UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to SectionPROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities Exchange Act ofOF
THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. __ )
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Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
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☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to |
NANOMETRICS INCORPORATED
Onto Innovation Inc.
(Name of Registrant as Specified In Its Charter)specified in its charter)
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. |
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i) |
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NANOMETRICS INCORPORATEDPROXY STATEMENT
1550 Buckeye DriveTABLE OF CONTENTS
Milpitas, California 95035
Forward Looking Statements
This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) which include those concerning Onto Innovation’s business momentum and future growth; acceptance of Onto Innovation’s products and services; Onto Innovation’s ability to both deliver products and services consistent with its customers’ demands and expectations and strengthen its market position; as well as other matters that are not purely historical data. Onto Innovation wishes to take advantage of the “safe harbor” provided for by the Act and cautions that actual results may differ materially from those projected as a result of various factors, including risks and uncertainties, many of which are beyond Onto Innovation’s control. Such factors include, but are not limited to, the following: variations in the level of orders, which can be affected by general economic conditions; seasonality and growth rates in the semiconductor manufacturing industry and in the markets served by Onto Innovation’s customers; the global economic and political climates; the impact on supply, production, sales and delivery of our products and services due to the global spread of the coronavirus (COVID-19); difficulties or delays in product functionality or performance; the delivery performance of sole source vendors; the timing of future product releases; failure to respond to changes in technology or customer preferences; changes in pricing by Onto Innovation or its competitors; Onto Innovation’s ability to leverage its resources to improve its position in its core markets, to weather difficult economic environments, to open new market opportunities and to target high-margin markets; the strength/weakness of the back-end and/or front-end semiconductor market segments; the imposition of tariffs or trade restrictions and costs, burdens and restrictions associated with other governmental actions; the ability to successfully integrate the businesses of Rudolph and Nanometrics promptly and effectively and to achieve the anticipated synergies and value-creation contemplated by the Merger within the expected time frame; unanticipated difficulties or expenditures relating to the Merger and integration of the Rudolph and Nanometrics businesses; the response of business partners and retention as a result of the Merger; the diversion of management time in connection with the integration; and the effect of litigation related to the Merger. Additional information and considerations regarding the risks faced by Onto Innovation are available in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and other filings with the Securities and Exchange Commission. As the forward-looking statements are based on Onto Innovation’s current expectations, the Company cannot guarantee any related future results, levels of activity, performance or achievements. Onto Innovation does not assume any obligation to update the forward-looking information contained in this proxy statement.
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 22, 2018
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of NANOMETRICS INCORPORATED, a Delaware corporation. The meeting will be held on Tuesday, May 22, 2018, at 9:00 a.m. local time, at our Corporate Headquarters located at 1550 Buckeye Drive, Milpitas, California 95035 for the following purposes:
Date: | Tuesday, May 12, 2020 | |
Time: | 10:00 a.m., Eastern time* | |
Place: | Company principal executive offices located at 16 Jonspin Road, Wilmington, Massachusetts, 01887 | |
Record Date: | Only stockholders of record at the close of business on March 13, 2020 are entitled to vote at the meeting and any adjournment or postponement thereof for which no new record date is set. | |
Items of Business: | 1. | To elect the Board’s |
| 2. | To approve, on an advisory (non-binding) basis, the compensation of |
| 3. | To |
| 4. | To |
5. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 26, 2020; and | |
6. | To transact such other business as may properly |
These items of business are described more fully described in the accompanying proxy statement. This year we will be providing access to our proxy materials via the internet in accordance with the Securities and Exchange Commission’s “Notice and Access” rules. On or about April 3, 2020, we will be mailing our Notice of Internet Availability of Proxy Statement accompanyingMaterials to our stockholders, which contains instructions for our stockholders’ use of this Notice.process, including how to access our 2020 proxy statement and 2019 annual report to stockholders and how to vote online. In addition, the Notice of Internet Availability of Proxy materials contains instructions on how you may receive a paper copy of the 2020 proxy statement and 2019 annual report to stockholders.
The record date forYour vote is important. As always, but especially now given the uncertainties posed by the Coronavirus (COVID-19) pandemic, we encourage you to vote your shares as soon as possible and prior to the Annual Meeting is March 23, 2018. Only stockholders of recordvia the internet even if you plan to participate in the Annual Meeting. Voting will ensure your shares are represented at the closeAnnual Meeting, regardless of businesswhether you attend the Annual Meeting. You may cast your vote via the internet, by mail or during the Annual Meeting. If you receive a paper copy of the proxy card by mail, you may also mark, sign, date, and return the proxy card promptly in the accompanying postage-prepaid envelope.
*We intend to hold our annual meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on that datemeeting attendees or may vote atdecide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). In such an event, we would announce any adjournment thereof.such updates in additional proxy materials filed with the SEC and in a press release that we would make available on our website at https://investors.ontoinnovation.com. We encourage you to check this website prior to the meeting if you plan to attend.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 12, 2020:
This notice, the proxy statement, and the 2019 Annual Report to Stockholders are available at:
https://www.ontoinnovation.com/ar-proxy
FOR THE BOARD OF DIRECTORS
Robert A. Koch
Secretary
Wilmington, Massachusetts April 3, 2020 | ||||
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NANOMETRICS INCORPORATEDPROXY SUMMARY
2018 ANNUAL MEETING OF STOCKHOLDERSOn October 25, 2019 (the “Merger Date”), Rudolph Technologies, Inc. merged with and into Nanometrics Incorporated, which was then renamed Onto Innovation Inc. (the “2019 Merger”). Unless otherwise indicated or context otherwise requires, as used herein “Nanometrics” refers to Nanometrics Incorporated and its subsidiaries prior to the 2019 Merger and “Rudolph” refers to Rudolph Technologies, Inc. and its subsidiaries prior to the 2019 Merger.
TABLE OF CONTENTSThis summary highlights information contained elsewhere in the proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
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Voting Matter |
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Proposal 1: Election of Directors | ||
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Proposal 2: Advisory Vote on Named Executive Officer Compensation | FOR | 30 |
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Proposal 4: Approval of the Onto Innovation Inc. 2020 Employee Stock Purchase Plan | ||
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Proposal 5: Ratification of Appointment of Independent Registered Public Accounting Firm for the Fiscal Year Ending December 26, 2020 | ||
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Snapshot Of Board Composition
NANOMETRICS INCORPORATEDThe following table presents a snapshot of the expected composition of the Onto Innovation Board of Directors immediately following the 2020 Annual Meeting, assuming the election of all nominees named in the proxy statement.
1550 Buckeye Drive
Board Characteristic | Onto Innovation | |
Total Number of Directors | 10 | |
Percentage of Independent Directors | 90% | |
Average Age of Directors (years) | 61.4 | |
Average Tenure of Directors (years) | 6.3 | |
Separate Chairman and CEO roles | Yes | |
Independent Chairman | Yes | |
Audit Committee Financial Experts | 2 |
Milpitas, California 95035
Snapshot Of Board Governance And Compensation Policies
The following table presents a snapshot of the Onto Innovation Board Governance and Compensation Policies currently in effect.
Policy | Onto Innovation |
Majority Voting for All Directors | Yes |
Regular Executive Sessions of Independent Directors | Yes |
Annual Board, Committee and Director Evaluations | Yes |
Risk Oversight by Full Board and Committees | Yes |
Independent Audit, Compensation and Nominating & Governance Committees | Yes |
Code of Business Conduct and Ethics for Employees and Directors | Yes |
Financial Information Integrity Policy | Yes |
Stock Ownership Requirement for Directors | 3x annual retainer |
Stock Ownership Requirement for CEO | 3x base salary |
Stock Ownership Requirement for other NEOs | 1x base salary |
Stock Ownership Requirements for other executives | Specified number of shares |
Anti-Hedging, Anti-Short Sale & Anti-Pledging Policy | Yes |
Compensation Clawback Policy | Yes |
No Future Tax Gross-Up Provisions | Yes |
No Poison Pill | Yes |
Stock Buyback Program | Yes |
Double Trigger Change-in-Control Provisions for Executives | Yes |
Snapshot Of Board Governance And Compensation Policies Newly Implemented Or Adjusted In Past Year
The following presents a snapshot of the Onto Innovation Board Governance and Compensation Policies that were newly implemented or adjusted in the past year.
As of the Merger Date, the following was established with regard to the Board of Directors:
◦ | Board size of twelve (12) Directors. |
◦ | Board of Directors Chairman: Christopher A. Seams |
◦ | Audit Committee: |
-Five (5) members |
-Chairperson: Christine A. Tsingos |
◦ | Compensation Committee: |
-Five (5) members |
-Chairperson: Edward J. Brown, Jr. |
◦ | Nominating & Governance Committee: |
-Five (5) members |
-Chairperson: Leo Berlinghieri |
Prior to the Merger Date, the Nanometrics Board of Directors approved the charters for the Audit, Compensation and Nominating & Governance Committees, the Code of Business Conduct and Ethics and the Financial Information Integrity Policy and the Summary of Corporate Governance Policies for the Company in order that they be established as of the Merger Date in accordance with NYSE listing rules. Each charter, policy and summary was thereafter ratified by the Board of Directors of the Company at the first Board of Directors Meeting following the Merger Date.
At the first Board of Directors meeting following the Merger Date, the Board approved the following policies for Onto Innovation:
◦ | Foreign Corrupt Practices Act Policy |
◦ | Related Parties Transaction Policy |
◦ | Stock Ownership Policy |
◦ | Director Candidate Policy |
◦ | Insider Trading Compliance Policy |
◦ | Stockholder Communication Policy |
Thereafter, an Incentive Compensation Clawback Policy was approved for the Company.
The Company established an incentive compensation plan for executives which combined elements of the legacy Nanometrics and Rudolph Technologies plans and includes a long-term equity component which utilizes both time-based and performance-based awards. The performance-based awards employ a Total Shareholder Return (“TSR”) calculation comparing Company TSR to a peer group consisting of the thirty (30) companies in the Philadelphia Semiconductor Index (SOX).
The Board of Directors determined that subsequent to the 2020 Annual Meeting of Stockholders the size of the Company Board would be reduced to ten (10) members.
Consistent with Nanometrics’ prior policy, the Board of Directors approved a 52-53-week fiscal year ending on the last Saturday in December for the Company.
PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS
The proxy detailed herein is solicited on behalf of the Board of Directors (the “Board” or “Board of Directors”) of Onto Innovation Inc. (“Onto Innovation,” the “Company,” “we,” “us” or “our”) for use at the 2020 Annual Meeting of Stockholders to be held May 22, 201812, 2020 at 10:00 a.m. Eastern time (the “Annual Meeting”), or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the Company’s principal executive offices, located at 16 Jonspin Road, Wilmington, Massachusetts 01887. Directions to the annual meeting may be found on our website www.ontoinnovation.com by clicking on “Company,” “Locations,” “Massachusetts” and then accessing the interactive map. The Company’s telephone number is (978) 253-6200.
We intend to hold the Annual Meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). In such an event, we would announce any such updates in additional proxy materials filed with the SEC and in a press release that would be available on our website at https://investors.ontoinnovation.com. We encourage you to check this website prior to the meeting if you plan to attend.
On or about Friday, April 3, 2020, we will furnish a Notice of Internet Availability of Proxy Materials (“Notice”) to our stockholders containing instructions on how to access the proxy materials online at:
https://www.ontoinnovation.com/ar-proxy
Instructions on how to vote online and to request a printed copy of the proxy materials may be found in the Notice. If you received a Notice by mail, you will not receive a paper copy of the proxy materials, unless you request such materials by following the instructions contained in the Notice. Your vote is important, regardless of the extent of your holdings.
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTINGTHE ANNUAL MEETING
Why did I
What Is The Purpose Of The Annual Meeting? |
At the Annual Meeting, stockholders will be asked to vote upon the matters set forth in the accompanying Notice of Annual Meeting, including:
the election of ten (10) directors;
an advisory resolution on named executive officer compensation;
approval of the Onto Innovation 2020 Stock Plan;
approval of the Onto Innovation 2020 Employee Stock Purchase Plan; and
the ratification of the appointment of our independent registered public accounting firm for fiscal 2020,
all of which are more fully described herein.
Will Other Matters Be Voted On At The Annual Meeting? |
We are not currently aware of any other matters to be presented at the Annual Meeting other than those described in this proxy statement. If any other matters not described in the proxy statement are properly presented at the meeting, any proxies received by us will be voted in the discretion of the proxy holders.
If you were a stockholder of record as of the close of business on March 13, 2020, which is referred to in this proxy statement as the “record date,” you are entitled to receive notice of the Annual Meeting and to vote the shares of common stock that you held as of the close of business on the record date. Each stockholder is entitled to one (1) vote for each share of common stock held by such stockholder on the record date.
May I Attend The Meeting? |
All stockholders of record as of the record date may attend the Annual Meeting.
To gain admission, you will need valid picture identification and proof that you are a notice regardingstockholder of record of the availabilityCompany as of the record date, or if you are a beneficial holder, proof from your bank, broker or other record holder of your shares that you are the beneficial owner of such shares. If you are a beneficial holder and wish to vote your shares at the meeting, you will need a legal proxy from your bank, broker or other record holder of your shares. To obtain directions to attend the Annual Meeting and vote in person, please contact Investor Relations at 978-253-6200.
What Constitutes A Quorum? |
The required quorum for the transaction of business at the Annual Meeting is a majority of the issues and outstanding shares of Common Stock of the Company, $0.001 par value per share (“Common Stock”), present in person or by proxy and entitled to vote at the Annual Meeting. On the record date, 50,381,691 shares of the Company’s Common Stock were issued and outstanding, each entitled to one vote on each matter to be acted upon at the Annual Meeting. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted to determine whether there is a quorum present. If a quorum is not present, the Annual Meeting may be adjourned or postponed to a later date.
What Are “Broker Non-Votes”? |
A broker non-vote occurs when a bank, broker or other registered holder of record holds shares for a beneficial owner, but is not empowered to vote on a particular proposal on behalf of such beneficial owner because the proposal is considered “non-routine” and the beneficial owner has not provided voting instructions on that proposal. The election of directors, the advisory vote on named executive officer compensation, the proposal to approve the Onto Innovation Inc. 2020 Stock Plan, and the proposal to approve the Onto Innovation Inc. 2020 Employee Stock Purchase Plan are treated as “non-routine” proposals. This means that if a brokerage firm holds your shares on your behalf, those shares will not be voted with respect to any of these proposals unless you provide instructions to that firm by voting your proxy. See below under “What Is the Vote Required for Election of Directors?” and “What Is the Vote Required for the Approval of Proposals Other Than Director Elections?” for a discussion of the impact of broker non-votes on each of the proposals that will be presented at the Annual Meeting. In order to ensure that any shares held on your behalf by a bank, broker or other registered holder of record are voted in accordance with your wishes, we encourage you to provide instructions to that firm or organization in accordance with the voting instruction form provided by the broker, bank or other registered holder or to contact your broker, bank or other registered holder to request a proxy form.
Who Bears The Cost Of Soliciting Proxies? |
The Company will bear the cost of soliciting proxies. In addition, the Company may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. Solicitation of proxies by mail may be supplemented by telephone, facsimile, e-mail or other electronic means or personal solicitation by directors, officers or regular employees of the Company. No additional compensation will be paid to such persons for such services. We have engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $15,000 in total.
Why Did I Receive A “Notice Of Internet Availability Of Proxy Materials” But No Proxy Materials? |
We are distributing the Company’s proxy materials onto stockholders of record via the Internet?
Pursuant tointernet in accordance with the “Notice and Access” approach permitted by rules adopted byof the Securities and Exchange Commission (the "SEC"(“SEC”), we have elected to provide access to our proxy. This approach benefits the
environment, while providing a timely and convenient method of accessing the materials over the Internet.and voting. Accordingly, we have sent you a Notice of Internet Availability of Proxy Materials (the “Notice”) because the Board of Directors of Nanometrics Incorporatedthe Company is soliciting your proxy to vote at the 20182020 Annual Meeting of Stockholders, including at any adjournments or postponements of the meeting. On or about April 3, 2020, the Company will begin mailing the Notice to all stockholders of record entitled to vote at the annual meeting. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy of the proxy materials and the Company’s 2019 Annual Report may be found in the Notice.
What Does It Mean If I Received More Than One Notice? |
We intend to mail theIf you receive more than one Notice, on or about April 11, 2018, to all stockholders of record entitled to vote at the annual meeting.
Will I receive any other proxy materials by mail?
We may send you a proxy card, along with a second Notice, on or after April 21, 2018.
How do I attend the annual meeting?
The meeting will be held on Tuesday, May 22, 2018, at 9:00 a.m., local time, at our Corporate Headquarters located at 1550 Buckeye Drive, Milpitas, California 95035. Directions to the annual meetingyour shares may be foundregistered in more than one name or in different accounts. Please follow the voting instructions on our website www.nanometrics.com by clicking on “Contact” then “Map & Local Driving Directions.” Information on howeach of the Notices to vote in person at the annual meeting is discussed below.
Who can vote at the annual meeting?
Only stockholdersensure that all of record at the close of business on March 23, 2018, will be entitled to vote at the annual meeting. On this record date, there were 23,879,563 shares of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If on March 23, 2018, your shares were registered directly in your name with Nanometrics' transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return a proxy card (if you have received one), or vote by proxy over the telephone or on the Internet as instructed below, to ensure your vote is counted.
Beneficial Owner Shares Registered in the Name of a Broker or Bank
If on March 23, 2018, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.voted.
How Do I Go About Voting? |
What am I voting on?
There are three matters scheduled for a vote:
Election of eight directors;
Advisory approval of the compensation of Nanometrics' named executive officers, as disclosed in this proxy statement in accordance with SEC rules; and
Ratification of appointment by the Audit Committee of the Board of Directors of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Nanometrics for its fiscal year ending December 29, 2018.
What if another matter is properly brought before the meeting?
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
How do I vote?
You may either vote "For"“For” all the nominees to the Board of Directors or you may "Withhold"“Withhold” your vote for any nominee you specify. For each of the other matters to be voted on, you may vote "For"“For” or "Against"“Against” or "Abstain"“Abstain” from voting.
Voting For Shares Registered Directly In The Name Of The Stockholder |
If you have a stock certificate or hold shares in an account with our transfer agent, you are considered the “stockholder of record” with respect to those shares. You can submit your proxy online by following the instructions on the Notice. You may opt to submit your proxy by requesting a stockholderfull set of proxy materials be mailed to you and completing and returning the proxy in the postage-paid envelope provided. Stockholders of record you may also vote in person at the annual meeting or vote by proxy over the telephone, or vote by proxy through the Internet, or vote by proxy using a proxy card that you may request or that we may elect to deliver at a later time.Annual Meeting. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person even if you have already votedsubmitted a proxy.
If you are a stockholder of record with shares registered in your name, you can vote by proxy.one of the following methods:
In Person - To vote in person, come to the annual meeting and you will receive a ballot when you arrive.
Via the Internet - To vote usingsubmit your proxy by internet, go to www.investorvote.com/ONTO and follow the instructions on the secure website. The deadline for proxy submission via the internet is 11:59 p.m. (EDT) on May 11, 2020.
Via Telephone – To submit your proxy by telephone, call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada.
By Mail – Stockholders who receive a paper proxy card may elect to submit a proxy card, you may request a proxy cardby mail and simplyshould complete, sign and date thetheir proxy card that may be delivered and returnmail it promptly in the pre-addressed postage-paid envelope that will be provided withaccompanies the delivery of paper proxy card. If you return your signed proxy card to us before the annual meeting, we will vote your shares as you direct.
To vote over the telephone, dial toll-free 1-800-690-6903 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice. Your telephone votecards. Proxy cards submitted by mail must be received by 11:59 p.m., Eastern Time on May 21, 2018,the time of the annual meeting in order for your shares to be counted.voted.
To vote throughFurther instructions on how to submit a proxy online or by mail are contained in the Internet, goNotice. Even if you plan to www.proxyvote.com to complete an electronicattend the meeting, we recommend that you submit your proxy card. Youin advance so that your vote will be askedcounted if you later decide not to provideattend the company number and control number frommeeting. Each stockholder of record is entitled to one (1) vote for each share of Common Stock owned by such stockholder on all matters presented at the Notice. Your Internet vote must be received by 11:59 p.m., Eastern Time on May 21, 2018,Annual Meeting. Stockholders do not have the right to be counted.
Beneficial Owner: Shares Registeredcumulate their votes in the Nameelection of Broker or Bankdirectors.
If you return a signed and dated proxy but do not indicate how the shares are to be voted, those shares will be voted in accordance with Onto Innovation’s Board of Directors’ recommendations. A valid proxy also authorizes the individuals named as proxies to vote your shares in their discretion on any other matters, which, although not described in the proxy statement, are properly presented for action at our Annual Meeting. If you indicate on your proxy that you wish to “abstain” from voting on an item, your shares will not be voted on that item.
While internet proxy voting is being provided to allow you to submit your proxy online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions, please be aware that you must bear any costs associated with your internet access, such as usage charges from Internet access providers and telephone companies.
If your shares are held in a beneficial ownerstock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of shares registeredheld in the name of“street name.” In that case, you may receive a separate voting instruction form, or you may need to contact your broker, bank, or other agent,stockholder of record to determine whether you should have received a Notice containingwill be able to provide voting instructions from that organization rather than from Nanometrics. Simply followelectronically via the internet. As the beneficial owner, you have the right to direct your broker, bank or other holder of record on how to vote your shares by submitting voting instructions to such person in accordance with the Noticedirections outlined in your proxy. In the event you are considered the “beneficial owner” of shares held in “street name” and you wish to ensure that your vote is counted. To vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank or another agent. Follow the instructions from your broker or bank included with these proxy materials or contact your broker or bank to request a proxy form.
May I Revoke My Proxy Instructions? |
InternetAny proxy votinggiven pursuant to this solicitation may be provided to allowrevoked by the person giving it at any time before it is voted. If you toare a stockholder of record, you may change your vote your shares online, with procedures designed to ensure the authenticity and correctness ofafter submitting your proxy voteby:
delivering a written notice of revocation or a duly executed proxy bearing a later date to the Secretary of the Company at the Company’s principal executive offices prior to the meeting, if you submitted your proxy by mail;
submitting a timely and valid later proxy online at www.investorvote.com/ONTO, if you submitted your proxy online;
submitting a timely and valid later proxy by telephone call to 1-800-652-VOTE (8683) within the USA, US territories and Canada or
attending the meeting and voting in person.
If you are a beneficial owner of shares, please contact your bank, broker or other holder of record for specific instructions on how to change or revoke your voting instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies.
How many votes do I have?
On each matter to be voted upon, you have one vote for each share of common stock you own as of March 23, 2018.
What Happens If I Do Not Vote? |
What happens if I do not vote?
Stockholder of Record: Shares Registered in
Stockholder Of Record: Shares Registered In Your Name |
If you are a stockholder of record and do not votesubmit a proxy by completing your proxy card, by telephone, through the Internet or vote in person at the annual meeting, your shares will not be voted.
Beneficial Owner: Shares Registered in the Name of Broker or
Beneficial Owner: Shares Registered In The Name Of Broker Or Bank |
If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange (“NYSE”) deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder advisory votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on Proposals 1, 2, 3 or 24 without your instructions but may vote your shares on Proposal 35 even in the absence of your instruction.
What if I return a proxy card or otherwise vote but do not make specific choices?
What If I Return A Proxy Card Or Otherwise Submit a Proxy But Do Not Make Specific Choices? |
If you return a signed and dated proxy card or otherwise votesubmit a proxy without marking voting selections, your shares will be voted, as applicable, “For” the election of all eightten (10) nominees for director, “For” the advisory approval of executive compensation, “For” approval of the Onto Innovation Inc. 2020 Stock Plan, “For” approval of the Onto Innovation Inc. 2020 Employee Stock Purchase Plan and “For” the ratification of the appointment by the Audit Committee of the Board of Directors of PricewaterhouseCoopersErnst & Young, LLP as the independent registered public accounting firm of Nanometricsthe Company for its fiscal year ending December 29, 2018.26, 2020. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
WhoFor the election of directors, each director is paying for this proxy solicitation?
