UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

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Filed by a Party other than the Registrant ¨☐

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¨☐ Preliminary Proxy Statement
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þ☑ Definitive Proxy Statement
¨☐ Definitive Additional Materials
¨☐ Soliciting Material Pursuant to §240.14a-12§240.14a-12

LAM RESEARCH CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO

September 29, 201625, 2019

Dear Lam Research Stockholders,

We cordially invite you to attend, in person or by proxy, the Lam Research Corporation 20162019 Annual Meeting of Stockholders. The annual meeting will be held on Wednesday,Tuesday, November 9, 2016,5, 2019, at 9:30 a.m. Pacific Standard Time in the Building CA1 Auditorium at the principal executive offices of Lam Research Corporation, which isare located at 4650 Cushing Parkway, Fremont, California 94538.

At this year’s annual meeting, stockholders will be asked to elect the nine10 nominees named in the attached proxy statement as directors to serve until the next annual meeting of stockholders, and until their respective successors are elected and qualified; to elect the two additional nominees named in the attached proxy statement in connection with the acquisition of KLA-Tencor Corporation as directors, subject to and contingent upon the acquisition being consummated prior to the 2016 annual meeting of stockholders, to serve until the next annual meeting of stockholders, and until their respective successors are elected and qualified; to cast an advisory vote to approve the compensation of our named executive officers,officer compensation, or “Say on Pay”; and to ratify the appointment of theErnst & Young LLP as our independent registered public accounting firm for fiscal year 2017.2020. The Board of Directors recommends that you vote in favor of all foureach director nominee and each of these proposals. Management will not provide a business update during this meeting; please refer to our latest quarterly earnings report for our current outlook.

Please refer to the proxy statement for detailed information about the annual meeting, each director nominee, and each of the proposals, as well as voting instructions.Your vote is important, and we strongly urge you to cast your vote as soon as possible by the internet, phonetelephone, or mail, even if you plan to attend the meeting in person.

Sincerely yours,

Lam Research Corporation

 

LOGO

Stephen G. Newberry

Chairman of the Board

 

 

    

Notice of 20162019 Annual Meeting

of Stockholders

 

LOGO

4650 Cushing Parkway

Fremont, California 94538

Telephone:510-572-0200

Meeting Information

 

   Category

Details

LOGO   Date and Time

 Wednesday,

Tuesday, November 9, 2016

5, 2019

9:30 a.m. Pacific Standard Time

LOGO  Place

Lam Research Corporation

Building CA1 Auditorium

4650 Cushing Parkway

Fremont, California 94538

Record Date

Only stockholders of record at the close of business on September 6, 2019, the “Record Date,” are entitled to notice of, and to vote at, the annual meeting.

Proxy and Annual Report Materials

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 5, 2019

Our notice of 2019 Annual Meeting of Stockholders, proxy statement, and annual report to stockholders are available on the Lam Research website athttps://investor.lamresearch.com.

  Elect Electronic Delivery - Save Time, Money & Trees
Place

As part of our efforts to be an environmentally responsible corporate citizen, we encourage Lam Research Corporation

Building CA1 Auditorium
4650 Cushing Parkway
Fremont, California 94538stockholders to voluntarily elect to receive future proxy and annual report materials electronically.

•  If you are a registered stockholder, please visit
https://enroll.icsdelivery.com/lrcxfor simple instructions.

•  If you are a stockholder who owns stock through a broker or brokerage account, please opt fore-delivery at https://enroll.icsdelivery.com/lrcxor by contacting your nominee.

Date of Distribution

This notice, proxy statement and proxy card are first being made available and/or mailed to our stockholders on or about September 25, 2019.

Items of Business

 

1.

   #

Proposal

Our Board’s
Recommendation

1.

Election of nine10 directors to serve until the next annual meeting of stockholders, and until their respective successors are elected and qualified

 2.

☑FOR each Director Nominee

Election of two additional directors in connection with the acquisition of KLA-Tencor Corporation (“KLA-Tencor”), subject to and contingent upon the acquisition being consummated prior to the 2016 annual meeting of stockholders, to serve until the next annual meeting of stockholders, and until their respective successors are elected and qualified
 3.

2.

Advisory vote to approve the compensation of our named executive officers,officer compensation, or “Say on Pay”

 4.

☑FOR

3.

Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 20172020

 5.

☑FOR

Transact

Transaction of such other business thatas may properly come before the annual meeting (including any adjournment or postponement thereof)

Record Date

Only stockholders of record at the close of business on September 13, 2016, the “Record Date,” are entitled to notice of and to vote at the annual meeting.

Voting

Please vote as soon as possible, even if you plan to attend the annual meeting in person.person, on all of the voting matters. You have three options for submitting your vote before the annual meeting: by the internet, phone or mail. 

LOGOby the internet,
LOGOby telephone, or
LOGOby mail.

The proxy statement and the accompanying proxy card provide detailed voting instructions.

Internet AvailabilityIT IS IMPORTANT THAT YOU VOTE to play a part in the future of Proxy Materials

Our Notice of 2016the Company. Please carefully review the proxy materials for the 2019 Annual Meeting of Stockholders, Proxy Statement and Annual Report to Stockholders are available on the Lam Research website athttp://investor.lamresearch.comand atwww.proxyvote.com.Stockholders.

By Order of the Board of Directors,

 

LOGO

Sarah A. O’Dowd

Secretary

This proxy statement is first being made available and/or mailed to our stockholders on or about September 29, 2016.

 

 

LAM RESEARCH CORPORATION

Proxy Statement for 20162019 Annual Meeting of Stockholders

TABLE OF CONTENTS

 

Proxy Statement Summary  1 

About Lam Research Corporation

1

Fiscal Year 2019 Financial Highlights

2

Figure 1. Proposals and Voting Recommendations

  12 

Figure 2. Summary Information Regarding Director Nominees

  12 

Figure 3. Director Nominee Key Qualifications, Skills and Experiences Highlights

3

Figure 4. Director Nominee Composition Highlights

3

Figure 5. Corporate Governance Highlights

  24 

Figure 4.6. Executive Compensation Highlights

  35 
Stock Ownership  46 

Security Ownership of Certain Beneficial Owners and Management

4

Section 16(a) Beneficial Ownership Reporting Compliance

  6 
Governance Matters  79 

Corporate Governance

  79 

Corporate Governance Policies

  79 

Board Nomination Policies and Procedures

  79 

Director Independence Policies

  811 

Leadership Structure of the Board

  911 

Other Governance Practices

  912 

Meeting Attendance

  1012 

Board Committees

  1013 

Board’s Role in Risk Oversightand Engagement

  1114

Stockholder Engagement

14

Corporate Social Responsibility

14 

Director Compensation

  1115 
Compensation Matters  1418 

Executive Compensation and Other Information

  1418 

Compensation Discussion and Analysis

  1418 

I.   Overview of Executive Compensation

  1419 

II.  Executive Compensation Governance and Procedures

  1723 

III.  Primary Components of Named Executive Officer Compensation; Calendar Year 20152018 Compensation Payouts; Calendar Year 20162019 Compensation Targets and Metrics

  1925 

IV. Tax and Accounting Considerations

  2733 

Compensation Committee Report

  2834 

Compensation Committee Interlocks and Insider Participation

  2834 

Executive Compensation Tables

  2935

CEO Pay Ratio

45 

Securities Authorized for Issuance under Equity Compensation Plans

  3846 
Audit Matters  4047 

Audit Committee Report

  4047 

Relationship with Independent Registered Public Accounting Firm

  4048 

Annual Evaluation and Selection of Independent Registered Public Accounting Firm

  4048 

Fees Billed by EYErnst & Young LLP

  4148 

Policy on Audit CommitteePre-Approval of Audit andNon-Audit Services

  4249 

Certain Relationships and Related Party Transactions

  4249 
Voting Proposals  4350 

Proposal No. 1: Election of Existing Directors

  4350 

20162019 Nominees for Director

44

Proposal No. 2: Election of Additional Directors

  51 

2016 Nominees for Director

52

Proposal No.  3:2: Advisory Vote to Approve the Compensation of Our Named Executive Officers,Officer Compensation, or “Say on Pay”

  5459 

Proposal No. 4:3: Ratification of the Appointment of theErnst  & Young LLP as our Independent Registered Public Accounting Firm for Fiscal Year 20172020

  5460 

Other Voting Matters

  5560 
Voting and Meeting Information  5661 

Information Concerning Solicitation and Voting

  5661 

Other Meeting Information

  5762 

    

 

Proxy Statement Summary

 

 

To assist you in reviewing the proposals to be acted upon at the annual meeting, we call your attention to the following summarized information about the Company, the proposals and voting recommendations, the Company’s director nominees, and highlights of the Company’sdirectors’ key qualifications, skills and experiences, board composition, corporate governance, and executive compensation. The following description is only a summary. For more complete information about these topics, please review the complete proxy statement.statement before voting. We also encourage you to read our latest annual report on Form10-K, which is also available at:https://investor.lamresearch.com. The content of any website referred to in this proxy statement is not a part of nor incorporated by reference in this proxy statement unless expressly noted.

We use the terms “Lam Research,” “Lam,” the “Company,” “we,” “our,” and “us” in this proxy statement to refer to Lam Research Corporation, a Delaware corporation. We also use the term “Board” to refer to the Company’s Board of Directors.

ABOUT LAM RESEARCH CORPORATION

Lam Research is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. We have built a strong global presence with core competencies in areas like nanoscale applications enablement, chemistry, plasma and fluidics, advanced systems engineering, and a broad range of operational disciplines. Our products and services are designed to help our customers build smaller, faster, and better performing devices that are used in a variety of electronic products, including mobile phones, personal computers, servers, wearables, automotive vehicles, and data storage devices. Our vision is to realize full value from the natural technology extensions of our Company.

Our customer base includes leading semiconductor memory, foundry, and integrated device manufacturers that make products such asnon-volatile memory, dynamic random-access memory (DRAM), and logic devices. We aim to increase our strategic relevance with our customers by contributing more to their continued success. Our core technical competency is integrating hardware, process, materials, software, and process control enabling results on the wafer.

LOGO

Semiconductor manufacturing, our customers’ business, involves the complete fabrication of multiple dies or integrated circuits on a wafer. This involves the repetition of a set of core processes and can require hundreds of individual steps. Fabricating these devices requires highly sophisticated process technologies to integrate an increasing array of new materials with precise control at the atomic scale. Along with meeting technical requirements, wafer processing equipment must deliver high productivity and be cost-effective.

Demand from the Cloud, Internet of Things (IoT), and other markets is driving the need for increasingly powerful and cost-efficient semiconductors. At the same time, there are growing technical challenges with traditional scaling. These trends are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical 3D scaling strategies as well as multiple patterning to enable shrinks.

We believe we are in a strong position with our leadership and competency in deposition, etch, and clean to facilitate some of the most significant innovations in semiconductor device manufacturing. Several factors create opportunity for sustainable differentiation for us: (i) our focus on research and development, with severalon-going programs related to sustaining engineering, product and process development, and concept and feasibility; (ii) our ability to effectively leverage cycles of learning from our broad installed base; (iii) our collaborative focus with ecosystem partners; and (iv) our focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.

Continues on next page  u

Lam Research Corporation 2019 Proxy Statement1

FISCAL YEAR 2019 FINANCIAL HIGHLIGHTS

LOGO

Figure 1. Proposals and Voting Recommendations

 

Voting Matters

 

Board Vote

Recommendation

 

Proposal 1 –No. 1: Election of Nine Nominees Named Herein as Directors

 

FOR each nominee

Proposal 2 – Election of Two Additional Nominees Named Herein, Subject to and Contingent Upon the Acquisition of KLA-Tencor Corporation (“KLA-Tencor”) Being Consummated Prior to the 2016 Annual Meeting of Stockholders, as Directors

FOR each nominee
Proposal 3 –No. 2: Advisory Vote to Approve the Compensation of Our Named Executive Officers,Officer Compensation, or “Say on Pay”

 

FOR

Proposal 4 –No. 3: Ratification of the Appointment of theErnst & Young LLP as our Independent Registered Public Accounting Firm for Fiscal Year 20172020

FOR

Transaction of such other business as may properly come before the annual meeting (including any adjournment or postponement thereof)

  FOR 

Figure 2. Summary Information Regarding Director Nominees

You are being asked to vote on the election of the nine director nominees listed in the table below under the heading “Existing Director Nominees” and, subject to and contingent upon the acquisition of KLA-Tencor being consummated prior to this year’s annual meeting of stockholders, the two additional director nominees listed under the subsequent heading “Additional Director Nominees.”these 10 directors. The following table provides summary information about each director nominee as of September 13, 2016,2019, and their biographical information is contained in the “Voting Proposals – Proposal No. 1: Election of Existing Directors – 20162019 Nominees for Director” and “Voting Proposals – Proposal No. 2: Election of Additional Directors – 2016 Nominees for Director” sectionssection below.

 

   Director  Committee
Membership		  Other Current Public
Boards
Name Age  Since Independent (1)  AC  CC  NGC  
Existing Director Nominees                   
Martin B. Anstice 49  2012 No            
Eric K. Brandt 54  2010 Yes  C/FE        

Yahoo!,

Dentsply Sirona

Michael R. Cannon 63  2011 Yes  M     M  

Seagate Technology,

Dialog Semiconductor

Youssef A. El-Mansy 71  2012 Yes     M      
Christine A. Heckart 50  2011 Yes  M         
Catherine P. Lego 59  2006 Yes     C  M  

Fairchild Semiconductor,

IPG Photonics

Stephen G. Newberry 62  2005 No           Splunk
Abhijit Y. Talwalkar 52  2011 

Yes

(Lead Independent Director)

     M  C   
Lih Shyng (Rick L.) Tsai 65  2016 Yes           

NXP Semiconductors,

Chunghwa Telecom

Additional Director Nominees(2)                   
John T. Dickson 70  –(2) Yes           QLogic
Gary B. Moore 67  –(2) Yes           Finjan Holdings
    
  Director  Committee
Membership		  

Other Current Public

Boards

   Name Age   Since  Independent (1)  AC  CC  NGC

Sohail U. Ahmed

 

 

61

 

  

 

2019

 

 

Yes

            

Timothy M. Archer

 

 

52

 

  

 

2018

 

 

No

  

*

         

Eric K. Brandt

 

 

57

 

  

 

2010

 

 

Yes

  

C/FE

     

M

  

Altaba (formerly Yahoo!), Dentsply Sirona,

Macerich

Michael R. Cannon

 

 

66

 

  

 

2011

 

 

Yes

  

M/FE

     

M

  

Dialog Semiconductor,

Seagate Technology

Youssef A.El-Mansy

 

 

74

 

  

 

2012

 

 

Yes

     

M

      

Catherine P. Lego

 

 

62

 

  

 

2006

 

 

Yes

  

*

  

C

  

M

  

Cypress Semiconductor,

Guidewire Software,

IPG Photonics

Bethany J. Mayer

 

 

57

 

  

 

2019

 

 

Yes

  

M/FE

        

Marvell Technology Group, Sempra Energy

Abhijit Y. Talwalkar

 

 

55

 

  

 

2011

 

 

Yes

(Lead Independent Director(2))

  

*

  

M

  

C

  

Advanced Micro Devices,

iRhythm Technologies,

TE Connectivity

Lih Shyng (Rick L.) Tsai

 

 

68

 

  

 

2016

 

 

Yes

     

M

     

MediaTek

Leslie F. Varon

 

 

62

 

  

 

2019

 

 

Yes

  

M/FE

        

Dentsply Sirona,

Hamilton Lane

(1)

Independence determined in accordance with Nasdaq rules.

(2)

Mr. Talwalkar will continue as the lead independent director (“LID”) through November 4, 2019. Thereafter, there will no longer be an LID and provided he isre-elected, Mr. Talwalkar will be the chairman of the Board. See “Governance Matters – Corporate Governance – Leadership Structure of the Board” for details.

 

(1)      Independence determined based on Nasdaq rules.

(2)     Currently members of KLA-Tencor board of directors

AC – Audit committee  

C– Chairperson

CC – Compensation and human resources committee  

M – Member

NGC – Nominating and governance committee  

FE – Audit committee financial expert (as determined based on SEC rules)

* – Qualifies as an audit committee financial expert (as determined based on SEC rules)

Figure 3. Director Nominee Key Qualifications, Skills and Experiences Highlights

The table below summarizes the key qualifications, skills and experiences of our nominees. Not having a mark does not mean the director nominee does not possess that qualification, skill or experience. The director biographies contained in the “Voting Proposals – Proposal No. 1: Election of Directors – 2019 Nominees for Director” section below describe each director nominee’s background and relevant experience in more detail, and identifies those qualifications, skills and experiences considered most relevant to the decision to nominate candidates to serve on our Board.

  Key Qualifications, Skills & Experiences of Director Nominees

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

Industry Knowledge– Knowledge of and experience with our semiconductor and broader technology industries and markets

X

X

X

X

X

X

X

X

X

X

Customer/Deep Technology Knowledge– Deep knowledge and understanding of semiconductor processing equipment technologies, including an understanding of our customers’ markets and needs

X

X

X

X

X

X

Marketing Experience– Extensive knowledge and experience inbusiness-to- business marketing and sales, and services and/or business development, preferably in a capital equipment industry

X

X

X

X

X

X

Leadership Experience– Experience as a current Or former CEO, president, COO and/or general manager of a significant business

X

X

X

X

X

X

Finance Experience – Profit and loss (P&L) and financing experience as an executive responsible for financial results of a breadth and Level of complexity comparable to the Company

X

X

X

X

X

X

X

X

Global Business Experience– Experience as a current or former business executive of a business with substantial global operations

X

X

X

X

X

X

X

X

Mergers and Acquisitions (‘‘M&A”) Experience– M&A and integration experience (includingbuy- and sell-side and hostile M&A experience) as a public company director or officer

X

X

X

X

X

X

X

X

X

Board/Governance Experience– Experience with corporate governance requirements and practices

X

X

X

X

X

X

X

X

Cybersecurity Expertise– Understanding of and/or experience overseeing corporate cybersecurity programs, and having a history of participation in relevant cyber education

X

X

X

Figure 4. Director Nominee Composition Highlights

The Board is committed to diversity and the pursuit of board refreshment and balanced tenure. The following table shows the tenure, age and gender diversity of the director nominees.

Tenure

LOGO

Age

LOGO

Gender Diversity

LOGO

 

Continues on next page  u

 

Lam Research Corporation 20162019 Proxy Statement 13

Figure 3.5. Corporate Governance Highlights

 

Board and Other Governance Information(1)

 

As of September 13, 20162019

 

Size of Board as Nominated

 

9

10

(2)

Average Age of Director Nominees58.3(3)
Average Tenure of Director Nominees5.96(4)

Number of Independent Nominated Directors

 

7

9

(5)

Number of Nominated Directors Who Attended <³75% of Meetings

 

0

10

Number of Nominated Directors on More Than Four Public Company Boards

 

0

(6)

Number of NominatedNon-Employee Directors Who Are Sitting Executives on More Than Three Public Company Boards

0

Directors Subject to Stock Ownership Guidelines (Page 12)

 

Yes

Hedging and Pledging Prohibited (Page 9)

 

Yes

Annual Election of Directors (Page 50)

 

Yes

Voting Standard (Page 50)

 

Majority

Plurality Voting Carveout for Contested Elections

 

Yes

Separate Chairman and Chief Executive Officer (“CEO”)

 

Yes

Lead Independent Director (Page 11)

 

Yes

(1)

Independent Directors Meet Without Management Present (Page 11)

 

Yes

Annual Board (Including Individual Director) and Committee Self-Evaluations (Page 12)

 

Yes

Annual Independent Director Evaluation of CEO (Page 14)

 

Yes

Risk Oversight by Full Board and Committees (Page 14)

 

Yes

Commitment to Board Refreshment and Diversity (Page 10)

 

Yes

Robust Director Nomination Process (Pages 9-10)

 

Yes

Significant Board Engagement (Page 14)

 

Yes

Board Orientation/Education Program (Page 11)

 

Yes

Code of Ethics Applicable to Directors (Page 9)

 

Yes

Stockholder Proxy Access (Pages 10, 63)

 

Yes

Stockholder Ability to Act by Written Consent

 

Yes

Poison Pill

Stockholder Engagement Program (Page 14)

 

No

Yes

Poison Pill

 

No

Publication of Corporate Social Responsibility Report on Our Website (Pages 14-15)

 

Yes

 

(1)The table reflects board information relating to the nine

Effective as of November 5, 2019, there will be no lead independent director nominees in proposal number one. Corresponding information adjusted for the two additional director nominees from the KLA-Tencor board in proposal number two is reflected in any related footnotes.position and only an independent chairman.

(2)The size of the board as nominated is 11 if adjusted for the two additional nominees from the KLA-Tencor board in proposal number two. See “Voting Proposals – Proposal No. 1: Election of Existing Directors –Board Size” for additional information regarding the board size.

(3)The average age of the director nominees is 60.2 if adjusted for the two additional nominees from the KLA-Tencor board in proposal number two.

(4)The average tenure of the director nominees is 4.87 if adjusted for the two additional nominees from the KLA-Tencor board in proposal number two.

(5)The number of independent nominated directors is nine if adjusted for the two additional nominees from the KLA-Tencor board in proposal number two.

(6)The number of nominated directors on more than four public company boards is still zero if adjusted for the two additional nominees from the KLA-Tencor board in proposal number two.

Figure 4.6. Executive Compensation Highlights

 

What We Do

Pay for Performance (Pages 14-16, 20-22, 23-25)(Pages 18-22, 25-31) – Our executive compensation program is designed to pay for performance with 100% of the short-termannual incentive program tied to company financial, strategic, and operational performance metrics,metrics; 50% of the long-term incentive program tied to relative total shareholder return, or “TSR,” performance,performance; and 50% of the long-term incentive program awarded in stock options and service-based restricted stock units, or “RSUs.”

Three-Year Performance Period for Our 20162019 Long-Term Incentive Program (Pages 23-25)(Pages 28-31) – Our current long-term incentive program is designed to pay for performance over a period of three years.

Absolute and Relative Performance Metrics (Pages 20-22, 23-25)25-31) – Our annual and long-term incentive programs for executive officers include the use of absolute and relative performance factors.

Balance of Annual and Long-Term Incentives– Our incentive programs provide a balance of annual and longer-termlong-term incentives.

Different Performance Metrics for Annual and Long-Term Incentive Programs(Pages 20-22, 23-25) (Pages 25-31) – Our annual and long-term incentive programs use different performance metrics.

Capped Amounts(Pages 20, 24-25) (Pages 26-31) – Amounts that can be earned under the annual and long-term incentive programs are capped.

Compensation Recovery/Clawback Policy (Page 17)23) – We have a policy inpursuant to which we can recover the excess amount of cash incentive-based compensation granted and paid to our officers who are covered by section 16 of the Securities Exchange Act of 1934, as amended, or the “Exchange Act.”

Prohibit Option Repricing– Our stock incentive plans prohibit option repricing without stockholder approval (excluding adjustments due to specified corporate transactions and changes in capitalization).approval.

Hedging and Pledging Policy(Page 7) – We have a policy applicable to our executive officers and directors that prohibits pledging and hedging.

Stock Ownership Guidelines (Page 17)22) – We have stock ownership guidelines for each of our executive officers and certain other senior executives; each of our NEOsnamed executive officers as set forth in Figure 16 has met his or her individual ownership level under the current program or has a period of time remaining under the guidelines to do so.

Independent Compensation Advisor (Page 18)(Pages 23-24) – The compensation and human resources committee benefits from its utilization of an independent compensation advisor retained directly by the committee that provides no other services to the Company.

Stockholder Engagement– We engage with stockholders on an annual basis and stockholder advisory firms on an as needed basis to obtain feedback concerning our compensation program.

What We Don’t Do

Tax “Gross-Ups”“Gross-Ups” for Perquisites, for Other Benefits or upon a Change in Control(Pages 27-30, 35-36) (Pages 32, 35-36, 41-46) – Our executive officers do not receive tax “gross-ups”“gross-ups” for perquisites, for other benefits, or upon a change in control.(1)

Single-Trigger Change in Control Provisions (Pages 26, 35-36)32, 41-42) – None of our executive officers hashave single-trigger change in control agreements.

 

(1)

Our executive officers may receive taxgross-ups in connection with relocation benefits that are widely available to all of our employees.

 

Continues on next page  u

 

Lam Research Corporation 20162019 Proxy Statement 35

    

 

Stock Ownership

 

 

Security Ownership of Certain Beneficial Owners and Management

 

The table below sets forth the beneficial ownership of shares of Lam common stock by: (i)(1) each person or entity who we believe, based on our review of filings made with the United States Securities and Exchange Commission, or the “SEC,” beneficially owned as of September 13, 2016, more than 5% of Lam’s common stock on the date set forth below; (ii)(2) each current director of the Company; (iii) each director nominee identified in proposal number two, (iv)(3) each NEO identified below in the “Compensation Matters – Executive Compensation and Other Information – Compensation Discussion and Analysis” section; and (v)(4) all current directors additional nominees identified in proposal number two and

current executive officers as a group. With the exception of 5% owners, and unless otherwise

noted, the information below reflects holdings as of September 13, 2016,6, 2019, which is the Record Date for the 2016 annual meeting2019 Annual Meeting of Stockholders and the most recent practicable date for determining ownership. For 5% owners, holdings are as of the dates of their most recent ownership reports filed with the SEC, which are the most practicable dates for determining their holdings. The percentage of the class owned is calculated using 161,264,422144,834,045 as the number of shares of Lam common stock outstanding on September 13, 2016.6, 2019.

 

 

Figure 5.7. Beneficial Ownership Table

 

Name of Person or Identity of GroupShares
Beneficially
Owned
(#)(1)		Percentage
of Class
5% Stockholders

JPMorgan Chase & Co.
270 Park Avenue
New York, NY 10017
   
  Name of Person or Identity of Group

 

 

Shares
Beneficially
Owned
(#) (1)

 

   

Percentage
of Class

 

 

5% Stockholders

         

The Vanguard Group, Inc.
100 Vanguard Boulevard
Malvern, PA 19355

 

 

11,885,413

(2) 

  

 

8.21

% 

BlackRock, Inc.
55 East 52nd Street
New York, NY 10055

 

 

11,429,062

(3) 

  

 

7.89

% 

Ameriprise Financial, Inc.
145 Ameriprise Financial Center
Minneapolis, MN 02100

 

 

9,286,271

(4) 

  

 

6.41

% 

Directors

         

Sohail U. Ahmed

 

 

470

 

  

 

*

 

Timothy M. Archer (also a Named Executive Officer)

 

 

118,447

 

  

 

*

 

Eric K. Brandt

 

 

26,195

 

  

 

*

 

Michael R. Cannon

 

 

16,090

 

  

 

*

 

Youssef A.El-Mansy

 

 

22,176

 

  

 

*

 

Christine A. Heckart

 

 

15,540

 

  

 

*

 

Catherine P. Lego

 

 

50,598

 

  

 

*

 

Bethany J. Mayer

 

 

470

 

  

 

*

 

Stephen G. Newberry

 

 

9,847

 

  

 

*

 

Abhijit Y. Talwalkar

 

 

13,727

 

  

 

*

 

Lih Shyng (Rick L.) Tsai

 

 

4,870

 

  

 

*

 

Leslie F. Varon

 

 

470

 

  

 

*

 

Named Executive Officers (“NEOs”)

         

Douglas R. Bettinger

 

 

114,489

 

  

 

*

 

Richard A. Gottscho

 

 

63,345

 

  

 

*

 

Patrick J. Lord

 

 

1,620

 

  

 

*

 

Vahid Vahedi

 

 

33,423

 

  

 

*

 

Seshasayee (Sesha) Varadarajan

 

 

43,425

 

  

 

*

 

Martin B. Anstice

 

 

81,037

(5) 

  

 

*

 

All current directors and executive officers as a group (20 people)

 

 

628,915

 

  

 

*

 

15,777,361(2)9.8% 

The Vanguard Group, Inc.
100 Vanguard Boulevard
Malvern, PA 19355

13,678,637(3)8.5% 

BlackRock Inc.
55 East 52nd Street
New York, NY 10055

10,331,709(4)6.4% 

Ameriprise Financial, Inc.
145 Ameriprise Financial Center
Minneapolis, MN 55474

8,023,367(5)5.0% 
Directors

Martin B. Anstice (also a Named Executive Officer)

134,363*

Eric K. Brandt

24,430*

Michael R. Cannon

20,730*

Youssef A. El-Mansy

22,333*

Christine A. Heckart

15,230*

Catherine P. Lego

46,238*

Stephen G. Newberry

32,840*

Krishna C. Saraswat

23,896*

Abhijit Y. Talwalkar

21,330*

Lih Shyng (Rick L.) Tsai

—  *
Additional Director Nominees

John T. Dickson

—  *

Gary B. Moore

—  *
Named Executive Officers (“NEOs”)

Timothy M. Archer

183,185(6)*

Douglas R. Bettinger

46,716*

Richard A. Gottscho

104,120*

Sarah A. O’Dowd

69,808*
All current directors, additional director nominees and executive officers as a group (16 people)745,219(6)*

*

Less than 1%.

(1)

Includes shares subject to outstanding stock options that are now exercisable or will become exercisable within 60 days after September 13, 2016,6, 2019, as well as restricted stock units, or “RSUs,”RSUs, that will vest within that time period, as follows:

 

  
Shares 
Martin B. Anstice

Sohail U. Ahmed

 

39,765

470

Timothy M. Archer

 

50,042

Eric K. Brandt

 

2,600

1,350

Michael R. Cannon

 

2,600

1,350

John T. Dickson

Youssef A.El-Mansy

 

—  

1,350

Youssef

Christine A. El-MansyHeckart

 

2,600

1,350

Christine A. Heckart

Catherine P. Lego

 

2,600

1,350

Catherine P. Lego

Bethany J. Mayer

 

2,600

470

Gary B. Moore

Stephen G. Newberry

 

—  

1,350

Stephen G. Newberry

Abhijit Y. Talwalkar

 

2,600

1,350

Krishna C. Saraswat2,600
Abhijit Y. Talwalkar2,600

Lih Shyng (Rick L.) Tsai

 

—  

1,350

Timothy M. Archer

Leslie F. Varon

 

117,926

470

Douglas R. Bettinger

 

15,172

57,982

Richard A. Gottscho

 

57,144

1,753

Sarah A. O’Dowd

Patrick J. Lord

 

32,539

1,333

Vahid Vahedi

 

1,192

Seshasayee (Sesha) Varadarajan

1,192

Martin B. Anstice

—  

All current directors additional director nominees and executive officers as a group (16(20 people)

 

283,346

181,206

The terms of any outstanding stock options that are now exercisable are reflected in “Figure 31. FYE201637. FYE2019 Outstanding Equity Awards,” below.except as described in the following sentences. Scott Meikle, Ph.D. and Sarah A. O’Dowd have options covering 876 and 54,626 shares, respectively, which are unexercised and exercisable within 60 days of September 6, 2019. The grants for Dr. Meikle and Ms. O’Dowd have terms consistent with the terms reflected in “Figure 37. FYE 2019 Outstanding Equity Awards,” except for the grant to Ms. O’Dowd on February 8, 2013 of 22,140 shares, which fully vested on February 8, 2015 and will expire on February 8, 2020.

As discussed in “Governance Matters – Director Compensation” below, thenon-employee directors receive an annual equity grant as part of their compensation. These grants generally vest on October 31, 2016,2019, subject to continued service on the board as of that date, with immediate delivery of the shares upon vesting. For 2015,2019, Drs.El-Mansy and Saraswat;Tsai; Messrs. Brandt, Cannon, Newberry and Talwalkar; and Mses. Heckart and Lego each received grants of 2,6001,350 RSUs. TheseFor 2019, Mr. Ahmed and Mses. Mayer and Varon, who were appointed directors following the annual equity grant, each receivedpro-rated grants of 470 RSUs that are included in the tables above. As of September 13, 2016, Dr. Tsai had not yet been granted an annual equity award and Messrs. Dickson and Moore had not yet been appointed to the board of the Company. In accordance with the Company’s non-employee director compensation program, Dr. Tsai will receive a pro-rated equity award (25% of the $200,000 targeted grant date value, with the number of RSUs determined in the same manner as an annual equity award) on the first Friday following his first attended board meeting (or, if the designated date falls within a blackout window under applicable Company policies, on the first following business day such grant is permissible under those policies).

 

(2)All information regarding JPMorgan Chase & Co., or “JPMorgan Chase,” is based solely on information disclosed in amendment number eight to Schedule 13G filed by JPMorgan Chase with the SEC on September 8, 2016 as a parent holding company on behalf of JPMorgan Chase and its wholly-owned subsidiaries: JPMorgan Chase Bank, National Association; J.P. Morgan Investment Management Inc.; J.P. Morgan Trust Company of Delaware; J.P. Morgan Securities LLC; J.P. Morgan International Bank Limited; J.P. Morgan (Suisse) SA; JPMorgan Asset Management (Canada) Inc.; JF Asset Management Limited; and JPMorgan Asset Management (UK) Limited. According to the Schedule 13G/A filing, of the 15,777,361 shares (including 503,855 shares it has a right to acquire) of Lam common stock reported as beneficially owned by JPMorgan Chase as of August 31, 2016, JPMorgan Chase had sole voting power with respect to 13,067,274 shares, had shared voting power with respect to 275,284 shares, had sole dispositive power with respect to 15,604,822 shares and shared dispositive power with respect to 171,638 shares of Lam common stock reported as beneficially owned by JPMorgan Chase as of that date.

(3)All information regarding The Vanguard Group, Inc., or “Vanguard,” is based solely on information disclosed in amendment number threeseven to Schedule 13G filed by Vanguard with the SEC on February 10, 2016.11, 2019. According to the Schedule 13G filing, of the 13,678,63711,885,413 shares of Lam common stock reported as beneficially owned by Vanguard as of December 31, 2015,2018, Vanguard had sole voting power with respect to 291,853195,218 shares, had shared voting power with respect to any other 15,90033,392 shares, had sole dispositive power with respect to 13,365,08411,664,065 shares, and had shared dispositive power with respect to 313,553221,348 shares of Lam common stock reported as beneficially owned by Vanguard as of that date.stock. The 13,678,63711,885,413 shares of Lam common stock reported as beneficially owned by Vanguard include 247,553142,438 shares beneficially owned by Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, as a result of it serving as investment manager of collective trust accounts, and 110,300129,752 shares beneficially owned by Vanguard Investments Australia, Ltd., a wholly-ownedwholly–owned subsidiary of Vanguard, as a result of it serving as investment manager of Australian investment offerings.

 

(4)(3)

All information regarding BlackRock Inc., or “BlackRock,” is based solely on information disclosed in amendment number eighteleven to Schedule 13G filed by BlackRock with the SEC on February 10, 20166, 2019 on behalf of BlackRock and its subsidiaries: BlackRock (Channel Islands) Ltd;Life Limited; BlackRock (Luxembourg) S.A.;International Limited; BlackRock Advisors, LLC; BlackRock (Netherlands) B.V.; BlackRock (Singapore)Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock AdvisorsFinancial Management, Inc.; BlackRock Japan Co., Ltd.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Advisors, LLC; BlackRock Asset Management Canada Limited; BlackRock Asset Management Deutschland AG; BlackRock Asset(Luxembourg) S.A.; BlackRock Investment Management Ireland(Australia) Limited; BlackRock Advisors (UK) Limited; BlackRock Fund Advisors; BlackRock Asset Management North Asia Limited; BlackRock Asset Management Schweiz AG; BlackRock Capital Management; BlackRock Financial Management, Inc.; BlackRock Fund Advisors;(Singapore) Limited; and BlackRock Fund Managers Ltd; BlackRock Institutional Trust Company, N.A.; BlackRock International Limited; BlackRock Investment Management (Australia) Limited; BlackRock Investment Management (UK) Ltd; BlackRock Investment Management, LLC; BlackRock Japan Co Ltd; and BlackRock Life Limited.Ltd. According to the Schedule 13G filing, of the 10,331,70911,429,062 shares of Lam common stock reported as beneficially owned by BlackRock as of December 31, 2015,2018, BlackRock had sole voting power with respect to 10,034,525 shares, did not have shared voting power with respect to any shares, had sole dispositive power with respect to 11,429,062 shares, and did not have shared dispositive power with respect to any shares of Lam common stock.

 

Continues on next page  u

 

Lam Research Corporation 20162019 Proxy Statement 57

respect to 8,837,695 shares, did not have shared voting power with respect to any other shares, had sole dispositive power with respect to 10,331,709 shares and did not have shared dispositive power with respect to any other shares of Lam common stock reported as beneficially owned by BlackRock as of that date.

(5)(4)

All information regarding Ameriprise Financial, Inc., or “Ameriprise,” is based solely on information disclosed in amendment number threesix to Schedule 13G filed by Ameriprise with the SEC on February 12, 2016.14, 2019. According to the Schedule 13G filing, of the 8,023,3679,286,271 shares of Lam common stock reported as beneficially owned by Ameriprise as of December 31, 2015,2018, Ameriprise did not have sole voting power with respect to any shares, and had shared voting power with respect to 7,995,0339,078,943 shares, did not have sole dispositive power with respect to any other shares, and had shared dispositive power with respect to 8,023,3679,286,271 shares of Lam common stock reported as beneficially owned by Ameriprise as of that date.stock. According to the Schedule 13G filing, Ameriprise, as the parent company of Columbia Management Investment Advisers, LLC, or “Columbia,” may be deemed to have, but disclaims, beneficial ownership of the shares reported by Columbia in the Schedule 13G filing. Accordingly, the shares reported as beneficially owned by Ameriprise include those shares separately reported as beneficially owned by Columbia.

 

(6)(5)Includes 4,353 shares

Mr. Anstice terminated his employment with the Company as of common stock held indirectly in a 401(k) plan and 514 sharesDecember 5, 2018, the date as of common stock held by Mr. Archer’s spouse in her 401(k) plan over which he may be deemed to havehis beneficial ownership.ownership information is reflected.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers, directors, and people who own more than 10% of a registered class of our equity securities to file an initial report of ownership (on a Form 3) and reports on subsequent changes in ownership (on Forms 4 or 5) with the SEC by specified due dates. Our executive officers, directors, and greater-than-10% stockholders are also required by SEC rules

to furnish us with copies of all section 16(a) forms they file. We are required to disclose in this proxy statement any failure to file any of these reports on a timely basis. Based solely on our review of the copies of the forms that we received from the filers, and on written representations from certain reporting persons, we believe that all of these requirements were satisfied during fiscal year 2016.

    

 

Governance Matters

 

 

Corporate Governance

 

Our board of directorsBoard and members of management are committed to responsible corporate governance to manage the Company for the long-term benefit of its stockholders. To that end, the boardBoard and management periodically review and update, as appropriate, the Company’s corporate governance policies and practices. As part of that process, the boardBoard and management consider the requirements of federal and state law, including rules and regulations of the SEC; the listing standards for the Nasdaq Global Select Market, or “Nasdaq;”“Nasdaq”; published guidelines and recommendations of proxy advisory firms; published guidelines of some of our top stockholders; published guidelines of other selected public companies; and any feedback we receive from our stockholders. A list of key corporate governance practices is provided in the “Proxy Statement Summary” above.

Corporate Governance Policies

We have instituted a variety of policies and procedures to foster and maintain responsible corporate governance, including the following:

Board committee charters. Each of the board’s audit, compensation and nominating and governance committees has a written charter adopted by the board that establishes practices and procedures for the committee in accordance with applicable corporate governance rules and regulations. Each committee reviews its charter annually and recommends changes to the board, as appropriate. Each committee charter is available on the investors’ page of our web site athttp://investor.lamresearch.com/corporate-governance.cfm. The content on any website referred to in this proxy statement is not a part of or incorporated by reference in this proxy statement unless expressly noted. Also refer to “Board Committees” below, for additional information regarding these board committees.

