |
|
| — |
|
| 34,542 |
|
| 5,902,366 |
| — | — |
| 44,725 | 12,635,703 | |||||||||||||||||||
Richard A. Gottscho |
| 16,866 |
|
| 2,083,871 |
|
| 41,321 |
|
| 7,058,235 |
| 9,236 | 1,184,365 |
| 27,869 | 8,177,601 | |||||||||||||||||||
Scott G. Meikle |
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||
Patrick J. Lord | 1,333 | 104,880 |
| 12,691 | 3,723,920 | |||||||||||||||||||||||||||||||
Seshasayee (Sesha) Varadarajan | — | — |
| 11,619 | 3,409,363 |
(1) | The table shows all stock options exercised and the value realized upon exercise, and all stock awards vested and the value realized upon vesting, by the NEOs during fiscal year |
Figure 35. FY201852. FY2020 Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation for Fiscal Year 2018 | ||||||||||||||||||||||||||||||||
Non-Qualified Deferred Compensation for Fiscal Year 2020 | Non-Qualified Deferred Compensation for Fiscal Year 2020 | |||||||||||||||||||||||||||||||
Name | Executive Contributions in FY 2018 ($)(1) | Registrant Contributions in FY 2018 ($)(2) | Aggregate Earnings in FY 2018 ($) (3) | Aggregate Balance at FYE 2018 ($)(4) | Executive Contributions in FY 2020 ($) (1) | Registrant Contributions in FY 2020 ($) (2) | Aggregate Earnings in FY 2020 ($) (3) | Aggregate Balance at ($) (4) | ||||||||||||||||||||||||
Martin B. Anstice |
| 90,070 |
|
| 2,500 |
|
| 553,374 |
|
| 6,356,301 |
| ||||||||||||||||||||
Timothy M. Archer |
| 602,436 |
|
| 2,500 |
|
| 288,867 |
|
| 5,746,877 |
| 390,100 | 2,500 | 391,921 | 7,488,060 | ||||||||||||||||
Douglas R. Bettinger |
| 486,615 |
|
| 871 |
|
| 230,220 |
|
| 2,502,941 |
| 527,809 | 1,093 | 155,947 | 3,784,110 | ||||||||||||||||
Richard A. Gottscho |
| — |
|
| — |
|
| 85,831 |
|
| 2,127,718 |
| — | — | 70,327 | 2,272,276 | ||||||||||||||||
Scott G. Meikle |
| 42,615 |
|
| — |
|
| 143 |
|
| 42,758 |
| ||||||||||||||||||||
Patrick J. Lord | — | — | — | — | ||||||||||||||||||||||||||||
Seshasayee (Sesha) Varadarajan | — | — | — | — |
(1) | The entire amount of each executive’s contributions in fiscal year |
(2) | Represents the amount that Lam credited to the Elective Deferred Compensation Plan, |
(3) | The NEOs did not receive above-market or preferential earnings in fiscal year |
(4) | The fiscalyear-end balance includes |
Potential Payments upon Termination or Change in Control
The following is a summary of the employment agreements of our named executive officers.
Executive Employment Agreements
Martin B. Anstice.Timothy M. Archer. The Company and Mr. AnsticeArcher entered into an employment agreement, or the “agreement,“Mr. Archer’s agreement,” effective January 1, 2018, for a term ending on December 31, 2020, subject to the right of the Company or Mr. Anstice,Archer, under certain circumstances, to terminate the agreement prior to such time. The agreement was amended on March 16, 2018 to reflect his promotion to president and COO and on August 8, 2019 to reflect his promotion to, and new compensation as, president and CEO.
Under the terms of theMr. Archer’s agreement, Mr. AnsticeArcher receives a base salary, which is reviewed annually and potentially adjusted. It was set initially set atin the beginning oflatest amendment to the term of the
agreement at $990,000.$1,000,000. Mr. AnsticeArcher is also entitled to participate in any short-term or long-term variable compensation programs offered by the Company to its executive officers generally, subject to the applicable terms and conditions of those programs and the approval of the independent members of the Board, and to participate in the Company’s Elective Deferred Compensation Plan. Mr. AnsticeArcher receives other benefits, such as health insurance, paid time off (as his schedule permits), and eligible benefits under other plans and programs generally applicable to executive officers of the Company.
If an Involuntary Termination (as defined in Mr. Anstice’sArcher’s agreement) of Mr. Anstice’sArcher’s employment occurs, other than in connection with a Change in Control (as defined in Mr. Anstice’sArcher’s agreement), Mr. AnsticeArcher will be entitled to: (1) alump-sum cash payment equal to 18 months of his then-
Continues on next page u
currentthen-current base salary, plus an amount equal to the average of the last five annual payments made to Mr. AnsticeArcher under the short term variable compensation program or any predecessor or successor programs (the “Short Term Program,” and such average, the “Five-Year Average Amount”), plus an amount equal to the pro rata amount he would have earned under the Short Term Program for the calendar year in which his employment is terminated had his employment continued until the end of such calendar year, such pro rata portion to be calculated based on the performance results achieved under the Short Term Program and the number of full months elapsed prior to the termination date; (2) payment of any amounts accrued as of the date of termination under any long-term, cash-based variable-compensation programs of the Company (the “Long Term Cash Programs”); (3) certain medical benefits; (4) a cash payment equal to a product of (x) a pro rata portion (based on time of service as of the date of termination) of the unvested Market-based PRSU/PRSU and/or other performance-based RSU awards granted to Mr. AnsticeArcher, as adjusted for the Company’s performance (calculated as set forth in the award agreements) over the time of service and (y) the closing stock price on the date of termination; and (5) vesting, as of the date of termination, of a pro rata portion of the unvested stock option or RSU awards that are not performance basedperformance-based granted to Mr. AnsticeArcher at least 12 months prior to the termination date.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 45 |
If a Change in Control of the Company (as defined in Mr. Anstice’sArcher’s agreement) occurs during the period of Mr. Anstice’sArcher’s employment, and if there is an Involuntary Termination of Mr. Anstice’sArcher’s employment either in contemplation of or within the 18 months following the Change in Control, Mr. AnsticeArcher will be entitled to: alump-sum cash payment equal to 24 months of Mr. Anstice’sArcher’s then-current base salary, plus an amount equal to two times the Five-Year Average Amount, plus an additional amount equal to a pro rata amount (based on the number of full months worked during the calendar year during which the termination occurs) of the Five-Year Average Amount; certain medical benefits; conversion of any Market-based PRSUs/PRSUs and/or other performance-based RSUs outstanding as of the Change in Control into a cash award payable at time of termination equal to the product of the closing stock price on the closing date of the Change in Control and the sum of: (x) a pro rata portion (based on time of service as of the date of termination) of the unvested Market-based PRSU/performance-based RSU awards granted to Mr. AnsticeArcher as adjusted for the Company’s performance (calculated as set forth in the award agreements) over the time of service and (y) the remainder of thepro-rata portion of unvested Market-based PRSU/performance-based RSU awards at target; vesting, as of the date of termination, of the unvested stock option or RSU awards that are not performance-based granted to Mr. AnsticeArcher prior to the Change in Control; and payment of any amounts accrued as of the Change in Control under any then-existing Long Term Cash Programs, plus an amount equal to the remaining target amount under any then-existing Long Term Cash Programs.
If the Company is acquired by another entity in connection with a Change in Control of the Company (as defined in Mr. Archer’s agreement) during the period of Mr. Archer’s employment, and there is or will be no market for the Company’s common stock, and if the acquiring company does not provide Mr. Archer with stock options and RSU awards comparable to the unvested stock option or RSU awards that are not performance-based that are granted to Mr. Archer prior to the Change in Control, then regardless of whether Mr. Archer’s employment is terminated, Mr. Archer will be entitled to the vesting, immediately prior to the Change in Control, of all such unvested stock option or RSU awards that are not performance-based that are granted to Mr. Archer prior to the Change in Control.
If Mr. Anstice’sArcher’s employment is terminated due to disability or in the event of his death, Mr. AnsticeArcher (or his estate) will be entitled to: (1) the pro rata amount he would have earned under the Short Term Program for the calendar year in which his employment is terminated had his employment continued until the end of such calendar year, such pro rata portion to be calculated based on the performance results achieved under the Short Term Program and the number of full months elapsed prior to the termination date; (2) payment of any amounts accrued as of the date of termination under any then-existing Long Term Cash Programs; (3) certain medical benefits; (4) vesting, as of the date of termination, of 50% of the unvested stock option, and RSU awards, which are not performance based, granted to Mr. AnsticeArcher prior to the date of termination (or a pro rata amount, based on period of service, if greater than 50%); and (5) vesting, as of the date of termination, of 50% of the Market-based PRSU/performance-based RSU awards (or a pro rata amount, based on period of service, if greater than 50%) as adjusted for the Company’s performance during the service period (in either case) granted to Mr. AnsticeArcher prior to the date of termination.
If Mr. AnsticeArcher voluntarily resigns, he will be entitled to no additional benefits (except as he may be eligible for under the Company’s Retiree Health Plans); stock options, RSUs and Market-based PRSUs/performance-based RSUs will cease to vest on the termination date; and stock options will be cancelledcanceled unless they are exercised within 90 days after the termination date. All RSUs and Market-based PRSUs/performance-based RSUs will be cancelledcanceled on the termination date.
Mr. Anstice’sArcher’s agreement also subjects Mr. AnsticeArcher to customary confidentiality andnon-competition obligations during the term of the agreement, the application of the Company’s compensation recovery, or clawback, policy to any compensation, andnon-solicitation obligations for a period of six months following the termination of his employment. The agreement also requires Mr. AnsticeArcher to execute a release in favor of the Company to receive the payments described above.
Douglas R. Bettinger.Timothy M. Archer. The Company and Mr. ArcherBettinger entered into an employment agreement, or the “agreement,“Mr. Bettinger’s agreement,” effectivewith a term commencing on January 1, 2018 for a termand ending on December 31, 2020, subject to the right of the Company or Mr. Archer,Bettinger, under certain circumstances, to terminate the agreement prior to such time. TheMr. Bettinger’s agreement was amended effective March 16,on November 30, 2018 to reflect his latest position of President2019 compensation and Chief Operating Officer. special equity award described in further detail in “Compensation Discussion and Analysis - Compensation Relating to Management Transition” above. The terms of Mr. Archer’sBettinger’s agreement are substantively similar to those of Mr. Anstice’sArcher’s agreement, except thatwith the following material difference: Mr. Archer’s initialBettinger’s base salary atwas set initially in the beginning of the term oflatest amendment to the agreement was set at $668,367.$640,000.
The severance terms of Mr. Archer’sBettinger’s agreement are generally similar to those of Mr. Anstice’sArcher’s agreement, providedexcept that (1) Mr. ArcherBettinger will receive12-months base salary instead of
18 months18-months in the event of his Involuntary Termination; and (2) instead of a payment of the Five-Year Average Amount, he will receive a payment of 50% of the Five-Year Average Amount. The Change in Control terms of Mr. Archer’s agreement are generally similar to those of Mr. Anstice’s agreement, provided that Mr. Archer will receive18-months base salary instead of 24 months in the event of his Involuntary Termination.
Douglas R. Bettinger. The Company and Mr. Bettinger entered into an employment agreement, or the “agreement,” with a term commencing on January 1, 2018 and ending on December 31, 2020, subject to the right of the Company or Mr. Bettinger, under certain circumstances, to terminate the agreement prior to such time. The terms of Mr. Bettinger’s agreement are substantively similar to those of Mr. Archer’s agreement, with the following material difference: Mr. Bettinger’s initial base salary at the beginning of the term of the agreement was set at $584,010.
The severance terms of Mr. Bettinger’s agreement are generally similar to those of Mr. Archer’s agreement, providedexcept that Mr. Bettinger will receive 18-months base salary instead of 24-monthsin computing the Five-Year Average Amount any partial year short-term plan payments in any year shall be annualized, and if employed for less than five years, then computed based on such fewer numberevent of years. The Change in Control terms of Mr. Bettinger’s agreement are generally similar to those of Mr. Archer’s agreement.his Involuntary Termination.
Richard A. Gottscho. The Company and Dr. Gottscho entered into an employment agreement, or the “agreement,“Dr. Gottscho’s agreement,” effective January 1, 2018, for a term ending on December 31, 2020, subject to the right of the Company or Dr. Gottscho, under certain circumstances, to terminate the agreement prior to such time. The terms of Dr. Gottscho’s agreement are substantively
similar to those of Mr. Archer’sBettinger’s agreement with the following material difference: under Dr. Gottscho’s agreement, his initial base salary at the beginning of the term of the agreement was set at $567,324. The severance and Change in Control terms of Dr. Gottscho’s agreement are also generally similar to those of Mr. Archer’sBettinger’s agreement.
Patrick J. Lord. The Company and Dr. Lord entered into an employment agreement, or “Dr. Lord’s agreement,” effective September 8, 2020, for a term ending on December 31, 2020, subject to the right of the Company or Dr. Lord, under certain circumstances, to terminate the agreement prior to such time. The terms of Dr. Lord’s agreement are substantively similar to those of Mr. Bettinger’s agreement with the following material difference: under Dr. Lord’s agreement, his initial base salary at the beginning of the term of the agreement was set at $509,850. The severance and Change in Control terms of Dr. Lord’s agreement are also generally similar to those of Mr. Bettinger’s agreement. Prior to entering into Dr. Lord’s agreement, the Company and Dr. Lord were party to a change in control agreement with terms substantively similar to the the change in control agreement with Mr. Varadarajan that is described below under “Other Executive Agreements.”
Other Executive Agreements
The Company entered into a change in control agreement with Dr. MeikleMr. Varadarajan effective January 1, 2018, or the “agreement,“change in control agreement,” for a term ending on December 31, 2020, subject to the right of the Company or Dr. Meikle,Mr. Varadarajan, under certain circumstances, to
terminate the change in control agreement prior to such time. The change in control terms of Mr. Varadarajan’s agreement provides that if a Change in Control (as defined in Dr. Meikle’s agreement) of the Company occurs during the period of his employment under the agreement, and there is an Involuntary Termination (as defined in his agreement) of his employment, Dr. Meikle will be entitled to payments and benefits substantivelyare generally similar to those contained in the change in control provisions of Mr. Archer’s agreement.