We will pay forelected by the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one Notice?
If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Stockholder of Record: Shares Registered in Your Name
Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
You may submit another properly completed proxy card withmajority of the votes cast (except that if the number of nominees exceeds the number of directors to be elected, directors will be elected by a later date.
You may grantplurality voting standard). This means that in order for a subsequent proxy by telephone or throughdirector nominee to be elected to our Board of Directors, the Internet.
You may sendnumber of votes cast “for” a timely written noticedirector’s election must exceed the number of votes cast “against” that you are revoking your proxy to Nanometrics’ Secretary at Nanometrics Incorporated, 1550 Buckeye Drive, Milpitas, California 95035.
You may attend the annual meetingdirector’s election (with “abstentions” and vote in person. Simply attending the meeting will“broker non-votes” not by itself, revoke your proxy.
Your most current proxy card or telephone or Internet proxy is the one that is counted.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If your shares are held by your broker or bankcounted as a nomineevote cast either “for” or agent, you should follow the instructions provided by your broker or bank.
When are stockholder proposals and director nominations due for next year’s annual meeting?
To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by December 12, 2018, to Nanometrics’ Secretary at Nanometrics Incorporated, 1550 Buckeye Drive, Milpitas, California 95035. If the date of our 2019 annual meeting is changed by more than 30 days from the one year anniversary of the date of the 2018 annual meeting, the proposal must be received a reasonable time before we begin to print and mail our proxy materials. The submission of a stockholder proposal does not guarantee“against” that it will be included in our proxy statement.
If you wish to submit a proposal (including a director nomination) at the meeting that is not to be included in next year’s proxy materials, you must do so by December 12, 2018, to Nanometrics’ Secretary at Nanometrics Incorporated, 1550 Buckeye Drive, Milpitas, California 95035. If we set the date of our 2019 annual meeting to a date more than 30 days from the one year anniversary of the date of our 2018 annual meeting, then the deadline for receipt of stockholder proposals will be no later than the close of business on the later of 120 calendar days in advance of the 2019 annual meeting or ten days following the date on which we first publicly announce the date of the 2019 annual meeting. You are also advised to review Nanometrics’ Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
How are votes counted?
Votes will be counted by the inspector ofdirector’s election, appointed for the meeting, who will separately count the votes for the proposals as follows:
Proposal 1, to elect directors, votes "For," "Withhold" and broker non-votes;
Proposal 2, the advisory vote on executive compensation, votes "For" and "Against,"although abstentions and broker non-votes;non-votes count for quorum purposes). Our Amended and
Proposal 3, Restated Bylaws (“Bylaws”) provide for a for election of directors by a majority of votes cast in uncontested elections, and our Corporate Governance Summary provides that any incumbent director nominee in an uncontested election who does not receive an affirmative majority of votes cast must promptly tender such director’s resignation to our Board of Directors. Further information regarding the ratificationprocess that will be followed if such an event occurs can be located under the heading “Proposal 1 - Election of Directors.”
What Is The Vote Required For The Approval Of Proposals Other Than Director Elections? |
The proposal to approve, on an advisory basis, the compensation of our named executive officers, the proposal to approve the Onto Innovation Inc. 2020 Stock Plan, the proposal to approve the Onto Innovation Inc. 2020 Employee Stock Purchase Plan and the proposal to ratify the appointment by the Audit Committee of the Board of Directors of PricewaterhouseCoopersErnst & Young LLP as theour independent registered public accounting firm of Nanometrics for itsthe fiscal year ending December 29, 2018, votes "For" and "Against," abstentions and, if applicable, broker non-votes.
What are "broker non-votes"?
As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to26, 2020 require the broker or nominee holding the shares as to how toaffirmative vote, on matters deemed by the NYSE to be “non-routine,” the broker or nominee cannot vote the shares. These unvoted shares are counted as "broker non-votes."
How many votes are needed to approve each proposal?
For Proposal 1, the election of directors, the eight nominees receiving the most “For” votes from the holders of shares present in person or represented by proxy, and entitled to vote on the election of directors will be elected. Only “For” votes will affect the outcome. However, the Board of Directors has adopted a Majority Vote Policy, pursuant to which any director-nominee that is elected but fails to receive more “For” votes than “Withheld” votes must submit his/her resignation for consideration by the Board. The Board will then decide whether to accept the director’s resignation. Details of the Majority Vote Policy are set out below under “Corporate Governance - Voting for Directors - Majority Vote Policy.”
For Proposal No. 2, the advisory approval of the compensation of Nanometrics’ named executive officers, will be approved if it receives “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote on the matter. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.
For Proposal 3, ratification of the appointment by the Audit Committee of the Board of Directors of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Nanometrics for its fiscal year ending December 29, 2018, will be approved if it receives “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote on the matter. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares entitled to vote are present at the meeting in person or represented by proxy. On the record date, there were 23,879,563 shares outstanding and entitled to vote.Thus, the holders of 11,939,782 shares must be present in person or represented by proxy at the meeting and entitled to have a quorum.
Yourvote on the matter to be approved. For such proposals, abstentions in effect count as negative votes, because they are shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares present at the meetingrepresented in person or represented by proxy may adjournthat are entitled to vote on the meeting to another date.
How can I find outmatter and not voted in the resultsaffirmative. Broker non-votes are not counted as part of the votingvote total (because they are not considered “entitled to vote” on the matter) and have no effect on the outcome of those proposals.
What Is Householding? |
The Company has adopted a procedure approved by the SEC called “householding.” Under this procedure, when multiple stockholders of record share the same address, we may deliver only one (1) Notice to that address unless we have received contrary instructions from one or more of those stockholders. The same procedure may be followed by brokers and other nominees holding shares of our stock in “street name” for more than one (1) beneficial owner with the same address.
If a stockholder holds shares of stock in multiple accounts (e.g., with our transfer agent and/or banks, brokers or other registered stockholder), we may be unable to use the householding procedures and, therefore, that stockholder may receive multiple copies of the Notice. You should follow the instructions on each Notice that you receive in order to vote the shares you hold in different accounts.
A stockholder that shares an address with another stockholder, who has received only one (1) Notice may write or call us as specified below:
(i) | To request a separate copy of such materials, which will be promptly mailed without charge; and |
(ii) | To request that separate copies of these materials be sent to his or her home for future meetings. |
Conversely, a stockholder of record who shares the same address with another stockholder of record may write or call us as specified below to request that a single set of the proxy materials be delivered to that address. Such stockholder requests may be made to our Investor Relations Department either via phone at the annual meeting?978-253-6200 or by mail directed to:
Investor Relations Department
Onto Innovation Inc.
16 Jonspin Road
Wilmington, Massachusetts 01887
If you are a beneficial owner of shares held in street name, please contact your bank, broker or other holder of record regarding such requests.
How Can I Find Out the Results Of The Voting At The Annual Meeting? |
Preliminary voting results will be announced at the annual meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four (4) business days after the annual meeting. If final voting results are not available to us in time to file a Form 8-K within four (4) business days after the meeting, we intend to file a Form 8‑K
to publish preliminary results and, within four (4) business days after the final results are known to us, file an additional Form 8-K to publish the final results.
What Are The Deadlines For Submission Of Stockholder Proposals For The 2021 Annual Meeting? |
Stockholders of the Company are entitled to present proposals for consideration at forthcoming stockholder meetings provided that they comply with the proxy rules promulgated by the SEC, if applicable, and the Bylaws of the Company. Stockholders wishing to present a proposal at the Company’s 2021 Annual Stockholder Meeting must submit such proposal in writing to the Company Secretary at Onto Innovation Inc., 16 Jonspin Road, Wilmington, Massachusetts 01887 no later than December 1, 2020 in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), if they wish for it to be eligible for inclusion in the proxy statement and form of proxy relating to that meeting. In addition, under the Company’s Bylaws, a stockholder wishing to nominate a director or make a proposal at the 2021 Annual Stockholder Meeting outside of Exchange Act Rule 14a-8 must submit such nomination or proposal in writing to the Company Secretary at the above address no earlier than January 12, 2021 and no later than February 11, 2021. The Nominating & Governance Committee will also consider qualified director nominees recommended by stockholders. Our process for receiving and evaluating Board member nominations from our stockholders is described below under the caption “Consideration Of Director Nominees.”
You are also advised to review Company’s Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES
Onto Innovation is committed to sound and effective corporate governance practices. Having such principles is essential to running our business efficiently and to maintaining our integrity in the marketplace. The major components of our corporate governance practices are described below.
Board Leadership Structure |
Our Company management is led by Michael P. Plisinski, who has served as our CEO and a director since the Merger Date and Christopher A. Seams, who is an independent director and has served as the Chairman of the Company’s Board of Directors since the Merger Date.
Prior to the 2019 Merger, Bruce C. Rhine served as the Chairman of the Board of Nanometrics and Pierre-Yves Lesaicherre, Ph.D. served as the President, Chief Executive Officer and a director of Nanometrics through the Merger Date. With regard to Rudolph, prior to the 2019 Merger, David B. Miller served as the Chairman of the Board of Rudolph and Mr. Plisinski served as the Chief Executive Officer of Rudolph and as a director on the Rudolph Board from November 2015 through the Merger Date.
Our Board of Directors is currently comprised of two (2) non-independent directors, Mr. Plisinski and Timothy J. Stultz, Ph.D., and ten (10) directors each of whom has been affirmatively determined by our Board of Directors to meet the criteria for independence established by the SEC and the NYSE. The independent directors meet periodically in executive session chaired by the Chairman without the CEO or other management present. Furthermore, each director is encouraged to suggest items for the Board agenda and to raise at any Board meeting subjects that are not on the agenda for that meeting.
In accordance with our sound and effective corporate governance practice, the roles of CEO and Chairman of the Board, as cited above, are held by separate individuals, with the independent Chairman of the Board being designated by the Board. The Board of Directors believes that, at the current time, the designation of an independent Chairman of the Board facilitates the functioning of the Board of Directors, while leaving the CEO responsible for setting the strategic direction for the Company and for the day-to-day leadership and performance of the Company. The independent Chairman of the Board:
Presides at all meetings of the stockholders and the Board of Directors at which he or she is present;
Establishes the agenda for each Board of Directors meeting;
Sets the schedule and annual agenda, to the extent foreseeable;
Calls and prepares the agenda for and presides over separate executive sessions of the independent directors;
Acts as a liaison between the independent directors and the Company’s management;
Serves as a point of communications with stockholders; and
Performs such other powers and duties as may from time to time be assigned by the Board of Directors or as may be prescribed by the Company’s Bylaws.
Board Meetings |
The Board of Directors of the Company held one (1) meeting during 2019, which 100% of the incumbent directors attended. In 2019, the Nanometrics Board of Directors held a total of thirteen (13) meetings as did the Rudolph Board of Directors. All of Nanometrics’ incumbent directors attended at least 80% of the total number of meetings held by the Nanometrics Board and its standing committees upon which such directors served during 2019. All of Rudolph’s incumbent directors attended at least 95% of the total number of meetings held by the Rudolph Board and its standing committees upon which such directors served during 2019. While the Company does not currently have a formal policy regarding the attendance of directors at the annual meeting of stockholders, directors are encouraged to attend. All members of both the Nanometrics Board of Directors and the Rudolph Board of Directors serving at the time attended the 2019 Annual Meeting of Stockholders for the respective companies.
On one (1) occasion during 2019, the Company’s Board met in executive session in which only the independent Board members were present. In 2019, the Nanometrics Board met in executive session on four (4) occasions and the Rudolph Board met in executive session on three (3) occasions.
The Board of Directors makes an annual determination as to the independence of each of our Board members under the current standards for “independence” established by the NYSE and the SEC. The Board has determined that the following nominees for election as directors to our Board are independent under the NYSE Corporate Governance Rules: Jeffrey A. Aukerman, Leo Berlinghieri, Edward J. Brown, Jr., Vita A. Cassese, Robert G. Deuster, David B. Miller, Bruce C. Rhine, Christopher A. Seams and Christine A. Tsingos. Michael P. Plisinski, due to his position as our Chief Executive Officer, is not considered to be independent. As for the two (2) directors not standing for re-election in 2020, John R. Whiten is independent while Timothy J. Stultz, Ph.D., due to his position as Nanometrics President and Chief Executive Officer prior to his retirement from those positions in November 2017, is not considered independent.
From July 2006 to February 2008, Mr. Rhine served as Nanometrics Chief Strategy Officer, and from March 2007 to August 2007, Mr. Rhine served as Nanometrics Chief Executive Officer. The Nanometrics Board of Directors determined that Mr. Rhine became an independent member of the Board effective February 2011 under the Nasdaq Listing Rules due to the passage of time subsequent to his previous management role with Nanometrics and this designation was confirmed under the NYSE Listing Rules by the Company Board.
During 2019, none of the independent members of our Board was a party to any transactions, relationships or arrangements that were considered by the Board to impair his or her independence.
Oversight Of Risk |
One of the Board’s primary responsibilities is reviewing the Company’s strategic plans and objectives, including oversight of the principal risk exposures of the Company. In particular, the Board is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for the Company. The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole, as well as through various Board standing committees that address risks inherent in their respective areas of oversight. The Audit Committee assists the Board in oversight and monitoring of the legal and financial risks facing the Company, management's approach to addressing these risks and strategies for risk mitigation and serves as the contact point for employees to report corporate compliance issues. On at least an annual basis, the Audit Committee reviews and discusses with management policies and systems pursuant to which management addresses risk, including risks associated with our audit, financial reporting, internal control, disclosure control, cybersecurity, legal and regulatory compliance, and investment policies. Our Audit Committee regularly reviews with our Board any issues that arise in connection with such topics and, in accordance with our Summary of Corporate Governance Guidelines, our full Board regularly engages in discussions of risk management to assess major risks facing our Company and review options for the mitigation of such risks. Our Compensation Committee periodically reviews enterprise risks to ensure that our compensation programs do not encourage excessive risk-taking and our Nominating & Governance Committee oversees risks related to governance issues, such as succession planning. As a result of the foregoing, we believe that our CEO, together with the Chairman of our Audit Committee and our full Board of Directors, provides effective oversight of the Company’s risk management function.
Board Committees |
The Board has three standing committees with separate chairs - the Audit, Compensation, and Nominating & Governance Committees. Each of the Board committees is comprised solely of independent directors. The Audit Committee, Compensation Committee and Nominating & Governance Committee have each adopted a written charter that sets forth the specific responsibilities and qualifications for membership to the respective committees. The charters of each of these committees are available on our website at https://investors.ontoinnovation.com/governance/governance-documents/.
In 2019, the composition of and number of meetings held by the Company’s Board Committees were as follows:
Committee Chairperson | Committee Members | # of Meetings held in 2019 | |
Audit Committee | |||
Onto Innovation2 | Christine A. Tsingos | Jeffrey A. Aukerman Vita A. Cassese Christopher A. Seams John R. Whitten | 2 |
Nanometrics1 | Christine A. Tsingos | Bruce C. Rhine Robert G. Deuster Christopher A. Seams | 8 |
Rudolph1 | Jeffrey A. Aukerman | Vita A. Cassese John R. Whitten | 5 |
Nominating & Governance Committee | |||
Onto Innovation2 | Leo Berlinghieri | David B. Miller Bruce C. Rhine Christopher A. Seams Christine A. Tsingos | 1 |
Nanometrics1 | Christopher A. Seams | Bruce C. Rhine Edward J. Brown, Jr. | 4 |
Rudolph1 | Leo Berlinghieri | Daniel H. Berry John R. Whitten | 4 |
Compensation Committee | |||
Onto Innovation2 | Edward J. Brown, Jr. | Jeffrey A. Aukerman Leo Berlinghieri Robert G. Deuster David B. Miller | 1 |
Nanometrics1 | Edward J. Brown, Jr. | J. Thomas Bentley Robert G. Deuster Christine A. Tsingos | 3 |
Rudolph1 | David B. Miller | Jeffrey A. Aukerman Vita A. Cassese Thomas G. Greig | 5 |
1 | Through the Merger Date. |
2 | After the Merger Date |
Audit Committee |
The Audit Committee assists the Board in fulfilling its responsibilities for general oversight of the integrity of our financial statements, our accounting policies and procedures and our compliance with legal and regulatory requirements. Among its functions, the Audit Committee is responsible for:
The appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm;
The approval of services performed by the Company’s independent registered public accounting firm;
Reviewing the responsibilities, functions and performance of the Company’s internal audit function;
Reviewing the scope and results of internal audits and ongoing assessments of the Company’s risk management processes;
Monitoring possible transactions between the Company and our officers and directors for any potential conflicts of interest; and
Evaluating the Company’s system of internal control over financial reporting and disclosure controls and procedures.
The report of our Audit Committee is found below under the caption “Audit Committee Report.”
The Board has determined that each of the Audit Committee members meet the Audit Committee membership requirements set forth by the NYSE and the SEC, including that they be “independent.” Furthermore, the Board has determined that each of Ms. Tsingos and Mr. Aukerman qualify as an “Audit Committee Financial Expert” as that term is defined under SEC rules.
Compensation Committee |
The Compensation Committee is responsible for the establishment of the policies upon which compensation of and incentives for the Company’s executive officers will be based, the review and recommendation for approval by the independent members of the Board of the compensation of the Company’s executive officers, and the administration of the Company’s equity compensation plans.
In general, the Compensation Committee reviews and recommends for approval by the independent members of the Board of Directors the Company’s compensation policies and practices, including executive salary levels and variable compensation programs, both cash-based and equity-based, benefits, severance and equity-based and other compensation plans, policies and programs. With respect to the compensation of the Company’s CEO, the Compensation Committee reviews and recommends for approval by the independent members of the Board the various elements of the CEO’s compensation. With respect to other executive officers, including each of our NEOs, the Compensation Committee reviews the recommendations for compensation for such individuals presented to the Compensation Committee by the CEO and the reasons therefor and, in its discretion, may modify the compensation packages for any such individuals. The Compensation Committee has delegated to the Company’s CEO the authority, within certain parameters, to approve the grant of restricted stock units (“RSUs”) to employees and consultants who are not executive officers for purposes of Section 16 of the Exchange Act and hold positions below the level of vice president. All such grants are thereafter reviewed and ratified by the Compensation Committee.
In accordance with its charter, the Compensation Committee may form and delegate its authority to subcommittees when appropriate. Further, the Compensation Committee has the authority to retain, and to terminate, any compensation consultant or other advisors to assist in the evaluation of director, CEO or executive compensation or other matters within the scope of the Compensation Committee’s responsibilities and is directly responsible for the appointment, compensation and oversight of such consultants and other advisors, including their fees and other retention terms. From time to time, the Compensation Committee engages the services of such outside compensation consultants to provide advice on compensation plans and issues related to the Company’s executive and non-executive employees. In 2019, the Company’s Compensation Committee engaged Compensia, Inc. (“Compensia”) to provide such assistance to the Compensation Committee. Prior to the 2019 Merger, Compensia provided compensation consultancy services to Nanometrics while Rudolph engaged Pay Governance LLC for such compensation advice. The Compensation Committee also has authority to obtain advice and assistance from internal or external legal, accounting and other advisors.
Each current member of our Compensation Committee is an “outside” director as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, and a “non-employee” director within the meaning of Rule 16b-3 under the Exchange Act. The Board has determined that each of the Compensation Committee members meet the Compensation Committee membership requirements set forth by the NYSE and the SEC, including that they be “independent.”
For further discussion of the Compensation Committee and its processes and procedures, please refer to the “Compensation Program Objectives, Design and Practices” section in the Compensation Discussion and Analysis below. The Compensation Committee Report is included under the caption “Compensation Committee Report on Executive Compensation” in this Proxy Statement.
Nominating & Governance Committee |
The responsibilities of the Nominating & Governance Committee include:
Identifying prospective director nominees and recommending to the Board director nominees for the next annual meeting of stockholders and replacements of a director in the event of a vacancy on the Board;
Recommending to the Board the appointment of directors to Board Committees;
Developing and recommending to the Board, and monitoring compliance with, the corporate governance principles and standards applicable to the Company;
Managing the CEO selection process; and
Together with our CEO, overseeing our Company’s management succession planning.
The Nominating & Governance Committee also oversees the annual evaluation of the Board, the Committees of the Board and the individual directors. Typically, this evaluation is performed during the first quarter by each of the directors and reflects an assessment of the Board, the Committees of the Board and each individual director in the prior year. Among other topics, the evaluation in general assesses:
For both the Board and the Committees:
◦ | Their structure and composition; |
◦ | The format and content of meetings; and |
◦ | The effectiveness of the Board/Committees. |
For each individual director:
◦ | Their performance and approach to their directorship; |
◦ | Their understanding of their role as a director; |
◦ | Their understanding of critical aspects of the Company’s business, products and strategy; and |
◦ | Their skills, experience and ongoing training. |
In addition, the Board reviews the issues faced during the past year, assesses its response and makes determinations whether additional resources or approaches might be applied to further optimize the handling of the issues. The goal of the evaluation is to identify and address any performance issues at the Board, committee or individual level, should they exist, identify potential gaps in the boardroom and to assure the maintenance of an appropriate mix of director skills and qualifications. Upon completion of the evaluation, the Nominating & Governance Committee provides feedback to the Board, the committees and the individual directors regarding the results of the evaluation and raises any issues that have been identified which may need to be addressed.
The Nominating & Governance Committee utilizes a variety of methods for identifying and evaluating nominees. Its general policy is to assess the appropriate size and needs of the Board of Directors and whether any vacancies are expected due to retirement or otherwise. In addition, candidates for director nominees are typically reviewed in the context of the current composition of the Board, the operating requirements of the Company, the current needs of the Board, and the long-term interests of stockholders, with the goal of maintaining a balance of knowledge, experience and capability. In the event those vacancies are anticipated, or otherwise arise, the Nominating & Governance Committee will consider recommending various potential candidates to fill such vacancies. Candidates may come to the attention of the Nominating & Governance Committee through its current members, stockholders or other persons.
The Board has determined that each of the Nominating & Governance Committee members meets the Nominating & Governance Committee membership requirements, including the independence requirements of the NYSE.
Other Committees |
Our Board of Directors may from time to time establish other special or standing committees to facilitate the management of the Company or to discharge specific duties delegated to the committee by the full Board of Directors.
Compensation Committee Interlocks And Insider Participation |
In 2019, no member serving on the Company’s Compensation Committee (Edward J Brown, Jr., Jeffrey A. Aukerman, Leo Berlinghieri, Robert G. Deuster, David B. Miller), the Nanometrics Compensation Committee (Edward J Brown, Jr., J. Thomas Bentley, Robert G. Deuster, Christine A. Tsingos) or the Rudolph Compensation Committee (David B. Miller, Jeffrey A. Aukerman, Vita A Cassese, Thomas G. Greig) at any time during the year had any form of interlocking relationship as described in Item 407(e)(4) of Regulation S-K with the respective company. Further, no member of the Company’s Compensation Committee as constituted in 2020 (Edward J Brown, Jr., Jeffrey A. Aukerman, Leo Berlinghieri, Robert G. Deuster, David B. Miller) has any form of interlocking relationship as described in Item 407(e)(4) of Regulation S-K as of the date of this proxy statement.
Board Membership Criteria And Nominee Identification |
The Nominating & Governance Committee of the Board determines the required selection criteria and qualifications of director nominees based upon the needs of the Company at the time nominees are considered. While the Nominating & Governance Committee has no specific minimum qualifications for director candidates, persons considered for Board of Directors positions
must demonstrate the following qualifications to be recommended by the Nominating & Governance Committee for a position on the Board:
The candidate must exhibit proven leadership capabilities, high integrity and experience with a high level of responsibilities within his or her chosen field;
The candidate must possess the ability to apply good business judgment and be of sound mind and high moral character;
The candidate must have no personal or financial interest that would conflict or appear to conflict with the interests of the Company;
The candidate must be in a position to properly exercise his or her duties of loyalty and be willing and able to commit the necessary time for Board of Directors and committee service; and
The candidate must have the ability to grasp complex principles of business, finance, international transactions and semiconductor inspection, metrology, lithography and related software technologies.