Corporate governance guidelines. We adhere to written corporate governance guidelines, adopted by the board and reviewed annually by the nominating and governance committee and the board. Selected provisions of the guidelines are discussed below, including in the “Board NominationFigure 8. Policies and Procedures” “Director Independence Policies” and “Other Governance Practices” sections below. The corporate governance guidelines are available on the investors’ page of our web site athttp://investor.lamresearch.com/corporate-governance.cfm. Summary

Corporate code of ethics. We maintain a code of ethics that applies to all employees, officers,

   Policy and members of the board. The code of ethics establishes standards reasonably

   Procedure

Summary

Board

committee

charters*

Each of the Board’s audit, compensation and human resources, and nominating and governance committees has a written charter adopted by the Board that delegates authority and responsibilities to the committee.

Each committee reviews its charter, and the nominating and governance committee reviews the charters of all of the committees, annually and recommends changes to the Board, as appropriate. See “Board Committees” below for additional information regarding these committees.

Corporate governance guidelines*

We adhere to written corporate governance guidelines, adopted by the Board and reviewed annually by the nominating and governance committee and the Board.

Selected provisions of the guidelines are discussed below, including in the “Board Nomination Policies and Procedures,” “Director Independence Policies,” and“Other Governance Practices” sections below.

Corporate

Code of

Ethics*

We maintain a code of ethics that applies to all employees, officers, and members of the Board.

The code of ethics establishes standards reasonably necessary to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, and full, fair, accurate, timely, and understandable disclosure in the periodic reports we file with the SEC and in other public communications. We will promptly disclose to the public any amendments to, or waivers from, any provision of the code of ethics to the extent required by applicable laws. We intend to make this public disclosure by posting the relevant material on our website, to the extent permitted by applicable laws.

Global Standards of Business Conduct*

We maintain written standards of business conduct to address a variety of situations that apply to our worldwide workforce. Among other things, these global standards of business conduct address relationships and/or conduct with one another, with Lam (including conflicts of interest, safeguarding of Company assets, and protection of confidential information), and with other companies and stakeholders (including anti-corruption).

Insider

Trading

Policy

Our insider trading policy restricts the trading of Company stock by our directors, officers, and employees, and includes provisions addressing insider blackout periods and prohibiting pledges of Company stock, and prohibiting such persons from engaging in hedging transactions, such as “cashless” collars, forward sales, equity swaps and other similar arrangements. Investments in exchange funds may be permitted on acase-by-case basis if the fund is broadly diversified.

necessary to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, and full, fair, accurate, timely, and understandable disclosure in the periodic reports we file with the SEC and in other public communications. We will promptly disclose to the public any amendments to, or waivers from, any provision of the code of ethics to the extent required by applicable laws. We intend to make this public disclosure by posting the relevant material on our website, to the extent permitted by applicable laws. A copy of the code of ethics is available on the investors’ page of our website athttp://investor.lamresearch.com/corporate-governance.cfm.

Global standards of business conduct policy.
*

A copy is available on the Investors section of our website athttps://investor.lamresearch.com/corporate-governance We maintain written standards of appropriate conduct in a variety of business situations that apply to our worldwide workforce. Among other things, these global standards of business conduct address relationships with one another, relationships with Lam (including conflicts of interest, safeguarding of Company assets and protection of confidential information) and relationships with other companies and stakeholders (including anti-corruption).

Insider trading policy. Our insider trading policy restricts the trading of Company stock by our directors, officers, and employees, and includes provisions addressing insider blackout periods and prohibiting hedges and pledges of Company stock.

Board Nomination Policies and Procedures

Board membership criteria. Under our corporate governance guidelines, the nominating and governance committee is responsible for assessingrecommending nominees to the independent directors, and the independent directors nominate the slate of directors for approval by our stockholders. In making its recommendations, whether for new or incumbent directors, the committee assesses the appropriate balance of experience, skills, and characteristics required for the board and for recommending director nominees toBoard at the independent directors.time.

Continues on next page  u

The guidelines direct the committee to consider all factors it considers appropriate. The committee need not consider all of the same factors for every candidate. 

Lam Research Corporation 2019 Proxy Statement9

Factors to be considered by the nominating and governance committee may include, but are not limited to: experience; business acumen; wisdom; integrity; judgment; the ability to make independent analytical inquiries; the ability to understand the Company’s business environment; the candidate’s willingness and ability to devote adequate time to board duties; specific skills, background, or experience considered necessary or desirable for board or committee service; specific experiences with other businesses or

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Lam Research Corporation 2016 Proxy Statement7

organizations that may be relevant to the Company or its industry; diversity with respect to any attribute(s) the boardBoard considers appropriate, including geographic, gender, age, and ethnic diversity; and the interplay of a candidate’s experiences and skills with those of other boardBoard members.

The specific skills, background, and experiences that are evaluated in connection with board service include:

•Industry knowledge: knowledge of and experience with the semiconductor and broader technology industries and markets;
•Customer/deep technology knowledge: deep knowledge and understanding of semiconductor processing equipment technologies, including an understanding of our customers’ markets and needs;
•Marketing experience: extensive knowledge and experience inbusiness-to-business marketing and sales, and services and/or business development, preferably in a capital equipment industry;
•Leadership experience: experience as a current or former CEO, president, COO, and/or general manager of a significant business;
•Finance experience: profit and loss and financing experience as an executive responsible for financial results of a breadth and level of complexity comparable to the Company;
•Global business experience: experience as a current or former business executive of a business with substantial global operations;
•Mergers and acquisitions (“M&A”) experience: M&A and integration experience (includingbuy- and sell-side and hostile M&A experience) as a public company director or officer;
•Board/governance experience: experience with corporate governance requirements and practices; and
•Cybersecurity expertise: understanding of and/or experience in overseeing corporate cybersecurity programs; and having a history of participation in relevant cyber education.

Each nominee’s key qualifications, skills, and attributes considered most relevant to the nomination of the candidate to serve on the Board are reflected in his or her biography under “Voting Proposals – Proposal No. 1: Election of Directors – 2019 Nominees for Director” below. For a summary of the key qualifications, skills, and attributes of the nominees to the Board, see “Proxy Statement Summary – Figure 3. Director Nominee Key Qualifications, Skills and Experiences Highlights.”

The Board and the nominating and governance committee regard board refreshment as important, and strive to maintain an appropriate balance of tenure, turnover, diversity, and skills on the board. TheBoard. See “Proxy Statement Summary – Figure 4. Director Nominee Composition Highlights”for additional information. In line with the Board’s pursuit of board refreshment and balanced tenure, including consideration of any resignations, the Board has appointed four new directors in the last year.

For many years, the composition of the Board has reflected the Board’s commitment to diversity. For example, every year since 2006, the Board has had at least two female directors, and over the last 10 years has appointed directors who have expanded the experiences, areas of substantive expertise and geographic and industry diversity of the board, as illustrated by the information provided in their biographies under “Voting Proposals –Proposal No. 1: Election of Directors – 2019 Nominees for Director” below.

Regarding tenure, the Board believes that new perspectives and ideas are important to a forward-looking and strategic board, as is the ability to benefit from the valuable experience and familiarity of longer-serving directors.

Priorlonger serving directors who can bring to recommending that an incumbent non-employee director be nominated for reelection tobear their learnings from their experience with the board,Company and with the committee reviewsindustry and business environment in which the experiences, skills and qualifications of the directors to assess the continuing relevance of the directors’ experiences, skills and qualifications to those considered necessary or desirable for the board at that time. Board members may not serve on more than four boards of public companies (including service on the Company’s board).Company operates.

To be nominated, a new or incumbent candidate must provide an irrevocable conditional resignation that will be effective upon (i)(1) the director’s failure to receive the required majority vote at an annual meeting at which the nominee facesre-election and (ii)(2) the board’sBoard’s acceptance of such resignation. In addition, no director, after having attained the age of 75 years, may be nominated forre-election or reappointment to the board.Board.

Nomination procedure. The nominating and governance committee sets specific qualifications for new directors, and identifies, screens, evaluates, and recommends qualified candidates for appointment or election to the board based on the board’s needs and desires at that time as developed through their self-evaluation process.Board. The committee considers recommendations from a variety of sources, including search firms, boardBoard members, executive officers, and stockholders. Nominations for election by the stockholders are made by the independent members of the board.Board. See “Voting Proposals – Proposal No. 1: Election of Existing Directors – 2016 Nominees for Director” and “Voting Proposals – Proposal No. 2: Election of Additional Directors – 20162019 Nominees for Director” below for additional information regarding the 20162019 candidates for election to the board.Board.

Certain provisions of our bylaws apply to the nomination or recommendation of candidates by a stockholder. For example, our bylaws provide that under certain circumstances, a stockholder, or group of up to 20 stockholders, who have maintained continuous ownership of at least three percent (3%) of our common stock for at least three years may nominate and include a specified number of director nominees in our annual meeting proxy statement that cannot exceed the

greater of two or 20% of the aggregate number of directors then serving on the Board (rounded down). Information regarding the nomination procedure is provided in the “Voting and Meeting Information – Other Meeting Information – Stockholder-Initiated–Stockholder-Initiated Proposals and Nominations for 20172020 Annual Meeting” section below.

Director Independence Policies

Board independence requirements. Our corporate governance guidelines require that at least a majority of the boardBoard members be independent. No director will qualify as “independent” unless the boardBoard affirmatively determines that the director qualifies as independent under the Nasdaq rules and has no relationship that would interfere with the exercise of independent judgment as a director. In addition, nonon-employee director may serve as a consultant or service provider to the Company without the approval of a majority of the independent directors (and any such director’s independence must be reassessed by the full boardBoard following such approval).

Board member independence. The boardBoard has determined that all current directors, other than Messrs. Anstice and Newberry,Mr. Archer, are independent in accordance with Nasdaq criteria for director independence. In making the determination, the Board considered prior employment with the Company, disclosed related party transactions, known familial relationships of directors with employees (not involving immediate family members) and commercial transactions involving other parties with common directorships, none of which qualified as related party transactions or were considered by the Board to interfere with the exercise of independent judgment as a director.

Board committee independence.All members of the board’sBoard’s audit, compensation, and nominating and governance committees must benon-employee or outside directors and independent in accordance with applicable Nasdaq criteria as well as, in the case of the compensation and human resources committee, applicable rules under section 162(m) of the Internal Revenue Code of 1986, as amended, or the “Code,” and Rule16b-3 of the Securities Exchange Act of 1934, as amended, or the “Exchange Act.” See “Board Committees” below for additional information regarding these board committees.

Lead independent director. Our corporate governance guidelines authorize the boardBoard to designate a lead independent director from among the independent board members. Mr. Talwalkar, who was appointed the lead independent director effective August 27, 2015, succeeding Grant Inman, who retired in 2015. Seewill continue to hold such role until November 4, 2019, the effective date of Mr. Newberry’s previously disclosed retirement. As described below under “Leadership Structure of the Board,” below for information regardingbeginning November 5, 2019, Mr. Talwalkar will be chairman of the responsibilities of theboard and there will be no lead independent director.

Executive sessions of independent directors. The boardBoard and its audit, compensation, and nominating and governance committees hold meetings of the independent directors and

committee members, without management present, as part of each regularly scheduled meeting and at any other time at the discretion of the boardBoard or committee, as applicable.

Board access to independent advisors. The boardBoard as a whole, and each of the board standing committeesBoard committee separately, has the complete authority to retain, at the Company’s expense, and terminate, in their discretion, any independent consultants, counselors, or advisors as they deem necessary or appropriate to fulfill their responsibilities.

Board education program. Our corporate governance guidelines provide that directors are expected to participate in educational events sufficient to maintain their understanding of their duties as directors and to enhance their ability to fulfill their responsibilities. In addition to any external educational opportunities that the directors find useful, the Company and the board leadership are expected to facilitate such participation by arranging for appropriate educational contentpresentations from time to be incorporated into regular board and committee meetings as well as on a quarterly basis presented by board and/or committee advisors and counsel independent of any content at regular board and committee meetings.time.

Leadership Structure of the Board

The currentCompany’s governance framework provides the Board with the flexibility to select the appropriate leadership structure for the Board of the Company. In making determinations about the leadership structure, the Board considers many factors, including the specific needs of the business and what is in the best interests of the Company’s stockholders.

The leadership structure of the boardBoard currently consists of a chairman and a lead independent director. The chairman, Mr. Newberry, served as chief executive officer of the Company from June 2005 to January 2012. The board believes that this is the appropriate board leadership structure at this time. Lam and its stockholders benefithave benefited from having Mr. Newberry as its chairman, as he brings to bear his experience as CEO as well as his other qualifications in carrying out his responsibilities as chairman. In light of Mr. Newberry’s previously announced retirement from the board, effective the close of business on November 4, 2019, the Board has elected Mr. Talwalkar, whom it has determined to be independent, as chairman, and determined there will be no lead independent director position as of November 5, 2019. Lam believes that it and its stockholders will benefit from having Mr. Talwalkar as its chairman, which role will include (i)all of the responsibilities of the current chairman and lead independent director, as he will bring to bear his experiences as the Company’s lead independent director over the last four years, a former CEO of a semiconductor company, and a board chairman of another public company, as well as his other qualifications in carrying out his responsibilities as chairman.

The chairman’s duties will include (1) preparing the agenda for the boardBoard meetings with input from the CEO, the boardBoard, and the committee chairs; (ii)(2) upon invitation, attending meetings of any of the boardBoard committees onof which he is not a member; (iii)(3) conveying to the CEO, together with the chair of the compensation and human resources committee, the results of the CEO’s performance evaluation; (iv)(4) reviewing proposals submitted by stockholders for action at meetings of

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Lam Research Corporation 2019 Proxy Statement11

stockholders and, depending on the subject matter, determining the appropriate body, among the boardBoard or any of the boardBoard committees, to evaluate each proposal, and making recommendations to the boardBoard regarding action to be taken in response to such proposal; (v) performing such duties(5) as requested by the board may reasonably assign at the request of the CEO; (vi) performing such other duties as the board may reasonably request from time to time; and (vii)Board, providing reports to the boardBoard on the chairman’s activities under his agreement. The Company and its stockholders also benefit from having a lead independent director to provide independent board leadership. The lead independent director is responsible foractivities; (6) coordinating the activities of the independent directors; consulting with the chairman regarding matters such as schedules of and agendas for board meetings; the quality, quantity and timeliness of the flow of information from management; the retention of consultants who report directly to the board; and(7) developing the agenda for, and moderating executive sessions of, the board’sfull Board and the Board’s independent directors.directors; and (8) performing such other duties as the Board may reasonably request from time to time.

Other Governance Practices

In addition to the principal policies and procedures described above, we have established a variety of other practices to enhance our corporate governance, including the following:

Board and committee assessments.At least once every two years, Every year, the boardBoard conducts a self-evaluation of the board,Board, its committees, and the individual directors, overseen by the nominating and governance committee. From time to time, the evaluation is facilitated by an independent third-party consultant. The evaluation solicits the opinions of the directors regarding the effectiveness of the Board, Board committees, and individual directors in fulfilling its/their obligations. Feedback on Board and committee effectiveness is provided to the full Board for discussion, and feedback regarding individual director performance is provided to each individual director. The Board and committees identify and hold themselves accountable for action items stemming from the assessment. The results of the evaluations are also considered as part of the director nomination process.

Director resignation or notification of change in executive officer status. Under our corporate governance guidelines, any director who is also an executive officer of the Company must offer to submit his or her resignation as a director to the boardBoard if the director ceases to be an executive officer of the Company. The boardBoard may accept or decline the offer, in its discretion. The corporate governance guidelines also require anon-employee director to notify the nominating and governance committee if the director changes or retires from his or her executive position at another company. The nominating and governance committee reviews the appropriateness of the director’s continuing boardBoard membership under the circumstances, and the director is expected to act in accordance with the nominating and governance committee’s recommendations.

Limitations on other board and committee memberships.Board members may not serve on more than four public company boards (including service on the Company’s Board).Non-employee directors who are sitting executives at other public companies may not serve on more than three public company boards (including the Company’s Board). The nominating and governance committee will review the

appropriateness of continued Board membership if anon-employee director who is a sitting executive serves on more than two such boards, and the director is expected to follow the recommendation of the nominating and governance committee. In addition,non-employee directors may not serve on more than three audit committees of public company boards (including the Company’s audit committee). Finally, the Company’s CEO may not serve on more than one other public company board.

Director and executive stock ownership. Under the corporate governance guidelines, each director is expected to own at least the lesser of five times the value of the annual cash retainer (not including any committee chair or other supplemental retainers for directors) or 5,0003,000 shares of Lam common stock, by the fifth anniversary of his or her initial election to the board.Board. Guidelines for stock ownership by designated members of the executive management team are described below under “Compensation Matters – Executive Compensation and OtherInformation – Compensation Discussion and Analysis.” All of our directors and designated members of our executive management team were in compliance with the Company’s applicable stock ownership guidelines at the end of fiscal year 20162019 or have a period of time remaining under the programguidelines to do so.meet the requirements.

Communications with board members. Any stockholder who wishes to communicate directly with the board of directors,Board, with any boardBoard committee, or with any individual director regarding the Company may write to the board,Board, the committee, or the director c/o Secretary, Lam Research Corporation, 4650 Cushing Parkway, Fremont, California 94538. The secretarySecretary will forward all such communications to the appropriate director(s).

Any stockholder, employee, or other person may communicate any complaint regarding any accounting, internal accounting control, or audit matter to the attention of the board’sBoard’s audit committee by sending written correspondence by mail (to Lam Research Corporation, Attention: Board Audit Committee, P.O. Box 5010, Fremont, California 94537-5010) or by phone telephone(855-208-8578) or internet (through the Company’s third partythird-party provider web sitewebsite atwww.lamhelpline.ethicspoint.com)www.lamhelpline.ethicspoint.com). The audit committee has established procedures to ensure that employee complaints or concerns regarding audit or accounting matters will be received and treated anonymously (if the complaint or concern is submitted anonymously and if permitted under applicable law).

Meeting Attendance

Our Board held a total of eight meetings during fiscal year 2019. The number of committee meetings held is shown in Figures9-11. All of the directors attended at least 75% of the aggregate number of Board meetings and meetings of Board committees on which they served during their tenure in fiscal year 2019.

We expect our directors to attend the annual meeting of stockholders each year unless unusual circumstances make attendance impractical. All of the individuals who were directors as of the 2018 annual meeting of stockholders attended that meeting.

Board Committees

The Board has three standing committees: an audit committee, a compensation and human resources committee, and a nominating and governance committee. The purpose, membership, and charter of each are described below. Copies of each charter are available on the Investors section of our website athttps://investor.lamresearch.com/corporate-governance.

Figure 9. Audit Committee

   Membership (1)(2)

Meetings  

in  

FY2019  

   Eric K. Brandt (Chair) (3)

   Michael R. Cannon (3)

   Christine A. Heckart

   Bethany J. Mayer (4)

   Leslie F. Varon (3)(4)

Independence (5)

5 of 5   

8  

Purpose

Purpose is to oversee the Company’s accounting and financial reporting processes, the Company’s Internal Audit Program, its investment policies and performance, its information security policies, its Ethics and Compliance Program, and the audits of our financial statements, including the system of internal controls.

As part of its responsibilities, the audit committee reviews and oversees potential conflict of interest situations, transactions required to be disclosed pursuant to Item 404 of RegulationS-K of the SEC, and any other transaction involving an executive or Board member.

(1)

As of September 6, 2019.

(2)

Each member is able to read and understand fundamental financial statements as required by the Nasdaq listing standards. Messrs. Newberry and Talwalkar and Ms. Lego (members of the Board) each qualify as an “audit committee financial expert” as defined in the SEC rules.

(3)

Each is an “audit committee financial expert” as defined in the SEC rules.

(4)

Mses. Mayer and Varon were appointed to the committee effective August 26, 2019.

(5)

The Board concluded that all members arenon-employee directors who are independent in accordance with the Nasdaq listing standards and SEC rules for audit committee member independence.

Figure 10. Compensation and Human Resources Committee

   Membership (1)

Meetings  

in  

FY2019  

   Youssef A. El-Mansy

   Catherine P. Lego (Chair)

   Abhijit Y. Talwalkar

   Lih Shyng (Rick L.) Tsai (2)

Independence (3)

4 of 4   

4  

Purpose

Purpose is to discharge certain responsibilities of the Board relating to executive compensation; to oversee incentive, equity-based plans, and other compensatory plans in which the Company’s executive officers and/or directors participate; to produce an annual report on executive compensation for inclusion as required in the Company’s annual proxy statement; and to discharge certain responsibilities of the Board with respect to organization and people matters.

The committee is authorized to perform the responsibilities referenced above and described in its charter.

(1)

As of September 6, 2019.

(2)

Dr. Tsai was appointed to the committee effective August 26, 2019.

(3)

The Board concluded that all members of the compensation and human resources committee arenon-employee directors who are independent in accordance with Rule16b-3 of the Exchange Act and the Nasdaq criteria for director and compensation committee member independence, and are outside directors for purposes of section 162(m) of the Code.

Figure 11. Nominating and Governance Committee

   Membership (1)

Meetings  

in  

FY2019  

   Eric K. Brandt (2)

   Michael R. Cannon

   Catherine P. Lego

   Abhijit Y. Talwalkar

   (Chair)

Independence (3)

4 of 4   

4  

Purpose

Purpose is to identify individuals qualified to serve as members of the Board of the Company, to recommend nominees for election as directors of the Company, to oversee self-evaluations of the Board’s performance, to develop and recommend corporate governance guidelines to the Board, and to provide oversight with respect to corporate governance.

The nominating and governance committee will consider for nomination persons properly nominated by stockholders in accordance with the Company’s bylaws and other procedures described below under “Voting and Meeting Information – Other Meeting Information – Stockholder-Initiated Proposals and Nominations for the 2020 Annual Meeting.” Subject to then-applicable law, stockholder nominations for director will be evaluated by the Company’s nominating and governance committee in accordance with the same criteria as is applied to candidates identified by the nominating and governance committee or other sources.

(1)

As of September 6, 2019.

(2)

Mr. Brandt was appointed to the committee effective August 26, 2019.

 

 

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Lam Research Corporation 20152019 Proxy Statement 913

concerns regarding audit or accounting matters will be received and treated anonymously (if the complaint or concern is submitted anonymously and permitted under applicable law).

Meeting Attendance

All of the directors attended at least 75% of the aggregate number of board meetings and meetings of board committees on which they served during their board tenure in fiscal year 2016. Our board of directors held a total of 13 meetings during fiscal year 2016.

We expect our directors to attend the annual meeting of stockholders each year. All individuals who were directors as of the 2015 annual meeting of stockholders attended the 2015 annual meeting of stockholders.

Board Committees

The board of directors has three standing committees: an audit committee, a compensation committee, and a nominating and governance committee. The purpose, membership and charter of each are described below.

Figure 6. Committee Membership

Current Committee Memberships
Name Audit Compensation Nominating
and
Governance
Eric K. Brandt Chair    
Michael R. Cannon x   x
Youssef A. El-Mansy   x  
Christine A. Heckart      x (1)    
Catherine P. Lego   Chair (2) x
Abhijit Y. Talwalkar        x (3) Chair (4)
Total Number of Meetings Held in FY2016 8 5 6

(1)Ms. Heckart was appointed as a member of the audit committee effective August 27, 2015. Until that time, she served as a member of the compensation committee.

(2)Ms. Lego was appointed as chair of the compensation committee effective August 27, 2015. Until that time, she served as a member of the audit committee.

(3) Mr. Talwalkar served as chair of the compensation committee through August 26, 2015, remaining thereafter as a member of the committee.

(4)Mr. Talwalkar was appointed as a member of the

The Board concluded that all nominating and governance committee effective May 14, 2015 and as chair ofmembers arenon-employee directors who are independent in accordance with the nominating and governance committee effective August 27, 2015.Nasdaq criteria for director independence.

Audit committee. The purpose of the audit committee is to oversee the Company’s accounting and financial reporting processes and the audits of our financial statements, including the system of internal controls. As part of its responsibilities, the audit committee reviews and oversees the potential conflict of interest situations, transactions required to be

disclosed pursuant to Item 404 of Regulation S-K of the SEC and any other transaction involving an executive or board member. A copy of the audit committee charter is available on the investors’ page of our web site athttp://investor.lamresearch.com/corporate-governance.cfm.

The board concluded that all audit committee members are non-employee directors who are independent in accordance with the Nasdaq listing standards and SEC rules for audit committee member independence and that each audit committee member is able to read and understand fundamental financial statements as required by the Nasdaq listing standards. The board also determined that Mr. Brandt, the chair of the committee, is an “audit committee financial expert” as defined in the SEC rules.

Compensation committee. The purpose of the compensation committee is to discharge certain responsibilities of the board relating to executive compensation; to oversee incentive, equity-based plans and other compensatory plans in which the Company’s executive officers and/or directors participate; and to produce an annual report on executive compensation for inclusion as required in the Company’s annual proxy statement. The compensation committee is authorized to perform the responsibilities of the committee referenced above and described in the charter. A copy of the compensation committee charter is available on the investors’ page of our web site athttp://investor.lamresearch.com/corporate-governance.cfm.

The board concluded that all members of the compensation committee are non-employee directors who are independent in accordance with Rule 16b-3 of the Exchange Act and the Nasdaq criteria for director and compensation committee member independence and who are outside directors for purposes of section 162(m) of the Code.

Nominating and governance committee. The purpose of the nominating and governance committee is to identify individuals qualified to serve as members of the board of the Company, to recommend nominees for election as directors of the Company, to oversee self-evaluations of the board’s performance, to develop and recommend corporate governance guidelines to the board, and to provide oversight with respect to corporate governance. A copy of the nominating and governance committee charter is available on the investors’ page of our web site athttp://investor.lamresearch.com/corporate-governance.cfm.

The board concluded that all nominating and governance committee members are non-employee directors who are independent in accordance with the Nasdaq criteria for director independence.

The nominating and governance committee will consider for nomination persons properly nominated by stockholders in accordance with the Company’s bylaws and other procedures described below under “Voting and Meeting Information –

Other Meeting Information – Stockholder-Initiated Proposals and Nominations for 2017 Annual Meeting.” Subject to then-applicable law, stockholder nominations for director will be evaluated by the Company’s nominating and governance committee in accordance with the same criteria as is applied to candidates identified by the nominating and governance committee or other sources.

Board’s Role in Risk Oversightand Engagement

General. The Board oversees the management of the business and affairs of the Company. In this oversight role, the Board serves as the ultimate decision-making body of the Company, except for those matters reserved for the stockholders. Board agendas facilitate Board/management dialogue regarding drivers of long-term stockholder value and key strategic and operational risks.

The boardBoard and its committees have the primary responsibilities for:

overseeing the Company’s business strategies, and approving the Company’s capital allocation plans and priorities, annual operating plan, and major corporate actions as set forth in the belowsub-bullets;
°A strategic plan is presented to the Board for discussion on an annual basis, and updates are presented at each quarterly Board meeting;
°An operating plan is presented to the Board for discussion on an annual basis, and updates are presented at each quarterly Board meeting;
°Capital allocation plans and priorities are discussed on a quarterly basis; and
°Other major corporate actions are presented and discussed as part of strategic plan updates and as special agenda topics, as appropriate.
appointing, annually evaluating the performance of, and approving the compensation of the CEO;
reviewing with the CEO the performance of the Company’s other executive officers and approving their compensation;
reviewing and approving CEO and top leadership succession planning;
advising and mentoring the Company’s senior management;
overseeing the Company’s internal controls over financial reporting and disclosure controls and procedures;
overseeing the Company’s ethics and compliance programs, including the Company’s code of ethics; and
overseeing the Company’s material risks and enterprise risk management processes and programs.

Risk Oversight. The Board is actively engaged in risk oversight. Management regularly reports to the boardBoard on its risk assessments and risk mitigation strategies for the major risks of our business. Generally, the boardBoard exercises its oversight responsibility directly; however, in specific cases, such responsibility has been delegated to board committees.committees of the Board. Committees that have

been charged with risk oversight regularly report to the boardBoard on those risk matters within their

areas of responsibility. Risk oversight responsibility has been delegated to board committees of the Board as follows:set forth below.

 

Our audit committee oversees risks related to the Company’s accounting and financial reporting, internal controls, and the auditing of our annual financial statements.statement audits, independent registered public accounting firm, internal audit function, and related party transactions. The audit committee also oversees risks related to our independent registered public accounting firmthe review and our internal audit function.monitoring of information security policies, with the responsibility of recommending such Board action as it deems appropriate.
Our compensation and human resources committee oversees risks related to the Company’s equity, and executive compensation programs and plans.plans, and organizational risks.
Our nominating and governance committee oversees risks related to director independence, boardBoard and boardBoard committee composition, and CEO succession planning.

Stockholder Engagement

We believe that engagement with our stockholders is an important part of effective corporate governance. Our senior management, including our president and CEO, chief financial officer (CFO) and members of our Investor Relations team, maintain regular contact with a broad base of investors through quarterly earnings calls, meetings, investor day events, industry conferences and other investor and industry events. In addition, we regularly engage with major stockholders on governance matters, including compensation and environmental and social governance. The outreach is generally conducted outside of our proxy solicitation period and, depending on the topics, includes members of our Legal, Investor Relations, Corporate Communications and Human Resources functions. During the proxy solicitation period, we may also engage with our stockholders about topics to be addressed at our annual meeting of stockholders. We share the opinions and information received from our stockholders with our board of directors. Over the last few years, we have heard from stockholders about their views on subjects such as proxy access, returning capital to stockholders, director tenure, board refreshment, director skills and experiences, board and workforce diversity, and environmental and social governance matters. Understanding the feedback shared with us, we have adopted proxy access, have maintained our focus on board diversification, board refreshment based on skills and experiences, workforce diversity, and pay for performance, and have enhanced our proxy statement and Corporate Social Responsibility (CSR) Report disclosures.

Corporate Social Responsibility

Our core values underpin our commitments to sustainable growth and making a positive contribution to people and the planet. We are committed to responsible business practices and continuous improvement in our own operations, in our partnerships with our customers, and across our supply chain.

Workplace. Guided by our Core Value of mutual trust and respect, we strive to provide a work environment that fosters inclusion and diversity, ensures every voice can be heard and enables employees to achieve their full potential. We aim to maintain a collaborative, supportive, and opportunity-rich culture that enhances innovation and employee engagement.

Community. We believe that positively involving our employees and giving back to our community is central to our culture and aligned with our Core Values. Our charitable giving includes employee volunteer hours, the Lam Research Foundation grant program, and employee donations.

Our charitable grantmaking is focused on two key areas: science, technology, engineering and math (STEM) education/education support programs and “quality of life” grants for social impact. As a successful equipment supplier in the technology industry, we encourage students to pursue STEM careers, engage in activities that give young people visibility into careers in the semiconductor industry, and support those students who demonstrate excellence in the STEM fields.

Operations:Environment and Safety. Lam Research carefully monitors and manages its environmental impact across the business – from procurement to manufacturing, during research and development (R&D) and product design, and throughout a product’s lifecycle.

We aim to protect the health and safety of our personnel throughout our entire operation, including our offices, manufacturing sites, R&D centers, and our field team working at customer sites.

Responsible and Accountable Global Supply Chain. All direct suppliers are expected to comply with our Global Supplier Code of Conduct and the Responsible Business Alliance Code of Conduct, both of which cover ethics, integrity, transparency, anti-corruption, conflict minerals, human trafficking, environmental sustainability, and social responsibility.

Lam Research is a proponent of industry standards and has adopted the standard guidelines published by the Institute for Supply Management (ISM), “Principles And Standards Of Ethical Supply Management Conduct With Guidelines.” Lam Research has also adopted the Responsible Business Alliance (RBA) Code of Conduct.

For more information about our corporate social responsibility efforts, please refer to our report available on the Environmental Health & Safety section our website athttps://www.lamresearch.com/company/corporate-social-responsibility/environmental-health-safety/.

 

 

 

Director Compensation

 

Our director compensation is designed to attract and retain high caliberhigh-caliber directors and to align director interests with those of stockholders. Director compensation is reviewed and determined annually by the boardBoard (in the case of Messrs. NewberryMr. Archer, as our president and Anstice,CEO, by the independent members of the board), uponBoard, and in the case of Mr. Newberry, by all other independent members of the Board) following a recommendation from the compensation [and people] committee.Non-employee director compensation (including the compensation of Mr. Newberry, who is currently ournon-employee chairman) is described below. Mr. Anstice,Archer, whose compensation as president and CEO is described below under “Compensation Matters – Executive Compensation and Other Information – Compensation Discussion and Analysis,” does not receive additional compensation for his service on the board.Board.

Non-employee director compensation.Non-employee directors receive annual cash retainers and equity awards. The chairman of the board, committee chairs,Board, the lead independent director, and committee chairs and members receive additional cash retainers.Non-employee directors who join the boardBoard or a committee midyearmid-year receivepro-rated cash retainers and equity awards, as applicable. Ournon-employee director compensation program is based on service during the calendar year; however, SEC rules require us to report compensation in this proxy statement on a fiscal-year basis. Cash compensation paid tonon-employee directors for the fiscal year ended June 26, 2016 is shown in the table below,30, 2019, together with the annual cash compensation program components in effect for calendar years 20152019 and 2016.2018, is shown below.

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Lam Research Corporation 2019 Proxy Statement15

Figure 7.12. Director Annual Retainers

 

Annual Retainers Calendar
Year 2016
($)		 Calendar
Year 2015
($)		 Fiscal
Year 2016
($)		 
 
Annual Retainers (1) Calendar
Year 2019
($)		 Calendar
Year 2018
($)		 Fiscal
Year 2019
($)		 
Non-employee Director 65,000   60,000   62,500   

 

75,000

 

 

 

75,000

 

 

 

75,000

 

Chairman

 

 

120,000

 

 

 

120,000

 

 

 

120,000

 

Lead Independent Director 22,500   20,000   21,250   

 

27,500

 

 

 

27,500

 

 

 

27,500

 

Chairman 280,000   280,000   280,000  
Audit Committee – Chair 30,000   25,000   27,500   

 

30,000

 

 

 

30,000

 

 

 

30,000

 

Audit Committee – Member 12,500   12,500   12,500   

 

12,500

 

 

 

12,500

 

 

 

12,500

 

Compensation Committee – Chair 20,000   20,000   20,000  
Compensation Committee – Member 10,000   10,000   10,000  

Compensation and Human Resources Committee – Chair

 

 

20,000

 

 

 

20,000

 

 

 

20,000

 

Compensation and Human Resources Committee – Member

 

 

10,000

 

 

 

10,000

 

 

 

10,000

 

Nominating and Governance Committee – Chair 15,000   10,000   12,500   

 

15,000

 

 

 

15,000

 

 

 

15,000

 

Nominating and Governance Committee – Member 5,000   5,000   5,000   

 

5,500

 

 

 

5,500

 

 

 

5,500

 

(1)

Each director is entitled to an annualnon-employee director cash retainer. Directors are also entitled to supplemental retainer fees if they have board leadership positions (e.g., chairman or lead independent director) and/or are either committee leaders or members.

Eachnon-employee director also receives an annual equity grant on the first Friday following the annual meeting (or, if the designated date falls within a blackout window under applicable Company policies, on the first following business day such grant is permissible under those policies) with a targeted grant date value equal to $200,000 (the number of RSUs subject to the award is determined by dividing $200,000 by the closing price of a share of Company common stock as of the date of grant, rounded down to the nearest 10 shares). These grants generally vest on October 31 in the

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Lam Research Corporation 2015 Proxy Statement11

year following the grant and are subject to the terms and conditions of the Company’s 2015 Stock Incentive Plan, as amended, or the “2015 Plan,” and the applicable award agreements. These grants immediately vest in full: (i)(1) if anon-employee director dies or becomes subject to a “disability” (as determined pursuant to the 2015 Plan), (ii)(2) upon the occurrence of a “Corporate Transaction” (as defined in the 2015 Plan), or (iii)(3) on the date of the annual meeting, if the annual meeting during the year in which the award was expected to vest occurs prior to the vest date and thenon-employee director is notre-elected or retires or resigns effective immediately prior to the annual meeting.Non-employee directors who commence service after the annual award has been granted receive on the first Friday following the first regularly scheduled, quarterly Board meeting attended apro-rated grant based on the number of regular boardregularly scheduled, quarterly Board meetings remaining in the year as of the effective date of the director’s election.appointment. Thepro-rated grants are subject to the same vesting schedule, terms and conditions as the annual equity awards, except that if the award is granted on the first Friday following the regularly scheduled quarterly November Board meeting, the grant vests immediately.

On November 6, 2015,9, 2018, each director at such time other than Mr. Anstice,the president and Dr. Tsai who was not a director during fiscal year 2016,CEO received a grant of 2,6001,350 RSUs for servicesservice during calendar year 2016. 2019.

Unless there is an acceleration event, these RSUs granted to each current director for service during calendar year 2019 will vest in full on October 31, 2016,2019, subject to the director’s continued service on the board.Board.

Chairman compensation. Mr. Newberry, who served as vice-chairman from December 7, 2010 until November 1, 2012 and since such date has served as chairman, has a chairman’s agreement documenting his responsibilities, described above under “Governance Matters – Corporate Governance – Leadership Structure of the Board,” and compensation. Mr. Newberry entered into a chairman’s agreement with the Company commencing on January 1, 2016 and expiring on December 31, 2016, subject to the right of earlier termination in certain circumstances and a one year extension upon mutual written agreement of the parties. The agreement provides that Mr. Newberry will serve as chairman (and not as an employee or officer) and in addition to his regular compensation as anon-employee director, he receivesreceived an additional cash retainer of $280,000 on the same date.$120,000.

Mr. Newberry was eligible to participate through 2014 in the Company’s Elective Deferred Compensation Plan that is generally applicable to executives of the Company, subject to the general terms and conditions of such plan. He continues to maintain a balance in the plan until he no longer performs service for the Company as a director, but is no longer eligible to defer any compensation into the plan.

The following table shows compensation for fiscal year 20162019 for persons serving as directors during fiscal 2016year 2019 other than Mr. Archer and Martin B. Anstice:

Figure 8. FY201613. FY2019 Director Compensation

 

Director Compensation for Fiscal Year 2016 
Director Compensation for Fiscal Year 2019Director Compensation for Fiscal Year 2019 
 Fees
Earned
or Paid
in Cash
($)		 Stock
Awards
($) (1)(2)		 

All Other
Compen-

sation
($) (3)

 

Total

($)

  Fees
Earned
or Paid
in Cash
($)		 Stock
Awards
($) (1)		 All Other
Compen-
sation
($) (2)		 Total
($)		 
Stephen G. Newberry  345,000(4)  196,846   23,962   565,808   

 

 

 

 

195,000

 

 

(3) 

 

 

 

 

 

 

193,820

 

 

(4) 

 

 

 

 

 

 

31,030

 

 

 

 

 

 

 

 

 

419,850

 

 

 

 

Sohail U. Ahmed(5)

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

—  

 

 

 

 

Eric K. Brandt  95,000(5)  196,846    —     291,846   

 

 

 

 

105,000

 

 

(6) 

 

 

 

 

 

 

193,820

 

 

(4) 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

298,820

 

 

 

 

Michael R. Cannon  82,500(6)  196,846    —     279,346   

 

 

 

 

93,000

 

 

(7) 

 

 

 

 

 

 

193,820

 

 

(4) 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

286,820

 

 

 

 

Youssef A. El-Mansy  75,000(7)  196,846   23,962   295,808   

 

 

 

 

85,000

 

 

(8) 

 

 

 

 

 

 

193,820

 

 

(4) 

 

 

 

 

 

 

31,030

 

 

 

 

 

 

 

 

 

309,850

 

 

 

 

Christine A. Heckart  78,625(8)  196,846    —     275,471   

 

 

 

 

87,500

 

 

(9) 

 

 

 

 

 

 

193,820

 

 

(4) 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

281,320

 

 

 

 

Grant M. Inman  —  (9)   —     23,962   23,962  
Catherine P. Lego  90,875(10)  196,846   22,748   310,469   

 

 

 

 

100,500

 

 

(10) 

 

 

 

 

 

 

193,820

 

 

(4) 

 

 

 

 

 

 

29,668

 

 

 

 

 

 

 

 

 

323,988

 

 

 

 

Krishna C. Saraswat  65,000(11)  196,846    —     261,846  
William R. Spivey  —  (12)   —     23,962   23,962  

Bethany J. Mayer(5)

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

—  

 

 

 

 

Abhijit Y. Talwalkar  120,500(13)  196,846    —     317,346   

 

 

 

 

127,500

 

 

(11) 

 

 

 

 

 

 

193,820

 

 

(4) 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

321,320

 

 

 

 

Lih Shyng (Rick L.) Tsai

 

 

 

 

 

75,000

 

 

(12) 

 

 

 

 

 

 

193,820

 

 

(4) 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

268,820

 

 

 

 

Leslie F. Varon(5)

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

—  

 

 

 

 

 

 

 

 

 

—  

 

 

 

 

 

(1) 

The amounts shown in this column represent the grant date fair value of unvested RSU awards granted during fiscal year 20162019 in accordance with Financial Accounting Standards Board Accounting Standards Codification 718, Compensation – Stock Compensation, or “ASC 718.” However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. The assumptions used to calculate the fair value of the RSUs in fiscal year 20162019 are set forth in Note 45 to the Consolidated Financial Statements of the Company’s Annual Reportannual report on Form10-K for the fiscal year ended June 26, 2016.30, 2019.