The change in control agreement of Mr. Varadarajan contains confidentiality,non-competition, andnon-solicitation terms that are substantively similar to those of Mr. Anstice’s, Mr. Archer’s, Mr. Bettinger’s, Dr. Gottscho’s and Dr. Gottscho’sLord’s agreements, and require Dr. MeikleMr. Varadarajan to execute a release in favor of the Company to receive the payments described in the previous paragraph.
Equity Plans
In addition to the above, certain of our stock plans provide for accelerated benefits after certain events. While the applicable triggers under each plan vary, these events generally include: (1) a merger or consolidation in which the Company is not the surviving entity, (2) a sale of substantially all of the Company’s assets, including a liquidation or dissolution of the Company, or (3) a change in the ownership of more than 50% of our outstanding securities by tender offer or similar transaction. After a designated event, the vesting of some or all of the awards granted under these plans may be immediately accelerated in full, or certain awards may be assumed, substituted, replaced, or settled in cash by a surviving corporation or its parent. The specific treatment of awards in a particular transaction will be determined by the Board and/or the terms of the applicable transaction documents.
Potential Payments to Named Executive Officers upon Termination or Change in Control
The tables below summarize the potential payments to our NEOs, assuming a change in control of the Company as of the end of fiscal year 2018.2020. These amounts are calculated assuming that the employment termination or change in control occurs on the last day of fiscal year 2018,2020, June 24, 2018.28, 2020. The closing price per share of our common stock on June 22, 2018,26, 2020, which was the last trading day of fiscal year 2018,2020, was $174.70.$302.52. The short-term incentive program pro rata amounts are calculated by multiplying the applicable pro rata percentage by the target. Actual performance will not be known until after the end of calendar year 2018.2020.
Figure 53. Potential Payments to NEOs upon Termination or Change in Control as of FYE2020
Potential Payments to Mr. Archer upon Termination or Change in Control as of June 28, 2020 | ||||||||||||||||||||
Involuntary Termination | ||||||||||||||||||||
Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control ($) | ||||||||||||||||
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Severance | — | — | — | 1,575,000 | 2,100,000 | |||||||||||||||
Short-term Incentive (5-year average) | — | — | — | 1,295,171 | 2,590,341 | |||||||||||||||
Short-term Incentive (pro rata) | — | 656,250 | — | 656,250 | 539,654 | |||||||||||||||
Long-term Incentives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Stock Options (Unvested and Accelerated) | — | 5,036,627 | — | 454,799 | 10,270,773 | |||||||||||||||
Service-based Restricted Stock Units (Unvested and Accelerated) | — | 4,996,420 | — | 586,586 | 10,524,066 | |||||||||||||||
Performance-based Restricted Stock Units (Unvested and Accelerated) | — | 11,486,684 | — | 9,367,460 | 17,544,016 | |||||||||||||||
Benefits and Perquisites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Health Benefit Continuation/COBRA Benefit | — | 36,702 | — | 36,702 | 36,702 | |||||||||||||||
Total | — | 22,212,683 | — | 13,971,968 | 43,605,552 |
Continues on next page u
Lam Research Corporation |
Compensation Severance Short-term Incentive (5-year average) Short-term Incentive (pro rata) Long-term Incentives: Stock Options (Unvested and Accelerated) Service-based Restricted Stock Units (Unvested and Accelerated) Performance-based Restricted Stock Units (Unvested and Accelerated) Benefits and Perquisites Health Benefit Continuation/COBRA Benefit Total Compensation Severance Short-term Incentive (5-year average) Short-term Incentive (pro rata) Long-term Incentives: Stock Options (Unvested and Accelerated) Service-based Restricted Stock Units (Unvested and Accelerated) Performance-based Restricted Stock Units (Unvested and Accelerated) Benefits and Perquisites Health Benefit Continuation/Retiree Health Plans Total Compensation Severance Short-term Incentive (5-year average) Short-term Incentive (pro rata) Long-term Incentives: Stock Options (Unvested and Accelerated) Service-based Restricted Stock Units (Unvested and Accelerated) Performance-based Restricted Stock Units (Unvested and Accelerated) Benefits and Perquisites Health Benefit Continuation/COBRA Benefit TotalFigures 36 – 40. Potential Payments to Mr. Bettinger upon Termination or Change in Control as of June 28, 2020 Involuntary Termination Voluntary
Termination
($) Disability or
Death
($) For
Cause
($) Not for
Cause
($) Change in
Control
($) — — — 659,200 988,800 — — — 389,171 1,167,512 — 274,667 — 274,667 324,309 — 582,422 — 177,873 1,253,792 — 6,321,458 — 239,596 12,882,814 — 4,407,716 — 3,768,925 6,553,993 — 25,235 — 25,235 25,235 — 11,611,498 — 5,534,667 23,196,455 Potential Payments to Dr. Gottscho upon Termination or Change in Control as of June 28, 2020 Involuntary Termination Voluntary
Termination
($) Disability or
Death
($) For
Cause
($) Not for
Cause
($) Change in
Control
($) — — — 596,031 894,047 — — — 389,149 1,167,446 — 223,512 — 223,512 324,291 — 497,974 — 160,560 1,094,679 — 1,017,375 — 232,940 2,300,967 — 4,249,801 — 3,677,740 6,184,368 673,000 673,000 673,000 673,000 673,000 673,000 6,661,662 673,000 5,952,932 12,638,798 Potential Payments to Dr. Lord upon Termination or Change in Control as of June 28, 2020 (1) Involuntary Termination Voluntary
Termination
($) Disability or
Death
($) For
Cause
($) Not for
Cause
($) Change in
Control
($) — — — — 764,775 — — — — 813,011 — — — — 225,836 — — — — 869,360 — — — — 2,012,666 — — — — 5,092,358 — — — — 25,235 — — — — 9,803,241
Potential Payments to NEOs
Potential Payments to Mr. Varadarajan upon Termination or Change in Control as of June 28, 2020 | ||||||||||||||||||||
Involuntary Termination | ||||||||||||||||||||
Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control ($) | ||||||||||||||||
Compensation | ||||||||||||||||||||
Severance | — | — | — | — | 720,588 | |||||||||||||||
Short-term Incentive (5-year average) | — | — | — | — | 757,832 | |||||||||||||||
Short-term Incentive (pro rata) | — | — | — | — | 210,509 | |||||||||||||||
Long-term Incentives: | ||||||||||||||||||||
Stock Options (Unvested and Accelerated) | — | — | — | — | 763,249 | |||||||||||||||
Service-based Restricted Stock Units (Unvested and Accelerated) | — | — | — | — | 1,754,616 | |||||||||||||||
Performance-based Restricted Stock Units (Unvested and Accelerated) | — | — | — | — | 4,475,186 | |||||||||||||||
Benefits and Perquisites | ||||||||||||||||||||
Health Benefit Continuation/COBRA Benefit | — | — | — | — | 23,581 | |||||||||||||||
Total | — | — | — | — | 8,705,561 |
(1) | The table summarizing the potential payments to Dr. Lord assumes that the employment termination or change in control occurs on the last day of fiscal year 2020, June 28, 2020. Following the end of fiscal year 2020, the Company and Dr. Lord entered into an employment agreement, as described above under “Potential Payments upon Termination or Change in Control—Executive Employment Agreements,” which replaced Dr. Lord’s prior change in control agreement. If Dr. Lord’s employment agreement had been in effect as of June 28, 2020, the potential payments to Dr. Lord would have been as follows: |
Potential Payments to Dr. Lord upon Termination or Change in Control as of June 28, 2020 | ||||||||||||||||||||
Involuntary Termination | ||||||||||||||||||||
Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control ($) | ||||||||||||||||
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Severance | — | — | — | 509,850 | 764,775 | |||||||||||||||
Short-term Incentive (5-year average) | — | — | — | 271,004 | 813,011 | |||||||||||||||
Short-term Incentive (pro rata) | — | 191,194 | — | 191,194 | 225,836 | |||||||||||||||
Long-term Incentives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Stock Options (Unvested and Accelerated) | — | 397,122 | — | 126,491 | 869,360 | |||||||||||||||
Service-based Restricted Stock Units (Unvested and Accelerated) | — | 905,140 | — | 180,907 | 2,012,666 | |||||||||||||||
Performance-based Restricted Stock Units (Unvested and Accelerated) | — | 3,447,215 | — | 2,893,643 | 5,092,358 | |||||||||||||||
Benefits and Perquisites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Health Benefit Continuation/COBRA Benefit | — | 25,235 | — | 25,235 | 25,235 | |||||||||||||||
Total | — | 4,965,906 | — | 4,198,324 | 9,803,241 |
Elective Deferred Compensation Plan
As described above in “Compensation Discussion and Analysis - Primary Components of NEO Compensation; CY2019 Compensation Payouts; CY2020 Compensation Targets and Metrics - Other Benefits Not Available to All Employees - Elective Deferred Compensation Plan”, the Company maintains an Elective Deferred Compensation Plan in which all of the NEOs are eligible to participate. In addition to the potential payments shown in Figure 53, in the event of a Change in Control (as defined in the Elective Deferred Compensation Plan), all amounts credited to a participating NEO’s account (other than amounts contributed through December 31, 2004, and earnings thereon) will be distributed in a lump sum payment on the first business day of the eighteenth month following such Change in Control. The balance, and applicable amounts, of each NEO’s account as of FYE2018the end of fiscal year 2020 are set forth in Figure 52, “FY2020 Non-Qualified Deferred Compensation”. Under the Elective Deferred Compensation Plan, amounts may be withdrawn or distributed from the plan through pre-scheduled payments or upon death, retirement, disability or a separation from service, as elected in advance by the participant in accordance with the terms of the plan.
Potential Payments to Mr. Anstice upon Termination or Change in Control as of June 24, 2018 | ||||||||||||||||||||
Involuntary Termination | ||||||||||||||||||||
Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control ($) | ||||||||||||||||
Compensation | ||||||||||||||||||||
Severance |
| — |
|
| — |
|
| — |
|
| 1,537,500 |
|
| 2,050,000 |
| |||||
Short-term Incentive(5-year average) |
| — |
|
| — |
|
| — |
|
| 2,139,414 |
|
| 4,278,828 |
| |||||
Short-term Incentive (pro rata) |
| — |
|
| 640,625 |
|
| — |
|
| 640,625 |
|
| 891,423 |
| |||||
Long-term Incentives: | ||||||||||||||||||||
Stock Options (Unvested and Accelerated) |
| — |
|
| 791,204 |
|
| — |
|
| 664,505 |
|
| 3,164,818 |
| |||||
Service-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| 2,933,737 |
|
| — |
|
| 876,186 |
|
| 8,424,383 |
| |||||
Performance-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| 17,319,781 |
|
| — |
|
| 15,796,110 |
|
| 24,530,835 |
| |||||
Benefits and Perquisites | ||||||||||||||||||||
Health Benefit Continuation/COBRA Benefit |
| — |
|
| 23,080 |
|
| — |
|
| 23,080 |
|
| 23,080 |
| |||||
Total |
| — |
|
| 21,708,427 |
|
| — |
|
| 21,677,420 |
|
| 43,363,367 |
|
Potential Payments to Mr. Archer upon Termination or Change in Control as of June 24, 2018 | ||||||||||||||||||||
Involuntary Termination | ||||||||||||||||||||
Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control ($) | ||||||||||||||||
Compensation | ||||||||||||||||||||
Severance |
| — |
|
| — |
|
| — |
|
| 688,418 |
|
| 1,032,627 |
| |||||
Short-term Incentive(5-year average) |
| — |
|
| — |
|
| — |
|
| 532,121 |
|
| 1,596,362 |
| |||||
Short-term Incentive (pro rata) |
| — |
|
| 358,551 |
|
| — |
|
| 358,551 |
|
| 443,434 |
| |||||
Long-term Incentives: | ||||||||||||||||||||
Stock Options (Unvested and Accelerated) |
| — |
|
| 429,360 |
|
| — |
|
| 358,097 |
|
| 1,717,441 |
| |||||
Service-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| 1,624,841 |
|
| — |
|
| 479,027 |
|
| 4,660,297 |
| |||||
Performance-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| 9,399,793 |
|
| — |
|
| 8,551,227 |
|
| 13,383,723 |
| |||||
Benefits and Perquisites | ||||||||||||||||||||
Health Benefit Continuation/COBRA Benefit |
| — |
|
| 34,620 |
|
| — |
|
| 34,620 |
|
| 34,620 |
| |||||
Total |
| — |
|
| 11,847,165 |
|
| — |
|
| 11,002,061 |
|
| 22,868,504 |
|
Potential Payments to Mr. Bettinger upon Termination or Change in Control as of June 24, 2018 | ||||||||||||||||||||
Involuntary Termination | ||||||||||||||||||||
Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control ($) | ||||||||||||||||
Compensation | ||||||||||||||||||||
Severance |
| — |
|
| — |
|
| — |
|
| 592,770 |
|
| 889,155 |
| |||||
Short-term Incentive(5-year average) |
| — |
|
| — |
|
| — |
|
| 351,106 |
|
| 1,053,317 |
| |||||
Short-term Incentive (pro rata) |
| — |
|
| 222,289 |
|
| — |
|
| 222,289 |
|
| 292,588 |
| |||||
Long-term Incentives: | ||||||||||||||||||||
Stock Options (Unvested and Accelerated) |
| — |
|
| 284,293 |
|
| — |
|
| 240,744 |
|
| 1,137,172 |
| |||||
Service-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| 864,110 |
|
| — |
|
| 312,058 |
|
| 2,628,886 |
| |||||
Performance-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| 6,058,295 |
|
| — |
|
| 5,648,981 |
|
| 8,358,149 |
| |||||
Benefits and Perquisites | ||||||||||||||||||||
Health Benefit Continuation/COBRA Benefit |
| — |
|
| 24,296 |
|
| — |
|
| 24,296 |
|
| 24,296 |
| |||||
Total |
| — |
|
| 7,453,283 |
|
| — |
|
| 7,392,244 |
|
| 14,383,563 |
|
Potential Payments to Dr. Gottscho upon Termination or Change in Control as of June 24, 2018 | ||||||||||||||||||||
Involuntary Termination | ||||||||||||||||||||
Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control ($) | ||||||||||||||||
Compensation | ||||||||||||||||||||
Severance |
| — |
|
| — |
|
| — |
|
| 567,324 |
|
| 850,986 |
| |||||
Short-term Incentive(5-year average) |
| — |
|
| — |
|
| — |
|
| 376,142 |
|
| 1,128,426 |
| |||||
Short-term Incentive (pro rata) |
| — |
|
| 212,747 |
|
| — |
|
| 212,747 |
|
| 313,452 |
| |||||
Long-term Incentives: | ||||||||||||||||||||
Stock Options (Unvested and Accelerated) |
| — |
|
| 335,977 |
|
| — |
|
| 284,504 |
|
| 1,343,909 |
| |||||
Service-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| 991,947 |
|
| — |
|
| 368,792 |
|
| 3,048,340 |
| |||||
Performance-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| 7,130,669 |
|
| — |
|
| 6,668,493 |
|
| 9,806,776 |
| |||||
Benefits and Perquisites | ||||||||||||||||||||
Health Benefit Continuation/Retiree Health Plans |
| 648,000 |
|
| 648,000 |
|
| 648,000 |
|
| 648,000 |
|
| 648,000 |
| |||||
Total |
| 648,000 |
|
| 9,319,340 |
|
| 648,000 |
|
| 9,126,002 |
|
| 17,139,889 |
|
Potential Payments to Dr. Meikle upon Termination or Change in Control as of June 24, 2018 | ||||||||||||||||||||
Involuntary Termination | ||||||||||||||||||||
Voluntary Termination ($) | Disability or Death ($) | For Cause ($) | Not for Cause ($) | Change in Control ($) | ||||||||||||||||
Compensation | ||||||||||||||||||||
Severance |
| — |
|
| — |
|
| — |
|
| — |
|
| 645,000 |
| |||||
Short-term Incentive(5-year average) |
| — |
|
| — |
|
| — |
|
| — |
|
| 1,020,600 |
| |||||
Short-term Incentive (pro rata) |
| — |
|
| — |
|
| — |
|
| — |
|
| 283,500 |
| |||||
Long-term Incentives: | ||||||||||||||||||||
Stock Options (Unvested and Accelerated) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Service-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| — |
|
| — |
|
| — |
|
| 3,748,713 |
| |||||
Performance-based Restricted Stock Units (Unvested and Accelerated) |
| — |
|
| — |
|
| — |
|
| — |
|
| 559,490 |
| |||||
Benefits and Perquisites | ||||||||||||||||||||
Health Benefit Continuation/COBRA Benefit |
| — |
|
| 23,080 |
|
| — |
|
| 23,080 |
|
| 23,080 |
| |||||
Total |
| — |
|
| 23,080 |
|
| — |
|
| 23,080 |
|
| 6,280,383 |
|
Continues on next page u
Lam Research Corporation |
In accordance with SEC rules, we are providing the ratio of the annual total compensation of our Chief Executive Officer, or the CEO, to the median of the annual total compensation of our employees (other than the CEO). The fiscal year 20182020 annual total compensation of our CEO, Mr. Anstice,Archer, was $12,848,645,$11,753,004, the fiscal year 20182020 annual total compensation of our median compensated employee (other than the CEO) was $95,770,$104,541, and the ratio of these amounts was 134112 to 1.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources system of record and the methodology described below. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
As permitted under the SEC rules, we are using the same median employee identified for purposes of our fiscal year 2019 and 2018 CEO pay ratios, as we believe the changes to our employee population and compensation have not significantly impacted our pay ratio. For purposes of identifying our median compensated employee in fiscal year 2018, we used our global employee population as of June 24, 2018, identified based on our human resources system of record. We used total direct compensation as our consistently applied compensation measure for such population. In this context, total direct compensation means the sum of the applicable annual base salarysalaries determined as of June 24, 2018, the incentive cash target amount payable for service in calendar year 2018, and the approved value of the annual equity awards granted during fiscal year 2018.2018 for our global employee population. We annualized the annual base salary and incentive cash target amountamounts for all permanent employees who did not work for the entire year. Given its global population, the Company used the foreign currency exchange rates in effect at the end of fiscal year 2018 to determine the annual total direct compensation and therefore the median compensated employee. After identifying our median compensated employee, we then calculated the annual total direct compensation for our median compensated employee using the same methodology used for the Company’s CEO as set forth in the “Summary Compensation Table”of this proxy statement.