The Nominating & Governance Committee retains the right to modify these qualifications from time to time.
The Nominating & Governance Committee has not adopted a formal diversity policy with regard to the selection of director nominees. Diversity is one of the factors that the Nominating & Governance Committee considers in identifying nominees for director. In selecting director nominees, the Nominating & Governance Committee considers, among other factors:
The competencies and skills that the candidate possesses and the candidate’s areas of qualification and expertise that would enhance the composition of the Board and further its ability to offer advice and guidance to management;
How the candidate would contribute to the Board’s overall balance of expertise, perspectives, backgrounds and experiences in substantive matters pertaining to the Company’s business; and
The candidate’s demonstrated excellence in his or her field and commitment to rigorously representing the long-term interests of the Company’s stockholders.
In its identification of director nominees, the Nominating & Governance Committee will consider how the candidate would contribute to the Board’s overall balance of diversity of expertise, perspectives, backgrounds and experiences in substantive matters pertaining to the Company’s business. When current Board members are considered for nomination for reelection, the Nominating & Governance Committee also takes into consideration their prior contributions to and performance on the Board and their record of attendance.
The Nominating & Governance Committee will consider the above criteria for nominees identified by the Nominating & Governance Committee itself, by stockholders, or through some other source. The Nominating & Governance Committee uses the same process for evaluating all nominees, regardless of the original source of nomination. The Nominating & Governance Committee may use the services of a third-party search firm to assist in the identification or evaluation of Board member candidates.
Consideration Of Director Nominees |
The Nominating & Governance Committee has a formal policy with regard to consideration of director candidates recommended by the Company’s stockholders, the Director Candidate Policy, which may be found on our website at:
https://investors.ontoinnovation.com/governance/governance-documents/
In accordance with the policy, the Nominating & Governance Committee will consider recommendations for candidates to the Board of Directors from stockholders of the Company holding no less than 1% of the Company’s securities for at least twelve (12) months prior to the date of the submission of the recommendation. Stockholders wishing to recommend persons for consideration by the Nominating & Governance Committee as nominees for election to the Company’s Board of Directors can do so by writing to the Office of the General Counsel of the Company at its principal executive offices giving:
Candidate’s name, age, business address and residence address;
Candidate’s detailed biographical data and qualifications including his/her principal occupation and employment history;
The class and number of shares of the Company which are beneficially owned by the candidate;
The candidate’s written consent to being named as a nominee and to serving as a director, if elected;
• | Information regarding any relationship between the candidate and the Company in the last three (3) years; |
Any other information relating to the candidate that is required by law to be disclosed in solicitations of proxies for election of directors;
The name and address of the recommending or nominating stockholder;
The class and number of shares of the Company which are beneficially owned by the recommending or nominating stockholder;
A description of all arrangements or understandings between such stockholder and each nominee and any other person or persons (naming such person or persons) relating to the nomination; and
Any other information specified under Section 2.5 of the Company’s Bylaws.
Corporate Governance Guidelines |
Our Board of Directors adopted Corporate Governance Guidelines, a copy of which is available on our website at https://investors.ontoinnovation.com/governance/governance-documents/ under “Corporate Governance Summary.”
Codes Of Ethics |
We have adopted a Code of Business Conduct and Ethics (applicable to all employees, executive officers and directors) and a Financial Information Integrity Policy (applicable to our financial officers, including our CEO and Chief Financial Officer (“CFO”)) that set forth principles to guide all employees, executive officers and directors and establish procedures for reporting any violations of these principles. Copies of these codes may be found on our website at:
https://investors.ontoinnovation.com/governance/governance-documents/
or may be requested by writing to:
Onto Innovation Inc.
Attention: Investor Relations
16 Jonspin Road
Wilmington, Massachusetts 01887
The Company will disclose any amendment to its code of ethics or waiver of a provision of its code of ethics applicable to its officers or directors, including the name of the officer or director to whom the waiver was granted, on our website at www.ontoinnovation.com, on the Investors page.
Related Person Transactions Policy |
There have been no “related person transactions” since the beginning of 2019 to present, nor are there any currently proposed “related person transactions,” involving any director, director nominee or executive officer of the Company, any known 5% stockholder of the Company or any immediate family member of any of the foregoing persons (which are referred to together as “related persons”). A “related person transaction” generally means a transaction involving more than $120,000 in which the Company (including any of its subsidiaries) is a participant and in which a related person has a direct or indirect material interest.
The Board has adopted policies addressing the Company’s procedures with respect to the review, approval and ratification of “related person transactions” that are required to be disclosed pursuant to Item 404(a) of Regulation S-K. Our related person practices and policies ensure that our directors, officers and employees are proactively screened from any conflicts of interests interfering with their obligations to the Company. Our policies are included in our corporate governance documents, including our Code of Business Conduct and Ethics, the Audit Committee Charter and Summary of Corporate Governance Policies, each of which is available on the Investors section of our website located at:
https://investors.ontoinnovation.com/governance/governance-documents/
Pursuant to our Code of Business Conduct and Ethics, our directors, officers and employees are required to avoid any actual or apparent conflicts of interest (other than conflicts of interest that have received appropriate approval as described below), which includes taking actions or having interests that may interfere with the objective or efficient performance of such person’s duties to the Company or that may result in such person receiving improper personal benefits as a result of their position with the Company.
Pursuant to both the Board’s Summary of Corporate Governance Policies and the Audit Committee Charter, the Audit Committee, which consists entirely of independent directors, will review any proposed transaction in which the Company or its subsidiaries are to participate if the amount involved in the transaction exceeds $120,000 and we are aware that any related person may have a direct or indirect material interest in the transaction. The Audit Committee will consider the facts and circumstances and will approve or ratify a proposed transaction if the Audit Committee considers it appropriate and believes that such transaction will serve the long-term interests of our stockholders. The Compensation Committee of the Board reviews and approves compensation decisions for Board members and our executive officers (and such other employees of the Company as directed by the Board) pursuant to the Compensation Committee Charter.
Communications With The Board Of Directors |
We have a formal policy regarding communications with the Board of Directors, our Stockholder Communications Policy, which is found on our website at https://investors.ontoinnovation.com/governance/governance-documents/.
Stockholders may communicate with the Board of Directors, any of the Company’s Board Committees (Audit, Compensation or Nominating & Governance) or any of the Company’s directors by writing to:
Onto Innovation Inc.
Office of the General Counsel
550 Clark Drive
P.O. Box 860
Budd Lake, New Jersey 07828
and such communications will be forwarded to the intended recipient(s) to the extent appropriate. Prior to forwarding any communication, the General Counsel will review it and, in his or her discretion, will not forward a communication deemed to be of a commercial nature or otherwise inappropriate.
ELECTION OF DIRECTORSCompensation Committee
At the 2018 annual meeting of stockholders, unless otherwise instructed, the proxy holders will vote the proxies received by them for the nominees named below, each of whom has been nominated by the Board of Directors.Onto Innovation2
The Board of Directors currently has eight members. All current directors are standing for election at the 2018 annual meeting. The nominees were recommended by the Nominating and Governance Committee of the Board of Directors. All of the nominees named below, with the exception of Pierre-Yves Lesaicherre, Ph.D., were previously elected as directors by our stockholders.
If the nominees are unable or decline to serve as a director at the time of the annual meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill the vacancy. We do not have any reason to believe that any of the nominees will be unable or will decline to serve as a director. Directors are elected by a plurality of the votes of the holders of shares present in person or by proxy and entitled to vote on the election of directors. The eight nominees receiving the highest number of affirmative votes will be elected. Pursuant to our Majority Vote Policy, if a nominee for director receives a greater number of “Withhold” votes than “For” votes, that director shall promptly tender to the Nominating and Governance Committee his/her offer of resignation. Within 90 days following certification of the stockholder vote, the Committee shall recommend to the Board the action to be taken with respect to such offer of resignation, and the Board shall consider and act upon the Committee’s recommendation. Unless marked otherwise, the proxy holders will vote proxies returned to us for the nominees named below.
Set forth below is information regarding each of our directors, including their ages, as of April 3, 2018, the periods during which they have served as a director, certain information as to principal occupations and directorships held by them in corporations whose shares are publicly registered, and a discussion of the specific experience, qualifications, attributes or skills of each nominee that led the Board to nominate that person as a nominee for director, as of the date of this proxy statement.
J. Thomas Bentley, age 68, has served as a director since April 2004. Mr. Bentley served as a Managing Director at SVB Alliant (formerly Alliant Partners), a mergers and acquisitions firm, from 1990, when he co-founded the firm, until October 2005. Mr. Bentley currently serves on the board of directors of Rambus, Inc., a chip interface technology company. Mr. Bentley holds a B.A. degree in Economics from Vanderbilt University and a Master of Science in Management from the Massachusetts Institute of Technology. Mr. Bentley’s extensive knowledge of the capital markets, strategic planning and mergers and acquisitions from his experience at SVB Alliant provides expertise to the Board in matters regarding Nanometrics’ capital requirements and strategic direction.
Edward J. Brown, Jr., age 60, has served as a director since February 2013. From May 2013 until September 2015, Mr.Jr.
Jeffrey A. Aukerman
Leo Berlinghieri
Robert G. Deuster
David B. Miller
1
Nanometrics1
Edward J. Brown, wasJr.
J. Thomas Bentley
Robert G. Deuster
Christine A. Tsingos
3
Rudolph1
David B. Miller
Jeffrey A. Aukerman
Vita A. Cassese
Thomas G. Greig
5
1 | Through the |
2 | After the Merger Date |
Audit Committee |
The Audit Committee assists the Board in fulfilling its responsibilities for general oversight of the integrity of our financial statements, our accounting policies and procedures and our compliance with legal and regulatory requirements. Among its functions, the Audit Committee is responsible for:
The appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm;
The approval of services performed by the Company’s independent registered public accounting firm;
Reviewing the responsibilities, functions and performance of the Company’s internal audit function;
Reviewing the scope and results of internal audits and ongoing assessments of the Company’s risk management processes;
Monitoring possible transactions between the Company and our officers and directors for any potential conflicts of interest; and
Evaluating the Company’s system of internal control over financial reporting and disclosure controls and procedures.
The report of our Audit Committee is found below under the caption “Audit Committee Report.”
The Board has determined that each of the Audit Committee members meet the Audit Committee membership requirements set forth by the NYSE and the SEC, including that they be “independent.” Furthermore, the Board has determined that each of Ms. Tsingos and Mr. Aukerman qualify as an “Audit Committee Financial Expert” as that term is defined under SEC rules.
Compensation Committee |
The Compensation Committee is responsible for the establishment of the policies upon which compensation of and incentives for the Company’s executive officers will be based, the review and recommendation for approval by the independent members of the Board of the compensation of the Company’s executive officers, and the administration of the Company’s equity compensation plans.
In general, the Compensation Committee reviews and recommends for approval by the independent members of the Board of Directors the Company’s compensation policies and practices, including executive salary levels and variable compensation programs, both cash-based and equity-based, benefits, severance and equity-based and other compensation plans, policies and programs. With respect to the compensation of the Company’s CEO, the Compensation Committee reviews and recommends for approval by the independent members of the Board the various elements of the CEO’s compensation. With respect to other executive officers, including each of our NEOs, the Compensation Committee reviews the recommendations for compensation for such individuals presented to the Compensation Committee by the CEO and the reasons therefor and, in its discretion, may modify the compensation packages for any such individuals. The Compensation Committee has delegated to the Company’s CEO the authority, within certain parameters, to approve the grant of restricted stock units (“RSUs”) to employees and consultants who are not executive officers for purposes of Section 16 of the Exchange Act and hold positions below the level of vice president. All such grants are thereafter reviewed and ratified by the Compensation Committee.
In accordance with its charter, the Compensation Committee may form and delegate its authority to subcommittees when appropriate. Further, the Compensation Committee has the authority to retain, and to terminate, any compensation consultant or other advisors to assist in the evaluation of director, CEO or executive compensation or other matters within the scope of the Compensation Committee’s responsibilities and is directly responsible for the appointment, compensation and oversight of such consultants and other advisors, including their fees and other retention terms. From time to time, the Compensation Committee engages the services of such outside compensation consultants to provide advice on compensation plans and issues related to the Company’s executive and non-executive employees. In 2019, the Company’s Compensation Committee engaged Compensia, Inc. (“Compensia”) to provide such assistance to the Compensation Committee. Prior to the 2019 Merger, Compensia provided compensation consultancy services to Nanometrics while Rudolph engaged Pay Governance LLC for such compensation advice. The Compensation Committee also has authority to obtain advice and assistance from internal or external legal, accounting and other advisors.
Each current member of our Compensation Committee is an “outside” director as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, and a “non-employee” director within the meaning of Rule 16b-3 under the Exchange Act. The Board has determined that each of the Compensation Committee members meet the Compensation Committee membership requirements set forth by the NYSE and the SEC, including that they be “independent.”
For further discussion of the Compensation Committee and its processes and procedures, please refer to the “Compensation Program Objectives, Design and Practices” section in the Compensation Discussion and Analysis below. The Compensation Committee Report is included under the caption “Compensation Committee Report on Executive Compensation” in this Proxy Statement.
Nominating & Governance Committee |
The responsibilities of the Nominating & Governance Committee include:
Identifying prospective director nominees and recommending to the Board director nominees for the next annual meeting of stockholders and replacements of a director in the event of a vacancy on the Board;
Recommending to the Board the appointment of directors to Board Committees;
Developing and recommending to the Board, and monitoring compliance with, the corporate governance principles and standards applicable to the Company;
Managing the CEO selection process; and
Together with our CEO, overseeing our Company’s management succession planning.
The Nominating & Governance Committee also oversees the annual evaluation of the Board, the Committees of the Board and the individual directors. Typically, this evaluation is performed during the first quarter by each of the directors and reflects an assessment of the Board, the Committees of the Board and each individual director in the prior year. Among other topics, the evaluation in general assesses:
For both the Board and the Committees:
◦ | Their structure and composition; |
◦ | The format and content of |
◦ | The effectiveness of the |
For each individual director:
◦ | Their performance and approach to their |
◦ | Their understanding of
|
◦ | Their understanding of critical aspects of the
|
|
|
In addition, the Board reviews the issues faced during the past year, assesses its response and makes determinations whether additional resources or approaches might be applied to further optimize the handling of the issues. The goal of the evaluation is to identify and address any performance issues at the Board, committee or individual level, should they exist, identify potential gaps in the boardroom and to assure the maintenance of an appropriate mix of director skills and qualifications. Upon completion of the evaluation, the Nominating & Governance Committee provides feedback to the Board, the committees and the individual directors regarding the results of the evaluation and raises any issues that have been identified which may need to be addressed.
The Nominating & Governance Committee utilizes a variety of methods for identifying and evaluating nominees. Its general policy is to assess the appropriate size and needs of the Board of Directors and whether any vacancies are expected due to retirement or otherwise. In addition, candidates for director nominees are typically reviewed in the context of the current composition of the Board, the operating requirements of the Company, the current needs of the Board, and the long-term interests of stockholders, with the goal of maintaining a balance of knowledge, experience and capability. In the event those vacancies are anticipated, or otherwise arise, the Nominating & Governance Committee will consider recommending various potential candidates to fill such vacancies. Candidates may come to the attention of the Nominating & Governance Committee through its current members, stockholders or other persons.
The Board has determined that each of the Nominating & Governance Committee members meets the Nominating & Governance Committee membership requirements, including the independence requirements of the NYSE.
Name |
| Audit |
| Compensation |
| Nominating and Governance |
Bruce C. Rhine |
| X |
|
|
| X* |
J. Thomas Bentley (1) |
|
|
| X |
|
|
Edward J. Brown, Jr. |
|
|
| X* |
| X |
Robert G. Deuster (2) |
| X |
| X |
|
|
Christopher A. Seams |
| X |
|
|
| X |
Christine A. Tsingos |
| X* |
| X |
|
|
|
|
|
|
|
|
|
Total meetings in fiscal 2017 |
| 8 |
| 7 |
| 5 |
Other Committees |
Our Board of Directors may from time to time establish other special or standing committees to facilitate the management of the Company or to discharge specific duties delegated to the committee by the full Board of Directors.
Compensation Committee Interlocks And Insider Participation |
In 2019, no member serving on the Company’s Compensation Committee (Edward J Brown, Jr., Jeffrey A. Aukerman, Leo Berlinghieri, Robert G. Deuster, David B. Miller), the Nanometrics Compensation Committee (Edward J Brown, Jr., J. Thomas Bentley, Robert G. Deuster, Christine A. Tsingos) or the Rudolph Compensation Committee (David B. Miller, Jeffrey A. Aukerman, Vita A Cassese, Thomas G. Greig) at any time during the year had any form of interlocking relationship as described in Item 407(e)(4) of Regulation S-K with the respective company. Further, no member of the Company’s Compensation Committee as constituted in 2020 (Edward J Brown, Jr., Jeffrey A. Aukerman, Leo Berlinghieri, Robert G. Deuster, David B. Miller) has any form of interlocking relationship as described in Item 407(e)(4) of Regulation S-K as of the date of this proxy statement.
Board Membership Criteria And Nominee Identification |
The Nominating & Governance Committee of the Board determines the required selection criteria and qualifications of director nominees based upon the needs of the Company at the time nominees are considered. While the Nominating & Governance Committee has no specific minimum qualifications for director candidates, persons considered for Board of Directors positions
must demonstrate the following qualifications to be recommended by the Nominating & Governance Committee for a position on the Board:
The candidate must exhibit proven leadership capabilities, high integrity and experience with a high level of responsibilities within his or her chosen field;
The candidate must possess the ability to apply good business judgment and be of sound mind and high moral character;
The candidate must have no personal or financial interest that would conflict or appear to conflict with the interests of the Company;
The candidate must be in a position to properly exercise his or her duties of loyalty and be willing and able to commit the necessary time for Board of Directors and committee service; and
The candidate must have the ability to grasp complex principles of business, finance, international transactions and semiconductor inspection, metrology, lithography and related software technologies.
The Nominating & Governance Committee retains the right to modify these qualifications from time to time.
The Nominating & Governance Committee has not adopted a formal diversity policy with regard to the selection of director nominees. Diversity is one of the factors that the Nominating & Governance Committee considers in identifying nominees for director. In selecting director nominees, the Nominating & Governance Committee considers, among other factors:
The competencies and skills that the candidate possesses and the candidate’s areas of qualification and expertise that would enhance the composition of the Board and further its ability to offer advice and guidance to management;
How the candidate would contribute to the Board’s overall balance of expertise, perspectives, backgrounds and experiences in substantive matters pertaining to the Company’s business; and
The candidate’s demonstrated excellence in his or her field and commitment to rigorously representing the long-term interests of the Company’s stockholders.
In its identification of director nominees, the Nominating & Governance Committee will consider how the candidate would contribute to the Board’s overall balance of diversity of expertise, perspectives, backgrounds and experiences in substantive matters pertaining to the Company’s business. When current Board members are considered for nomination for reelection, the Nominating & Governance Committee also takes into consideration their prior contributions to and performance on the Board and their record of attendance.
The Nominating & Governance Committee will consider the above criteria for nominees identified by the Nominating & Governance Committee itself, by stockholders, or through some other source. The Nominating & Governance Committee uses the same process for evaluating all nominees, regardless of the original source of nomination. The Nominating & Governance Committee may use the services of a third-party search firm to assist in the identification or evaluation of Board member candidates.
Consideration Of Director Nominees |
The Nominating & Governance Committee has a formal policy with regard to consideration of director candidates recommended by the Company’s stockholders, the Director Candidate Policy, which may be found on our website at:
https://investors.ontoinnovation.com/governance/governance-documents/
In accordance with the policy, the Nominating & Governance Committee will consider recommendations for candidates to the Board of Directors from stockholders of the Company holding no less than 1% of the Company’s securities for at least twelve (12) months prior to the date of the submission of the recommendation. Stockholders wishing to recommend persons for consideration by the Nominating & Governance Committee as nominees for election to the Company’s Board of Directors can do so by writing to the Office of the General Counsel of the Company at its principal executive offices giving:
Candidate’s name, age, business address and residence address;
Candidate’s detailed biographical data and qualifications including his/her principal occupation and employment history;
The class and number of shares of the Company which are beneficially owned by the candidate;
The candidate’s written consent to being named as a nominee and to serving as a director, if elected;
Thereafter, an Incentive Compensation Clawback Policy was approved for the Company.
The Company established an incentive compensation plan for executives which combined elements of the legacy Nanometrics and Rudolph Technologies plans and includes a long-term equity component which utilizes both time-based and performance-based awards. The performance-based awards employ a Total Shareholder Return (“TSR”) calculation comparing Company TSR to a peer group consisting of the thirty (30) companies in the Philadelphia Semiconductor Index (SOX).
The Board of Directors determined that subsequent to the 2020 Annual Meeting of Stockholders the size of the Company Board would be reduced to ten (10) members.
Consistent with Nanometrics’ prior policy, the Board of Directors approved a 52-53-week fiscal year ending on the last Saturday in December for the Company.
PROXY STATEMENT
The proxy detailed herein is solicited on behalf of the Board of Directors (the “Board” or “Board of Directors”) of Onto Innovation Inc. (“Onto Innovation,” the “Company,” “we,” “us” or “our”) for use at the 2020 Annual Meeting of Stockholders to be held May 12, 2020 at 10:00 a.m. Eastern time (the “Annual Meeting”), or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the Company’s principal executive offices, located at 16 Jonspin Road, Wilmington, Massachusetts 01887. Directions to the annual meeting may be found on our website www.ontoinnovation.com by clicking on “Company,” “Locations,” “Massachusetts” and then accessing the interactive map. The Company’s telephone number is (978) 253-6200.
We intend to hold the Annual Meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). In such an event, we would announce any such updates in additional proxy materials filed with the SEC and in a press release that would be available on our website at https://investors.ontoinnovation.com. We encourage you to check this website prior to the meeting if you plan to attend.
On or about Friday, April 3, 2020, we will furnish a Notice of Internet Availability of Proxy Materials (“Notice”) to our stockholders containing instructions on how to access the proxy materials online at:
https://www.ontoinnovation.com/ar-proxy
Instructions on how to vote online and to request a printed copy of the proxy materials may be found in the Notice. If you received a Notice by mail, you will not receive a paper copy of the proxy materials, unless you request such materials by following the instructions contained in the Notice. Your vote is important, regardless of the extent of your holdings.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
What Is The |
At the Annual Meeting, stockholders will be asked to vote upon the matters set forth in the accompanying Notice of Annual Meeting, including:
the election of ten (10) directors;
an advisory resolution on named executive officer compensation;
approval of the Onto Innovation 2020 Stock Plan;
approval of the Onto Innovation 2020 Employee Stock Purchase Plan; and
the ratification of the appointment of our independent registered public accounting firm for fiscal 2020,
all of which are more fully described herein.
Will Other Matters Be Voted On At The |
We are not currently aware of any other matters to be presented at the Annual Meeting other than those described in this proxy statement. If any other matters not described in the proxy statement are properly presented at the meeting, any proxies received by us will be voted in the discretion of the proxy holders.
If you were a stockholder of record as of the close of business on March 13, 2020, which is referred to in this proxy statement as the “record date,” you are entitled to receive notice of the Annual Meeting and to vote the shares of common stock that you held as of the close of business on the record date. Each stockholder is entitled to one (1) vote for each share of common stock held by such stockholder on the record date.
May I Attend The |
All stockholders of record as of the record date may attend the Annual Meeting.
To gain admission, you will need valid picture identification and proof that you are a stockholder of record of the Company as of the record date, or if you are a beneficial holder, proof from your bank, broker or other record holder of your shares that you are the beneficial owner of such shares. If you are a beneficial holder and wish to vote your shares at the meeting, you will need a legal proxy from your bank, broker or other record holder of your shares. To obtain directions to attend the Annual Meeting and vote in person, please contact Investor Relations at 978-253-6200.