 

(2) 

Represents the portion of medical, dental, and vision premiums paid by the Company.

(3)

Mr. Newberry received $195,000, representing his $120,000 chairman retainer and $75,000 annual retainer as a director.

(4)

On November 6, 2015,9, 2018, eachnon-employee director who was on the board at such time received an annual grant of 2,6001,350 RSUs based on the $76.90$147.85 closing price of Lam’s common stock and the target value of $200,000, rounded down to the nearest 10 shares.

(3)Represents the portion of medical, dental, and vision premiums paid by the Company.

(4)Mr. Newberry received $345,000, representing his $280,000 chairman retainer and $65,000 annual retainer as a director.

 

(5) 

Mr. Ahmed was appointed to the Board effective June 3, 2019. Mses. Mayer and Varon were appointed to the Board effective May 9, 2019. Each received prorated annual retainers and RSU awards in fiscal year 2020 for service during calendar year 2019.

(6)

Mr. Brandt received $95,000,$105,000, representing his $65,000$75,000 annual retainer and $30,000 as the chair of the audit committee.

 

(6)(7) 

Mr. Cannon received $82,500,$93,000, representing his $65,000$75,000 annual retainer, $12,500 as a member of the audit committee, and $5,000$5,500 as a member of the nominating and governance committee.

 

(7)(8) 

Dr. El-Mansy received $75,000,$85,000, representing his $65,000$75,000 annual retainer and $10,000 as a member of the compensation and human resources committee.

(8)(9) 

Ms. Heckart received $78,625,$87,500, representing her $65,000$75,000 annual retainer and $12,500 as a member of the audit committee, and $1,125 as a partial year member of the compensation committee.

(9)Mr. Inman retired in November 2015. All payments to Mr. Inman for the relevant fiscal year were paid in the prior fiscal year period.

 

(10) 

Ms. Lego received $90,875,$100,500, representing her $65,000$75,000 annual retainer, $20,000 as a the chair of the compensation and human resources committee, $5,000and $5,500 as a member of the nominating and governance committee, and $875 as a partial year member of the audit committee.

 

(11) Dr. Saraswat received $65,000, representing his $65,000 annual retainer.

(12)Dr. Spivey retired in November 2015. All payments to Dr. Spivey for the relevant fiscal year were paid in the prior fiscal year period.

(13)Mr. Talwalkar received $120,500,$127,500, representing his $65,000$75,000 annual retainer, $22,500$27,500 as lead independent director, $10,000 as a member of the compensation and human resources committee, and $15,000 as the chair of the nominating and governance committee, and $8,000 ascommittee.

(12)

Dr. Tsai received a partial year chair of the compensation committee.$75,000 annual retainer.

Other benefits.Any members of the boardBoard enrolled in the Company’s health plans on or prior to December 31, 2012, can continue to participate after retirement from the boardBoard in the Company’s Retiree Health Plans. The boardBoard eliminated this benefit for any person who became a director after December 31, 2012. The most recent valuation of the Company’s accumulated post-retirement benefit obligation under Accounting Standards Codification 715,Compensation-

Retirement Compensation-Retirement Benefits, or “ASC 715,” as of June 26, 2016,30, 2019, for eligible former directors and the current directors who may become eligible is shown below. Factors affecting the amount of post-retirement benefit obligation include current age, at enrollment, age at retirement, coverage tier (e.g., single, plus spouse, plus family), interest rate, and length of service.

Figure 9. FY201614. FY2019 Accumulated Post-Retirement Benefit Obligations

 

Director Compensation for Fiscal Year 20162019 
Name Accumulated
Post-Retirement
Benefit Obligation,
as of June 26,  201630, 2019
($)		 

Stephen G. Newberry

 

869,000

847,000

Sohail U. Ahmed

 

—  

Eric K. Brandt

 

—  

Michael R. Cannon

 

—  

Youssef A.El-Mansy

 

574,000

584,000

Christine A. Heckart

 

—  

Grant M. Inman

Catherine P. Lego

 

438,000

487,000

Catherine P. Lego

Bethany J. Mayer

 

496,000

—  

Krishna C. Saraswat

Abhijit Y. Talwalkar

 

—  

William R. Spivey

Lih Shyng (Rick L.) Tsai

 

807,000

—  

Abhijit Y. Talwalkar

Leslie F. Varon

 

—  

 

 

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Lam Research Corporation 20162019 Proxy Statement 1317

    

 

Compensation Matters

 

 

Executive Compensation and Other Information

Compensation Discussion and Analysis

This Compensation Discussion and Analysis, or “CD&A,” describes our executive compensation program. It is organized into the following four sections:

 

I. Overview of Executive Compensation (Including Our(including our Philosophy and Program Design)
II. Executive Compensation Governance and Procedures
III. Primary Components of Named Executive Officer Compensation; Calendar Year 20152018 Compensation Payouts; Calendar Year 20162019 Compensation Targets and Metrics
IV. Tax and Accounting Considerations

Our CD&A discusses compensation earned by our fiscal year 20162019 “Named Executive Officers,” or “NEOs,” who are as follows:

Figure 10. FY201615. FY2019 NEOs

 

Named Executive Officer  Position(s)
Martin B. Anstice

Timothy M. Archer

  

President and Chief Executive Officer

Timothy M. ArcherExecutive Vice (effective December 5, 2018)

President and Chief Operating Officer (through December 5, 2018)

Douglas R. Bettinger

  

Executive Vice President and Chief Financial Officer

Richard A. Gottscho

  

Executive Vice President, Global ProductsChief Technology Officer

Sarah A. O’Dowd

Patrick J. Lord

  

Senior Vice President and General Manager, Customer Support Business Group (CSBG)

Vahid Vahedi

Senior Vice President and General Manager, Etch Business Unit

Seshasayee (Sesha) Varadarajan

Senior Vice President and General Manager, Deposition Business Unit

Martin B. Anstice

Former Chief LegalExecutive Officer and Secretary(through December 5, 2018)

On December 5, 2018, Martin B. Anstice resigned as CEO of the Company and a member of the Board, terminating his participation in the calendar year 2018 annual incentive program and canceling all of his unvested equity awards under the Company’s long-term incentive programs. In order to create a long-term, stable leadership structure, the Board took the following actions. Pursuant to the Company’s succession plan, the Board immediately appointed Mr. Archer, the Company’s then president and chief operating officer (“COO”), as CEO and as a member of the Board. The Board also took steps to retain Mr. Bettinger as CFO and, in lieu of appointing a COO, expanded Mr. Bettinger’s responsibilities to cover certain operational matters. The Board issued longer-term retentive awards to both of them and adjusted their compensation accordingly. The details are described in more detail under each element of our compensation program, including “Compensation Relating to Management Transition,”under “III. Primary Components of Named Executive Officer Compensation; Calendar Year 2018 Compensation Payouts; Calendar 2019 Compensation Targets and Metrics.”

I. OVERVIEW OF EXECUTIVE COMPENSATION

To align with stockholders’ interests, our executive compensation program is designed to foster apay-for-performance culture and achieve the executive compensation objectives set forth in “Executive Compensation Philosophy and Program Design – Executive Compensation Philosophy” below. We have structured our compensation program and payouts to reflect these goals. Highlights of our executive compensation program are listed in “Proxy Statement Summary – Figure 6. Executive Compensation Highlights” above. Our president and CEO’s compensation in relation to each of our revenue and net income, isas well as the Company’s cumulative five-year total shareholder return on common stock compared against the cumulative returns of other indexes, are shown below.

Figure 11. FY2011-FY2016 16. FY2014-FY2019 CEO Pay for Performance

CEO Pay for Performance

 

 

LOGOLOGO

(1)

“CEO Total Compensation” consists of base salary, annual incentive payments, accrued values of the cash payments under the long-term incentive program when applicable and grant date fair values of equity-based awards both under the long-term incentive program or otherwise, and all other compensation as reported in the “Summary Compensation Table” below.

 

(2)

The CEO Total Compensation for fiscal year 2012 reflects2019 represents Mr. Anstice’s successionArcher’s compensation for service as president and COO until December 5, 2018 and thereafter until the end of Mr. Newberrythe 2019 fiscal

year as our Presidentpresident and CEO as of January 1, 2012.

(3)The CEO Total CompensationCEO; for fiscal years 2016, 2015 and 2014 reflects awards covering a three-year performance period as comparedadditional information with respect to the two-year period in all other prior fiscal years. The one-time 2014 Gap Year Award,special equity award associated with a value of $3,074,271 is reflected in the “Executive Compensation Tables – Summary Compensation Table” below, is not included in fiscal year 2014 CEO Total Compensation in order to allow readers to more easily compare compensation in prior and subsequent periods and better reflect the compensation payable in any fiscal year following the transition. SeeMr. Archer’s promotion see “III. Primary Components of Named Executive Officer Compensation; Calendar Year 20152018 Compensation Payouts; Calendar Year 20162019 Compensation Targets and Metrics – Long-Term Incentive Program – DesignCompensation Relating to Management Transition.” for additional information regardingFor prior years, the impactCEO Total Compensation relates to the compensation of the Gap Year Award.applicable CEO.

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Lam Research Corporation 2019 Proxy Statement19

The graph below compares Lam’s cumulative five-year total shareholder return on common stock with the cumulative total returns of the Nasdaq Composite Index, the Standard & Poor’s (“S&P”) 500 Index, and the Philadelphia Semiconductor Sector Index. The graph tracks the performance of a $100 investment in our common stock and in each of the indices (with the reinvestment of all dividends) for the five years ended June 30, 2019.

COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN*

Among the Company, the Nasdaq Company Index,

the S&P 500 Index and the Philadelphia Semiconductor Sector Index

LOGO

*

$100 invested on June 29, 2014 in stock or June 30, 2014 in index, including reinvestment of dividends. Indexes calculated onmonth-end basis.

Copyright© 2019 Standard & Poor’s, a division of S&P Global. All rights reserved.

To understand our executive compensation program fully, we feelbelieve it is important to understand:

 

Ourour business, our industry environment, and our financial performance; and
Ourour executive compensation philosophy and program design.

Our Business, Our Industry Environment, and Our Financial Performance

 

 

Lam Research has been an innovative supplierAn overview of wafer fabrication equipmentour business and services to the semiconductor industry for more than 35 years. Our customers include semiconductor manufacturers that make memory, microprocessors, and other logic integrated circuits for a wide range of electronics; including cell phones, computers, tablets, storage devices, and networking equipment.environment is set forth in “Proxy Statement Summary” above.

Our market-leading products are designed to help our customers build the smaller, faster and more powerful devices that are necessary to power the capabilities required by end users. The process of integrated circuits fabrication consists of a complex series of process and preparation steps, and our product offerings in deposition, etch and clean address a number of the most critical steps in the fabrication process. We leverage our expertise in semiconductor processing to develop technology and/or productivity solutions that typically benefit our customers through lower defect rates, enhanced yields, faster processing time, and reduced cost as well as by facilitating their ability to meet more stringent performance and design standards.

Although we have a June fiscal year end, our executive compensation program is generally designed and oriented on a calendar-year basis to correspond with our calendar-year-based business planning. This CD&A generally reflects a calendar-year orientation rather than a fiscal yearfiscal-year orientation, as shown below. The Executive Compensation Tables at the end of this CD&A are based on our fiscal year, as required by SEC regulations.

Figure 12.17. Executive Compensation Calendar-Year Orientation

 

LOGO

LOGO

In calendar year 2015,2018, demand for semiconductor equipment increasedcontinued to increase relative to calendar year 2014,2017, as technology inflections ledcontinued to lead to higher investments.investments from our customers. Against this backdrop, Lam delivered another year of record financial performance.

Highlights for calendar year 2015:2018:

 

Achievedachieved record revenues of approximately $5.9$10.9 billion for the calendar year, representing a 21%14% increase over calendar year 2014;2017;
Generatedgenerated operating cash flow of approximately $1.2$3.1 billion, which represents approximately 21%29% of revenues; and
Repurchased

generated sufficient cash flow to support payment of approximately 3.4 million shares of common stock, returning approximately $259 million to stockholders; and
Paid approximately $153$504 million in dividends to stockholders.

In October 2015, we announced an agreementstockholders, a 72% increase compared to combine with KLA-Tencor Corporation (“KLA-Tencor”), bringing together Lam’s capabilities in deposition, etch and clean with KLA-Tencor’s portfolio of inspection and metrology solutions.

calendar year 2017.

In the first half of calendar year 2016, investments for2019, wafer fabrication equipment spending have remained solid as customers transitionlevels reduced mainly related to next generation technology nodes, which are increasingly complex and more costlythe memory segment. Customers lowered their investments in memory capacity in response to produce.the overall demand environment.

In a reduced wafer fabrication spending environment, Lam has continued to generate solid operating income and cash generation with revenues of $2.9$4.8 billion, and operating cash flows from operations of $607 million$1.8 billion, earned from the March and June 20162019 quarters combined.

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Lam Research Corporation 2016 Proxy Statement15

Executive Compensation Philosophy and Program Design

 

 

Executive Compensation Philosophy

The philosophy of our compensation and human resources committee that guided this year’s awards and payout decisions is that our executive compensation program should:

 

provide competitive compensation to attract and retain top talent;
provide total compensation packages that are fair to employees and reward corporate, organizational, and individual performance;
align pay with business objectives while driving exceptional performance;
optimize value to employees while maintaining cost-effectiveness to the Company;
create stockholder value over the long term;long-term;
align our annual program to short-termannual performance and our long-term program to longer-term performance;
recognize that a long-term, high-quality management team is a competitive differentiator for Lam, enhancing customer trust/market share and, therefore, stockholder value; and
provide rewards when results have been demonstrated.

Our compensation and human resources committee’s executive compensation objectives are to motivate:

 

performance that creates long-term stockholder value;
outstanding performance at the corporate, organization, and individual levels; and
retention of a long-term, high-quality management team.

Program Design

Our program design incorporates an annual review of the compensation elements. However, a review can be undertaken whenever there is a change in roles or responsibilities or a new hire joins the Company.

Our program design uses a mix of short-annual and long-term components, and a mix of cash and equity components. Our executive compensation program includes base salary,salary; an annual incentive program, or “AIP,” and“AIP”; a long-term incentive program, or “LTIP,”“LTIP”; promotion, retention and/or new hire awards whenever necessary, which is not usual; as well as stock ownership guidelines and a compensation recovery policy. As illustrated below, our program design is weighted towardstoward performance and stockholder value. The performance-based program components include AIP cash payouts and market-based equity and stock option awards under the LTIP.

 

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Lam Research Corporation 2019 Proxy Statement21

Figure 13.18. NEO Compensation Target Pay Mix Averages(1)

 

LOGO

LOGO

 

(1) 

Data for 2016, 20152019, 2018, and 20142017 charts is for the then-applicable NEOs (i.e., fiscal year 20142019 NEOs are represented in the 20142019 chart, etc.).

 

(2)In 2016, as part of the

The Company’s LTIP design (in whichprovides that 50% of the target award opportunity wasis awarded in Market-based Performance Restricted Stock UnitsPRSUs and the remaining 50% in a combination of stock options and service-based RSUs with at least 10% of the award in each of these two vehicles)vehicles. Except as provided in footnote 4, in 2019, the percentagepercentages of the LTIP target award opportunity awarded in stock options and service-based RSUs waswere 20% and 30%, respectively. In 20152017 and 2014,2018, the corresponding percentages awarded in stock options and service-based RSUs were 10% and 40%, respectively.. See “III. Primary Components of Named Executive Officer Compensation; Calendar Year 20152018 Compensation Payouts; Calendar Year 20162019 Compensation Targets and Metrics – Long-Term Incentive Program-Design”Program – Design” for further information regarding the impact of such a target pay mix.

 

(3)

For purposes of this illustration, we include Market-based PRSUs and stock options as performance-based, but do not classify service-based RSUs as performance-based.

(4)In 2014,

Data for 2018 and 2019 does not include the Company issued one-time Gapservice-based RSUs and stock options awarded to Mr. Archer and the service-based RSUs awarded to Mr. Bettinger in connection with the management transition. See “III. Primary Components of NamedExecutive Officer Compensation; Calendar Year Awards2018 Compensation Payouts; Calendar Year 2019 Compensation Targets and Metrics – Compensation Relating to bridgeManagement Transition” for further information regarding the transition from a two- to three-year LTIP design. The amount and terms of such awards. Theseone-time 2014 Gap Year LTIP equity 2018 awards are not included in 2014the 2018 or 2019 target pay mix in order to allow readersthe reader to more easily compare pay mixes relative to prior and future and prior periods. See “III. Primary Components of Named Executive Officer Compensation; Calendar Year 2015 Compensation Payouts; Calendar Year 2016 Compensation Targets and Metrics – Long-Term Incentive Program-Design” regarding the impact of the Gap Year Award.

 

(4)For purposes of this illustration, we include Market-based Performance RSUs and stock options as performance based, but do not classify service-based RSUs as performance based.

For senior vice presidents and above, we also have stock ownership guidelines that foster a long-term orientation. Our stock ownership guidelines for our NEOs and certain other senior executives are shown below. The requirements are specified in the alternative of shares or dollars to allow for stock price volatility. Ownership levels as shown below must be achieved within five years of appointment to one of the

below positions. Increased requirements due to promotions or an increase in the

ownership guideline must be achieved within five years of promotion or a change in the guidelines. At the end of fiscal year 2016,2019, all of the NEOs were in compliance with our stock ownership guidelines or have a period of time remaining under the guidelines to meet the required ownership level.

 

 

Figure 14.19. Executive Stock Ownership Guidelines

 

Position  Guidelines (lesser of)

President and Chief Executive Officer

  5x base salary or 65,00050,000 shares

Executive Vice Presidents

  2x base salary or 20,00010,000 shares

Senior Vice Presidents

  1x base salary or 10,0005,000 shares

Compensation Recovery, or “Clawback” Policy

 

 

Our executive officers covered by section 16 of the Exchange Act are subject to the Company’s compensation recovery, or “clawback,” policy. The clawback policy was adopted in August 2014 and will enable us to recover, the excess amount of cash incentive-based compensation issued starting in calendar year 2015 to covered individuals when a material restatement of financial results is required within 36 months of the issuance of the original financial statements.statements, the excess amount of cash incentive-based compensation issued starting

in calendar year 2015 to officers covered by section 16 of the Exchange Act when a material restatement of financial results is required. A covered individual’s fraud must have materially contributed to the need to issue restated financial statements in order for the clawback

policy to apply to that individual. The recovery of compensation is not the exclusive remedy available in the event that the clawback policy is triggered.

Highlights of Preferred Compensation-Related Policies, Practices and Provisions

We maintain preferred policies, practices and provisions related to or in our compensation program, which include the material ones highlighted in “Proxy Statement Summary – Figure4. Executive Compensation Highlights.”

 

 

II. EXECUTIVE COMPENSATION GOVERNANCE AND PROCEDURES

 

Role of the Compensation and Human Resources Committee

 

 

Our board of directorsBoard has delegated certain responsibilities to the compensation and human resources committee, or the “committee,” through a formal charter. The committee(1) oversees the compensation programs in which our president and chief executive officer and hisour CEO’s direct executive and senior vice president reports participate. The independent members of our board of directorsBoard approve the compensation packages and payouts for our CEO. The CEO is not present for any decisions regarding his compensation packages and payouts.

Committee responsibilities include but are not limited to:

reviewing and approving the Company’s executive compensation philosophy, objectives, and strategies;
reviewing and approving the appropriate peer group companies for purposes of evaluating the Company’s compensation competitiveness;
causing the board of directorsBoard to perform a periodic performance evaluation of the CEO;
recommending to the independent members of the board of directorsBoard (as determined under both Nasdaq’s listing standards and section 162(m) of the Code) corporate goals and objectives under the

Company’s compensation plans, compensation packages (e.g., annual base salary level, annual cash incentive award, long-term incentive award and any employment agreement, severance arrangement,change-in-control arrangement, equity grant, or special or supplemental benefits, and any material amendment to any of the foregoing) as applicable to the CEO, and compensation payouts for the CEO;

annually reviewing with the CEO the performance of the Company’s other executive officers in light of the Company’s executive compensation goals and objectives and approving the compensation packages and compensation payouts for such individuals;
reviewing and recommending for appropriate boardBoard action all cash, equity-based and other compensation packages, and compensation payouts applicable to the chairman and other members of the board;Board; and
reviewing, and approving where appropriate, equity- basedequity-based compensation plans.

(1)For purposes of this CD&A, a reference to a compensation action or decision by the committee with respect to our chairman and our president and chief executive officer, means an action or decision by the independent members of our board of directors upon the recommendation of the committee and, in the case of all other NEOs, an action or decision by the compensation committee.

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Lam Research Corporation 2016 Proxy Statement17

The committee is authorized to delegate such of its authority and responsibilities as the committeeit deems proper and consistent with legal requirements to its members, of the committee, any other committee of the board andBoard and/or one or more officers of the Company, in accordance with the provisions of the Delaware General Corporation Law. For additional information on the committee’s responsibilities and authorities, see “Governance Matters – Corporate Governance – Board Committees – Compensation–Compensation and Human Resources Committee” above.

In order to carry out these responsibilities, the committee receives and reviews information, analysisanalyses, and proposals prepared by our management and by the committee’s compensation consultant (see “Role of Committee Advisors” below).

Role of Committee Advisors

 

 

The committee is authorized to engage its own independent advisors to assist in carrying out its responsibilities. The committee has engaged the services of Compensia, Inc., or “Compensia,” a national compensation consulting firm, as the committee’s compensation consultant. Compensia provides the committee with independent and objective guidance regarding the amount and types of compensation for our chairman,non-employee directors, and executive officers, and how these amounts and types of compensation compare to other companies’ compensation practices, as well as guidance on market trends, evolving regulatory requirements, compensation of our independent directors, peer group composition, and other matters as requested by the committee.

Representatives of Compensia regularly attend committee meetings (including executive sessions without management present), communicate with the committee chair outside of meetings, and assist the committee with the preparationits consideration of performance metrics and goals. Compensia reports to the

(1)

For purposes of this CD&A, a reference to a compensation action or decision by the committee with respect to our chairman and our chief executive officer, means an action or decision by the independent members of our Board after considering the recommendation of the committee and, in the case of all other NEOs, an action or decision by the compensation and human resources committee.

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Lam Research Corporation 2019 Proxy Statement23

committee, not to management. At the committee’s request, Compensia meets with members of management to gather and discuss information that is relevant to advising the committee. The committee may replace Compensia or hire additional advisors at any time. Compensia has not provided any other services to the committee or to our management, and has received no compensation from us other than with respect to the services described above. The committee assessed the independence of Compensia pursuant to SEC rules and Nasdaq listing standards, including the following factors: (1) the absence of other services provided by it to the Company; (2) the fees paid to it by the Company as a percentage of its total revenue; (3) its policies and procedures to prevent conflicts of interest; (4) the absence of any business or personal relationships with committee members; (5) the fact that it does not own any Lam common stock; and (6) the absence of any business or personal relationships with our executive officers. The committee assessed this information and concluded that the work of Compensia had not raised any conflict of interest.

Role of Management

 

 

Our CEO, with support from our human resources and finance organizations, develops recommendations for the compensation of our other executive officers. Typically, these recommendations cover base salaries, annual incentive program target award opportunities, long-term incentive program target award opportunities, and the criteria upon which these award opportunities may be earned, as well as actual payout amounts under the annual and long-term incentive programs.

The committee considers the CEO’s recommendations within the context of competitive compensation data, the Company’s compensation philosophy and objectives, current business conditions, the advice of Compensia, and any other factors it considers relevant. At the request of the committee, our chairman also provides input to the committee.

Our CEO attends committee meetings at the request of the committee but leaves the meeting for any deliberations related to and decisions regarding his own compensation, when the committee meets in executive session, and at any other time requested by the committee.

Peer Group Practices and Survey Data

 

 

In establishing the total compensation levels of our executive officers, as well as the mix and weighting of individual compensation elements, the committee monitors compensation data from a group of comparably sized companies in the technology industry, or the “Peer Group,” which may differ from peer groups used by stockholder advisory firms. The committee selects the companies constituting our Peer Group based on their comparability to our lines of business and industry, annual revenue, and

market capitalization, and our belief that we are likely to compete with them for executive talent. Our Peer

Group is focused on U.S. based,U.S.-based, public semiconductor, semiconductor equipment and materials companies, and similarly sizedsimilarly-sized high-technology equipment and hardware companies with a global presence and a significant investment in research and development. The table below summarizes how the Peer Group companies compare to the Company:

Figure 15. 201620. 2019 Peer Group Revenue and Market Capitalization

 

Metric Lam
Research
($M)		  Target for
Peer Group		 Peer
Group
Median
($M)		 
Revenue (last completedfour quarters asof June 3,2015)  5,027   0.5 to
2 times Lam		  4,730  
Market Capitalization (30-day average as of June 3, 2015)  12,492   0.33 to

3 times Lam

  11,682  
    
   Metric Lam
Research
($M)		  Target for
Peer Group		 Peer
Group
Median
($M)		 

Revenue (last completed reported four quarters as of July 2, 2018)

  10,296  0.33 to
3 times Lam		  5,992 

Market Capitalization(30-day average as of July 2, 2018)

  30,657  0.33 to

3 times Lam

  23,030 

Based on these criteria, the Peer Group and targets may be modified from time to time. Our Peer Group was reviewed in August 20152018 for calendar year 20162019 compensation decisions and based on the criteria identified above, one company was added to the Peer Group was retained without any changes.peer group (Qualcomm Incorporated). Our Peer Group consists of the companies listed below.as follows:

Figure 16. CY201621. CY2019 Peer Group Companies

 

Advanced Micro Devices, Inc.

 KLA-Tencor Corporation

Micron Technology, Inc.

Agilent Technologies, Inc.

 Marvell Technology Group Ltd

NetApp, Inc.

Analog Devices, Inc.

 

NVIDIA Corporation

Applied Materials, Inc.

ON Semiconductor Corporation

Broadcom Limited

Qualcomm Incorporated

Corning Incorporated

Skyworks Solutions, Inc.

Juniper Networks, Inc.

Texas Instruments Inc.

KLA Corporation

Western Digital Corporation

Maxim Integrated Products, Inc.

Applied Materials, Inc.

 NetApp,

Xilinx, Inc.

Avago TechnologiesNVIDIA Corporation
Broadcom CorporationON Semiconductor Corporation
Corning

Microchip Technology Incorporated

SanDisk Corporation
Freescale SemiconductorXilinx, Inc.
Juniper Networks, Inc.

  

We derive revenue, market capitalization, and NEO compensation data from public filings made by our Peer Group companies with the SEC and from other publicly available sources. Radford Technology Survey data may be used to supplement compensation data from public filings as needed. The committee reviews compensation practices and selected data on base salary, bonus targets, total cash compensation, equity awards, and total compensation drawn from the Peer Group companies and/or the Radford Technology Survey primarily as a reference to help ensure compensation packages are consistent with market norms.

Base pay levels for each executive officer are generally set with reference to market competitivemarket-competitive levels and in reflection of

each officer’s skills, experienceexperiences, and performance. Variable pay target award opportunities and total direct compensation for each executive officer are generally designed to deliver market competitivemarket-competitive compensation for the achievement of stretch goals, with downside risk for underperforming and upside reward for success.overperforming. For those executive officers who are new to their roles, compensation arrangements may be designed to

deliver below market compensation.below-market compensation for a period of time. However, the committee does not “target” pay at any specific percentile. Rather, individual pay positioning depends on a variety of factors, such as prior job performance, job scope and responsibilities, skill set, prior experience, time in position, internal comparisons of pay levels for similar skill levels or positions, our goals to attract and retain executive talent, Company performance, and general market conditions.

Assessment of Compensation Risk

 

 

Management, with the assistance of Compensia, the committee’s independent compensation consultant, conducted

a compensation risk assessment in 20162019 and concluded that the Company’s current employee compensation programs are not reasonably likely to have a material adverse effect on the Company’s business.

20152018 Say on Pay Voting Results; Company Response

 

 

We evaluate our executive compensation program and practices at least annually. Among other things, we consider the outcome of our most recent Say on Pay vote and input we receive from our stockholders. In 2015,2018, our stockholders approved our 20152018 advisory vote on executive compensation, with 96.6%91.17% of the votes cast in favor of the advisory proposal. We believe that our most recent Say on Pay vote signifies our stockholders’ approvalsupport of the changes we made in 2014 to strengthen our pay for performance alignment.executive compensation program and practices. We did not make any material changes to our programs and practices in fiscal year 2016. Additionally, we continue to further enhance our disclosure regarding our compensation program and practices.2019.

 

 

III. PRIMARY COMPONENTS OF NAMED EXECUTIVE OFFICER COMPENSATION; CALENDAR YEAR 20152018 COMPENSATION PAYOUTS; CALENDAR YEAR 20162019 COMPENSATION TARGETS AND METRICS

 

This section describes the components of our executive compensation program. It also describes, for each component, the payouts to our NEOs for calendar year 20152018 and the forward-looking actions taken with respect to our NEOs in calendar year 2016.2019.

Base Salary

 

 

We believe the purpose of base salary is to provide competitive compensation to attract and retain top talent and

to provide compensation to employees, including our NEOs, with a fixed and fair amount of compensation for the jobs they perform. Accordingly, we seek to ensure that our base salary levels are competitive in reference to Peer Group practice and market survey data. Adjustments to base salary are generally considered by the committee each year in February.

For calendar years 2019 and 2018, base salaries for NEOs were determined by the committee in February of each year (other than the calendar year 2019 base salary for Mr. Bettinger, which was determined by the committee in November 2018 in connection with the management transition described under “Compensation Discussion and Analysis” above) and became effective on March 1 or the first day of the pay period that included March 1 (if earlier), based on the factors described above. The following base salary adjustments for 2019 were made to remain competitive relative to our Peer Group and reflect performance as follows: Mr. Archer’s base salary was increased by 45% following his

December 5, 2018 promotion to CEO (see “CompensationDiscussion and Analysis” above for additional detail), Mr. Bettinger’s base salary was increased by 8% in light of his additional responsibilities associated with increased oversight for the operational performance of the Company, and the base salaries of Drs. Gottscho, Lord and Vahedi and Mr. Varadarajan increased by 3%. The base salaries of the NEOs for calendar years 2019 and 2018 are shown below.

Figure 22. NEO Annual Base Salaries

   
   Named Executive Officer 

Annual Base
Salary

2019 (1)
($)

  

Annual Base
Salary

2018 (2)
($)

 

Timothy M. Archer

 

 

1,000,000

 

 

 

688,418

 

Douglas R. Bettinger

 

 

640,000

 

 

 

592,770

 

Richard A. Gottscho

 

 

584,344

 

 

 

567,324

 

Patrick J. Lord

 

 

463,500

 

 

 

450,000

 

Vahid Vahedi

 

 

453,200

 

 

 

440,000

 

Seshasayee (Sesha) Varadarajan

 

 

453,200

 

 

 

440,000

 

Martin B. Anstice(3)

 

 

—  

 

 

 

1,025,000

 

(1)

Effective February 25, 2019

(2)

Effective February 26, 2018

(3)

Mr. Anstice terminated his employment with the Company as of December 5, 2018.

 

 

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Lam Research Corporation 20162019 Proxy Statement 1925

For calendar years 2016 and 2015, base salaries for NEOs were determined by the committee in February of each year and became effective on March 1 and March 31, respectively, based on the factors described above. In order to remain competitive against our Peer Group, the base salaries for 2016 for Mr. Archer and Dr. Gottscho were increased by 3%, for Mr. Anstice was increased by 3.6%, and for Mr. Bettinger and Ms. O’Dowd were increased by 5%. The base salaries of the NEOs for calendar years 2016 and 2015 are as follows:

Figure 17. NEO Annual Base Salaries

Named Executive Officer Annual Base
Salary as of
March 1, 2016
($)		  Annual Base
Salary as of
March 31, 2015
($)		 
Martin B. Anstice  960,000    927,000  
Timothy M. Archer  636,540    618,000  
Douglas R. Bettinger  567,000    540,000  
Richard A. Gottscho  556,200    540,000  
Sarah A. O’Dowd  448,875    427,500  

Annual Incentive Program

 

 

Design

Our annual incentive program is designed to provide short-term,annual, performance-based compensation that: (i)(1) is based on the achievement ofpre-set annual financial, strategic, and operational objectives aligned with outstanding performance throughout fluctuating business cycles,performance; and (ii)(2) will allow us to attract and retain top talent, while maintaining cost-effectiveness to the Company. The committee establishes individual target award opportunities for each NEO as a percentage of base salary. Specific target award opportunities are determined based on job scope and responsibilities, as well as an assessment of Peer Group data. Awards have a maximum payment amount defined as a multiple of the target award opportunity. The maximum award for 20152018 and 20162019 was set at 2.25 times target, consistent with prior years.

Annual incentive program components

Annual incentive program components, each of which plays a role in determining actual payments made, include:

 

a Funding Factor,
a Corporate Performance Factor, and
various Individual Performance Factors.

The Funding Factor is set by the committee to create a maximum payout amount from which annual incentive program payouts may be made. The committee may exercise negative (but not positive) discretion against the Funding Factor result, and generally the entire funded amount is not paid out. Achievement of a minimum level of performance against the Funding Factor goals is required to fund any program payments. In February 2015,2018, for calendar year 2015,

2018, the committee setnon-GAAP operating income as a percentage of revenue as the metric for the Funding Factor, with the following goals:

 

a minimum achievement of 5%non-GAAP operating income as a percentage of revenue was required to fund any program payments, and
achievement ofnon-GAAP operating income (as a percentage of revenue) greater than or equal to 20% resulting in the maximum payout potential of 225% of target,
with actual funding levels interpolated between those points.

The committee selectednon-GAAP operating income as a percentage of revenue because it believes that operating income as a percentage of revenue is the performance metric that best reflects core operating results.(2)Non-GAAP operating income is considered useful to investors for analyzing business trends and comparing performance to prior periods. By excluding certain costs and expenses that are not indicative of core results,non-GAAP results are more useful for analyzing business trends over multiple periods.

As a guide for using negative discretion against the Funding Factor results and for making payout decisions, the committee primarily tracks the results of the following two components that are weighted equally in making payout decisions, and against which discretion may be applied in a positive or negative direction, provided the Funding Factor result is not exceeded:

 

the Corporate Performance Factor, which is based on a corporate-wide metric and goals that are designed to be a stretch goals that apply to all NEOs; and
the Individual Performance Factors, which are designed to be stretch goals and are based on organization-specific metrics and individual performancegoals that are designed to be stretch goals that apply to each individual NEO. In addition, in assessing individual performance, the CEO considers the performance of the whole executive team.

The specific metrics and goals, and their relative weightings, for the Corporate Performance Factor are determined by the committee based uponfollowing the recommendation of our CEO, and the Individual Performance Factors are determined by our CEO, or in the case of the CEO, by the committee.

(2)Non-GAAP results are designed to provide information about performance without the impact of certain non-recurring and other non-operating line items. Non-GAAP operating income is derived from GAAP results, with charges and credits in the following line items excluded from GAAP results for applicable quarters during fiscal years 2016 and 2015: restructuring charges; acquisition-related costs; costs associated with rationalization of certain product configurations; amortization related to intangible assets acquired in the Novellus Systems, Inc. transaction; acquisition-related inventory fair value impact; impairment of a long-lived asset; impairment of goodwill; costs associated with campus consolidation; and gain on sale of assets, net of associated exit costs.

The metrics and goals for the Corporate and Individual Performance Factors are set annually. Goals are set depending on the business environment, to ensureensuring that they are stretch goals regardless of changes in the business environment. Accordingly, as business conditions improve, goals are set to require better performance, and asif business conditions deteriorate, goals are set to require stretch performance under more difficult conditions.

We believe that, over time, outstanding business results create stockholder value. Consistent with this belief, multiple

performance-based metrics (non-GAAP(non-GAAP operating income, product market share, and strategic operational, and organizational metrics) are established for our NEOs as part of the Corporate and Individual Performance Factors.

We believe the metrics and goals set under this program, together with the exercise of discretion by the committee as described above, have been effective to motivate our NEOs and the organizations they lead and to achievepay-for-performance results.

(2)

Non-GAAP operating income is derived from GAAP results, with charges and credits in the following line items excluded from GAAP results for applicable quarters during fiscal years 2019 and 2018: amortization related to intangible assets acquired through certain business combinations; business combination acquisition and integration related costs; costs associated with business process reengineering; and restructuring charges.

 

Figure 18.23. Annual Incentive Program Payouts

 

Calendar
Year		  Average NEO’s
Annual Incentive
Payout as % of Target
Award  Opportunity		   Business Environment
2015   159    Strong operating performance and expansion of served available markets, supported by stable economic conditions. Robust demand for semiconductor equipment driven by both capacity and technology investments.
2014   127    Strong operating performance and supported by stable economic conditions and healthy demand for semiconductor equipment; Company growth in various growing industry technology inflections
2013   105    Healthy demand for semiconductor equipment with stable economic conditions and favorable supply demand conditions; delivered on annualized cost savings targets defined in integration plans
   

   Calendar

   Year

  Average NEO’s
Annual Incentive
Payout as % of Target
Award Opportunity		   Business Environment

2018

   137   Strong operating performance and continued expansion of served available markets. Growth in demand for semiconductor equipment driven by the memory segment for both capacity and technology investments.

2017

   204   Strong operating performance and continued expansion of served available markets, supported by overall economic environment. Healthy demand for semiconductor equipment driven by capacity and technology investments.

2016

   166   Strong operating performance and continued expansion of served available markets, supported by stable economic conditions. Healthy demand for semiconductor equipment driven by capacity and technology investments.

 

Calendar year 20152018 annual incentive program parameters and payout decisions

In February 2015,2018, the committee set the calendar year 20152018 target award opportunity and established the metrics and goals for the Funding Factor, the metrics and annual goals for the Corporate Performance Factor, and the metrics and goals were established for the Individual Performance Factors for each NEO were established.then-employed NEO. In February 2016,2019, the committee considered the actual results under these factors and made payout decisions for the calendar year 20152018 program, all as described below.

20152018 Annual Incentive Program Target Award Opportunities. The annual incentive program target award opportunities for calendar year 20152018 for each NEO were as set forth below in Figure 19 below24 in accordance with the principles set forth above under “Executive Compensation Governance and Procedures – Peer Group Practices and Survey Data.”

20152018 Annual Incentive Program Corporate Performance Factor. In February 2015,2018, the committee setnon-GAAP operating income as a percentage of revenue as the metric for the calendar year 20152018 Corporate Performance Factor, and set:

 

a goal of 19%27% of revenue for the year, which was designed to be a stretch goal, and which would result in a Corporate Performance Factor of 1.00;
a minimum Corporate Performance Factor of 0.100.40 for any payout; and
a maximum Corporate Performance Factor of 1.50 for the maximum payout.

These goals were designed to be stretch goals. Actualnon-GAAP operating income as a percentage of revenue was 21.6%29.6% for calendar year 2015.2018. This performance resulted in a total Corporate Performance Factor of 1.26 for calendar year 2015 of 1.26.2018.