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information, as of June 24, 2018,28, 2020, regarding securities authorized for issuance under the Company’s equity compensation plans. The Company’s equity compensation plans include the 1999 Employee Stock Purchase Plan, the 2007 Stock Incentive Plan, the 2011 Stock Incentive Plan, and the 2015 Stock Incentive Plan, each as amended and as may be amended. Since November 4, 2015, the Company has issued awards under the 1999 Employee Stock Purchase Plan and the 2015 Stock Incentive Plan, each as amended. As of August 29, 2018 theThe 1999 Employee Stock Purchase Plan was amended and restated by the Board subject to stockholder approvalon August 29, 2018 and approved at this year’s annual meeting.the 2018 Annual Meeting of Stockholders. Please see “Proposal No. 3: Approval of the Adoption of the Lam Research Corporation 1999 Employee Stock Purchase Plan, as Amended and Restated” in the 2018 proxy statement for additional information.
Figure 41. FYE201854. FYE2020 Securities Authorized for Issuance under Equity Compensation Plans
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights (1) ($) (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (c) | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a) | Weighted-Average ($) (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (c) | ||||||||||||||||||
Equity compensation plans approved by security holders | 3,241,355 | (2) | 100.47 | 15,331,136 | (3) | 2,235,376 | (2) | 158.01 | 15,325,477 | (3) | ||||||||||||||
Equity compensation plans not approved by security holders | 128,387 | (4) | 40.46 | — | 49,385 | (4) | 47.99 | — | ||||||||||||||||
Total | 3,369,742 | 86.53 | 15,331,136 | 2,284,761 | 144.63 | 15,325,477 |
(1) | Does not include |
(2) | Includes |
(3) | Includes |
(4) | Includes |
Continues on next page u
Lam Research Corporation |
|
The audit committee operates under a written charter adopted by the Board that outlines its purpose and responsibilities. The audit committee reviews and assesses the adequacy of its charter at least annually and, when appropriate, recommends to the Board changes to its charter to reflect the evolving role of the audit committee. The charter of the audit committee is available on the Investors section of our website at https://investor.lamresearch.com/corporate-governance.
The audit committee is composed entirely of directors who meet the independence requirements of Nasdaq and the SEC, and who otherwise satisfy the requirements for audit committee service imposed by the Exchange Act. The Board has designated all of the audit committee members as “audit committee financial experts” under the SEC rules.
The Company’s management, audit committee, and independent registered public accounting firm (Ernst & Young LLP) have specific but different responsibilities relating to Lam’s financial reporting. Lam’s management is responsible for the preparation, presentation and integrity of financial statements and for the system of internal control and the financial reporting process. Ernst & Young LLP, or “EY,” has the responsibility to express an opinion on the financial statements and the system of internal control over financial reporting, based on the audit they conducted in accordance with the standards of the Public Company Accounting Oversight Board (U.S.). The audit committee is responsible for monitoring and overseeing these processes. The audit committee relies on the expertise and knowledge of management, the internal audit department, and the independent auditor in carrying out its oversight responsibilities.
In accordance with applicable law, the audit committee has ultimate authority and responsibility for selecting, compensating, evaluating, and, when appropriate, replacing the Company’s independent audit firm, and evaluates its independence. The audit committee has the authority to engage its own outside advisors, including experts as the committee considers necessary to carry out its responsibilities, apart from counsel or advisors hired by management.
In this context and in connection with the audited financial statements contained in the Company’s Annual Report on Form10-K for the fiscal year ended June 24, 2018,28, 2020, the audit committee took the following actions:
Received and discussed the audited financial statements with Company management;
Discussed with EY the matters required to be discussed by applicable auditing standardsrequirements of the Public Company Accounting Oversight Board, or the “PCAOB”;
Received and discussed the written disclosures and the letter from EY as per applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the audit committee concerning independence, and discussed with EY its independence; and
Based on the foregoing reviews and discussions, recommended to the Board that the audited financial statements be included in the Company’s 20182020 Annual Report on Form10-K for the fiscal year ended June 24, 201828, 2020 for filing with the SEC.
This Audit Committee Report shall not be deemed “filed” with the SEC for purposes of federal securities law, and it shall not, under any circumstances, be incorporated by reference into any of the Company’s past or future SEC filings. The report shall not be deemed soliciting material.
MEMBERS OF THE AUDIT COMMITTEE
Eric K. Brandt (Chair)
Michael R. Cannon
Christine A. HeckartBethany J. Mayer
Leslie F. Varon
Relationship with Independent Registered Public Accounting Firm
EY has audited the Company’s consolidated financial statements since the Company’s inception.
Annual Evaluation and Selection of Independent Registered Public Accounting Firm
The audit committee annually evaluates the performance of the Company’s independent registered public accounting firm, including the senior audit engagement team, and determines whether to reengage the current accounting firm or consider other audit firms. Factors considered by the audit committee in deciding whether to retain EY include: (1) EY’s global
capabilities to handle the breadth and complexity of the Company’s global operations; (2) EY’s technical expertise and knowledge of the Company’s industry and global operations; (3) the quality and candor of EY’s communications with the audit committee and management; (4) EY’s independence; (5) the quality and efficiency of the services provided by EY, including input from management on EY’s performance and how effectively EY demonstrated its independent judgment, objectivity and professional skepticism; (6) the appropriateness of EY’s fees; and (7) EY’s tenure as our independent auditor, including the benefits of that tenure, and the controls and processes in place (such as rotation of key partners) that help ensure EY’s continued independence in light of such tenure.
Figure 42.55. Independent Registered Public Accounting Firm Evaluation and Selection Highlights
Independence Controls |
Audit Committee Oversight – Oversight includes regular private sessions with EY, discussions with EY about the scope of its audit and business imperatives, a comprehensive annual evaluation when determining whether to engage EY, and direct involvement by the audit committee and its chair in the selection of a new this position. |
Limits onNon-Audit Services – The audit committee preapproves audit and permissiblenon-audit services provided by EY in accordance with itspre-approval policy. |
EY’s Internal Independence Process – EY conducts periodic internal reviews of its audit and other work, assesses the adequacy of partners and other personnel working on the Company’s account, and rotates the lead assurance engagement partner, the global coordinating partner, and other partners on the engagement consistent with independence and rotation requirements established by the PCAOB and SEC. |
Strong Regulatory Framework – EY, as an independent registered public accounting firm, is subject to PCAOB inspections, |
Benefits of Longer Tenure |
Enhanced Audit Quality – EY’s significant institutional knowledge of, and deep expertise |
Competitive Fees – Because of EY’s familiarity with the Company and the industry, audit and other fees are competitive with peer independent registered public accounting firms. |
Avoid Costs Associated with New Auditor – Bringing on a new independent registered public accounting firm would be costly and require a significant time commitment, which could lead to management distractions. |
The table below shows the fees billed by EY for audit and other services provided to the Company in fiscal years 20182020 and 2017.2019.
Figure 43. FY2018/201756. FY2020/2019 Fees Billed by Ernst & Young LLP
Fiscal Year 2018 ($) | Fiscal Year 2017 ($) | |||||||
Audit Fees(1) |
| 4,605,495 |
|
| 4,176,990 |
| ||
Audit-Related Fees(2) |
| 90,500 |
|
| 135,684 |
| ||
Tax Fees(3) |
| 34,888 |
|
| 71,673 |
| ||
All Other Fees |
| — |
|
| — |
| ||
TOTAL |
| 4,730,883 |
|
| 4,384,347 |
|
Fiscal Year 2020 ($) | Fiscal Year 2019 ($) | |||||||
Audit Fees (1) | 4,504,880 | 4,703,830 | ||||||
Audit-Related Fees (2) | 7,000 | 27,000 | ||||||
Tax Fees (3) | 211,416 | 194,170 | ||||||
All Other Fees | — | — | ||||||
TOTAL | 4,723,296 | 4,925,000 |
(1) | Audit Fees represent fees for professional services provided in connection with the audits of annual financial statements. Audit Fees also include reviews of quarterly financial statements, audit services related to other statutory or regulatory filings or engagements, and fees related to EY’s audit of the effectiveness of the Company’s internal control over financial reporting pursuant to section 404 of the Sarbanes-Oxley Act. |
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 53 |
(2) | Audit-Related Fees represent fees for assurance and related services that are reasonably related to the audit or review of the Company’s financial statements and are not reported above under “Audit Fees”. These fees principally include due diligence and accounting consultation fees in connection with |
(3) | Tax Fees represent fees for professional services for tax planning, tax compliance and review services related to foreign tax compliance and assistance with tax audits and appeals. |
Continues on next page u
The audit committee reviewed summaries of the services provided by EY and the related fees during fiscal year 20182020 and has determined that the provision ofnon-audit services was compatible with maintaining the independence of EY as the Company’s independent registered public accounting firm. The audit committee or its delegate approved 100% of the services and related fee amounts for services provided by EY during fiscal year 2018.2020.
Policy on Audit CommitteePre-Approval of Audit andNon-Audit Services
It is the responsibility of the audit committee to approve, in accordance with sections 10A(h) and (i) of the Exchange Act and the rules and regulations of the SEC, all professional services to be provided to us by our independent registered public accounting firm, provided that the audit committee shallmay not approve anynon-audit services proscribed by section 10A(g) of the Exchange Act in the absence of an applicable exemption.
It is our policy that the audit committeepre-approves all audit and permissiblenon-audit services provided by our independent registered public accounting firm, consistent with the criteria set forth in the audit committee charter and applicable laws and regulations. The audit committee has delegated to the chair of the audit committee the authority topre-approve such services, provided that the chair shall report any decisions topre-approve such services to the full audit committee at its next regular meeting. These services may include audit services, audit-related services, tax services, and other services. Our independent registered public accounting firm and our management are required to periodically report to the audit committee regarding the extent of services provided by our independent registered public accounting firm pursuant to any suchpre-approval.
Certain Relationships and Related Party Transactions
The audit committee is responsible for the review and oversight of all related party transactions required to be disclosed to the public under SEC rules pursuant to its written charter. In addition, the Company maintains a written code of ethics that requires all employees, officers and directors to act ethically when handling any actual or apparent conflicts of interest in personal and professional relationships and to promptly report any such issues to the Company’s legal department.