What Constitutes A Quorum? |
The required quorum for the transaction of business at the Annual Meeting is a majority of the issues and outstanding shares of Common Stock of the Company, $0.001 par value per share (“Common Stock”), present in person or by proxy and entitled to vote at the Annual Meeting. On the record date, 50,381,691 shares of the Company’s Common Stock were issued and outstanding, each entitled to one vote on each matter to be acted upon at the Annual Meeting. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted to determine whether there is a quorum present. If a quorum is not present, the Annual Meeting may be adjourned or postponed to a later date.
What Are “Broker Non-Votes”? |
A broker non-vote occurs when a bank, broker or other registered holder of record holds shares for a beneficial owner, but is not empowered to vote on a particular proposal on behalf of such beneficial owner because the proposal is considered “non-routine” and the beneficial owner has not provided voting instructions on that proposal. The election of directors, the advisory vote on named executive officer compensation, the proposal to approve the Onto Innovation Inc. 2020 Stock Plan, and the proposal to approve the Onto Innovation Inc. 2020 Employee Stock Purchase Plan are treated as “non-routine” proposals. This means that if a brokerage firm holds your shares on your behalf, those shares will not be voted with respect to any of these proposals unless you provide instructions to that firm by voting your proxy. See below under “What Is the Vote Required for Election of Directors?” and “What Is the Vote Required for the Approval of Proposals Other Than Director Elections?” for a discussion of the impact of broker non-votes on each of the proposals that will be presented at the Annual Meeting. In order to ensure that any shares held on your behalf by a bank, broker or other registered holder of record are voted in accordance with your wishes, we encourage you to provide instructions to that firm or organization in accordance with the voting instruction form provided by the broker, bank or other registered holder or to contact your broker, bank or other registered holder to request a proxy form.
Who Bears The |
The Company will bear the cost of soliciting proxies. In addition, the Company may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. Solicitation of proxies by mail may be supplemented by telephone, facsimile, e-mail or other electronic means or personal solicitation by directors, officers or regular employees of the Company. No additional compensation will be paid to such persons for such services. We have engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $15,000 in total.
|
We are distributing the Company’s proxy materials to stockholders of record via the internet in accordance with the “Notice and Access” approach permitted by rules of the Securities and Exchange Commission (“SEC”). This approach benefits the
environment, while providing a timely and convenient method of accessing the materials and voting. Accordingly, we have sent you a Notice because the Board of Directors of the Company is soliciting your proxy to vote at the 2020 Annual Meeting of Stockholders, including at any adjournments or postponements of the meeting. On or about April 3, 2020, the Company will begin mailing the Notice to all stockholders of record entitled to vote at the annual meeting. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy of the proxy materials and the Company’s 2019 Annual Report may be found in the Notice.
What Does It Mean If I Received More Than One Notice? |
If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each of the Notices to ensure that all of your shares are voted.
|
You may either vote “For” all the nominees to the Board of Directors or you may “Withhold” your vote for any nominee you specify. For each of the other matters to be voted on, you may vote “For” or “Against” or “Abstain” from voting.
The Board of Directors has determined that each of the directors serving on our Nominating and Governance Committee is “independent” within the meaning of the Listing Rules of Nasdaq.
The Board of Directors has adopted a written Nominating and Governance Committee Charter, which is available on our website at http://investor.nanometrics.com/corporate-governance.
Voting For |
If you have a stock certificate or hold shares in an account with our transfer agent, you are considered the “stockholder of record” with respect to those shares. You can submit your proxy online by following the instructions on the Notice. You may opt to submit your proxy by requesting a full set of proxy materials be mailed to you and completing and returning the proxy in the postage-paid envelope provided. Stockholders of record may also vote in person at the Annual Meeting. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person even if you have already submitted a proxy.
If you are a stockholder of record with shares registered in your name, you can vote by one of the following methods:
In Person - To vote in person, come to the annual meeting and you will receive a ballot when you arrive.
Via the Internet - To submit your proxy by internet, go to www.investorvote.com/ONTO and follow the instructions on the secure website. The deadline for proxy submission via the internet is 11:59 p.m. (EDT) on May 11, 2020.
Via Telephone – To submit your proxy by telephone, call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada.
By Mail – Stockholders who receive a paper proxy card may elect to submit a proxy by mail and should complete, sign and date their proxy card and mail it in the pre-addressed postage-paid envelope that accompanies the delivery of paper proxy cards. Proxy cards submitted by mail must be received by the time of the annual meeting in order for your shares to be voted.
Further instructions on how to submit a proxy online or by mail are contained in the Notice. Even if you plan to attend the meeting, we recommend that you submit your proxy in advance so that your vote will be counted if you later decide not to attend the meeting. Each stockholder of record is entitled to one (1) vote for each share of Common Stock owned by such stockholder on all matters presented at the Annual Meeting. Stockholders do not have the right to cumulate their votes in the election of directors.
If you return a signed and dated proxy but do not indicate how the shares are to be voted, those shares will be voted in accordance with Onto Innovation’s Board of Directors’ recommendations. A valid proxy also authorizes the individuals named as proxies to vote your shares in their discretion on any other matters, which, although not described in the proxy statement, are properly presented for action at our Annual Meeting. If you indicate on your proxy that you wish to “abstain” from voting on an item, your shares will not be voted on that item.
While internet proxy voting is being provided to allow you to submit your proxy online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions, please be aware that you must bear any costs associated with your internet access, such as usage charges from Internet access providers and telephone companies.
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of shares held in “street name.” In that case, you may receive a separate voting instruction form, or you may need to contact your broker, bank, or other stockholder of record to determine whether you will be able to provide voting instructions electronically via the internet. As the beneficial owner, you have the right to direct your broker, bank or other holder of record on how to vote your shares by submitting voting instructions to such person in accordance with the directions outlined in your proxy. In the event you are considered the “beneficial owner” of shares held in “street name” and you wish to vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank or another agent. Follow the instructions from your broker or bank included with these proxy materials or contact your broker or bank to request a proxy form.
May I Revoke My Proxy Instructions? |
Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted. If you are a stockholder of record, you may change your vote after submitting your proxy by:
delivering a written notice of revocation or a duly executed proxy bearing a later date to the Secretary of the Company at the Company’s principal executive offices prior to the meeting, if you submitted your proxy by mail;
submitting a timely and valid later proxy online at www.investorvote.com/ONTO, if you submitted your proxy online;
submitting a timely and valid later proxy by telephone call to 1-800-652-VOTE (8683) within the USA, US territories and Canada or
attending the meeting and voting in person.
If you are a beneficial owner of shares, please contact your bank, broker or other holder of record for specific instructions on how to change or revoke your voting instructions.
What Happens If I Do Not Vote? |
Stockholder Of Record: Shares Registered In Your Name |
If you are a stockholder of record and do not submit a proxy by completing your proxy card, by telephone, through the Internet or vote in person at the annual meeting, your shares will not be voted.
Beneficial Owner: Shares Registered In The Name Of Broker Or Bank |
If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange (“NYSE”) deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder advisory votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on Proposals 1, 2, 3 or 4 without your instructions but may vote your shares on Proposal 5 even in the absence of your instruction.
What If I Return A Proxy Card Or Otherwise Submit a Proxy But Do Not Make Specific Choices? |
If you return a signed and dated proxy card or otherwise submit a proxy without marking voting selections, your shares will be voted, as applicable, “For” the election of all ten (10) nominees for director, “For” the advisory approval of executive compensation, “For” approval of the Onto Innovation Inc. 2020 Stock Plan, “For” approval of the Onto Innovation Inc. 2020 Employee Stock Purchase Plan and “For” the ratification of the appointment by the Audit Committee of the Board of Directors of Ernst & Young, LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 26, 2020. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
For the election of directors, each director is elected by the vote of the majority of the votes cast (except that if the number of nominees exceeds the number of directors to be elected, directors will be elected by a plurality voting standard). This means that in order for a director nominee to be elected to our Board of Directors, the number of votes cast “for” a director’s election must exceed the number of votes cast “against” that director’s election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election, although abstentions and broker non-votes count for quorum purposes). Our Amended and Restated Bylaws (“Bylaws”) provide for a for election of directors by a majority of votes cast in uncontested elections, and our Corporate Governance Summary provides that any incumbent director nominee in an uncontested election who does not receive an affirmative majority of votes cast must promptly tender such director’s resignation to our Board of Directors. Further information regarding the process that will be followed if such an event occurs can be located under the heading “Proposal 1 - Election of Directors.”
What Is The Vote Required For The Approval Of Proposals Other Than Director Elections? |
The proposal to approve, on an advisory basis, the compensation of our named executive officers, the proposal to approve the Onto Innovation Inc. 2020 Stock Plan, the proposal to approve the Onto Innovation Inc. 2020 Employee Stock Purchase Plan and the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 26, 2020 require the affirmative vote, in person or by proxy, of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter to be approved. For such proposals, abstentions in effect count as negative votes, because they are shares represented in person or by proxy that are entitled to vote on the matter and not voted in the affirmative. Broker non-votes are not counted as part of the vote total (because they are not considered “entitled to vote” on the matter) and have no effect on the outcome of those proposals.
What Is Householding? |
The Company has adopted a procedure approved by the SEC called “householding.” Under this procedure, when multiple stockholders of record share the same address, we may deliver only one (1) Notice to that address unless we have received contrary instructions from one or more of those stockholders. The same procedure may be followed by brokers and other nominees holding shares of our stock in “street name” for more than one (1) beneficial owner with the same address.
If a stockholder holds shares of stock in multiple accounts (e.g., with our transfer agent and/or banks, brokers or other registered stockholder), we may be unable to use the householding procedures and, therefore, that stockholder may receive multiple copies of the Notice. You should follow the instructions on each Notice that you receive in order to vote the shares you hold in different accounts.
A stockholder that shares an address with another stockholder, who has received only one (1) Notice may write or call us as specified below:
(i) | To request a |
| (ii) | To request that separate copies of |
Conversely, a stockholder of record who shares the same address with another stockholder of record may write or call us as specified below to request that a single set of the proxy materials be delivered to that address. Such stockholder requests may be made to our Investor Relations Department either via phone at 978-253-6200 or by mail directed to:
Investor Relations Department
Onto Innovation Inc.
16 Jonspin Road
Wilmington, Massachusetts 01887
If you are a beneficial owner of shares held in street name, please contact your bank, broker or other holder of record regarding such requests.
How Can I Find Out the |
Preliminary voting results will be announced at the annual meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four (4) business days after the annual meeting. If final voting results are not available to us in time to file a Form 8-K within four (4) business days after the meeting, we intend to file a Form 8‑K
to publish preliminary results and, within four (4) business days after the final results are known to us, file an additional Form 8-K to publish the final results.
What Are The Deadlines For Submission Of Stockholder Proposals For The 2021 Annual Meeting? |
Stockholders of the Company are entitled to present proposals for consideration at forthcoming stockholder meetings provided that they comply with the proxy rules promulgated by the SEC, if applicable, and the Bylaws of the Company. Stockholders wishing to present a proposal at the Company’s 2021 Annual Stockholder Meeting must submit such proposal in writing to the Company Secretary at Onto Innovation Inc., 16 Jonspin Road, Wilmington, Massachusetts 01887 no later than December 1, 2020 in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), if they wish for it to be eligible for inclusion in the proxy statement and form of proxy relating to that meeting. In addition, under the Company’s Bylaws, a stockholder wishing to nominate a director or make a proposal at the 2021 Annual Stockholder Meeting outside of Exchange Act Rule 14a-8 must submit such nomination or proposal in writing to the Company Secretary at the above address no earlier than January 12, 2021 and no later than February 11, 2021. The Nominating & Governance Committee will also consider qualified director nominees recommended by stockholders. Our process for receiving and evaluating Board member nominations from our stockholders is described below under the caption “Consideration Of Director Nominees.”
You are also advised to review Company’s Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES
Onto Innovation is committed to sound and effective corporate governance practices. Having such principles is essential to running our business efficiently and to maintaining our integrity in the marketplace. The major components of our corporate governance practices are described below.
Board Leadership Structure |
Our Company management is led by Michael P. Plisinski, who has served as our CEO and a director since the Merger Date and Christopher A. Seams, who is an independent director and has served as the Chairman of the Company’s Board of Directors since the Merger Date.
Prior to the 2019 Merger, Bruce C. Rhine served as the Chairman of the Board of Nanometrics and Pierre-Yves Lesaicherre, Ph.D. served as the President, Chief Executive Officer and a director of Nanometrics through the Merger Date. With regard to Rudolph, prior to the 2019 Merger, David B. Miller served as the Chairman of the Board of Rudolph and Mr. Plisinski served as the Chief Executive Officer of Rudolph and as a director on the Rudolph Board from November 2015 through the Merger Date.
Our Board of Directors is currently comprised of two (2) non-independent directors, Mr. Plisinski and Timothy J. Stultz, Ph.D., and ten (10) directors each of whom has been affirmatively determined by our Board of Directors to meet the criteria for independence established by the SEC and the NYSE. The independent directors meet periodically in executive session chaired by the Chairman without the CEO or other management present. Furthermore, each director is encouraged to suggest items for the Board agenda and to raise at any Board meeting subjects that are not on the agenda for that meeting.
In accordance with our sound and effective corporate governance practice, the roles of CEO and Chairman of the Board, as cited above, are held by separate individuals, with the independent Chairman of the Board being designated by the Board. The Board of Directors believes that, at the current time, the designation of an independent Chairman of the Board facilitates the functioning of the Board of Directors, while leaving the CEO responsible for setting the strategic direction for the Company and for the day-to-day leadership and performance of the Company. The independent Chairman of the Board:
Presides at all meetings of the stockholders and the Board of Directors at which he or she is present;
Establishes the agenda for each Board of Directors meeting;
Sets the schedule and annual agenda, to the extent foreseeable;
Calls and prepares the agenda for and presides over separate executive sessions of the independent directors;
Acts as a liaison between the independent directors and the Company’s management;
Serves as a point of communications with stockholders; and
Performs such other powers and duties as may from time to time be assigned by the Board of Directors or as may be prescribed by the Company’s Bylaws.
Board Meetings |
The Board of Directors of the Company held one (1) meeting during 2019, which 100% of the incumbent directors attended. In 2019, the Nanometrics Board of Directors held a total of thirteen (13) meetings as did the Rudolph Board of Directors. All of Nanometrics’ incumbent directors attended at least 80% of the total number of meetings held by the Nanometrics Board and its standing committees upon which such directors served during 2019. All of Rudolph’s incumbent directors attended at least 95% of the total number of meetings held by the Rudolph Board and its standing committees upon which such directors served during 2019. While the Company does not currently have a formal policy regarding the attendance of directors at the annual meeting of stockholders, directors are encouraged to attend. All members of both the Nanometrics Board of Directors and the Rudolph Board of Directors serving at the time attended the 2019 Annual Meeting of Stockholders for the respective companies.
On one (1) occasion during 2019, the Company’s Board met in executive session in which only the independent Board members were present. In 2019, the Nanometrics Board met in executive session on four (4) occasions and the Rudolph Board met in executive session on three (3) occasions.
The Board of Directors makes an annual determination as to the independence of each of our Board members under the current standards for “independence” established by the NYSE and the SEC. The Board has determined that the following nominees for election as directors to our Board are independent under the NYSE Corporate Governance Rules: Jeffrey A. Aukerman, Leo Berlinghieri, Edward J. Brown, Jr., Vita A. Cassese, Robert G. Deuster, David B. Miller, Bruce C. Rhine, Christopher A. Seams and Christine A. Tsingos. Michael P. Plisinski, due to his position as our Chief Executive Officer, is not considered to be independent. As for the two (2) directors not standing for re-election in 2020, John R. Whiten is independent while Timothy J. Stultz, Ph.D., due to his position as Nanometrics President and Chief Executive Officer prior to his retirement from those positions in November 2017, is not considered independent.
From July 2006 to February 2008, Mr. Rhine served as Nanometrics Chief Strategy Officer, and from March 2007 to August 2007, Mr. Rhine served as Nanometrics Chief Executive Officer. The Nanometrics Board of Directors determined that Mr. Rhine became an independent member of the Board effective February 2011 under the Nasdaq Listing Rules due to the passage of time subsequent to his previous management role with Nanometrics and this designation was confirmed under the NYSE Listing Rules by the Company Board.
During 2019, none of the independent members of our Board was a party to any transactions, relationships or arrangements that were considered by the Board to impair his or her independence.
Oversight Of Risk |
One of the Board’s primary responsibilities is reviewing the Company’s strategic plans and objectives, including oversight of the principal risk exposures of the Company. In particular, the Board is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for the Company. The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole, as well as through various Board standing committees that address risks inherent in their respective areas of oversight. The Audit Committee assists the Board in oversight and monitoring of the legal and financial risks facing the Company, management's approach to addressing these risks and strategies for risk mitigation and serves as the contact point for employees to report corporate compliance issues. On at least an annual basis, the Audit Committee reviews and discusses with management policies and systems pursuant to which management addresses risk, including risks associated with our audit, financial reporting, internal control, disclosure control, cybersecurity, legal and regulatory compliance, and investment policies. Our Audit Committee regularly reviews with our Board any issues that arise in connection with such topics and, in accordance with our Summary of Corporate Governance Guidelines, our full Board regularly engages in discussions of risk management to assess major risks facing our Company and review options for the mitigation of such risks. Our Compensation Committee periodically reviews enterprise risks to ensure that our compensation programs do not encourage excessive risk-taking and our Nominating & Governance Committee oversees risks related to governance issues, such as succession planning. As a result of the foregoing, we believe that our CEO, together with the Chairman of our Audit Committee and our full Board of Directors, provides effective oversight of the Company’s risk management function.
Board Committees |
The Board has three standing committees with separate chairs - the Audit, Compensation, and Nominating & Governance Committees. Each of the Board committees is comprised solely of independent directors. The Audit Committee, Compensation Committee and Nominating & Governance Committee have each adopted a written charter that sets forth the specific responsibilities and qualifications for membership to the respective committees. The charters of each of these committees are available on our website at https://investors.ontoinnovation.com/governance/governance-documents/.
In 2019, the composition of and number of meetings held by the Company’s Board Committees were as follows:
Committee Chairperson | Committee Members | # of Meetings held in | |
Audit Committee | |||
Onto Innovation2 | Christine A. Tsingos | Jeffrey A. Aukerman Vita A. Cassese Christopher A. Seams John R. Whitten | 2 |
Nanometrics1 | Christine A. Tsingos | Bruce C. Rhine Robert G. Deuster Christopher A. Seams | 8 |
Rudolph1 | Jeffrey A. Aukerman | Vita A. Cassese John R. Whitten | 5 |
Nominating & Governance Committee | |||
Onto Innovation2 | Leo Berlinghieri | David B. Miller Bruce C. Rhine Christopher A. Seams Christine A. Tsingos | 1 |
Nanometrics1 | Christopher A. Seams | Bruce C. Rhine Edward J. Brown, Jr. | 4 |
Rudolph1 | Leo Berlinghieri | Daniel H. Berry John R. Whitten | 4 |
Stockholder Communication Policy |
Thereafter, an Incentive Compensation Clawback Policy was approved for the Company.
The Company established an incentive compensation plan for executives which combined elements of the legacy Nanometrics and Rudolph Technologies plans and includes a long-term equity component which utilizes both time-based and performance-based awards. The performance-based awards employ a Total Shareholder Return (“TSR”) calculation comparing Company TSR to a peer group consisting of the thirty (30) companies in the Philadelphia Semiconductor Index (SOX).
The Board of Directors determined that subsequent to the 2020 Annual Meeting of Stockholders the size of the Company Board would be reduced to ten (10) members.
Consistent with Nanometrics’ prior policy, the Board of Directors approved a 52-53-week fiscal year ending on the last Saturday in December for the Company.
PROXY STATEMENT
The proxy detailed herein is solicited on behalf of the Board of Directors (the “Board” or “Board of Directors”) of Onto Innovation Inc. (“Onto Innovation,” the “Company,” “we,” “us” or “our”) for use at the 2020 Annual Meeting of Stockholders to be held May 12, 2020 at 10:00 a.m. Eastern time (the “Annual Meeting”), or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the Company’s principal executive offices, located at 16 Jonspin Road, Wilmington, Massachusetts 01887. Directions to the annual meeting may be found on our website www.ontoinnovation.com by clicking on “Company,” “Locations,” “Massachusetts” and then accessing the interactive map. The Company’s telephone number is (978) 253-6200.
We intend to hold the Annual Meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). In such an event, we would announce any such updates in additional proxy materials filed with the SEC and in a press release that would be available on our website at https://investors.ontoinnovation.com. We encourage you to check this website prior to the meeting if you plan to attend.
On or about Friday, April 3, 2020, we will furnish a Notice of Internet Availability of Proxy Materials (“Notice”) to our stockholders containing instructions on how to access the proxy materials online at:
https://www.ontoinnovation.com/ar-proxy
Instructions on how to vote online and to request a printed copy of the proxy materials may be found in the Notice. If you received a Notice by mail, you will not receive a paper copy of the proxy materials, unless you request such materials by following the instructions contained in the Notice. Your vote is important, regardless of the extent of your holdings.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
|
At the Annual Meeting, stockholders will be asked to vote upon the matters set forth in the accompanying Notice of Annual Meeting, including:
the election of ten (10) directors;
an advisory resolution on named executive officer compensation;
approval of the Onto Innovation 2020 Stock Plan;
approval of the Onto Innovation 2020 Employee Stock Purchase Plan; and
the ratification of the appointment of our independent registered public accounting firm for fiscal 2020,
all of which are more fully described herein.
Will Other Matters Be Voted On At The Annual Meeting? |
We are not currently aware of any other matters to be presented at the Annual Meeting other than those described in this proxy statement. If any other matters not described in the proxy statement are properly presented at the meeting, any proxies received by us will be voted in the discretion of the proxy holders.
If you were a stockholder of record as of the close of business on March 13, 2020, which is referred to in this proxy statement as the “record date,” you are entitled to receive notice of the Annual Meeting and to vote the shares of common stock that you held as of the close of business on the record date. Each stockholder is entitled to one (1) vote for each share of common stock held by such stockholder on the record date.
May I Attend The Meeting? |
All stockholders of record as of the record date may attend the Annual Meeting.
To gain admission, you will need valid picture identification and proof that you are a stockholder of record of the Company as of the record date, or if you are a beneficial holder, proof from your bank, broker or other record holder of your shares that you are the beneficial owner of such shares. If you are a beneficial holder and wish to vote your shares at the meeting, you will need a legal proxy from your bank, broker or other record holder of your shares. To obtain directions to attend the Annual Meeting and vote in person, please contact Investor Relations at 978-253-6200.
What Constitutes A Quorum? |
The required quorum for the transaction of business at the Annual Meeting is a majority of the issues and outstanding shares of Common Stock of the Company, $0.001 par value per share (“Common Stock”), present in person or by proxy and entitled to vote at the Annual Meeting. On the record date, 50,381,691 shares of the Company’s Common Stock were issued and outstanding, each entitled to one vote on each matter to be acted upon at the Annual Meeting. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted to determine whether there is a quorum present. If a quorum is not present, the Annual Meeting may be adjourned or postponed to a later date.
What Are “Broker Non-Votes”? |
A broker non-vote occurs when a bank, broker or other registered holder of record holds shares for a beneficial owner, but is not empowered to vote on a particular proposal on behalf of such beneficial owner because the proposal is considered “non-routine” and the beneficial owner has not provided voting instructions on that proposal. The election of directors, the advisory vote on named executive officer compensation, the proposal to approve the Onto Innovation Inc. 2020 Stock Plan, and the proposal to approve the Onto Innovation Inc. 2020 Employee Stock Purchase Plan are treated as “non-routine” proposals. This means that if a brokerage firm holds your shares on your behalf, those shares will not be voted with respect to any of these proposals unless you provide instructions to that firm by voting your proxy. See below under “What Is the Vote Required for Election of Directors?” and “What Is the Vote Required for the Approval of Proposals Other Than Director Elections?” for a discussion of the impact of broker non-votes on each of the proposals that will be presented at the Annual Meeting. In order to ensure that any shares held on your behalf by a bank, broker or other registered holder of record are voted in accordance with your wishes, we encourage you to provide instructions to that firm or organization in accordance with the voting instruction form provided by the broker, bank or other registered holder or to contact your broker, bank or other registered holder to request a proxy form.