20152018 Annual Incentive Program Organization/Individual Performance Factor.Factors. For 2015,2018, the organization-specific performance metrics and goals for each NEO’s Individual Performance Factor were set on an

annual basis and were designed to be stretch goals. The Individual Performance Factor for Mr. AnsticeArcher for calendar year 20152018 was based on the average of the Individual Performance Factors of all of the executive and senior vice presidents reporting to him.him, subject to discretion based on the Company’s performance to business, strategic, and operational objectives. For all other NEOs, their respective Individual Performance Factors were based on market share and/or strategic, operational, and organizational performance goals specific to the organizations they managed, as described in more detail below.

The accomplishments of actual individual performance against the established goals described below during 20152018 were considered.

 

Mr. Archer’s Individual Performance Factor for calendar year 20152018 was based on the accomplishment of market share, and strategic, operational, and organizational development goals for the global sales organization, the customer support business group and global operations.organization.
Mr. Bettinger’s Individual Performance Factor for calendar year 20152018 was based on the accomplishment of strategic, operational, and organizational development goals for finance, global information systems, and investor relations.
Dr. Gottscho’s Individual Performance Factor for calendar year 2018 was based on the accomplishment of market share, and strategic, operational, and organizational development goals for the central engineering groups and the establishment of strategic and organizational goals for the office of the chief technology officer.
Dr. Lord’s Individual Performance Factor for calendar year 2018 was based on the accomplishment of market share, strategic, operational, and organizational development goals for the customer support business group (CSBG).
Dr. Vahedi’s Individual Performance Factor for calendar year 2018 was based on the accomplishment of market share, strategic, operational, and organizational development goals for the etch business unit.

Mr. Varadarajan’s Individual Performance Factor for calendar year 2018 was based on the accomplishment of

 

 

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Lam Research Corporation 20162019 Proxy Statement 2127

market share, strategic, operational, and organizational development goals for the deposition business unit.

Dr. Gottscho’s Individual Performance Factor for calendar year 2015 was based on the accomplishment of market share, and strategic, operational and organizational development goals for the product groups – deposition, etch, and clean.
Ms. O’Dowd’s Individual Performance Factor for calendar year 2015 was based on the accomplishment of strategic, operational and organizational development goals for the legal department.

InThe committee’s consideration of the above accomplishments as well asresulted in the teamwork demonstrated to deliver the overall strong companyfollowing Individual Performance Factors for each NEO: Mr. Archer, 1.09; Mr. Bettinger, 1.10; Dr. Gottscho, 1.10; Dr. Lord, 1.15; Dr. Vahedi, 1.05; and Mr. Varadarajan, 1.05.

performance in 2015, the committee exercised discretion such that each NEO received an Individual Performance Factor of 1.26 (equal to the Corporate Performance Factor) for the 2015 calendar year.

20152018 Annual Incentive Program Payout Decisions. In February 2016,2019, in light of the Funding Factor results and based on the above results and decisions, the committee approved the following payouts for the calendar year 20152018 annual incentive program payouts for each NEO, which were substantially less than the maximum payout available under the Funding Factor:Factor as shown below in Figure 24:

 

 

Figure 19. CY201524. CY2018 Annual Incentive Program Payouts

 

Named Executive Officer  Target Award
Opportunity
(% of Base Salary)		   Target Award
Opportunity
($) (1)		   Maximum Payout under
Funding Factor (225.0% of
Target Award Opportunity)
($)(2)		   Actual
Payouts
($)		 
Martin B. Anstice   150     1,390,500     3,128,625     2,207,558  
 
Named Executive Officer (1)  Target Award
Opportunity
(% of Base Salary)		   Target Award
Opportunity
($) (2)		   Maximum Payout under
Funding Factor (225.0% of
Target Award Opportunity)
($) (3)		   Actual
Payouts
($)		 
Timothy M. Archer   110     679,800     1,529,550     1,079,250    

 

125

 

  

 

860,523

 

  

 

1,936,176

 

  

 

1,181,842

 

Douglas R. Bettinger   90     486,000     1,093,500     771,574    

 

90

 

  

 

533,493

 

  

 

1,200,359

 

  

 

739,421

 

Richard A. Gottscho   90     486,000     1,093,500     771,574    

 

90

 

  

 

510,592

 

  

 

1,148,831

 

  

 

707,680

 

Sarah A. O’Dowd   80     342,000     769,500     542,959  

Patrick J. Lord

  

 

85

 

  

 

382,500

 

  

 

860,625

 

  

 

554,243

 

Vahid Vahedi

  

 

85

 

  

 

374,000

 

  

 

841,500

 

  

 

494,802

 

Seshasayee (Sesha) Varadarajan

  

 

85

 

  

 

374,000

 

  

 

841,500

 

  

 

494,802

 

 

(1) 

Mr. Anstice did not receive a payout under the annual incentive program for calendar year 2018 because he terminated his employment with the Company as of December 5, 2018.

(2)

Calculated by multiplying each NEO’s annual base salary for the calendar year 20152018 by his or her respective target award opportunity percentage.

 

(2)(3)

The Funding Factor resulted in a potential payout of up to 225.0% of target award opportunity for the calendar year (based on the actualnon-GAAP operating income percentage results detailed under “20152018 Annual Incentive Program Corporate Performance Factor” above and the specific goals set forth in the second paragraph under “Annual incentive program components” above).

Calendar year 20162019 annual incentive program parameters

In February 2016,2019, the committee set the target award opportunity for each NEO as a percentage of base salary, and consistent with prior years set a cap on payments equal to 2.25 times the target award opportunity. The target award opportunity for each NEO is shown below. The target percentages increased for Mr. Archer to reflect his promotion to CEO and Mr. Bettinger to reflect a more competitive level and his additional responsibilities associated with increased oversight for the operational performance of the Company.

Figure 20. CY201625. CY2019 Annual Incentive Program Target Award Opportunities

 

Named Executive Officer(1) Target Award
Opportunity
(% of Base Salary)		 
Martin B. Anstice

Timothy M. Archer

 

150

Timothy M. Archer

Douglas R. Bettinger

 

110

100

Douglas R. Bettinger

Richard A. Gottscho

 

90

Richard A. Gottscho

Patrick J. Lord

 

90

85

Sarah A. O’Dowd

Vahid Vahedi

 

80

85

Seshasayee (Sesha) Varadarajan

 

85

(1)

Mr. Anstice did not participate in the annual incentive program for calendar year 2019 because he terminated his employment as of December 5, 2018.

The committee also approvednon-GAAP operating income as a percentage of revenue as the annual metric for the Funding Factor and for the Corporate Performance Factor, as non-GAAP operating income as a percentage of revenue, and set the annual goals for the Funding Factor and also the Corporate Performance Factor. Consistent with the program design, the Corporate Performance Factor goal is more difficult to achieve than the Funding Factor goal. Individual Performance Factor metrics and goals were also established for each NEO. These include strategic and operational performance goals specific to individuals and their business organization. As a result, each NEO has multiple performance metrics and goals under this program. All Corporate and Individual Performance Factor goals were designed to be stretch goals.

Long-Term Incentive Program

 

 

Design

Our long-term incentive program, or “LTIP,”LTIP is designed to attract and retain top talent, provide competitive levels of compensation, align pay with achievement of business objectives and with stock performance over a multi-year period, reward our NEOs for outstanding Company performance, and create stockholder value over the long term. Our LTIP was redesigned in February 2014 to further those objectives by: (i) establishing a program entirely composed of equity, (ii) introducing a new LTIP vehicle, a Market-Based Performance Restricted Stock Unit, or “Market-Based PRSU,” designed to reward eligible participants based on our stock price performance relative to the Philadelphia Semiconductor Sector Index (SOX), or “SOX index,” (iii)

differentiating the metric in our LTIP from the absolute operational performance metrics used for the annual incentive program, and (iv) extending the performance period for the LTIP from two to three years.

As a result, the LTIP now operates on overlapping three-year cycles, whereas prior to 2014, it operated on overlapping two-year cycles. In 2014, this change would have left participants with a gap in long-term incentive vesting opportunity in 2016. To ensure that participants received a long-term award that vested in 2016, the committee also awarded in 2014 a one-time gap year award with a two-year performance period, or the “Gap Year Award.” The target amount awarded under the Gap Year Award was equal to 50% of the target award opportunity under the regular three-year LTIP award. While the impact on the employee from the extended performance period and the Gap Year Award, assuming performance and target opportunities are the same year after year, was to normalize the received compensation in any year, the impact on the Company from such normalization (visible in “Figure 28. Summary Compensation Table” and “Figure 31. FYE2016 Outstanding Equity Awards” below), was a higher grant-based compensation expense in fiscal year 2014. This is in addition to the impact on the total compensation figures in the Company’s “Summary Compensation Table” in fiscal years 2014 and 2015 from the long-term cash awards, which ceased being awarded in fiscal year 2013 but were not paid out until fiscal year 2015, under the previously designed programs for our performance during the relevant periods.long-term.

Under the current long-term incentive program, at the beginning of each multi-year performance period, target award opportunities (expressed as a U.S. dollar value) and performance metrics are established for the program. Of the

total target award opportunity, 50% is awarded in Market-BasedMarket-based PRSUs, and the remaining 50% is awarded in a combination of stock options and service-based RSUs with at least 10% of the award in each of these two vehicles. The specific percentage of service-based RSUs and stock options are reviewed annually to determine whether service-based RSUs or stock options are the more appropriateefficient form of equity for the majority of the award based on criteria such as the current business environment and the potential value to motivate and

retain the executives. We consider performance-based RSUsMarket-based PRSUs and stock options as performance-based, but do not classify service-based RSUs as performance-based. This means that if options constitute 10% of the total target award opportunity, the long-term incentive program will be 60% performance-based. If options constitute 40% of the total target award opportunity, the long-term incentive program will be 90% performance-based.

 

 

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Lam Research Corporation 2016 Proxy Statement23

Equity Vehicles

The equity vehicles used in our 2016/20182019/2021 long-term incentive program are as follows:

Figure 21. 2016/201826. 2019/2021 LTIP Program Equity Vehicles

 

Equity
Vehicles		 

   Equity

   Vehicles

% of Target

Award

Opportunity

   Terms

Market-BasedMarket-based PRSUs

   50   

•  Awards cliff vest three years from the March 1, 20162019 grant date, or “Grant Date,” subject to satisfaction of minimala minimum performance requirement and continued employment. Cliff, rather than annual, vesting provides for both retention and for aligning NEOs with longer-term stockholder interests.

 

•  The performance period for Market-BasedMarket-based PRSUs is three years from the first business day in February (February 1, 20162019 through January 31, 2019)2022).

 

•  The number of shares represented by the Market-BasedMarket-based PRSUs that can be earned over the performance period is based on our stock price performance compared to the market price performance of the Philadelphia Semiconductor Sector Index (SOX), subject to the below-referenced ceiling. The stock price performance or market price performance is measured using the closing price for the 50 trading days prior to the dates the performance period begins and ends. The target number of shares represented by the Market-BasedMarket-based PRSUs is increased by 2% of target for each 1% that Lam’s stock price performance exceeds the market price performance of the SOX index; similarly, the target number of shares represented by the Market-BasedMarket-based PRSUs is decreased by 2% of target for each 1% that Lam’s stock price performance trails the market price performance of the SOX index. The result of the vesting formula is rounded down to the nearest whole number. A table reflecting the potential payouts depending on various comparative results is shown below in Figure 22 below.27.

 

•  The final award cannot exceed 150% of target (requiring a positive percentage change in the Company’s stock price performance compared to that of the market price performance of the SOX index equal to or greater than 25 percentage points) and can be as little as 0% of target (requiring a percentage change in the Company’s stock price performance compared to that of the market price performance of the SOX index equal to or lesser than negative 50 percentage points).

 

•  The number of Market-BasedMarket-based PRSUs granted was determined by dividing 50% of the target opportunity by the30-day average of the closing price of our common stock prior to the Grant Date, $69.12,$169.46, rounded down to the nearest share.

 

•  Awards that vest at the end of the performance period are distributed in shares of our common stock.

Stock Options

   20   

•  Awards vestone-third on the first, second, and third anniversaries of the March 1, 20162019 grant date, or “Grant Date,” subject to continued employment.

 

•  The number of stock options granted is determined by dividing 20% of the target opportunity by the30-day average of the closing price of our common stock prior to the Grant Date, $69.12,$169.46, rounded down to the nearest share and multiplying the result by three.four. The ratio of threefour options for every RSU is based on a Black Scholes fair value accounting analysis.

 

•  The exercise price of stock options is the closing price of our common stock on the Grant Date.

•  Awards are exercisable upon vesting.

 

•  Expiration is on the seventh anniversary of the Grant Date.

Service-based
RSUs

   30   

•  Awards vestone-third on the first, second, and third anniversaries of the March 1, 20162019 grant date, or “Grant Date,” subject to continued employment.

 

•  The number of RSUs granted is determined by dividing 30% of the target opportunity by the30-day average of the closing price of our common stock prior to the Grant Date, $69.12,$169.46, rounded down to the nearest share.

 

•  Awards are distributed in shares of our common stock upon vesting.

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Lam Research Corporation 2019 Proxy Statement29

Figure 22. Market-Based27. Market-based PRSU Vesting Summary

 

 
% Change in Lam’s Stock Price
Performance Compared to % Change in
SOX Index Market Price Performance		 Market-Based PRSUs
That Can Be Earned
(% of Target) (1)		  

Market-based PRSUs
That Can Be Earned

(% of Target) (1)

 
+ 25% or more 150   

 

150

 

10% 120   

 

120

 

0% (equal to index) 100   

 

100

 

-10% 80  
-25% 50  

- 10%

 

 

80

 

- 25%

 

 

50

 

- 50% or less 0   

 

0

 

 

(1)

As set forth in the third bullet of the first row of Figure 21,26, the results of the vesting formula (reflecting the number of Market-Based PRSUs that can be earned) are linearly interpolated between the stated percentages using the described formula.

Target Award Opportunity

Under the long-term incentive program, the committee sets a target award opportunity for each participant based on the NEO’s position and responsibilities and an assessment of competitive compensation data. The target award opportunities for each participant are expressed in a U.S. dollar value. The target amounts for each NEO under the program cycles affecting fiscal year 20162019 are as follows:shown below.

Figure 23.28. LTIP Target Award Opportunities

 

Named Executive Officer(1) Long-
Term
Incentive
Program		   Target Award
Opportunity
($)		 

Timothy M. Archer

 

2019/2021

(2) 

2016/2018(1)

  

7,500,000

7,200,000

Martin B. Anstice2015/2017(2)6,750,000

 

2018/2020

2014/2016

(3) 

  

6,500,000

5,000,000

2016/2018(1)4,000,000
Timothy M. Archer2015/2017(2)3,500,000

 

2017/2019

(4) 

2014/2016(3)

  

3,000,000

4,500,000

2016/2018(1)2,750,000
Douglas R. Bettinger2015/2017(2)2,500,000

 

2016/2018

(5) 

2014/2016(3)

  

2,500,000

4,000,000

Douglas R. Bettinger

 

2019/2021

(2) 

2016/2018(1)

  

3,250,000

2,700,000

Richard A. Gottscho2015/2017(2)3,000,000

 

2018/2020

2014/2016

(3) 

  

2,500,000

2,250,000

2016/2018(1)1,400,000
Sarah A. O’Dowd2015/2017(2)1,300,000

 

2017/2019

(4) 

2014/2016(3)

  

1,300,000

2,750,000

2016/2018

(5)

  

2,750,000

Richard A. Gottscho

2019/2021

(2)

2,250,000

2018/2020

(3)

2,500,000

2017/2019

(4)

3,250,000

2016/2018

(5)

3,250,000

Patrick J. Lord(6)

2019/2021

(2)

1,800,000

2018/2020

(3)

1,900,000

2017/2019

(4)

1,350,000

2016/2018

(5)

1,100,000

Vahid Vahedi(6)

2019/2021

(2)

1,575,000

2018/2020

(3)

1,700,000

2017/2019

(4)

1,200,000

2016/2018

(5)

1,100,000

Seshasayee (Sesha)
Varadarajan(6)

2019/2021

(2)

1,575,000

2018/2020

(3)

1,700,000

2017/2019

(4)

1,200,000

2016/2018

(5)

1,100,000

 

(1) 

Mr. Anstice did not participate in the 2019/2021 LTIP. His unvested awards under the 2016/2018, 2017/2019 and 2018/2020 LTIPs were canceled as of December 5, 2018 when he terminated his employment.

(2)

The three-year performance period for the 2019/2021 LTIP began on February 1, 2019 and ends on January 31, 2022.

(3)

The three-year performance period for the 2018/2020 LTIP began on February 1, 2018 and ends on January 31, 2021.

(4)

The three-year performance period for the 2017/2019 LTIP began on February 1, 2017 and ends on January 31, 2020.

(5)

The three-year performance period for the 2016/2018 LTIP began on February 1, 2016 and endsended on January 31, 2019.

 

(2)(6) The three-year performance period for

Of the 2015/2017 LTIP began on February 2, 2015 and ends on February 1, 2018.

(3)The three-year performance period for the 2014/2016 LTIP began on February 18, 2014 and ends on February 17, 2017. The 2014
Gap Year Award (with a performance period that began on February 18, 2014 and that ended on February 17, 2016, and target award opportunities for each participantthe awards to Drs. Lord and Vahedi and Mr. Varadarajan under the 2016/2018 and 2017/2019 vice president long-term incentive programs, 50% were awarded in Market-based PRSUs and 50% in service-based RSUs on terms otherwise similar (except in determining the number of shares representing the Market-Based PRSUs and number of RSU, using 50% as the percentage) to those of his or her 2014/2016securities awarded to other NEOs under the 2016/2018 LTIP target award opportunity) is not included.and 2017/2019 LTIP, respectively.

Calendar Year 2014 Gap Year2016/2018 LTIP Award Parameters and Payouts

On February 18, 2014,March 1, 2016, the committee granted to each then current NEO (Mr. Archer, Mr. Bettinger, Dr. Gottscho and Mr. Anstice) as part of the one-time calendar year 2014 Gap Year Awards,2016/2018 CEO staff long-term incentive program, or “Gap Year“2016/2018 CEO Staff LTIP Awards,” Market-BasedMarket-based PRSUs, and service-based RSUs and stock options, with a combined value equal to 50% of the NEO’s total target award opportunity undershown below. On March 1, 2016, the calendar year 2014/2016equity award grant board committee granted to the remaining current NEOs (Dr. Lord, Dr. Vahedi and Mr. Varadarajan) as part of the 2016/2018 vice president long-term incentive program, asor “2016/2018 VP LTIP Awards” and collectively with 2016/2018 CEO Staff LTIP Awards, the “2016/2018 LTIP Awards,” Market-based PRSUs and service-based RSUs with a total award opportunity shown below. EachThe service-based RSUs and stock options (only under the 2016/2018 CEO Staff LTIP Awards) vested over three years,one-third on each anniversary of these awardsthe grant date. The Market-based PRSUs cliff vested twothree years from the grant date. These awards were madeThe terms of the Market-based PRSUs and service-based RSUs granted to all of the NEOs as part of the transition from two-year vesting to three-year vesting and to normalize2016/2018 LTIP Awards were the received compensation in any year.same.

Figure 24. Gap Year Awards29. 2016/2018 LTIP Award Grants

 

Named Executive Officer Target
Award
Opportunity
($)		 Market-
Based
PRSUs
Award (1)
(#)		 

Service-
Based

RSUs

Award
(#)

 

Stock

Options

Award
(#)

 
Martin B. Anstice 3,250,000   31,394   25,115   18,834  
 
Named Executive Officer (1)(2) Target
Award
Opportunity
($)		 Market-
based
PRSUs
Award
(#)		 Stock
Options
Award
(#)		 Service-
based
RSUs
Award
(#)		 
Timothy M. Archer 1,500,000   14,489   11,591   8,691   

 

4,000,000

 

 

 

28,935

 

 

 

34,722

 

 

 

17,361

 

Douglas R. Bettinger 1,250,000   12,074   9,659   7,242   

 

2,750,000

 

 

 

19,892

 

 

 

23,871

 

 

 

11,935

 

Richard A. Gottscho 1,250,000   12,074   9,659   7,242   

 

3,250,000

 

 

 

23,509

 

 

 

28,209

 

 

 

14,105

 

Sarah A. O’Dowd 650,000   6,278   5,023   3,765  

Patrick J. Lord

 

 

1,100,000

 

 

 

7,957

 

 

 

—

 

 

 

7,957

 

Vahid Vahedi

 

 

1,100,000

 

 

 

7,957

 

 

 

—

 

 

 

7,957

 

Seshasayee (Sesha) Varadarajan

 

 

1,100,000

 

 

 

7,957

 

 

 

—

 

 

 

7,957

 

 

(1)

All of the Market-based PRSUs andone-third of the stock options and service-based RSUs granted to Mr. Anstice under the 2016/2018 LTIP that were scheduled to vest in February 2019 were canceled upon his termination of employment with the Company as of December 5, 2018.

(2)

The number of Market-BasedMarket-based PRSUs awarded is reflected at target. The final number of shares that may have been earned is 0% to 150% of target as shown in Figure 25 below.target.

In February 2016,2019, the committee determined the payouts for the calendar year 2014 Gap Year2016/2018 LTIP Awards of Market-Based PRSUs awarded to the NEOs on February 18, 2014.Market-based PRSUs. The number of shares represented by the Market-BasedMarket-based PRSUs earned over the performance period was based on our stock price performance compared to the market price performance of the SOX index, subject toindex.

Based on the below-referenced ceiling. In each case, the stock / index price performance was measured using the closing price for the 50-trading days prior to the dates the performance period beganabove formula and ended. The target number of shares represented by the Market-Based PRSUs increased by 2% of target for each 1% that Lam’s stock price performance exceeded the market price performance of the SOX index; similarly, the target number of shares represented by the Market-Based PRSUs decreased by 2% of target for each 1% that Lam’s stock price performance trailed the market price performance of the SOX index. The result of the vesting formula was rounded down to the nearest whole number. There was a ceiling but no floor to the number of shares that may have been earned under the Market-Based PRSUs: the payment amount could not exceed 150% of target (which would have required a percentage changeMarket-based PRSU Vesting Summary set forth in Figures 26 and 27, the Company’s stock price performance comparedover the three-year performance period was equal to that89.93% and performance of the SOX index (based on market price) over the same three-year

performance period was equal to 84.47%. Lam’s stock price outperformed the SOX index by 5.46%, which resulted in a performance payout of 110.93% to target number of Market-based PRSUs granted to each NEO. Based on such results, the committee made the following payouts to each NEO for the 2016/2018 LTIP Award of Market-based PRSUs.

Figure 30. 2016/2018 LTIP Market-based PRSU Award Payouts

   
   Named Executive Officer (1) Target
Market-
based
PRSUs
(#)		  

Actual

Payout of
Market-based
PRSUs (110.93%
of Target Award
Opportunity)

(#)

 

Timothy M. Archer

 

 

28,935

 

 

 

32,097

 

Douglas R. Bettinger

 

 

19,892

 

 

 

22,066

 

Richard A. Gottscho

 

 

23,509

 

 

 

26,078

 

Patrick J. Lord

 

 

7,957

 

 

 

8,826

 

Vahid Vahedi

 

 

7,957

 

 

 

8,826

 

Seshasayee (Sesha) Varadarajan

 

 

7,957

 

 

 

8,826

 

(1)

All of the Market-based PRSUs granted to Mr. Anstice under the 2016/2018 LTIP that were scheduled to vest in February 2019 were canceled upon his termination of employment with the Company as of December 5, 2018.

Calendar Year 2019 LTIP Awards

Calendar year 2019 decisions for the 2019/2021 long-term incentive program.On March 1, 2019, the committee made a grant under the 2019/2021 long-term incentive program, of Market-based PRSUs, stock options, and service-based RSUs on the terms set forth in Figure 26 with a combined value equal to the NEO’s total target award opportunity, as shown below.

Figure 31. 2019/2021 LTIP Award Grants

     
   Named Executive Officer (1)(2) Target
Award
Opportunity
($)		  Market-
based
PRSUs
Award
(#)		  Stock
Options
Award
(#)		  Service-
based
RSUs
Award
(#)		 

Timothy M. Archer

 

 

7,200,000

 

 

 

21,243

 

 

 

33,988

 

 

 

12,746

 

Douglas R. Bettinger

 

 

2,700,000

 

 

 

7,966

 

 

 

12,744

 

 

 

4,779

 

Richard A. Gottscho

 

 

2,250,000

 

 

 

6,638

 

 

 

10,620

 

 

 

3,983

 

Patrick J. Lord

 

 

1,800,000

 

 

 

5,310

 

 

 

8,496

 

 

 

3,186

 

Vahid Vahedi

 

 

1,575,000

 

 

 

4,647

 

 

 

7,432

 

 

 

2,788

 

Seshasayee (Sesha) Varadarajan

 

 

1,575,000

 

 

 

4,647

 

 

 

7,432

 

 

 

2,788

 

(1)

The number of Market-based PRSUs awarded is reflected at target. The final number of shares that may be earned will be 0% to 150% of target.

(2)

Mr. Anstice did not participate in the 2019/2021 LTIP because he terminated his employment with the Company as of December 5, 2018.

 

 

Continues on next page  u

 

Lam Research Corporation 20162019 Proxy Statement 2531

market price performanceCompensation Relating to Management Transition

The independent members of the SOX index equalBoard consulted with the committee and the committee’s compensation consultant to determine the appropriate amount and vesting schedule for Mr. Archer’s award. The independent members of the Board, on December 6, 2018, granted to Mr. Archer a $5,000,000 equity award consisting of 50% service-based RSUs and 50% stock options with a four-year vesting schedule, as shown below. No adjustment was made at that time to his annual base salary or greater than positive 25 percentage points)his target award opportunities under the AIP or LTIP. These were adjusted to be competitive with CEOs in our peer group as part of the normal annual compensation review in February 2019.

In light of Mr. Bettinger’s critical role, his expanded responsibilities, and could have been 0% of target (requiring a percentage changethe intense competition in the Company’s stock price performance comparedtechnology industry for proven CFO talent, he received a special equity award on November 30, 2018. The committee consulted with its compensation consultant and with the Board to that ofdetermine the market price performance ofamount and vesting schedule for the SOX index equal to or lesser than negative 50 percentage points).

Based on the above formula, the Company’s stock price performance over the two-year performance period was equal to 39.18% and the market price performance of the SOX index over the same two-year performance period was equal to 18.15%. Given that Lam’s stock price outperformed the market price of the SOX index by 21.03%, the number of shares represented by the Market-Based PRSUs was equal to 142.06% (100% plus twice the 21.03% of outperformance) of the target number of Market-Based PRSUsaward. The committee granted to each NEO. Based on such results, the committee made the following payouts to each NEO for the Gap Year AwardMr. Bettinger aone-time service-based restricted stock unit (RSU) award with a nominal value of Market-Based PRSUs.$8,000,000 and a four-year vesting schedule, as shown below.

Figure 25. Gap Year Market-Based PRSU32. 2018 Special Equity Award PayoutsTerms

Named Executive
Officer		 

Target
Market-

Based
PRSUs (1)
(#)

  

Maximum
Payout of
Market-

Based
PRSUs

(150% of
Target Award
Opportunity)
(#)

  Actual
Payout of
Market-
Based
PRSUs
(142.06% of
Target Award
Opportunity)
(#)		 
Martin B. Anstice  31,394    47,091    44,598  
Timothy M. Archer  14,489    21,734    20,583  
Douglas R. Bettinger  12,074    18,111    17,152  
Richard A. Gottscho  12,074    18,111    17,152  
Sarah A. O’Dowd  6,278    9,417    8,918  

 

(1)

   Named Executive  

   Officer

Equity VehicleGranted
(#)		Terms

Timothy M. Archer

Stock Options71,430

•  Award vestsone-quarter on the first anniversary of the December 6, 2018 grant date, or “Grant Date,” and the remainder on apro-rated basis on the sixth day of every month thereafter for the next 36 months, subject to continued employment.

•  The number of Market-Based PRSUs awardedstock options granted was determined by dividing 50% of the $5,000,000 nominal value of the equity grant by the30-day average of the closing price of our common stock prior to the Grant Date, $146.87, rounded down to the nearest share and multiplying the result by approximately 4.2. The ratio of options for every RSU was based on a Black Scholes fair value accounting analysis.

•  The exercise price of stock options is reflected at target. The final numberthe closing price of shares that may have been earnedour common stock on the Grant Date.

•  Award is equalexercisable upon vesting.

•  Expiration is on the seventh anniversary of the Grant Date.

Timothy M. Archer

Service-based
RSUs		17,021

•  Award vestsone-quarter on the first anniversary of the December 6, 2018 grant date, or “Grant Date,” and the remainder on apro-rated basis on the sixth day of every month thereafter for the next 36 months, subject to 0% to 150% of target.

Calendar Year 2016 LTIP Awardscontinued employment.

Calendar year 2016 decisions for the 2016/2018 long-term incentive program. On March 1, 2016, the committee made a grant under the 2016/2018 long-term incentive program, of Market-Based PRSUs, stock options and service-based RSUs on the terms set forth in Figure 21 above with a combined value equal to the NEO’s total target award opportunity, as shown in the following table.

Figure 26. 2016/2018 LTIP Awards

Named Executive Officer Target
Award
Opportunity
($)		  Market-
Based
PRSUs
Award (1)
(#)		  Stock
Options
Award
(#)		  Service-
Based
RSUs
Award
(#)		 
Martin B. Anstice  7,500,000    54,253    65,103    32,552  
Timothy M. Archer  4,000,000    28,935    34,722    17,361  
Douglas R. Bettinger  2,750,000    19,892    23,871    11,935  
Richard A. Gottscho  3,250,000    23,509    28,209    14,105  
Sarah A. O’Dowd  1,400,000    10,127    12,150    6,076  

 

(1)

•  The number of Market-Based PRSUs awardedRSUs granted was determined by dividing 50% of the $5,000,000 nominal value of the equity grant by the30-day average of the closing price of our common stock prior to the Grant Date, $146.87, rounded down to the nearest share.

•  Award is reflected at target.distributed in shares of our common stock upon vesting.

Douglas R. Bettinger

Service-based
RSUs		54,884

•  Award vestsone-quarter on the first anniversary of the November 30, 2018 grant date and the remainder on apro-rated basis on the last day of every month thereafter for the next 36 months, subject to continued employment.

•  The final number of RSUs granted was determined by dividing the $8,000,000 nominal value of the equity grant by the30-day average of the closing price of our common stock prior to the November 30, 2018 grant date, $145.76, rounded down to the nearest share.

•  Award is distributed in shares that may be earned will be 0% to 150% of target.our common stock upon vesting.

Employment / Change in Control Arrangements

 

 

The Company enters into employment / change in control agreements to help attract and retain our NEOs and believes that these agreements facilitate a smooth transaction and transition planning in connection with change in control events. Because Mr. Anstice’s prior agreement terminated in December 2014 and the committee wanted to align the terms and dates of all executive agreements, effectiveEffective January 2015,2018, the Company entered into new three-year term employment agreements with Messrs. Anstice,Mr. Archer (amended on March 16, 2018 and August 8, 2019), Mr. Bettinger and(amended on November 30, 2018), Dr. Gottscho and aMr. Anstice, and new change in control agreementagreements with Ms. O’Dowd.

Dr. Lord, Dr. Vahedi and Mr. Varadarajan. The employment agreements generally provide for designated payments in the event of an involuntary termination of employment, death or disability, as such terms are defined in the applicable agreements. The employment agreements, and also the change in control agreements, generally provide for designated payments in the case of a change in control when coupled with an involuntary termination (i.e., a double trigger is required before payment is made due to a change in control), as such terms are defined in the applicable agreements.

For additional information about these arrangements and detail about post-termination payments under these arrangements, see the“Potential Payments upon Termination or Change in Control” section below.

Other Benefits Not Available to All Employees

 

 

Elective Deferred Compensation Plan

The Company maintains an elective deferred compensation planElective Deferred Compensation Plan that allows eligible employees (including all of the NEOs) to voluntarily defer receipt of all or a portion of base salary and certain incentive compensation payments until a date or dates elected by the participating employee. This allows the employee to defer taxes on designated compensation amounts. In addition, the Company providesis obligated to pay a limited Company contribution to the plan for all eligible employees.

Supplemental Health and Welfare

We provide certain health and welfare benefits not generally available to other employees, including the payment of premiums for supplemental long-term disability insurance and Company-provided coverage in the amount of $1 million for both life and accidental death and dismemberment insurance for all NEOs. Until January 1, 2013, the Company also provided an executive medical, dental, and vision reimbursement program that reimbursed NEOs’ cost of medical, dental, and vision expenses in excess of the regular employee plans through the end of 2012.

We also provide post-retirement medical and dental insurance coverage for eligible former executive officers under our

Retiree Health Plans, subject to certain eligibility requirements. The program was closed to executive officers who joined the Company or became executive officers through promotion effective on or after January 1, 2013. We have an independent actuarial valuation of post-retirement benefits for eligible NEOs conducted annually in accordance with

generally accepted accounting principles. The most recent valuation was conducted in June 20162019 and reflected the following retirement benefit obligation for the NEOs:NEOs as shown below.

Figure 27.33. NEO Post-Retirement Benefit Obligations

 

Named Executive Officer As of
June 26, 201630, 2019
($)		 
Martin B. Anstice

Timothy M. Archer

 

542,000

889,000

Timothy M. Archer598,000

Douglas R. Bettinger(1)

 

—  

Richard A. Gottscho

 

627,000

662,000

Sarah A. O’Dowd

Patrick J. Lord(1)

 

510,000

—  

Vahid Vahedi

 

932,000

Seshasayee (Sesha) Varadarajan(1)

—  

Martin B. Anstice

—  

 

(1) 

Mr. Bettinger, wasDr. Lord and Mr. Varadarajan are not eligible to participate because he was not an employeeunder the terms of the Company prior to the termination of the program.

 

 

IV. TAX AND ACCOUNTING CONSIDERATIONS

 

Deductibility of Executive Compensation

 

 

SectionPrior to 2018, and where applicable for grandfathered awards, section 162(m) of the Internal Revenue Code of 1986, as amended, or the “Code,” imposesimposed limitations on the deductibility for federal income tax purposes of compensation in excess of $1 million paid to our chief executive officer, and any of our three other most highly compensated executive officers (other than our chief financial officer) in a single tax year. Generally,year unless the compensation in excess of $1 million may only be deducted if it is qualified as “performance-based compensation” within the meaning of the Code.

The committee monitorsconsiders a number of factors, including the application of section 162(m) and the associated Treasury regulations and considers the advisability of qualifying our executive compensation for deductibility of such compensation. The committee’s policy iscompensation when making compensation decisions and retains the discretion to qualify our executiveaward compensation for deductibility under applicable tax laws to the extent practicable and where the committee believeseven if it is in the best interests of the Company and the Company’s stockholders.

When we design our executive compensation programs, we take into account whether a particular form of compensation will qualify as “performance-based” for purposes of section 162(m).

To facilitate the deductibility of compensation payments under section 162(m):

in fiscal year 2004, we initially adopted the Executive Incentive Plan, or “EIP,” and obtained stockholder approval for the EIP at that time. We most recently received stockholder approval for the EIP at our last annual meeting.
in fiscal year 2016, we initially adopted the Lam 2015 Stock Incentive Plan, or “SIP” and obtained stockholder approval for the SIP at our last annual meeting.

The annual program awards to our NEOs are generally administrated under the AIP and intended to qualify for deductibility under section 162(m) to the extent practicable.

Consistent with the EIP or SIP and the regulations under section 162(m), compensation income realized upon the exercise of stock options generally will be deductible because the awards are granted by a committee whose members are outside directors and the other conditions of the 162(m) are satisfied. However, compensation associated with RSUs may not be deductible unless vesting is based on specific performance goals (such as with the Market-Based PRSUs) and the other conditions of the EIP or SIP (as applicable) are satisfied. Therefore, compensation income realized upon the vesting of service-based RSUs or upon the vesting of equity awards not meeting the conditions required by the EIP or SIP are not deductible to the Company to the extent that the 162(m) compensation threshold is exceeded.deductible.

Taxation of “Parachute” Payments

 

 

Sections 280G and 4999 of the Code provide that “disqualified individuals” within the meaning of the Code (which generally includes certain officers, directors and employees of the Company) may be subject to additional tax if they receive payments or benefits in connection with a change in control of the Company that exceed certain prescribed limits. The

Company or its successor may also forfeit a deduction on the amounts subject to this additional tax.

Continues on next page  u

Lam Research Corporation 2016 Proxy Statement27

We did not provide any of our executive officers, any director, or any other service provider with a “gross-up”“gross-up” or other reimbursement payment for any tax liability that the individual might owe as a result of the application of sections 280G or 4999 during fiscal year 2016,2018, and we have not agreed and are not otherwise obligated to provide any individual with such a “gross-up”“gross-up” or other reimbursement as a result of the application of sections 280G and 4999.

Internal Revenue Code Section 409A

 

 

Section 409A of the Code imposes significant additional taxes on an executive officer, director, or service provider that receivesnon-compliant “deferred compensation” that is within the scope of section 409A. Among other things, section 409A potentially applies to the cash awards under the LTIP, the Elective Deferred Compensation Plan, certain equity awards, and severance arrangements.

To assist our employees in avoiding additional taxes under section 409A, we have structured the LTIP, the Elective

Continues on next page  u

Lam Research Corporation 2019 Proxy Statement33

Deferred Compensation Plan, and our equity awards in a manner intended to qualify them for exclusion from, or compliance with, section 409A.

Accounting for Stock-Based Compensation

 

 

We follow Financial Accounting Standards Board Accounting Standards Codification TopicASC 718 or “ASC 718,” for accounting for our stock options and other stock-based awards. ASC 718 requires companies to calculate the grant date “fair value” of their stock option grants and other equity awards using a variety of assumptions. This calculation is performed for accounting purposes. ASC 718 also requires companies to recognize the compensation cost of stock option

grants and other stock-based awards in their income statements over the period that an employee is required to render service in exchange for the option or other equity award.

Compensation Committee Report

The compensation and human resources committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of SEC RegulationS-K. Based on this review and discussion, the compensation and human resources committee has recommended to the board of directorsBoard that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s Annual Report on Form10-K.

This Compensation Committee Report shall not be deemed “filed” with the SEC for purposes of federal securities law, and it shall not, under any circumstances, be incorporated by reference into any of the Company’s past or future SEC filings. The report shall not be deemed soliciting material.

MEMBERS OF THE COMPENSATION AND HUMAN RESOURCES COMMITTEE

Youssef A.El-Mansy

Catherine P. Lego (Chair)

Abhijit Y. Talwalkar

Lih Shyng (Rick L.) Tsai

Compensation Committee Interlocks and Insider Participation

None of the compensation and human resources committee members has ever been an officer or employee of Lam Research. No interlocking relationship exists as of the date of this proxy statement or existed during fiscal year 20162019 between any member of our compensation and human resources committee and any member of any other company’s board of directors or compensation committee.