No family relationships exist as of the date of this proxy statement or existed during fiscal year 20182020 among any of our directors and executive officers. There was only onewere three related party transactiontransactions (including employment and compensation associated therewith) that occurred since the beginning of fiscal year 2020:
year 2018. The son of Stephen G. Newberry, who was the former chairman of our Board prior to his retirement from the Board effective as of November 4, 2019, Ryan Newberry, is employed by the Company as a manager of security. In addition, the
The daughter-in-law of Stephen G. Newberry, Meghan Newberry, is employed by the Company as a manager of materials in the supply chain operations group.
The brother-in-law of Ava Hahn, our Senior Vice President, Chief Legal Officer and Secretary, Eric Samulon, is employed by the Company as a senior manager of product development in the etch business unit.
In fiscal year 2018,2020, the aggregate compensation paid to Ryan Newberry, and Meghan Newberry and Eric Samulon, including salary, incentive compensation, the grant date value of long-term incentive awards and the value of any other health and other benefits contributed to or paid for by the Company, was less than $200,000$250,000 each. The aggregate compensation for each is similar to the aggregate compensation of other employees holding equivalent positions.
|
Proposal No. 1: Election of Directors
This first proposal relates to the election to ourthe Board of nine nominees who are directors of the Company as of the date of this proxy statement. In general, the nine nominees identified in this proposal who receive the highest number of “for” votes will be elected. However, any nominee who fails to receive affirmative approval from holders of a majority of the votes cast in such nominee’s election at the annual meeting, either by proxy or in person, will not be elected to the Board, even if he or she is among the top nine nominees in total “for” votes. This requirement reflects the majority vote provisions implemented by the Company in November 2009. The term of office of each person elected as a director will be until the next annual meeting of stockholders, andor until his or her successor is elected and qualified or until his or her earlier resignation or removal.
Unless otherwise instructed, the people named on the proxy card as proxy holders, the “Proxy Holders,” will vote the proxies received by them for the nine nominees named below, each of whom is currently a director of the Company. The proxies cannot be voted for more than nine nominees, whether or not there are additional nominees. If any nominee of the Company should decline or be unable to serve as a director as of the time of the annual meeting, andthen unless otherwise instructed, the proxies will be voted for any substitute nominee designated by the presentthen-current Board to fill the vacancy. The Company is not aware of any nominee who will be unable, or will decline, to serve as a director.
The nominees for election or reelection have been nominated for election to the Board in accordance with the criteria and procedures discussed above in “Governance Matters -Corporate Governance.”
Board Size.The nine directors to be elected in this proposal are fewer than the 10 members of the Board as of the date of mailing. As is discussed above in “Governance Matters -Corporate Governance,” one of our current directors, Dr. El-Mansy, is retiring from the Board effective as of November 1, 2020, and the size of the Board will be reduced to nine prior to the 2020 annual meeting.
Information regarding each nominee.Regarding Each Nominee.In addition to the biographical information concerning each nominee’s specific experience, attributes, positions and qualifications and age as of September 7, 2018,4, 2020, we believe that each of our nominees, while serving as a director and/or officer of the Company, has devoted adequate time to the Board and performed his or her duties with critical attributes such as honesty, integrity, wisdom, and an adherence to high ethical standards. Each nominee has demonstrated strong business acumen, an ability to make independent analytical inquiries, to understand the Company’s business environment and to exercise sound judgment, as well as a commitment to the Company and its core values. We believe the nominees have an appropriate diversity and interplay ofdiverse viewpoints, skills, backgrounds, and experiences that will encourage a robust decision-making process for the Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NINE DIRECTOR NOMINEES SET FORTH BELOW.
Continues on next page u
Lam Research Corporation |
20182020 Nominees for Director
Director since Age |
| Mr. Ahmed is the Mr. Ahmed earned an M.S. degree in chemical engineering from the
The Board has concluded that Mr. | ||
Timothy M. Archer Director since 2018 Age 53 | Timothy M. Archer has served as the Company’s President and Chief Executive Officer since December 5, 2018. Mr. Archer joined the Company in June 2012 as our executive vice president, chief operating officer; and was promoted to president and chief operating officer in January 2018. Prior to joining us, he spent 18 years at Novellus Systems, Inc. in various technology development and business leadership roles, including most recently as chief operating officer from January 2011 to June 2012; executive vice president of Worldwide Sales, Marketing, and Customer Satisfaction from September 2009 to January 2011; and executive vice president of the Mr. Archer completed the Program for Management Development at the Harvard Graduate School of Business and earned a B.S. degree in applied physics from the California Institute of Technology. The Board has concluded that Mr. Archer should serve as a director of the Company because of his strong leadership; his knowledge and experience acquired from his current service as President, Chief Executive Officer and a director of the Company, and his past service as President and Chief Operating Officer, and experience. |
Eric K. Brandt Director since 2010 Age
Board Committees: •Audit ° Chair since 2014 ° Member: 2010-2014 • Nominating and Governance ° Member since 2019
Public company ships in last five years: • • Dentsply Sirona Inc. • The Macerich Company • Altaba Inc. (former) • Yahoo! Inc. (former) |
| Eric K. Brandt is the former Executive Vice President and Chief Financial Officer of Broadcom Corporation, a global supplier of semiconductor devices, a position he held from March 2007 until its merger with Avago Technologies Limited in February 2016. From September 2005 to March 2007, Mr. Brandt served as President and Chief Executive Officer of Avanir Pharmaceuticals, Inc., a pharmaceutical company. Prior to Avanir Pharmaceuticals, Mr. Brandt was Executive Vice President-Finance and Technical Operations and Chief Financial Officer of Allergan Inc., a global specialty pharmaceutical company, where he also held a number of other senior positions following his arrival there in May 1999.
Mr. Brandt has served as a member of the board of directors of: NortonLifeLock, Inc., a consumer cyber security provider, since February 2020, where he is the chair of the audit committee; The Macerich Company, a real estate investment trust focused on regional malls, since June 2018, where he is a member of the compensation committee; Altaba Inc. (formerly Yahoo! Inc.), a management investment company that remained and was subsequently renamed following the completion of Yahoo!’s sale of its operating businesses in June 2017 (and which is in the process of a stockholder approved plan of dissolution and liquidation), since its inception, where he has served as chairman of the board, chair of the audit committee and nominating and governance committee, and a member of the compensation committee; and Dentsply Sirona Inc. (formerly Dentsply International, Inc.), a manufacturer and distributor of dental product solutions, since 2004, where he
He previously served on the board of directors of: MC10, Inc., a privately-held medical device Internet of Things (IoT) company, from March 2016 until February 2018, where he was chair of the compensation committee and governance committee; Yahoo! Inc., a digital information discovery company, since March 2016 to June 2017, where he was chairman of the board and chair of the audit and finance committee; Vertex Pharmaceuticals, Inc., a pharmaceutical company, from 2002 to 2009, where he was chair of the audit committee, and a member of the nominating and governance committee; and Avanir Pharmaceuticals from 2005 to 2007.
Mr. Brandt earned an M.B.A. degree from the Harvard Graduate School of Business and a B.S. degree in chemical engineering from the Massachusetts Institute of Technology.
The Board has concluded that Mr. Brandt |
Lam Research Corporation 2020 Proxy Statement | 57 |
Michael R. Cannon Director since 2011 Age
Board Committees: •Audit ° Member since 2011 •
° Chair since 2019 °Member
Public company director-ships in last five years: • Dialog Semiconductor • Seagate Technology Public Limited • Adobe Systems Inc. (former) |
| Michael R. Cannon is the General Partner of MRC & LBC Partners, LLC, a private management consulting company. From February 2007 until his retirement in January 2009, Mr. Cannon served as President of Global Operations of Dell Inc., a computer systems manufacturer and services provider; and from January 2009 to January 2011, he served as a consultant to Dell. Prior to joining Dell, he was President and Chief Executive Officer of Solectron Corporation, an electronic manufacturing services company, from January 2003 to February 2007. From July 1996 to January 2003, Mr. Cannon served as President and Chief Executive Officer of Maxtor Corporation, a disk drive and storage systems manufacturer. Prior to joining Maxtor, Mr. Cannon held senior management positions at International Business Machines Corp. (IBM), a global services, software and systems company.
Mr. Cannon has served as a member of the board of directors of: Seagate Technology Public Limited, a disk drive and storage solutions company, since February 2011, where he became
He previously served on the board of directors of Adobe Systems Inc., a diversified software company, from December 2003 to April 2016, where he had been a member of the audit committee and chair of the compensation committee; Elster Group SE, a precision metering and smart grid technology company, from October 2010 until the company was acquired in August 2012; Solectron Corporation, an electronic manufacturing services company, from January 2003 to January 2007; and Maxtor Corporation, a disk drive and storage solutions company, from July 1996 until Seagate acquired Maxtor in May 2006.
Mr. Cannon studied mechanical engineering at Michigan State University and completed the Advanced Management Program at the Harvard Graduate School of Business.
The Board has concluded that Mr. Cannon |
Continues on next page u
|
| |
|
|
Catherine P. Lego Director since 2006 Age
Board Committees: •Audit ° Chair: 2009 – 2014 °Member: 2006 – 2015 •Compensation and Human Resources ° Chair since 2015 •Nominating and Governance °Member since 2014
Public company director-ships in last five years: • • Guidewire Software, Inc. • IPG Photonics Corporation • Cypress Semiconductor Corp. (former) • Fairchild Semiconductor International Inc. (former) • SanDisk Corporation (former) |
| Catherine P. Lego is the founder of Lego Ventures LLC, a consulting services firm for early stage electronics companies,
Ms. Lego has served as a member of the board of directors
She previously served on the board of directors of the following public companies: Cypress Semiconductor Corp., an advanced embedded solutions company for automotive and other products, from September 2017 to April 2020, where she was the chair of the audit committee and a member of the nominating and corporate governance committee; Fairchild Semiconductor International Inc., a fabricator of power management devices, from August 2013 to September 2016, where she was a member of the compensation committee and nominating and governance committee; SanDisk Corporation, a global developer of flash memory storage solutions from 1989 to 2016, where she was the chair of the audit committee; ETEC Corporation, a producer of electron beam lithography tools, from 1991 through 1997; Uniphase Corporation (presently JDS Uniphase Corporation), a designer and manufacturer of components and modules for the fiber optic based telecommunications industry and laser-based semiconductor defect examination and analysis equipment, from 1994 until 1999, when it merged with JDS Fitel; Zitel Corporation, an information technology company, from 1995 to 2000; WJ Communications, Inc., a broadband communications company, from October 2004 to May 2008; and Micro Linear Corporation, a fabless analog semiconductor company. Ms. Lego also served as a member of the board of directors of other technology companies that are privately-held.
Ms. Lego earned an M.S. degree in accounting from the New York University Leonard N. Stern School of Business and a B.A. degree in economics and biology from Williams College.
The Board has concluded that Ms. Lego |
Continues on next page u
Lam Research Corporation |
Director since Age Board Committees: • Audit °Member since 2019
Public company director- ships in last five years: • • • Sempra Energy • Delphi Automotive PLC (former) • Ixia (former) |
| Bethany J. Mayer has served as an Executive Partner of Siris Capital Group LLC, a private equity firm, since January 2018. She was the
Ms. Mayer earned an M.B.A. degree from CSU-Monterey Bay and a B.S. degree in
The Board has concluded that boards. |
Abhijit Y. Talwalkar
Director since 2011 Age
Board Committees: • ���Compensation and Human Resources °Chair: 2012 – 2015 °Member since 2015 •Nominating and Governance ° °
Public company director- ships in last five years: • Advanced Micro Devices Inc. • iRhythm Technologies Inc. • TE Connectivity Ltd.
|
| Abhijit Y. Talwalkar is the former President and Chief Executive Officer of LSI Corporation, a leading provider of silicon, systems and software technologies for the storage and networking markets, a position he held from May 2005 until the completion of LSI’s merger with Avago Technologies in May 2014. From 1993 to 2005, Mr. Talwalkar was employed by Intel Corporation, a leading producer of microchips, computing and communications products. At Intel, he held a number of senior management positions, including as Corporate Vice President andCo-General Manager of the Digital Enterprise Group, which was comprised of Intel’s business client, server, storage and communications business, and as Vice President and General Manager for the Intel Enterprise Platform Group, where he focused on developing, marketing, and supporting Intel business strategies for enterprise computing. Prior to joining Intel, Mr. Talwalkar held senior engineering and marketing positions at Sequent Computer Systems, a multiprocessing computer systems design and manufacturer that later became a part of IBM; Bipolar Integrated Technology, Inc., a
Mr. Talwalkar has served as a member of the board of directors of: Advanced Micro Devices Inc., a developer of high performance computing, graphics and visualization technologies, since June 2017, where he
He previously served as a member of the board of directors of LSI from May 2005 to May 2014 and the U.S. Semiconductor Industry Association
Mr. Talwalkar earned a B.S. degree in electrical engineering from Oregon State University.
The Board has concluded that Mr. Talwalkar |
Continues on next page u
Lam Research Corporation |
Lih Shyng (Rick L.) Tsai Director since 2016 Age Board Committees: • Compensation and Human Resources ° Member since 2019
Public company director-ships in last five years: • MediaTek Inc. •
• NXP Semiconductors N.V. (former) • USI Corporation (former) |
| Rick L. Tsai has served as the CEO of MediaTek Inc., a
Dr. Tsai has served as a member of the board of directors
He previously served on the board of directors of: USI Corporation, a Taiwanese-listed polyethylene manufacturer, from June 2014 until March 2019; NXP Semiconductors N.V., from July 2014 until June 2017; Chunghwa Telecom from January 2014 until December 2016, where he served as chairman; TSMC from 2003 to 2013; TSMC Solar and TSMC SSL from August 2011 to January 2014, where he served as their chairman; and Taiwan Semiconductor Industry Association (TSIA) from June 2009 to March 2013, where he served as chairman.
Dr. Tsai earned a Ph.D. degree in material science and engineering from Cornell University and a B.S. degree in physics from the National Taiwan University in Taipei, Taiwan.