Who Bears The Cost Of Soliciting Proxies? |
The Company will bear the cost of soliciting proxies. In addition, the Company may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. Solicitation of proxies by mail may be supplemented by telephone, facsimile, e-mail or other electronic means or personal solicitation by directors, officers or regular employees of the Company. No additional compensation will be paid to such persons for such services. We have engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $15,000 in total.
Why Did I Receive A “Notice Of Internet Availability Of Proxy Materials” But No Proxy Materials? |
We are distributing the Company’s proxy materials to stockholders of record via the internet in accordance with the “Notice and Access” approach permitted by rules of the Securities and Exchange Commission (“SEC”). This approach benefits the
environment, while providing a timely and convenient method of accessing the materials and voting. Accordingly, we have sent you a Notice because the Board of Directors of the Company is soliciting your proxy to vote at the 2020 Annual Meeting of Stockholders, including at any adjournments or postponements of the meeting. On or about April 3, 2020, the Company will begin mailing the Notice to all stockholders of record entitled to vote at the annual meeting. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy of the proxy materials and the Company’s 2019 Annual Report may be found in the Notice.
What Does It Mean If I Received More Than One Notice? |
If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each of the Notices to ensure that all of your shares are voted.
How Do I Go About Voting? |
You may either vote “For” all the nominees to the Board of Directors or you may “Withhold” your vote for any nominee you specify. For each of the other matters to be voted on, you may vote “For” or “Against” or “Abstain” from voting.
Voting For Shares Registered Directly In The Name Of The Stockholder |
If you have a stock certificate or hold shares in an account with our transfer agent, you are considered the “stockholder of record” with respect to those shares. You can submit your proxy online by following the instructions on the Notice. You may opt to submit your proxy by requesting a full set of proxy materials be mailed to you and completing and returning the proxy in the postage-paid envelope provided. Stockholders of record may also vote in person at the Annual Meeting. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person even if you have already submitted a proxy.
If you are a stockholder of record with shares registered in your name, you can vote by one of the following methods:
In Person - To vote in person, come to the annual meeting and you will receive a ballot when you arrive.
Via the Internet - To submit your proxy by internet, go to www.investorvote.com/ONTO and follow the instructions on the secure website. The deadline for proxy submission via the internet is 11:59 p.m. (EDT) on May 11, 2020.
Via Telephone – To submit your proxy by telephone, call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada.
By Mail – Stockholders who receive a paper proxy card may elect to submit a proxy by mail and should complete, sign and date their proxy card and mail it in the pre-addressed postage-paid envelope that accompanies the delivery of paper proxy cards. Proxy cards submitted by mail must be received by the time of the annual meeting in order for your shares to be voted.
Further instructions on how to submit a proxy online or by mail are contained in the Notice. Even if you plan to attend the meeting, we recommend that you submit your proxy in advance so that your vote will be counted if you later decide not to attend the meeting. Each stockholder of record is entitled to one (1) vote for each share of Common Stock owned by such stockholder on all matters presented at the Annual Meeting. Stockholders do not have the right to cumulate their votes in the election of directors.
If you return a signed and dated proxy but do not indicate how the shares are to be voted, those shares will be voted in accordance with Onto Innovation’s Board of Directors’ recommendations. A valid proxy also authorizes the individuals named as proxies to vote your shares in their discretion on any other matters, which, although not described in the proxy statement, are properly presented for action at our Annual Meeting. If you indicate on your proxy that you wish to “abstain” from voting on an item, your shares will not be voted on that item.
While internet proxy voting is being provided to allow you to submit your proxy online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions, please be aware that you must bear any costs associated with your internet access, such as usage charges from Internet access providers and telephone companies.
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of shares held in “street name.” In that case, you may receive a separate voting instruction form, or you may need to contact your broker, bank, or other stockholder of record to determine whether you will be able to provide voting instructions electronically via the internet. As the beneficial owner, you have the right to direct your broker, bank or other holder of record on how to vote your shares by submitting voting instructions to such person in accordance with the directions outlined in your proxy. In the event you are considered the “beneficial owner” of shares held in “street name” and you wish to vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank or another agent. Follow the instructions from your broker or bank included with these proxy materials or contact your broker or bank to request a proxy form.
May I Revoke My Proxy Instructions? |
Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted. If you are a stockholder of record, you may change your vote after submitting your proxy by:
delivering a written notice of revocation or a duly executed proxy bearing a later date to the Secretary of the Company at the Company’s principal executive offices prior to the meeting, if you submitted your proxy by mail;
submitting a timely and valid later proxy online at www.investorvote.com/ONTO, if you submitted your proxy online;
submitting a timely and valid later proxy by telephone call to 1-800-652-VOTE (8683) within the USA, US territories and Canada or
attending the meeting and voting in person.
If you are a beneficial owner of shares, please contact your bank, broker or other holder of record for specific instructions on how to change or revoke your voting instructions.
What Happens If I Do Not Vote? |
Stockholder Of Record: Shares Registered In Your Name |
If you are a stockholder of record and do not submit a proxy by completing your proxy card, by telephone, through the Internet or vote in person at the annual meeting, your shares will not be voted.
Beneficial Owner: Shares Registered In The Name Of Broker Or Bank |
If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange (“NYSE”) deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder advisory votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on Proposals 1, 2, 3 or 4 without your instructions but may vote your shares on Proposal 5 even in the absence of your instruction.
What If I Return A Proxy Card Or Otherwise Submit a |
If you return a signed and dated proxy card or otherwise submit a proxy without marking voting selections, your shares will be voted, as applicable, “For” the election of all ten (10) nominees for director, “For” the advisory approval of executive compensation, “For” approval of the Onto Innovation Inc. 2020 Stock Plan, “For” approval of the Onto Innovation Inc. 2020 Employee Stock Purchase Plan and “For” the ratification of the appointment by the Audit Committee of the Board of Directors of Ernst & Young, LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 26, 2020. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
For the election of directors, each director is elected by the vote of the majority of the votes cast (except that if the number of nominees exceeds the number of directors to be elected, directors will be elected by a plurality voting standard). This means that in order for a director nominee to be elected to our Board of Directors, the number of votes cast “for” a director’s election must exceed the number of votes cast “against” that director’s election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election, although abstentions and broker non-votes count for quorum purposes). Our Amended and Restated Bylaws (“Bylaws”) provide for a for election of directors by a majority of votes cast in uncontested elections, and our Corporate Governance Summary provides that any incumbent director nominee in an uncontested election who does not receive an affirmative majority of votes cast must promptly tender such director’s resignation to our Board of Directors. Further information regarding the process that will be followed if such an event occurs can be located under the heading “Proposal 1 - Election of Directors.”
What Is The Vote Required For The Approval Of Proposals Other Than Director Elections? |
The proposal to approve, on an advisory basis, the compensation of our named executive officers, the proposal to approve the Onto Innovation Inc. 2020 Stock Plan, the proposal to approve the Onto Innovation Inc. 2020 Employee Stock Purchase Plan and the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 26, 2020 require the affirmative vote, in person or by proxy, of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter to be approved. For such proposals, abstentions in effect count as negative votes, because they are shares represented in person or by proxy that are entitled to vote on the matter and not voted in the affirmative. Broker non-votes are not counted as part of the vote total (because they are not considered “entitled to vote” on the matter) and have no effect on the outcome of those proposals.
What Is Householding? |
The Company has adopted a procedure approved by the SEC called “householding.” Under this procedure, when multiple stockholders of record share the same address, we may deliver only one (1) Notice to that address unless we have received contrary instructions from one or more of those stockholders. The same procedure may be followed by brokers and other nominees holding shares of our stock in “street name” for more than one (1) beneficial owner with the same address.
If a stockholder holds shares of stock in multiple accounts (e.g., with our transfer agent and/or banks, brokers or other registered stockholder), we may be unable to use the householding procedures and, therefore, that stockholder may receive multiple copies of the Notice. You should follow the instructions on each Notice that you receive in order to vote the shares you hold in different accounts.
A stockholder that shares an address with another stockholder, who has received only one (1) Notice may write or call us as specified below:
(i) | To request a separate copy of such materials, which will be promptly mailed without charge; and |
(ii) | To request that separate copies of these materials be sent to his or her home for future meetings. |
Conversely, a stockholder of record who shares the same address with another stockholder of record may write or call us as specified below to request that a single set of the proxy materials be delivered to that address. Such stockholder requests may be made to our Investor Relations Department either via phone at 978-253-6200 or by mail directed to:
Investor Relations Department
Onto Innovation Inc.
16 Jonspin Road
Wilmington, Massachusetts 01887
If you are a beneficial owner of shares held in street name, please contact your bank, broker or other holder of record regarding such requests.
How Can I Find Out the Results Of The Voting At The Annual Meeting? |
Preliminary voting results will be announced at the annual meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four (4) business days after the annual meeting. If final voting results are not available to us in time to file a Form 8-K within four (4) business days after the meeting, we intend to file a Form 8‑K
to publish preliminary results and, within four (4) business days after the final results are known to us, file an additional Form 8-K to publish the final results.
What Are The Deadlines For Submission Of Stockholder Proposals For The 2021 Annual Meeting? |
Stockholders of the Company are entitled to present proposals for consideration at forthcoming stockholder meetings provided that they comply with the proxy rules promulgated by the SEC, if applicable, and the Bylaws of the Company. Stockholders wishing to present a proposal at the Company’s 2021 Annual Stockholder Meeting must submit such proposal in writing to the Company Secretary at Onto Innovation Inc., 16 Jonspin Road, Wilmington, Massachusetts 01887 no later than December 1, 2020 in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), if they wish for it to be eligible for inclusion in the proxy statement and form of proxy relating to that meeting. In addition, under the Company’s Bylaws, a stockholder wishing to nominate a director or make a proposal at the 2021 Annual Stockholder Meeting outside of Exchange Act Rule 14a-8 must submit such nomination or proposal in writing to the Company Secretary at the above address no earlier than January 12, 2021 and no later than February 11, 2021. The Nominating & Governance Committee will also consider qualified director nominees recommended by stockholders. Our process for receiving and evaluating Board member nominations from our stockholders is described below under the caption “Consideration Of Director Nominees.”
You are also advised to review Company’s Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES
Onto Innovation is committed to sound and effective corporate governance practices. Having such principles is essential to running our business efficiently and to maintaining our integrity in the marketplace. The major components of our corporate governance practices are described below.
Board Leadership Structure |
Our Company management is led by Michael P. Plisinski, who has served as our CEO and a director since the Merger Date and Christopher A. Seams, who is an independent director and has served as the Chairman of the Company’s Board of Directors since the Merger Date.
Prior to the 2019 Merger, Bruce C. Rhine served as the Chairman of the Board of Nanometrics and Pierre-Yves Lesaicherre, Ph.D. served as the President, Chief Executive Officer and a director of Nanometrics through the Merger Date. With regard to Rudolph, prior to the 2019 Merger, David B. Miller served as the Chairman of the Board of Rudolph and Mr. Plisinski served as the Chief Executive Officer of Rudolph and as a director on the Rudolph Board from November 2015 through the Merger Date.
Our Board of Directors is currently comprised of two (2) non-independent directors, Mr. Plisinski and Timothy J. Stultz, Ph.D., and ten (10) directors each of whom has been affirmatively determined by our Board of Directors to meet the criteria for independence established by the SEC and the NYSE. The independent directors meet periodically in executive session chaired by the Chairman without the CEO or other management present. Furthermore, each director is encouraged to suggest items for the Board agenda and to raise at any Board meeting subjects that are not on the agenda for that meeting.
In accordance with our sound and effective corporate governance practice, the roles of CEO and Chairman of the Board, as cited above, are held by separate individuals, with the independent Chairman of the Board being designated by the Board. The Board of Directors believes that, at the current time, the designation of an independent Chairman of the Board facilitates the functioning of the Board of Directors, while leaving the CEO responsible for setting the strategic direction for the Company and for the day-to-day leadership and performance of the Company. The independent Chairman of the Board:
Presides at all meetings of the stockholders and the Board of Directors at which he or she is present;
Establishes the agenda for each Board of Directors meeting;
Sets the schedule and annual agenda, to the extent foreseeable;
Calls and prepares the agenda for and presides over separate executive sessions of the independent directors;
Acts as a liaison between the independent directors and the Company’s management;
Serves as a point of communications with stockholders; and
Performs such other powers and duties as may from time to time be assigned by the Board of Directors or as may be prescribed by the Company’s Bylaws.
Board Meetings |
The Board of Directors of the Company held one (1) meeting during 2019, which 100% of the incumbent directors attended. In 2019, the Nanometrics Board of Directors held a total of thirteen (13) meetings as did the Rudolph Board of Directors. All of Nanometrics’ incumbent directors attended at least 80% of the total number of meetings held by the Nanometrics Board and its standing committees upon which such directors served during 2019. All of Rudolph’s incumbent directors attended at least 95% of the total number of meetings held by the Rudolph Board and its standing committees upon which such directors served during 2019. While the Company does not currently have a formal policy regarding the attendance of directors at the annual meeting of stockholders, directors are encouraged to attend. All members of both the Nanometrics Board of Directors and the Rudolph Board of Directors serving at the time attended the 2019 Annual Meeting of Stockholders for the respective companies.
On one (1) occasion during 2019, the Company’s Board met in executive session in which only the independent Board members were present. In 2019, the Nanometrics Board met in executive session on four (4) occasions and the Rudolph Board met in executive session on three (3) occasions.
The Board of Directors makes an annual determination as to the independence of each of our Board members under the current standards for “independence” established by the NYSE and the SEC. The Board has determined that the following nominees for election as directors to our Board are independent under the NYSE Corporate Governance Rules: Jeffrey A. Aukerman, Leo Berlinghieri, Edward J. Brown, Jr., Vita A. Cassese, Robert G. Deuster, David B. Miller, Bruce C. Rhine, Christopher A. Seams and Christine A. Tsingos. Michael P. Plisinski, due to his position as our Chief Executive Officer, is not considered to be independent. As for the two (2) directors not standing for re-election in 2020, John R. Whiten is independent while Timothy J. Stultz, Ph.D., due to his position as Nanometrics President and Chief Executive Officer prior to his retirement from those positions in November 2017, is not considered independent.
From July 2006 to February 2008, Mr. Rhine served as Nanometrics Chief Strategy Officer, and from March 2007 to August 2007, Mr. Rhine served as Nanometrics Chief Executive Officer. The Nanometrics Board of Directors determined that Mr. Rhine became an independent member of the Board effective February 2011 under the Nasdaq Listing Rules due to the passage of time subsequent to his previous management role with Nanometrics and this designation was confirmed under the NYSE Listing Rules by the Company Board.
During 2019, none of the independent members of our Board was a party to any transactions, relationships or arrangements that were considered by the Board to impair his or her independence.
Oversight Of Risk |
One of the Board’s primary responsibilities is reviewing the Company’s strategic plans and objectives, including oversight of the principal risk exposures of the Company. In particular, the Board is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for the Company. The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole, as well as through various Board standing committees that address risks inherent in their respective areas of oversight. The Audit Committee assists the Board in oversight and monitoring of the legal and financial risks facing the Company, management's approach to addressing these risks and strategies for risk mitigation and serves as the contact point for employees to report corporate compliance issues. On at least an annual basis, the Audit Committee reviews and discusses with management policies and systems pursuant to which management addresses risk, including risks associated with our audit, financial reporting, internal control, disclosure control, cybersecurity, legal and regulatory compliance, and investment policies. Our Audit Committee regularly reviews with our Board any issues that arise in connection with such topics and, in accordance with our Summary of Corporate Governance Guidelines, our full Board regularly engages in discussions of risk management to assess major risks facing our Company and review options for the mitigation of such risks. Our Compensation Committee periodically reviews enterprise risks to ensure that our compensation programs do not encourage excessive risk-taking and our Nominating & Governance Committee oversees risks related to governance issues, such as succession planning. As a result of the foregoing, we believe that our CEO, together with the Chairman of our Audit Committee and our full Board of Directors, provides effective oversight of the Company’s risk management function.
Board Committees |
The Board has three standing committees with separate chairs - the Audit, Compensation, and Nominating & Governance Committees. Each of the Board committees is comprised solely of independent directors. The Audit Committee, Compensation Committee and Nominating & Governance Committee have each adopted a written charter that sets forth the specific responsibilities and qualifications for membership to the respective committees. The charters of each of these committees are available on our website at https://investors.ontoinnovation.com/governance/governance-documents/.
In 2019, the composition of and number of meetings held by the Company’s Board Committees were as follows:
Committee Chairperson | Committee Members | # of Meetings held in 2019 | |
Audit Committee | |||
Onto Innovation2 | Christine A. Tsingos | Jeffrey A. Aukerman Vita A. Cassese Christopher A. Seams John R. Whitten | 2 |
Nanometrics1 | Christine A. Tsingos | Bruce C. Rhine Robert G. Deuster Christopher A. Seams | 8 |
Rudolph1 | Jeffrey A. Aukerman | Vita A. Cassese John R. Whitten | 5 |
Nominating & Governance Committee | |||
Onto Innovation2 | Leo Berlinghieri | David B. Miller Bruce C. Rhine Christopher A. Seams Christine A. Tsingos | 1 |
Nanometrics1 | Christopher A. Seams | Bruce C. Rhine Edward J. Brown, Jr. | 4 |
Rudolph1 | Leo Berlinghieri | Daniel H. Berry John R. Whitten | 4 |
Compensation Committee | |||
Onto Innovation2 | Edward J. Brown, Jr. | Jeffrey A. Aukerman Leo Berlinghieri Robert G. Deuster David B. Miller | 1 |
Nanometrics1 | Edward J. Brown, Jr. | J. Thomas Bentley Robert G. Deuster Christine A. Tsingos | 3 |
Rudolph1 | David B. Miller | Jeffrey A. Aukerman Vita A. Cassese Thomas G. Greig | 5 |
1 | Through the Merger Date. |
2 | After the Merger Date |
Audit Committee |
The Audit Committee assists the Board in fulfilling its responsibilities for general oversight of the integrity of our financial statements, our accounting policies and procedures and our compliance with legal and regulatory requirements. Among its functions, the Audit Committee is responsible for:
The appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm;
The approval of services performed by the Company’s independent registered public accounting firm;
Reviewing the responsibilities, functions and performance of the Company’s internal audit function;
Reviewing the scope and results of internal audits and ongoing assessments of the Company’s risk management processes;
Monitoring possible transactions between the Company and our officers and directors for any potential conflicts of interest; and
Evaluating the Company’s system of internal control over financial reporting and disclosure controls and procedures.
The report of our Audit Committee is found below under the caption “Audit Committee Report.”
The Board has determined that each of the Audit Committee members meet the Audit Committee membership requirements set forth by the NYSE and the SEC, including that they be “independent.” Furthermore, the Board has determined that each of Ms. Tsingos and Mr. Aukerman qualify as an “Audit Committee Financial Expert” as that term is defined under SEC rules.
Compensation Committee |
The Compensation Committee is responsible for the establishment of the policies upon which compensation of and incentives for the Company’s executive officers will be based, the review and recommendation for approval by the independent members of the Board of the compensation of the Company’s executive officers, and the administration of the Company’s equity compensation plans.
In general, the Compensation Committee reviews and recommends for approval by the independent members of the Board of Directors the Company’s compensation policies and practices, including executive salary levels and variable compensation programs, both cash-based and equity-based, benefits, severance and equity-based and other compensation plans, policies and programs. With respect to the compensation of the Company’s CEO, the Compensation Committee reviews and recommends for approval by the independent members of the Board the various elements of the CEO’s compensation. With respect to other executive officers, including each of our NEOs, the Compensation Committee reviews the recommendations for compensation for such individuals presented to the Compensation Committee by the CEO and the reasons therefor and, in its discretion, may modify the compensation packages for any such individuals. The Compensation Committee has delegated to the Company’s CEO the authority, within certain parameters, to approve the grant of restricted stock units (“RSUs”) to employees and consultants who are not executive officers for purposes of Section 16 of the Exchange Act and hold positions below the level of vice president. All such grants are thereafter reviewed and ratified by the Compensation Committee.
In accordance with its charter, the Compensation Committee may form and delegate its authority to subcommittees when appropriate. Further, the Compensation Committee has the authority to retain, and to terminate, any compensation consultant or other advisors to assist in the evaluation of director, CEO or executive compensation or other matters within the scope of the Compensation Committee’s responsibilities and is directly responsible for the appointment, compensation and oversight of such consultants and other advisors, including their fees and other retention terms. From time to time, the Compensation Committee engages the services of such outside compensation consultants to provide advice on compensation plans and issues related to the Company’s executive and non-executive employees. In 2019, the Company’s Compensation Committee engaged Compensia, Inc. (“Compensia”) to provide such assistance to the Compensation Committee. Prior to the 2019 Merger, Compensia provided compensation consultancy services to Nanometrics while Rudolph engaged Pay Governance LLC for such compensation advice. The Compensation Committee also has authority to obtain advice and assistance from internal or external legal, accounting and other advisors.
Each current member of our Compensation Committee is an “outside” director as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, and a “non-employee” director within the meaning of Rule 16b-3 under the Exchange Act. The Board has determined that each of the Compensation Committee members meet the Compensation Committee membership requirements set forth by the NYSE and the SEC, including that they be “independent.”
For further discussion of the Compensation Committee and its processes and procedures, please refer to the “Compensation Program Objectives, Design and Practices” section in the Compensation Discussion and Analysis below. The Compensation Committee Report is included under the caption “Compensation Committee Report on Executive Compensation” in this Proxy Statement.
Nominating & Governance Committee |
The responsibilities of the Nominating & Governance Committee include:
Identifying prospective director nominees and recommending to the Board director nominees for the next annual meeting of stockholders and replacements of a director in the event of a vacancy on the Board;
Recommending to the Board the appointment of directors to Board Committees;
Developing and recommending to the Board, and monitoring compliance with, the corporate governance principles and standards applicable to the Company;
Managing the CEO selection process; and
Together with our CEO, overseeing our Company’s management succession planning.
The Nominating & Governance Committee also oversees the annual evaluation of the Board, the Committees of the Board and the individual directors. Typically, this evaluation is performed during the first quarter by each of the directors and reflects an assessment of the Board, the Committees of the Board and each individual director in the prior year. Among other topics, the evaluation in general assesses:
For both the Board and the Committees:
◦ | Their structure and composition; |
◦ | The format and content of meetings; and |
◦ | The effectiveness of the Board/Committees. |
For each individual director:
◦ | Their performance and approach to |
◦ | Their understanding of their role as a director; |
◦ | Their understanding of critical aspects of the Company’s business, products and strategy; and |
◦ | Their skills, experience and ongoing training. |
In addition, the Board reviews the issues faced during the past year, assesses its response and makes determinations whether additional resources or approaches might be applied to further optimize the handling of the issues. The goal of the evaluation is to identify and address any performance issues at the Board, committee or individual level, should they exist, identify potential gaps in the boardroom and to assure the maintenance of an appropriate mix of director skills and qualifications. Upon completion of the evaluation, the Nominating & Governance Committee provides feedback to the Board, the committees and the individual directors regarding the results of the evaluation and raises any issues that have been identified which may need to be addressed.
The Nominating & Governance Committee utilizes a variety of methods for identifying and evaluating nominees. Its general policy is to assess the appropriate size and needs of the Board of Directors and whether any vacancies are expected due to retirement or otherwise. In addition, candidates for director nominees are typically reviewed in the context of the current composition of the Board, the operating requirements of the Company, the current needs of the Board, and the long-term interests of stockholders, with the goal of maintaining a balance of knowledge, experience and capability. In the event those vacancies are anticipated, or otherwise arise, the Nominating & Governance Committee will consider recommending various potential candidates to fill such vacancies. Candidates may come to the attention of the Nominating & Governance Committee through its current members, stockholders or other persons.
The Board has determined that each of the Nominating & Governance Committee members meets the Nominating & Governance Committee membership requirements, including the independence requirements of the NYSE.