 

Executive Compensation Tables

The following tables (Figures 28-33)34-39) show compensation information for our named executive officers:

Figure 28.34. Summary Compensation Table

 

Summary Compensation Table 
Name and Principal Position Fiscal
Year		  Salary
($)		  Bonus
($)		  Stock
Awards
($)(1)		  Options
Awards
($)(2)		  Non-Equity
Incentive Plan
Compensation
($)(3)		  All Other
Compensation
($)(4)		  Total
($)		 

Martin B. Anstice

President and

Chief Executive Officer

  2016    937,789    —      6,175,315    1,224,848    2,207,558(7)   10,521    10,556,031  
  2015    906,646    —      5,849,027    558,635    3,839,904(8)   10,527    11,164,739  
  2014    803,846    —      8,298,569    897,137    4,978,689(9)   30,977    15,009,218  

Timothy M. Archer

Executive Vice President and
Chief Operating Officer

  2016    624,061    —      3,293,501    653,260    1,079,250(7)   10,689    5,660,761  
  2015    604,431    —      3,032,808    289,658    2,114,132(10)   10,543    6,051,572  
  2014    580,769    1,000,000(5)   3,830,003    414,012    3,034,681(11)   30,521    8,889,985  

Douglas R. Bettinger

Executive Vice President and
Chief Financial Officer

  2016    548,827    —      2,264,175    449,109    771,574(7)   8,080    4,041,765  
  2015    528,692    —      2,166,214    206,870    1,450,547(12)   8,017    4,360,340  
  2014    494,231    —      3,191,636    344,994    1,484,487(13)   22,961    5,538,309  

Richard A. Gottscho

Executive Vice President,
Global Products

  2016    545,296    9,600(6)   2,675,862    606,262    771,574(7)   9,082    4,617,676  
  2015    528,692    5,867(6)   2,599,550    312,531    1,482,521(14)   9,398    4,938,559  
  2014    475,000    —      3,191,636    441,128    2,109,623(15)   23,059    6,240,446  
Sarah A. O’Dowd
Senior Vice President,Chief
Legal Officer and Secretary		  2016    434,488    —      1,152,683    261,125    542,959(7)   7,259    2,398,514  
  2015    418,077    —      1,126,410    135,357    956,427(16)   7,551    2,643,822  
  2014    408,077    —      1,659,629    229,365    1,371,075(17)   26,364    3,694,509  
 
Summary Compensation Table 

Name and Principal Position

 

 

Fiscal
Year

 

  

Salary
($)

 

  

Bonus
($)

 

  

Stock
Awards
($) (1)

 

  

Option
Awards
($) (2)

 

  

Non-Equity
Incentive Plan
Compensation
($)

 

  

All Other
Compensation
($) (3)

 

  

Total
($)

 

 

Timothy M. Archer

President and

Chief Executive Officer

 

 

2019

 

 

 

809,512

 

 

 

—  

 

 

 

7,829,921

 

 

 

3,911,321

 

 

 

1,181,842

(4) 

 

 

12,513

 

 

 

13,745,109

 

 

 

2018

 

 

 

674,922

 

 

 

—  

 

 

 

4,180,920

 

 

 

600,122

 

 

 

1,599,068

(5) 

 

 

9,856

 

 

 

7,064,888

 

 

 

2017

 

 

 

646,945

 

 

 

—  

 

 

 

3,950,881

 

 

 

426,531

 

 

 

1,165,193

(6) 

 

 

11,301

 

 

 

6,200,851

 

Douglas R. Bettinger

Executive Vice President and
Chief Financial Officer

 

 

2019

 

 

 

620,518

 

 

 

—  

 

 

 

9,856,919

 

 

 

529,186

 

 

 

739,421

(4) 

 

 

9,073

 

 

 

11,755,117

 

 

 

2018

 

 

 

586,874

 

 

 

—  

 

 

 

1,881,292

 

 

 

270,066

 

 

 

914,560

(5) 

 

 

9,123

 

 

 

3,661,915

 

 

 

2017

 

 

 

572,561

 

 

 

—  

 

 

 

2,414,365

 

 

 

260,640

 

 

 

849,190

(6) 

 

 

7,983

 

 

 

4,104,739

 

Richard A. Gottscho

Executive Vice President,
Chief Technology Officer

 

 

2019

 

 

 

584,126

 

 

 

10,971

(7) 

 

 

1,755,652

 

 

 

474,750

 

 

 

707,680

(4) 

 

 

9,553

 

 

 

3,542,732

 

 

 

2018

 

 

 

567,324

 

 

 

5,867

(7) 

 

 

2,090,283

 

 

 

316,208

 

 

 

1,072,242

(5) 

 

 

9,384

 

 

 

4,061,308

 

 

 

2017

 

 

 

559,837

 

 

 

6,171

(7) 

 

 

2,853,402

 

 

 

362,059

 

 

 

833,015

(6) 

 

 

9,307

 

 

 

4,623,791

 

Patrick J. Lord

Senior Vice President and
General Manager, CSGB

 

 

2019

 

 

 

463,327

 

 

 

—  

 

 

 

1,404,389

 

 

 

352,790

 

 

 

554,243

(4) 

 

 

8,668

 

 

 

2,783,417

 

 

 

2018

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

2017

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

Vahid Vahedi

Senior Vice President and General Manager, Etch Business Unit

 

 

2019

 

 

 

453,031

 

 

 

4,171

(7) 

 

 

1,229,006

 

 

 

308,609

 

 

 

494,802

(4) 

 

 

8,755

 

 

 

2,498,374

 

 

 

2018

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

2017

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

Seshasayee (Sesha) Varadarajan

Senior Vice President and General Manager, Deposition Business Unit

 

 

2019

 

 

 

453,031

 

 

 

—  

 

 

 

1,229,006

 

 

 

308,609

 

 

 

494,802

(4) 

 

 

8,785

 

 

 

2,494,233

 

 

 

2018

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

2017

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

Martin B. Anstice

Former Chief Executive Officer

 

 

2019

 

 

 

465,192

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

465,192

 

 

 

2018

 

 

 

1,001,442

 

 

 

—  

 

 

 

7,526,050

 

 

 

1,080,493

 

 

 

3,229,875

(5) 

 

 

10,785

 

 

 

12,848,645

 

 

 

2017

 

 

 

969,808

 

 

 

—  

 

 

 

7,023,914

 

 

 

758,314

 

 

 

2,396,304

(6) 

 

 

10,541

 

 

 

11,158,881

 

 

(1) 

The amounts shown in this column represent the value of service-based and market-based performaceperformance RSU awards, under the LTIP, (for fiscal year 2014, this includes the calendar year 2014/2016 LTIP award and the Gap Year Award (a one-time award discussed in further detail in the “Long-Term Incentive Program – Design” section above)), granted in accordance with ASC 718. However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. The assumptions used to calculate the fair value of the RSUs in fiscal year 20162019 are set forth in Note 45 to the Consolidated Financial Statements of the Company’s Annual Reportannual report on Form10-K for the fiscal year ended June 26, 2016.30, 2019. For additional details regarding the grants see ““FY2016FY2019 Grants of Plan-Based Awards” table below.

 

(2) 

The amounts shown in this column represent the value of the stock option awards granted, under the LTIP, (for fiscal year 2014, this includes the calendar year 2014/2016 LTIP award and the Gap Year Award (a one-time award discussed in further detail in the “Long-Term Incentive Program – Design” section above)), in accordance with ASC 718. However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. The assumption used to calculate the fair value of stock options in fiscal year 2016 are set forth in Note 4 to the Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for the fiscal year ended June 26, 2016. For additional details regarding the grants see“FY2016 Grants of Plan-Based Awards” table below.

(3)Includes the long-term cash awards, which ceased in calendar year 2015 (as discussed in further detail in the “Long-Term Incentive Program – Design” section above), under the previously designed long-term incentive programs for our performance during the relevant periods.

(4)Please refer to“FY2016 All Other Compensation Table” which immediately follows this table, for additional information.

(5)Represents a retention bonus pursuant to the terms of his employment agreement (effective June 4, 2012), or “Archer Employment Agreement,” entered into in connection with the acquisition of Novellus Systems, Inc.

(6)Represents patent awards.

(7)Represents the amount earned by and subsequently paid under the calendar year 2015 Annual Incentive Program, or “AIP.”

(8)Represents $1,708,290 earned by and subsequently paid to Mr. Anstice under the calendar year 2014 Annual Incentive Program, or “AIP,” and $2,131,614 accrued on his behalf for the performance during fiscal year 2015 under the calendar year 2013/2014 Long-Term Incentive Program, or “LTIP-Cash.” Mr. Anstice has received the amounts accrued under the calendar year 2013/2014 LTIP-Cash.

(9)Represents $1,155,041 earned by and subsequently paid to Mr. Anstice under the calendar year 2013 AIP, $857,186 accrued on his behalf for the performance during fiscal year 2014 under the calendar year 2012/2013 Long-Term Incentive Program, or “LTIP-Cash,” and $2,966,462 accrued on his behalf for the performance during fiscal year 2014 under the calendar year 2013/2014 LTIP-Cash. Mr. Anstice has received the amount accrued under the calendar year 2012/2013 LTIP-Cash and 2013/2014 LTIP-Cash.

(10)Represents $835,164 earned by and subsequently paid to Mr. Archer under the calendar year 2014 AIP and $1,278,968 accrued on his behalf for the performance during fiscal year 2015 under the calendar year 2013/2014 Long-Term Incentive Program, or “LTIP-Cash.” Mr. Archer has received the amount accrued under the calendar year 2013/2014 LTIP-Cash.

(11)Represents $642,528 earned by and subsequently paid to Mr. Archer under the calendar year 2013 AIP, $612,276 accrued on his behalf for the performance during fiscal year 2014 under the calendar year 2012/2013 Long-Term Incentive Program, or “LTIP-Cash,” and $1,779,877 accrued on his behalf for the performance during fiscal year 2014 under the calendar year 2013/2014 LTIP-Cash. Mr. Archer has received the amount accrued under the calendar year 2012/2013 LTIP-Cash and 2013/2014 LTIP-Cash.

Continues on next page  u

Lam Research Corporation 2016 Proxy Statement29

(12)Represents $597,902 earned by and subsequently paid to Mr. Bettinger under the calendar year 2014 AIP and $852,645 accrued on his behalf for the performance during fiscal year 2015 under the calendar year 2013/2014 Long-Term Incentive Program, or “LTIP-Cash.” Mr. Bettinger has received the amount accrued under the calendar year 2013/2014 LTIP-Cash.

(13)Represents $297,902 earned by and subsequently paid to Mr. Bettinger under the calendar year 2013 AIP, and $1,186,585 accrued on his behalf for the performance during fiscal year 2014 under the calendar year 2013/2014 Long-Term Incentive Program, or “LTIP-Cash.” Mr. Bettinger has received the amounts accrued under the calendar year 2013/2014 LTIP-Cash.

(14)Represents $597,902 earned by and subsequently paid to Dr. Gottscho under the calendar year 2014 AIP and $884,619 accrued on his behalf for the performance during fiscal year 2015 under the calendar year 2013/2014 Long-Term Incentive Program, or “LTIP-Cash.” Dr. Gottscho has received the amount accrued under the calendar year 2013/2014 LTIP-Cash.

(15)Represents $486,685 earned by and subsequently paid to Dr. Gottscho under the calendar year 2013 AIP, $391,857 accrued on his behalf for the performance during fiscal year 2014 under the calendar year 2012/2013 Long-Term Incentive Program, or “LTIP-Cash,” and $1,231,082 accrued on his behalf for the performance during fiscal year 2014 under the calendar year 2013/2014 LTIP-Cash. Dr. Gottscho has received the amount accrued under the calendar year 2012/2013 LTIP-Cash and 2013/2014 LTIP-Cash.

(16)Represents $420,113 earned by and subsequently paid to Ms. O’Dowd under the calendar year 2014 AIP and $536,314 accrued on her behalf for the performance during fiscal year 2015 under the calendar year 2013/2014 Long-Term Incentive Program, or “LTIP-Cash.” Ms. O’Dowd has received the amount accrued under the calendar year 2013/2014 LTIP-Cash.

(17)Represents $318,575 earned by and subsequently paid to Ms. O’Dowd under the calendar year 2013 AIP, $306,138 accrued on her behalf for the performance during fiscal year 2014 under the calendar year 2012/2013 Long-Term Incentive Program, or “LTIP-Cash,” and $746,362 accrued on her behalf for the performance during fiscal year 2014 under the calendar year 2013/2014 LTIP-Cash. Ms. O’Dowd has received the amount accrued under the calendar year 2012/2013 LTIP-Cash and 2013/2014 LTIP-Cash.

Figure 29. FY2016 All Other Compensation Table

All Other Compensation Table for Fiscal Year 2016 
  

Company Matching
Contribution to

the Company’s
Section 401(k) Plan
($)

  

Company
Paid Long-Term
Disability Insurance
Premiums(1)

($)

  Company
Paid Life
Insurance
Premiums (2)
($)		  Company
Contribution to the
Elective Deferred
Compensation Plan
($)		  Total
($)		 
Martin B. Anstice  8,038    —      —      2,483    10,521  
Timothy M. Archer  8,189    —      —      2,500    10,689  
Douglas R. Bettinger  8,080    —      —      —      8,080  
Richard A. Gottscho  7,908    1,174    —      —      9,082  
Sarah A. O’Dowd  4,572    —      187    2,500    7,259  

(1)Represents the portion of supplemental long-term disability insurance premiums paid by Lam.

(2)Represents the portion of life insurance premiums paid by Lam in excess of the non-discriminatory life insurance benefits provided to all Company employees.

Figure 30. FY2016 Grants of Plan-Based Awards

Grants of Plan-Based Awards for Fiscal Year 2016 
        Estimated Future
Payouts Under Non-
Equity Incentive
Plan Awards		  Estimated Future
Payouts Under
Equity Incentive
Plan Awards		  All Other
Stock
Awards:
Number
of Shares
of Stock		  All Other
Option
Awards:
Number of
Securities
Underlying		  Exercise
or Base
Price of
Option		  Grant
Date Fair
Value of
Stock
and
Option		 
Name 

Award

Type

 Grant
Date		 Approved
Date		 Target
($)(1)		  Maximum
($)(1)		  Target
(#)(2)		  Maximum
(#)(2)		  or Units
(#)		  Options
(#)		  Awards
($/Sh)		  Awards
($)(3)		 
Martin B. Anstice Annual Incentive Program N/A 2/18/16  1,440,000    3,240,000    —      —      —      —      —      —    
 LTIP-Equity                                    
 

Market-Based PRSUs

 3/1/16 2/18/16          54,253(4)   81,379(4)   —      —      —      3,829,177  
 

Service-Based RSUs

 3/1/16 2/18/16          —      —      32,552(5)   —      —      2,346,138  
 

Stock Options

 3/1/16 2/18/16          —      —      —      65,103(6)   75.57    1,224,848  
Timothy M. Archer Annual Incentive Program N/A 2/17/16  700,194    1,575,437    —      —      —      —      —      —    
 LTIP-Equity                                    
 

Market-Based PRSUs

 3/1/16 2/17/16          28,935(4)   43,402(4)   —      —      —      2,042,232  
 

Service-Based RSUs

 3/1/16 2/17/16          —      —      17,361(5)   —      —      1,251,269  
 

Stock Options

 3/1/16 2/17/16          —      —      —      34,722(6)   75.57    653,260  
Douglas R. Bettinger Annual Incentive Program N/A 2/17/16  510,300    1,148,175    —      —      —      —      —      —    
 LTIP-Equity                                    
 

Market-Based PRSUs

 3/1/16 2/17/16          19,892(4)   29,838(4)   —      —      —      1,403,977  
 

Service-Based RSUs

 3/1/16 2/17/16          —      —      11,935(5)   —      —      860,198  
 

Stock Options

 3/1/16 2/17/16          —      —      —      23,871(6)   75.57    449,109  
Richard A. Gottscho Annual Incentive Program N/A 2/17/16  500,580    1,126,305    —      —      —      —      —      —    
 LTIP-Equity                                    
 

Market-Based PRSUs

 3/1/16 2/17/16          23,509(4)   35,263(4)   —      —      —      1,659,265  
 

Service-Based RSUs

 3/1/16 2/17/16          —      —      14,105(5)   —      —      1,016,597  
 

Stock Options

 3/1/16 2/17/16          —      —      —      28,209(6)   75.57    606,262  
Sarah A. O’Dowd Annual Incentive Program N/A 2/17/16  359,100    807,975    —      —      —      —      —      —    
 LTIP-Equity                                    
 

Market-Based PRSUs

 3/1/16 2/17/16          10,127(4)   15,190(4)   —      —      —      714,764  
 

Service-Based RSUs

 3/1/16 2/17/16          —      —      6,076(5)   —      —      437,919  
 

Stock Options

 3/1/16 2/17/16          —      —      —      12,150(6)   75.57    261,125  

(1)The AIP target and maximum estimated future payouts reflected in this table were calculated using the base salary approved in February 2016, effective as of March 2016. Award payouts range from 0% to 225% of target.

(2)The amounts reported in the Estimated Future Payouts Under Equity Incentive Plan Awards columns represent the target and maximum number (150% of target) of Market-Based PRSUs that may be paid out to the NEOs on the terms described in “Executive Compensation and Other Information – Compensation Discussion and Analysis” above. Award payouts range from 0% to 150% of target.

(3)The amounts shown in this column represent the value of service-based and market-based performance RSU and stock option awards granted during fiscal year 2016 in accordance with ASC 718. However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. The assumptions used to calculate the fair value of the service-based or market-based performance RSUstock options in fiscal year 20162019 are set forth in Note 45 to the Consolidated Financial Statements of the Company’s Annual Reportannual report on Form10-K for the fiscal year ended June 26, 2016.30, 2019. For additional details regarding the grants see “FY2019 Grants of Plan-Based Awards” table below.

(3)

Please refer to “FY2019 All Other Compensation Table” which immediately follows this table, for additional information.

 

(4) 

Represents the amount earned by and subsequently paid under the calendar year 2018 AIP.

(5)

Represents the amount earned by and subsequently paid under the calendar year 2017 AIP.

(6)

Represents the amount earned by and subsequently paid under the calendar year 2016 AIP.

(7)

Represents patent awards.

Continues on next page  u

Lam Research Corporation 2019 Proxy Statement35

Figure 35. FY2019 All Other Compensation Table

 
All Other Compensation Table for Fiscal Year 2019 
  Company Matching
Contribution to
the Company’s
Section 401(k) Plan
($)		  Company
Paid Long-Term
Disability Insurance
Premiums (1)
($)		  Company
Paid Life
Insurance
Premiums (2)
($)		  Company
Contribution to the
Elective Deferred
Compensation Plan
($)		  Total
($)		 

Timothy M. Archer

 

 

10,013

 

 

 

—  

 

 

 

—  

 

 

 

2,500

 

 

 

12,513

 

Douglas R. Bettinger

 

 

8,186

 

 

 

—  

 

 

 

—  

 

 

 

887

 

 

 

9,073

 

Richard A. Gottscho

 

 

8,477

 

 

 

1,076

 

 

 

—  

 

 

 

—  

 

 

 

9,553

 

Patrick J. Lord

 

 

8,545

 

 

 

—  

 

 

 

123

 

 

 

—  

 

 

 

8,668

 

Vahid Vahedi

 

 

8,604

 

 

 

—  

 

 

 

151

 

 

 

—  

 

 

 

8,755

 

Seshasayee (Sesha) Varadarajan

 

 

8,634

 

 

 

—  

 

 

 

151

 

 

 

—  

 

 

 

8,785

 

Martin B. Anstice

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

(1)

Represents the portion of supplemental long-term disability insurance premiums paid by Lam.

(2)

Represents the portion of life insurance premiums paid by Lam in excess of thenon-discriminatory life insurance benefits provided to all Company employees.

Figure 36. FY2019 Grants of Plan-Based Awards

                                                                                                              
 
Grants of Plan-Based Awards for Fiscal Year  2019 
        Estimated Future
Payouts UnderNon-
Equity Incentive
Plan Awards		  Estimated Future
Payouts Under
Equity  Incentive
Plan Awards		  

All Other
Stock
Awards:
Number

of Shares

of Stock

or Units
(#)

 

  

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

 

  

Exercise
or Base
Price of
Option
Awards
($/Sh)

 

  

Grant

Date Fair

Value of

Stock
and

Option
Awards
($) (3)

 

 

Name

 

 

Award

Type

 

 

Grant
Date

 

 

Approved
Date

 

 

Target
($) (1)

 

  

Maximum
($) (1)

 

  

Target
(#) (2)

 

  

Maximum
(#) (2)

 

 

Timothy M. Archer

 

Annual Incentive Program

 

N/A

 

2/12/19

 

 

1,500,000

 

 

 

3,375,000

 

                        
 

LTIP-Equity

                                    
 

Market-based PRSUs

 

3/1/19

 

2/12/19

         

 

21,243

(4) 

 

 

31,864

(4) 

             

 

3,521,665

 

 

Service-based RSUs

 

3/1/19

 

2/12/19

                 

 

12,746

(5) 

         

 

2,096,717

 

 

Stock Options

 

3/1/19

 

2/12/19

                     

 

33,988

(6) 

 

 

176.75

 

 

 

1,411,328

 

 

Special Equity Award

                                    
 

Service-based RSUs

 

12/6/18

 

12/5/18

                 

 

17,021

(7) 

         

 

2,211,539

 

  

Stock Options

 

12/6/18

 

12/5/18

                     

 

71,430

(8) 

 

 

145.73

 

 

 

2,499,993

 

Douglas R. Bettinger

 

Annual Incentive Program

 

N/A

 

2/11/19

 

 

640,000

 

 

 

1,440,000

 

                        
 

LTIP-Equity

                                    
 

Market-based PRSUs

 

3/1/19

 

2/11/19

         

 

7,966

(4) 

 

 

11,949

(4) 

             

 

1,320,603

 

 

Service-based RSUs

 

3/1/19

 

2/11/19

                 

 

4,779

(5) 

         

 

786,146

 

 

Stock Options

 

3/1/19

 

2/11/19

                     

 

12,744

(6) 

 

 

176.75

 

 

 

529,186

 

 

Special Equity Award

                                    
  

Service-based RSUs

 

11/30/18

 

11/29/18

                 

 

54,884

(9) 

         

 

7,750,170

 

Richard A. Gottscho

 

Annual Incentive Program

 

N/A

 

2/11/19

 

 

525,910

 

 

 

1,183,297

 

                        
 

LTIP-Equity

                                    
 

Market-based PRSUs

 

3/1/19

 

2/11/19

         

 

6,638

(4) 

 

 

9,957

(4) 

             

 

1,100,448

 

 

Service-based RSUs

 

3/1/19

 

2/11/19

                 

 

3,983

(5) 

         

 

655,204

 

 

Stock Options

 

3/1/19

 

2/11/19

                     

 

10,620

(6) 

 

 

176.75

 

 

 

474,750

 

Patrick J. Lord

 

Annual Incentive Program

 

N/A

 

2/11/19

 

 

393,975

 

 

 

886,444

 

                        
 

LTIP-Equity

                                    
 

Market-based PRSUs

 

3/1/19

 

2/11/19

         

 

5,310

(4) 

 

 

7,965

(4) 

             

 

880,292

 

 

Service-based RSUs

 

3/1/19

 

2/11/19

                 

 

3,186

(5) 

         

 

524,097

 

 

Stock Options

 

3/1/19

 

2/11/19

                     

 

8,496

(6) 

 

 

176.75

 

 

 

352,790

 

Vahid Vahedi

 

Annual Incentive Program

 

N/A

 

2/11/19

 

 

385,220

 

 

 

866,745

 

                        
 

LTIP-Equity

                                    
 

Market-based PRSUs

 

3/1/19

 

2/11/19

         

 

4,647

(4) 

 

 

6,970

(4) 

             

 

770,380

 

 

Service-based RSUs

 

3/1/19

 

2/11/19

                 

 

2,788

(5) 

         

 

458,626

 

 

Stock Options

 

3/1/19

 

2/11/19

                     

 

7,432

(6) 

 

 

176.75

 

 

 

308,609

 

                                                                                                              
 
Grants of Plan-Based Awards for Fiscal Year  2019 
        Estimated Future
Payouts UnderNon-
Equity Incentive
Plan Awards		  Estimated Future
Payouts Under
Equity  Incentive
Plan Awards		  

All Other
Stock
Awards:
Number

of Shares

of Stock

or Units
(#)

 

  

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

 

  

Exercise
or Base
Price of
Option
Awards
($/Sh)

 

  

Grant

Date Fair

Value of

Stock
and

Option
Awards
($) (3)

 

 

Name

 

 

Award

Type

 

 

Grant
Date

 

 

Approved
Date

 

 

Target
($) (1)

 

  

Maximum
($) (1)

 

  

Target
(#) (2)

 

  

Maximum
(#) (2)

 

 

Seshasayee (Sesha) Varadarajan

 

Annual Incentive Program

 

N/A

 

2/11/19

 

 

385,220

 

 

 

866,745

 

                        
 

LTIP-Equity

                                    
 

Market-based PRSUs

 

3/1/19

 

2/11/19

         

 

4,647

(4) 

 

 

6,970

(4) 

             

 

770,380

 

 

Service-based RSUs

 

3/1/19

 

2/11/19

                 

 

2,788

(5) 

         

 

458,626

 

 

Stock Options

 

3/1/19

 

2/11/19

                     

 

7,432

(6) 

 

 

176.75

 

 

 

308,609

 

Martin B. Anstice(10)

 

Annual Incentive Program

                                 

 

—  

 

 

LTIP-Equity

                                    
 

Market-based PRSUs

                                 

 

—  

 

 

Service-based RSUs

                                 

 

—  

 

 

Stock Options

                                 

 

—  

 

(1)

The Market-BasedAIP target and maximum estimated future payouts reflected in this table were calculated using the base salary approved in February 2019, effective as of February 25, 2019. Awards payouts range from 0% to 225% of target.

(2)

The amounts reported represent the target and maximum number of Market-based PRSUs that may vest on the terms described in “Executive Compensation and Other Information –Compensation Discussion and Analysis” above. The number of shares that may be earned is equal to from 0% to 150% of target.

(3)

The amounts reported represent the fair value of Market-based PRSU, service-based RSU, and stock option awards granted during fiscal year 2019 in accordance with ASC 718. However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. The assumptions used to calculate the fair value of awards granted during fiscal year 2019 are set forth in Note 5 to the Consolidated Financial Statements of the Company’s annual report on Form10-K for the fiscal year ended June 30, 2019.

(4)

The Market-based PRSUs will vest on March 1, 2019,2022, subject to continued employment. The actual conversion of Market-BasedMarket-based PRSUs into shares of Lam common stock following the conclusion of the three-year performance period will range from 0% to 150% of the target amount, depending upon Lam’s stock price performance compared to the market price performance of the SOX index over the applicable three-year performance period.

 

(5) One-third of the

The RSUs will vest in three equal installments on March 1 of each of 2017, 20182020, 2021, and 2019,2022, subject to continued employment.

 

(6) One-third of the

The stock options will become exercisable in three equal installments on March 1 of each of 2017, 20182020, 2021, and 2019,2022, subject to continued employment.

(7)

The RSUs will vest over four years (one quarter on theone-year anniversary of the grant date and the remainder on apro-rated basis on the sixth day of every month thereafter for the next 36 months, subject to continued employment). The award is described in “Compensation Relating to Management Transition” above.

(8)

The stock options will become exercisable over four years (one quarter on theone-year anniversary of the grant date and the remainder on apro-rated basis on the sixth day of every month thereafter for the next 36 months, subject to continued employment). The award is described in “Compensation Relating to Management Transition” above.

(9)

The RSUs will vest over four years(one-quarter of the RSUs on theone-year anniversary of the grant date and the remainder of the RSUs on apro-rated basis on the last day of every month thereafter for the next 36 months, subject to continued employment). The award is described in “Compensation Relating to Management Transition” above.

(10)

Mr. Anstice did not participate in the calendar year 2019 annual incentive program or the 2019/2021 LTIP program because he terminated his employment as of December 5, 2018.

 

Continues on next page  u

 

Lam Research Corporation 20162019 Proxy Statement 3137

Figure 31. FYE201637. FYE2019 Outstanding Equity Awards

 

Outstanding Equity Awards at 2016 Fiscal Year-End
Option AwardsStock Awards
NameNumber of
Securities
Underlying
Unexercised
Options
Exercisable
(#)		Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)		Option
Exercise
Price
($)		Option
Expiration
Date		Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)		Market
Value
of Shares or
Units of
Stock
That Have
Not
Vested
($) (1)

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units

or Other Rights
That Have Not
Vested
(#)

Equity

Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($) (1)

Martin B. Anstice

65,103(2)75.573/1/23
32,552(3)2,678,379
54,253(4)4,463,937
8,374(5)16,748(5)80.602/11/22
22,332(6)1,837,477
41,873(7)3,445,310
12,557(8)12,557(8)51.762/18/21
16,744(9)1,377,696
62,789(10)5,166,279
18,834(11)51.762/18/21
Timothy M. Archer34,722(2)75.573/1/23
17,361(3)1,428,463
28,935(4)2,380,772
4,342(5)8,684(5)80.602/11/22
11,580(6)952,802
21,712(7)1,786,463
11,590(8)5,795(8)51.762/18/21
7,728(9)635,860
28,979(10)2,384,392
8,691(11)51.762/18/21
52,803(12)42.612/8/20
40,500(13)29.3412/16/20
Douglas R. Bettinger23,871(2)75.573/1/23
11,935(3)982,012
19,892(4)1,636,714
3,101(5)6,202(5)80.602/11/22
8,271(6)680,538
15,508(7)1,275,998
4,829(8)4,829(8)51.762/18/21
6,440(9)529,883
24,149(10)1,986,980
7,242(11)51.762/18/21
Richard A. Gottscho28,209(2)75.573/1/23
14,105(3)1,160,559
23,509(4)1,934,321
3,722(5)7,444(5)80.602/11/22
9,926(6)816,711
18,610(7)1,531,231
9,658(8)4,829(8)51.762/18/21
6,440(9)529,883
24,149(10)1,986,980
7,242(11)51.762/18/21
36,522(12)42.612/8/20
 
Outstanding Equity Awards at 2019 Fiscal  Year-End 
  Option Awards  Stock Awards 

Name

 Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)		  Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)		  Option
Exercise
Price
($)		  Option
Expiration
Date		  Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)		  

Market

Value
of Shares or
Units of
Stock

That Have
Not

Vested

($) (1)

  

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other  Rights
That Have Not
Vested

(#)

  

Equity
Incentive

Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($) (1)

 

Timothy M. Archer

 

 

—  

(2) 

 

 

33,988

(2) 

 

 

176.75

 

 

 

3/1/26

 

                
                 

 

12,746

(3) 

 

 

2,394,209

 

        
                         

 

21,243

(4) 

 

 

3,990,285

 

 

 

—  

(5) 

 

 

71,430

(5) 

 

 

145.73

 

 

 

12/6/25

 

                
                 

 

17,021

(6) 

 

 

3,197,225

 

        
 

 

3,508

(7) 

 

 

7,016

(7) 

 

 

190.07

 

 

 

3/1/25

 

                
                 

 

7,018

(8) 

 

 

1,318,261

 

        
                         

 

13,159

(9) 

 

 

2,471,787

 

 

 

10,360

(10) 

 

 

5,180

(10) 

 

 

119.67

 

 

 

3/1/24

 

                
                 

 

5,181

(11) 

 

 

973,199

 

        
                         

 

19,428

(12) 

 

 

3,649,356

 

 

 

23,148

(13) 

 

 

—  

(13) 

 

 

75.57

 

 

 

3/1/23

 

                
 

 

13,026

(14) 

 

 

—  

(14) 

 

 

80.60

 

 

 

2/11/22

 

                

Douglas R. Bettinger

 

 

—  

(2) 

 

 

12,744

(2) 

 

 

176.75

 

 

 

3/1/26

 

                
                 

 

4,779

(3) 

 

 

897,687

 

        
                         

 

7,966

(4) 

 

 

1,496,333

 

                 

 

54,884

(15) 

 

 

10,309,411

 

        
 

 

1,578

(7) 

 

 

3,158

(7) 

 

 

190.07

 

 

 

3/1/25

 

                
                 

 

3,158

(8) 

 

 

593,199

 

        
                         

 

5,921

(9) 

 

 

1,112,201

 

 

 

6,330

(10) 

 

 

3,166

(10) 

 

 

119.67

 

 

 

3/1/24

 

                
                 

 

3,166

(11) 

 

 

594,701

 

        
                         

 

11,872

(12) 

 

 

2,230,036

 

 

 

23,871

(13) 

 

 

—  

(13) 

 

 

75.57

 

 

 

3/1/23

 

                
 

 

9,303

(14) 

 

 

—  

(14) 

 

 

80.60

 

 

 

2/11/22

 

                
 

 

7,242

(16) 

 

 

—  

(16) 

 

 

51.76

 

 

 

2/18/21

 

                
 

 

9,658

(16) 

 

 

—  

(16) 

 

 

51.76

 

 

 

2/18/21

 

                

Richard A. Gottscho

 

 

—  

(2) 

 

 

10,620

(2) 

 

 

176.75

 

 

 

3/1/26

 

                
                 

 

3,983

(3) 

 

 

748,167

 

        
                         

 

6,638

(4) 

 

 

1,246,882

 

 

 

1,753

(7) 

 

 

3,507

(7) 

 

 

190.07

 

 

 

3/1/25

 

                
                 

 

3,509

(8) 

 

 

659,131

 

        
                         

 

6,579

(9) 

 

 

1,235,799

 

 

 

3,741

(10) 

 

 

3,742

(10) 

 

 

119.67

 

 

 

3/1/24

 

                
                 

 

3,742

(11) 

 

 

702,897

 

        
                         

 

14,031

(12) 

 

 

2,635,583

 

Outstanding Equity Awards at 2016 Fiscal Year-End
Option AwardsStock Awards
NameNumber of
Securities
Underlying
Unexercised
Options
Exercisable
(#)		Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)		Option
Exercise
Price
($)		Option
Expiration
Date		Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)		Market
Value
of Shares or
Units of
Stock
That Have
Not
Vested
($) (1)

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units

or Other Rights
That Have Not
Vested
(#)

Equity

Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($) (1)

Sarah A. O’Dowd12,150(2)75.573/1/23
6,076(3)499,933
10,127(4)833,250
1,612(5)3,224(5)80.602/11/22
4,301(6)353,886
8,064(7)663,506
5,022(8)2,511(8)51.762/18/21
3,349(9)275,556
12,557(10)1,033,190
3,765(11)51.762/18/21
22,140(12)42.612/8/20

 
Outstanding Equity Awards at 2019 Fiscal  Year-End 
  Option Awards  Stock Awards 

Name

 Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)		  Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)		  Option
Exercise
Price
($)		  Option
Expiration
Date		  Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)		  

Market

Value
of Shares or
Units of
Stock

That Have
Not

Vested

($) (1)

  

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other  Rights
That Have Not
Vested

(#)

  

Equity
Incentive

Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($) (1)

 

Patrick J. Lord

 

 

—  

(2) 

 

 

8,496

(2) 

 

 

176.75

 

 

 

3/1/26

 

                
                 

 

3,186

(3) 

 

 

598,458

 

        
                         

 

5,310

(4) 

 

 

997,430

 

 

 

1,333

(7) 

 

 

2,667

(7) 

 

 

190.07

 

 

 

3/1/25

 

                
                 

 

2,667

(8) 

 

 

500,969

 

        
                         

 

5,000

(9) 

 

 

939,200

 

 

 

—  

(10) 

 

 

1,554

(10) 

 

 

119.67

 

 

 

3/1/24

 

                
                 

 

1,554

(11) 

 

 

291,903

 

        
                         

 

5,828

(12) 

 

 

1,094,732

 

Vahid Vahedi

 

 

—  

(2) 

 

 

7,432

(2) 

 

 

176.75

 

 

 

3/1/26

 

                
                 

 

2,788

(3) 

 

 

523,698

 

        
                         

 

4,647

(4) 

 

 

872,892

 

 

 

1,192

(7) 

 

 

2,384

(7) 

 

 

190.07

 

 

 

3/1/25

 

                
                 

 

2,386

(8) 

 

 

448,186

 

        
                         

 

4,474

(9) 

 

 

840,396

 

                 

 

1,727

(11) 

 

 

324,400

 

        
                         

 

5,180

(12) 

 

 

973,011

 

Seshasayee (Sesha) Varadarajan

 

 

—  

(2) 

 

 

7,432

(2) 

 

 

176.75

 

 

 

3/1/26

 

                
                 

 

2,788

(3) 

 

 

523,698

 

        
                         

 

4,647

(4) 

 

 

872,892

 

 

 

1,192

(7) 

 

 

2,384

(7) 

 

 

190.07

 

 

 

3/1/25

 

                
                 

 

2,386

(8) 

 

 

448,186

 

        
                         

 

4,474

(9) 

 

 

840,396

 

                 

 

1,727

(11) 

 

 

324,400

 

        
                         

 

5,180

(12) 

 

 

973,011

 

Martin B. Anstice (17)

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

(1) 

Calculated by multiplying the number of unvested sharesunits by $82.28,$187.84, the closing price per share of our common stock on June 24, 2016.28, 2019.

 

(2) 

The stock options were granted on March 1, 2016. 2019.One-third of the stock options will become exercisable on March 1 of each 2017, 2018of 2020, 2021 and 2019,2022, subject to continued employment.

 

(3) 

The RSUs were granted on March 1, 2016. 2019.One-third of the RSUs will vest on March 1 of each of 2017, 20182020, 2021 and 2019,2022, subject to continued employment.

 

(4) 

The Market-BasedMarket-based PRSUs were granted on March 1, 2019. The Market-based PRSUs will vest on March 1, 2022, subject to continued employment. The Market-based PRSUs are shown at their target amount. The actual conversion of the Market-BasedMarket-based PRSUs into shares of Lam common stock following the conclusion of the three-year performance period will range from 0% to 150% of that target amount, depending upon Lam’s stock price performance compared to the market price performance of the SOX index over the applicable three-year performance period. The Market-Based PRSUs were granted on March 1, 2016. The Market-Based PRSUs will vest on March 1, 2019, subject to continued employment.

 

(5) 

The stock options were granted on February 11, 2015. As of the 2016 fiscal year end, one-third of the stock options had become exercisable. One-third of theDecember 6, 2018. The stock options will become exercisable over four years (one quarter on February 11theone-year anniversary of eachthe grant date and the remainder on apro-rated basis on the sixth day of 2017 and 2018,every month thereafter for the next 36 months, subject to continued employment.employment).

 

(6) 

The RSUs were granted on February 11, 2015. As of the 2016 fiscal year end, one-third of the RSUs vested. One-third of theDecember 6, 2018. The RSUs will vest over four years (one quarter on February 11theone-year anniversary of eachthe grant date and the remainder on apro-rated basis on the sixth day of 2017 and 2018, subject to continued employment.every month thereafter for the next 36 months).

 

(7) 

The Market-Basedstock options were granted on March 1, 2018.One-third of the stock options became exercisable on March 1, 2019 and will become exercisable on March 1 of each of 2020 and 2021, subject to continued employment.

(8)

The RSUs were granted on March 1, 2018.One-third of the RSUs vested on March 1, 2019 and will vest on March 1 of each of 2020 and 2021, subject to continued employment.

(9)

The Market-based PRSUs were granted on March 1, 2018. The Market-based PRSUs will vest on March 1, 2021, subject to continued employment. The Market-based PRSUs are shown at their target amount. The actual conversion of the Market-BasedMarket-based PRSUs into shares of Lam common stock following the conclusion of the three-year performance period will range from 0% to 150% of that target amount, depending upon Lam’s stock price performance compared to the market price performance of the SOX index over the applicable three-year performance period.

Continues on next page  u

Lam Research Corporation 2019 Proxy Statement39

(10)

The Market-Based PRSUsstock options were granted on February 11, 2015. The Market-Based PRSUsMarch 1, 2017.One-third of the stock options became exercisable on March 1 of each of 2018 and 2019 and will vestbecome exercisable on February 11, 2018,March 1, 2020, subject to continued employment.

 

(8)(11) Stock options

The RSUs were granted on February 18, 2014. AsMarch 1, 2017.One-third of the 2016 fiscal year end, two-thirdsRSUs vested on March 1 of the stock options had become exercisable. One-thirdeach of the stock options2018 and 2019 and will become exercisablevest on February 18, 2017,March 1, 2020, subject to continued employment.

 

(9)(12) RSUs

The Market-based PRSUs were granted on February 18, 2014. As of the 2016 fiscal year-end, two-thirds of the RSUs had vested. One-third of the RSUsMarch 1, 2017. The Market-based PRSUs will vest on February 18, 2017,March 1, 2020, subject to continued employment.

(10)Market-Based The Market-based PRSUs are shown at their target amount. The actual conversion of the Market-BasedMarket-based PRSUs into shares of Lam common stock following the conclusion of the three-year performance period will range from 0% to 150% of that target amount, depending upon Lam’s stock price performance compared to the market price performance of the SOX index over the applicable three-year performance period. The Market-Based PRSUs were granted on February 18, 2014. The Market-Based PRSUs will vest on February 18, 2017, subject to continued employment.

 

(11)(13) Stock

The stock options were granted as parton March 1, 2016. As of the Gap Year Award2019 fiscalyear-end, the stock options had become exercisable.