The Board has concluded that Dr. Tsai | ||
Leslie F. Varon Director since 2019 Age 63 Board Committees: • Audit ° Member since 2019 Public company director- ships in • Dentsply Sirona Inc. • Hamilton Lane | Leslie F. Varon is the former Chief Financial Officer of Xerox Corporation, a document solutions company, a position she held from November 2015 until December 2016. From January 2017 until March 2017, when she retired from the company, she was a Special Advisor to Ms. Varon has served as a member of the boards of directors of: Dentsply Sirona, Inc., a manufacturer and distributor of dental product solutions, since January 2018, where she chairs the audit and finance committee; and Hamilton Lane, a private markets investment company, since May 2017, where she is the chair of the audit committee. She previously served on the board of directors of Xerox International Partners, a joint venture of Xerox and Fuji Xerox, from July 2006 until March 2017. Ms. Varon earned an M.B.A. degree from Virginia Tech, and a B.S. degree in Psychology from Binghamton University. The Board acquisitions experience. |
Proposal No. 2: Advisory Vote to Approve Our Named Executive Officer Compensation, or “Say on Pay”
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and section 14A of the Exchange Act enablesenable the Company’s stockholders to vote to approve, on an advisory ornon-binding basis, our named executive officer compensation, as disclosed in this proxy statement in accordance with SEC rules. Although the vote is advisory and is not binding on us or on our Board, our compensation and human resources committee and, as appropriate, our Board, will take into account the outcome of the vote when considering future executive compensation decisions and will evaluate whether any actions are necessary to address stockholder concerns.
We believe that our compensation philosophy has allowed us to attract, retain, and motivate qualified executive officers who have contributed to our success. For more information regarding the compensation of our named executive officers, our compensation philosophy, our 20172019 Say on Pay results and our response, we encourage you to read the section of this proxy statement entitled “Compensation Matters–- Executive Compensation and Other Information –- Compensation Discussion and Analysis,” the compensation tables, and the narrative following the compensation tables for a more detailed discussion of our compensation policies and practices.
We are asking for stockholder approval, on an advisory ornon-binding basis, of the following resolution:
‘RESOLVED, that the stockholders of Lam Research Corporation (the Company) hereby approve, on an advisory
basis, the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of SEC RegulationS-K, including the “Compensation Discussion and Analysis,” the compensation tables and any related narrative disclosure included in the proxy statement.’
Each proxy received by the Proxy Holders will be voted “FOR” the advisory vote to approve the compensation of our named executive officers, unless the stockholder provides other instructions.
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the policies and practices described in this proxy statement.
We provide for annual advisory votes to approve the compensation of our named executive officers. Unless modified, the next advisory vote to approve our named executive officer compensation will be at the 20182021 annual meeting.
Stockholder approval of Proposal No. 2 requires the affirmative vote of the holders of a majority of the outstanding shares of common stock having voting power present, in person or by proxy, at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY ORNON-BINDING BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION.
Continues on next page u
Lam Research Corporation |
Proposal No. 3: Approval of the Adoption of the Lam Research Corporation 1999 Employee Stock Purchase Plan, as Amended and Restated
Stockholders are being asked to approve the Lam Research Corporation 1999 Employee Stock Purchase Plan, or “the ESPP,” as amended and restated.
The Board originally adopted the ESPP on September 30, 1998, and stockholders originally approved the ESPP on November 5, 1998. Amendments to the ESPP were subsequently adopted by the Board and compensation committee on August 21, 2003 and September 18, 2003, respectively, and approved by stockholders on November 6, 2003. The compensation committee further amended and restated the ESPP on December 18, 2009, May 20, 2010, August 27, 2012, and November 1, 2012. Lastly, on August 29, 2018, the Board further amended and restated the ESPP (the “Revised ESPP”), subject to stockholder approval pursuant to applicable stock exchange requirements. The changes approved by the Board in August 2018 are hereinafter referred to as the “Amendment.” If the Revised ESPP is approved by stockholders, the Revised ESPP will be effective.
The principal features and purpose of the Revised ESPP are summarized below. The following summary of the Revised ESPP does not purport to be a complete description of all of the provisions of the Revised ESPP and is qualified in its entirety by reference to the complete text of the Revised ESPP, which has been filed with the SEC asAppendix A to this proxy statement. Capitalized terms used but not defined in the summary have the meaning specified in the Revised ESPP.
Immediately prior to August 29, 2018, the number of shares of common stock reserved for issuance under the ESPP was 24,309,281 shares, of which 4,995,845 remained available for issuance.
Summary of Amendment
The Amendment would (1) increase the number of shares of common stock available for issuance under the ESPP and (2) extend the term of the ESPP for an additional ten years.
Increase in Shares Available for Issuance.The Amendment to the ESPP would increase the maximum number of shares available for purchases of common stock from the remaining 4,995,845 shares to 7,550,771 shares, which is an increase of 2,554,926 shares. This increase is 1.7% of our outstanding common stock as of September 7, 2018 and the maximum number of shares remaining available for issuance under the ESPP is 5% of our outstanding common stock as of September 7, 2018. These percentages reflect the simple dilution of our stockholders that would occur if the proposed Amendment to the ESPP is approved.
Based on the closing price on Nasdaq of our common stock on September 7, 2018, of $159.58 per share, the aggregate market value as of that date of the additional 2,554,926 shares of common stock requested under the Amendment was $407,715,091.
Extension of Term.The Amendment would also extend the term of the ESPP for an additional ten years, until August 29, 2028.
Summary of the Revised ESPP
Purpose.The Revised ESPP allows the Company’s employees (including employees who are officers, Board members, or employees of designated Company subsidiaries located in or outside the United States) to use payroll deductions to purchase Company common stock on the terms described below.
All grants of purchase rights made to participants outside of the United States are deemed to be made under anon-U.S.sub-plan of the Revised ESPP unless otherwise designated at the time of grant.
Plan Administration.The Revised ESPP shall be administered by the Board, the compensation committee, and/or a committee appointed by the Board, whose administration, interpretation and application of the Revised ESPP and its terms will be final, conclusive and binding on all participants. The Board has appointed its compensation committee to administer the Revised ESPP and the compensation committee has delegated its authority for routine plan administration to the ESPP Management Committee, although the VP of Human Resources has been appointed to administer any grants of purchase rights made tonon-U.S. participants under anon-U.S.sub-plan of the Revised ESPP. The Administrator may also adopt rules, procedures orsub-plans applicable to particular subsidiaries of the Company or locations. The Revised ESPP provides that no member of the Board or committee will be liable for any action or determination taken or made in good faith with respect to the Revised ESPP, or any shares purchased or issued under the Revised ESPP.
Securities Subject to Plan.Subject to adjustment (under the Revised ESPP), up to 7,550,771 shares of Company common stock will be reserved for issuance pursuant to purchases made under the Revised ESPP.
Eligibility and Participation.Any regular Company employee customarily employed by the Company (or by any subsidiary designated for participation) for at least 20 hours per week (or
if otherwise required by local law outside the United States) is eligible to participate in the Revised ESPP. Officers and members of the Board who are eligible employees are also permitted to participate in the Revised ESPP. As of September 7, 2018, approximately 10,600 employees were eligible to participate in the Revised ESPP, including 10 officers of the Company. The Revised ESPP currently has approximately 8,200 participants.
An employee will not be eligible to participate in the Revised ESPP during an offering period to the extent that immediately after the grant of a purchase right on an offering date or interim offering date, the employee (or any other person whose stock would be attributed to the employee under section 424(d) of the Code) would own stock and/or hold outstanding purchase rights to purchase stock possessing five percent or more of the total combined voting power or value of all classes of stock of Lam or of any subsidiary.
Eligible employees become participants in the Revised ESPP by delivering to the Company fifteen days prior to the applicable offering date (including interim purchase dates) a subscription agreement authorizing payroll deductions, or at such other time as may be determined by the Administrator. An employee who becomes eligible to participate in the Revised ESPP after the commencement of an offering period may participate on an interim basis until commencement of the next offering period. At the end of each offering period, each participant in the offering period will be automatically enrolled in the next succeeding offering period at the same withholding percentage unless the participant notifies the Administrator in writing that the participant does not want to bere-enrolled.
Offering Periods and Dates.Although the Administrator may alter the duration of the offering periods to any period between three (3) and 24 months, the offering periods under the Revised ESPP have generally been 12 months in duration. Within a given12-month offering period, there are typically two dates on which Company common stock may be purchased. If, on the first business day following an exercise date (other than the last exercise date of an offering period), the fair market value of a share of Company common stock is less than the fair market value as of the first day of the offering period, the terms of the Revised ESPP provide that a new offering period will automatically begin as of that day and all eligible employees participating in the Revised ESPP will be automatically enrolled in the new offering period at the withholding percentage specified in the participant’s most recent subscription agreement (and the old offering period will be terminated). The Administrator may alter the duration of the offering periods or the number or timing of the purchase dates within the parameters of the Revised ESPP.
Payroll Deductions.The purchase price of the shares is accumulated by payroll deductions during the offering period. Each employee participating in the Revised ESPP may elect to have up to 15% of eligible base compensation (defined in the
Revised ESPP to include all regular straight-time gross earnings, exclusive of overtime, shift premium, incentive compensation or payments, or bonuses, commissions or other payments) deducted and credited to that employee’s account under the Revised ESPP. No additional payments or amounts may be credited to an employee’s account; however, an employee may change the rate of payroll deductions or withdraw entirely from the Revised ESPP during any offering period.
Amounts deducted from eligible base compensation and credited to a participating employee’s account shall be held as general funds of the Company and shall not accrue interest. To the extent that an employee’s payroll deductions exceed the amount required to purchase shares subject to purchase rights, the excess shall be carried forward to apply on the next exercise date, provided that any amounts remaining shall be refunded to the employee without interest at the termination of an offering period.
Purchase of Stock; Exercise of Purchase Right.By electing to participate in the Revised ESPP, each employee is in effect granted a right to purchase shares of Company common stock using payroll deductions accumulated as of each of the purchase dates during any offering period. However, no participant may (i) accrue rights to purchase stock under all employee stock purchase plans of the Company and its subsidiaries at a rate that exceeds $25,000 of fair market value of such stock (determined at the date of grant of those purchase rights) for each calendar year in which the purchase rights would be outstanding at any time; or (ii) purchase more than 10,000 shares of Company common stock during any offering period. The Administrator may designate an alternative shares limit (other than zero) in its sole discretion, prior to the commencement of any offering period to which the alternative limit applies. If the Administrator establishes an alternative limit, all participants shall be notified of the alternative limit prior to the commencement of the offering period to which the limit first applies. Any alternative limit set by the Administrator must continue to apply with respect to all succeeding exercise dates and offering periods unless revised by the Administrator. If the number of shares otherwise subject to purchase rights during an offering period exceeds the number of shares then available under the Revised ESPP, a pro rata allocation of the shares shall be made in as equitable a manner as is practicable. Unless an employee withdraws from participation in the Revised ESPP (see “Withdrawal.” below), or his or her participation is otherwise discontinued (see “Termination of Employment.” below), the employee’s right to purchase shares will be
exercised automatically at the end of the purchase date for the maximum number of shares at the applicable price.
Purchase Price of Company Common Stock; Taxes on the Acquisition or Disposition of Stock.On any particular purchase date under the Revised ESPP, the purchase price per share will be 85% of the lower of the fair market value of a share of common stock as of (i) the beginning of the offering period,
Continues on next page u
(ii) any intervening interim offering date (if the employee becomes a participant as of that date), or (iii) the purchase date. On September 7, 2018, the closing market price of Lam common stock was $159.58, as reported by Nasdaq.
The fair market value of a share of Company common stock on a given date shall be the closing price as reported in the Wall Street Journal for such date. If there is no public trading of Company common stock on a given date, the fair market value shall be determined by the Administrator in its discretion.
The participant shall be responsible for all taxes or other withholdings required in connection with the acquisition or disposition of stock purchased under the Revised ESPP. See “U.S. Federal Income Tax Information,” below. The participant shall not have an interest or voting right in any shares covered under the Revised ESPP prior to purchase.
Ability of the Board or Administrator to Amend the Revised ESPP.The Board may terminate or amend the Revised ESPP, or any purchase right granted thereunder, at any time (except in the event of certain changes in control of Lam). However, stockholder approval is required for any amendment to (i) increase the number of shares which may be issued under the Revised ESPP, (ii) change the designation of employees (or class of employees) eligible to participate under the Revised ESPP, or (iii) materially increase the benefits which may accrue to employees participating under the Revised ESPP (if, at the time of such amendment, Lam has a class of securities registered under section 12 of the Exchange Act).
Term and Termination of Plan.If approved by stockholders, the Revised ESPP will have been deemed effective upon the adoption by the Board, and will continue in effect for a term of 10 years from August 29, 2018. However, the Board may earlier terminate the Revised ESPP at any time. If the Board terminates the Revised ESPP before an employee’s right to purchase shares has been exercised under the Revised ESPP, any funds deducted from the employee’s eligible base compensation and credited to the employee’s account under the Revised ESPP shall be refunded.
Withdrawal.An employee may terminate his or her interest in a given offering by signing and delivering to the Administrator a notice of withdrawal from the Revised ESPP. Such withdrawal may be effected at any time prior to the closing of any offering period or interim purchase date. Any withdrawal by the employee of accumulated payroll deductions for a given offering automatically terminates the employee’s interest in that offering. The Revised ESPP does not permit a partial withdrawal. An employee’s withdrawal from an offering does not affect the employee’s eligibility to participate in subsequent offerings under the Revised ESPP.
By executing a subscription agreement to participate in the Revised ESPP, an employee does not become obligated to make any actual stock purchase; rather, the subscription
agreement merely indicates the employee’s election to have eligible base compensation deducted and shares placed under right to him or her for purchase. However, unless the employee terminates his or her participation, or withdraws his or her payroll deductions, the right to purchase shares will be exercised automatically on each purchase date, and for the maximum number of full shares purchasable with the employee’s accumulated payroll deductions.
Termination of Employment.Termination of a participant’s continuous status as an employee for any reason, including retirement or death, cancels his or her participation in the Revised ESPP immediately. In such event, the payroll deductions credited to the employee’s account will be returned to the employee or, in the case of death, to the person or persons entitled thereto as specified by the employee in the subscription agreement.