Other Committees |
Our Board of Directors may from time to time establish other special or standing committees to facilitate the management of the Company or to discharge specific duties delegated to the committee by the full Board of Directors.
Compensation Committee Interlocks And Insider Participation |
In 2019, no member serving on the Company’s Compensation Committee (Edward J Brown, Jr., Jeffrey A. Aukerman, Leo Berlinghieri, Robert G. Deuster, David B. Miller), the Nanometrics Compensation Committee (Edward J Brown, Jr., J. Thomas Bentley, Robert G. Deuster, Christine A. Tsingos) or the Rudolph Compensation Committee (David B. Miller, Jeffrey A. Aukerman, Vita A Cassese, Thomas G. Greig) at any time during the year had any form of interlocking relationship as described in Item 407(e)(4) of Regulation S-K with the respective company. Further, no member of the Company’s Compensation Committee as constituted in 2020 (Edward J Brown, Jr., Jeffrey A. Aukerman, Leo Berlinghieri, Robert G. Deuster, David B. Miller) has any form of interlocking relationship as described in Item 407(e)(4) of Regulation S-K as of the date of this proxy statement.
Board Membership Criteria And Nominee Identification |
The Nominating & Governance Committee of the Board determines the required selection criteria and qualifications of director nominees based upon the needs of the Company at the time nominees are considered. While the Nominating & Governance Committee has no specific minimum qualifications for director candidates, persons considered for Board of Directors positions
must demonstrate the following qualifications to be recommended by the Nominating & Governance Committee for a position on the Board:
The candidate must exhibit proven leadership capabilities, high integrity and experience with a high level of responsibilities within his or her chosen field;
The candidate must possess the ability to apply good business judgment and be of sound mind and high moral character;
The candidate must have no personal or financial interest that would conflict or appear to conflict with the interests of the Company;
The candidate must be in a position to properly exercise his or her duties of loyalty and be willing and able to commit the necessary time for Board of Directors and committee service; and
The candidate must have the ability to grasp complex principles of business, finance, international transactions and semiconductor inspection, metrology, lithography and related software technologies.
The Nominating & Governance Committee retains the right to modify these qualifications from time to time.
The Nominating & Governance Committee has not adopted a formal diversity policy with regard to the selection of director nominees. Diversity is one of the factors that the Nominating & Governance Committee considers in identifying nominees for director. In selecting director nominees, the Nominating & Governance Committee considers, among other factors:
The competencies and skills that the candidate possesses and the candidate’s areas of qualification and expertise that would enhance the composition of the Board and further its ability to offer advice and guidance to management;
How the candidate would contribute to the Board’s overall balance of expertise, perspectives, backgrounds and experiences in substantive matters pertaining to the Company’s business; and
The candidate’s demonstrated excellence in his or her field and commitment to rigorously representing the long-term interests of the Company’s stockholders.
In its identification of director nominees, the Nominating & Governance Committee will consider how the candidate would contribute to the Board’s overall balance of diversity of expertise, perspectives, backgrounds and experiences in substantive matters pertaining to the Company’s business. When current Board members are considered for nomination for reelection, the Nominating & Governance Committee also takes into consideration their prior contributions to and performance on the Board and their record of attendance.
The Nominating & Governance Committee will consider the above criteria for nominees identified by the Nominating & Governance Committee itself, by stockholders, or through some other source. The Nominating & Governance Committee uses the same process for evaluating all nominees, regardless of the original source of nomination. The Nominating & Governance Committee may use the services of a third-party search firm to assist in the identification or evaluation of Board member candidates.
Consideration Of Director Nominees |
The Nominating & Governance Committee has a formal policy with regard to consideration of director candidates recommended by the Company’s stockholders, the Director Candidate Policy, which may be found on our website at:
https://investors.ontoinnovation.com/governance/governance-documents/
In accordance with the policy, the Nominating & Governance Committee will consider recommendations for candidates to the Board of Directors from stockholders of the Company holding no less than 1% of the Company’s securities for at least twelve (12) months prior to the date of the submission of the recommendation. Stockholders wishing to recommend persons for consideration by the Nominating & Governance Committee as nominees for election to the Company’s Board of Directors can do so by writing to the Office of the General Counsel of the Company at its principal executive offices giving:
Candidate’s name, age, business address and residence address;
Candidate’s detailed biographical data and qualifications including his/her principal occupation and employment history;
The class and number of shares of the Company which are beneficially owned by the candidate;
The candidate’s written consent to being named as a nominee and to serving as a director, if elected;
• | Information regarding any relationship between the candidate and the Company in the last three (3) years; |
Any other information relating to the candidate that is required by law to be disclosed in solicitations of proxies for election of directors;
The name and address of the recommending or nominating stockholder;
The class and number of shares of the Company which are beneficially owned by the recommending or nominating stockholder;
A description of all arrangements or understandings between such stockholder and each nominee and any other person or persons (naming such person or persons) relating to the nomination; and
Any other information specified under Section 2.5 of the Company’s Bylaws.
Corporate Governance Guidelines |
Our Board of Directors adopted Corporate Governance Guidelines, a copy of which is available on our website at https://investors.ontoinnovation.com/governance/governance-documents/ under “Corporate Governance Summary.”
Codes Of Ethics |
We have adopted a Code of Business Conduct and Ethics (applicable to all employees, executive officers and directors) and a Financial Information Integrity Policy (applicable to our financial officers, including our CEO and Chief Financial Officer (“CFO”)) that set forth principles to guide all employees, executive officers and directors and establish procedures for reporting any violations of these principles. Copies of these codes may be found on our website at:
https://investors.ontoinnovation.com/governance/governance-documents/
or may be requested by writing to:
Onto Innovation Inc.
Attention: Investor Relations
16 Jonspin Road
Wilmington, Massachusetts 01887
The Company will disclose any amendment to its code of ethics or waiver of a provision of its code of ethics applicable to its officers or directors, including the name of the officer or director to whom the waiver was granted, on our website at www.ontoinnovation.com, on the Investors page.
Related Person Transactions Policy |
There have been no “related person transactions” since the beginning of 2019 to present, nor are there any currently proposed “related person transactions,” involving any director, director nominee or executive officer of the Company, any known 5% stockholder of the Company or any immediate family member of any of the foregoing persons (which are referred to together as “related persons”). A “related person transaction” generally means a transaction involving more than $120,000 in which the Company (including any of its subsidiaries) is a participant and in which a related person has a direct or indirect material interest.
The Board has adopted policies addressing the Company’s procedures with respect to the review, approval and ratification of “related person transactions” that are required to be disclosed pursuant to Item 404(a) of Regulation S-K. Our related person practices and policies ensure that our directors, officers and employees are proactively screened from any conflicts of interests interfering with their obligations to the Company. Our policies are included in our corporate governance documents, including our Code of Business Conduct and Ethics, the Audit Committee Charter and Summary of Corporate Governance Policies, each of which is available on the Investors section of our website located at:
https://investors.ontoinnovation.com/governance/governance-documents/
Pursuant to our Code of Business Conduct and Ethics, our directors, officers and employees are required to avoid any actual or apparent conflicts of interest (other than conflicts of interest that have received appropriate approval as described below), which includes taking actions or having interests that may interfere with the objective or efficient performance of such person’s duties to the Company or that may result in such person receiving improper personal benefits as a result of their position with the Company.
• | Pursuant to our Summary of Corporate Governance Policies, if a director becomes involved in any activity or interest that may result in an actual or potential conflict (or the appearance of a conflict) with the interests of the Company, that director is required to disclose such information promptly to the Board, |
Pursuant to both the Board’s Summary of Corporate Governance Policies and the Audit Committee Charter, the Audit Committee, which consists entirely of independent directors, will review any proposed transaction in which the Company or its subsidiaries are to participate if the amount involved in the transaction exceeds $120,000 and we are aware that any related person may have a direct or indirect material interest in the transaction. The Audit Committee will consider the facts and circumstances and will approve or ratify a proposed transaction if the Audit Committee considers it appropriate and believes that such transaction will serve the long-term interests of our stockholders. The Compensation Committee of the Board reviews and approves compensation decisions for Board members and our executive officers (and such other employees of the Company as directed by the Board) pursuant to the Compensation Committee Charter.
Communications With The Board |
We have a formal policy regarding communications with the Board of Directors, our Stockholder Communications Policy, which is found on our website at https://investors.ontoinnovation.com/governance/governance-documents/.
Stockholders may communicate with the Board of Directors, any of the Company’s Board Committees (Audit, Compensation or Nominating & Governance) or any of the Company’s directors by writing to:
Onto Innovation Inc.
Office of the General Counsel
550 Clark Drive
P.O. Box 860
Budd Lake, New Jersey 07828
and such communications will be forwarded to the intended recipient(s) to the extent appropriate. Prior to forwarding any communication, the General Counsel will review it and, in his or her discretion, will not forward a communication deemed to be of a commercial nature or otherwise inappropriate.
ELECTION OF DIRECTORS
Nominees |
The Board currently has twelve (12) members. Effective subsequent to the 2020 Annual Meeting of Stockholders, the authorized number of directors for the Board shall be reduced to ten (10) members. All current directors are standing for election at the Annual Meeting with the exception of John R. Whitten and Timothy J. Stultz, Ph.D.
The Company’s Amended and Restated Certificate of Incorporation provides that at each annual meeting of stockholders, each director of the Company shall be elected to hold office, and shall serve, until the expiration of the term for which he or she is elected and until his or her successor is duly elected and qualified or until his or her death, resignation, or removal; except that if any such election shall not be so held, such election shall take place at a stockholders' meeting called and held in accordance with the DGCL.
Based on the recommendation of the Nominating & Governance Committee, the ten (10) director nominees approved by the Board for inclusion in this proxy statement are:
Jeffrey A. AukermanLeo BerlinghieriEdward J. Brown, Jr.Vita A. Cassese Robert G. DeusterDavid B. MillerMichael P. PlisinskiBruce C. Rhine Christopher A. SeamsChristine A. Tsingos |
Each nominee is currently serving as a director of Onto Innovation. In making its recommendations, the Nominating & Governance Committee considered a number of factors, including its criteria for Board membership, which include the minimum qualifications that must be possessed by a director candidate in order to be nominated for a position on our Board. Each nominee has indicated that he or she will serve if elected. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the Company’s ten (10) nominees. In the event that any nominee of the Company becomes unable or unavailable to serve as a director at the time of the Annual Meeting (which we do not anticipate), the proxy holders will vote the proxies for any substitute nominee who is designated by the current Board of Directors to fill the vacancy. Alternatively, the Board of Directors, in its discretion, may elect to reduce the number of directors serving on the Board. We do not have any reason to believe that any of the nominees will be unable or will decline to serve as a director.
Board Composition And Refreshment |
A priority of the Nominating & Governance Committee and the Board as a whole is making certain that the composition of the Board reflects the desired professional experience, skills and backgrounds in order to present an array of viewpoints and perspectives and effectively represent the long-term interests of stockholders. Further, the Board recognizes the importance of Board refreshment in order to continue to achieve an appropriate balance of tenure, turnover, diversity and skills on the Board.
Vote Required |
Pursuant to the Company’s Bylaws, our directors are elected by the affirmative vote of the majority of the votes cast (provided, however, that if the number of nominees exceeds the number of directors to be elected, directors will be elected by a plurality voting standard). In order for a director in an uncontested election to be elected, the number of votes cast “for” his/her election must exceed the number of votes cast “against” his/her election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election). If a nominee for director in an uncontested election receives a greater number of “Withhold” votes for election than “For” votes and is not elected, our Corporate Governance Summary provides that such director must promptly tender a resignation to the Board. Our Nominating & Governance Committee would then make a recommendation to the Board on whether to accept or reject the tendered resignation, or whether other action should be taken. Within ninety (90) days after the date of the certification of the election results, our Board will act on any such tendered resignation and publicly disclose (in a press release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision.
Our Board and its Nominating & Governance Committee believe that all of the directors and nominees are highly qualified and have demonstrated leadership skills and have experience and judgment in areas that are relevant to our business. We believe that their ability to challenge and stimulate management and their dedication to the affairs of the Company collectively serve the interests of the Company and its stockholders.
The ten (10) nominees for director are set forth below. All information is as of the record date.
Name | Position | Board Tenure(1) | ||||
Nominee Directors: | ||||||
Jeffrey A. Aukerman | Former Partner, Deloitte & Touche LLP | 5.25 years | ||||
Leo Berlinghieri | Former Chief Executive Officer and President, MKS Instruments, Inc. | 11.50 years | ||||
Edward J. Brown, Jr. | Former CEO, Cymer Light Source | 7.08 years | ||||
Vita A. Cassese | Chief Executive Officer, Mardon Management Advisors | 1.67 years | ||||
Robert G. Deuster | Former CEO, Collectors Universe, Inc. | 3.00 years | ||||
Michael P. Plisinski | Chief Executive Officer, Onto Innovation Inc. | 4.33 years | ||||
David B. Miller | Former President, DuPont Electronics & Communications | 4.67 years | ||||
Bruce D. Rhine | Former CEO, Nanometrics Incorporated | 13.50 years | ||||
Christopher A. Seams | Former CEO, Deca Technologies | 4.58 years | ||||
Christine A. Tsingos | Former Executive Vice President and CFO, Bio-Rad Laboratories | 5.83 years |
(1) | Board Tenure includes time served on the
|
Except as discussed below, each nominee and each incumbent director has been engaged in the principal occupation set forth above during the past five (5) years. There are no family relationships between any directors or executive officers of the Company. Messrs. Aukerman, Berlinghieri, Miller, Plisinski and Whitten, along with Ms. Cassese, all former members of the Rudolph Board of Directors, were appointed to the Board on October 22, 2019 pursuant to the Agreement and Plan of Merger, dated as of June 23, 2019 (the “Merger Agreement”), among Nanometrics, Rudolph and PV Equipment Inc., after recommendation by the previous Board of Directors of Rudolph. The Nominating & Governance Committee thereafter considered the professional experience, skills and backgrounds of the nominees (including Messrs. Aukerman, Berlinghieri, Miller and Plisinski and Ms. Cassese) and recommended the nominees to the full Board.
The following reflects additional information regarding the background and qualifications of our directors, including the experience and skills that support the Board’s determination that each director should serve on our Board.
Director Since: | December 2014 (formerly with Rudolph) |
Age: | 54 |
Independent Status: | Independent Director |
Board Committee(s): | Audit, Compensation |
Other Boards Served: | Advisory Council to the Lariccia School of Accounting & Finance at Youngstown State University (since 2012) |
Mr. Aukerman is a certified public accountant and has extensive public accounting and consulting experience, serving many public and private equity sponsored public reporting companies in the manufacturing, distribution and services industries. From July 1987 to May 2014, Mr. Aukerman was employed by Deloitte & Touche LLP, which, together with its affiliates, is an audit, consulting, tax and advisory services firm, and served as an audit partner for the most recent fifteen (15) years. He also served in various capacities for the firm, including as an audit function professional practice director for the Cleveland, Ohio office and a regional leader of internal control subject matter specialists. Mr. Aukerman graduated magna cum laude with a B.S.B.A. in Accounting from Youngstown State University.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Served as Partner at Deloitte & Touche LLP.
High Level of Financial Experience
Twenty-seven (27) years of extensive experience with a wide range of financial reporting, accounting, risk management, and compliance matters at Deloitte & Touche LLP.
Director Since: | September 2008 (formerly with Rudolph) |
Age: | 66 |
Independent Status: | Independent Director |
Board Committee(s): | Nominating & Governance (Chair), Compensation |
Other Boards Served: | Unipower, LLC (since 2017) MKS Instruments, Inc. (2005-2013) Massachusetts High Technology Council, Inc. (2006-2013) |
From July 2005 to December 2013, Mr. Berlinghieri served as Chief Executive Officer and President of MKS Instruments, Inc., a critical subsystem and instrument provider to the semiconductor industry. From April 2004 to July 2005, Mr. Berlinghieri served as President and Chief Operating Officer and prior to that served as Vice President and Chief Operating Officer from July 2003 to April 2004 for MKS Instruments, Inc.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Served for over eight (8) years as Chief Executive Officer and President of MKS Instruments, Inc. Additional prior experience as Vice President and Chief Operating Officer of the company, among other senior management roles.
High Level of Financial Experience
Substantial financial experience gained in roles as Chief Executive Officer, President and Vice President and Chief Operating Officer with MKS Instruments, Inc.
Gained extensive international experience in various roles with MKS Instruments, including Chief Executive Officer, Chief Operating Officer and Vice President of Global Sales and Service.
Extensive Knowledge of Company Business/Industry
Over thirty-three (33) years of experience in the semiconductor industry, including eight (8) years at the helm of MKS Instruments, Inc. a public corporation. Also served on the SEMI North America Advisory Board (NAAB) including as its chairman in 2009.
Innovation/Technology Experience
Broad array of technological experience with MKS Instruments, Inc., including roles in manufacturing, customer support, and sales all in addition to his roles as Chief Executive Officer and Chief Operating Officer.
February 2013 | |
Age: | 62 |
Independent Status: | Independent Director |
Board Committee(s): | Compensation (Chair) |
Other Boards Served: | Astrodyne TDI (2015-present) |
From May 2013 until September 2015, Mr. Brown was the Chief Executive Officer of Cymer Light Source, following the merger of Cymer, Inc. with ASML Holding Ltd., prior to which Mr. Brown served as President and Chief Operating Officer of Cymer, Inc. from September 2005 until May 2013. From 1984 to 2005, Mr. Brown was employed at Applied Materials, Inc., where he held numerous high-level management positions including group vice president and senior advisor to the president, vice president and general manager of the Intel business unit, as well as managing director heading up their largest product division, Global Operations. Prior to Applied Materials Inc., Mr. Brown held key engineering positions at TRW Corporation and Burroughs Corporation. Mr. Brown received a master’s degree in business administration from National University and a bachelor’s degree in industrial studies from San Diego State University.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Served as Chief Executive Officer for Cymer Light Source. Further, he served for over seven (7) years as President and Chief Operating Officer of Cymer, Inc. as well as held various senior management positions with Applied Materials, Inc. and key engineering positions at TRW Corporation and Burroughs Corporation.
High Level of Financial Experience
Substantial financial experience gained as Chief Executive Officer of Cymer Light Source, as President and Chief Operating Officer of Cymer, Inc. as well as high-level management positions with Applied Materials, Inc., among others.
Broad International Exposure
Gained extensive international experience as Chief Executive Officer of Cymer Light Source, President and Chief Operating Officer of Cymer, Inc. and Global Vice President of Worldwide Business Operations as well as other roles including vice president of Applied Material, Inc.’s largest product division, Global Operations.
Extensive Knowledge of Company Business/Industry
Over forty (40) years of employment experience within an array of fields in the semiconductor industry. Also served on the SEMI North America Advisory Board (NAAB).
Innovation/Technology Experience
Expansive scope of technological and innovative experience from over forty (40) years of semiconductor industry employment in key management, operations, development and engineering positions.
Director Since: | July 2018 (formerly with Rudolph) |
Age: | 70 |
Independent Status: | Independent Director |
Board Committee(s): | Audit |
Other Boards Served: | Loftware, Inc. (since 2014) Interactive Health, Inc. (since 2017) Medical Knowledge Group (2015-2019) Zitter Health Insights (2015-2019) Context Matters, Inc. (2016-2017) Decision Resources Group, Inc. (2010-2012) College of Mount Saint Vincent Board (Trustee) (since 2007) |
Ms. Cassese currently serves as the CEO of Mardon Management Advisors, a technology and analytics advisory firm. Ms. Cassese has over 30 years of experience in operating and strategic management roles at Pfizer, Inc., Ms. Cassese’s last held position at Pfizer, Inc. was chief information officer of its Worldwide Pharmaceuticals Group. Ms. Cassese serves as a mentor for the Masters in Technology program at Columbia University and has been a guest lecturer at New York University's Stern School of Business, MIT Sloan School of Business, and Boston University. Ms. Cassese earned a B.A. in Mathematics from the College of Mount Saint Vincent and an MBA from New York University’s Stern School of Business.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Serves as Chief Executive Officer of Mardon Management Advisors. Additional experience as Vice President, Business Development, Strategy and Innovation for Pfizer, Inc. and CIO for Pfizer Worldwide Pharmaceuticals.
High Level of Financial Experience
Substantial financial experience gained in serving in executive management roles with Pfizer, Inc. and as chief information officer of Pfizer’s Worldwide Pharmaceuticals Group with an annual operating budget exceeding $1.5B.
Broad International Exposure
Roles with Pfizer included management of nearly 2,000 employees in 44 countries as well as serving on the company’s Worldwide Pharmaceuticals Executive Leadership Team responsible for long-term international business strategy.
Innovation/Technology Experience
Extensive innovation and technology experience derived from over 30 years of operations experience, service on multiple technical advisory boards and leadership of a technology and analytics advisory firm.
March 2017 | |
Age: | 69 |
Independent Status: | Independent Director |
Board Committee(s): | Compensation |
Other Boards Served: | Collectors Universe, Inc. (2012-2018) |
Ondax Incorporated (2010-2018) | |
Symmetry Medical Incorporated (2014-2017) | |
Pico Holdings (2011-2016) |
Mr. Deuster served as Chief Executive Officer of Collectors Universe, Inc., a public company that provides authentication and grading services to the global collectibles market, from 2012 to 2017. Mr. Deuster served as Chairman and Chief Executive Officer of Newport Corporation, a public company that is a global supplier of laser, optical and motion control products, from May 1996 until his retirement in October 2007. Mr. Deuster served in various senior management positions at Applied Power, Inc. (now Actuant Corporation) and General Electric Company’s Medical Systems Division. Mr. Deuster received a B.S. in Electrical Engineering from Marquette University in 1973. Mr. Deuster holds a Masters Professional Director Certification from the American College of Corporate Directors (“ACCD”), a public company director education and credentialing organization.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Served as Chief Executive Officer of both Collectors Universe, Inc. and Newport Corporation. Further, he served in various senior management positions at Applied Power, Inc. and General Electric Company's Medical Systems Division.
High Level of Financial Experience
Substantial financial experience gained as Chief Executive Officer of Collectors Universe, Inc. for over five (5) years, as Chief Executive Officer of Newport Corporation for over eleven (11) years and in other senior management positions with Applied Power, Inc. and General Electric Company's Medical Systems Division.
Broad International Exposure
Gained extensive international experience as Chief Executive Officer of both Collectors Universe, Inc. and Newport Corporation.
Extensive Knowledge of Company Business/Industry
Significant employment experience as Chief Executive Officer of Newport Corporation, a global supplier of laser, optical and motion control products to an array of industries including the semiconductor industry.
Innovation/Technology Experience
Extensive innovation and technology experience derived from over eleven (11) years of service as the Chief Executive Officer of Newport Corporation as well as in various senior management positions at Applied Power, Inc. and General Electric Company's Medical Systems Division.
Director Since: | July 2015 (formerly with Rudolph) |
Age: | 63 |
Independent Status: | Independent Director |
Board Committee(s): | Compensation, Nominating & Governance |
Other Boards Served: | President, University of Virginia School of Engineering & Applied Science Foundation (since 2011) Merrimac Industries, Inc. (2002-2008) SEMI International (2011-2015) North Carolina Chamber of Commerce (2010-2015) |
Mr. Miller served as the Rudolph non-executive Chairman from August 2018 through the Merger Date. From June 1981 to November 2015, Mr. Miller served in various positions, most recently as President, with DuPont Electronics & Communications, an electronic materials company. Mr. Miller holds a B.S. in Electrical Engineering from the University of Virginia.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Served as President of DuPont Electronics & Communications.
High Level of Financial Experience
Substantial financial experience gained in roles with DuPont Electronics & Communications including as President of the company. Oversight of complex financial transactions, profit and loss responsibility and investor relations during prior operations and leadership roles with this company.
Broad International Exposure
Served as President of DuPont Electronics & Communications, a global electronic materials company. Served on several joint venture boards in the U.S. and Asia while with DuPont Electronics & Communications as well as on the board of SEMI International. Resided in Tokyo, Japan for three (3) years.