(14)

The stock options were granted on February 11, 2015. As of the 2019 fiscalyear-end, the stock options had become exercisable.

(15)

The RSUs were granted on November 30, 2018. The RSUs will vest over four years (one quarter on theone-year anniversary of the grant date and the remainder on apro-rated basis on the last day of every month thereafter for the next 36 months).

(16)

The stock options were granted on February 18, 2014. As of the 20162019 fiscal year end,year-end, the stock options granted on February 18, 2014 as part of the Gap Year Award had become exercisable.

 

(12)(17) Stock options

Mr. Anstice’s outstanding equity awards were granted on February 8, 2013. Ascanceled pursuant to their terms due to him terminating his employment as of the 2016 fiscal year-end, the stock options granted on February 8, 2013 had become exercisable.December 5, 2018.

(13)Stock options were granted on December 16, 2010. As of the 2016 fiscal year-end, the stock options granted on December 16, 2010 had become exercisable.

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Lam Research Corporation 2016 Proxy Statement33

Figure 32. FY201638. FY2019 Option Exercises and Stock Vested

 

Option Exercises and Stock Vested for Fiscal Year 2016(1) 
Option Exercises and Stock Vested for Fiscal Year 2019 (1)Option Exercises and Stock Vested for Fiscal Year 2019 (1) 
 Option Awards Stock Awards 
 Option Awards Stock Awards 
Name Number of
Shares
Acquired on
Exercise
(#)		 Value
Realized on
Exercise
($)		 Number of
Shares
Acquired on
Vesting
(#)		 Value
Realized on
Vesting
($)		  Number of
Shares
Acquired on
Exercise
(#)		 Value
Realized on
Exercise
($)		 Number of
Shares
Acquired on
Vesting
(#)		 Value
Realized on
Vesting
($)		 
Martin B. Anstice  —      —     97,623   6,576,160  
Timothy M. Archer  —      —     45,691   3,075,870   

 

—  

 

 

 

—  

 

 

 

46,574

 

 

 

8,231,955

 

Douglas R. Bettinger  —      —     37,386   2,518,929   

 

—  

 

 

 

—  

 

 

 

30,790

 

 

 

5,442,133

 

Richard A. Gottscho  —      —     38,213   2,572,030   

 

9,403

 

 

 

1,256,511

 

 

 

36,276

 

 

 

6,411,783

 

Sarah A. O’Dowd  —      —     19,440   1,309,795  

Patrick J. Lord

 

 

1,553

 

 

 

101,457

 

 

 

14,366

 

 

 

2,539,191

 

Vahid Vahedi

 

 

—  

 

 

 

—  

 

 

 

14,399

 

 

 

2,545,023

 

Seshasayee (Sesha) Varadarajan

 

 

—  

 

 

 

—  

 

 

 

14,399

 

 

 

2,545,023

 

Martin B. Anstice

 

 

52,611

 

 

 

4,269,526

 

 

 

—  

 

 

 

—  

 

 

(1) 

The table shows all stock options exercised and the value realized upon exercise, and all stock awards vested and the value realized upon vesting, by the NEOs during fiscal year 2016,2019, which ended on June 26, 2016.30, 2019.

Figure 33. FY2016 39. FY2019Non-Qualified Deferred Compensation

 

Non-Qualified Deferred Compensation for Fiscal Year 2016 
Non-Qualified Deferred Compensation for Fiscal Year 2019Non-Qualified Deferred Compensation for Fiscal Year 2019 
Name Executive
Contributions
in FY 2016
($)(1)		 Registrant
Contributions
in FY 2016
($)(2)		 Aggregate
Earnings in
FY 2016
($)(3)		 Aggregate
Balance at
FYE 2016
($)(4)		  Executive
Contributions
in FY 2019
($) (1)		 Registrant
Contributions
in FY 2019
($) (2)		 Aggregate
Earnings in
FY 2019
($) (3)		 Aggregate
Balance at
FYE 2019
($) (4)		 
Martin B. Anstice 84,344   2,483   (92,757)  4,612,613  
Timothy M. Archer 425,922   2,500   (107,946)  3,963,166   

 

622,134

 

 

 

2,500

 

 

 

332,028

 

 

 

6,703,539

 

Douglas R. Bettinger 263    —     (113,906)  1,431,125   

 

415,621

 

 

 

887

 

 

 

179,812

 

 

 

3,099,261

 

Richard A. Gottscho  —      —     31,784   1,933,263   

 

—  

 

 

 

—  

 

 

 

74,231

 

 

 

2,201,949

 

Sarah A. O’Dowd 791,006   2,500   (8,947)  6,761,806  

Patrick J. Lord

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

Vahid Vahedi

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

Seshasayee (Sesha) Varadarajan

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

Martin B. Anstice

 

 

43,641

 

 

 

—  

 

 

 

309,661

 

 

 

6,709,603

 

 

(1) 

The entire amount of each executive’s contributions in fiscal year 20162019 is reported in each respective NEO’s compensation in our fiscal year 20162019 “Summary Compensation Table.” above.

 

(2) 

Represents the amount that Lam credited to the Elective Deferred Compensation Plan the “EDCP,”(“EDCP”), which is 3% of Executive Salary Contribution during calendar year 2015,2018, to a maximum benefit of $2,500. These amounts are included in the “Summary Compensation Table” and “FY2019 All Other Compensation Table For Fiscal Year 2016.” above.

 

(3) 

The NEOs did not receive above-market or preferential earnings in fiscal year 2016.2019.

 

(4) 

The fiscalyear-end balance includes $4,618,543 for Mr. Anstice, $3,642,690$5,746,877 for Mr. Archer, $1,544,768$2,502,941 for Mr. Bettinger, $1,901,479$2,127,718 for Dr. Gottscho, and $5,977,247$6,356,301 for Ms. O’DowdMr. Anstice that were previously reported in the ““FY2018Non-Qualified Deferred Compensation for Fiscal Year 2015”Compensation” table in our 20152018 proxy statement.

Potential Payments upon Termination or Change in Control

 

 

The following is a summary of the employment agreements of our named executive officers.

Executive Employment Agreements

Martin B. Anstice.Timothy M. Archer. The Company and Mr. AnsticeArcher entered into an employment agreement, or the “agreement,“Mr. Archer’s agreement,” effective January 1, 2015,2018, for a term ending on December 31, 2017,2020, subject to the right of the Company or Mr. Anstice,Archer, under certain circumstances, to terminate the agreement prior to such time. ThisThe agreement replaced the prior agreement that endedwas amended on December 31, 2014.March 16, 2018 to reflect his promotion to president and COO and on August 8, 2019 to reflect his promotion to, and new compensation as, president and CEO.

Under the terms of theMr. Archer’s agreement, Mr. AnsticeArcher receives a base salary, which is reviewed annually and potentially

adjusted. It was initially set atin the beginning of the term oflatest amendment to the agreement at $900,000.$1,000,000. Mr. AnsticeArcher is also entitled to participate in any short-term or long-term variable compensation programs offered by the Company to its executive officers generally, subject to the applicable terms and conditions of those programs and the approval of the independent members of the board,Board, and to participate in the Company’s Elective Deferred Compensation Plan. Mr. AnsticeArcher receives other benefits, such as health insurance, paid time off (as his schedule permits), and eligible benefits under other plans and programs generally applicable to executive officers of the Company.

If an Involuntary Termination (as defined in Mr. Anstice’sArcher’s agreement) of Mr. Anstice’sArcher’s employment occurs, other than in connection with a Change in Control (as defined in Mr. Anstice’sArcher’s agreement), Mr. AnsticeArcher will be entitled to: (1) a

lump-sum cash payment equal to 18 months of his then-current base salary, plus an amount equal to the average of the last five annual payments made to Mr. AnsticeArcher under the short term variable compensation program or any predecessor or successor programs (the “Short Term Program,” and such average, the “Five Year“Five-Year Average Amount”), plus an amount equal to the pro-ratapro rata amount he would have earned under the Short Term Program for the calendar year in which his employment is terminated had his employment continued until the end of such calendar year, such pro-ratapro rata portion to be calculated based on the performance results achieved under the Short Term programProgram and the number of full months elapsed prior to the termination date; (2) payment of any amounts accrued as of the date of termination under any long-term, cash-based variable-compensation programs of the Company (the “Long Term Cash Programs”); (3) certain medical benefits; (4) a cash payment equal to a product of (x) a pro rata portion (based on time of service as of the date of termination) of the unvested Market-Based PRSU/Market-based PRSU and/or

other performance-based RSU awards granted to Mr. AnsticeArcher, as adjusted for the Company’s performance (calculated as set forth in the award agreements) over the time of service and (y) the closing stock price on the date of termination; and (5) vesting, as of the date of termination, of a pro rata portion of the unvested stock option or RSU awards that are not performance basedperformance-based granted to Mr. AnsticeArcher at least 12 months prior to the termination date.

If a Change in Control of the Company (as defined in Mr. Anstice’sArcher’s agreement) occurs during the period of Mr. Anstice’sArcher’s employment, and if there is an Involuntary Termination of Mr. Anstice’sArcher’s employment either in contemplation of or within the 18 months following the Change in Control, Mr. AnsticeArcher will be entitled to: alump-sum cash payment equal to 24 months of Mr. Anstice’sArcher’s then-current base salary, plus an amount equal to two times the Five YearFive-Year Average Amount, plus an additional amount equal to a pro rata amount (based on the number of full months worked during the calendar year during which the termination occurs) of the Five YearFive-Year Average Amount; certain medical benefits; conversion of any Market-Based PRSUs/Market-based PRSUs and/or other performance-based RSUs outstanding as of the Change in Control into a cash award payable at time of termination equal to the product of the closing stock price on the closing date of the Change in Control and the sum of: (x) a pro rata portion (based on time of service as of the date of termination) of the unvested Market-BasedMarket-based PRSU/performance-based RSU awards granted to Mr. AnsticeArcher as adjusted for the Company’s performance (calculated as set forth in the award agreements) over the time of service and (y) the remainder of thepro-rata portion of unvested Market-BasedMarket-based PRSU/performance-based RSU awards at target; vesting, as of the date of termination, of the unvested stock option or RSU awards that are not performance-based granted to Mr. AnsticeArcher prior to the Change in Control; and payment of any amounts accrued as of the Change in Control under any then existingthen-existing Long Term Cash Programs, plus an amount equal to the remaining target amount under any then existingthen-existing Long Term Cash Programs.

If Mr. Anstice’sArcher’s employment is terminated due to disability or in the event of his death, Mr. AnsticeArcher (or his estate) will be entitled to: (1) the pro rata amount he would have earned under the Short Term Program for the calendar year in which his employment is terminated had his employment continued until the end of such calendar year, such pro rata portion to be calculated based on the performance results achieved under the Short Term Program and the number of full months elapsed prior to the termination date; (2) payment of any amounts accrued as of the date of termination under any then existingthen-existing Long Term Cash Programs; (3) certain medical benefits; (4) vesting, as of the date of termination, of 50% of the unvested stock option, and RSU awards, which are not performance based, granted to Mr. AnsticeArcher prior to the date of termination (or a pro rata amount, based on period of service, if greater than 50%); and (5) vesting, as of the date of

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Lam Research Corporation 2019 Proxy Statement41

termination, of 50% of the Market-BasedMarket-based PRSU/performance-based RSU awards (or a pro rata amount, based on period of service, if greater than 50%) as adjusted for the Company’s performance during the service period (in either case) granted to Mr. AnsticeArcher prior to the date of termination.

If Mr. AnsticeArcher voluntarily resigns, he will be entitled to no additional benefits (except as he may be eligible for under the Company’s Retiree Health Plans); stock options, RSUs and Market-BasedMarket-based PRSUs/performance-based RSUs will cease to vest on the termination date; and stock options will be cancelledcanceled unless they are exercised within 90 days after the termination date. All RSUs and Market-BasedMarket-based PRSUs/performance-based RSUs will be cancelledcanceled on the termination date.

Mr. Anstice’sArcher’s agreement also subjects Mr. AnsticeArcher to customary confidentiality andnon-competition obligations during the term of the agreement, the application of the Company’s compensation recovery, or clawback, policy to any compensation, andnon-solicitation obligations for a period of six months following the termination of his employment. The agreement also requires Mr. AnsticeArcher to execute a release in favor of the Company to receive the payments described above.

Timothy M. Archer. The Company and Mr. Archer entered into an employment agreement, or the “agreement,” effective January 1, 2015, for a term ending on December 31, 2017, subject to the right of the Company or Mr. Archer, under certain circumstances, to terminate the agreement prior to such time. The agreement replaced the employment agreement between the parties that was effective on June 4, 2012 and amended on January 30, 2014. The terms of Mr. Archer’s agreement are substantively similar to those of Mr. Anstice’s agreement, except that Mr. Archer’s initial base salary at the beginning of the term of the agreement was set at $600,000.

The severance terms of Mr. Archer’s agreement are generally similar to those of Mr. Anstice’s agreement, provided that (1)

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Lam Research Corporation 2016 Proxy Statement35

Mr. Archer will receive 12-months base salary instead of 18 months in the event of his Involuntary Termination; and (2) instead of a payment of the Five Year Average Amount, he will receive a payment of 50% of the Five Year Average Amount. The Change in Control terms of Mr. Archer’s agreement are generally similar to those of Mr. Anstice’s agreement, provided that Mr. Archer will receive 18-months base salary instead of 24 months in the event of his Involuntary Termination.

Douglas R. Bettinger. The Company and Mr. Bettinger entered into an employment agreement, or the “agreement,“Mr. Bettinger’s agreement,” with a term commencing on January 1, 20152018 and ending on December 31, 2017,2020, subject to the right of the Company or Mr. Bettinger, under certain circumstances, to terminate the agreement prior to such time. TheMr. Bettinger’s agreement replaced the employment agreement between the parties that was effective on March 11, 2013 and amended on JanuaryNovember 30, 2014. 2018 to reflect his 2019 compensation and special equity award described in further detail in “Compensation Discussion and Analysis—Compensation Relating to Management Transition” above.The terms of Mr. Bettinger’s agreement are substantively similar to those of Mr. Archer’s agreement, with the following material difference: Mr. Bettinger’s initial base salary at the beginning of the term of the agreement was set at $525,000.$584,010, and then $640,000 as part of the November 30, 2018 amendment.

The severance terms of Mr. Bettinger’s agreement are generally similar to those of Mr. Archer’s agreement, providedexcept that (1) Mr. Bettinger will receive12-months base salary instead of18-monthsin computing the Five Yearevent of his Involuntary Termination; and (2) instead of a payment of the Five-Year Average Amount, any partial year short-term plan payments in any year shall be annualized, and if employed for less than five years, then computed based on such fewer numberhe will receive a payment of years.50% of the Five-Year Average Amount. The Change in Control terms of Mr. Bettinger’s agreement are generally similar to those of Mr. Archer’s agreement.agreement, except that Mr. Bettinger will receive18-months base salary instead of24-months in the event of his Involuntary Termination.

Richard A. Gottscho.. The Company and Dr. Gottscho entered into an employment agreement, or the “agreement,“Dr. Gottscho’s agreement,” effective January 1, 2015,2018, for a term ending on December 31, 2017,2020, subject to the right of the Company or Dr. Gottscho, under certain circumstances, to terminate the

agreement prior to such time. The agreement replaced the employment agreement between the parties that was effective on July 18, 2012 and amended on January 30, 2014. The terms of Dr. Gottscho’s agreement are substantively similar to those of Mr. Archer’sBettinger’s agreement with the following material difference: under Dr. Gottscho’s agreement, his initial base salary at the beginning of the term of the agreement was set at $525,000.$567,324. The severance and Change in Control terms of Dr. Gottscho’s agreement are also generally similar to those of Mr. Bettinger’s agreement.

Martin B. Anstice. The Company and Mr. Anstice entered into an employment agreement, or “Mr. Anstice’s agreement,” effective January 1, 2018, for a term that would have ended on December 31, 2020 if not for Mr. Anstice’s termination of his employment and agreement on December 5, 2018. The terms of Mr. Anstice’s agreement were substantively similar to those of Mr. Archer’s agreement with the following material difference: under Mr. Anstice’s agreement, his initial base salary at the beginning of the term of the agreement was set at $990,000. The severance and Change in Control terms of Mr. Anstice’s agreement were also generally similar to those of Mr. Archer’s agreement.

Other Executive Agreements

The Company entered into a change in control agreementagreements with Ms. O’DowdDr. Lord, Dr. Vahedi and Mr. Varadarajan effective January 1, 2015,2018, or the “agreement,“change in control agreement,” for a term ending on December 31, 2017,2020, subject to the right of the Company or Ms. O’Dowd,Dr. Lord, Dr. Vahedi or Mr. Varadarajan, respectively, under certain circumstances, to

terminate thetheir respective change in control agreement prior to such time. The agreement replaced aEach change in control agreement between the parties that was effective on July 18, 2012 and amended on January 30, 2014. The agreement provides that if a changeChange in controlControl (as defined in Ms. O’Dowd’sDr. Lord’s, Dr. Vahedi’s or Mr. Varadarajan’s respective agreement) of the Company occurs during the period of her employment under the agreement, and there is an Involuntary Termination (as defined in herthe agreement) of her employment, Ms. O’DowdDr. Lord, Dr. Vahedi or Mr. Varadarajan will be entitled to payments and benefits substantively similar to those contained in the change in control provisions of Mr. Archer’sBettinger’s agreement.

The change in control agreements containagreement of Dr. Lord, Dr. Vahedi and Mr. Varadarajan each contains confidentiality,non-competition, andnon-solicitation terms that are substantively similar to those of Mr. Anstice’s, Mr. Archer’s, Mr. Bettinger’s and Dr. Gottscho’s agreements, and require Ms. O’DowdDr. Lord, Dr. Vahedi or Mr. Varadarajan to execute a release in favor of the Company to receive the payments described in the previous paragraph.

Equity Plans

In addition to the above, certain of our stock plans provide for accelerated benefits after certain events. While the applicable triggers under each plan vary, these events generally include: (i)(1) a merger or consolidation in which the Company is not the surviving entity, (ii)(2) a sale of substantially all of the Company’s assets, including a liquidation or dissolution of the Company, or (iii)(3) a change in the ownership of more than 50% of our

outstanding securities by tender offer or similar transaction. After a designated event, the vesting of some or all of the awards granted under these plans may be immediately accelerated in full, or certain awards may be assumed, substituted, replaced, or settled in cash by a surviving corporation or its parent. The specific treatment of awards in a particular transaction will be determined by the boardBoard and/or the terms of the applicable transaction documents.

Potential Payments to Named Executive Officers upon Termination or Change in Control

The tables below summarize the potential payments to our NEOs, assuming a change in control of the Company as of the

end of fiscal year 2016.2019. These amounts are calculated assuming that the employment termination or change in control occurs on the last day of fiscal year 2016,2019, June 26, 2016.30, 2019. The closing price per share of our common stock on June 24, 2016,28, 2019, which was the last trading day of fiscal year 2016,2019, was $82.28.$187.84. The short-term incentive program pro-ratapro rata amounts are calculated by multiplying the applicable pro-ratapro rata percentage by the target. Actual performance will not be known until after the end of calendar year 2016. Our board has determined that, if consummated,2019. For Mr. Anstice, the KLA-Tencor merger will be considered a changetable below sets forth the actual payments and benefits he received in control under our employment and change in control agreements (discussed above for our NEOs).connection with his resignation on December 5, 2018.

 

Figures 3440 – 38.46.

Potential Payments to NEOs upon Termination or Change in Control as of FYE2016FYE2019

 

Potential Payments to Mr. Anstice upon Termination or Change in Control as of June 26, 2016 
Potential Payments to Mr. Archer upon Termination or Change in Control as of June 30, 2019Potential Payments to Mr. Archer upon Termination or Change in Control as of June 30, 2019 
   Involuntary Termination 
   Involuntary Termination 
 Voluntary
Termination
($)		 Disability
or Death
($)		 For
Cause
($)		 Not for
Cause
($)		 Change in
Control
($)		  Voluntary
Termination
($)		 

Disability

or Death

($)

 For
Cause
($)		 Not for
Cause
($)		 Change in
Control
($)		 

Compensation

                    
Severance  —      —      —     1,440,000   1,920,000   

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

1,500,000

 

 

 

2,000,000

 

Short-term Incentive (5-year average)  —      —      —     1,272,731   2,545,462   

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

1,172,103

 

 

 

2,344,207

 

Short-term Incentive (pro rata)  —     600,480    —     600,480   530,729   

 

—  

 

 

 

625,000

 

 

 

—  

 

 

 

625,000

 

 

 

488,376

 

Long-term Incentives:                    

Stock Options (Unvested and Accelerated)

  —     353,201    —     132,436   848,217   

 

—  

 

 

 

1,780,702

 

 

 

—  

 

 

 

88,280

 

 

 

3,737,965

 

Service-Based Restricted Stock Units (Unvested and Accelerated)

  —     2,257,791    —     765,478   5,893,552  

Performance-Based Restricted Stock Units (Unvested and Accelerated)

  —     10,001,015    —     8,221,339   15,037,967  

Service-based Restricted Stock Units (Unvested and Accelerated)

 

 

—  

 

 

 

3,368,582

 

 

 

—  

 

 

 

408,082

 

 

 

7,882,893

 

Performance-based Restricted Stock Units (Unvested and Accelerated)

 

 

—  

 

 

 

7,212,509

 

 

 

—  

 

 

 

5,407,329

 

 

 

10,878,356

 

Benefits and Perquisites

                    
Health Benefit Continuation/COBRA Benefit  —     21,447    —     21,447   21,447   

 

—  

 

 

 

37,164

 

 

 

—  

 

 

 

37,164

 

 

 

37,164

 

Total

  —      13,233,934    —      12,453,911    26,797,374   

 

—  

 

 

 

13,023,957

 

 

 

—  

 

 

 

9,237,958

 

 

 

27,368,961

 

 

Potential Payments to Mr. Archer upon Termination or Change in Control as of June 26, 2016 
     Involuntary Termination 
  Voluntary
Termination
($)		  Disability
or Death
($)		  For
Cause
($)		  Not for
Cause
($)		  Change in
Control
($)		 

Compensation

                    
Severance  —          —      636,540    954,810  
Short-term Incentive (5-year average)  —          —      400,156    1,200,469  
Short-term Incentive (pro rata)  —      291,981    —      291,981    333,730  
Long-term Incentives:                    

Stock Options (Unvested and Accelerated)

  —      179,094    —      61,386    424,437  

Service-Based Restricted Stock Units (Unvested and Accelerated)

  —      1,164,385    —      370,754    3,017,125  

Performance-Based Restricted Stock Units (Unvested and Accelerated)

  —      4,877,944    —      3,930,520    7,458,941  

Benefits and Perquisites

                    
Health Benefit Continuation/COBRA Benefit  —      32,170    —      32,170    32,170  

Total

  —      6,545,574    —      5,723,507    13,421,682  

Potential Payments to Mr. Bettinger upon Termination or Change in Control as of June 26, 2016 
     Involuntary Termination 
  Voluntary
Termination
($)		  Disability
or Death
($)		  For
Cause
($)		  Not for
Cause
($)		  Change in
Control
($)		 

Compensation

                    
Severance  —          —      567,000    850,500  
Short-term Incentive (5-year average)  —          —      284,908    873,652  
Short-term Incentive (pro rata)  —      212,795    —      212,795    242,875  
Long-term Incentives:                    

Stock Options (Unvested and Accelerated)

  —      131,819    —      50,864    317,975  

Service-Based Restricted Stock Units (Unvested and Accelerated)

  —      837,768    —      290,051    2,192,433  

Performance-Based Restricted Stock Units (Unvested and Accelerated)

  —      3,780,898    —      3,127,940    5,654,060  

Benefits and Perquisites

                    
Health Benefit Continuation/COBRA Benefit  —      24,212    —      24,212    24,212  

Total

  —      4,987,492    —      4,557,770    10,155,707  

 
Potential Payments to Mr. Bettinger upon Termination or Change in  Control as of June 30, 2019 
     Involuntary Termination 
 

 

 Voluntary
Termination
($)		  

Disability

or Death

($)

  For
Cause
($)		  Not for
Cause
($)		  Change in
Control
($)		 

Compensation

                    

Severance

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

640,000

 

 

 

960,000

 

Short-term Incentive(5-year average)

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

387,265

 

 

 

1,161,794

 

Short-term Incentive (pro rata)

 

 

—  

 

 

 

266,667

 

 

 

—  

 

 

 

266,667

 

 

 

322,721

 

Long-term Incentives:

                    

Stock Options (Unvested and Accelerated)

 

 

—  

 

 

 

124,622

 

 

 

—  

 

 

 

53,957

 

 

 

357,157

 

Service-based Restricted Stock Units (Unvested and Accelerated)

 

 

—  

 

 

 

5,900,524

 

 

 

—  

 

 

 

222,825

 

 

 

12,394,998

 

Performance-based Restricted Stock Units (Unvested and Accelerated)

 

 

—  

 

 

 

3,694,970

 

 

 

—  

 

 

 

3,014,032

 

 

 

5,333,024

 

Benefits and Perquisites

                    

Health Benefit Continuation/COBRA Benefit

 

 

—  

 

 

 

25,509

 

 

 

—  

 

 

 

25,509

 

 

 

25,509

 

Total

 

 

—  

 

 

 

10,012,292

 

 

 

—  

 

 

 

4,610,255

 

 

 

20,555,203

 

 

Continues on next page  u

 

Lam Research Corporation 20162019 Proxy Statement 3743

 
Potential Payments to Dr. Gottscho upon Termination or Change in  Control as of June 30, 2019 
     Involuntary Termination 
 

 

 Voluntary
Termination
($)		  

Disability

or Death

($)

  For
Cause
($)		  Not for
Cause
($)		  Change in
Control
($)		 

Compensation

                    

Severance

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

584,344

 

 

 

876,516

 

Short-term Incentive(5-year average)

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

398,241

 

 

 

1,194,724

 

Short-term Incentive (pro rata)

 

 

—  

 

 

 

219,129

 

 

 

—  

 

 

 

219,129

 

 

 

331,868

 

Long-term Incentives:

                    

Stock Options (Unvested and Accelerated)

 

 

—  

 

 

 

122,661

 

 

 

—  

 

 

 

63,773

 

 

 

372,868

 

Service-based Restricted Stock Units (Unvested and Accelerated)

 

 

—  

 

 

 

714,590

 

 

 

—  

 

 

 

258,116

 

 

 

2,110,195

 

Performance-based Restricted Stock Units (Unvested and Accelerated)

 

 

—  

 

 

 

4,023,415

 

 

 

—  

 

 

 

3,449,312

 

 

 

5,698,142

 

Benefits and Perquisites

                    

Health Benefit Continuation/Retiree Health Plans

 

 

662,000

 

 

 

662,000

 

 

 

662,000

 

 

 

662,000

 

 

 

662,000

 

Total

 

 

662,000

 

 

 

5,741,795

 

 

 

662,000

 

 

 

5,634,915

 

 

 

11,246,313

 

Potential Payments to Dr. Lord upon Termination or Change in  Control as of June 30, 2019
Involuntary Termination

Voluntary
Termination
($)

Disability

or Death

($)

For
Cause
($)		Not for
Cause
($)		Change in
Control
($)

Compensation

Severance

—  

—  

—  

—  

695,250

Short-term Incentive(5-year average)

—  

—  

—  

—  

807,122

Short-term Incentive (pro rata)

—  

—  

—  

—  

224,201

Long-term Incentives:

Stock Options (Unvested and Accelerated)

—  

—  

—  

—  

200,157

Service-based Restricted Stock Units (Unvested and Accelerated)

—  

—  

—  

—  

1,391,331

Performance-based Restricted Stock Units (Unvested and Accelerated)

—  

—  

—  

—  

3,229,538

Benefits and Perquisites

Health Benefit Continuation/Retiree Health Plans

—  

—  

—  

—  

25,509

Total

—  

—  

—  

—  

6,573,108

Potential Payments to Dr. Gottscho upon Termination or Change in Control as of June 26, 2016 
     Involuntary Termination 
  Voluntary
Termination
($)		  Disability
or Death
($)		  For
Cause
($)		  Not for
Cause
($)		  Change in
Control
($)		 

Compensation

                    
Severance  —      —      —      556,200    834,300  
Short-term Incentive (5-year average)  —      —      —      255,053    765,158  
Short-term Incentive (pro rata)  —      208,742    —      208,742    212,714  
Long-term Incentives:                    

Stock Options (Unvested and Accelerated)

  —      146,895    —      51,211    349,169  

Service-Based Restricted Stock Units (Unvested and Accelerated)

  —      961,085    —      312,746    2,507,154  

Performance-Based Restricted Stock Units (Unvested and Accelerated)

  —      4,061,115    —      3,288,638    6,208,681  

Benefits and Perquisites

                    
Health Benefit Continuation/Retiree Health Plans  627,000    627,000    627,000    627,000    627,000  

Total

  627,000    6,004,837    627,000    5,299,590    11,504,176  

Potential Payments to Mr. Vahedi upon Termination or Change in  Control as of June 30, 2019
Involuntary Termination

Voluntary
Termination
($)

Disability
or Death

($)

For
Cause
($)		Not for
Cause
($)		Change in
Control
($)

Compensation

Severance

—  

—  

—  

—  

679,800

Short-term Incentive(5-year average)

—  

—  

—  

—  

777,981

Short-term Incentive (pro rata)

—  

—  

—  

—  

216,106

Long-term Incentives:

Stock Options (Unvested and Accelerated)

—  

—  

—  

—  

82,421

Service-based Restricted Stock Units (Unvested and Accelerated)

—  

—  

—  

—  

1,296,284

Performance-based Restricted Stock Units (Unvested and Accelerated)

—  

—  

—  

—  

2,861,307

Benefits and Perquisites

Health Benefit Continuation/Retiree Health Plans

—  

—  

—  

—  

16,328

Total

—  

—  

—  

—  

5,930,227

Potential Payments to Mr. Varadarajan upon Termination or Change  in Control as of June 30, 2019
Involuntary Termination

Voluntary
Termination
($)		Disability
or Death
($)		For
Cause
($)		Not for
Cause
($)		Change in
Control
($)

Compensation

Severance

—  

—  

—  

—  

679,800

Short-term Incentive(5-year average)

—  

—  

—  

—  

747,712

Short-term Incentive (pro rata)

—  

—  

—  

—  

207,698

Long-term Incentives:

Stock Options (Unvested and Accelerated)

—  

—  

—  

—  

82,421

Service-based Restricted Stock Units (Unvested and Accelerated)

—  

—  

—  

—  

1,296,284

Performance-based Restricted Stock Units (Unvested and Accelerated)

—  

—  

—  

—  

2,861,307

Benefits and Perquisites

Health Benefit Continuation/Retiree Health Plans

—  

—  

—  

—  

23,967

Total

—  

—  

—  

—  

5,899,189

 

Potential Payments to Ms. O’Dowd upon Termination or Change in Control as of June 26, 2016 
     Involuntary Termination 
  Voluntary
Termination
($)		  Disability
or Death
($)		  For
Cause
($)		  Not for
Cause
($)		  Change in
Control
($)		 

Compensation

                    
Severance  —      —      —      —      673,313  
Short-term Incentive (5-year average)  —      —      —      —      560,139  
Short-term Incentive (pro rata)  —      —      —      —      155,719  
Long-term Incentives:                    

Stock Options (Unvested and Accelerated)

  —      —      —      —      163,579  

Service-Based Restricted Stock Units (Unvested and Accelerated)

  —      —      —      —      1,129,375  

Performance-Based Restricted Stock Units (Unvested and Accelerated)

  —      —      —      —      2,922,160  

Benefits and Perquisites

                    
Health Benefit Continuation/Retiree Health Plans  510,000    510,000    510,000    510,000    510,000  

Total

  510,000    510,000    510,000    510,000    6,114,285  
Potential Payments to Mr. Anstice upon Termination or Change in  Control as of December 5, 2019

Voluntary
Termination
($)

Compensation

Severance

—  

Short-term Incentive(5-year average)

—  

Short-term Incentive (pro rata)

—  

Long-term Incentives:

Stock Options (Unvested and Accelerated)

—  

Service-based Restricted Stock Units (Unvested and Accelerated)

—  

Performance-based Restricted Stock Units (Unvested and Accelerated)

—  

Benefits and Perquisites

Health Benefit Continuation/Retiree Health Plans

—  

Total

—  

CEO Pay Ratio

In accordance with SEC rules, we are providing the ratio of the annual total compensation of our Chief Executive Officer, or the CEO, to the median of the annual total compensation of our employees (other than the CEO). The fiscal year 2019 annual total compensation of our CEO, Mr. Archer, was $13,745,109, the fiscal year 2019 annual total compensation of our median compensated employee (other than the CEO) was $95,689, and the ratio of these amounts was 144 to 1.

This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources system of record and the methodology described below. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and

assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.

As permitted under the SEC rules, we are using the same median employee identified for purposes of our fiscal year 2018 CEO pay ratio, as we believe the changes to our employee population and compensation have not significantly impacted our pay ratio. For purposes of identifying our median compensated employee in fiscal year 2018, we used our global employee population as of June 24, 2018, identified based on our human resources system of record. We used total direct compensation as our consistently applied compensation measure for such population. In this context, total direct compensation means the sum of the applicable

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Lam Research Corporation 2019 Proxy Statement45

annual base salaries determined as of June 24, 2018, the incentive cash target amount payable for service in calendar year 2018, and the approved value of the annual equity awards granted during fiscal year 2018 for our global employee population. We annualized the annual base salary and incentive cash target amounts for all employees who did not work for the entire year. Given its global population, the Company used the foreign currency exchange rates in effect

at the end of fiscal year 2018 to determine the annual total direct compensation and therefore the median compensated employee. After identifying our median compensated employee, we then calculated the annual total direct compensation for our median compensated employee using the same methodology used for the Company’s CEO as set forth in the “Summary Compensation Table”of this proxy statement.

 

 

Securities Authorized for Issuance Underunder Equity Compensation Plans

The following table provides information, as of June 26, 2016,30, 2019, regarding securities authorized for issuance under the Company’s equity compensation plans. The Company’s equity compensation plans of the Company include the 1999 Employee Stock Purchase Plan, the 2007 Stock Incentive Plan, the 2011 Stock Incentive Plan, and the 2015 Stock Incentive Plan, each as amended and as may be amended. Since November 4, 2015, the Company has issued awards under the 1999 Employee Stock Purchase Plan and the 2015 Stock Incentive Plan, each as amended. The 1999 Employee Stock Purchase Plan was amended and restated by the Board on August 29, 2018 and approved at the 2018 Annual Meeting of Stockholders. Please see “Proposal No. 3: Approval of the Adoption of the Lam Research Corporation 1999 Employee Stock Purchase Plan, as Amended and Restated” in the 2018 proxy statement for additional information.

Figure 39. FYE201647. FYE2019 Securities Authorized for Issuance under Equity Compensation Plans

 

 
Plan Category Number of
Securities to be
Issued Upon
Exercise of
Outstanding Options,
Warrants, and Rights
(a)		 

Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants, and
Rights (1)

($) (b)

 Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(excluding securities
reflected in column (a))
(c)		  Number of
Securities to be
Issued Upon
Exercise of
Outstanding  Options,
Warrants, and Rights
(a)		 Weighted-Average
Exercise Price  of
Outstanding
Options,
Warrants, and
Rights (1)
($) (b)		 Number of Securities
Remaining Available for
Future Issuance Under
Equity  Compensation Plans
(excluding securities
reflected in column (a))
(c)		 
Equity compensation plans approved by security holders  3,056,815(2)  61.16    21,256,281(3)  

 

2,860,328

(2) 

 

 

129.64

 

 

 

16,308,432

(3) 

Equity compensation plans not approved by security holders  2,080,872(4)  23.15    —     

 

83,601

(4) 

 

 

48.16

 

 

 

—  

 

Total

  5,137,687    47.41    21,256,281   

 

2,943,929

 

 

 

115.96

 

 

 

16,308,432

 

 

(1) 

Does not include RSUs.

(2) 

Includes 884,87459,576 shares issuable upon RSUservice-based RSUs vesting or stock option exercises under the Company’s 2007 Stock Incentive Plan, as amended, or the “2007 Plan,” and 2,171,9412,800,752 shares issuable upon RSUservice-based RSUs vesting, market-based PRSUs vesting (assumes that the amount of shares that will be issued will be at the maximum vesting amount) or stock option exercises under the Company’s 2015 Stock Incentive Plan as amended, or the “2015 Plan.” The 2007 Plan was adopted by the board in August 2006, approved by Lam’s stockholders in November 2006, and amended by the board in November 2006 and May 2013, and was retired in November 2015 when Lam’s stockholders approved the Company’s 2015 Plan. The term of the 2007 Plan and 2015 Plan was 10 years from the last date of any approval, amendment, or restatement of the plan by the Company’s stockholders. The 2015 Plan reserves for issuance up to 18,000,000 shares of the Company’s common stock. If the number of shares that will be issued upon vesting of the outstanding market-based PRSUs is at the target amount, the number of shares to be issued upon exercise of outstanding options, warrant, and rights would be reduced 217,387 shares, as reported in Note 5 to the Consolidated Financial Statements of the Company’s annual report on Form10-K for the fiscal year ended June 30, 2019.

 

(3) 

Includes 14,758,2249,379,904 shares available for future issuance under the 2015 Plan and 6,498,0576,928,528 shares available for future issuance under the 1999 Employee Stock Purchase Plan, as amended, or the “1999 ESPP.” The 1999 ESPP was adopted by the board in September 1998, approved by Lam’s stockholders in November 1998, amended by stockholder approval in November 2003, amended by stockholder approval in November 2012, and most recently amended by the board in November 2012.August 2018. The term of the 1999 ESPP is 20 years from its effective date of September 30, 1998,August 29, 2018, unless otherwise terminated or extended in accordance with its terms.

 

(4) 

Includes 2,080,87283,601 shares issuable upon RSU vestingservice-based RSUs or stock option exercises under the Company’s 2011 Stock Incentive Plan, as amended, or the “2011 Plan.” As part of the acquisition of Novellus Systems, Inc., Lam assumed the Novellus Systems, Inc. 2011 Stock Incentive Plan. The 2011 Plan was approved by Novellus shareholders before the merger but has not been approved by a separate vote of Lam stockholders. The 2011 Plan was amended by the board in July 2012. The term of the 2011 Plan was 10 years from its effective date of May 10, 2011, unless otherwise terminated or extended in accordance with its terms, and was retired in November 2015 when the 2015 Plan was approved by stockholders.

Continues on next page  u

Lam Research Corporation 2016 Proxy Statement39

    

 

Audit Matters

 

 

Audit Committee Report

 

The audit committee operates under a written charter adopted by the Board that outlines its purpose and responsibilities. The audit committee reviews and assesses the adequacy of its charter at least annually and, when appropriate, recommends to the Board changes to its charter to reflect the evolving role of the audit committee. The charter of the audit committee is available on the Investors section of our website athttps://investor.lamresearch.com/corporate-governance.

The audit committee is composed entirely of directors who meet the independence requirements of Nasdaq and the SEC, and who otherwise satisfy the requirements for audit committee service imposed by the Exchange Act. The Board has designated four out of five audit committee members as “audit committee financial experts” under the SEC rules.

The Company’s management, audit committee, and independent registered public accounting firm (Ernst & Young LLP) have specific but different responsibilities relating to Lam’s financial reporting. Lam’s management is responsible for the preparation, presentation and integrity of financial statements and for the system of internal control and the financial reporting process. Ernst & Young LLP, or “EY,” has the responsibility to express an opinion on the financial statements and the system of internal control over financial reporting, based on the audit they conducted in accordance with the standards of the Public Company Accounting Oversight Board (U.S.). The audit committee is responsible for monitoring and overseeing these processes. The audit committee relies on the expertise and knowledge of management, the internal audit department, and the independent auditor in carrying out its oversight responsibilities.

In accordance with applicable law, the audit committee has ultimate authority and responsibility for selecting, compensating, evaluating, and, when appropriate, replacing the Company’s independent audit firm, and evaluates its independence. The audit committee has the authority to

engage its own outside advisors, including experts as the committee considers necessary to carry out its responsibilities, apart from counsel or advisors hired by management.