Capital Changes.In the event any change is made in the capitalization of the Company, such as stock splits or stock dividends, which results in an increase or decrease in the number of shares of common stock outstanding without receipt of consideration by the Company, appropriate adjustments will be made by the Company to the shares subject to purchase and to the purchase price per share, subject to any required action by the stockholders of the Company. In the event of the liquidation or dissolution of the Company, the then-current offering period shall terminate automatically, unless otherwise provided by the Board. In the event the Company merges with another corporation (and Company stockholders own less than 50% of the surviving entity or its parent), or the Company sells all or substantially all of its assets, the Revised ESPP provides that each outstanding right to purchase shares will be assumed or an equivalent right will be substituted by the successor corporation; otherwise, the Revised ESPP provides that all outstanding purchase rights held by Company employees may be accelerated.
Nonassignability.No rights or accumulated payroll deductions of an employee under the Revised ESPP may be pledged, assigned or transferred for any reason, and any such attempt may be treated by Lam as an election to withdraw from the Revised ESPP.
Reports.Individual accounts are maintained for each participant in the Revised ESPP. Each participant receives as promptly as practicable after the end of the offering period a report of his or her account setting forth the total amount of payroll deductions accumulated, the per share purchase price, the number of shares purchased and the remaining cash balance, if any.
Compliance with Applicable Law.Shares will not be issued with respect to a purchase right unless the exercise of such purchase right and the issuance and delivery of such shares comply with all applicable provisions of law, domestic or foreign, including the Securities Act of 1933, as amended, or the “Securities Act;” the Exchange Act; the rules and regulations promulgated thereunder, and the requirements of
any stock exchange upon which the shares may then be listed, and will be further subject to the approval of counsel for the Company with respect to such compliance. Also, as a condition to the exercise of a purchase right, the Company may require the person exercising the purchase right to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
U.S. Federal Income Tax Information
The Revised ESPP, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of sections 421 and 423 of the Code. Under these provisions, no income will be taxable to a participant at the time of grant of the right to purchase, or the actual purchase of, shares. However, upon the employee’s disposition of shares purchased under the Revised ESPP, the participant will generally be subject to tax. Upon disposition (including by gift), if the shares have been held by the participant for more than two years after the first day of the offering period and more than one year after the purchase date of the shares, or upon death of the participant while holding the shares, the participant will recognize taxable ordinary income equal to the lesser of (a) the excess of the fair market value of the shares at the time of the disposition over the purchase price of the shares, or (b) 15% of the fair market value of the shares on the first day of the offering period (or interim date on which the employee began to participate in the Revised ESPP, if later), and any additional taxable gain on the disposition will be treated as long-term capital gain. If the shares are disposed of before the expiration of the holding periods described above, the excess of the fair market value of the shares on the purchase date over the purchase price will be taxable as ordinary income, and any gain or loss on such disposition will be treated as a capital gain or loss. Lam is not entitled to a deduction for amounts taxable to a participant, except to the extent of ordinary income reported by the participant on disposition of shares before the expiration of the holding periods described above.
The foregoing is only a summary of the U.S. federal income tax consequences of the Revised ESPP to participants and does not purport to be complete. Reference should be made to the applicable provisions of the Code. In addition, the summary does not discuss the income tax consequences of a participant’s death or the income tax laws of any municipality, state or foreign country in which the participant may reside, and to which the participant may be subject.
Restriction on Resale
Certain officers and directors of the Company may be deemed to be “affiliates” of the Company, as that term is defined under
the Securities Act. Common stock acquired under the Revised ESPP by an affiliate may only be reoffered or resold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or another exemption from the registration requirements of the Securities Act.
Plan Benefits
All employees of the Company who satisfy the eligibility requirements set forth in the Revised ESPP may each year purchase up to an amount of Company common stock equal to the lesser of $25,000 or 15% of their eligible base compensation. Participation in the Revised ESPP is voluntary and each eligible employee will make his or her own decision whether and to what extent to participate. Accordingly, we cannot currently determine the benefits or number of shares that will be received in the future by individual employees or groups of employees. Ournon-employee directors are not eligible to participate.
Aggregate Past Grants Under the Revised ESPP
The following table sets forth summary information with respect to the number of shares of our common stock purchased under the ESPP to the Company’s named executive officers, all current executive officers as a group, directors, associates of such executive officer, directors and nominees, each other person who received or is to receive 5% of such options, warrants or rights and all employees (other than executive officers) as a group as of September 7, 2018. As of September 7, 2018, the closing price on Nasdaq of our common stock was $159.58 per share.
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
Continues on next page ��u
Approval of Proposal No. 3 will require the affirmative vote of a majority of the outstanding shares of common stock present in person or represented by proxy and voting on the proposal at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ADOPTION OF THE ESPP, AS AMENDED AND RESTATED.
Proposal No. 4: Ratification of the Appointment of theErnst & Young LLP as our Independent Registered Public Accounting Firm for Fiscal Year 20192021
Stockholders are being asked to ratify the appointment of EY as the Company’s independent registered public accounting firm for fiscal year 2019.2021. Although the audit committee has the sole authority to appoint the Company’s independent registered public accounting firm, as a matter of good corporate governance, the Board submits its selection to our stockholders for ratification. If the stockholders shoulddo not ratify the appointment of EY, the audit committee will contemplate whether to reconsider the appointment. EY has been the Company’s independent registered public accounting firm (independent auditor) since fiscal year 1981.
Each proxy received by the Proxy Holders will be voted “FOR” the ratification of the appointment of EY, unless the stockholder provides other instructions.
Our audit committee meets periodically with EY to review both audit andnon-audit services performed by EY, as well as the fees charged for those services. Among other things, the committee examines the effect that the performance ofnon-audit services, if any, may have upon the independence of the independent registered public accounting firm. All
professional services provided by EY, includingnon-audit services, if any, are subject to approval by the audit committee in accordance with applicable securities laws, rules, and regulations. For more information, see “Audit Matters -Audit Committee Report” and “Audit Matters—Matters - Relationship with Independent Registered Public Accounting Firm” above.
A representative of EY is expected to be present at the annual meeting and will have an opportunity to make a statement if he or she so desires. The representative will also be available to respond to appropriate questions from the stockholders.
Stockholder approval of Proposal No. 43 requires the affirmative vote of the holders of a majority of the outstanding shares of common stock having voting power present, in person or by proxy, at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF THEERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2019.2021.
We are not aware of any other matters to be submitted at the annual meeting. If any other matters properly come before the annual meeting, the Proxy Holders intend to vote the shares they represent as the Board may recommend or, if the Board does not make a recommendation, as the Proxy Holders decide in their reasonable judgment. It is important that your
stock holdings be represented at the meeting, regardless of the number of shares you hold. We urge you to complete and return the accompanying proxy card in the enclosed envelope, or vote your shares by telephone or internet, as described in the materials accompanying this proxy statement.
Voting and Meeting Information
|
Information Concerning Solicitation and Voting
Our Board solicits your proxy for the 20182020 Annual Meeting of Stockholders and any adjournment or postponement of the meeting, for the purposes described in the “Notice of 20182020 Annual Meeting of Stockholders.” The sections below show important details about the annual meeting and voting.
Record Date
Only stockholders of record at the close of business on September 7, 2018,4, 2020, the “Record Date,” are entitled to receive notice of and to vote at the annual meeting.
Shares Outstanding
As of the Record Date, 152,286,842145,087,944 shares of common stock were outstanding.
Quorum
Stockholders who hold shares representing a majority of our shares of common stock outstanding and entitled to vote on the Record Date must be present in person or represented by proxy to constitute a quorum. A quorum is required to transact business at the annual meeting. Virtual attendance at the annual meeting constitutes presence in person for purposes of a quorum at the annual meeting.
Inspector of Elections
The Company will appoint an inspector of elections to determine whether a quorum is present. The inspector will also tabulate the votes cast by proxy or at the annual meeting.meeting, whether cast in person or by proxy.
Effect of Abstentions and BrokerNon-Non-Votes Votes
Shares voted “abstain” and brokernon-votes (shares held by brokers that do not receive voting instructions from the beneficial owner of the shares, and do not have discretionary authority to vote on a matter) will be counted as present for purposes of determining whether we have a quorum. For purposes of voting results, abstentions will not be counted with respect to the election of directors but will have the effect of “no” votes with respect to other proposals, and brokernon-votes will not be counted with respect to any proposal.
Voting by Proxy
Stockholders may votedirect the Proxy Holders on how to cast votes on their behalf by internet, telephone, or mail, per the instructions on the accompanying proxy card.
Voting at the Meeting
Stockholders can vote in person during theThis year’s annual meeting will be a virtual meeting. Stockholders of record may vote electronically during the meeting by visiting the meeting website at www.virtualshareholdermeeting.com/LRCX2020. To vote during the meeting, a stockholder will beneed the 16-digit control number included on a list held by the inspectortheir Notice of elections. EachInternet Access or proxy card. A beneficial owner (anof shares (i.e. an owner who is not the record holder of their shares) must obtain a proxy fromshould refer to the voting instructions provided by the beneficial owner’s brokerage firm, bank, or theother stockholder of record holding such shares for the beneficial owner, and present it toowner. Voting electronically during the inspector of elections with a ballot. Voting in personmeeting by a stockholder as described here will replace any previous votes of that stockholder submitted by proxy.
Changing Your Vote
Stockholders of record may change their votes by revoking their proxies at any time before the polls close by (1) submitting a later-dated proxy by the internet, telephone or mail, or (2) submitting a vote in person atelectronically during the annual meeting. Before the annual meeting, stockholders of record may also deliver voting instructions to: Lam Research Corporation, Attention: Secretary, 4650 Cushing Parkway, Fremont, California 94538. If a beneficial owner holds shares through a bank or brokerage firm, or another stockholder of record, the beneficial owner must contact the stockholder of record in order to revoke any prior voting instructions.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 65 |
Voting Instructions
If a stockholder completes and submits proxy voting instructions, the Proxy Holders will follow the stockholder’s instructions. If a stockholder submits proxy voting instructions but does not include voting instructions for each item, the Proxy Holders will vote as the Board recommends on each item for which the stockholder did not include an instruction. The Proxy Holders will vote on any other matters properly presented at the annual meeting in accordance with their best judgment.
Voting Results
We will announce preliminary results at the annual meeting. We will report final voting results athttps://investor.lamresearch.com and in a Form8-K to be filed shortly after the annual meeting.
Availability of Proxy Materials
Beginning on September 26, 2018,23, 2020, this proxy statement and the accompanying proxy card and 20182020 Annual Report on Form10-K to Stockholders will be mailed to stockholders entitled to vote at the annual meeting who have designated a
Continues on next page u
preference for a printed copy. Stockholders who previously chose to receive proxy materials electronically were sent an email with instructions on how to access this year’s proxy materials and the proxy voting site.
We have also provided our stockholders access to our proxy materials over the internet in accordance with rules and regulations adopted by the SEC. These materials are available on our website athttps://investor.lamresearch.comand at www.proxyvote.com. We will furnish, without charge, a printed copy of these materials and our 20182020 Annual Report (including exhibits) on request by telephone(510-572-1615), by mail (to Investor Relations, Lam Research Corporation, 4650 Cushing Parkway, Fremont, California 94538), or by email (toinvestor.relations@lamresearch.com).
A Notice of Internet Availability of Proxy Materials will be mailed beginning on September 26, 201823, 2020 to all stockholders entitled to vote at the meeting. The notice will have instructions for stockholders on how to access our proxy materials through the internet and how to request that a printed copy of the proxy materials be mailed to them. The notice will also have instructions on how to elect to receive all
future proxy materials electronically or in printed form. If you choose to receive future proxy materials electronically, you will receive an email each year with instructions on how to access the proxy materials and proxy voting site.
Proxy Solicitation Costs
The Company will bear the cost of all proxy solicitation activities. Our directors, officers and other employees may solicit proxies personally or by telephone, email or other communication means, without any cost to Lam Research. In addition, we have retained D.F. King & Co., Inc. to assist in obtaining proxies by mail, facsimile or email from brokers, bank nominees and other institutions for the annual meeting. The estimated cost of such services is $12,000$14,000 plusout-of-pocket expenses. D.F. King & Co, Inc. may be contacted at 48 Wall Street, New York, New York 10005. We are required to request that brokers and nominees who hold stock in their names furnish our proxy materials to the beneficial owners of the stock, and we must reimburse these brokers and nominees for the expenses of doing so in accordance with statutory fee schedules.
Annual Meeting Admission
All stockholders entitled to vote as of the Record Date are entitled to attend the annual meeting. Admissionmeeting virtually. Stockholders of stockholdersrecord may attend the meeting by visiting the meeting website at www.virtualshareholdermeeting.com/LRCX2020. To attend, a stockholder will begin at 9:00 a.m. Pacific Standard Timeneed the 16-digit control number included on November 6, 2018. Any stockholders interested in attending the annual meeting should be prepared to present government-issued photo identification, such as a valid driver’s license or passport, and verificationtheir Notice of ownership of Company common stockInternet Access or proxy status ascard. A beneficial owner of shares (i.e. an owner who is not the Record Date for admittance. For stockholdersrecord holder of record as of the Record Date, proof of ownership as of the Record Date will be verified prior to admittance into the annual meeting. For stockholderstheir shares) who were not stockholders as of the Record Date but hold shares through a bank, broker or other nominee holder, proof of beneficial ownership as of the Record Date, such as an account statement or similar evidence of ownership, will be verified prior to admittance into the annual meeting. For proxy holders, proof of valid proxy status will also be verified prior to admittance into the annual meeting. Stockholders and proxy holders will be admitted to the annual meeting if they comply with these procedures. Information on how to obtain directionswishes to attend the annual meeting and vote in person is available on our website athttps://investor.lamresearch.com.should refer to the instructions provided by the beneficial owner’s brokerage firm, bank, or other stockholder of record holding such shares for the beneficial owner.
Voting on Proposals
Pursuant to Proposal No. 1, Board members will be elected at the annual meeting to fill nine seats on the Board to serve until
the next annual meeting of stockholders, and until their respective successors are elected and qualified, under a “majority vote” standard. The majority voting standard means that, even though there are nine nominees in total for the nine Board seats, a nominee will be elected only if he or she receives an affirmative “for” vote from stockholders owning, as of the Record Date, at least a majority of the shares present and voted at the meeting in such nominee’s election by proxy or in person. If an incumbent fails to receive the required majority, his or her previously submitted resignation will be promptly considered by the Board. Each stockholder may cast one vote (“for” or “withhold”), per share held, for each of the nine nominees. Stockholders may not cumulate votes in the election of directors.