Extensive Knowledge of Company Business/Industry
Forty (40) years of experience within the electronics industry including six (6) years at the helm of DuPont Electronics & Communications, which in addition to other markets, served the semiconductor industry.
Innovation/Technology Experience
Significant experience and leadership roles with DuPont Electronics & Communications, overseeing the company’s technology advancement, breadth of process expertise and ongoing innovation.
Director Since: | November 2015 (formerly with Rudolph) |
Age: | 50 |
Independent Status: | Non-Independent Director |
Board Committee(s): | None |
Other Boards Served: | None |
Mr. Plisinski has served as the Company’s Chief Executive Officer since the Merger Date and was previously Chief Executive Officer of Rudolph beginning in November 2015. Prior to his appointment as Rudolph’s CEO, Mr. Plisinski served as Rudolph’s Executive Vice President and Chief Operating Officer from October 2014 to November 2015 and as Vice President and General Manager, Data Analysis and Review Business Unit from February 2006 when Rudolph merged with August Technology Corporation (“August Technology”) until October 2014. From February 2004 to February 2006, Mr. Plisinski served as August Technology’s Vice President of Engineering and, from July 2003 to February 2004, as its Director of Strategic Marketing for review and analysis products. Mr. Plisinski joined August Technology as part of the acquisition of Counterpoint Solutions, a supplier of optical review and automated metrology equipment to the semiconductor industry, where he was both sole founder and President from June 1999 to July 2003. Mr. Plisinski has a B.S. in Computer Science from the University of Massachusetts and has completed the Advanced Management Program from Harvard Business School.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Serving as Chief Executive Officer of Onto Innovation with prior experience as Chief Executive Officer of Rudolph, Chief Operating Officer and Vice President of Rudolph, General Manager of the Rudolph’s Data Analysis and Review Business Unit, among other senior management positions.
High Level of Financial Experience
Substantial financial experience gained in roles as Chief Executive Officer of the Company and Rudolph and Chief Operating Officer and Vice President, General Manager of the Data Analysis and Review Business Unit of Rudolph.
Broad International Exposure
Extensive experience working with the Asian and European customers of the Company through the various roles held with Rudolph, August Technology and the Company.
Extensive Knowledge of Company Business/Industry
Over fifteen (15) years of dedicated experience with Rudolph and August Technology and an additional four (4) years as founder of an optical review and automated metrology start-up company, each serving the semiconductor industry.
Innovation/Technology Experience
Technological and innovative experience includes leadership roles in both engineering and software development while with Rudolph and August Technology. Prior entrepreneurial experience in the founding of optical review and automated metrology equipment company, Counterpoint Solutions.
Director Since: | July 2006 |
Age: | 62 |
Independent Status: | Independent Director |
Board Committee(s): | Audit (Chairman through July 2018), Nominating & Governance |
Other Boards Served: | Snap2Insights (since 2018) |
Shaper.io (since 2015) | |
Columbia Nutritional LLC (since 2014) | |
Phoseon Technology, Inc. (since 2012) | |
Jama Software (2008-2018) | |
NEXX Systems (2002-2012) | |
Nor-Cal Products, Inc. (2010-2017) | |
Accent Optical Technologies Inc. (2000-2006) |
Mr. Rhine served as the Chairman of the Board of Directors of Nanometrics from August 2009 through the Merger Date. From July 2006 to February 2008, Mr. Rhine served as Nanometrics’ Chief Strategy Officer and from March 2007 to August 2007, as Nanometrics Chief Executive Officer. From 2000 to 2006, Mr. Rhine served as Chairman and Chief Executive Officer of Accent Optical Technologies, Inc. (acquired by Nanometrics in July 2006) and as its President from January 2003 to April 2005 and from August 2000 to September 2001. Prior to 2000 Mr. Rhine was an executive at Applied Materials, Lam Research Corporation, Asyst Technologies and Air Products and Chemicals. Mr. Rhine holds a B.S. degree in Chemical Engineering and an M.B.A. in Finance from The Pennsylvania State University. Mr. Rhine is a member of the National Association of Corporate Directors (“NACD”) and the ACCD.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Served as Chief Executive Officer of Nanometrics and of Accent Optical Technologies with additional prior senior leadership experience with Applied Materials, Lam Research Corporation, Asyst Technologies and Air Products and Chemicals.
High Level of Financial Experience
Substantial financial experience gained in roles as Chief Executive Officer of Nanometrics and of Accent Optical Technologies as well as with executive roles held in several semiconductor industry companies.
Broad International Exposure
Gained extensive international experience as Chief Executive Officer of Nanometrics and of Accent Optical Technology as well as through array of other executive roles within the semiconductor industry.
Extensive Knowledge of Company Business/Industry
Over thirty-seven (37) years of dedicated experience within the semiconductor industry.
Innovation/Technology Experience
Broad and comprehensive array of technological experience with multiple companies within the semiconductor space including serving as the Chief Strategy Officer of Nanometrics.
Director Since: | August 2015 |
Age: | 57 |
Independent Status: | Independent Director |
Board Committee(s): | Audit, Nominating & Governance |
Other Boards Served: | Xperi Corporation (since 2016) |
Tessera Technologies, Inc. (2013-2016) |
Mr. Seams served as Chief Executive Officer of Deca Technologies from June 2013 to August 2016. Prior to Deca Technologies, Mr. Seams served as Executive Vice President of sales and marketing at Cypress Semiconductor and held various technical and operational management positions in its manufacturing, development and operations. Prior to joining Cypress in 1990, Mr. Seams worked in process development for Advanced Micro Devices and Philips Research Laboratories. Mr. Seams earned his bachelor’s degree in electrical engineering from Texas A&M University and his master’s degree in electrical and computer engineering from the University of Texas at Austin. Mr. Seams has a Professional Certificate in Advanced Computer Security from Stanford University and is a senior member of the Institute of Electrical and Electronics Engineers. Mr. Seams is a member of the ACCD as well as a member and Certified Director of the NACD.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Served as Chief Executive Officer of Deca Technologies as well as in additional senior leadership roles within the semiconductor industry including with Cypress Semiconductor.
High Level of Financial Experience
Substantial financial experience gained in roles as Chief Executive Officer of Deca Technologies as well as with executive roles held in the semiconductor industry.
Broad International Exposure
Extensive international experience as Chief Executive Officer of Deca Technologies, Executive Vice President of sales and marketing at Cypress Semiconductor as well as through other management roles with both Cypress and other semiconductor companies with which he worked.
Extensive Knowledge of Company Business/Industry
Over thirty (30) years of dedicated experience within the semiconductor industry.
Innovation/Technology Experience
Technological and innovative experience gained through an array of technical and operational management positions in manufacturing, development and operations for Cypress Semiconductor as well as in process development for Advanced Micro Devices and Philips Research Laboratories.
Director Since: | May 2014 |
Age: | 61 |
Independent Status: | Independent Director |
Board Committee(s): | Audit (Chair), Nominating & Governance |
Other Boards Served: | Envista Holdings Corporation (since September 2019) |
Varex Imaging Corporation (since February 2017) |
Ms. Tsingos served as the Executive Vice President and Chief Financial Officer of Bio-Rad Laboratories from December 2002 through May 2019. Prior to Bio-Rad, Ms. Tsingos held executive positions at Autodesk, The Cooper Companies, and Attest Systems. Ms. Tsingos earned her Bachelor of Arts in International Studies from the American University in Washington D.C. and an M.B.A in International Business from the George Washington University. In 2010, Ms. Tsingos was awarded the prestigious Bay Area CFO of the Year.
Specific Qualifications, Attributes, Skills and Experience
Relevant Senior Leadership / CEO Experience
Served as Executive Vice President and Chief Financial Officer of Bio-Rad Laboratories.
High Level of Financial Experience
Over thirty (30) years of financial and operational experience with a series of companies including sixteen (16) years of service as Chief Financial Officer of Bio-Rad Laboratories.
Broad International Exposure
Comprehensive international experience through service as Chief Financial Officer of Bio-Rad Laboratories.
The Board unanimously recommends voting “FOR ALL” of the nominees set forth above. |
Directors who are employees of the Company receive no compensation for their services as members of the Board of Directors. Director compensation for non-employee members of the Board is a mix of cash and equity-based compensation, which is largely comprised of the equity component to align the interests of our directors with the Company’s long-term performance and stockholder interests. The components of the compensation for directors who are not employees of the Company are as follows:
Board Compensation Element | Amount/Value | ||
Annual Retainer | $70,000 | 1 | |
Annual Equity Grant (in RSUs) | $150,000 | 2 | |
Committee Chair Stipend | |||
Audit | $20,000 | 1 | |
Compensation | $15,000 | 1 | |
Nominating & Governance | $10,000 | 1 | |
Committee Member Stipend | |||
Audit | $10,000 | 1 | |
Compensation | $7,500 | 1 | |
Nominating & Governance | $5,000 | 1 | |
Board Chair Stipend | $50,000 | 1 | |
Initial Equity Grant (in RSUs) | $150,000 | 3 |
1 | Paid subsequent to the director election results at the Annual Stockholders Meeting. |
2 | Awarded at second quarter Board meeting in a number of shares calculated by dividing the listed amount by the closing stock price per share of Company Common Stock on the date of grant, rounded to the nearest 100 shares. |
3 | Awarded as of the first Board meeting following election or
|
Any initial equity grants and/or annual equity grants typically vest on the first anniversary of the grant date. Equity awards granted to Rudolph directors in 2019 were granted under and subject to the terms of the Rudolph Technologies, Inc. 2018 Stock Plan. Equity awards granted to Nanometrics directors in 2019 were granted under and subject to the terms of the Nanometrics Incorporated 2005 Equity Incentive Plan.
Prior to the 2019 Merger, Nanometrics non-employee directors received an annual retainer fee of $60,000. In addition, the Chairman of the Board, Audit Committee Chairman, Compensation Committee Chairman and Nominating & Governance Committee Chairman received an incremental $30,000, $20,000, $20,000 and $10,000 annual retainer, respectively, for serving in such capacities. Committee members, other than the chairpersons, received an incremental $10,000 annual retainer for service on the Audit or Compensation Committee and an incremental $7,500 annual retainer for service on the Nominating & Governance Committee. All retainer fees were paid annually, as of the date of Nanometrics annual stockholders meeting, and in advance of the provision of services to which the retainer relates.
Prior to the 2019 Merger, Rudolph non-employee directors received an annual retainer fee of $70,000. In addition, the Chairman of the Board and the Chairmen of the Audit Committee, Compensation Committee and Nominating & Governance Committee received an incremental $40,000 and $15,000 annual retainer, respectively, for serving in such capacities. Rudolph directors were not paid in 2019 to serve on the committees of the Board of Directors with the exception of those directors serving as committee chairs during 2019. The foregoing compensation was paid on a quarterly basis to the Rudolph directors. No fees were paid to Rudolph directors for special subcommittee work in 2019.
For the year ended December 31, 2019, the directors, excluding the directors who are named executive officers, received total compensation indicated in the table below. There were no option awards, non-equity incentive plan compensation, or pension and nonqualified deferred compensation earnings granted to such directors. They did not earn any type of compensation during the year other than what is disclosed in the following table:
Name |
| Fees Earned or Paid in Cash |
| Stock Awards (1) |
| All Other Compensation |
| Total |
Nanometrics Non-Executive Directors | ||||||||
J. Thomas Bentley2 |
| $0 |
| $0 |
| $0 |
| $0 |
Edward J. Brown, Jr. |
| $90,000 |
| $119,654 |
| $0 |
| $209,654 |
Robert G. Deuster3 |
| $80,000 |
| $119,654 |
| $6,856 |
| $199,654 |
Bruce C. Rhine |
| $107,500 |
| $119,654 |
| $0 |
| $234,010 |
Christopher A. Seams |
| $80,000 |
| $119,654 |
| $0 |
| $199,654 |
Timothy J. Stultz, Ph.D.3,4 |
| $60,000 |
| $119,654 |
| $259,944 |
| $699,542 |
Christine A. Tsingos |
| $97,500 |
| $119,654 |
| $0 |
| $217,154 |
Rudolph Non-Executive Directors | ||||||||
Jeffery A. Aukerman5 |
| $21,250 |
| $0 |
| $0 |
| $21,250 |
Leo Berlinghieri5 |
| $21,250 |
| $0 |
| $0 |
| $21,250 |
Vita A. Cassese6 |
| $17,500 |
| $0 |
| $0 |
| $17,500 |
David B. Miller7 |
| $31,250 |
| $0 |
| $0 |
| $31,250 |
John R. Whitten4,6 |
| $17,500 |
| $0 |
| $0 |
| $17,500 |
| (1) | Represents the grant date fair value for each share-based compensation award granted during the year, calculated in accordance with FASB ASC Topic 718. The assumptions used in determining the grant date fair value of these awards are set forth in Note 9 to our
|
(2) | Mr. Bentley did not stand for re-election to the Nanometrics board of directors on May 22, 2019. |
(3) | All other compensation for Mr. Deuster and Dr. Stultz includes amounts for health care reimbursements. All other compensation for Dr. Stultz also included payment of $250,645 for merger consultations. |
(4) | Dr. Stultz and Mr. Whitten are not standing for re-election at the Annual Meeting. |
(5) | The |
|
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The Company has established guidelines related to stock ownership and retention for its non-employee directors. Currently, the guidelines require that each non-employee director of the Company own shares of Company Common Stock valued at a minimum of three (3) times the amount of the director’s total cash compensation which includes the annual cash retainer as well as any additional fee paid to those individuals who are Committee Chairs, Lead Director or Chairman of the Board. For a new director the stock holding requirement is to be attained within five (5) years of his or her initial election or appointment to the Board. ADVISORY VOTE ON EXECUTIVE COMPENSATION The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. Consistent with the recommendation of the Board of Directors and the preference of our stockholders as reflected in the non-binding advisory vote on the frequency of future advisory votes on named executive officer compensation held at the Nanometrics 2017 Annual Meeting of Stockholders, the Company currently holds an annual “say on pay” vote. In accordance with this policy, this year we are requesting our stockholders to approve an advisory resolution on the Company’s executive compensation as reported in this Proxy Statement, and as required by Section 14A(a)(1) of the Exchange Act. Our executive compensation arrangements are designed to enhance stockholder value on an annual and long-term basis. These arrangements are consistent with our compensation philosophy and pay-for-performance principles and, as such, have been designed to provide competitive compensation packages that enable the Company to attract and retain talented executives, motivate executive officers to achieve the Company’s short- and long-term business strategies and objectives, align the interests of executives with those of stockholders, and are consistent with current market practices and good corporate governance principles. Please read the Compensation Discussion and Analysis beginning on page 49 of this proxy statement and the tabular and additional narrative disclosures on executive compensation beginning on page 71 of this proxy statement for additional details about our executive compensation arrangements, including information about the fiscal year 2019 compensation of our named executive officers. We are asking our stockholders to indicate their support for our compensation arrangements as described in this proxy statement. For the reasons discussed above, the Board recommends that stockholders vote in favor of the following resolution: “RESOLVED, that the Company’s stockholders APPROVE, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the proxy statement for this meeting pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion and other related tables and disclosures.” Because your vote is advisory, it will not be binding upon or overrule any decisions of the Board, nor will it create any additional fiduciary duty on the part of the Board. This advisory vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices described in this proxy statement, and does not seek to have the Board or Compensation Committee take any specific action. However, the Board and the Compensation Committee value the view expressed by our stockholders in their vote on this proposal and will take into account the outcome of the vote when considering executive compensation matters in the future.
The affirmative vote, in person or by proxy, of a majority of the shares present or represented at the meeting and entitled to vote will be required to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement.
APPROVAL OF ONTO INNOVATION INC. 2020 STOCK PLAN The Board of Directors is requesting that our stockholders approve a new stock plan, the Onto Innovation Inc. 2020 Stock Plan (the “2020 Stock Plan”). The Board has adopted the 2020 Stock Plan, subject to stockholder approval at the Annual Meeting. If approved by our stockholders, the 2020 Stock Plan will become effective as of May 12, 2020 and will expire ten (10 years from such date, unless terminated earlier. The 2020 Stock Plan is structured to allow the Board to award equity incentives to eligible directors, officers, employees and consultants in order to assist the Company in attracting, retaining and motivating the best available personnel for the successful conduct of the Company’s business. The Company believes that linking compensation to corporate performance motivates employees and consultants to improve stockholder value. The Company has, therefore, consistently included equity incentives as a significant component of compensation for its officers, employees, directors and consultants. With the high demand for highly skilled employees and consultants, especially in the technology industries, management believes it is critical to the Company’s success to maintain competitive compensation programs. The Board believes that the approval of the 2020 Stock Plan would be in the best interests of the Company and its stockholders. We currently maintain the Nanometrics Incorporated 2005 Equity Incentive Plan (the “Nanometrics 2005 Stock Plan”) and the Rudolph Technologies, Inc. 2018 Stock Plan (the “Rudolph 2018 Stock Plan”). The Nanometrics 2005 Stock Plan currently expires on May 23, 2023 while the Rudolph 2018 Stock Plan currently expires on May 16, 2028. We are seeking stockholder approval of the 2020 Stock Plan so that we can maintain and administer one equity incentive plan for all eligible participants following the 2019 Merger and continue to provide our officers, employees, directors and consultants with equity-based compensation that aligns their interests with the interests of our stockholders. To ensure that the Company has an adequate number of shares available for compensation to its directors, executive officers and other employees and consultants, we are asking our stockholders to approve the 2020 Stock Plan with a total share reserve of 3,500,000 shares, as described below under “Share Reserve Under the 2020 Stock Plan”.
The following are key governance highlights of the 2020 Stock Plan:
Under the 2020 Stock Plan, the number of shares of Company common stock available for issuance to eligible participants will be 3,500,000, subject to stockholder approval, plus any shares subject to awards under the Nanometrics 2005 Stock Plan or the Rudolph 2018 Stock Plan that would again become available for new awards under the terms of either such plan if such plan were still in effect and without regard to any termination thereof. As of the effective date of the 2020 Stock Plan, no additional grants may thereafter be issued under either the Nanometrics 2005 Stock Plan or the Rudolph 2018 Stock Plan. As of March 13, 2020, 1,280,597 shares remained available for grant under the Nanometrics 2005 Stock Plan and 2,393,656 shares under the Rudolph 2018 Stock Plan. The following table presents information about the number of shares that were subject to various outstanding equity awards under the Nanometrics 2005 Stock Plan or the Rudolph 2018 Stock Plan and the shares remaining available for issuance under these two (2) plans. On March 13, 2020, the total number of shares outstanding was 50,381,691 and our closing stock price was $27.98.
In determining whether to approve the 2020 Stock Plan, including the share reserve under the 2020 Stock Plan, the following considerations were taken into account:
The following is a summary of the principal features of the 2020 Stock Plan and its operation. This summary is qualified in its entirety by reference to the 2020 Stock Plan itself set forth in Appendix A.
The 2020 Stock Plan provides for the grant of equity awards to employees, directors and consultants. Options granted under the 2020 Stock Plan may either be “incentive stock options” as defined in Code Section 422 or nonstatutory stock options, as determined by the Board.
The general purposes of the 2020 Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to the employees, directors and consultants of the Company and to promote the success of the Company’s business.
The 2020 Stock Plan will be administered by the Compensation Committee (“Committee”) or the Board, as applicable (in either case, the “Administrator”).
The 2020 Stock Plan provides that nonstatutory stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance units and performance shares may be granted to employees, directors and consultants of the Company and any parent or subsidiary. Incentive stock options may be granted only to employees of the Company and any parent or subsidiary. The Administrator will determine which eligible persons will be granted awards. As of March 13, 2020, there were twelve (12) outside directors (which will be reduced to ten (10) on the date of the Annual Meeting), approximately 1,300 employees and consultants eligible to participate in the 2020 Stock Plan.
The maximum aggregate number of shares that may be awarded and sold under the 2020 Stock Plan is 3,500,000 shares. If, after the effective date of the 2020 Stock Plan, any shares subject to awards granted under the Nanometrics 2005 Stock Plan or the Rudolph 2018 Stock Plan would again become available for new awards under the terms of such plan if it were still in effect and without regard to any termination of such plan, then those shares will be available for the purpose of granting awards under the 2020 Stock Plan. The shares issued pursuant to awards under the 2020 Stock Plan may be authorized but unissued or reacquired Common Stock. No awards have been granted under the 2020 Stock Plan. If an award terminates, expires or becomes unexercisable without having been exercised in full, or, with respect to restricted stock, restricted stock units, performance units or performance shares, is terminated or forfeited in whole or in part due to failure to vest, the shares (or forfeited shares) which were subject to such terminated, expired, unexercised or forfeited award will become available for future issuance under the 2020 Stock Plan. To the extent that an award under the 2020 Stock Plan is paid out in cash, rather than shares, such cash payment will not result in reduction of the shares available for issuance under the 2020 Stock Plan. Shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award will not again become available for future grant under the 2020 Stock Plan. Upon exercise of a SAR settled in shares, all shares subject to the SAR (not the number of net shares actually issued pursuant to the SAR upon any exercise) will cease to be available under the 2020 Stock Plan.
For any calendar year, (i) the value of awards granted to an outside director under the 2020 Stock Plan may not exceed $600,000 and (ii) the value of awards granted to any individual participant other than an outside director under the 2020 Stock Plan may not exceed $5,000,000, in each case calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes. For purposes of applying this annual limit, any award of performance units, performance shares or any other award subject to performance-based vesting criteria will be taken into account assuming target performance achievement under the terms of such award.
All awards granted to all participants under the 2020 Stock Plan will be subject to a minimum vesting period of not less than one (1) year from the date of grant; provided, the Administrator may provide for the grant of awards to participants without regard to the minimum vesting requirement with respect to a maximum of five percent (5%) of the total number of shares authorized for issuance under the 2020 Stock Plan.
In connection with an entity’s merger or consolidation with the Company or any subsidiary or the direct or indirect acquisition by the Company or any subsidiary of an entity’s property or stock, the Committee may grant awards in substitution or exchange for any options or other stock or stock-based awards granted before such merger or consolidation by such entity or its affiliate. Substitute awards may be granted on such terms and conditions as the Committee deems appropriate, notwithstanding any limitations on awards in the 2020 Stock Plan. Substitute awards will generally not count against the aggregate share reserve. Additionally, in the event that a company acquired by the Company or any subsidiary, or with which the Company or any subsidiary otherwise combines, has shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition or combination as determined by the Administrator, the shares available for grant pursuant to the terms of such pre-existing plan may be used under certain circumstances for awards under the 2020 Stock Plan and shall not reduce the shares authorized for grant under the 2020 Stock Plan.
Stock option awards may be granted to employees, directors or consultants of the Company at any time and from time to time as determined by the Administrator in its discretion, except incentive stock options may be granted only to employees of the Company. The exercise price of options granted under the 2020 Stock Plan is determined by the Administrator and must not be less than 100% of the fair market value of the Common Stock at the time of grant. Options granted under the 2020 Stock Plan expire as determined by the Administrator, but in no event later than ten (10) years from date of grant. No option may be exercised by any person after its expiration. Incentive stock options granted to stockholders owning more than 10% of the voting stock of the Company must have an exercise price per share no less than 110% of the fair market value at the time of grant and the term of such option may be no more than five years from the date of grant. The fair market value of the Common Stock is generally determined with reference to the closing sale price for the Common Stock (or the closing bid if no sales were reported) on the day of determination. Options become exercisable at such times as are determined by the Administrator and as set forth in the individual award agreements. An option is exercised by giving notice to the Company in the form determined by the Administrator, specifying the number of full shares of Common Stock to be purchased and tendering payment of the purchase price. The 2020 Stock Plan permits payment to be made by cash, check, other shares of Common Stock, delivery of a properly executed exercise notice together with any other documentation as the Administrator and the participant’s broker (if applicable) may require to effect an exercise of the option and delivery to the Company of the sale or other proceeds (as permitted by applicable law) required to pay the exercise price, withholding shares otherwise issuable in connection with the exercise of the option, such other consideration and method of payment authorized by the Administrator in its discretion or permitted by the award agreement, or any combination thereof.