In this context and in connection with the audited financial statements contained in the Company’s Annual Report on Form10-K for the fiscal year ended June 26, 2016,30, 2019, the audit committee took the following actions:

 

ReviewedReceived and discussed the audited financial statements with Company management.management;
Discussed with EY the matters required to be discussed by applicable auditing standardsrequirements of the Public Company Accounting Oversight Board, or the “PCAOB.“PCAOB,”
and the SEC;
ReviewedReceived and discussed the written disclosures and the letter from EY required by Rule 3526as per applicable requirements of the PCAOB “Communicationregarding the independent registered public accounting firm’s communications with Audit Committees Concerning Independence,”the audit committee concerning independence, and discussed with EY its independence.independence; and
Based on the foregoing reviews and discussions, recommended to the board of directorsBoard that the audited financial statements be included in the Company’s 20162019 Annual Report on Form10-K for the fiscal year ended June 26, 201630, 2019 for filing with the SEC.

This Audit Committee Report shall not be deemed “filed” with the SEC for purposes of federal securities law, and it shall not, under any circumstances, be incorporated by reference into any of the Company’s past or future SEC filings. The report shall not be deemed soliciting material.

MEMBERS OF THE AUDIT COMMITTEE

Eric K. Brandt (Chair)

Michael R. Cannon

Christine A. Heckart

Bethany J. Mayer

Leslie F. Varon

 

 

Continues on next page  u

Lam Research Corporation 2019 Proxy Statement47

 

Relationship with Independent Registered Public Accounting Firm

 

EY has audited the Company’s consolidated financial statements since the Company’s inception.

Annual Evaluation and Selection of Independent Registered Public Accounting Firm

The audit committee annually evaluates the performance of the Company’s independent registered public accounting firm, including the senior audit engagement team, and determines whether to reengage the current accounting firm or consider other audit firms. Factors considered by the audit committee in deciding whether to retain EY include: (i)(1) EY’s global

capabilities to handle the breadth and complexity of the

Company’s global operations; (ii)(2) EY’s technical expertise and knowledge of the Company’s industry and global operations; (iii)(3) the quality and candor of EY’s communications with the audit committee and management; (iv)(4) EY’s independence; (v)(5) the quality and efficiency of the services provided by EY, including input from management on EY’s performance and how effectively EY demonstrated its independent judgment, objectivity and professional skepticism; (vi)(6) the appropriateness of EY’s fees; and (vii)(7) EY’s tenure as our independent auditor, including the benefits of that tenure, and the controls and processes in place (such as rotation of key partners) that help ensure EY’s continued independence in the facelight of such tenure.

 

Figure 40.48. Independent Registered Public Accounting Firm Evaluation and Selection Highlights

 

Independence Controls

Audit Committee Oversight– Oversight includes regular private sessions with EY, discussions with EY about the scope of its audit and business imperatives, a comprehensive annual evaluation when determining whether to engage EY, and direct involvement by the audit committee and its chair in the selection of a new lead assurance engagement partner and new global coordinating partner in connection with the mandated rotation of these positions.

Limits onNon-Audit Services– The audit committee preapproves audit and permissiblenon-audit services provided by EY in accordance with itspre-approval policy.

EY’s Internal Independence Process– EY conducts periodic internal reviews of its audit and other work, assesses the adequacy of partners and other personnel working on the Company’s account, and rotates the lead assurance engagement partner, the global coordinating partner, and other partners on the engagement consistent with independence and rotation requirements established by the PCAOB and SEC.

Strong Regulatory Framework– EY, as an independent registered public accounting firm, is subject to PCAOB inspections, “Big 4” peer reviews and PCAOB and SEC oversight.

Benefits of Longer Tenure

Enhanced Audit Quality– EY’s significant institutional knowledge of, and deep expertise ofin, the Company’s semiconductor equipment industry and global business, accounting policies and practices, and internal control over financial reporting enhances audit quality.

Competitive Fees– Because of EY’s familiarity with the Company and the industry, audit and other fees are competitive with peer independent registered public accounting firms.

Avoid Costs Associated with New Auditor– Bringing on a new independent registered public accounting firm would be costly and require a significant time commitment, which could lead to management distractions.

Fees Billed by EYErnst & Young LLP

The table below shows the fees billed by EY for audit and other services provided to the Company in fiscal years 20162019 and 2015.2018.

Figure 41. FY2016/2015 EY48. FY2019/2018 Fees Billed by Ernst & Young LLP

 

 
 Fiscal Year 2019
($)		 Fiscal Year 2018
($)		 
 Fiscal Year 2016
($)		 Fiscal Year 2015
($)		 
Audit Fees(1) 4,697,837   4,736,008    4,703,830   4,605,495 
Audit-Related Fees(2) 373,721    —      27,000   90,500 
Tax Fees(3) 265,527   82,634    194,170   34,888 
All Other Fees  —      —      —     —   
TOTAL 5,337,085   4,818,642    4,925,000   4,730,883 

(1) 

Audit Fees represent fees for professional services provided in connection with the audits of annual financial statements. Audit Fees also include reviews of quarterly financial statements, audit services related to other statutory or regulatory filings or engagements, and fees related to EY’s audit of the effectiveness of the Company’s internal control over financial reporting pursuant to section 404 of the Sarbanes-Oxley Act.

 

(2) 

Audit-Related Fees represent fees for assurance and related services that are reasonably related to the audit or review of the Company’s financial statements and are not reported above under “Audit Fees”. These fees principally include due diligence and accounting consultationsconsultation fees in connection with our proposed acquisition of KLA-Tencor Corporation.Coventor, Inc. in 2018 and an information systems audit in 2019.

 

(3) 

Tax Fees represent fees for professional services for tax planning, tax compliance and review services related to foreign tax compliance and assistance with tax audits and appeals.

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Lam Research Corporation 2016 Proxy Statement41

The audit committee reviewed summaries of the services provided by EY and the related fees during fiscal year 20162019 and has determined that the provision ofnon-audit services was compatible with maintaining the independence of EY as the Company’s independent registered public accounting firm. The audit committee or its delegate approved 100% of the services and related fee amounts for services provided by EY during fiscal year 2016.2019.

Policy on Audit CommitteePre-Approval of Audit andNon-Audit Services

It is the responsibility of the audit committee to approve, in accordance with sections 10A(h) and (i) of the Exchange Act and the rules and regulations of the SEC, all professional services to be provided to us by our independent registered public accounting firm, provided that the audit committee shallmay not approve anynon-audit services proscribed by section 10A(g) of the Exchange Act in the absence of an applicable exemption.

It is our policy that the audit committeepre-approves all audit and permissiblenon-audit services provided by our independent registered public accounting firm, consistent with the criteria set forth in the audit committee charter and applicable laws and regulations. The audit committee has delegated to the chair of the audit committee the authority topre-approve such services, provided that the chair shall report any decisions topre-approve such services to the full audit committee at its next regular meeting. These services may include audit services, audit-related services, tax services, and other services. Our independent registered public accounting firm and our management are required to periodically report to the audit committee regarding the extent of services provided by our independent registered public accounting firm pursuant to any suchpre-approval.

 

 

 

Certain Relationships and Related Party Transactions

 

The audit committee is responsible for the review and oversight of all related party transactions required to be disclosed to the public under SEC rules pursuant to its written charter. In addition, the Company maintains a written code of ethics that requires all employees, officers and directors to act ethically when handling any actual or apparent conflicts of interest in personal and professional relationships and to promptly report any such issues to the Company’s legal department.

No family relationships exist as of the date of this proxy statement or existed during fiscal year 20162019 among any of our directors and executive officers. There waswere only onetwo related party transactiontransactions (including employment and compensation associated therewith) that occurred during since the beginning of

fiscal year 2016.2019. The son of Stephen G. Newberry, the chairman of our board of directors,Board, Ryan Newberry, is employed by the Company as a manager of security. In addition, thedaughter-in-law of Stephen G. Newberry, Meghan Newberry, is employed by the Company as a manager of materials in the supply chain operations group. In fiscal year 2016,2019, the aggregate

compensation paid to Ryan Newberry and Meghan Newberry, including salary, incentive compensation, the grant date value of long-term incentive awards and the value of any other health and benefits contributed to or paid for by the Company, was less than $150,000.$200,000 each. The aggregate compensation for each is similar to the aggregate compensation of other employees holding equivalent positions.

 

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Lam Research Corporation 2019 Proxy Statement49

    

 

Voting Proposals

 

 

Proposal No. 1: Election of Existing Directors

 

This first proposal relates to the election to our boardBoard of directors of nine10 nominees who are directors of the Company as of the date of this proxy statement. The second proposal relates to the election to our board of directors of two members of KLA-Tencor’s board of directors, whose nomination and election is subject to and contingent upon the acquisition of KLA-Tencor being consummated prior to this year’s annual meeting of stockholders. See “Proposal No. 2. Election of Additional Directors” for additional information. In general, the nine10 nominees identified in this proposal who receive the highest number of “for” votes will be elected. However, any nominee who fails to receive affirmative approval from holders of a majority of the votes cast in such nominee’s election at the annual meeting, either by proxy or in person, will not be elected to the board,Board, even if he or she is among the top nine10 nominees in total “for” votes. This requirement reflects the majority vote provisions implemented by the Company in November 2009. The term of office of each person elected as a director will be until the next annual meeting of stockholders, and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Unless otherwise instructed, the Proxypeople named on the proxy card as proxy holders, the “Proxy Holders, (as defined in “Voting and Meeting Information – Information Concerning Solicitation and Voting – Voting Instructions” below) will vote the proxies received by them for the nine10 nominees named below, each of whom is currently a director of the Company. The proxies cannot be voted for more than nine10 nominees, whether or not there are additional nominees. If any nominee of the Company should decline or be unable to serve as a director as of the time of the annual meeting, andthen unless otherwise instructed, the proxies will be voted for any substitute nominee designated by the present board of directorsBoard to fill the vacancy. The Company is not aware of any nominee who will be unable, or will decline, to serve as a director.

The below nominees for election or reelection have been nominated for election to the board of directorsBoard in accordance with the criteria and procedures discussed above in “Governance Matters - –Corporate Governance.”

Appointment of New Director.Directors.As part of its Board refreshment planning and continued focus on diversity, the board’s self-evaluation process, the boardBoard identified the desirability of having additional representation by former executivesaugmenting its skills and experiences in three areas: operational leadership with technology industry experience including outside of the Company’ssemiconductor ecosystem, an audit committee financial expert, and a former executive of a major customerscustomer.

The Board retained a third-party search firm in connection with the first two areas and from executives of global businesses, especially ones headquartered in countries whereselected Ms. Mayer as having operational leadership with technology industry experience including outside the Company conducts significant business. The board believed that the existing board members would be able tosemiconductor ecosystem, and Ms. Varon as an audit committee financial expert.

identify qualified candidatesThe Board identified Mr. Ahmed as a candidate without the involvement of a recruiting firm. Lih Shyng (Rick L.) Tsai, Ph.D.Mr. Ahmed was identifiedintroduced by Mr. Archer and selected as a candidate by Mr. Anstice because he met these criteria. Dr. Tsai was initially identified as a potential candidatedirector because of his leadership positions at Taiwan Semiconductor Manufacturing Company Limited (TSMC), includingexperience as director, president and CEO, his knowledgea former executive of one of the semiconductor equipment business, the Company’s major customers, who had significant experience in working with him, and his excellent reputation in the semiconductor industry. See “2016 Nominees for Director” below for additional information regarding Dr. Tsai’s qualifications. Company.

Over the course of a year, Dr. Tsaiseveral months, Mses. Mayer and Varon and Mr. Ahmed met with our chairman, lead independent director (LID)/ director/nominating and governance committee chair, members of the nominating and governance committee, additional board members, and our president and CEO, as well as representatives of the Company’s executive team. Following those meetings, the nominating and governance committee recommended Dr. Tsaiall of these candidates for appointment to the independent directors as a nominee for electionBoard. The Board, after discussing the recommendation and increasing the size of the Board, approved the recommendation of the committee and appointed the candidates to the board. The board discussed and approved this recommendation.Board.

Board SizeSize.. The nine10 directors to be elected in this proposal isare fewer than the 1012 members of the boardBoard as of the date of mailing. As previously disclosed in a current report on Form8-K, Dr. SaraswatMr. Newberry is retiring from and Ms. Heckart is resigning from the boardBoard effective as of the close of business on November 7, 20164, 2019, just before the 2016date of the 2019 annual meeting, at which time the size of the boardBoard will be reduced to nine (or 11, if the acquisition of KLA-Tencor is consummated prior to this year’s annual meeting).10.

Information Regarding Each Nominee.In addition to the biographical information concerning each board nominee’s specific experience, attributes, positions and qualifications and age as of September 13, 2016,6, 2019, we believe that each of our nominees, while serving as a director and/or officer of the Company, has devoted adequate time to the board of directorsBoard and performed his or her duties with critical attributes such as honesty, integrity, wisdom, and an adherence to high ethical standards. Each nominee has demonstrated strong business acumen, an ability to make independent analytical inquiries, to understand the Company’s business environment and to exercise sound judgment, as well as a commitment to the Company and its core values. We believe the nominees have an appropriate diversity and interplay ofdiverse viewpoints, skills, backgrounds, and experiences that will encourage a robust decision-making process for the board.Board.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NINE10 DIRECTOR NOMINEES SET FORTH BELOW.

 

2019 Nominees for Director

LOGO

Sohail U. Ahmed

Director since 2019

Age 61

Mr. Ahmed is the former Senior Vice President and General Manager of the Technology and Manufacturing Group at Intel Corporation, a leading producer of microchips, computing and communications products, where he was responsible for overseeing the research and development and deployment of next-generation silicon logic technologies for production of future Intel microprocessors. He held that position from January 2015 to October 2018. Immediately prior to that, he was Corporate Vice President and General Manager, Logic Technology Department at Intel from 2004 to January 2015. Mr. Ahmed joined Intel in 1984, working as a process engineer, and held progressive technical and management positions in logic process development.

Mr. Ahmed earned an M.S. degree in chemical engineering from the University of California, Davis, and a B.S. degree in chemical engineering from the University of Southern California.

The Board has concluded that Mr. Ahmed should serve as a director of the Company because of his extensive knowledge and experience acquired as an executive of a major semiconductor manufacturer focused on next-generation silicon logic technologies, his deep knowledge and understanding of semiconductor processing equipment technologies, and his experience as a senior executive of a major Company customer.

LOGO

Timothy M. Archer

Director since 2018

Age 52

Timothy M. Archer has served as the Company’s President and Chief Executive Officer since December 5, 2018. Mr. Archer joined the Company in June 2012 as our executive vice president, chief operating officer; and was promoted to president and chief operating officer in January 2018. Prior to joining us, he spent 18 years at Novellus Systems, Inc. in various technology development and business leadership roles, including most recently as chief operating officer from January 2011 to June 2012; executive vice president of Worldwide Sales, Marketing, and Customer Satisfaction from September 2009 to January 2011; and executive vice president of the PECVD and Electrofill Business Units from November 2008 to September 2009. His tenure at Novellus also included assignments as senior director of technology for Novellus Systems Japan from 1999 to 2001 and senior director of technology for the Electrofill Business Unit from April 2001 to April 2002. He started his career in 1989 at Tektronix, where he was responsible for process development for high-speed bipolar integrated circuits.

Mr. Archer completed the Program for Management Development at the Harvard Graduate School of Business and earned a B.S. degree in applied physics from the California Institute of Technology.

The Board has concluded that Mr. Archer should serve as a director of the Company because of his strong leadership; his knowledge and experience acquired from his current service as President, Chief Executive Officer and a director of the Company, and his past service as President and Chief Operating Officer, and as Executive Vice President and Chief Operating Officer of the Company; his deep knowledge and understanding of semiconductor processing equipment technologies; his understanding of our customers’ markets and needs; and his mergers and acquisitions experience.

 

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Lam Research Corporation 20162019 Proxy Statement 4351

2016 Nominees for Director

LOGO

Martin B. Anstice

Director since 2012

Age 49

Martin B. Anstice has served as the Company’s President and Chief Executive Officer since January 2012. Mr. Anstice joined the Company in April 2001 as Senior Director, Operations Controller; was promoted to the position of Managing Director and Corporate Controller in May 2002; and was promoted to Group Vice President and Chief Financial Officer in June 2004. He was appointed Executive Vice President and Chief Operating Officer in September 2008 and President in December 2010. Prior to joining the Company, Mr. Anstice held various finance positions from 1988 to 1999 at Raychem Corporation, a global materials science company. Subsequent to the acquisition of Raychem by Tyco International, a global provider of engineered electronic components, network solutions and wireless systems, he assumed responsibilities supporting mergers and acquisition activities of Tyco Electronics. Mr. Anstice is an Associate member of the Institute of Chartered Management Accountants in the United Kingdom.

The board has concluded that Mr. Anstice is qualified to serve as a director of the Company because of his knowledge of and experience in the semiconductor equipment industry including as current President, Chief Executive Officer and a director of the Company, past President and Chief Operating Officer, and past Chief Financial Officer of the Company; his international business experience; and his strong leadership and experience as a corporate executive.

LOGO

 

Eric K. Brandt

Director since 2010

Age 5457

 

Board Committees:

•  Audit

°  Chair since 2014

°  Member: 2010-2014

•  Nominating and Governance

°  Recently appointed member

 

Public company directorshipsdirector-ships in last five years:

•  Altaba Inc. (formerly
Yahoo! Inc.)

•  Dentsply Sirona Inc.

•  The Macerich Company

•  Yahoo! Inc. (former)

 

 

Eric K. Brandt is the former Executive Vice President and Chief Financial Officer of Broadcom Corporation, a global supplier of semiconductor devices, a position he held from March 2007 until its merger with Avago Technologies Limited in February 2016. From September 2005 to March 2007, Mr. Brandt served as President and Chief Executive Officer of Avanir Pharmaceuticals, Inc., a pharmaceutical company. Prior to Avanir Pharmaceuticals, Mr. Brandt was Executive Vice President-Finance and Technical Operations and Chief Financial Officer of Allergan Inc., a global specialty pharmaceutical company, where he also held a number of other senior positions following his arrival there in May 1999.

 

Mr. Brandt has served as a member of the board of directors of: The Macerich Company, a real estate investment trust focused on regional malls, since June 2018, where he is a member of the compensation committee; Altaba Inc. (formerly Yahoo!, Inc.), a digital information discoverymanagement investment company that remained and was subsequently renamed following the completion of Yahoo!’s sale of its operating businesses in June 2017, since March 2016,its inception, where he has been aserved as chairman of the board, chair of the audit committee and finance committee; MC10, Inc.,nominating and governance committee, and a privately-held medical device internet of things (IoT) company, since March 2016, where he has been chairmember of the compensation committee; and Dentsply Sirona Inc. (formerly Dentsply International, Inc.), a manufacturer and distributor of dental product solutions, since 2004, where he has beenserved as chairman of the board, and a member of the auditnominating and finance committeegovernance committee. Altaba Inc. is in the process of a stockholder approved plan of dissolution and of the committee responsible for compensation.liquidation and a subsequently anticipatedde-listing that will leave it as a privately-held company.

 

He previously served on the board of directors of: MC10, Inc., a privately-held medical device Internet of Things (IoT) company, from March 2016 until February 2018, where he was chair of the compensation committee and governance committee; Yahoo! Inc., a digital information discovery company, since March 2016 to June 2017, where he was chairman of the board and chair of the audit and finance committee; Vertex Pharmaceuticals, Inc., a pharmaceutical company, from 2002 to 2009, where he was chair of the audit committee, from 2002 to 2009;and a member of the nominating and governance committee; and Avanir Pharmaceuticals from 2005 to 2007.

 

Mr. Brandt receivedearned an M.B.A. degree from the Harvard Graduate School of Business and a B.S. degree in chemical engineering from the Massachusetts Institute of Technology and an M.B.A. degree from the Harvard Graduate School of Business.Technology.

 

The boardBoard has concluded that Mr. Brandt is qualified toshould serve as a director of the Company because of his financial expertise including as a former chief financial officer of a publicly traded company that is a customer of our customers; his knowledge of and experience in the semiconductor industry;industry and other technology industries; his mergers and acquisitions experience; and his board/board governance experience from service on other public company boards, including as an audit committee member and chair.chair, a compensation committee member and a nominating and governance committee member and chair; and his cybersecurity expertise.

 

LOGO

 

Michael R. Cannon

Director since 2011

Age 6366

 

Board Committees:

•  Audit

°  Member since 2011

•  Compensation

°Member: 2011-2013

•Nominating and Governance

°  Member since 2011

 

Public company directorshipsdirector-ships in last five years:

•  Dialog Semiconductor

•  Seagate Technology Public Limited

•  Dialog Semiconductor

•   Adobe Systems Inc. (former)

•  Elster Group SE (former)

 

 

Michael R. Cannon is the General Partner of MRC & LBC Partners, LLC, a private management consulting company. From February 2007 until his retirement in January 2009, Mr. Cannon served as President of Global Operations of Dell Inc., a computer systems manufacturer and services provider; and from January 2009 to January 2011, he served as a consultant to Dell. Prior to joining Dell, he was President and Chief Executive Officer of Solectron Corporation, an electronic manufacturing services company, from January 2003 to February 2007. From July 1996 to January 2003, Mr. Cannon served as President and Chief Executive Officer of Maxtor Corporation, a disk drive and storage systems manufacturer. Prior to joining Maxtor, Mr. Cannon held senior management positions at International Business Machines Corp. (IBM), a global services, software and systems company.

 

Mr. Cannon has served as a member of the board of directors ofof: Seagate Technology Public Limited, a disk drive and storage solutions company, since February 2011, where he became lead independent director in October 2016 and has been a chair of the nominations and governance committee and a member of the auditcompensation committee and was a member of the audit and finance committee;committees; and Dialog Semiconductor, a mixed signal integrated circuits company, since February 2013, where he has been a chair of the remuneration committee and a member of the nomination committee.

 

Mr. CannonHe previously served on the board of directors of Adobe Systems Inc., a diversified software company, from December 2003 to April 2016, where he had been a member of the audit committee and chair of the compensation committee; Elster Group SE, a precision metering and smart grid technology company, from October 2010 until the company was acquired in August 2012; Solectron Corporation, an electronic manufacturing services company, from January 2003 to January 2007; and Maxtor Corporation, a disk drive and storage solutions company, from July 1996 until Seagate acquired Maxtor in May 2006.

 

HeMr. Cannon studied mechanical engineering at Michigan State University and completed the Advanced Management Program at the Harvard Graduate School of Business.

 

The boardBoard has concluded that Mr. Cannon is qualified toshould serve as a director of the Company because of his extensive board and governanceindustry knowledge; his marketing experience; his experience as a director on other public company boards, including on an audit committee, compensation or remuneration committees and nominations and governance committees; his experience in leadership rolesPresident at a public corporation that is a customer of our customers; his finance experience; his 20 years of international business experience; his experience with marketing, mergers and acquisitions and related transactions;acquisitions; and his industry knowledge.extensive board experience as a director on other public company boards, including service on audit, compensation and nominating and governance committees.

 

 

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Lam Research Corporation 2016 Proxy Statement45

LOGO

 

Youssef A.El-Mansy

Director since 2012

Age 7174

 

Board Committees:

•  Compensation and Human Resources

°  Member since 2012

Public company directorships in last five years:

•   Novellus Systems, Inc. (former)

 

 

Youssef A.El-Mansy is the retired Vice President, Director of Logic Technology Development, at Intel Corporation, a leading producer of microchips, computing and communications products, where he was responsible for managing technology development, the processor design center for Intel’s Technology and Manufacturing Group and two wafer manufacturing facilities. Dr.El-Mansy joined Intel in 1979 and led microprocessor technology development at Intel for 20 years.

 

Dr.El-Mansy previously served on the board of directors of Novellus Systems, Inc., from April 2004 until the company was acquired by Lam Research in June 2012; and Zygo Corporation, an optical system designer and manufacturer, from July 2004 to June 2009.

 

Dr. El-MansyHe is a Fellow of the Institute of Electrical and Electronics Engineers, or “IEEE,” and has been awarded the 2004 IEEE Frederik Philips Award for leadership in developingstate-of-the-art logic technologies and the 2013 IEEE Robert Noyce Medal for establishing a highly effective Research-Development-Manufacturing methodology that led to industry leadership in logic technology.

 

Dr.El-Mansy holds earned a Ph.D. degree in electronics from Carleton University in Ottawa, Canada and B.S. and M.S. degrees in electronics and communications from Alexandria University in Egypt and a Ph.D. degree in electronics from Carleton University in Ottawa, Canada.Egypt.

 

The boardBoard has concluded that Dr.El-Mansy is qualified to should serve as a director of the Company because of his more than 30 years of industry knowledge and experience as an industry executive focused on the manufacturing of technological devices and components for a major semiconductor manufacturer;manufacturer, his understanding of the Company’s technologies;experience in semiconductor technologies, his mergers and acquisitions experience, and his past board/board governance experience at other public companies as a director and as member and chair of a compensation committee.

 

LOGO

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Christine A. Heckart

Director since 2011

Age 50

Board Committees:

•   Audit

°Member since 2015

•   Compensation

°Member: 2011 – 2015

Lam Research Corporation 2019 Proxy Statement 

Christine A. Heckart has served as the Chief Marketing Officer of Brocade Communications Systems, Inc., a networking solution company, since March 2014. Immediately prior to joining Brocade, she was the Executive Vice President, Strategy, Marketing, People and Systems since May 2013 and the Chief Marketing Officer from July 2012 until May 2013 at ServiceSource International Inc., a service revenue management company. From February 2010 to May 2012, she was the Chief Marketing Officer at NetApp, Inc., a data storage and management solutions provider. Ms. Heckart served as General Manager for the TV, video and music business of Microsoft Corporation, a developer of software, services, and hardware, from 2005 to 2010; and led global marketing at Juniper Networks, Inc., a provider of network infrastructure solutions, from 2002 to 2005. She was President at TeleChoice, Inc., a consulting firm specializing in business and marketing strategies, from 1995 to 2002.

Ms. Heckart has served as a member of the board of directors of 6Sense, a privately-held business-to-business predictive intelligence engine company, since November 2015.

Ms. Heckart holds a B.A. degree in economics from the University of Colorado at Boulder.

The board has concluded that Ms. Heckart is qualified to serve as a director of the Company because of her experience in leadership roles at public corporations; her knowledge of the electronics industry, including networks and big data; and her strong marketing background and experience.

53

LOGO

 

Catherine P. Lego

Director since 2006

Age 5962

 

Board Committees:

•  Audit

°  Chair: 2009 – 2014

°  Member: 2006 – 2015

•  Compensation and Human Resources

°  Chair since 2015

•  Nominating and Governance

°  Member since 2014

 

Public company directorshipsdirector-ships in last five years:

•  FairchildCypress Semiconductor InternationalCorp.

•  Guidewire Software, Inc.

•  IPG Photonics Corporation

•  Fairchild Semiconductor International Inc. (former)

•  SanDisk Corporation (former)

 

 

Catherine P. Lego is the founder of Lego Ventures LLC, a consulting services firm for early stage electronics companies, formed in 1992.which she operated from 1992 until December 2018. From December 1999 to December 2009, she was the General Partner of The Photonics Fund, LLP, an early stage venture capital investment firm focused on investing in components, modules and systems companies for the fiber optics telecommunications market, which she founded. Ms. Lego was a general partner at Oak Investment Partners, a venture capital firm, from 1981 to 1992. Prior to Oak Investment Partners, she practiced as a Certified Public Accountant with Coopers & Lybrand, an accounting firm.

 

Ms. Lego has served as a member of the board of directors of Guidewire Software, Inc., an industry platform provider for property and casualty insurers, since September 2019; Cypress Semiconductor Corp., an advanced embedded solutions company for automotive and other products, since September 2017, where she is chair of the audit committee and a member of the nominating and corporate governance committee; and IPG Photonics Corporation, a high-power fiber laser and amplifier company for diverse applications, since July 2016, where she is a member of the audit committee and compensation committees; and Fairchild Semiconductor International Inc., a fabricator of power management devices, since August 2013, where she is a memberchair of the compensation committee and nominating and governance committee.

 

She previously served on the board of directors of the following public companies: Fairchild Semiconductor International Inc., a fabricator of power management devices, from August 2013 to September 2016, where she was a member of the compensation committee and nominating and governance committee; SanDisk Corporation, a global developer of flash memory storage solutions from 1989 to 2016, where she was the chair of the audit committee; ETEC Corporation, a producer of electron beam lithography tools, from 1991 through 1997; Uniphase Corporation (presently JDS Uniphase Corporation), a designer and manufacturer of components and modules for the fiber optic based telecommunications industry and laser-based semiconductor defect examination and analysis equipment, from 1994 until 1999, when it merged with JDS Fitel; Zitel Corporation, an information technology company, from 1995 to 2000; WJ Communications, Inc., a broadband communications company, from October 2004 to May 2008; and Micro Linear Corporation, a fabless analog semiconductor company. Ms. Lego also served as a member of the board of directors of other technology companies that are privately-held.

 

She received a B.A. degree in economics and biology from Williams College andMs. Lego earned an M.S. degree in accounting from the New York University Leonard N. Stern School of Business.Business and a B.A. degree in economics and biology from Williams College.

 

The boardBoard has concluded that Ms. Lego is qualified toshould serve as a director of the Company because of her experience on our board;Board, her substantial accounting and finance expertise;expertise, her knowledge of the electronics and semiconductor industries, and the perspectiveher experience on boards of companies that are customers of our customers;customers, her experience with mergers and acquisitions;acquisitions, and her board and governance experience on other boards, including her service as a former chairman of an audit committee and current member of aaudit, compensation committee and nominating and governance committee.committees.

 

LOGO

Bethany J. Mayer

Director since 2019

Age 57

Board Committees:

•  Audit

°  Recently appointed member

Public company director-
ships in last five years:

•  Marvell Technology Group
Ltd.

•  Sempra Energy

•  Delphi Automotive PLC
(former)

•  Ixia (former)

Ms. Mayer has served as an Executive Partner of Siris Capital Group LLC, a private equity firm, since January 2018. She was the Executive Vice President, Corporate Development and Technology of Sempra Energy, an energy services holding company, from November 2018 to January 2019. From September 2014 to December 2017, Ms. Mayer was the President and Chief Executive Officer of Ixia, a test, visibility, security solutions, network testing tools and virtual network security solutions provider for applications across physical and virtual networks that was ultimately acquired by Keysight Technologies in 2017. From May 2011 to May 2014, Ms. Mayer served as Senior Vice President and General Manager of Hewlett-Packard Company’s (HP) Networking business unit and the Network Function Virtualization business unit. From 2010 until 2011, she served as Vice President, Worldwide Marketing and Alliances of HP’s Enterprise Servers Storage and Networking Group. Prior to joining HP, she held leadership roles at Blue Coat Systems, Inc., a hardware, software, and services provider for cybersecurity and network management; Cisco Systems, Inc., an internet technology company; and Apple Computer, Inc., a technology company.

She has served as a member of the boards of directors of: Sempra Energy since June 2019 after serving from February 2017 to November 2018, where she is a member of the environmental, health, safety and technology committee; Marvell Technology Group Ltd, a infrastructure semiconductor solutions company, since May 2018, where she is a member of the audit committee; and Electronics for Imaging Inc., a privately held print technology company, since July 2019.

Ms. Mayer previously served on the boards of directors of SnapRoute, Inc., a privately-held developer of open source network stacks for enterprises, from May 2018 to July 2019; DataStax, Inc., a privately-held database software provider for cloud applications, from May 2018 to April 2019; Pulse Secure, LLC, a privately-held provider of access and mobile security solutions to both enterprises and service providers, from January 2018 to November 2018; Delphi Automotive PLC, an auto parts supplier, from August 2015 to April 2016; and Ixia from September 2014 to December 2017.

Ms. Mayer earned an M.B.A. degree fromCSU-Monterey Bay and a B.S. degree in political science from Santa Clara University.

The Board has concluded that Ms. Mayer should serve as a director of the Company because of her leadership skills and her experience in operational roles at companies in various technology industries, including networks, network management, servers, security solutions, cybersecurity and internet technology; and her board governance experience from service on other boards.

 

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Lam Research Corporation 20162019 Proxy Statement 4755

LOGO

Stephen G. Newberry

Chairman of the Board

Director since 2005

Age 62

Public company director- ships in last five years:

• Splunk Inc.

• Nanometrics Incorporated (former)

• Amkor Technology, Inc. (former)

Stephen G. Newberry has served as the Chairman of the Company’s board since November 2012. He served as the Company’s Vice Chairman from December 2010 to November 2012, Chief Executive Officer from June 2005 to January 2012 and President from July 1998 to December 2010. Mr. Newberry joined the Company in August 1997 as Executive Vice President, a role in which he served until July 1998, and Chief Operating Officer, a role in which he served until June 2005. Prior to joining the Company, Mr. Newberry held various executive positions at Applied Materials, Inc. during his 17-year tenure there, including as Group Vice President of Global Operations and Planning.

Mr. Newberry has also served as a member of the board of directors of Splunk Inc., a software platform company for real-time operational intelligence, since January 2013, where he chairs the compensation committee.

Mr. Newberry previously served on the board of directors of Nanometrics Incorporated, a provider of process control metrology and inspection systems from May 2011 to May 2015, where he served as a chair of the compensation committee and member of the nominating and governance committee; Amkor Technology, Inc., a provider of outsourced semiconductor packaging assembly and test services, from March 2009 to May 2011, where he served as a member of the compensation committee; Nextest Systems Corporation, a developer of automated test equipment systems for the semiconductor industry, from 2000 to 2008, where he served as a member of the audit, compensation and nominating and corporate governance committees; and Semiconductor Equipment and Materials International, or “SEMI,” a global semiconductor equipment trade association, from July 2004 to July 2014.

Mr. Newberry received a B.S. degree in ocean engineering from the U.S. Naval Academy and graduated from the Program for Management Development at the Harvard Graduate School of Business.

The board has concluded that Mr. Newberry is qualified to serve as a director of the Company because of his 30 years’ experience in the semiconductor equipment industry; his comprehensive understanding of the Company and its products, markets, and strategies gained through his role as an executive of our Company, including as our former Chief Executive Officer; his marketing experience; his previous role, including as a director, at SEMI, our industry’s leading trade association; his public company board and governance experience, including on the audit committee, compensation committees and nominating and governance committees of other companies; and his strong business and operations leadership and expertise.

LOGO

 

Abhijit Y. Talwalkar

Lead Independent Director

Director since 2011

Age 5255

 

Board Committees:

•  Compensation and Human Resources

°  Chair: 2012 – 2015

°  Member since 2015

•  Nominating and Governance

°  Chair since 2015

°  Member: 2015-2015

 

Public company directorshipsdirector-
ships in last five years:

•  Advanced Micro Devices Inc.

•  iRhythm Technologies Inc.

•  TE Connectivity Ltd.

•  LSI Corporation (former)

 

 

Abhijit Y. Talwalkar is the former President and Chief Executive Officer of LSI Corporation, a leading provider of silicon, systems and software technologies for the storage and networking markets, a position he held from May 2005 until the completion of LSI’s merger with Avago Technologies in May 2014. From 1993 to 2005, Mr. Talwalkar was employed by Intel Corporation, the largest semiconductor manufacturer in the industry.a leading producer of microchips, computing and communications products. At Intel, he held a number of senior management positions, including as Corporate Vice President andCo-General Manager of the Digital Enterprise Group, which was comprised of Intel’s business client, server, storage and communications business, and as Vice President and General Manager for the Intel Enterprise Platform Group, where he focused on developing, marketing, and supporting Intel business strategies for enterprise computing. Prior to joining Intel, Mr. Talwalkar held senior engineering and marketing positions at Sequent Computer Systems, a multiprocessing computer systems design and manufacturer that later became a part of IBM; Bipolar Integrated Technology, Inc., a VLSIvery-large-scale integration (VLSI) bipolar semiconductor company; and Lattice Semiconductor Inc., a service driven developer of programmable design solutions widely used in semiconductor components.

 

Mr. Talwalkar has served as a member of the board of directors of: Advanced Micro Devices Inc., a developer of high performance computing, graphics and visualization technologies, since June 2017, where he serves as a member of the compensation and leadership resources committee and the nominating and corporate governance committee; TE Connectivity Ltd, a connectivity and sensor solutions company, since March 2017, where he has served as a member of the audit and compensation committees; and iRhythm Technologies Inc., a privately-held digital health care solutions company, focused on the advancement of cardiac care, since May 2016, where he is the chairman of the board;board and Virtual Power Systems, Inc.,has served as a privately-held software company focused on providing infrastructure to manage data center power, since February 2016.member of the audit, compensation and nominating and governance committees.

 

He previously served as a member of the board of directors of LSI from May 2005 to May 2014 and the U.S. Semiconductor Industry Association a semiconductor industry trade association from May 2005 to May 2014. He was additionally a member of the U.S. delegation for World Semiconductor Council proceedings.

 

He hasMr. Talwalkar earned a B.S. degree in electrical engineering from Oregon State University.

 

The boardBoard has concluded that Mr. Talwalkar is qualified toshould serve as a director of the Company because of his experience in the semiconductor industry, including as the former chief executive officer of a semiconductor company and his previous role in the semiconductor industry’s trade association; his technology experience; his business and operations leadership roles at other semiconductor companies that include a customer of ours; andthe Company; his finance experience; his global business experience; his mergers and acquisitions experience; his board governance experience from service on other public company boards, including as chairman of another board; and marketing experience.his cybersecurity expertise.

 

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Lam Research Corporation 2016 Proxy Statement49

LOGO

 

Lih Shyng (Rick L.) Tsai

Director since 2016

Age 6568

 

Board Committees:

•  Compensation and
Human Resources

°  Recently appointed
member

Public company director-
ships in last five years:

•  MediaTek Inc.

•  Chunghwa Telecom Co,
Ltd. (former)

•  NXP Semiconductors N.V.
(former)

•  Chunghwa Telecom Co, Ltd.

•  Taiwan Semiconductor Manufacturing Company, LimitedUSI Corporation (former)

 

 

Rick L. Tsai has served as the CEO of MediaTek Inc., a Taiwanese-listed global fabless semiconductor company, since February 2018. He wasCo-CEO of MediaTek from June 2017 to February 2018. He is the former Chief Executive Officer of Chunghwa Telecom Co., Ltd., a Taiwanese integrated telecom service provider, sincea position he held from January 2014.2014 until December 2016. From August 2011 to January 2014, Dr. Tsai concurrently served as Chief Executive Officer of TSMC Solar Ltd., a provider of high-performance solar modules, and TSMC Solid State Lighting Ltd. (SSL), a company providing lighting solutions that combine its parent’s expertise in semiconductor manufacturing and rigorous quality control with its own integrated capabilities spanningepi-wafers, chips, emitter packaging and extensive value-added modules and light engines, both of which are wholly-owned subsidiaries of Taiwan Semiconductor Manufacturing Company, Limited (TSMC). Prior to these positions, Dr. Tsai was TSMC’s President of New Businesses from June 2009 to July 2011 and President and CEO of TSMC from July 2005 to June 2009. Dr. Tsai held other key executive positions, such as COO, EVP of Worldwide Sales and Marketing, and EVP of Operations, since joining TSMC in 1989. Dr. Tsai served as President of TSMC’s affiliate, Vanguard International Semiconductor, from 1999 to 2000. Prior to joining TSMC, Dr. Tsai held various technical positions at Hewlett Packard, an international information technology company, from 1981 to 1989.

 

Dr. Tsai has served as a member of the board of directors of NXP Semiconductors N.V., a company focused on secure connectivity solutions for embedded applications, since July 2014; Chunghwa Telecom since January 2014, where he has served as chairman; and USI Corporation, a privately-held polyethylene manufacturer,MediaTek Inc. since June 2014.2017.

 

He previously served on the board of directors ofof: USI Corporation, a Taiwanese-listed polyethylene manufacturer, from June 2014 until March 2019; NXP Semiconductors N.V., from July 2014 until June 2017; Chunghwa Telecom from January 2014 until December 2016, where he served as chairman; TSMC from 2003 to 2013; TSMC Solar and TSMC SSL from August 2011 to January 2014, where he served as their chairman; and Taiwan Semiconductor Industry Association (TSIA) from June 2009 to March 2013, where he served as chairman.