Each share is entitled to one vote on Proposals No. 2 3, and 4.3. Votes may be cast “for,” “against” or “abstain” on Proposals No. 2 3, and 4.3. Approval of Proposals No. 2 3 and 43 requires the affirmative vote of a majority of the shares of common stock present or represented by proxy and cast at the meeting.
If a stockholder votes by means of the proxy solicited by this proxy statement and does not instruct the Proxy Holders how to vote, the Proxy Holders will vote: “FOR” all individuals nominated by the Board; “FOR” approval, on an advisory basis, of our named executive officer compensation; “FOR” approval of the adoption of the ESPP, as amended and restated; and “FOR” the ratification of EY as the Company’s independent registered public accounting firm for fiscal year 2019.2021.
If you choose to vote in person, you will have an opportunity to do so at the annual meeting. You may either bring your proxy card to the annual meeting, or if you do not bring your proxy card, the Company will pass out written ballots to anyone who was a stockholder as of the Record Date. As noted above, if you are a beneficial owner (an owner who is not the record holder of their shares), you will need to obtain a proxy from your brokerage firm, bank, or the stockholder of record holding shares on your behalf.
Voting by 401(k) Plan Participants
Participants in Lam’s Savings Plus Plan, Lam Research 401(k), or the “401(k) Plan,” who held Lam common stock in their personal 401(k) Plan accounts as of the Record Date, will receive this proxy statement, so that each participant may vote, by proxy, his or her interest in Lam’s common stock as held by the 401(k) Plan. The 401(k) Plan trustee will aggregate and vote proxies in accordance with the instructions in the proxies of employee participants that it receives.
Stockholder Accounts Sharing the Same Last Name and Address; Stockholders Holding Multiple Accounts
To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding Lam Research stock but who share the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders of record who have the same address and last name will receive only one copy of our proxy statement and annual report unless one of the stockholders notifies our investor relations department that one or more of them want to receive separate copies. This procedure reduces duplicate mailings and therefore saves printing and mailing costs, as well as natural resources. Stockholders who participate in householding will continue to have access to all proxy materials athttps://investor.lamresearch.com, as well as the ability to submit separate proxy voting instructions for each account through the internet or by telephone.
Stockholders holding multiple accounts of Lam common stock may request separate copies of the proxy materials by contacting us by telephone(510-572-1615), by mail (to Investor Relations, Lam Research Corporation, 4650 Cushing Parkway, Fremont, California 94538) or by email (toinvestor.relations@lamresearch.com). Stockholders may also contact us by telephone, mail or email to request consolidation of proxy materials mailed to multiple accounts at the same address.
Stockholder-Initiated Proposals and Nominations for 20192021 Annual Meeting
Proposals submitted under SEC rules for inclusion in the Company’s proxy statement. Stockholder-initiated proposals (other than director nominations) may be eligible for inclusion in our proxy statement for next year’s 20192021 annual meeting of stockholders (in accordance with SECRule 14a-8) and for consideration at the 20192021 annual meeting of stockholders. The Company must receive a stockholder proposal no later than May 29, 201926, 2021 for the proposal to be eligible for inclusion. Any stockholder interested in submitting a proposal or nomination is advised to contact legal counsel familiar with the detailed securities law requirements for submitting proposals or nominations for inclusion in a company’s proxy statement.
Proposed nominations of directors under Company bylaws for Proxy Access.Our bylaws provide for “Proxy Access.” Pursuant to the Proxy Access provisions of our bylaws, a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding common stock continuously for at least three years can nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board, provided that the stockholders and the nominees satisfy the requirements specified in our bylaws. If a stockholder or group of stockholders wishes to nominate one or more director candidates to be included in our proxy statement for the 20192021 annual meeting of stockholders pursuant to Proxy Access, all of the information required by our bylaws must be received by the Secretary of the Company no earlier than April 29, 2019,26, 2021, and no later than May 29, 2019.26, 2021.
Proposals and nominations under Company bylaws for presentation at the annual meeting but for which the proponent does not seek to include materials in our proxy statement.Stockholders may also submit proposals for consideration and nominations of director candidates for election at the annual meeting by following certain requirements set forth in our bylaws. These proposals will not be eligible for inclusion in the Company’s proxy statement for the 20192021 annual meeting of stockholders unless they are submitted in compliance with then applicable SEC rules or pursuant to the Proxy Access described above; however, they will be presented for consideration at the 20192021 annual meeting of stockholders if the requirements established by our bylaws for stockholder proposals and nominations have been satisfied.
Continues on next page u
Lam Research Corporation 2020 Proxy Statement | 67 |
Our bylaws establish requirements for stockholder proposals and nominations not included in our proxy statement to be considered at the annual meeting. Assuming that the 20192021 annual meeting of stockholders takes place at roughly the same date next year as the 20182020 annual meeting (and subject to any change in our bylaws-whichbylaws—which would be publicly disclosed by theCompany-and Company—and to any provisions of then-applicable SEC rules), a stockholder of record must submit the proposal or
Continues on next page u
nomination in writing and it must be received by the Secretary of the Company no earlier than July 13, 2019,10, 2021, and no later than August 12, 2019.9, 2021.
For a full description of the requirements for submitting a proposal or nomination, see the Company’s bylaws. Submissions or questions should be sent to: Secretary, Lam Research Corporation, 4650 Cushing Parkway, Fremont, California 94538.
By Order of the Board of Directors,
Sarah A. O’DowdAna M. Hahn
Secretary
Fremont, California
Dated: September 26, 201823, 2020
Appendix A
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During the Meeting - www.virtualshareholdermeeting.com/LRCX2020 You may attend the annual meeting of stockholders via the Internet and vote during the meeting. Have the information printed in the box marked by the arrow in hand when you access the web site and then follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.LAM RESEARCH CORPORATION ATTN: INVESTOR RELATIONS 4650 CUSHING PARKWAY FREMONT, CALIFORNIA 94538 D23553-P42715-Z77848 LAM RESEARCH CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
Amended For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and Restated Effective as of August 29, 2018
|
This Amended and Restated Lam Research Corporation 1999 Employee Stock Purchase Plan (“Plan”) is amended and restated as of August 29, 2018. The Plan is intended to provide employeeswrite the number(s) of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock ofnominee(s) on the Company through accumulated payroll deductions.line below. The Company’s intention is to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code (the “423(b) Plan”), although the Company makes no undertaking or representation to maintain such qualification. The provisions of the 423(b) Plan, accordingly, will be construed so as to extend and limit Plan participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423(b) of the Code. In addition, this Plan document authorizes the grant of rights to purchase stock pursuant to rules, procedures orsub-plans adopted by the Board or Administrator that are designed to achieve tax, securities law or other Company compliance objectives in particular locations outside the United States.
All grants made to participants outside of the United States shall be deemed to be made under aNon-U.S.Sub-Plan, unless otherwise designated at the time of grant.
|
(a) “Administrator” means the Board, the Compensation Committee of the Board or any committee the Board may subsequently appoint to administer the Plan pursuant to Section 14 hereof, if one is appointed. If at any time or to any extent the Board shall not administer the Plan, then the functions of the Board specified in the Plan shall be exercised by the Administrator. The VP of Human Resources shall administer theNon-U.S.Sub-Plans of the Plan and shall be the “Administrator” for such purposes.
(b) “Annual Increase” means the number of shares of Common Stock that, pursuant to Section 13, may annually be added to the number of shares issuable under the Plan.
(c) “Board” means the Board of Directors recommends you vote FOR all nine of the Company.
(d) “Code” means the Internal Revenue Codenominees listed in proposal 1. ! ! ! 1. Election of 1986, as amended.
(e) “Common Stock” means the Common Stock of the Company.
(f) “Company” means Lam Research Corporation, a Delaware corporation.
(g) “Compensation” means all regular, straight-time gross earnings, exclusive of payments for overtime, shift premium, incentive compensation, incentive payments, bonuses, commissions, or other compensation.
(h) “Continuous Status as an Employee” means the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of a leave of absence agreed to in writing by the Company, provided that such leave is for a period of not more than 90 days orre-employment upon the expiration of such leave is guaranteed by contract or statute.
(i) “Designated Subsidiaries” means the Subsidiaries that have been designated by the Board or Administrator from time to time in its sole discretion as eligible to participate in this Plan.
(j) “Employee” means any person, including an officer or an employee member of theDirectors Nominees: 01) Sohail U. Ahmed 02) Timothy M. Archer 03) Eric K. Brandt 04) Michael R. Cannon 05) Catherine P. Lego 06) Bethany J. Mayer 07) Abhijit Y. Talwalkar 08) Lih Shyng (Rick L.) Tsai 09) Leslie F. Varon The Board of Directors who is customarily employed for at least 20 hours per week byrecommends you vote FOR proposals 2 and 3. For Against Abstain ! ! ! 2. Advisory vote to approve the Company or one of its Designated Subsidiaries. For purposescompensation of the 423(b) Plan, whether an individual qualifies as an Employee shall be determined by the Administrator, in its sole discretion, by reference to Section 3401(c)named executive officers of Lam Research, or “Say on Pay.” ! ! ! 3. Ratification of the Code and the regulations promulgated thereunder. Unless the Administrator makes a contrary determination, the Employeesappointment of the Company shall,independent registered public accounting firm for all purposes offiscal year 2021. NOTE: Other business that may properly come before the 423(b) Plan,annual meeting (including any adjournment or postponement thereof) will be those individuals who satisfyvoted as the customary employment criteria set forth above and are carriedproxy holders deem advisable. Please sign exactly as employees by the Companyyour name(s) appear(s) in this card. When signing as attorney, executor, administrator, or other fiduciary, please give full title. Joint owners should each sign personally. For a Designated Subsidiary for regular payroll purposes.Corporation, an authorized officer must sign. For purposes of a Non U.S.Sub-Plan,partnership, an authorized person must sign. the Administrator may determine that Employees are eligible to participate even if they are employed for less than twenty (20) hours per week if, in the Administrator’s sole judgment, applicable laws require such a determination.
(k) “Exercise Date” means such business days during each Offering Period of this Plan as may be identified by the Administrator pursuant to Section 8 of this Plan.
(l) “Interim Offering Date” means the first business day following an Exercise Date other than the last Exercise Date of an Offering Period.
(m) “Maximum Share Amount” means the maximum number of shares of Common Stock that a Participant can purchase during any single Offering Period as set forth in Section 3(d)(ii) of this Plan.
(n)“Non-U.S.Sub-Plan” shall mean asub-plan of the Plan that does not necessarily meet the requirements set forth in Section 423(b) of the Code, as amended.
(o) “Offering Date” means the first business day of an Offering Period.
(p) “Offering Period” means a period established by the Administrator pursuant to Section 4 of this Plan during which payroll deductions are accumulated from Participants and applied to the purchase of Common Stock.
(q) “Participant” means an Employee who has elected to participate in this Plan pursuant to Section 5 hereof.
(r) “Plan” means this Amended and Restated Lam Research Corporation 1999 Employee Stock Purchase Plan, including both the 423(b) Plan and anyNon-U.S.Sub-Plan unless otherwise indicated.
(s) “Purchase Right” means a right to purchase Common Stock granted pursuant to Section 7 of this Plan.
(t) “Subsidiary” means a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.
(u)“423(b) Plan” means an employee stock purchase plan that is designed to meet the requirements set forth in Section 423(b) of the Code, as amended. The provisions of this 423(b) Plan should be construed, administered and enforced in accordance with Section 423(b) of the Code.
|
(a) Regular Participation. Any person who is, or will be, an Employee on the Offering Date of a given Offering Period shall be eligible to participate in this Plan during such Offering Period, subject to the requirements of Section 5(a) of this Plan.
(b) Interim Participation. Any person who becomes an Employee after the Offering Date of an Offering Period and before an Interim Offering Date shall be eligible to participate in this Plan during such Offering Period, but only on and beginning with the first Interim Offering Date on or before which such person becomes an Employee, and subject to the requirements of Section 5(a) of this Plan.
(c) Exclusion of Five Percent Stockholders. Notwithstanding paragraphs (a) and (b) of this Section 3, an Employee shall not be eligible to participate in this Plan during an Offering Period to the extent that immediately after the grant of a Purchase Right on an Offering Date or Interim Offering Date, the Employee (or any other person whose stock would be attributed to the Employee under Section 424(d) of the Code) would own stock and/or hold outstanding purchase rights to purchase stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary.
(d)Accrual andPurchase Limits.Notwithstanding any other provisions of this Plan or any subscription agreement or other offering documents, no Participant may (i) accrue rights to purchase stock under all employee stock purchase plans of the Company and its Subsidiaries at a rate that exceeds $25,000 of fair market value of such stock (determined at the date of grant of those purchase rights) for each calendar year in which the purchase rights would be outstanding at any time; or (ii) purchase more than 10,000 shares of the Company’s Common Stock during any Offering Period. Notwithstanding the share limit described in clause 3(d)(ii), the Administrator may designate an alternative shares limit (other than zero) in its sole discretion, prior to the commencement of any Offering Period to which the alternative limit applies. If the Administrator establishes an alternative limit, all participants shall be notified of the alternative limit prior to the commencement of the Offering Period to which the limit first applies. Any alternative limit set by the Administrator shall continue to apply with respect to all succeeding Exercise Dates and Offering Periods unless revised by the Administrator as provided in this clause 3(d)(ii).
|
The duration of each Offering Period shall be determined by the Administrator, provided that an Offering Period shall be no shorter than 3 months and no longer than 24 months (measured from the first business day of the first month to the last business day of
the last month) and succeeding Offering Periods shall be the same duration unless otherwise determined by the Administrator pursuant to this Section. Unless otherwise determined by the Administrator:
(a) a new Offering Period shall begin on the first business day after the last Exercise Date of an Offering Period;
(b) a new Offering Period shall begin, and the old Offering Period shall terminate, on the first business day after an Exercise Date (other than the last Exercise Date of an Offering Period) if the fair market value (as defined in Section 7(b)(i) of this Plan) of a share of Common Stock is less than the fair market value of a share of Common Stock on the Offering Date of the Offering Period; and
(c) an Offering Period shall terminate on the date that there are no Participants enrolled in it.
|
(a) An Employee may become a Participant in this Plan by completing a subscription agreement, in such form or forms as the Administrator may approve from time to time, and filing it with the Company’s payroll office within 15 days before the applicable Offering Date or Interim Offering Date, unless another time for filing the subscription agreement is set by the Administrator for all Employees with respect to a given Offering Period. The subscription agreement shall authorize payroll deductions pursuant to this Plan and shall have such other terms as the Administrator may specify from time to time.