Restricted stock awards may be granted to employees, directors or consultants of the Company at any time and from time to time as determined by the Administrator in its discretion. Each restricted stock grant will be evidenced by an award agreement that will specify the number of shares granted and such other terms and conditions as the Administrator will determine in accordance with the terms of the 2020 Stock Plan. Subject to the terms of the 2020 Stock Plan, the Administrator will have complete discretion to determine (i) the number of shares subject to a restricted stock award granted to any participant, and (ii) any vesting conditions that must be satisfied. The Administrator may provide that awards of restricted stock earn dividends paid with respect to such shares. Any such dividends will be accumulated and credited to an account for the participant, with interest in the Administrator’s discretion, and will be subject to the same terms and conditions, including vesting restrictions, as the award with respect to which the dividends are credited. To the extent an award of restricted stock is forfeited in whole or in part, any accrued dividends with respect to such award will be forfeited at the same time and to the same extent as such award. No dividends or accrued interest, if any, earned with respect to an award of restricted stock may be paid before the underlying award vests.
Restricted stock units may be granted to employees, directors or consultants of the Company at any time and from time to time as determined by the Administrator. Each restricted stock unit grant will be evidenced by an award agreement that will specify such terms and conditions as the Administrator will determine in accordance with the terms of the 2020 Stock Plan. Restricted stock units result in a payment to a participant only if the vesting criteria the Administrator establishes are satisfied. The Administrator may set vesting criteria based on the achievement of Company-wide, business unit, or individual goals (including continued employment), or any other basis determined by the Administrator in its discretion. The restricted stock units will vest at a rate determined by the Administrator. Upon satisfying the applicable vesting criteria, the participant will be entitled to a payout as specified in the award agreement or as otherwise determined by the Administrator. The Administrator, in its sole discretion, may pay earned restricted stock units in shares, cash, or a combination thereof. On the date set forth in, and otherwise subject to the terms and conditions of the award agreement, or as provided by the Administrator, all unearned restricted stock units will be terminated and forfeited to the Company. Additionally, the Administrator is authorized to grant participants dividend equivalents based on the dividends declared on shares that are subject to any outstanding restricted stock unit. Any such dividend equivalents will be accumulated and credited to an account for the participant, with interest in the Administrator’s discretion, and will be subject to the same terms and conditions, including vesting restrictions, as the award with respect to which the dividend equivalents are credited. To the extent an award of restricted stock units is forfeited in whole or in part, any accrued dividend equivalents with respect to such award will be forfeited at the same time and to the same extent as such award. No dividend equivalents or accrued interest, if any, earned with respect to restricted stock units may be paid before the underlying award vests.
SARs may be granted to employees, directors or consultants of the Company at any time and from time to time as determined by the Administrator in its discretion. Each SAR grant will be evidenced by an award agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator will determine in accordance with the terms of the 2020 Stock Plan. The Administrator will have discretion to determine the terms and conditions of SARs granted under the 2020 Stock Plan; provided that no SAR may have a term of more than 10 years from the date of grant and that the exercise price of a SAR may not have an exercise price below 100% of the fair market value of the Common Stock on the grant date. No SAR can be exercised by any person after its expiration. Upon exercise of a SAR, the holder of the SAR will be entitled to receive payment from us in an amount determined by multiplying (i) the difference between the fair market value of a share on the date of exercise over the exercise price, times (ii) the number of shares with respect to which the SAR is exercised. At the discretion of the Administrator and as set forth in the applicable award agreement, payment to the holder of a SAR may be in cash, shares of Common Stock or a combination thereof.
Performance units and performance shares may be granted to employees, directors or consultants of the Company at any time and from time to time, as determined by the Administrator in its sole discretion. The Administrator will have complete discretion in determining the number of performance units/shares granted to each participant. The Administrator may provide that awards of performance shares and performance units earn dividends or dividend equivalents, as applicable, and accrued interest in its discretion. To the extent an award of performance units or performance shares is terminated, cancelled or forfeited in whole or in part, due to failure to meet performance conditions or otherwise, any dividends, dividend equivalents and accrued interest will be terminated, cancelled or forfeited at the same time and to the same extent as such award. No dividends, dividend equivalents or accrued interest, if any, earned with respect to a performance unit award or a performance share award may be paid before the underlying award vests. The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a service provider to the Company) in its discretion which, depending on the extent to which they are met, will determine the number or value of performance units or performance shares that will be paid out. Each award of performance units and performance shares will be evidenced by an award agreement that will specify the time period during which the performance objectives or other vesting provisions must be met (the “performance period”), vesting period and such other terms and conditions as the Administrator will determine in its discretion in accordance with the terms of the 2020 Stock Plan. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, or any other basis determined by the Administrator in its discretion. After the applicable performance period has ended, the holder of performance units or performance shares will be entitled to receive a payout of the number of performance units or performance shares earned by the participant over the performance period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. The Administrator may pay earned performance units and performance shares in the form of cash, in shares, or in a combination thereof. After the grant of performance units or performance shares, the Administrator may reduce or waive any performance objectives or other vesting provisions for such performance unit or performance share. On the date set forth in, and otherwise subject to the terms and conditions of, the award agreement, or as otherwise provided by the Administrator, all unearned or unvested performance units and performance shares will be forfeited to the Company.
The 2020 Stock Plan gives the Administrator the authority to vary the terms of the individual award agreements. Under the 2020 Stock Plan, unvested awards granted will generally be forfeited or expire upon a participant’s termination of employment unless the Committee exercises its discretion to modify the time at which stock options and SARs may be exercised or any restrictions will lapse or be removed or waived, notwithstanding any provision of the 2020 Stock Plan to the contrary. Generally, with respect to stock options and SARs, if a participant ceases to provide ongoing service as an employee, director or consultant for any reason other than death or disability or termination for cause, then the participant will generally have the right to exercise his or her outstanding options and SARs for three (3) months after the date of termination, but only to the extent that the participant was entitled to exercise such option or SAR at the date of such termination. If such termination is due to death or disability, the participant (or the participant’s legal representative) will generally have the right to exercise any existing unexercised option or SAR at any time within twelve (12) months following the termination date, but only to the extent that the participant was entitled to exercise such option or SAR at the date of such termination. In no event will an option or SAR be exercisable beyond its term. In the event of a participant’s termination for cause, then the participant’s options and/or SARs, whether vested or unvested, will immediately be forfeited upon termination. A participant’s rights with respect to any award granted under the 2020 Stock Plan shall in all events be subject to (i) any right that the Company may have under any clawback or recoupment policy as may be in effect from time to time or any other clawback or recoupment agreement or arrangement applicable to a participant; or (ii) any right or obligation that the Company may have regarding the recoupment of incentive-based compensation under Exchange Act Section 10D and any applicable rules and regulations issued by the SEC.
Awards are intended to operate in such a manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A, except as otherwise determined in the sole discretion of the Administrator, provided that no warranty of such exemption or compliance is made. The 2020 Stock Plan and each award Agreement under the 2020 Stock Plan is intended to meet the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator.
Unless determined otherwise by the Administrator, an award granted under the 2020 Stock Plan may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution or as otherwise permitted in the 2020 Stock Plan and may be exercised, during the lifetime of the participant, only by the participant. If the Administrator makes an award granted under the 2020 Stock Plan transferable, such award shall be subject to the terms of the 2020 Stock Plan and the award agreement and will contain such additional terms and conditions as the Administrator deems appropriate. Notwithstanding the foregoing, under no circumstance may unvested or unexercised awards be transferred for value or consideration.
In the event that any dividend (other than ordinary cash dividends) or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares or other securities of the Company, or other change in the corporate structure of the Company affecting the shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the 2020 Stock Plan, will adjust, in such equitable manner as the Administrator deems appropriate, the number and class of shares issuable under the 2020 Stock Plan and/or the number, class and, if applicable, exercise price of shares subject to each outstanding award.
In the event of a liquidation or dissolution, the Administrator will notify each participant as soon as practicable prior to the effective date of such proposed transaction. To the extent that an award has not been previously exercised (with respect to options and SARs) or vested (with respect to other awards), an award will terminate immediately prior to the consummation of such proposed action.
In the event of a Change-in-Control, notwithstanding any other provision of the 2020 Stock Plan or an award, each outstanding award shall be treated as the Administrator determines in its discretion without a participant’s consent, including, without limitation, that awards may be assumed, or substantially equivalent awards may be substituted, by the acquiring or succeeding entity or an affiliate thereof (a “successor”) with appropriate adjustments as to the number and kind of shares and prices; upon written notice to a participant, the participant’s awards will terminate immediately prior to the consummation of such Change-in-Control; awards will vest and become exercisable, realizable, or payable, or restrictions applicable to an award will lapse, in whole or in part, prior to or upon consummation of such Change-in-Control, and, to the extent the Administrator determines, terminate upon the effectiveness of such Change-in-Control; awards will terminate in exchange for an amount of cash and/or property, if any, equal to the amount (if any) that would have been attained upon the exercise of such award or realization of the participant’s rights as of the date of the occurrence of the transaction; the replacement of such award with other rights or property selected by the Administrator in its sole discretion; or any combination of the foregoing. In the event of a Change-in-Control, with respect to awards held by participants other than outside directors, if the successor elects not to assume or substitute an Award, as determined by the Administrator in accordance with the terms of the 2020 Stock Plan, the participant will fully vest in and have the right to exercise all of his or her outstanding stock options and SARs; all restrictions on restricted stock and restricted stock units will lapse; and, with respect to performance units, performance shares and any other awards subject to performance-based vesting conditions, all performance goals or other vesting conditions will be deemed achieved at target. With respect to awards granted to an outside director that are assumed or substituted by a successor, if, on the date of or following such assumption or substitution, the participant’s status as a Director or a director of the successor, as applicable, is terminated other than upon a voluntary resignation by the participant (unless such resignation is at the request of the successor), then the participant will fully vest in and have the right to exercise options and/or SARs as to all of the shares underlying such award for a period of one year following such termination (but in no event later than the expiration of the term of such option as set forth in the award agreement); all restrictions on restricted stock and restricted stock units will lapse; and, with respect to performance units, performance shares and any other awards subject to performance-based vesting conditions, all performance goals or other vesting conditions will be deemed achieved at target.
The 2020 Stock Plan will become effective on the date approved by stockholders and will have a ten-year term commencing on that date, subject to any earlier termination by the Board. The Board may amend, alter, suspend or terminate the 2020 Stock Plan or any part thereof from time to time, except that stockholder approval will be required for any amendment to the 2020 Stock Plan to the extent required by any applicable laws, regulations of the securities exchange on which the shares are then listed, or otherwise in the Board’s discretion. The Administrator may waive any conditions or restrictions of or amend, modify or terminate outstanding awards under the 2020 Stock Plan notwithstanding any plan provision to the contrary. As a general matter, no amendment, alteration, suspension or termination of the 2020 Stock Plan or an outstanding award may impair the rights of any participant under any then outstanding award without the participant’s written consent, with the exception of certain compliance amendments.
Future grants under the 2020 Stock Plan will be made at the discretion of the Administrator and, accordingly, are not yet determinable. In addition, the value of the awards granted under the 2020 Stock Plan will depend on a number of factors, including the fair market value of our common stock on future dates and the exercise decisions made by the participants. Consequently, it is not possible to determine the benefits that might be received by participants receiving discretionary grants under the Plan. Nanometrics granted awards under the Nanometrics 2005 Stock Plan and Rudolph granted awards under the Rudolph 2018 Stock Plan in 2019 each to the named executive officers, outside directors and to other eligible employees. The 2019 grants to our named executive officers and to our outside directors are reflected in the 2019 Grants of Plan-Based Awards Table and the 2019 Director Compensation Table, respectively, in this proxy statement. The closing market price of a share of Company common stock as reported on the New York Stock Exchange on December 31, 2019 was $36.54. The following table sets forth, as of December 31, 2019, certain information related to our equity compensation plans.
No taxable income is reportable by the recipient when a nonstatutory stock option with an exercise price equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the option. Any taxable income recognized in connection with an option exercise by an employee of the Company is subject to tax withholding by the Company. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.
No taxable income is generally reportable by the recipient when an incentive stock option is granted or exercised. If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two or one year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option.
No taxable income is reportable by the recipient when a stock appreciation right with an exercise price equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss. A participant generally will not have taxable income at the time an award of restricted stock or restricted stock units is granted. Instead, with respect to restricted stock, he or she will recognize ordinary income in the first taxable year in which the restricted shares are no longer subject to substantial risk of forfeiture in an amount equal to the excess of the fair market value of the shares on the vesting date over the amount, if any, the participant paid for the shares. However, the recipient of a restricted stock award may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date the award is granted. Upon settlement of a restricted stock unit, a participant will recognize ordinary income an amount equal to the fair market value of the shares received or, if the restricted stock unit is paid in cash, the amount payable.
A participant generally will not have taxable income at the time an award of performance units or performance shares is granted. Instead, with respect to performance shares, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the award are no longer subject to substantial risk of forfeiture. Upon settlement of a performance unit, a participant will recognize ordinary income an amount equal to the fair market value of the shares received or, if the performance units are paid in cash, the amount payable.
The Company generally will be entitled to a tax deduction in connection with an award under the 2020 Stock Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Code Section 162(m) places a $1 million limit on the deductibility of compensation paid to certain covered employees. Based on recent legislation effective for tax years commencing after December 31, 2017, this limit on deductibility applies to the Company’s chief executive officer, its chief financial officer, its three most highly compensated executive officers included as named executive officers in the proxy statement, and any individual who was a named executive officer for fiscal 2017 or thereafter. In addition, the legislation eliminated the exception to the limit on deductibility for certain performance-based compensation. THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON THE PARTICIPANT AND THE COMPANY AS OF THE DATE HEREOF WITH RESPECT TO AWARDS UNDER THE 2020 STOCK PLAN AND DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE. PARTICIPANTS SHOULD CONSULT THEIR OWN TAX ADVISORS.
The affirmative vote, in person or by proxy, of a majority of the shares present or represented at the meeting and entitled to vote will be required to approve the adoption of the 2020 Stock Plan.
APPROVAL OF THE ONTO INNOVATION INC. 2020 EMPLOYEE STOCK PURCHASE PLAN The Board of Directors is requesting that our stockholders approve a new employee stock purchase plan, the Onto Innovation Inc. 2020 Employee Stock Purchase Plan (the “2020 ESPP”). The Board has adopted the 2020 ESPP, subject to stockholder approval at the Annual Meeting. If approved by our stockholders, the 2020 ESPP will become effective as of July 1, 2020 and will expire ten (10) years from such date, unless terminated earlier. The 2020 ESPP is intended to replace the Nanometrics 2003 Employee Stock Purchase Plan (the “2003 ESPP”). If the stockholders approve this Proposal 4, the 2003 ESPP will expire after the final share purchase is made on or about June 30, 2020. The Board has determined that it remains in the best interests of the Company and its stockholders to have an employee stock purchase plan and is asking the Company’s stockholders to approve the 2020 ESPP.
The following is a summary of the principal features of the 2020 ESPP and its operation. The summary is qualified in its entirety by reference to the 2020 ESPP as set forth in Appendix B.
The 2020 ESPP was adopted by the Board in March 2020, subject to stockholder approval at the Annual Meeting. The purpose of the 2020 ESPP is to provide eligible employees with an opportunity to purchase shares of Common Stock through payroll deductions, to enhance the employees’ sense of participation in the Company and its participating subsidiaries, and to provide an incentive for continued employment.
If the Company’s stockholders approve this proposal, the number of shares of the Company’s Common Stock to be reserved for issuance under the 2020 ESPP shall be 1,500,000, as may be adjusted for stock splits, stock dividends or other changes in capitalization, mergers, reorganizations and other transactions in accordance with plan terms.
The 2020 ESPP will be administered by the Board or a committee of members of the Board (in either case, the “Administrator”). Subject to the provisions of the 2020 ESPP, all questions of interpretation or application of the 2020 ESPP are determined by the Administrator and its decisions are final and binding upon all participants.
Each of the Company’s (or the Company’s participating subsidiaries’) employees who is customarily employed for at least twenty (20) hours per week and more than five (5) months in a calendar year by the Company or a designated subsidiary, (provided that, in certain jurisdictions outside the United States employees employed for less than twenty (20) hours per week or less than five (5) months in a calendar year if so required by local laws, as determined by the Company), on the first trading day of the applicable offering period is eligible to participate in the 2020 ESPP. As of March 13, 2020, there were approximately 1,300 employees eligible to participate under the terms of the 2020 ESPP. Notwithstanding the foregoing, no employee will be granted an option under the 2020 ESPP (i) to the extent that, immediately after the grant, such employee would own 5% or more of the total combined voting power of all classes of the Company’s capital stock or the capital stock of any Company parent or subsidiary, or (ii) to the extent that his or her rights to purchase stock under all of the Company’s employee stock purchase plans accrues at a rate which exceeds $25,000 worth of stock (determined at the fair market value of the shares at the time such option is granted) for each calendar year.
Each offering period under the 2020 ESPP will have a duration of approximately six (6) months, commencing on the first trading day on or after January 1st and July 1st of each year of the 2020 ESPP and terminating on the last trading day of the applicable period ending six (6) months later. On the last trading day of each offering period (the exercise date), shares of Common Stock may be purchased on behalf of the participant in accordance with the terms of the 2020 ESPP. Eligible employees may participate in the 2020 ESPP by delivering a subscription agreement as provided by the Company prior to the beginning of an offering period authorizing payroll deductions pursuant to the 2020 ESPP. Such payroll deductions may not be less than 1% or exceed 15% of a participant’s compensation during the offering. Under the terms of the 2020 ESPP, the purchase price of shares under the 2020 ESPP is 85% of the fair market value of a share of Common Stock on the exercise date, as may be adjusted in accordance with plan terms.
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, each outstanding option under the 2020 ESPP may be assumed or an equivalent option will be substituted by the successor corporation or a parent or subsidiary of such successor corporation. In the event the successor corporation refuses to assume or substitute for the options, any offering period then in progress will be shortened by setting a new exercise date on which such offering period will end. The new exercise date will be prior to the proposed sale or merger. The Administrator will notify each participant in writing at least ten (10) business days prior to the new exercise date that the purchase date for the participant’s option has been changed to the new exercise date and that the participant’s option will be exercised automatically on the new exercise date unless the participant withdraws from the 2020 ESPP prior to such date.
The Administrator may amend, terminate or suspend the 2020 ESPP at any time and for any reason. Generally, no such termination can adversely affect options previously granted and stockholder approval will be sought for certain changes as required by applicable law. Upon its approval by the stockholders, the 2020 ESPP will continue until the earlier to occur of (i) the termination of the 2020 ESPP by the Board, or (ii) July 1, 2030 (the date which is ten (10) years from the effective date of the 2020 ESPP).
The federal income tax consequences of an employee’s purchases under the 2020 ESPP will vary. The following discussion is only a summary of the general federal income tax rules applicable to the 2020 ESPP. Employees should consult their own tax advisors since a taxpayer’s particular situation may be such that some variation of the rules described below will apply. The 2020 ESPP and the right of participants to make purchases thereunder are intended to qualify under the provisions of Section 421 and 423 of the Code. Under those provisions, no income will be taxable to a participant at the time of grant of the option or purchase of shares. However, a participant may become liable for tax upon the dispositions of shares acquired under the 2020 ESPP (or if he or she dies holding such shares), and the tax consequences will depend on how long a participant has held the shares prior to disposition. If the shares are disposed of at least one (1) year after the shares were acquired under the 2020 ESPP and at least two (2) years after the first day of the offering period to which the shares relate, or if the employee dies while holding the shares, the following tax consequences will apply. The lesser of (a) the excess of fair market value of the shares at the time of such disposition over the purchase price of the shares (the “option price”) or (b) the excess of the fair market value of the shares at the time the option was granted over the option price will be treated as ordinary income to the participant. Any further gain upon disposition generally will be taxed at long-term capital gain rates. If the shares are sold and the sales price is less than the option price, there is no ordinary income and the participant has a long-term capital loss equal to the difference. No deduction in respect of the disposition of such shares will be allowed to the Company. If the shares are sold or disposed of (including by way of gift) before the expiration of either the two-year or the one-year holding period described above, the following tax consequences will apply. The amount by which the fair market value of the shares on the date the option is exercised (which is the last trading day of the offering period and which is hereafter referred to as the “termination date”) exceeds the option price will be treated as ordinary income to the participant. This excess will constitute ordinary income in the year of sale or other disposition even if no gain is realized on the sale or a gratuitous transfer of the shares is made. The balance of any gain will be treated as capital gain and will qualify for long-term capital gain treatment if the shares have been held for more than one (1) year following the exercise of the option. Even if the shares are sold for less than their fair market value on the termination date, the same amount of ordinary income is attributed to a participant and a capital loss is allowed equal to the difference between the sales price and the value of such shares on such termination date. The Company, in the event of an early disposition, will be allowed a deduction for federal income tax purposes equal to the ordinary income realized by the disposing employee. THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON THE PARTICIPANT AND THE COMPANY AS OF THE DATE HEREOF WITH RESPECT TO THE 2020 ESPP AND DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
The affirmative vote, in person or by proxy, of a majority of the shares present or represented at the meeting and entitled to vote will be required to approve the 2020 ESPP. The Board recommends a vote “FOR” the adoption of the Onto Innovation Inc. 2020 Employee Stock Purchase Plan. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Although ratification by stockholders is not required by law, the Board of Directors is submitting the Audit Committee’s selection of Ernst & Young LLP (“E&Y”) as the Company’s independent registered public accounting firm for fiscal year 2020 for ratification as a matter of good corporate governance and recommends that the stockholders vote for ratification of such appointment. In the event of a negative vote on such ratification, the Board of Directors will reconsider its selection. Even if the selection is ratified, the Audit Committee may appoint a new independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of the Company and its stockholders. E&Y has indicated that representatives of E&Y, the independent registered public accounting firm presented herein, will be in attendance at the Annual Meeting. Such representatives will have the opportunity to make a statement, if they desire to do so, and to respond to appropriate questions.
Prior to the 2019 Merger, E&Y was the independent registered public accounting firm of Rudolph, and PricewaterhouseCoopers LLP (“PwC”) was the independent registered accounting firm of Nanometrics. As previously reported on our Current Report on Form 8-K filed with the SEC on November 13, 2019, PwC resigned on November 11, 2019, and E&Y was engaged by the Company as its independent registered public accounting firm for the year ending December 31, 2019. The decision to change the independent registered accounting firm was approved by the Audit Committee. PwC’s reports on Nanometrics’ financial statements for the fiscal years ended December 29, 2018 and December 30, 2017 contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principle. During the fiscal years ended December 29, 2018 and December 30, 2017 and the subsequent interim period through November 11, 2019, there have been no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused PwC to make reference thereto in their reports on the financial statements for such years. During the fiscal years ended December 29, 2018 and December 30, 2017 and subsequent interim period through November 11, 2019, there have been no reportable events (as defined in S-K 304(a)(1)(v)), except that as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly periods ended April 1, 2017, July 1, 2017 and September 30, 2017 (the “2017 Form 10-Qs”), management concluded that a material weakness existed related to ineffective controls over the existence of inventories subject to the cycle count programs. The material weakness was remediated and described in Item 9A of the Company’s annual report on Form 10-K for the year ended December 30, 2017. The Company requested that PwC furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of the letter from PwC, dated November 12, 2019, is filed as Exhibit 16.1 to such Form 8-K. During the fiscal years ended December 29, 2018 and December 30, 2017, and the subsequent interim periods through November 11, 2019, neither Onto Innovation nor anyone on its behalf consulted with E&Y, regarding either: (i) the application of accounting principles to a specific transaction, completed or proposed, or the type of audit opinion that might be rendered on Onto Innovation’s financial statements, and neither a written report nor oral advice was provided to Onto Innovation that EY concluded was an important factor considered by Onto Innovation in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
E&Y served as Rudolph’s independent registered public accounting firm since March 2008 and was selected as the accounting firm for the Company after the Merger Date. During this time, the firm has demonstrated: A high degree of independence and professionalism in their audit engagement with Rudolph and the Company;
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