 

Dr. Tsai receivedearned a Ph.D. degree in material science and engineering from Cornell University and a B.S. degree in physics from the National Taiwan University in Taipei, Taiwan and a Ph.D. degree in material science and engineering from Cornell University.Taiwan.

 

The boardBoard has concluded that Dr. Tsai is qualified toshould serve as a director of the Company because of his substantial operational and leadership experience in global businesses, particularly in the semiconductor industry, includingthrough his service as president, and CEO as well as aand director of TSMC, and as chairman and CEOa major customer of Chunghwa Telecom;the Company; his knowledge of the semiconductor and semiconductor equipment business;industry; his extensive executive and board experience in international operations in the semiconductor industry;for global technology companies, including NXP Semiconductor, Chunghwa Telecom and MediaTek; and his board/governance experience with other semiconductor companies such as NXP Semiconductor.mergers and acquisitions experience.

 

Proposal No. 2: Election of Additional Directors

In addition to the nine nominees standing for election in proposal number one, two nominees from KLA-Tencor’s board of directors are also standing for election in proposal number two, subject to and contingent upon the acquisition of KLA-Tencor being consummated prior to this year’s annual meeting of stockholders. This means that the proposal to elect the two additional nominees is effective only if the acquisition is consummated before the annual meeting and the proposal is withdrawn if the acquisition is not consummated before the annual meeting.

In general, the two nominees identified in this proposal who receive the highest number of “for” votes will be elected. However, any nominee who fails to receive affirmative approval from holders of a majority of the votes cast in such nominee’s election at the annual meeting, either by proxy or in person, will not be elected to the board, even if he or she is among the top two nominees in total “for” votes. This requirement reflects the majority vote provisions implemented by the Company in November 2009. The term of office of each person elected as a director will be until the next annual meeting of stockholders, and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Unless otherwise instructed, the Proxy Holders (as defined in “Voting and Meeting Information – Information Concerning Solicitation and Voting – Voting Instructions” below) will vote the proxies received by them for the two nominees named below. The proxies cannot be voted for more than two nominees in proposal number two, whether or not there are additional nominees. If any nominee of the Company should decline or be unable to serve as a director as of the time of the

annual meeting, and unless otherwise instructed, the proxies will be voted for any substitute nominee designated by the present board of directors to fill the vacancy. The Company is not aware of any nominee who will be unable, or will decline, to serve as a director.

The below nominees have been nominated for election to the board of directors in accordance with the criteria and procedures discussed above in “Governance Matters – Corporate Governance.” Their biographical information (including their specific experiences, and positions), attributes, qualifications and ages as of September 13, 2016 are set forth below.

Appointment of KLA-Tencor Directors. As part of the acquisition of KLA-Tencor, the Company agreed in its Agreement and Plan of Merger and Reorganization dated as October 20, 2015, to appoint two members of KLA-Tencor’s board of directors to serve as members of our board of directors beginning with the closing of the merger and continuing until our next annual stockholders meeting. The nominating and governance committee recommended that the Company pursue conversations with three members of the KLA-Tencor board, each of whom met with our chairman, the members of the nominating and governance committee and our CEO. Following these meetings, the nominating and governance committee recommended that Messrs. Dickson and Moore should be invited to join the Lam board, and the board approved this recommendation.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE TWO DIRECTOR NOMINEES SET FORTH BELOW.

 

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Lam Research Corporation 20162019 Proxy Statement 5157

2016 Nominees for Director

LOGO

LOGO

 

John T. DicksonLeslie F. Varon

Director Upon Consummation

of KLA-Tencor Acquisitionsince 2019

Age 7062

Board Committees:

•  Audit

°  Recently appointed member

 

Public company director-

ships in last five years:

•  KLA-Tencor CorporationDentsply Sirona Inc.

•  QLogic Corporation

•   Avago Technologies Limited (former)

•   Freescale Semiconductor, Ltd. (former)Hamilton Lane

 

 

John T. DicksonMs. Varon is the former Chief Financial Officer of Xerox Corporation, a document solutions company, a position she held from November 2015 until December 2016. From January 2017 until March 2017, when she retired from the company, she was a Special Advisor to the then new Xerox Chief Executive Officer. Her previous leadership roles during her tenure at Xerox include: Vice President, and head of operations of Alcatel-Lucent, a global telecommunications corporation,Investor Relations from May 2010 to January 2012, who also served as a member of Alcatel-Lucent’s Management Committee. From August 2000March 2015 until October 2005, he was the President and Chief Executive Officer of Agere Systems, Inc., a leading semiconductor and software solution company for storage, mobility and networking markets. Prior to joining Agere, Mr. Dickson held a number of senior positions at Lucent from 1996 to 2000, which included Executive2015; Vice President, of Lucent’s MicroelectronicsFinance and Communications Technologies Group;Corporate Controller from July 2006 until February 2015, where she oversaw global financial operating executives and had responsibility for corporate financial planning and analysis, accounting, internal audit, risk management, global real estate and worldwide shared services centers; Vice President, North America Finance and Operational Support from October 2004 until June 2006; Vice President, Investor Relations and Corporate Secretary from 1997 until September 2004; and Director of AT&T Corporation’s integrated circuit business unit,Corporate Audit from 1993 to 1996; and Chief Executive Officer of SHOgraphics, Inc., a developer of three-dimensional graphics systems, from 1991 to 1993. He also held senior roles with ICL, Plc, a computer hardware, software and service company, in the United Kingdom from 1983 to 1990 and Texas Instruments, Inc. in Europe from 1969 to 1983.until 1997.

 

Mr. DicksonMs. Varon has served as a member of the boardboards of directors of: Dentsply Sirona, Inc., a manufacturer and distributor of KLA-Tencor Corporation, a leading provider of process control and yield managementdental product solutions, since 2007 (which service will cease uponJanuary 2018, where she chairs the completion ofaudit and finance committee; and Hamilton Lane, a private markets investment company, since May 2017, where she is the KLA-Tencor acquisition by Lam Research), where he has been a memberchair of the audit and the nominating and governance committees and had been a member of the compensation committee; and QLogic Corporation since 2014, where he has been the lead independent director and a member of the compensation and the audit committees.

Mr. Dicksoncommittee. She previously served as a member ofon the board of directors of Avago Technologies Limited,Xerox International Partners, a leading designer, developerjoint venture of Xerox and global supplier of analog and digital semiconductor connectivity solutions,Fuji Xerox, from January 2012 to May 2015; Freescale Semiconductor, Ltd., a global leader in the design and manufacture of embedded semiconductors, from May 2012July 2006 until July 2013; National Semiconductor Company, a semiconductor manufacturing company specializing in analog devices and subsystems, from April 2006 to September 2010; Mettler-Toledo International Inc., a leading global manufacturer of laboratory and manufacturing precision instruments and services, from March 2000 to April 2009; Agere Systems, Inc. from March 2001 until October 2005; and the Semiconductor Industry Association. He also served as a member of the board of directors of a number of other semiconductor and technology joint ventures and companies privately held.2017.

 

Mr. Dickson has a B.Eng. in electronic engineeringMs. Varon earned an M.B.A. degree from Virginia Tech, and a postgraduate diplomaB.S. degree in business studiesPsychology from the University of Sheffield, United Kingdom.Binghamton University.

 

The boardBoard has concluded that Mr. Dickson is qualified toMs. Varon should serve as a director of the Company because of hisher substantial experiencefinance experience; her qualifications as an executive and director for a number of significant semiconductor companies, including his service as CEO of Agere Systems, Inc., a leading semiconductor and software solutions company; his executive experience with large global companies such as Alcatel-Lucent, Lucent and AT&T; his long tenure on the KLA-Tencor board of directors and his service on all three of its standing committees, including his most recent service on its audit committee.

LOGO

Gary B. Moore

Director Upon Consummation

of KLA-Tencor Acquisition

Age 67

Public company director-

ships in last five years:

•  KLA-Tencor Corporation

•  Finjan Holdings Inc.

Gary B. Moore is the retired President and Chief Operating Officer of Cisco Systems, Inc., a leading global provider of networking and other communications and information technology related products and services, a position he had held from October 2012 to July 2015. Mr. Moore first joined Cisco in October 2001 as Senior Vice President, Advanced Services, and, in August 2007, he also assumed responsibility as co-lead of Cisco Services. From May 2010 to February 2011, he served as Executive Vice President, Cisco Services, and he was Cisco’s Executive Vice President and Chief Operating Officer from February 2011 until October 2012. Immediately before joining Cisco, Mr. Moore served for approximately two years as Chief Executive Officer of Netigy Corporation, a network consulting company. Prior to that, he was employed for 26 years by Electronic Data Systems (“EDS”), an information technology equipment and services company, where he held a number of senior executive positions, including as the President and Chief Executive Officer of joint venture Hitachi Data Systems from 1989 to 1992.

Mr. Moore has served as a member of the board of directors of KLA-Tencor Corporation, a leading provider of process control and yield management solutions, since 2014 (which service will cease upon the completion of the KLA-Tencor acquisition by Lam Research), where he has been a member of the compensation committee; Finjan Holdings, Inc., a cybersecurity company, since November 2015; and vArmour, a leading data center and cloud security company that is privately held, since November 2015.

He previously served as a member of the board of directors of other infrastructure and cloud computing companies that are privately held.

He studied computer operations and programming at the U.S. Armed Forces Institute and programming at the Electronic Computer Programming Institute.

The board has concluded that Mr. Moore is qualified to serve as a director of the Company because of his substantialcommittee financial expert; her leadership experience as a former senior executive with Cisco,chief financial officer; her board governance experience on other public company boards, including his roleher service as Cisco’s Presidenta current chair of two other public company audit committees; and Chief Operating Officer; his experience in international operations in the technology industry; his experience with global services businesses;her mergers and his most recent service on the compensation committee of KLA-Tencor.

acquisitions experience.

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Lam Research Corporation 2016 Proxy Statement53

 

Proposal No. 3:2: Advisory Vote to Approve the Compensation of Our Named Executive Officers,Officer Compensation, or “Say on Pay”

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 orand section 14A of the “Dodd-FrankExchange Act” enables enable the Company’s stockholders to vote to approve, on an advisory ornon-binding basis, the compensation of our named executive officers,officer compensation, as disclosed in this proxy statement in accordance with SEC rules. Although the vote is advisory and is not binding on us or on our board of directors,Board, our compensation and human resources committee and, as appropriate, our board,Board, will take into account the outcome of the vote when considering future executive compensation decisions and will evaluate whether any actions are necessary to address stockholder concerns.

We believe that our compensation philosophy has allowed us to attract, retain, and motivate qualified executive officers who have contributed to our success. For more information regarding the compensation of our named executive officers, our compensation philosophy, our 20152018 Say on Pay results and our response, we encourage you to read the section of this proxy statement entitled “Compensation Matters– Executive Compensation and Other Information – Compensation Discussion and Analysis,” the compensation tables, and the narrative following the compensation tables for a more detailed discussion of our compensation policies and practices.

We are asking for stockholder approval, on an advisory ornon-binding basis, of the following resolution:

‘RESOLVED, that the stockholders of Lam Research Corporation (the Company) hereby approve, on an advisory basis, the compensation of ourthe Company’s named executive officers, as disclosed in accordance withpursuant to Item 402 of SEC rules (including section 14A of the Exchange Act) inRegulationS-K, including the “Compensation Discussion and Analysis,” section, the compensation tables and any related narrative disclosure included in thisthe proxy statement.’

Each proxy received by the Proxy Holders will be voted “FOR” the advisory vote to approve the compensation of our named executive officers, unless the stockholder provides other instructions.

This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the policies and practices described in this proxy statement.

We provide for annual advisory votes to approve the compensation of our named executive officers. Unless modified, the next advisory vote to approve the compensation of our named executive officersofficer compensation will be at the 20172020 annual meeting.

Stockholder approval of Proposal No. 32 requires the affirmative vote of the holders of a majority of the outstanding shares of common stock having voting power present, in person or by proxy, at the annual meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY ORNON-BINDING BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.OFFICER COMPENSATION.

 

 

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Lam Research Corporation 2019 Proxy Statement59

 

Proposal No. 4:3: Ratification of the Appointment of theErnst & Young LLP as our Independent Registered Public Accounting Firm for Fiscal Year 20172020

 

Stockholders are being asked to ratify the appointment of Ernst & Young LLP, or “EY,”EY as the Company’s independent registered public accounting firm for fiscal year 2017.2020. Although the audit committee has the sole authority to appoint the Company’s independent registered public accounting firm, as a matter of good corporate governance, the boardBoard submits its selection to our stockholders for ratification. If the stockholders shoulddo not ratify the appointment of EY, the audit committee will contemplate whether to reconsider the appointment. EY has been the Company’s independent registered public accounting firm (independent auditor) since fiscal year 1981.

Each proxy received by the Proxy Holders will be voted “FOR” the ratification of the appointment of EY, unless the stockholder provides other instructions.

Our audit committee meets periodically with EY to review both audit andnon-audit services performed by EY, as well as the fees charged for those services. Among other things, the committee examines the effect that the performance ofnon-audit services, if any, may have upon the independence of the independent registered public accounting firm. All professional

professional services provided by EY, includingnon-audit services, if any, are subject to approval by the audit committee in accordance with applicable securities laws, rules, and regulations. For more information, see “Audit Matters – -Audit Committee Report” and “Audit Matters – Relationship with Independent Registered Public Accounting Firm” above.

A representative of EY is expected to be present at the annual meeting and will have an opportunity to make a statement if he or she so desires. The representative will also be available to respond to appropriate questions from the stockholders.

Stockholder approval of Proposal No. 43 requires the affirmative vote of the holders of a majority of the outstanding shares of common stock having voting power present, in person or by proxy, at the annual meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2017.2020.

 

 

Other Voting Matters

 

We are not aware of any other matters to be submitted at the annual meeting. If any other matters properly come before the annual meeting, the Proxy Holders intend to vote the shares they represent as the board of directorsBoard may recommend or, if the boardBoard does not make a recommendation, as the Proxy Holders decide in their reasonable judgment.

It is important that your

stock holdings be represented at the meeting, regardless of the number of shares you hold. We urge you to complete and return the accompanying proxy card in the enclosed envelope, or vote your shares by telephone or internet, as described in the materials accompanying this proxy statement.

 

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Lam Research Corporation 2016 Proxy Statement55

    

 

Voting and Meeting Information

 

 

Information Concerning Solicitation and Voting

 

Our board of directorsBoard solicits your proxy for the 20162019 Annual Meeting of Stockholders and any adjournment or postponement of the meeting, for the purposes described in the “Notice“Notice of 20162019 Annual Meeting of Stockholders.” The sections below show important details about the annual meeting and voting.

Record Date

Only stockholders of record at the close of business on September 13, 2016,6, 2019, the “Record Date,” are entitled to receive notice of and to vote at the annual meeting.

Shares Outstanding

As of the Record Date, 161,264,422144,834,045 shares of common stock were outstanding.

Quorum

Stockholders who hold shares representing a majority of our shares of common stock outstanding and entitled to vote on the Record Date must be present in person or represented by proxy to constitute a quorum. A quorum is required to transact business at the annual meeting.

Inspector of Elections

The Company will appoint an inspector of elections to determine whether a quorum is present. The inspector will also tabulate the votes cast by proxy or at the annual meeting.

Effect of Abstentions and BrokerNon-Votes

Shares voted “abstain” and brokernon-votes (shares held by brokers that do not receive voting instructions from the beneficial owner of the shares, and do not have discretionary authority to vote on a matter) will be counted as present for purposes of determining whether we have a quorum. For purposes of voting results, abstentions will not be counted with respect to the election of directors but will have the effect of “no” votes with respect to other proposals, and brokernon-votes will not be counted with respect to any proposal.

Voting by Proxy

Stockholders may vote by internet, telephone, or mail, per the instructions on the accompanying proxy card.

Voting at the Meeting

Stockholders can vote in person during the meeting. Stockholders of record will be on a list held by the inspector of elections. Each beneficial owner (an owner who is not the record holder of their shares) must obtain a proxy from the beneficial owner’s brokerage firm, bank, or the stockholder of record holding such shares for the beneficial owner, and present it to the inspector of elections with a ballot. Voting in person by a stockholder as described here will replace any previous votes of that stockholder submitted by proxy.

Changing Your Vote

Stockholders of record may change their votes by revoking their proxies at any time before the polls close by (i)(1) submitting a later-dated proxy by the internet, telephone or mail, or (ii)(2) submitting a vote in person at the annual meeting. Before the annual meeting, stockholders of record may also deliver voting instructions to: Lam Research Corporation, Attention: Secretary, 4650 Cushing Parkway, Fremont, California 94538. If a beneficial owner holds shares through a bank or brokerage firm, or another stockholder of record, the beneficial owner must contact the stockholder of record in order to revoke any prior voting instructions.

Voting Instructions

If a stockholder completes and submits proxy voting instructions, the people named on the proxy card as proxy holders, the “ProxyProxy Holders” will follow the stockholder’s instructions. If a stockholder submits proxy voting instructions but does not include voting instructions for each item, the Proxy Holders will vote as the boardBoard recommends on each item for which the stockholder did not include an instruction. The Proxy Holders will vote on any other matters properly presented at the annual meeting in accordance with their best judgment.

Voting Results

We will announce preliminary results at the annual meeting. We will report final voting results athttp:https://investor.lamresearch.com and in a Form8-K to be filed shortly after the annual meeting.

Availability of Proxy Materials

Beginning on September 29, 2016,25, 2019, this proxy statement and the accompanying proxy card and 20162018 Annual Report on Form10-K to Stockholders will be mailed to stockholders entitled to vote at

the annual meeting who have designated a

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Lam Research Corporation 2019 Proxy Statement61

preference for a printed copy. Stockholders who previously chose to receive proxy materials electronically were sent an email with instructions on how to access this year’s proxy materials and the proxy voting site.

We have also provided our stockholders access to our proxy materials over the internet in accordance with rules and regulations adopted by the SEC. These materials are available on our website athttp:https://investor.lamresearch.comand at www.proxyvote.com. We will furnish, without charge, a printed copy of these materials and our 20162018 Annual Report (including exhibits) on request by phone telephone(510-572-1615), by mail (to Investor Relations, Lam Research Corporation, 4650 Cushing Parkway, Fremont, California 94538), or by email (toinvestor.relations@lamresearch.com).

A Notice of Internet Availability of Proxy Materials will be mailed beginning on September 29, 201625, 2019 to all stockholders entitled to vote at the meeting. The notice will have instructions for stockholders on how to access our proxy materials through the internet and how to request that a printed copy of the proxy materials be mailed to them. The

notice will also have instructions on how to elect to receive all

future proxy materials electronically or in printed form. If you choose to receive future proxy materials electronically, you will receive an email each year with instructions on how to access the proxy materials and proxy voting site.

Proxy Solicitation Costs

The Company will bear the cost of all proxy solicitation activities. Our directors, officers and other employees may solicit proxies personally or by telephone, email or other communication means, without any cost to Lam Research. In addition, we have retained D.F. King & Co., Inc. to assist in obtaining proxies by mail, facsimile or email from brokers, bank nominees and other institutions for the annual meeting. The estimated cost of such services is $12,000 plusout-of-pocket expenses. D.F. King & Co, Inc. may be contacted at 48 Wall Street, New York, New York 10005. We are required to request that brokers and nominees who hold stock in their names furnish our proxy materials to the beneficial owners of the stock, and we must reimburse these brokers and nominees for the expenses of doing so in accordance with statutory fee schedules.

 

 

 

Other Meeting Information

 

Annual Meeting Admission

All stockholders entitled to vote as of the Record Date are entitled to attend the annual meeting. Admission of stockholders will begin at 9:00 a.m. Pacific Standard Time on November 9, 2016.5, 2019. Any stockholders interested in attending the annual meeting should be prepared to present government-issued photo identification, such as a valid driver’s license or passport, and verification of ownership of Company common stock or proxy status as of the Record Date for admittance. For stockholders of record as of the Record Date, proof of ownership as of the Record Date will be verified prior to admittance into the annual meeting. For stockholders who were not stockholders as of the Record Date but hold shares through a bank, broker or other nominee holder, proof of beneficial ownership as of the Record Date, such as an account statement or similar evidence of ownership, will be verified prior to admittance into the annual meeting. For proxy holders, proof of valid proxy status will also be verified prior to admittance into the annual meeting. Stockholders and proxy holders will be admitted to the annual meeting if they comply with these procedures. Information on how to obtain directions to attend the annual meeting and vote in person is available on our website athttp:https://investor.lamresearch.com.

Voting on Proposals

Pursuant to ProposalsProposal No. 1, and 2, boardBoard members will be elected at the annual meeting to fill nine, or eleven if the acquisition of KLA-Tencor is consummated prior to this year’s

annual meeting of stockholders,10 seats on the boardBoard to serve until

the next annual meeting of stockholders, and until their respective successors are elected and qualified, under a “majority vote” standard. The majority voting standard means that, even though there are eleven10 nominees in total for the eleven board10 Board seats, a nominee will be elected only if he or she receives an affirmative “for” vote from stockholders owning, as of the Record Date, at least a majority of the shares present and voted at the meeting in such nominee’s election by proxy or in person. If an incumbent fails to receive the required majority, his or her previously submitted resignation will be promptly considered by the board.Board. Each stockholder may cast one vote (“for” or “withhold”), per share held, for each of the eleventen nominees. Stockholders may not cumulate votes in the election of directors.

Each share is entitled to one vote on Proposals No. 32 and 4.3. Votes may be cast “for,” “against” or “abstain” on those Proposals.Proposals No. 2 and 3. Approval of Proposals No. 2 and 3 requires the affirmative vote of a majority of the shares of common stock present or represented by proxy and cast at the meeting.

If a stockholder votes by means of the proxy solicited by this proxy statement and does not instruct the Proxy Holders how to vote, the Proxy Holders will vote: “FOR” all individuals nominated by the board;Board; “FOR” approval, on an advisory basis, of the compensation of our named executive officers;officer compensation; and “FOR” the ratification of EY as the Company’s independent registered public accounting firm for fiscal year 2017.2020.

If you choose to vote in person, you will have an opportunity to do so at the annual meeting. You may either bring your proxy

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Lam Research Corporation 2016 Proxy Statement57

card to the annual meeting, or if you do not bring your proxy card, the Company will pass out written ballots to anyone who was a stockholder as of the Record Date. As noted above, if you are a beneficial owner (an owner who is not the record holder of their shares), you will need to obtain a proxy from your brokerage firm, bank, or the stockholder of record holding shares on your behalf.

Voting by 401(k) Plan Participants

Participants in Lam’s Savings Plus Plan, Lam Research 401(k), or the “401(k) Plan,” who held Lam common stock in their personal 401(k) Plan accounts as of the Record Date will receive this proxy statement, so that each participant may vote, by proxy, his or her interest in Lam’s common stock as held by the 401(k) Plan. The 401(k) Plan trustee will aggregate and vote proxies in accordance with the instructions in the proxies of employee participants that it receives.

Stockholder Accounts Sharing the Same Last Name and Address; Stockholders Holding Multiple Accounts

To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding Lam Research stock but who share the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders of record who have the same address and last name will receive only one copy of our proxy statement and annual report unless one of the stockholders notifies our investor relations department that one or more of them want to receive separate copies. This procedure reduces duplicate mailings and therefore saves printing and mailing costs, as well as natural resources. Stockholders who participate in householding will continue to have access to all proxy materials athttp:https://investor.lamresearch.com, as well as the ability to submit separate proxy voting instructions for each account through the internet or by phone.telephone.

Stockholders holding multiple accounts of Lam common stock may request separate copies of the proxy materials by contacting us by phone telephone(510-572-1615), by mail (to Investor Relations, Lam Research Corporation, 4650 Cushing Parkway, Fremont, California 94538) or by email (toinvestor.relations@lamresearch.com). Stockholders may also contact us by phone,telephone, mail or email to request consolidation of proxy materials mailed to multiple accounts at the same address.

Stockholder-Initiated Proposals and Nominations for 20172020 Annual Meeting

Proposals submitted under SEC rules for inclusion in the Company’s proxy statement. Stockholder-initiated proposals (other

(other than director nominations) may be eligible for inclusion

in our proxy statement for next year’s 20172020 annual meeting of stockholders (in accordance with SECRule 14a-8) and for consideration at the 20172020 annual meeting.meeting of stockholders. The Company must receive a stockholder proposal no later than June 1, 2017May 28, 2020 for the proposal to be eligible for inclusion. Any stockholder interested in submitting a proposal or nomination is advised to contact legal counsel familiar with the detailed securities law requirements for submitting proposals or nominations for inclusion in a company’s proxy statement.

Proposed nominations of directors under Company bylaws for Proxy Access.Our bylaws provide for “Proxy Access.” Pursuant to the Proxy Access provisions of our bylaws, a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding common stock continuously for at least three years can nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board, provided that the stockholders and the nominees satisfy the requirements specified in our bylaws. If a stockholder or group of stockholders wishes to nominate one or more director candidates to be included in our proxy statement for the 2020 annual meeting of stockholders pursuant to Proxy Access, all of the information required by our bylaws must be received by the Secretary of the Company no earlier than April 28, 2020, and no later than May 28, 2020.

Proposals and nominations under Company bylaws.bylaws for presentation at the annual meeting but for which the proponent does not seek to include materials in our proxy statement.Stockholders may also submit proposals for consideration and nominations of director candidates for election at the annual meeting by following certain requirements set forth in our bylaws. The current applicable provisions of our bylaws are described below. ProposalsThese proposals will not be eligible for inclusion in the Company’s proxy statement for the 20172020 annual meeting of stockholders unless they are submitted in compliance with then applicable SEC rules;rules or pursuant to the Proxy Access described above; however, they will be presented for discussionconsideration at the 2020 annual meeting of stockholders if the requirements established by our bylaws for stockholder proposals and nominations have been satisfied. Under current SEC rules, stockholder nominations for directors are not eligible for inclusion in the Company’s proxy materials.

Our bylaws establish requirements for stockholder proposals and nominations not included in our proxy statement to be discussedconsidered at the annual meeting. Assuming that the 20172020 annual meeting of stockholders takes place at roughly the same date next year as the 20162019 annual meeting (and subject to any change in our bylaws – which would be publicly disclosed by the Company – and to any provisions of then-applicable SEC rules), the principal requirements for the 2017 annual meeting would be as follows:

For proposals and for nominations:

Aa stockholder of record or “Stockholder,” must submit the proposal or nomination in writing;writing and it must be received by the secretarySecretary of the Company no earlier than July 16, 2017,12, 2020, and no later than August 15, 2017;
For each Stockholder and beneficial owner of Company common stock, or “Beneficial Owner,” if any, on behalf of whom the proposal or nomination is being made the Stockholder’s notice to the secretary of a proposal or nomination must state:

11, 2020.

°the name and record address of the Stockholder and the Beneficial Owner;
°the class, series and number of shares of capital stock of the Company that are owned, directly or indirectly, beneficially and of record by the Stockholder and the Beneficial Owner and any affiliates of such parties;
°the name of each nominee holder of shares of all stock of the Company owned beneficially but not of record by the Stockholder and the Beneficial Owner and any affiliates of such parties;
 

°a description of any options, warrants, convertible securities, stock appreciation rights or similar rights (“Derivative Instruments”) held by the Stockholder, the Beneficial Owner, or any affiliates of such parties with respect to the Company’s stock, and any other direct or indirect opportunities to profit or share in any profit derived from any increase or decrease in the value of shares of the Company;
°whether and the extent to which any other transaction agreement, arrangement or understanding, including any short position or any borrowing or lending of shares of stock of the Company, has been made by or on behalf of the Stockholder, the Beneficial Owner or any affiliates of such parties, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such Stockholder, Beneficial Owner or any affiliates of such parties, or to increase or decrease the voting power or pecuniary or economic interest of such Stockholder, Beneficial Owner or any affiliates of such parties, with respect to stock of the Company;
°a description of any proxies, contracts, or other voting arrangements pursuant to which the Stockholder or the Beneficial Owner has a right to vote, directly or indirectly, the Company’s stock;
°a description of any rights to dividends separated or separable from the underlying shares of the Company to which the Stockholder or the Beneficial Owner are entitled;
°any performance-related fees (other than an asset-based fee) that the Stockholder or the Beneficial Owner is directly or indirectly entitled to based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of each such party’s immediate family sharing the same household (which information set forth in this paragraph shall be supplemented by such stockholder or such beneficial owner, as the case may be, not later than 10 days after the record date for determining the stockholders entitled to vote at the meeting; provided, that if such date is after the date of the meeting, not later than the day prior to the meeting)
°a representation that the Stockholder giving notice intends to appear in person or by proxy at the annual or special meeting to bring before the meeting such business or to nominate the persons named in the notice;
°any other information relating to the Stockholder or the Beneficial Owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to section 14 of the Exchange Act, and the rules and regulations pursuant thereto; and
°a statement whether or not each such party will deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of voting power of all the shares of capital stock of the Company required under applicable law to carry the proposal or, in the case of a nomination or nominations, at least the percentage of voting power of all of the shares of capital stock of the Company reasonably believe by the Stockholder or Beneficial Owner, as the case may be, to be sufficient to elect the nominee or nominees proposed to be nominated by the record stockholder.

Additionally, forproposals, the notice must set forth a brief description of such business (including the text of any resolutions proposed for consideration and, if such business includes a proposal to amend the bylaws, the text of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such Stockholder and the Beneficial Owner, if any, on whose behalf the proposal is made.

Additionally, for nominations, the notice must:

set forth, as to each person whom the Stockholder proposes to nominate for election or reelection as a director, all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Exchange Act;
set forth the reasons for conducting such nomination at the meeting and any material interest in such nomination of such Stockholder and the Beneficial Owner, if any, on whose behalf the nomination is made (including any anticipated benefit from the nomination of directors to such Stockholder and the Beneficial Owner or any affiliates of such persons);
set forth, as to each person whom the Stockholder proposes to nominate for election or reelection as a director, the following information:

°the class, series and number of shares of capital stock of the Company that are owned, directly or indirectly, beneficially and of record by such person or any affiliates of such person;
°the name of each nominee holder of shares of all stock of the Company owned beneficially but not of record by such person and any affiliates of such person;
°a description of any Derivative Instruments directly or indirectly owned beneficially by such person or any affiliates of such person, and any other direct or indirect opportunities to share in any profit derived from any increase or decrease in the value of shares of the Company;
°

whether and the extent to which any other transaction agreement, arrangement or understanding, including any short position or any borrowing or lending of shares of stock of the Company, has been made by or on behalf of

 

Continues on next page  u

 

Lam Research Corporation 20162019 Proxy Statement 59

such person or any affiliates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person or any affiliates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person or any affiliates of such person, with respect to stock of the Company;

°a description of (i) all agreements, arrangements, or understandings (whether written or oral) between such Stockholder or any affiliates of such party, and any proposed nominee or any affiliates of such proposed nominee and (ii) all agreements, arrangements, or understandings (whether written or oral) between such Stockholder or any affiliates of such party, and any other party or parties (including their names) pursuant to which the nomination(s) are being made by such party, or otherwise relating to the Company or their ownership of capital stock of the Company; and
°a representation that the Stockholder giving notice intends to appear in person or by proxy at the annual meeting to bring before the meeting such business or to nominate the persons named in the notice;

be accompanied by a written representation and agreement that such proposed nominee:

°is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Company, will act or vote on any issue or question,
°has disclosed, and will disclose, to the Company any agreement, arrangement or understanding that such proposed nominee has with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director of the Company,
°in such person’s individual capacity, would be in compliance with, if elected as a director of the Company, and will comply with and, upon election, execute any63

requisite documentation pertaining to all applicable publicly disclosed confidentiality, corporate governance, conflict of interest, Regulation FD, code of ethics, and stock ownership and trading policies and guidelines of the Company, such documentation to include a confidentiality agreement between the Company and such proposed nominee, and

°consents to being named in any proxy statement of the Company, or other filings required to be made by the Company in connection with the solicitation of proxies for election of directors pursuant to section 14 of the Exchange Act and the rules and regulations promulgated thereunder, and to serve as a director if elected;

be accompanied by a statement whether such person, if elected, intends to tender, promptly following such person’s election or reelection, an irrevocable conditional resignation effective upon such person’s failure to receive the required vote for reelection or to be renominated by the board at the next meeting at which such person would face reelection and upon acceptance of such resignation by the board, in accordance with our corporate governance guidelines.

For a full description of the requirements for submitting a proposal or nomination, see the Company’s bylaws. Submissions or questions should be sent to: Secretary, Lam Research Corporation, 4650 Cushing Parkway, Fremont, California 94538.

By Order of the Board of Directors,

 

LOGO

Sarah A. O’Dowd

Secretary

Fremont, California

Dated: September 29, 201625, 2019

 

LOGO

LAM RESEARCH CORPORATION

ATTN: INVESTOR RELATIONS

4650 CUSHING PARKWAY

FREMONT, CALIFORNIA 94538

VOTE BY INTERNET -www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717.

LOGO

LamR RESEARCH
LAM RESEARCH CORPORATION
ATTN: INVESTOR RELATIONS
4650 CUSHING PARKWAY
FREMONT, CA 94538
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E13675-P82493-Z68577 KEEP THIS PORTION FOR YOUR RECORDS

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

E84662-P28350-Z75551

KEEP THIS PORTION FOR YOUR RECORDS

DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
LAM RESEARCH CORPORATION
The Board of Directors recommends you vote FOR all eleven of the nominees listed in proposals 1 and 2:
For All Withhold All For All Except
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
1. Election of Directors
Nominees:
01) Martin B. Anstice
02) Eric K. Brandt
03) Michael R. Cannon
04) Youssef A. El-Mansy
05) Christine A. Heckart
06) Catherine P. Lego
07) Stephen G. Newberry
08) Abhijit Y. Talwalkar
09) Rick L. Tsai
2. Election of Additional Directors, Subject to and Contingent upon the Acquisition of KLA-Tencor Corporation being Consummated Prior to the 2016 Annual Meeting of Stockholders
Nominees:
10) John T. Dickson
11) Gary B. Moore
The Board of Directors recommends you vote FOR proposals 3 and 4. For Against Abstain
3. Advisory vote to approve the compensation of the named executive officers of Lam Research, or “Say on Pay.”
4. Ratification of the appointment of the independent registered public accounting firm for fiscal year 2017.
NOTE: Other business that may properly come before the annual meeting (including any adjournment or postponement thereof) will be voted as the proxy holders deem advisable.
For address change/comments, mark here.
(see reverse for instructions)
Please indicate if you plan to attend this meeting.
Yes No
Please sign exactly as your name(s) appear(s) in this card. When signing as attorney, executor, administrator, or other fiduciary, please give full title. Joint owners should each sign personally. For a Corporation, an authorized officer must sign. For a partnership, an authorized person must sign.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
V.1.1

LAM RESEARCH CORPORATION

For

All

Withhold

All

For All

Except

To withhold authority to vote for any individual
nominee(s), mark “For All Except” and write the
number(s) of the nominee(s) on the line below.

The Board of Directors recommends you vote FOR all ten of the nominees listed in proposal 1.

1.  Election of Directors

☐☐☐

Nominees:

01)  Sohail U. Ahmed              06)   Catherine P. Lego

02)  Timothy M. Archer          07)   Bethany J. Mayer

03)  Eric K. Brandt                  08)   Abhijit Y. Talwalkar

04)  Michael R. Cannon          09)   Lih Shyng (Rick L.) Tsai

05)  Youssef A. El-Mansy      10)   Leslie F. Varon

The Board of Directors recommends you vote FOR proposals 2 and 3.

ForAgainstAbstain

 2.   Advisory vote to approve the compensation of the named executive officers of Lam Research, or “Say on Pay.”

☐☐☐

 3.   Ratification of the appointment of the independent registered public accounting firm for fiscal year 2020.

☐

☐

☐

NOTE:Other business that may properly come before the annual meeting (including any adjournment or postponement thereof) will be voted as the proxy holders deem advisable.

For address change/comments, mark here.

(see reverse for instructions)

☐

Please indicate if you plan to attend this meeting.

☐

Yes

☐

No

Please sign exactly as your name(s) appear(s) in this card. When signing as attorney, executor, administrator, or other fiduciary, please give full title. Joint owners should each sign personally. For a Corporation, an authorized officer must sign. For a partnership, an authorized person must sign.

Signature [PLEASE SIGN WITHIN BOX]

Date

Signature (Joint Owners)

Date

LOGO

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice and Proxy Statement and Annual Report Combined Document are available at www.proxyvote.com.
E13676-P82493-Z68577
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF LAM RESEARCH CORPORATION
IN CONJUNCTION WITH THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON NOVEMBER 9, 2016
The undersigned stockholder of LAM RESEARCH CORPORATION, a Delaware corporation (the “Company”), hereby (a) acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated September 29, 2016, and the 2016 Annual Report to Stockholders; (b) appoints Martin B. Anstice and George M. Schisler, Jr., or either of them, proxy holders and attorneys-in-fact, each with full power to designate substitutes, on behalf and in the name of the undersigned, to represent the undersigned at the 2016 Annual Meeting of Stockholders of LAM RESEARCH CORPORATION (and any adjournment(s) or postponement(s) of the Meeting) to be held on November 9, 2016 at 9:30 a.m., Pacific Standard Time, in the Building CA1 Auditorium at the principal executive offices of the Company located at 4650 Cushing Parkway, Fremont, California 94538, and (c) authorizes the proxy holders to vote all shares of Common Stock that the undersigned would be entitled to vote if personally present at the Meeting, on the matters set forth on the reverse side and, in their discretion, on any other matter(s) that may properly come before the Meeting or any adjournment(s) or postponement(s) of the Meeting.
This proxy will be voted as directed. If no contrary direction is indicated, the proxy will be voted FOR all eleven of the director nominees listed in proposals 1 and 2, FOR the advisory vote to approve the compensation of the named executive officers of Lam Research, or “Say on Pay” and FOR the proposal to ratify the appointment of the independent registered public accounting firm for fiscal year 2017, and as the proxy holders deem advisable, on any other matter(s) that may properly come before the meeting.
Address change/comments:
(If you noted any address change/comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
V.1.1www.proxyvote.com.

E84663-P28350-Z75551  

THIS PROXY IS SOLICITED ON BEHALF OF THE

BOARD OF DIRECTORS OF LAM RESEARCH CORPORATION

IN CONJUNCTION WITH THE ANNUAL MEETING

OF STOCKHOLDERS TO BE HELD ON NOVEMBER 5, 2019

The undersigned stockholder of LAM RESEARCH CORPORATION, a Delaware corporation (the “Company”), hereby (a) acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated September 25, 2019, and the 2019 Annual Report to Stockholders; (b) appoints Timothy M. Archer and George M. Schisler, Jr., or either of them, proxy holders and attorneys-in-fact, each with full power to designate substitutes, on behalf and in the name of the undersigned, to represent the undersigned at the 2019 Annual Meeting of Stockholders of LAM RESEARCH CORPORATION (and any adjournment(s) or postponement(s) of the Meeting) to be held on November 5, 2019 at 9:30 a.m., Pacific Standard Time, in the Building CA1 Auditorium at the principal executive offices of the Company located at 4650 Cushing Parkway, Fremont, California 94538, and (c) authorizes the proxy holders to vote all shares of Common Stock that the undersigned would be entitled to vote if personally present at the Meeting, on the matters set forth on the reverse side and, in their discretion, on any other matter(s) that may properly come before the Meeting or any adjournment(s) or postponement(s) of the Meeting.

This proxy will be voted as directed. If no contrary direction is indicated, the proxy will be voted FOR all ten of the director nominees listed in proposal 1; FOR the advisory vote to approve the compensation of the named executive officers of Lam Research, or “Say on Pay;” FOR the proposal to ratify the appointment of the independent registered public accounting firm for fiscal year 2020; and as the proxy holders deem advisable, on any other matter(s) that may properly come before the meeting.

Address change/comments:

(If you noted any address change/comments above, please mark corresponding box on the reverse side.)

Continued and to be signed on reverse side