(b) At the end of an Offering Period, each Participant in the Offering Period who remains an Employee shall be automatically enrolled in the next succeeding Offering Period (a “Re-enrollment”) unless, in a manner and at a time specified by the Administrator, but in no event later than the day before the Offering Date of such succeeding Offering Period, the Participant notifies the Administrator in writing that the Participant does not wish to bere-enrolled.Re-enrollment shall be at the withholding percentage specified in the Participant’s most recent subscription agreement unless the Participant changes that percentage by timely written notice. No Participant shall be automaticallyre-enrolled whose participation has terminated by operation of Section 10 of this Plan.
(c) If an Offering Period commences pursuant to Section 4(b) of this Plan, each Employee on the Offering Date of that Offering Period shall automatically become a Participant in the commencing Offering Period. Participation shall be at the withholding percentage specified in the Participant’s most recent subscription agreement, unless the Participant notice changes that percentage by timely written notice. If the Participant has no subscription agreement on file, Participation shall be at a 0% withholding rate until changed by the Participant. No Participant shall be automaticallyre-enrolled whose participation has terminated by operation of Section 11 of this Plan.
|
(a) Each Participant shall have withheld a percentage of his or her Compensation received during an Offering Period. Withholding shall be in whole percentages, up to a maximum (not to exceed 15%) established by the Administrator from time to time, as specified by the Participant in his or her subscription agreement. Payroll deductions for a Participant during an Offering Period shall begin with the first payroll following the Offering Date or Interim Offering Date and shall end on the last Exercise Date of the Offering Period, unless sooner terminated by the Participant as provided in Section 11 of this Plan.
(b) All payroll deductions made by a Participant shall be credited to the Participant’s account under this Plan. A Participant may not make any additional payments into such account.
(c) A Participant may change the rate of his or her payroll deductions during an Offering Period by filing with the Administrator a new subscription agreement authorizing the change. The change shall take effect 15 days after the Administrator’s receipt of the new subscription agreement, except that increases in rate shall take effect on the day after the first Exercise Date on or after the 15th day.
|
(a) Grant of Purchase Rights. On the Offering Date, or (if applicable) Interim Offering Date of each Offering Period, the Participant shall be granted a Purchase Right to purchase (at theper-share price) during the Offering Period up to the lesser of (a) the number of shares of Common Stock determined by dividing (i) $25,000 multiplied by the number of (whole or part) calendar years in the Offering Period by (ii) the fair market value of a share of Common Stock on the Offering Date or Interim Offering Date; or (b) the Maximum Share Amount.
(b) Terms of Purchase Rights. Except as otherwise determined by the Administrator, each Purchase Right shall have the following terms:
|
|
|
|
|
|
(a) The Administrator shall establish one or more Exercise Dates for each Offering Period.
(b) Each Participant’s Purchase Right shall be exercised automatically on each Exercise Date during the Offering Period to purchase the maximum number of full shares up to the Maximum Share Amount at the applicable price using the Participant’s accumulated payroll deductions.
(c) The shares purchased upon exercise of a Purchase Right shall be deemed to be transferred to the Participant on the Exercise Date. A Participant will have no interest or voting right in shares covered by a Purchase Right until the Purchase Right has been exercised.
(d) Any cash remaining in a Participant’s payroll deduction account after the purchase of shares on an Exercise Date shall be carried forward in that account for application on the next Exercise Date; provided that at the termination of an Offering Period, any such cash shall be promptly refunded returned to the Participant.
|
If the number of shares to be purchased on an Exercise Date by all Participants in this Plan exceeds the number of shares then available for issuance under this Plan, then the Company shall make a pro rata allocation of the remaining shares in as uniform a manner as shall be reasonably practicable and as the Administrator shall determine to be equitable. In such event, the Company shall give written notice of such reduction of the number of shares to be purchased under a participant’s option to each participant affected.
|
(a) Shares purchased by a Participant under this Plan will be registered in the name of the Participant, or in the name of the Participant and his or her spouse, or in the name of the Participant and joint tenant(s) (with right of survivorship), as designated by the Participant.
(b) As soon as administratively feasible after each Exercise Date, the Company shall deliver to the Participant a certificate representing the shares purchased upon exercise of a Purchase Right. If approved by the Administrator in its discretion, the Company may instead (i) deliver a certificate (or equivalent) to a broker for crediting to the Participant’s account or (ii) make a notation in the Participant’s favor ofnon-certificated shares on the Company’s stock records.
|
(a) A Participant may withdraw all, but not less than all, of the payroll deductions credited to his account under this Plan at any time before an Exercise Date by giving written notice to the Administrator in a form the Administrator prescribes from time to time. The Participant’s Purchase Right will automatically terminate on the date of receipt of the notice, all payroll deductions credited to the Participant���s account will be refunded promptly thereafter, and no further payroll deductions will be made during the Offering Period.
(b) Upon termination of a Participant’s Continuous Status as an Employee for any reason, including retirement or death, the payroll deductions credited to the Participant’s account will be promptly refunded to the Participant or, in the case of death, to the person or persons entitled thereto under Section 15 of this Plan, and the Participant’s Purchase Right will automatically terminate.
(c) If a Participant fails to remain in Continuous Status as an Employee during an Offering Period, the Participant will be deemed to have withdrawn from this Plan, the payroll deductions credited to the Participant’s account will be promptly refunded, and the Participant’s Purchase Right shall terminate.
(d) A Participant’s withdrawal from an offering will not affect the Participant’s eligibility to participate in a succeeding Offering Period or in any similar plan that may be adopted by the Company.
|
Amounts withheld from Participants’ Compensation under this Plan shall constitute general funds of the Company and may be used for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. No interest shall accrue on the payroll deductions of a Participant in this Plan.
|
Subject to adjustment as provided in Section 18, the maximum aggregate number of shares of Common Stock available for issuance under the Plan shall be 7,550,771 shares of Common Stock, which may be newly issued or treasury shares, or shares acquired on the open market, the total of which includes 4,995,845 shares of Common Stock which remain available for issuance as of August 29, 2018.
|
This Plan shall be administered by the Administrator. The administration, interpretation, and application of this Plan by the Administrator shall be final, conclusive, and binding upon all persons. Neither Members of the Board nor the Administrator shall be liable for any action or determination taken or made in good faith with respect to the Plan, or any shares purchased or issued or Purchase Right exercised thereunder.The Administrator may also adopt rules, procedures orsub-plans applicable to particular Subsidiaries or locations. Any suchsub-plans may be designed to be outside the scope of Section 423(b) of the Code. The rules of suchsub-plans may take precedence over other provisions of this Plan, but unless otherwise superseded by the specific terms of suchsub-plan, the provisions of this Plan shall govern the operation of suchsub-plan. To the extent inconsistent with the requirements of Section 423(b), suchsub-plan and rights granted thereunder shall not be considered to comply with Section 423(b) of the Code.
|
(a) A Participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the Participant’s account under this Plan in the event of the Participant’s death.
(b) A designation of beneficiary may be changed by the Participant at any time by written notice. In the event of the death of a Participant, and in the absence of a beneficiary validly designated under this Plan who is living at the time of the Participant’s death, the Administrator shall deliver such shares and/or cash to the executor or administrator of the Participant’s estate, or if no such executor or administrator has been appointed (to the Administrator’s knowledge), the Administrator, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant or, if no spouse, dependent, or relative is known to the Administrator, then to such other person as the Administrator may designate.
|
Neither payroll deductions credited to a Participant’s account nor any rights with regard to the exercise of a Purchase Right or to receive shares under this Plan may be assigned, transferred, pledged, or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 15 hereof) by the Participant. Any such attempt at assignment, transfer, pledge, or other disposition shall be without effect, except that the Administrator may treat such act as an election to withdraw funds in accordance with Section 11 hereof.
|
Individual accounts will be maintained for each Participant in this Plan. Statements of account will be given to participating Employees promptly following each Exercise Date, which statements will set forth the amounts of payroll deductions, the per share purchase price, the number of shares purchased and the remaining cash balance, if any.
|
(a) Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each Purchase Right under this Plan that has not yet been exercised and the number of shares of Common Stock that have been authorized for issuance under this Plan but have not yet been placed under a Purchase Right, including, but not limited to, the Annual Increase (collectively, the“Reserves”), as well as the price per share of Common Stock covered by each Purchase Right under this Plan that has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company and any repurchase of shares of Common Stock pursuant to Section 13 herein shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Administrator, whose determination shall be final, binding, and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to a Purchase Right.
(b) In the event of the proposed dissolution or liquidation of the Company, the then-current Offering Period will terminate immediately before the consummation of such proposed action, unless otherwise provided by the Board or the Administrator (if the Administrator is not the Board). In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation (if stockholders of the Company own less than 50% of the total outstanding voting power in the surviving entity or a parent of the surviving entity after the merger), each Purchase Right under this Plan shall be assumed or an equivalent purchase right shall be substituted by the successor corporation or a parent or subsidiary of the successor corporation, unless the successor corporation does not agree to assume the Purchase Right or to substitute an equivalent purchase right, in which case the Administrator may, in lieu of such assumption or substitution, accelerate the exercisability of Purchase Rights, and allow Purchase Rights to be exercisable (if the Board approves) as to shares as to which the Purchase Right would not otherwise be exercisable, on terms and for a period that the Administrator determines in its discretion. To the extent that the Administrator accelerates exercisability of Purchase Rights as described above, it shall promptly so notify all Participants in writing.
(c) The Administrator may, in its discretion, also make provision for adjusting the Reserves, as well as the price per share of Common Stock covered by each outstanding Purchase Right, if the Company effects one or more reorganizations, recapitalizations, rights offerings, or other increases or reductions of shares of its outstanding Common Stock, or if the Company consolidates with or merges into any other corporation.
|
(a) The Board may at any time terminate or amend in any manner this Plan; except, however, that no amendment may be made without prior approval of the stockholders of the Company (obtained in the manner described in paragraph 21) if it would:
|
|
|
If any amendment requiring stockholder approval under this paragraph 19 of this Plan is made after the first registration of any class of equity securities by the Company under Section 12 of the Exchange Act, such stockholder approval shall be solicited as described in paragraph 21 of this Plan.
(b) The Board may elect to terminate any or all outstanding Purchase Rights at any time, except to the extent that exercisability of such Purchase Rights has been accelerated pursuant to Section 18(b) hereof. If this Plan is terminated, the Board may also elect to terminate Purchase Rights upon completion of the next purchase of shares on the next Exercise Date or to permit Purchase Rights to expire in accordance with their terms (with participation to continue through such expiration dates). If Purchase Rights are terminated before expiration, any funds contributed to this Plan that have not been used to purchase shares shall be refunded to Participants as soon as administratively feasible.
|
All notices or other communications by a Participant to the Company or the Administrator under or in connection with this Plan shall be deemed to have been duly given when received in the form specified by the Administrator at the location, or by the person, designated by the Administrator for the receipt thereof.
|
(a) Any required approval of the stockholders of the Company pursuant to paragraph 19(a) of this Plan shall be solicited substantially in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder.
(b) If any required approval by the stockholders of this Plan itself or of any amendment thereto is solicited at any time otherwise than in the manner described in Section 21(a) hereof, then the Company shall, at or before the first annual meeting of stockholders held after the later of (i) the first registration of any class of equity securities of the Company under Section 12 of the Exchange Act or (ii) the granting of a Purchase Right hereunder to an Officer and Director after such registration, do the following:
|
|
|
(a) Shares shall not be issued with respect to a Purchase Right unless the exercise of such Purchase Right and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.
(b) As a condition to the exercise of a Purchase Right, the Company may require the person exercising such Purchase Right to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
|
This Plan shall continue in effect for a term of 10 years (until August 28, 2028), pursuant to an amendment and restatement by the Board of Directors on August 29, 2018, unless sooner terminated under Section 19 hereof.
|
The terms and conditions of Purchase Rights granted hereunder to, and the purchase of shares by, persons subject to Section 16 of the Securities Exchange Act of 1934 shall comply with the applicable provisions of Rule16b-3 of such Act. This Plan shall be deemed to contain, and such Purchase Rights shall contain, and the shares issued upon exercise thereof shall be subject to, such additional conditions and restrictions as may be required by Rule16b-3 to qualify for the maximum exemption from Section 16 of the Securities Exchange Act of 1934 with respect to Plan transactions.
|
|
|
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
|
|
|
| ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||
|
|
|
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report Combined Document are available atwww.proxyvote.com. www.proxyvote.com.
D23554-P42715-Z77848
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF LAM RESEARCH CORPORATION
IN CONJUNCTION WITH THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON NOVEMBER 3, 2020
The undersigned stockholder of LAM RESEARCH CORPORATION, a Delaware corporation (the “Company”), hereby (a) acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated September 23, 2020, and the 2020 Annual Report to Stockholders; (b) appoints Timothy M. Archer and George M. Schisler, Jr., or either of them, proxy holders andattorneys-in-fact, each with full power to designate substitutes, on behalf and in the name of the undersigned, to represent the undersigned at the 2020 Annual Meeting of Stockholders of LAM RESEARCH CORPORATION (and any adjournment(s) or postponement(s) of the Meeting) to be held on November 3, 2020 at 2:00 p.m., Pacific Standard Time, and (c) authorizes the proxy holders to vote all shares of Common Stock that the undersigned would be entitled to vote if personally present at the Meeting, on the matters set forth on the reverse side and, in their discretion, on any other matter(s) that may properly come before the Meeting or any adjournment(s) or postponement(s) of the Meeting.
This proxy will be voted as directed. If no contrary direction is indicated, the proxy will be voted FOR all nine of the director nominees listed in proposal 1; FOR the advisory vote to approve the compensation of the named executive officers of Lam Research, or “Say on Pay;” FOR the proposal to ratify the appointment of the independent registered public accounting firm for fiscal year 2021; and as the proxy holders deem advisable, on any other matter(s) that may properly come before the meeting.
Continued and to be signed on reverse side
E49680-P11451-Z72863
| ||||||||||||||
| ||||||||||||||
|